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Colin Hunt: Good morning, and welcome to the presentation of AIB Group's results for 2025, a landmark year for our company. I'm going to spend some time outlining the macroeconomic backdrop and giving an overview of the progress on our '23 to '26 strategy before handing over to Donal, our CFO, who will bring us through the details of our financial performance. 2025 was another year of successful delivery by AIB Group against our strategic objectives, priorities and targets. We're pleased to be delivering a profit after tax of over EUR 2.1 billion, representing a RoTE of 25%. In a looser monetary policy environment, our NII remained resilient, coming in ahead of expectations at EUR 3.75 billion. The strength of our financial performance and the scale of organic capital generation allowed us to grow our business, to invest in our business and to propose total distributions of EUR 2.25 billion, payout ratio of 105%, while still delivering an exceptionally strong capital outturn with CET1 ending the year at 16.2%. And 2025 was the year that AIB returned to full private ownership, having returned a cumulative circa EUR 21 billion to the Irish state. So it was a landmark year, a year of progress and closure, a year that positions us to build an ever better, ever stronger, trusted AIB in the interest of all our stakeholders and the economies and the communities that we serve. We remain resolutely committed to the sustainability agenda, an agenda that sits at the core of our strategy and at the very heart of our purpose. We're making good progress towards meeting our long-established 2030 targets with almost EUR 23 billion of green and transition lending deployed since 2019. And last year's new green lending reached an all-time high for us of 43% of all new lending, well on track to hit the 70% target we've set for ourselves. We're also continuing to decarbonize our own business with 92% of our electricity needs sourced from our virtual power purchase agreement from the output of 2 solar farms. The scale of the environmental and social lending opportunity and our excellent credentials in this space create the platform for continued success in ESG bond issuance, and I'm very proud of the fact that AIB is now one of the world's leading issuers of ESG paper globally. Our confidence in the outlook for AIB in 2026 and beyond is underpinned by continuing solid and consistent performance by the Irish economy. Growth in modified domestic demand surprised somewhat on the upside in 2025, and is expected to hover around 2.5% to 3% over the next few years, a rate of expansion that is reasonable in an Irish context and stellar compared to our neighboring economies across the Irish sea and indeed further afield. Our population continues to grow, and it's likely to exceed 6 million in the next decade. And our labor force exceeded 2.8 million people at the end of last year, representing an increase of an incredible 59% since 2000. And now that demographic bounty is a key driver of Ireland's economic success, and it creates a very positive operating backdrop for AIB, Ireland's leading financial institution. And while we've seen remarkable growth in the numbers of work in the country's GDP, the balance sheets of the country, businesses, households, individuals are all very conservatively positioned. Net government debt fell to 40% of gross national income last year and the downward trajectory is expected to remain a feature of the budgetary landscape over the coming years. Now the government is in a very strong position to deliver on its ambitious national development plan, which will see EUR 275 billion deployed in building a world-class public and social infrastructure here over the next decade. And meanwhile, households continue to delever with debt to disposable income running at about 40% of the post-GFC peak with the savings ratio running at 15%, an indicator of which is very well reflected in our own liabilities performance. Ireland remains a preferred destination for foreign direct investment. Now we will, of course, continue monitoring the international trade climate, but it's only fair to say that the performance in 2025 surprised on the upside, both in terms of investment and also in terms of export volumes. I made mention already of the government's NDP, a plan which will see a much needed ramping up of infrastructure -- of investment in critical infrastructure. And if this country is to consolidate and sustain its economic progress, we need to close existing gaps in housing, water, energy and transport infrastructure, and we need to do it at pace. We look forward to continued progress on the delivery of new housing with 2025 seeing over 36,000 new homes being completed. And that was the best output performance since the GFC, but it's still well a drift of the level of housing completions needed to satisfy demand. And we expect to see housing output continuing to grow year in, year out with the level of completions forecasted 45,000 in 2028, representing an increase of some 25% on the 2025 performance. But given the scale of unsatisfied demand that's out there, housing supply is going to have to reach levels well ahead of in-year structural demand if the market is to return to equilibrium. So challenges remain, but we are seeing good progress, and we are optimistic about the supply outlook and the opportunities that creates for our lending businesses, both in mortgages and development finance. Now looking back to the lending performance last year, new lending was 2% higher than in 2024. We saw a 4% decline in new mortgage lending in a growing market with our mortgage market share falling to 30%. Now I've remarked on many occasions that we do not target mortgage market share per se. Instead, we are focused on writing the right business at the right price. That said, it is important to note that not all mortgage market shares are the same. And we have a strong preference for having direct relationships with our customers as they embark on the biggest financial decisions of their lives. In the direct-to-consumer market, we remain by some distance, the leading player with a market share of 46% and the pipeline for the early months of 2026 looks very good. Personal lending was 4% ahead and now 88% of personal loans are applied for digitally across the group. Total property lending saw an increase of 25% of the subdued base of recent years. Corporate lending had a good performance with new lending up 8%, but this was offset by a quieter year for Climate & Infrastructure Capital in a noisy external environment. A number of deals which we expected to close in December tipped into January, and that business is off to a very good start this year. Now given the macro backdrop and the strong and visible pipeline ahead for the operation divisions, we are confident in our ability to deliver a medium-term lending growth CAGR of 5% out to the end of 2027. Our franchise remains exceptionally strong, and we are very pleased to be now serving more than 3.4 million customers with more new customers choosing AIB than any other financial institution in Ireland. And the trust that our customers, both long-standing and new place in us is underpinned by the resilience of our digital offering with level 1 service availability running at 99.99% in 2025 and by the strength of our physical presence with AIB having the largest branch network in Ireland. And that community engagement is key to our relationship with our customers, particularly for the very biggest moments in their financial lives who know that we are digitally trustworthy and we are there in person when it really matters. I'm pleased with the response of our customers to our enhanced savings and investment offering through AIB Life and Goodbody with total AUM now comfortably exceeding EUR 18 billion with plenty of growth in the pipeline. On a stand-alone basis, AIB Life is now showing real traction with AUM reaching EUR 3 billion, which was a 20% increase in 2025. Now as Ireland ages and government policy evolves, we believe there is potential for significant additional growth in savings and investments in '26 and beyond. We remain the bank of choice for new account openings with the group enjoying a market share of 49% of the flow and 40% of the stock of current accounts in 2025. Our Corporate and Business Banking franchise remains exceptionally strong, and we're going to continue to invest in secure and speedy digital enablement over the years ahead as we meet the evolving needs of these critical parts of Ireland's economic success. And of course, we remain the country's leading green bank, standing we will maintain as we grow the share of green lending and broaden and enhance the range of green products and services across the group. Looking now at the first of our strategic priorities, the focus on customers, their expectations and their needs is key to the long-term success of AIB. Through a data-driven approach to customer segmentation, we understand those expectations and needs like never before. And that unrelenting focus on our customers is paying dividends in the form of Net Promoter Scores with all-time highs in 5 of the 6 key customer journeys being recorded in 2025. Meanwhile, service levels in our customer engagement centers remain very strong, and we continue to invest in delivering an easier, more engaging and protective relationship with our customers. And we will use AI extensively to help us deliver that high-quality relationship of real trust. ABBYY, our AI digital assistant, whom we launched in December of 2024, is engaging now with an ever greater number of customers. Covering 66 customer journeys, ABBYY has assisted over 1.3 million customers since her rollout, and the feedback has been very positive, with particular reference being made to the speed and the ease of dealing with our digital assistant. 80% of our customers who call our engagement centers choose to continue dealing with ABBYY. We are continuing to make steady progress on our second strategic priority, greening our business. We're playing an active role in financing the transition to a more sustainable future. We've now deployed almost EUR 23 billion of the EUR 30 billion Climate Action Fund. And we lent an additional EUR 6.3 billion in new green and transition lending in '25, with the greatest contribution coming from retail banking, predominantly in the form of green mortgages, which now account for 62% of all new Republic of Ireland mortgage lending. Across corporate and business banking, we are the leading player in financing sustainable lending to the engines of economic development, while Climate and Infrastructure Capital is continuing to play an important role in funding solar, wind, bioenergy, waste-to-energy assets in Ireland, Britain, the European Union and in North America. The loan book in this division has now expanded to more than EUR 6 billion, and we expect to see further significant growth in '26 and beyond. And notwithstanding our ambition to be a champion of the transition to a greener future, the scale of the opportunity is simply enormous and continues to grow, allowing us to be highly selective in choosing the technologies and the geographies where we are willing to put the group's capital to work. Our third strategic priority speaks to ever greater operational efficiency and resilience, and I am very pleased to report accelerating progress right the way across the organization. We've invested significantly in resilience because it is fundamental to customer trust, and trust is the prerequisite for any credible digital ambition. We're continuing to strengthen, simplify and streamline AIB with a 40% decline in the number of legal entities within the group and ongoing decommissioning of legacy applications and increased digital automation of customer contact. We've invested wisely in AI with Copilot now deployed across the organization and the first wave of internal agentic assistance is now being deployed. We're making great progress in enhancing credit decisioning through nCino, which now handles 2/3 of all new SME lending. Our platforms remain resilient with world-class Level 1 service availability and 0 critical cyber incidents in 2025. And the rollout of push notifications on our app is making a material difference to the quality of our everyday customer engagement. There is so much more to come with our next-generation app set to launch in the summer. And by design, it will be more agile and flexible than any other app previously deployed by us, and it will be capable of rapid and high-frequency enhancements. Allied with the imminent launch of Zippay across the Irish retail banks, our customers are going to enjoy and experience a significant improvement in the quality of their digital interaction with us over the coming months. Now this foundation gives us the right to accelerate. Our new digital platforms can scale confidently because the underlying estate is stable, secure and well governed. The pace of technological change that we're seeing is unprecedented in the history of banking. Now our team has demonstrated clearly and consistently the efficiency, security, resilience and customer experience gains that they are capable of delivering. And given that track record of achievement and the speed of change that is now readily apparent, we believe that we can credibly build the future faster at AIB. Our annual investment in the business has increased from an average of EUR 300 million recent years to EUR 350 million last year and will rise to EUR 400 million this year and beyond. And the bulk of that increase is devoted to strategic projects, which will allow us to continue enhancing our customer experience, our digital agility and the resilience and the durability of our systems. We will build the future faster here and in so doing, continue to earn the trust of our 3.4 million and growing customer base. We are now well embarked on the final year of the strategic cycle. And while we're very focused on delivering on our targets for 2026 and continuing to generate attractive shareholder returns, our minds are inevitably turning to the next strategic cycle, which will bring us to 2030. And as we move through the months ahead, our plans and our targets will take more concrete form and we'll seek Board approval for what comes next in December before we share the full details with our investors and the analyst community. Now it would be premature of me at this stage to outline the set of performance indicators and parameters, which will guide the next phase of AIB's development. However, they will, I believe, be fully reflective of my own 2030 ambitions for this organization. I want AIB to be the best bank in Europe and the most trusted brand in Ireland. Now these may be audacious aspirations, but they're grounded in what we have already achieved together. We have made huge progress in recent years in reshaping and transforming the group in the interest of all our stakeholders. We have the leading customer franchise. We're generating shareholder value, including a RoTE of 25% and return on assets of 1.4%. Our organization is in great shape with 370 basis points of organic capital generation and EUR 2.25 billion return to our shareholders. And I'm very excited about what I know it can and will deliver over the months and years ahead. Now 2025 was a landmark year. We delivered against the commitments we set for ourselves. We performed ahead of expectations, and we did so with positive momentum across the business. However, 2025 was a milestone. It wasn't a destination. We've come a huge way in recent years with a strong capital base, a very clear strategic ambition and a market-leading position. AIB is well positioned for the future, and I remain convinced that our best days still lie ahead as we work relentlessly to build a better, stronger, more resilient AIB in the interests of all those who put their trust in us. Donal? Donal Galvin: Thank you very much, Colin, and good morning, everyone. I'm very happy and pleased to be able to deliver the financial highlights for AIB for 2025. We've delivered a profit after tax of EUR 2.1 billion with a return on tangible equity of 25% and earnings per share of EUR 0.933. Our total income was EUR 4.5 billion, which was down 8% on the year. That's broken down between a net interest income reduction of 9% and net fee and commission income increase of 4%. Our costs were slightly lower than expected at EUR 1.99 billion, which is up 1% on the year, and that gave us a cost/income ratio of 44%, and our FTEs were 3% lower year-to-year. Our gross loans increased 2% or 3% on an underlying basis to EUR 72.3 billion, and that included EUR 14.7 billion of new lending, which was up 2% year-on-year. Our asset quality remains resilient and our ECL coverage remains at 1.6%. We had an ECL charge of EUR 172 million, which represents a 24 basis points cost of risk. And our NPEs finished the year at 2.2% of gross loans, which is the lowest for a number of years in AIB. Our funding position remains exceptionally strong. We have customer deposits of EUR 117.2 billion, and that represents a 7% increase on the year, which is well ahead of our own expectations. Within wholesale markets, we issued AT1, Tier 2, Euro senior and Dollar Senior, leaving us with a very strong funding position. Our capital at the end of the year, our CET1 was 16.2%, well ahead of regulatory requirements, but that incorporates very strong organic capital generation of 370 basis points and very strong performance on RWA optimization initiatives. Our total distributions for the year are EUR 2.25 billion, representing a 105% ratio. EUR 263 million was already paid in November as an interim. We have a EUR 988 million proposed final ordinary cash dividend. And we've announced and already begun to execute a EUR 1 billion on-market buyback. I'll say on the income statement, I don't want to really repeat myself too much. Obviously, income was down 8%, as I previously mentioned. But notwithstanding that fact, we can see earnings per share flat year-on-year. Total cash dividend per share of EUR 0.5858 is up 58%. So really strong performance there, we feel on the returns. Our bank levies and regulatory fees were EUR 114 million in the year, and that includes EUR 94 million for the Irish banking levy. As we look into 2026, we don't expect any material exceptional items and our bank levies and regulatory fees, we currently estimate will be around EUR 140 million. Net interest income of EUR 3.748 billion, down 9%. I'll just try to walk through the moving parts here. There's a 42 basis points benefit from our structural hedge program. Obviously, related to this, a 45 basis points reduction in net interest margin from cash held with central banks. Customer loans and investment securities are down 22 and 19 basis points, again, just reflecting those lower interest rates. And on the liability side, we had a strong benefit from wholesale funding costs of EUR 119 million, and we had an associated cost of EUR 88 million as customers termed out some of their deposits. Our Q4 exit NIM was 2.69%, and it ends the year overall at 2.73%. This is an important slide, I think, for us to show how we have managed our interest rate exposure through the last number of years. Obviously, interest rates going from minus 50% up to 4% and landing down at 2% has meant that we have been -- have had to proactively manage our balance sheet. As we give our guidance for 2026, the assumptions that we make is that we'll have an ECB deposit rate of 2% and that deposit beta will remain at 20% as it was throughout 2025. We're very comfortable with our NII resilience, which we believe we have shown over the last number of years. And what gives me the great confidence going into '26 and beyond is that we have a growing and granular deposit base, which we have seen grow significantly over the last number of years. We see growth in all of our core markets of around 5% per annum, and we very proactively manage our balance sheet. We do this through our structural hedge program. I think last year, in the midyear, I would have referenced a EUR 15 billion increase in our structural hedge in 2025. Already this year, in the last number of days, we have executed an additional EUR 10 billion of structural hedge. The average yield on that was 2.3% and the average life was 5 years. So the impact that has is reducing our NII sensitivity to 100 basis point move or shock from EUR 378 million down to EUR 286 million. Some of the other moving parts with the structural hedge are that we expect to have EUR 6 billion of swaps maturing in '26, EUR 6 billion of swaps maturing in '27. Throughout '24, '25 and even earlier this year, I've talked about wanting to extend the duration, which is now expected to be 5% -- 5 years by the end of 2026. So we expect at the end of '26 to have a received fixed yield of 2.3% on euros and 2.7% on sterling. In addition, as we've talked about before, we have a large quantum of fixed rate mortgages of around EUR 21 billion. They have a yield of 3.1% and a weighted average life of 1.9 years, and that's relevant because we leave them unhedged, really to add a little bit of natural duration to our balance sheet. So I've really tried to summarize the position for year-end. We'll have an average life of 5.1 years on our euro hedge, and that will remain in place over the next number of years. And our received fixed yield is around 2.3%, so at stroke in the money. So looking through that and looking at that, that's what really underpins and gives us the confidence for our NII guidance to be circa EUR 3.8 billion in 2026. Other income was EUR 756 million, and our net fees and commissions were up 4% in the year. I think the main standouts really was in our cards business, which was up 11%, our wealth and insurance business, which was up 7%. And as we've talked about previously, this is a huge area of focus for the organization going forward. We have EUR 18.3 billion of AUM, as Colin would have mentioned, a number of years ago. Obviously, that would have been a much lower number or approximately 0. But obviously, post the acquisition of Goodbody, post the start-up of our joint venture with AIB Life, we feel we have a very strong foundation. So the Goodbody AUM is EUR 15.3 billion, which grew by 7% in the year. The AIB Life AUM is EUR 3 billion, which grew 20% in the year. I think in the coming years, what you should expect to see in this area is AUM growth of 10% per annum and revenue growth of 15% per annum. But that is going to be a massive area of focus for the organization linked to the huge customer numbers that we have, obviously, linked to a lot of the activity we are embarking on with respect to digitalization and personalization. Other income, some of the other line items can always be a little bit more volatile. I try to just update and guide as the year progresses. But overall, for 2026, other income greater than EUR 750 million. Our cost performance was strong in 2025, outturn of EUR 1.99 billion, which is up 1%. A few different moving parts here. Staff costs were down 1%, mainly due to reduction in headcount. G&A expenses up 6%. We're seeing some inflationary impacts there, higher business volume impacts there and also higher OpEx-related investment spend. So not all of our technology spends get capitalized, some also goes through our OpEx, and you will see it here. And our depreciation number is down 3% on the year, as we really tightly manage the execution of our big programs. So overall, that gives us a cost/income ratio of 44%. Like I said, our FTE reduction was down 3%, ending the year with 10,207 employees. And this is a trajectory we expect to maintain in the coming years. We believe that we'll be able to do it on an organic basis, obviously, as we go through the next number of years. Colin mentioned that we were going to increase our investment spend from EUR 300 million to EUR 350 million, up to EUR 400 million now in 2026. And we're going to really look to accelerate our digitization, which will enable faster innovation, scalability, enhanced security and obviously, operational efficiency. As a result of this, you can expect to see our depreciation grow by 3% or 4% per annum, but that is obviously going to be partially offset by ongoing cost-saving initiatives and efficiencies that come from the rollout of these large programs. But for 2026, we expect our cost to increase by 2%. With respect to asset quality, we had an ECL charge of EUR 172 million for the year, which represents a 24 basis points cost of risk. I'll just really simply break it down into 3 different areas. We had a write-back of EUR 52 million from macros, and that's really reflecting the fact that the way we saw the different range of outcomes post Liberation Day, the outturn, particularly in Ireland, ended up being significantly better. We had a EUR 210 million net charge relating to underlying credit performances, which is really just the normal movement of credit between stages. And lastly, with our PMA, we had a small charge of EUR 14 million in the year, leading us overall to that charge of EUR 172 million. So we have an ECL stock of EUR 1.1 billion and an ECL cover rate of 1.6%. We have PMA of EUR 254 million represents around 26% of our ECL stock. So notwithstanding all of the volatility that remains in the world at the moment, we feel we are very, very conservatively provided. So for 2026, we expect a cost of risk within the range of 20 to 30 basis points, and I look to narrow that as the year progresses. Main movements on the balance sheet side. Obviously, loans increased 2%, liabilities increased 7%. That obviously gives us an excess liquidity position. So what you're seeing here is an increase in the amount of investments we make in the treasury world. We bought an additional EUR 2.4 billion worth of bonds in the sovereign and supranational space in the Eurozone. And for 2026, I think you can expect to see that grow by another EUR 4 billion or EUR 5 billion. Loans to banks was EUR 48 billion, which included EUR 36 billion at the CBI and GBP 3.8 billion with the Bank of England. Overall, our loans increased by 3% on an underlying basis or 2% on a reported basis. Big FX impacts in the year, slight impact from some disposals in the year. But overall, I think we are more confident now than ever that we will be able to reach and achieve our 5% asset growth targets for '26 and '27. What we saw in 2025, I would say, was our wholesale businesses performed very strongly. Property market, still a little bit muted, recovering from the interest rate changes and valuation shock. Our personal consumer business performed very, very strong. And on our mortgage business, we saw growth overall in the year. As I look to 2026, I think what you can expect to see is growth in all of these areas, just slightly more. So our funding and capital position remains very strong. LDR of 61%, LCR of 204% and a net stable funding ratio of 163%. Our MREL ratio was 35.2% in excess of our requirements. So very, very strong foundation there. But I think the big story on the liability side or the balance sheet side for 2025 was really deposits and the deposit growth. So notwithstanding the fact that we had a movement of around EUR 2.4 billion of our customers moving to term, we actually had an increase overall in our current account and demand deposits. So 7% growth was an exceptionally strong outturn, though we do expect that to temper somewhat in 2026, more in line with modified domestic demand. There's no other reason there, no competitive environments that we're necessarily concerned about. It's just we feel that 2025 was maybe an unusually large growth area, but that remains to be seen, and we will obviously be able to watch that quarter-by-quarter. Capital generation for 2025 in AIB was exceptionally strong. We started the year at 15.1%. And then early in Q1, we had a Basel IV impact of 120 basis points. We had organic capital generation of 370 basis points from our business activity. We have a reduction of 390 basis points for distributions, as we've talked about. We engaged with the government and we canceled the warrants that they were granted in 2017 around the time of the IPO, and that had a cost of 70 basis points. Given our strong business performance, we had really strong DTA utilization benefit of 40 basis points. with some other equity movements of 20 basis points cost, which is really just AT1 coupons. And then in other RWA movements, we have a number of RWA optimization items where we had a strong outperformance. That includes execution of a mortgage SRT in quarter 4, the sale of our 49% shareholding in AIB Merchant Services and also the implementation of a new IRB model for our Climate and Infrastructure Capital business, which also had a positive benefit. That doesn't even incorporate the EUR 1.2 billion directed buyback that we did with the government in the first half of the year where we bought back EUR 1.2 billion of stock at a price of EUR 6.25 because that was obviously deducted from the prior year's returns. So the outturn of 16.2% is very strong, over 6% of capital generated in the year, which is really, really strong, and we're very happy with that, obviously, comfortably above all of our buffers. With respect to how we think about capital, same as prior years, come in on the 1st of January and drive a stronger business performance as is possible. So obviously, 370 basis points was the outturn for 2025, but I think you should be thinking even for the medium term, greater than 320 basis points on a sustainable basis and our deferred DTA benefit of circa 35 basis points steady state going forward. We're going to invest in our business in 2 ways. Number one, increase our investment spend and change in technology up to EUR 400 million. And we're obviously going to utilize more of our capital as we grow our balance sheet on a 5% annualized basis. We will continue to optimize our balance sheet wherever we can in whichever format we can. So we will do this through SRTs, where we've already issued 2 transactions, 2 different asset types. Obviously, the corporate transaction was done in '24. The mortgage -- AIB mortgage transaction was done in '25. And in 2026, we will look to execute an SRT transaction within our project finance or Climate and infrastructure capital portfolio. IRB model adoption and development is an ongoing theme. We do expect to have 80% of our balance sheet on IRB models by 2028. I've mentioned the benefit from the project finance model. 2026, we have 2 different portfolios, which we're hoping to review and conclude that being EBS mortgages and commercial real estate, but it's a little bit too early to know what the outturns there are going to be. And lastly, we look to deliver market-leading distributions. We've paid out over 100% in 2024 and 2025. We've paid out EUR 6.5 billion in distributions since 2023. For our ordinary dividend policy, we look to pay a sustainable dividend within a 40% to 60% payout range. Our ordinary dividend will be paid in cash. Our interim dividend will be paid up at 1/3 of the prior year's ordinary distribution -- ordinary dividend per share. With respect to additional distributions, we have capacity for above policy payouts, subject to annual review and necessary approvals. We have optionality to utilize share buybacks, special dividends or a combination of both as we look to move towards our medium-term target of greater than 14%. So wrapping it all up, our 2025 performance, we feel was strong, already achieved or outperformed our 2026 targets. 2026 guidance will be interest income circa EUR 3.8 billion, other income greater than EUR 750 million. Costs are expected to grow by 2%. We expect a cost of risk between 20 and 30 basis points. Loans will grow by 5%, and we expect deposits to grow by 2% or 3% and we will deliver a return on tangible equity greater than 20%. So for 2026 and beyond, we expect to deliver a strong performance in the final year of our strategy. Moving into the next strategic cycle, we have a lot of positive momentum in our business. Sustainable business growth and returns, strong organic capital generation, increased investment in our business and market-leading shareholder distributions. Our medium-term targets continue to guide the business and will be refreshed for our next strategic cycle this time next year. Thank you all very much. Colin Hunt: Thank you very much indeed, Donal. And now we're going to take some time for questions, and we're going to the phone lines. Colin Hunt: The first question comes from Denis McGoldrick in Goodbody. Denis McGoldrick: Just 2, please, if I may. So firstly, you're guiding to circa EUR 3.8 billion NII for 2026. Can you talk us through the moving parts within that year-on-year, along with any color you could give on NII beyond this year, please? And then secondly, you delivered 7% deposit growth in 2025. But could you talk us through the mix within that between interest and noninterest-bearing and how you see that evolving this year? Donal Galvin: Thanks, Denis. I'll take that one. Look, on the liability side, I think it's fair to say that the savings ratio in Ireland is a little bit higher than what people would have imagined. And I think the impact on the Irish banking system was pretty consistent. Notwithstanding that fact, we do think that the deposit market will normalize in 2026, which is why we think that the increase will be 2% to 3%. So it seems like a big drop, but I would argue that that's more due to 2025 outperformance, but we will be able to keep an eye on this on a quarterly basis. I think we don't expect any particular change in mix. Our deposit beta in 2025 was around 20% 2026. We expect to see something similar. So I would just use the same mix as you go forward. And overall, with NII, really nothing new here. I think -- I mean, taking the year-end position of 2025, believing and putting that 5% growth over the coming years, I think, is how you will be able to get closer to the numbers I have. Indeed, as I look at -- if I look at consensus for 2026, '27, '28, I've obviously given you '26 numbers, which are slightly better than consensus. '27 is in and around where we see things. I think 2028 consensus seems a little bit light on loans and obviously, on associated interest income. But for all of those years, '27, '28 will be greater than 20% return on tangible equity as well. I can certainly commit to that. Colin Hunt: Thank you very much indeed, Donal. We're now going to Diarmaid Sheridan at Davy. Diarmaid Sheridan: Two, if I may, please. Just firstly, on the capital and distributions. Could I just invite you to maybe talk to us about when you expect to get to your greater than 14% target, please? And I guess, Donal, you provided some of the outlining measures. But just given how strong capital generation is, I mean, unless you're significantly exceeding your distributions that you've exceeded -- that you've delivered in the last couple of years, it's kind of hard to see how it gets to that level without something maybe from an inorganic or maybe is there something we're missing? The second question just on new lending, just in terms of what the key drivers to get from to bridge from that kind of 2% to 5% growth. I appreciate underlying 3% in '25. And specifically, just on the mortgage market, I get the point you make around the direct channel. Clearly, the broker channel has become a much more significant part. I just challenge you as to whether it's sensible to remain out of that channel? Or is that an area that you're comfortable not to play a significant role in. Colin Hunt: Well, first of all, we don't remain out of the mortgage channel out of the intermediary channel. We have a presence there through Haven. And we've had a big prioritization of green mortgages in the past number of years. And in the final quarter of last year, we made some adjustments to our non-Green mortgage rates. We haven't really seen a huge increase in the size of the intermediary channel in the past number of years. But we do prioritize our direct relationship with our customers. That's what we want to maintain that direct relationship with our customers. But certainly, on foot of the quality of our digital engagement, quality of our in-branch advisory service, the length and breadth of the country and given those price adjustments we made for non-green rates in the closing quarter of last year, what we're seeing coming through now in terms of pipeline is very, very encouraging about the volume of mortgage growth we're reporting in 2026. Donal Galvin: Diarmaid, yes, I think with respect to the capital question, the -- moving towards our medium-term target of 14% being ambition for quite a period of time. That obviously as a baseline represents the amount of capital the organization thinks that it needs to run the business successfully, which is why we are focused on trying to get to that as soon as we possibly can. I would say 2025 was more around a significant outperformance on the capital front than any reluctance to return capital. I mean, and I'd say every of the big initiatives that we worked on, we came out on the right side of that, which isn't always the case. But generating 6% of CET1 in any particular year is a particularly large amount. But look, that's what we worked hard to do. And on any opportunity where we get to look at our balance sheet or any of our activities and make things more efficient, we are going to do that. Even if it drags me or pulls me further higher away from 14%, we will do that, okay? So we executed a mortgage SRT in quarter 4, cost me money, generated 25 basis points of CET1, but it was an implied cost of equity of 3% or 4%, okay? So we will continue to look to do the right things to optimize our capital. And on an annual basis, that's what puts us in a stronger position as possible to move towards that 14%, give our stakeholders, the regulator, the Board, the comfort and confidence for us to maintain payouts similar to the last number of years. Colin Hunt: Thanks, Diarmaid. Now we're going to Sheel Shah at JPMorgan. Good morning. Sheel Shah: Two questions from my side, please. Firstly, on the distributions. So the dividend payout ratio looks to be at the top end of your target range. Can I ask how you're thinking about the split of distributions going forward into '26 and beyond. Would you expect EPS to, for example, grow considering that we're already at the top of the payout ratio range and maybe attributable profits may be taking a bit of a step down next year? And then secondly, can I ask about the investment spend and maybe sort of leaning towards the mobile app and your data insights. Could I ask how much sense do you have of the number of AIB customers that can be potential wealth customers. And how much leakage do you have in terms of AIB customers that maybe go to other providers for services? I'm wondering how much of this you can capture within the group going forward? Colin Hunt: I'll take the second question and then Donal can do the distributions. Do you want to go first, Donal? Donal Galvin: Yes. Look, with respect to the distributions, I mean, from the half year, obviously, we knew the position that we were going to be in, by and large, financially speaking. So I mean, the way we try to look at our distributions, we'll talk to investors, we'll engage with the regulator and then we'll have our own particular thoughts on what the right mix is. This is the first year for us, obviously, being out of state ownership. We announced a new dividend policy, obviously, last year as well, and we were very focused on ensuring that we delivered cleanly, clearly and consistently against that. . So then the makeup with respect to the buyback and the cash dividend, it was -- I mean, a number of factors we had to take into account, one of them being market liquidity as well. We do a buyback that was particularly larger, it might even be difficult to execute within a particular year as well. So that's something that goes into our thoughts. We came out for the first time last year, and we said we'll pay a cash dividend within the range of 40% to 60%. And we decided to pay out at the top end of that range for 2025. Obviously, that's a strong indication of our desire to deliver strong returns to our shareholders. But look, on a go-forward basis, the most important thing, having a conversation around distributions, it goes back to how we think about capital and how we manage ourselves. When we come in on the 1st of January, work hard, deliver on the plans, then you'll generate strong returns. Like without doing that, you're not even having a conversation. So that really is our focus, and then we look and analyze the best makeup of returns in the last quarter of the year. Colin Hunt: Thanks very much indeed. In relation to the app, yes, we have 3.4 million customers, 85% of our customers are digitally active. The app is in the final stages of development. In fact, we have a pilot out there, which is getting very, very positive reaction at the moment, and we look forward to launching it in the summer months. And it's going to be a significant change to what we currently offer. It's going to be far, far more intuitive, far, far easier to navigate, far, far better functionality, and it will encompass all aspects of your relationship with AIB Group. The simple truth is that we really didn't have savings and investment products in the wealth space until we acquired Goodbody and until we established AIB Life. And we've seen our AUM now grow to the point of 18.3%. There's significant further gains to be made there. I've absolutely no doubt about it over the next number of years, and the app is going to make a difference in that regard as well. But that isn't the sole reason that we're increasing our investment spend. What we're looking at is a progressive transformation of our architecture. We've built a data warehouse in the cloud, world-class. We are investing in a new credit life cycle management system. We are building a unified mortgage platform, all of which will allow us to respond to our customers' needs in a far, far more agile, rapid and secure way because ultimately, this is about trust. We're going to turn now to Aman at Barclays. Good morning. Aman Rakkar: I wanted to just come back on capital, please. There's quite a few moving parts in terms of capital generation going forward. In particular, the SRTs and potential headwinds. So I think previously, you've kind of called out CRE, the kind of give back of the CRE component within Basel as a potential headwind. I don't know if you could kind of give us a kind of updated take on whether you still think that is the case. And if you could, in any way, quantify that, that would be really, really helpful. And I just wanted to just ask a bit more about SRTs and around the quantum -- like is there a limit on the amount of SRTs aggregate or cumulative SRTs that you'd be looking to have out at any one point in time? I just want to get a sense of the kind of ongoing run rate of SRTs beyond the kind of existing stock when we're thinking about building out capital from here? Donal Galvin: Yes. Look, with respect to commercial real estate, huge beneficiary from Basel IV effective rough numbers, the risk weightings went from around 100% down to 80%. I don't think that I'm going to have line of sight on that outturn until probably the end of 2026. And I don't actually expect an inspection until 2027. But I'm naturally just going to assume that we'll be given up some of that, but I can't quantify that at the moment. With respect to SRTs, the way we think about those and the way I've talked about this from the start, I want to have a program set up on multiple asset classes executed over multiple years. The reason I want to do this, it's not necessarily for capital generation, okay? We have plenty of capital. And obviously, with every SRT, I'm moving away from 14%, but it's really, for me, an RWA optimization tool and a risk management tool. It helps us at entity level or a business level manage returns. So corporate transaction done successfully in '24, AIB mortgages in '25. Similar sizes, like we look to target 20, 25 basis points of CET1 per transaction. We don't look to be very aggressive and do massive jumbo deals, okay, because it's -- that is not the exercise that we're trying to execute. 2026, we look at our Climate & Infrastructure business. It has a newly approved project finance model, a slotting approach. I'm going to imagine it will be -- there will be less inefficiencies. So the SRT may be less effective than others that we've done. It's just I want to have that asset class in an SRT program, which will help us risk manage it going forward. Beyond that, I will look at commercial real estate. I need to understand all of the data that we're getting from our IRB analysis, and then that will help me figure out how we want to target that market. That's more than likely going to be 2027. And then EBS mortgages as well is another area and another portfolio that I want to look at. I need to wait for the EBS to complete and conclude its own IRB on-site inspection, again, so we can see what the underlying data is telling us. I think they're the main asset classes that I want to get up and running. I want to have them up and running. They will endure. They will remain in perpetuity, certainly as long as they're allowed. I think the question sometimes comes up if different firms maybe max out, let's say, quantums, et cetera, then there's kind of questions from the regulator around associated counterparty risk. But we kind of want to do regular smaller transactions, very diverse investor base over the coming years. But each transaction look to save 20 to 25 basis points of CET1. Each transaction probably going to cost EUR 10 million, EUR 15 million. Cost of equity to date has been very, very attractive for us, but they are the kind of metrics you should be thinking about. Colin Hunt: Thanks very much indeed. And now we're turning to Guy Stebbings at BNP. Good morning, Guy. Guy Stebbings: I think most of my questions are covered. But just one bigger pitch question for Colin. You talked about wanting to be the best bank in Europe in sort of longer term. Could be seen sort of quite an ambitious statement. I guess best bank means different things to different people. So just interested in terms of what sort of metrics you would be thinking about when benchmarking this as such. Colin Hunt: Yes, it's an interesting question and one that was predicted to be landed on top of me today. Ultimately, this is -- we won't decide if we're the best bank in Europe. It will be our stakeholders that do. So whatever -- how do our customers regard us? How do our shareholders regard us. How do our employees regard us and of course, very importantly, how do our regulators look at us. And so it will be a compendium of their views that will determine if we will be a judge to be the best bank in Europe. I know what the team here are capable of. I know the scale of the ambition that we have, and I am very confident that we are going to do our utmost to be ranked amongst all those stakeholder groups as the best bank in Europe. And we'll obviously be updating you in 12 months' time when we have the actual parameters and metrics around how we are going to evaluate that. But it will be in the eyes of the various important stakeholder groups that we deal with every single day. Now turning to Rob Noble, Deutsche Bank. Robert Noble: Two for me, please. So the Climate Capital segment is the one that's growing fastest and presumably will grow fastest going forward as well. There's quite a pickup in Stage 3 loans and the cost of risk has stepped up. So what's going on in this division? And what sort of returns do you see that part of the business generating compared to the group as it scales up. And then just a follow-up on all the capital questions. At the bottom line, what sort of RWA growth you're expecting in 2026 pre the unknown IRB changes? And then do those IRB changes, do they affect your Pillar 2 requirement at all? And could that potentially lead you to lower the 14% core Tier 1 target? Donal Galvin: Rob, thanks for the questions. I'll take that. With respect to Pillar 2, let's wait and see. Overall, we have very detailed programs in place, working with the regulator where we're trying to close out various items on the to-do list. We've been very, very, I would say, efficient in closing those down and over the last number of years have seen a slow, steady improvement in our add-ons, but we are very ambitious in this area as obviously, our add-ons are one of the key ingredients to our medium-term targets. With respect to climate capital, a few different things there. So I mentioned that we have a new slotting model, which is approved, which is really what is used for the bulk of the activities in that area. We've begun to roll that out in quarter 3 and quarter 4. But looking through it all, if it had a -- if that business had a risk weighting density of around 90% pre that model, post the model, it's around 75%, okay? So that's one of the key inputs that you need for your returns analysis. The margins on the business are pretty consistent in different jurisdictions. And I would probably think about that being like a 2.2% margin business or certainly, that's what we model for when we're looking at the business and its growth and its trajectory. Costs are very low, obviously, given it's a very small professional wholesale team. And then it comes down to the cost of risk. For 2025, that division stand-alone had a very high cost of risk of around 110 basis points. Within that, there was around EUR 0.5 billion, EUR 500 million worth of fiber type transactions, all originated around 2019, 2020. And that's to do with the rollout of fiber throughout Europe, okay? Ireland, U.K., France, Germany, Italy, et cetera. So all of those deals are now -- or a lot of them, some are performing exceptionally well, such as in Ireland. U.K., not so much, delays from COVID, et cetera, et cetera, they are coming through now. So we took a few PMAs, quite an amount of PMAs, really just to ensure that in all eventualities, we were really well provided for. So you are seeing refis and equity recaps happening in that business at the moment. But if you took out that fiber portfolio, the cost of risk for that book was probably 5 or 6 basis points. Certainly for our planning assumptions, we use a cost of risk of less than 20 basis points. So if you put all that together, you can see the growth trajectory, and you can see that this is an accretive business for AIB and very heavily supported and strategically important for us. Colin Hunt: Thank you. Now I go to RBC. Good morning, Pablo. Unknown Analyst: I wanted to ask on fee income first. So you're guiding to AUM CAGR of 10% to 2028 with related revenue growth above that at 15% per year. So could you just please provide a bit more detail on what will drive that revenue growth going forward besides the demographic trends that you have already mentioned and perhaps also what the required investment -- additional investments are in that part of the business going forward? My second question was more on your deposit growth. I know that you've mentioned you expect that deceleration to -- from the 7% that you saw in 2025 to be more in line with the evolution of MDD. And I believe you also mentioned that you didn't necessarily expect a material headwind from changes in the competitive environment in Ireland. So I just wanted to check what you have been seeing in the last months in this year as well. And if you expect any material disruption given potential new entrants into the market, the ongoing transaction in Ireland, et cetera? Donal Galvin: Yes. Look, on the wealth, the way we're set up, and I'll just try to explain the guidance we gave you a little bit there. We imagine 10% AUM growth. I'd like to imagine that, that is on the conservative side. We have 2 businesses, high net worth within Goodbodys and then more mass market through AIB Life. Goodbody is obviously -- I mean, if we're able to acquire any smaller roll-up businesses in that space, we're really aggressively looking to pursue that avenue. And that will be, I would say, in Ireland, we would say EUR 1 million up of net worth. The AIB Life business has performed really, really well. It only started up a number of years ago. That is now fully functioning within the AIB construct. So it's a joint venture with Great-West Lifeco, where there's 140 advisers operating throughout the country and working through AIB branches with AIB colleagues. I think the statistics were maybe 40,000 face-to-face meetings or 35,000 face-to-face meetings last year with our customers. And we do expect this to just grow as we continue to roll out new products. And obviously, as the population matures and also educates a bit more on wealth products. So that's what gives us the confidence in this area, massive area of focus for us, not just with respect to customer acquisition, but also connectivity with our mobile presence and mobile banking apps as well, making that as easy as we possibly can for customers. On deposits, it's -- look, it's where -- I'm trying to be as open and clear about this as possible. And I will admit over the last number of years, I have underestimated liability growth for the organization. We're certainly very comfortable with our position in the market, okay? 49%, 50% of all new accounts being opened, and that's a huge area of focus for us, 40% of the stock. So we have no concerns necessarily over competitive threats in this area. It's just we felt that at some stage, a normal savings ratio deposit impact is going to come to pass. I was expecting a slightly different outturn in 2025. Obviously, I was wrong, and it was an outperformance. So let's see how it turns out in 2026. Is it conservative? I mean, who knows. But certainly, that's what our econometric models would show us. And indeed, if it's wrong, I'm sure we'll know it at the next quarterly Central Bank of Ireland report in any case. Colin Hunt: Now we're past the top of the hour, and we're going to draw matters to a close there. Thank you so much indeed for your attendance and for your questions this morning. If you have any other questions or any points of clarification, please do reach out to Niamh, to Siobhain, to John and Bernie on the IR team, and we look forward to engaging with you and indeed our investors face-to-face as the roadshow commences later on today. Thank you so much indeed.
Operator: Thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEBTOON Entertainment Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead. Soohwan Kim: Good afternoon, and thank you for joining us. As a reminder, our remarks today will include forward-looking statements, including those regarding our future plans, objectives and expected performance and our guidance for the next quarter. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings, including those stated in the Risk Factors section of our filings with the SEC. These forward-looking statements represent our outlook only as of date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we discuss today include both GAAP and non-GAAP financial measures. Reconciliation of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to and not a substitute for GAAP measures. Joining me today on the call are Junkoo Kim, Founder and CEO; David Lee, CFO and COO; and Yongsoo Kim, Chief Strategy Officer. With that, I will now turn the call over to our Founder and CEO, Junkoo Kim. Junkoo Kim: Thank you, everyone, for joining us today. I will make a few brief comments on our performance, and then David will provide more details on our results and outlook. For my first thought on the year, please refer to the shareholder letter posted on our Investor Relations website. We reported solid year 2025 results with revenue growth of 3.9% on a constant currency basis and adjusted EBITDA of over $19 million. We are pleased to see MPU growth turn positive in the first quarter, driven by growth in Korea and in Rest of World. We made significant progress advancing our personalization tools throughout the year. As we have become more proficient with AI, we are now making increasingly personalized content recommendations that are unique to our users. In Korea, where we have seen the most progress, we also increased the content diversity at the same time. We are seeing MPU growth as users need more titles and episodes as they get more relevant recommendations. We believe that we can take the learning from Korea and apply them to other regions. We are excited that following the end of Q4 on January 8, 2026, the Walt Disney Company and WEBTOON Entertainment announced that we have completed the previous announced strategic agreement, including both the development of an all new digital comics platform as well as Disney's approximately 2% equity investment in WEBTOON Entertainment. We are targeting a 2026 launch for this new platform. We have already launched a total of 12 format titles on WEBTOON's Mobile vertical-scroll format following the initial collaboration announcement with Disney in August 2025. These have included stories from Amazing Spider-Man, Star Wars and Avengers, and we look forward to introducing an original series later this year. This is a powerful next step for our growing global business and a strong foundation for even greater collaboration with Disney in the year ahead. Finally, we continue to advance our flywheel with IP adaptations, which further keep users engaged with our platform. And I would like to highlight just a few examples here. Animation continues to be a major initiative for us, and we are excited to announce that Amazon MGM Studio greenlit Lore Olympus to be developed into a new animated series from WEBTOON Productions and The Jim Henson company. In Japan, anime is a particular focus, and I'm happy to announce that we reached our target of 20 new anime projects in 2025. We are excited to have launched another anime series on Crunchyroll with DARK MOON: The BLOOD ALTAR this January. We are also seeing success with live action as Netflix announced that viral hit will be adapted into a Japanese live action series following the success of our anime adaptation in 2024. Overall, we believe these financial and operational results demonstrate that our flywheel and strategy are working. Our ecosystem of content, creators and users continues to drive the success of our business. That said, we acknowledge that we have an opportunity to accelerate our flywheel and realize our growth potential faster. We remain laser-focused on deepening engagement across our platform to foster a stronger, more vibrant fandom and look forward to sharing more about our plans in the quarters ahead. With that, I will now turn the call over to David. David, please go ahead. David Lee: Thank you, JK, and thank you, everyone, for joining us. For the fourth quarter, we reported revenue of $330.7 million, in line with our expectations. Our reported revenue was down 4.1% on a constant currency basis and 6.3% on a reported basis as paid content growth was more than offset by declines in advertising and IP adaptations. For the full year 2025, we reported revenue of $1.4 billion. Our reported revenue grew 3.9% on a constant currency basis, driven by constant currency growth in all revenue streams and grew 2.5% on a reported basis. We expanded gross margin by 100 basis points to 24.3% in the fourth quarter as we lapped a number of discrete items that were recategorized from marketing to cost of revenue during the year. We believe we can expand gross margin over time as we execute on our cross-border content distribution strategies and grow higher-margin businesses like advertising. Net loss was $336.5 million in the quarter compared to a loss of $102.6 million in the year prior, driven primarily by goodwill impairments. Net loss for the full year was $373.4 million compared to a loss of $152.9 million in the year prior. We exercised cost discipline through the quarter, leveraging our G&A and marketing expenses to deliver adjusted EBITDA growth. Adjusted EBITDA was $0.6 million in the quarter, exceeding the high end of guidance. This compares to a negative adjusted EBITDA of $3.5 million in the same quarter of 2024. For the full year, adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the year prior. As a result, our adjusted EPS for the quarter was $0.00 compared to a negative adjusted EPS of $0.03 in the prior year and $0.15 for the full year compared to $0.57 in the prior year. Turning to operational health. We continue to focus on driving users to our app as well as converting them to paying users. While fourth quarter app MAU and webcomic app MAU declined 6.5% and 2.6%, respectively, year-over-year, we were pleased to have driven MPU growth of 0.7%, evidence that our personalized content recommendations are working. Importantly, our English platform webcomic app MAU was up 2.2% year-over-year. For the full year, MAU of 7.5 million declined 2.9% year-over-year. While app MAU declined 4.3%, webcomic app MAU grew 1.9% and English platform webcomic app MAU was up 12.8% for the full year. Global MAU declined 1.7% in the quarter. We estimate that global MAU benefited from roughly a 10 percentage point increase in Wattpad activity resulting from automated web traffic in certain noncore markets. While we saw a small increase starting in late Q3 2025, the web traffic peaked in Q4 2025, and we are seeing reduced impact in Q1 2026. Notably, this had no impact on app MAU and is not expected to have a material impact on our business. For the full year, total MAU of $157 million declined 7.1%. Now I'd like to provide an update on our revenue streams at a consolidated level. Starting with paid content. In the quarter, we posted 0.4% revenue growth on a constant currency basis. For the full year, we posted 1.5% revenue growth on a constant currency basis. While ARPU declined 0.3% in the quarter on a constant currency basis, we were pleased to see 4.6% growth for the full year. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model. Advertising posted a decline of 10.3% in the fourth quarter on a constant currency basis year-over-year. In Korea, we saw similar declines from the same e-commerce advertising partners last quarter, but we experienced growth from other partners. Ad revenue from NAVER was relatively consistent with the fourth quarter of the prior year. For the full year, we posted 0.4% advertising growth on a constant currency basis. Finally, our IP adaptation business saw revenue decline 29.7% year-over-year on a constant currency basis in Q4. As we've shared previously, revenue recognition for IP adaptations can be volatile from quarter-to-quarter, depending on the timing of key milestones for various projects. For the full year, IP adaptation revenue was up 35.5% on a constant currency basis. We had a strong year of IP adaptations in Korea, particularly driven by the theatrical success of My Daughter Is a Zombie and The Trauma Code on Netflix. Now I'd like to look at our results in the context of core geographies. In Korea, during the fourth quarter, our revenue declined 9.1% year-over-year on a constant currency basis as growth in paid content was more than offset by a decline in advertising and IP out of patients. For the full year, we posted revenue growth of 5.9% on a constant currency basis. During the fourth quarter, while MAU of $24.3 million decreased 10.8%, we were pleased to see MPU of 3.7 million grow 3.3% and a paying ratio of 15.1%, reflecting an increase of 207 basis points compared to the fourth quarter of 2024. Korea ARPU on a constant currency basis was up 0.9% compared to the fourth quarter of 2024. For the full year, Korea MAU was $24 million, decreasing 11.1% year-over-year, while Korea MPU was $3.6 million, declining 5.3% year-over-year. Full year paying ratio was 14.8%, up 91 basis points year-over-year. Full year Korea ARPU grew 4.7% to $8.2 million on a constant currency basis. Moving to Japan. For the quarter, Japan revenue declined 1.0% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by a single-digit growth in advertising and IP adaptations, all on a constant currency basis. For the full year, we posted 3.9% revenue growth on a constant currency basis. LINE Manga continued to be the #1 overall app for revenue, including mobile games for the quarter as well as the full year according to data.ai. Compared to Q4 2024, Japan's MAU of 22.2 million increased 0.5%. MPU of $2.1 million declined 6.9% and paying ratio of 9.5% was down 76 basis points year-over-year. Fourth quarter Japan ARPU of $23.30 grew 5.7% year-over-year on a constant currency basis. For the full year, Japan MAU increased 4.9% year-over-year to $23 million, while Japan MPU of 2.2 million declined 0.1% year-over-year. Full year paying ratio of 9.7% was down 49 basis points year-over-year and ARPU grew 3.4% on a constant currency basis. We expect to complete our infrastructure investments by the end of Q1 and redeploy engineering resources to support improvement across our personalized recommendation tools. We believe more personalized AI recommendations may drive MPU growth in Japan as we've done in Korea. In Rest of World, we saw revenue growth of 0.8% year-over-year on a constant currency basis in the quarter, driven by single-digit growth in paid content and triple-digit growth in IP adaptations, partially offset by a double-digit decline in advertising. For the full year, we posted a 2.1% revenue decline on a constant currency basis. Fourth quarter MAU was flat year-over-year after including the 10% growth impact in Wattpad activity resulting from automated web traffic. MPU grew 5.7% and paying ratio of 1.5% increased 8 basis points compared to the fourth quarter of last year. Fourth quarter Rest of World ARPU of $6.50 declined 5.1% year-over-year on a reported and a constant currency basis. For the full year, Rest of World MAU of $110 million decreased 8.4% year-over-year, while MPU of $1.7 million declined 1.5% year-over-year. Full year paying ratio of 1.6% was up 11 basis points year-over-year. Full year Rest of World ARPU increased 0.5% to $6.60 on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter was $80.5 million compared to $82.3 million in the prior year. This resulted in a gross margin of 24.3%, which expanded 100 basis points compared to the prior year. Full year gross profit was $322.2 million compared to $339.1 million in the prior year, translating to a gross margin of 23.3%, which decreased 180 basis points compared to the prior year. Adjusted EBITDA for the quarter was $0.6 million compared to a loss of $3.5 million in the prior year, and full year adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the prior year. On the cost side, Total G&A expenses for the quarter were $65.4 million compared to $77.8 million in the prior year quarter as we exercised cost discipline. Total general and administrative expenses for the full year were $259.5 million compared to $332 million in the year prior. Interest income in the quarter was $4.5 million compared to $6.0 million in the prior year, and other loss was $9.2 million compared to $6.2 million in the prior year period. For the full year, interest income was $19.2 million compared to $15.8 million in the prior year, and other loss was $9.8 million compared to other income of $6.5 million in the prior year. We had an income tax benefit of $18.4 million in the quarter compared to an income tax expense of $4.9 million in the prior year. Income tax benefit for the full year was $16 million compared to tax expense of $3.6 million in the prior year. Depreciation and amortization was $10.6 million in the fourth quarter compared to $12.1 million in the prior year. Depreciation and amortization for the full year was $35.4 million compared to $40.1 million in the prior year. Net loss of $336.5 million was driven by impairment losses on goodwill, the majority of which was attributable to Wattpad. This compares to a net loss of $102.6 million in the prior year quarter. Net loss for the full year was $373.4 million compared to net loss of $152.9 million last year. As a result, fourth quarter GAAP loss per share was $2.36 compared to a loss per share of $0.72 in the prior year period, and full year loss per share was $2.66 compared to a loss per share of $1.21 in the prior year. Adjusted EPS was $0.00 in the quarter compared to a negative adjusted EPS of $0.03 in the prior year period, and full year adjusted EPS was $0.15 compared to $0.57 in the year prior. Our balance sheet remains strong with a cash balance of $582 million and another $11 million of short-term deposits included in other current assets at year-end. We generated $11.2 million in cash flow from operations during the year. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I'd like to spend a few moments discussing our first quarter outlook. For the first quarter of 2026, we expect to deliver revenue growth in the range of negative 1.5% to positive 1.5% on a constant currency basis. This represents revenue in the range of $317 million to $327 million based on current FX rates. We anticipate first quarter adjusted EBITDA in the range of $0 million to $5 million, representing an adjusted EBITDA margin in the range of 0% to 1.5%. We continue to believe in the fundamental health of our long-term strategy, underpinned by our powerful flywheel of creators, content and users. As we've shared today, we're making numerous investments across all 3 of these areas that we believe will support a return to double-digit year-over-year growth by the end of the year. In closing, I'm pleased with the progress we made in 2025. We're encouraged by the positive signs we see in key metrics like MPU, and we look forward to executing our strategy in 2026. With that, I'd like to turn it back to our operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from the line of Mark Mahaney with Evercore. Mark Stephen Mahaney: Okay. Could I ask 2 questions, please? First, any more details on this launch coming up, the 2026 launch with Disney, the all-new digital comics platform? Just talk about what needs to be done in order to put that together, marketing plans, product plans? How far along is this platform to being launched? And then secondly, David, on this return to double-digit year-over-year growth by the end of the year. If that happens, could you just maybe give a little bit more color on that, either by region or by revenue segment? Like what are the factors most likely? Is it recovery in the rest of world market? Is it Japan or Korea? Or is it paid content? What are the factors most likely to get to that return to double-digit year-over-year growth by the end of the year? David Lee: Thanks, Mark. This is David Lee, and those are 2 good questions. Let me take them in turn. First, with regard to Disney, it has been some time since we last spoke to you. So I wanted to be complete. Since we last spoke, first, remember that Disney closed their investment in us on January 8 of this year, purchasing 2.7 million shares for approximately a purchase price of $32.8 million. It's also important that we've been hard at work with them. You'll note that we have launched already with their collaboration 12 reformatted titles, including 7 since the end of Q3. And while I don't think I need to list them all as you'll find them in the materials that we provided, I'm particularly impressed by the strength of those stories, stories that include Predator and Star Wars and even The Unbeatable Squirrel Girl, et cetera. But to your broader question, we've always talked about 2 elements: one, the ability to tell original stories that we have demonstrated success with in the past, new to the world stories. And in our disclosure, we noted we are committed to doing so at least one this 2026 period. I think that's important because I think new-to-the-world originals has powered a lot of the creator success as well as the consumer delight on our platform. The second is we've committed to launching the new consumer platform. Remember, we intend to build and operate completely this new platform in collaboration with Disney. We committed to launching that by the end of the year. You'll note that while I mentioned double-digit growth in revenue by the end of the year, I did not note any disclosed additional investment or burden on the company to achieve these outcomes with Disney. Let me turn to your second question because I think it's important. We recognize that in the guidance we provided, which is flat growth for Q1, that there may be a misconception. We're very confident in our platform. Our flywheel is healthy. We really will deliver double-digit growth by the end of the year, and it comes in 3 parts. First, you will see a return to the strong growth we have demonstrated in paid content, the core of our business. You'll note that we mentioned that in Japan, which has become a very large business for us, where we're still #1 in revenue when you include all consumer apps, including mobile games for 3 quarters running, that we had to take time to invest in infrastructure. While we complete that, we noted by the end of this quarter, Q1. And as a result, you could expect that will drive paid content growth towards the end of the year as one example. The other is advertising. Korea is our most mature business in advertising, and we've been clear now in the last 2 quarterly releases on the impact of a single discrete advertiser and e-commerce provider. We also talk about the health broadly in our ability to grow our legacy businesses and advertising in Korea and the upside future opportunity in Rest of World. This will also contribute to double-digit growth. And then finally, crossover IP, JK was very clear about some very compelling examples. There will be more to come. While this is only 8% of our total revenue in the reported quarter of Q4, the ability strategically for next-generation consumers, for example, in the U.S., where Yongsoo Kim has led growth in English web comic MAU and now you're seeing in MPU for them to see on the big screen or on the small screen, stories that they can discover not just on our platform. And I'll let the results come through the course of the year, but I think this is an important component of our growth by Q4 of 2026 as well. Yongsoo Kim: Mark, this is Yong Kim, the CSO of WEBTOON. Regarding the Disney app launch within this year, the most critical and time-intensive component is the development of the new product. Disney's best content library is already in place. The key is building a new app that delivers the best possible user experience around discovery and recommendation so that this library can be presented to the user in the most compelling way. Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs. Unknown Analyst: This is [ Julie ] on for Eric. Two, if I could. You talked a little bit about the progress made to your recommendation algorithm in Korea as being a driver toward improved user engagement. Could you talk and expand a little bit around the key learnings within that market and how we should be thinking about the application of various recommendation algorithms to other users or within other markets more broadly? And then on the creator side, you talked a little bit about content diversification coming from the rest of the world. Any updates on how we should be thinking about competitive dynamics for attracting and retaining creators, specifically within the English language markets? David Lee: Thanks, Julie. Good questions. Let me address the first. We are a tech company at heart. And with regard to our business in Korea, we're very pleased to see that in our original business, you're still seeing strong performance. There, metrics like MPU are very important, where we have approximately 50% household penetration in a market where we're an everyday household name, being able to see, as you saw, the total company delivered 0.7% increase in paying users, but Korea specifically in the breakout you saw delivered plus 3%. Because we have very strong awareness in Korea, product innovation and content presentation is an ongoing constant endeavor for us as a tech company. And this AI-driven and machine learning-driven personalization engine is particularly relevant for our most mature market because there's habit formation already in place. So we're pleased with that. And frankly, I think you're going to see more of it outside of just our original foundation market. In fact, we even disclosed that as we've completed our infrastructure project in Japan, we specifically tried to be clear in our script that you will see machine learning-based recommendation engines and CRM that we think will help drive and return the Japan business to the historic growth that you've seen in the past. You'll hear more about our intent to drive global innovation from one market across all markets, but AI is a proven tactic for us, and you'll see more of it as we roll out more results this year. Your second question was with regard to creator content diversification. And I think your question was particularly focused on the market here in the U.S. or what we call the English-speaking markets. So first, I just want to draw attention to the fact that we've intentionally kept our investments in marketing and in product innovation in what we call Rest of World, our English webcomic app MAU growth, which grew 2.2% and prior grew double digits, is now being accompanied with NPU growth. We didn't break it out for you at that level of disclosure, but I wanted to call it out qualitatively as I think it's a meaningful milestone for the company. In order to create a healthy opportunity for creators, it starts with creating a growing and healthy base of paying users, which I think you're seeing today. And then I'd point you to the ongoing comments by JK in his script, but also the shareholder letter, a number of the exciting crossover IP projects that we've talked about. We talked about Chasing Red, starring Riverdale star Madalaine Petsch. We talked about Lore Olympus being greenlit by Amazon. These represent not just great opportunities for us and shareholders, but this represent proof points for that creator who is an amateur, of the 24 million, who wants to be published globally and have a voice. I think there'll be more to come on this, but I think both the platform as well as the off-platform opportunities we'll pursue are reasons why our creator ecosystem remains strong. We are not seeing any pressure with regard to the strength of that part of our flywheel. We think it continues to be foundational and a point of leverage for us. Yongsoo Kim: Regarding the second question, in the U.S., we continue to focus on strengthening our English original content development, not only by bringing proven hits from Korea and Japan, but also developing strong original title locally. Following the success of Lore Olympus, we have seen promising momentum from titles such as Starfish late last year, Chip King earlier this year. Across all markets, including English market, we will continue to carefully manage the balance between globally successful IP and locally developed content. Operator: Our next question comes from the line of Benjamin Black with Deutsche Bank. Benjamin Black: First, a follow-up on the Disney platform. Can you maybe just dig in a little bit to the economics a little bit? How should we be thinking about the margin profile of the new joint platform compared to the core WEBTOON app? And then secondly, maybe a bigger picture question. If we sort of zoom out and look at the broader advertising opportunity for your platform, maybe speak to us a little bit about the investments that are still required to really sort of address that potential opportunity going forward. David Lee: Great. This is David, and I'll start, but Yongsoo will jump in shortly. With regard to what we've disclosed in the past, and here, I'm not going to speak on behalf of Disney. I'm going to focus more on our experience at WEBTOON. Remember, Benjamin, we have partnered with great companies in the past. And we've talked about the economics, the unit economics of when we have our own original, as Yongsoo just mentioned, or when we have a wonderful what we call reformatted title from somebody else's universal platform. When you take out the cost to produce great hits, the ongoing cost structure and margin from a great piece of content, whether they are created by us as an original or by our creators or from outside our platform, we've never disclosed a meaningful margin drainage or impact. And I think from that, you can infer that we're very excited about collaborating not just with Disney, but with anyone who can see us as the destination for this growth we're seeing amongst Gen Z and Gen Alpha here in the U.S. I don't want to go more into detail on Disney. Yongsoo can provide some color on the strength of that relationship. Let me briefly cover ads. When you look at our ads business, we are very careful to maintain the long-term proposition for Rest of World as we're quite early. And that includes actions we've taken to recently focus, for example, the Wattpad effort separate from our broader WEBTOON opportunity in the U.S. This is invest in the fundamental stage for Wattpad. And so I would love to be able to give you more milestones of progress, but we're just not yet there. We're much more focused on growing the paid content business in the U.S. with Global WEBTOON and putting in place the framework for advertising growth second. Let me turn to Yongsoo for any comments you may have. Yongsoo Kim: Yes. Regarding the new platform, as the operator of the new platform, WEBTOON will recognize all revenue and cost. With respect to the content and brand licensing fee, the structure has been determined in a manner that is totally consistent with our existing business. Operator: Our next question comes from the line of Doug Anmuth with JPMorgan. Dae Lee: This is Dae on for Doug. I have 2 as well. First one on your expectations to exit the year growing double digit. I appreciate the comment you gave on paid content versus advertising and by regions. But could you break that down a little bit more? And tell us if the excitement is more around what you're seeing on the MPU side? Or is it more on the monetization side? Because in 2025, the content growth appears to have been driven by ARPU growth. So just curious like how you guys are thinking about the drivers of the double-digit percent growth across those 2? And then secondly, I appreciate the IP adaptation revenue is milestone driven and lumpy quarter-over-quarter. But curious if you can share like how your 2026 pipeline look compared to 2025? And like how much of that or how much contribution from IP addition is baked into your double-digit percent growth exiting the year? David Lee: Good question, Dave. Thanks for them. First, with regard to the double-digit growth we expect by the end of 2026, I think I was careful to make sure that you understood that, that would be driven by both paid content and an improvement in our advertising business trends as well. When one looks at paid content, as you know, the different flywheels we have in Korea, Japan and rest of world are in different states. So let me have you recall what we've described in the past as I think they're important. In Korea, where we have a strong penetration and awareness, MPU and ARPU is critically important as product innovation that we just discussed, including innovations in AI as well as the rollout of content keep that market strong, and we're pleased with the strength of that market. In Japan, when one excludes the recent effort to create the infrastructure to persist in the growth we saw in the first half of 2025, that is a market where LINE Manga is the #1 app. And as you know, we've historically seen not just increase in ARPU, but also a fundamental increase in actual top-of-funnel metrics. So there, we're very early with arguably less than 20% household penetration in a market that is very accustomed to purchasing our digital format. So I would expect that in the mid- to long term, you should see Japan return to healthy growth, not just in ARPU, but also in more mid- and top-of-funnel metrics. And then in Rest of World, we are very early. It's our largest addressable market. We're pleased to have noted the MCU year-on-year growth disclosed in the quarter and the previously disclosed for the last 2 quarters growth in top-of-funnel web comic app MAU in English, but we have not yet committed to significant at-scale revenue growth as we are preparing that market given its potential size for mid- to long-term opportunity in revenue. With regard to advertising, as I mentioned, Korea represents one of our larger opportunities in advertising and a discrete reliance on one e-commerce provider accounted for some of the noise in the numbers in Q4 as disclosed. We believe we have a healthy business and a strong team in more mature markets, and we believe it's very early days for the growth in Rest of World. Japan, as we've described in advertising, has consistently been an area of strength for us, particularly in rewarded video, and I would expect us to return to that strength by the end of this year as well. With regard to the IP pipeline. First, despite the quarterly shifts that you hear us discussing, I want to review the fact that IP adaptation revenue for all of fiscal 2025 grew a whopping 35.5%. So this is a very healthy business, not measured in the swing between one quarter or the next, but zooming out more broadly as a lever point for us to create faster adoption. Qualitatively, I would say we are very pleased with our pipeline in 2026, but we are cautious about promising a specific quarterly impact from that pipeline as we all know that 1 quarter can shift when you are producing great IP hits. And turning it over to Yongsoo now for a comment. Yongsoo Kim: Regarding the end of year growth, the growth of our weapon platform business typically follows a pattern where MAU increased first, followed by MPU growth, which then drives revenue expansion. Last year, we shared updates on MAU growth for our English WEBTOON platform, and we are now seeing that momentum translate into MPU growth in the region with the MPU growth having resumed. In Japan, revenue growth was strong over the past 2 years, but MAU growth was somewhat stagnant. We believe we are now seeing the impact of that dynamic. In response, we are preparing initiatives aimed not only at driving revenue growth in Japan, but also at expanding the overall user base. We expect these efforts to begin delivering meaningful results in the second half of this year in Japan. Operator: Our next question comes from the line of Matthew Cost with Morgan Stanley. Matthew Cost: I guess on the 12 reformat titles of Disney content that are on the WEBTOON app, how is engagement with those titles going? Is it attracting new people? Is it driving new forms of engagement? I guess when you think about the goal of bringing the Disney content on to WEBTOON, what are your early learnings in terms of moving towards that goal from those titles that you put on the app? David Lee: Thank you, Matt. I appreciate the question. First, it is quite early going, candidly, in our collaboration with Disney. I think the pace that we're demonstrating is a reflection of just how large scale the opportunity set is for us in this area, this area, call it reformatted stories on our platform. So we're pleased to present the 12, including the 7 that we have recently announced since the end of Q3, but it's far too early for you to really have a meaningful sense on specific metrics. For us, I think this opportunity won't be measured in a quarter's performance. The collaboration with Disney was always intended for the long-term success of both enterprises, and we're very excited about that. So as Yongsoo mentioned, having an original this year and not just that, but being able to really build this consumer platform he mentioned right and launch it before the end of the year, these are the areas we're focused on versus on probably too early to give results on these important reformatted titles. Operator: Our next question comes from the line of Andrew Marok with Raymond James. Andrew Marok: Maybe one on advertising, if I could. As we're seeing kind of the broader advertising ecosystem take a shift toward more performance-oriented outcomes over brand-focused outcomes, I guess, how is that informing your investment road map, your product focus as you're building out your ad ecosystem? David Lee: Well, it's interesting. When you look at the business with regard to Korea, we have a long history of great products built by our team that are absolutely anticipating future trends around performance. And I'm not going to go through all of them, Andrew. We can do it in a follow-up meeting. But if you look at that business, we've set the pace in many ways for products that are very much tied to the publisher or the advertiser success on platform. I think rewarded video, but not just that. We talked to you about our off-platform deals with large e-commerce creators, one of which we just mentioned. When you look at our business in Japan and Rest of World, we're really just at the beginning stages of rolling out the infrastructure. You should anticipate in the Rest of World business here in the U.S. for us to have long-term success, but it will take us time to establish the direct ad sales force and to build for the North American market specifically, product offerings and advertising that are not just exported from our success in Japan and Korea. That's why we are very cautious about providing any short-term expectations for the business as we recognize we have to build for the market, and that will take us time. Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session and today's conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day.
Operator: Good afternoon, everyone, and thank you for standing by. Welcome to Evolus' Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded and webcast live. [Operator Instructions] I'd like to turn the conference call over to Nareg Sagherian, Vice President and Head of Global Investor Relations and Corporate Communications. Please go ahead. Nareg Sagherian: Thank you, operator, and welcome to everyone joining us on today's call to review Evolus' Fourth quarter and full year 2025 financial results. Our fourth quarter and full year 2025 press release is now on our website at evolus.com. With me today are David Moatazedi, President and Chief Executive Officer; and Tatjana Mitchell, Chief Financial Officer. Rui Avelar, Chief Medical Officer and Head of R&D, is also with us for the Q&A portion of the call. Today's call will include forward-looking statements. Actual results may differ materially due to risks and uncertainties outlined in our earnings press release and SEC filings. These forward-looking statements are based on current assumptions, and we undertake no obligation to update them. Additionally, we will discuss certain non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for our GAAP results. A reconciliation of GAAP to non-GAAP measures is included in today's earnings release. As a reminder, our earnings release and SEC filings are available on the SEC's website and on our Investor Relations website. Following the conclusion of today's call, a replay will be available on our website at investors.evolus.com. With that, I'll turn the call over to our CEO, David Moatazedi. David Moatazedi: Thank you, Nareg. Good afternoon, everyone. Before reviewing our 2025 performance and outlining our objectives for 2026, I would like to take a step back and provide a broader perspective around our performance beauty strategy. As we enter our seventh year as a commercial stage company, I'm proud of the fact that we are redefining the category through a beauty first lens. We are the first company with a neurotoxin dedicated exclusively to cash pay aesthetic and free from reimbursement dynamics. This approach enables deeper alignment with our customers and allows us to build differentiated long-term partnerships with aesthetic practices, partnerships that are increasingly translating into measurable share gains. The key piece of that strategy is Evolux, the first program in the industry that rewards practices with co-branded media investment tied to purchase volumes. As our customers grow with us, we reinvest to drive awareness for both our products and their practices, strengthening the partnership and reinforcing shared success. We've also focused on increasing patient retention through Evolus Rewards the first SMS-based loyalty program in aesthetics and the only consumer loyalty program co-branded with clinics. The program is designed to drive repeat visits and build lasting relationships between practices and patients. Over the past 6 years, Evolus Rewards has grown to more than 1.4 million treated patients, reinforcing brand preference and contributing to sustained share expansion. In the fourth quarter, we successfully piloted our new portfolio growth rebates, which officially launched at our national sales meeting in January. This growth rebate is designed to reward practices for growing with Evolus across our expanding portfolio of products, further increasing our strategic importance within each account and strengthening our competitive position. Education remains another cornerstone of our model. We have built a world-class medical education platform with broad reach and comprehensive curriculum that includes CME programs, live broadcast, cadaver labs, preceptor ships and small group hands-on trainings. In 2025 alone, we provided hands-on trainings to over 14,000 clinicians directly in their clinics. This year, we are elevating that platform further and we'll be hosting top-tier clinicians with new flagship training events at Evolus' headquarters. These immersive 2-day training will be focused on anatomy, clinical training and business support for high-volume practices. Most importantly, we continue to build a world-class portfolio of differentiated products. Jeuveau, our flagship neurotoxin remains a strong and growing product. We continue to advance the science, supporting its unique precision profile and differentiation, including an independent study published last year in JAMA demonstrating fast onset, the highest peak effect and the longest duration of the toxin study. This represents the second head-to-head study validating Jeuveau's advantages. Clinicians who trial the product recognize the differentiation which has supported our capture of over 14% U.S. market share to date. We continued to gain share in 2025, even in a declining procedural environment, demonstrating the resilience and competitiveness of the brand. In 2025, we also introduced the first new HA technology in over a decade with Evolysse. Our first 2 formulations are now in the market, and we expect FDA approval of Evolysse Sculpt, our flagship mid-face volume product in the fourth quarter. Our proprietary Cold-X Technology creates a natural HA formulation, which successfully demonstrated a longer duration of effect against one of the market-leading brands. Customers are reporting strong satisfaction, noting that gel's efficiency and for giving depth of placement, allowing injectors to achieve a more subtle natural-looking results. To date, more than 3,000 customers have purchased Evolysse, expanding our presence within accounts and increasing our overall share of injectable spend. As we enter the second phase of launch in the second quarter of 2026, we will be initiating a large sampling and experience program, which we expect to broaden the adoption of Evolysse. Internationally, we also continue to make significant progress. Last year, we entered France with our partner, Symatese, transitioned Germany to a direct model in the fourth quarter and delivered strong growth across existing markets. As a result, we now operate in 9 countries outside the United States with international revenue nearly doubling year-over-year. In key markets such as the U.K., we are approaching double-digit market share, reflecting the strength of our positioning outside the U.S. Turning to operating performance. 2025 was a unique year for the aesthetics market and only the third time in 25 years that U.S. injectable procedural volumes declined. Despite that backdrop, Evolus delivered 12% full year revenue growth marking our sixth consecutive year of double-digit growth. We exited the year on an accelerating growth rate of 14% in the fourth quarter, supported by top line growth across all product lines in the U.S. with Jeuveau and Evolysse as well as our international business. Midyear, we made the right decision to rebate our expense structure and align the organization for durable, profitable growth. The benefits of these actions were evident in the second half of the year where we achieved meaningful operating leverage. That structural reset and expense base positions us for 2026, where we expect to deliver on our revenue guidance, while growing non-GAAP operating expenses at a modest 0% to 3%, and expanding operating leverage to result in a low to mid-single-digit adjusted EBITDA margin. Our strategy remains consistent. We are building a global performance beauty company centered on differentiated brands for the cash pay consumer. In 2026, we look forward to introducing Estyme in Europe in the second quarter, expect FDA approval to Evolysse Sculpt in the fourth quarter and continue actively engaging in pipeline opportunities. We are deeply committed to driving profitable growth going forward and continue to target revenue between $450 million and $500 million, with 13% to 15% adjusted EBITDA margins in 2028. This outlook is meaningfully supported by the strengthening U.S. Jeuveau share to the mid-teens, scaling U.S. Evolysse share into the high single digits and the international business growing to more than 15% of total revenue. With that, I'll turn it over to Tatjana to walk through the financial details. Tatjana Mitchell: Thank you, David. Before walking through the fourth quarter and full year results, I want to recognize our commercial and operating teams for their execution throughout 2025. It was a year that required flexibility and discipline as we navigated a challenging U.S. aesthetic market. The organization responded with clear prioritization, thoughtful cost management and a focused allocation of resources towards the highest return initiatives. That discipline allowed us to deliver fourth quarter profitability and positions us well for sustainable annual profitability beginning in 2026. I will now review the financial results. Global net revenue for the fourth quarter was $90.3 million, representing 14% growth over the fourth quarter of 2024. This included $83.1 million of global Jeuveau revenue and $7.2 million from Evolysse. For the full year, global net revenue was $297.2 million up 12% compared to 2024, marking our sixth consecutive year of double-digit growth. International revenue represented approximately 8% of 2025 global revenues, increasing from 5% in 2024. This included product revenue from Europe and Australia and service revenue from our distributor relationship in Canada. We are seeing continued momentum in our international markets, including approaching double-digit market share of toxin in the U.K., our most mature markets. International revenue is expected to become a more meaningful contributor over time as we prepare for the European launch of Estyme in the first half of 2026 and continue to grow our toxin share in existing markets. Turning to gross margin. Reported gross margin for the fourth quarter was approximately 66% and adjusted gross margin, which excludes the amortization of intangibles, was approximately 67%. For the full year, reported gross margin was approximately 66% and adjusted gross margin was approximately 67%. With respect to tariffs, based on announcements to date, Jeuveau, a biologic is not currently impacted by tariffs. Following the recent U.S. Supreme Court decision and subsequent executive actions, Evolysse, which is classified as a medical device and imported from France is currently subject to a 10% tariff. The administration has also communicated the possibility of an additional 5% tariff, though it has not been formally implemented. Our fiscal 2025 results reflect the previous 15% tariff and our 2026 guidance also reflects a 15% tariff assumption. We are evaluating the potential recovery of previously paid tariffs. We also continue to monitor policy developments and will evaluate any potential impact pending further guidance from the administration. Moving now to operating expenses. GAAP operating expenses for the fourth quarter were $55.1 million, down from $57.3 million in the third quarter. As a note on this quarter-over-quarter decrease, we realized the $4.5 million benefit driven by the revaluation of the contingent royalty obligation. Non-GAAP operating expenses for the fourth quarter were $53 million compared to $49.7 million in the third quarter, which includes the timing of costs related to our customer event that shifted from the third quarter to the fourth quarter. For the full year 2025, GAAP operating expenses were $229.8 million compared to $216.7 million in 2024. Non-GAAP operating expenses were $209.7 million in 2025 and within our guidance range of $208 million to $213 million. Importantly, non-GAAP operating expenses declined 4% in the second half of the year compared to the first half reflecting the benefits of expense reductions we implemented in Q2. As a reminder, non-GAAP operating expenses exclude stock-based compensation, revaluation of the contingent royalty obligation, depreciation, amortization and restructuring costs. Within operating expenses, selling, general and administrative expenses for the fourth quarter were $54.7 million compared to $52.8 million in the third quarter. This included $4.8 million of noncash stock-based compensation compared to $5 million in the prior quarter. For the full year 2025, SG&A expenses were $220.8 million, compared to $198 million in 2024, reflecting investments in our evolution into a multiproduct company with the launch of Evolysse in the U.S. as well as investments in scaling existing international markets. Non-GAAP operating income for the fourth quarter was $7.1 million compared to $6.7 million in the fourth quarter of 2024. As a reminder, both non-GAAP operating expenses and non-GAAP operating income excludes stock-based compensation expense, revaluation of the contingent royalty obligation, depreciation and amortization and restructuring charges. Non-GAAP operating income also excludes amortization of intangible assets. Turning now to the balance sheet. We ended the fourth quarter with $53.8 million in cash compared to $43.5 million at the end of the third quarter. The increase was driven by strong sales growth, disciplined expense management and effective working capital execution. As we look ahead to 2026, while we are not providing specific cash guidance, we expect cash usage to be meaningfully lower than in 2025 as operating leverage improves. Our use of cash in 2026 will primarily reflect interest payments and investments ahead of the anticipated launch of Evolysse Sculpt, including inventory build and a milestone payment. Today, we entered into a revolving credit facility with Eclipse Business Capital, providing up to $30 million of availability with an accordion feature up to $40 million. This facility is supported primarily by our receivables and will be used for working capital needs, including inventory build and preparation for the anticipated launch of Evolysse Sculpt. As a reminder, under our long-term debt agreement with Pharmakon, we retain access to 2 additional $50 million tranches with no incremental financial covenants or performance conditions and our existing term loan does not mature until mid-2030. Taken together, our approximately $50 million of cash access to up to $40 million under the revolving credit facility and availability of an additional $100 million under our existing long-term debt agreement provides substantial liquidity and flexibility. Combined with our improving operating leverage and sustained profitability beginning in 2026, we believe we have a clear path to generating meaningful free cash flow in the years ahead. This capital structure gives us the ability to scale the business, proactively manage our debt and continue to invest in growth. We are not planning to raise equity capital and remain highly sensitive to dilution. Let me now summarize our 2026 guidance. We expect total net revenues to be between $327 million and $337 million, which represents 10% to 13% growth over our 2025 results. Evolysse and Estyme injectable HA gels are expected to contribute 10% to 12% of total revenue in 2026. Adjusted gross profit margin for the full year 2026 is expected to be between 65.5% and 67%, reflecting an evolving revenue mix while maintaining the disciplined approach to margin optimization. Non-GAAP operating expenses for 2026 are expected to be between $210 million and $216 million, representing a minimal 0% to 3% increase over 2025. Against our anticipated double-digit revenue growth, this reflects meaningful operating leverage, driven by structural efficiencies implemented over the past year. In 2025, we aligned our commercial organization to support a multiproduct portfolio across U.S. and international markets, and streamlined our support functions, allowing us to scale revenue in 2026 without proportionate increases in field infrastructure. As previously guided, we expect to achieve full year profitability in 2026, delivering a low to mid-single-digit adjusted EBITDA margin on a consolidated basis. Beginning in fiscal year 2026 we will transition our primary profitability metric from non-GAAP operating income or loss to adjusted EBITDA to improve comparability with industry peers. This change does not impact our reported results as the reconciling items between the 2 metrics are consistent. As a point of note, other modeling assumptions for 2026 include, annual interest expense between $16 million and $17 million, which includes interest and amortization of financing costs on the long-term debt facility and on the revolving credit facility. Full year diluted weighted average shares outstanding of approximately 68 million. In summary, our 2026 outlook reflects the structurally improved cost base, disciplined capital allocation and increasing operating leverage, positioning the company for sustained profitability and future free cash flow generation. With that, I will turn it back to David for closing remarks. David Moatazedi: Thank you, Tatjana. As we look ahead, Evolus enters 2026 from a position of strength. We've solidified our operating foundation, expanded our portfolio and demonstrated the discipline required to scale profitably with double-digit growth, a largely flat expense base, and multiple value-creating milestones on the horizon, we are entering a period of accelerating operating leverage and sustained profitability. Our focus remains clear. We're building a global performance beauty company centered on the customer experience, investing to drive practice growth while maintaining the expense discipline necessary to drive operating profit. We look forward to launching Estyme in Europe next quarter and gaining approval of Evolysse Sculpt in the fourth. These milestones, coupled with the continued momentum across our portfolio, reinforce our confidence in achieving 13% to 15% adjusted EBITDA margins in 2028. Thank you for your continued support. We look forward to updating you on our progress throughout the year. Operator, you may now begin the Q&A. Operator: [Operator Instructions] Our first question is coming from Annabel Samimy from Stifel. Annabel Samimy: And I guess good end to the year. Some questions about Evolysse and just trying to understand qualitatively, has the growth of Evolysse been primarily coming from the early adopter population? Are you starting to -- is the new count build starting to come from those injectors who want to start taking advantage of Evolysse in the portfolio? And are you starting to go deeper? Or is it starting to go broader? So maybe you can give some qualitative description around those ordering patterns. David Moatazedi: Sure. Annabel, thanks for the question. So what we're seeing with Evolysse is a business that's continuing to diversify in terms of its customer base. As I mentioned on the call, we're now -- we now have over 3,000 purchasing accounts which represents a large portion of the Jeuveau revenue that was generated last year is now placed in order for Evolysse. So we feel very good about our ability to establish Evolysse in some of those clinics. We were also very pleasantly surprised by the portfolio rebate and how important that was in the fourth quarter within some of those accounts to commit a larger portion of their overall filler and toxin business to us, especially recognizing that we're operating with the first 2 formulations, and we plan to introduce more. So the portfolio rebate helps build on that momentum. What we also see is an opportunity now that we've learned a lot about this product to take it significantly wider. And that's really the initiative that we referenced on the call. In the second quarter, we plan to engage in a heavy sampling and trial program through a universe outside of that group of 3,000 to give them the opportunity to trial the product, to gain the training required, to adopt it and broaden that universe in advance of the approval of Sculpt and subsequent launch. And so we feel that we're on a very good track with the product. You saw the momentum build coming out of the year in the fourth quarter, and we see the momentum continuing to increase. Feedback from customers, we've done a number of surveys, and this is probably the most important part and we know that others have done channel checks, it's very positive on this product. The more experience that clinicians get with Evolysse, they realize that the advanced technology gives them a number of unique differences from the formulations that are currently available in the market. What's happening in the backdrop is consumers are looking for more natural fillers and a more natural look. And Evolysse, because of the Cold-X Technology it's designed in a way that gives you more effect with less product, creating a more natural look rather than relying on the swelling of the HA to deliver that outcome and we hear that consistently on top of the fact that they have the latitude to inject this product at varying depth and I think that gives it also one other clinical advantage that we're hearing in the market as well. So overall, the buzz on this product is great. We're looking to take even wider as we get into the year. Annabel Samimy: I guess a follow-up question to that, is this a product that you think could turn around the growth in the market that I think was probably impacted not just by macro, but possibly changing trends? David Moatazedi: Yes. As you said, there are 2 parts. I think the macro piece mirrors, if you will, the toxin market. And we do believe that you're starting to see improvement in the filler market when you look at the overall category year-on-year. But the changing trends is certainly a part of it because of communication that clinicians now have with their consumers is evolving around the use of HAs and we know that they're using less volume in each treatment. I'm going to turn it to Rui because I know Rui spent a lot of time recently with a number of clinicians talking about how the use of filler is evolving, especially with Evolysse. Rui Avelar: Yes. And I think you've covered the major points, actually. It is a trend towards going to more and more natural. That's certainly one thing, it's certainly been helpful to punctuate the fact that this is a hyaluronic acid and distinguish the different opportunities that are within the filler. The thing that seems to be resonating very well is we saw in the clinical data that you don't need a lot of product to get effect. In fact, examples of less products still getting more effect. That's resonating really well, also less product being required. And then ultimately, from an injector perspective, they really appreciated the fact that you correct to the outcome that you're looking for. You don't have to undercorrect and anticipate swelling, you don't have to overcorrect because you're going to lose some volume because of the HA. So that control has been a big thing for the injectors itself. And finally, our data certainly suggests that the duration is there when we look at the 1-year data from Form and Smooth and the 2-year data from Sculpt. Annabel Samimy: Great. And if I can just ask one last quick follow-up. In terms of the accounts that are ordering, are they predictably ordering after that second training now? Have you seen that consistent with what you've said in the past? Or is there still a pause after they first get trained? David Moatazedi: Yes, it's a great question. I think coming out of the third quarter, we talked about that second training being an inflection point in utilization of the product. And we continue to see that being a really important indicator getting them sampled first and then trialing the product to get trained, followed by a second training, and we continue to emphasize that as well with the field. I talked about all the different training vehicles we have. I want to just -- my hats off to the education team across the company because we have a very comprehensive medical education platform, the launch of Evolysse was marked with a very large webcast, several thousand attendees. We've now done several thousand hands on trainings as well, and we have several thousand more clinics that could go through the second training. So we have our road map mapped out for us with existing clinics to drive meaningful volume increase as well as those new clinics to get that initial training. And we feel like we've got a great handle on this product. We are optimistic that the market is showing signs of recovery, although we do forecast a bit of a decline in the filler market continuing this year, and it is an improvement. But we expect that to start to recover towards the latter part of the year. So overall, we feel like we're on the right track. Our guidance reflects that as well and we're really looking forward to putting this in the hands of more clinicians. Operator: Our next question today is coming from Marc Goodman from Leerink Partners. Alyssa Larios: This is Alyssa on for Marc. I was wondering if you could provide some more detail on the structure of the rebate program, specifically how rewards are tiered for participating clinics and what metrics determine their eligibility? And secondly, looking ahead to 2026, how would you describe the overall marketing strategy? Are there active consumer-facing brand campaigns active right now and how is the investment split across the fillers versus the toxin? David Moatazedi: Okay. Why don't I touch on the rebate and briefly on the marketing strategy, and then I'll have Tatjana touch on the investment overall as you think about really broadly commercial, how you think about that investment. Starting with the rebate, one of the things we've prided ourselves on from the beginning is we value transparency in how we price our products and how we operate. And so when we launch this portfolio rebate, it was designed as a growth rebate in the pilot. And so accounts that purchased 50,000 more in the quarter or 100,000 more in the quarter, they were eligible to receive a growth rebate for committing more of their business to Evolus. And that growth rebate came at the very end of the quarter as a result of directly from their purchases. And that complemented our Evolux program, which I touched on earlier, which is a volume-based pricing program. That is exactly what we're mirroring in the front half of the year. It was very simple to communicate 2 accounts. As a matter of fact, I had the opportunity to present this to a number of accounts in the fourth quarter during the pilot phase. And I'd tell you it was incredibly well received. I think many investors know that one of the challenges when we're a single product company is we were competing against portfolio bundles. This growth rebate in the pilot was designed to work through those bundles and it did so very effectively. And we trained our sales force in January on that growth rebate. It is based on 6 months of purchasing volume for those clinics. So it's from January 1 through the summer and the end of June. And we're hearing very good feedback on it. As a matter of fact, it's not just a portfolio rebate. We're hearing the same with our national accounts where we're seeing a very high growth rate in those national account chains as well, but see an opportunity to partner with Evolus in a more meaningful way. And that's really been the focus of the team. And then lastly, on the marketing strategy. Look, what I love about what we're doing is we're building on these unique capabilities. Our marketing strategy in terms of investing back in the clinics is directly tied to Evolux. And so we're doing unique things like digital advertising, billboards, TV spots, and we're doing them on both Jeuveau and Evolysse. They're all customized around the clinic and they're all targeted within the radius of their practice. And now that we increase our base of users, it's increasing our media spend as well in a very efficient way, and I know Tatjana will touch on that. And the last thing, we do co-promotions as well with other beauty brands. In the first quarter, we did one with Jeuveau and a brand called IPSY, which creates beauty products and accounts were able to purchase Jeuveau and earn a number of these gift bags that they in turn were able to market to their patients as a gift with purchase. And we think this is one of the unique elements of being a cash-based company, focused on the beauty space that enables us to partner with our clinics and give them value-added benefits that help them attract new consumers to their office. That partnership with IPSY was exclusive to Jeuveau, we're the first beauty company they partnered with, and it became a benefit for those patients. But I'll let Tatjana talk a little bit about what that spend means. Tatjana Mitchell: Yes. Thanks, David. So maybe I think it's important to comment on our commercial spend. So the largest portion of that spend is really on our sales team and all of their activities. The next largest is in training. And then the 2 others are marketing where you would consider traditional media, and that's when we talk about CBM, the co-brand marketing. And then the fourth piece that David mentioned are these partnerships. We disclosed our advertising costs. We disclosed this media spend. And for the last 3 years, if you look, it's been in the range of $7.5 million to call it $9 million. And for 2026, it's going to stay in that range. And what we're able to do with that CBM, which is earned through the Evolux program, is really support the practices to drive the highest ROI for us and for them, but it's not this traditional just going out right and spending media into advertising the brands. Operator: Our next question is coming from Uy Ear from Mizuho Securities. Uy Ear: I guess, David, just based on your internal data such as your consumer loyalty programs and whatnot, how are you sort of seeing the market, the toxin market trending and how -- I think you perhaps kind of commented as well on improvement in the facial filler market. Yes, maybe just help us understand what you're seeing based on what you're hearing externally as well as what you are seeing internally? And I guess the second question we have is on your portfolio programs. I think you mentioned it was helping adoptions of Evolysse. Just wondering whether it's also helping with Jeuveau's adoption expansion as well in the accounts? David Moatazedi: Yes. Thanks for the question, Uy. I think we have a really great handle on both not just our internal data, but some of the third-party external data in terms of what that means for the market. And to boil it down in 2025, we believe that the neurotoxin market declined mid- to upper single digits in terms of overall volume. And you saw that our business for Jeuveau, we gained in units despite the fact that you saw the entrance of a new competitor. So here's a brand in its sixth year that's continuing to demonstrate resilience. And I do believe we have a large part to do with a differentiated clinical data set as well as a very sophisticated sales organization with a number of unique tools because of our cash pay advantage. And we see that supported in our Evolus Rewards program that consumers are coming back and seeking retreatment with Evolysse -- with Jeuveau rather. And we continue to see that the retreatment rates rising over time. At the same time, I think we've seen over the course of the year, overall procedural volumes started to show incremental improvements. So especially if you compare to the first half of the year to the back half, we saw a meaningful improvement in the overall toxin market, and we do believe that although not all companies have reported yet, then in the fourth quarter, the market returned back to some level of stability, call it flat to low single-digit growth on the neurotoxin market. And you can mirror that to some degree on fillers, just not back to the same level of recovery and that it reflected that the market was returning to some level of improvement. And we expect that to continue into this year. And that's really what we've modeled is a toxin market with call it, low single-digit growth, a filler market that we'll start to see a road back to recovery for this year. And I think our internal data supports that. We're really pleased with what we're seeing in the market to start the year. I talked a little bit about our national account growth is incredibly healthy to start the year. The discussions around the portfolio that our sales force is having have been incredibly positive, and we're continuing to see momentum there. And so we see it as continuity in the right direction on the overall business. At the same time, it's important to recognize that this is all a marginal improvement over the prior time period. We haven't yet seen a bounce back. And so our guide doesn't reflect that. But to the extent we do, we'd expect to see a fairly short recovery once that does occur. And you're absolutely right that there's an interplay between the benefits of adding a new account for Jeuveau and the willingness to trial Evolysse. And also on the inverse, the Evolysse accounts that have brought Jeuveau into the door. And I think given we're just 3 quarters in, you're just starting to see the benefits of those 2 brands cross-pollinating both around the clinic and in front of the consumer because they earn in rewards on both brands. And so we see a lot of opportunity in 2026, especially with the focus on the portfolio bundle to be able to capitalize on that unique advantage. And of course, the approval of Sculpt only gives us an additional boost as we build on that portfolio benefit. Operator: The next question is coming from Navann Ty from BNP Paribas. Navann Ty Dietschi: Can you discuss your assumption on the competitive launches into the guidance with the BoNT/E and RELFYDESS. And also, if you can discuss your strategy around bundling after when you will be able to leverage Sculpt? David Moatazedi: Navann, thanks for the question. As you pointed out, 2026, we're going to see 2 new toxin entrants from the 2 bigger players in this space. And so we expect AbbVie to launch their neurotoxin, a shorter-acting BoNT/E in the summer is what we understand. And then in the back half of the year, we expect liquid toxin to be introduced by Galderma. So we'll see the sampling that will come with those just as we did last year with the introduction of a player from Korea with Hugel, we expect to see heavy sampling in the market. That is reflected in our guide. And just keep in mind, sampling doesn't always translate over to adoption. So in the near term, it creates some pressure. But over the long term, you start to see accounts will commit to the brands that they're willing to purchase. Although we haven't seen a short-acting toxin in the market, it would be interesting to see their go-to-market strategy, don't have a lot of visibility to that. On the liquid product, we certainly competed with that product in Europe now it's approaching a year. It's been available there. So we're very familiar with it and understand how both consumers and clinicians see that. And I think as we get closer to commercialization, maybe we'll be in a position to talk a little bit more about that aspect. And I think that answered the second part to your question. Navann Ty Dietschi: And just on the bundling, how will the strategy will evolve with Sculpt? David Moatazedi: Yes. I think for this year, we're focused on the portfolio growth rebate for a full year. This is a pretty significant shift in conversations, you can imagine. Our reps are now going in there and having a conversation about committing an account business to us over a 6-month period in order to gain these benefits. These are strategic conversations for the clinic around who they want to commit their partnership to and the portfolio rebate gives us the rationale and the portfolio itself gives us the support to earn that business. And so we're seeing very good uptake early on. We expect to continue to do the portfolio rebate through the back half of the year as well. And as we expect Sculpt approval in the fourth quarter. That will be a product we'll talk about in 2027 more meaningfully and we may look to make adjustments to the portfolio growth rebate as we see it play out over the course of this year. We're just a couple of months in, and we're really pleased with how the field is executing against it. Operator: Your next question is coming from Sam Eiber from BTIG. Sam Eiber: Maybe just following up on the last question. I guess how should we think about filler growth perhaps accelerating in 2027 with the Sculpt launch? I guess, are accounts waiting for the product? Or does it necessarily just change the conversation you're able to have with providers here? David Moatazedi: Yes. Maybe we'll start -- I'll turn it over to Rui to talk a little bit about clinically why this is meaningful to the accounts? And then I can talk a little bit about how that plays into the broader bundle in partnership with the clinic. Rui Avelar: When we think about products like Sculpt, we're now describing the premium sector within the HA and the flagship product there is Voluma, for instance, that's the largest, most successful HA that's ever been launched. We think Sculpt will represent a competitor to that product. And when we think about what we're doing with that mid face, we're asking these gels to come in and take volume and do something that's really quite structural. And remember, it comes from a minimally invasive form. We are very optimistic about this product when we were doing diligence on the product. The investigators were very happy with the performance. And subsequent to that, we've actually gone against a product that's in the market well known and we've shown that -- we showed non-inferiority and superiority at the primary endpoint. And then more impressively, as you follow it out over time, when you get to the 2-year mark, we're showing 2 to 3x more responder rates at the 2-year mark. So we're optimistic. We're optimistic from that data. And as we're getting feedback from people using it in Europe, it's -- that feedback is actually correlating really well with what we saw in the clinical trials. David Moatazedi: Yes. And then as it relates to the overall portfolio bundle, look, we see our positioning in this market continuing to strengthen. You look at Jeuveau, 6 years mature, continuing to capture market share. Evolysse off to an incredibly strong start in a market that has been challenged. But when you back out the underlying market performance, the actual performance of Evolysse within the market has been very strong, and we're doing that without a full portfolio in the space. And so we do believe that this is going to continue to build on our in-market share gain momentum that we continue to demonstrate as a company. And I think you couple that product being highly differentiated with our cash-based strategy on top of this large injector base that's purchasing Jeuveau, and we see a lot of opportunities to drive continued momentum over the next several years. And I'm really excited to see what the international team could do with the Estyme products, in the U.K., where we're now in our fourth year approaching double-digit market share with Nuceiva, which is our toxin there, that Estyme product is going to be rolled out with all 4 formulations all approved at the same time. And so that's going to give the team in the U.K. a real boost in terms of our ability to more effectively compete against the portfolio. So we see this as part of the natural evolution of the company, and we're excited to see this unfold. Sam Eiber: Okay. That's really helpful. Maybe I can just ask a quick follow-up on some of the inventory dynamics at the provider level. Just sanity checking, is that back at what you would describe as normalized levels at this place? Or is there more room to work through that? David Moatazedi: I think what we saw in the middle of last year was a drawdown in inventories, and we continue to believe that accounts are measured in how they take on inventory in this environment. They're seeing an improvement, which means they're a little more open than maybe they were coming out of the second quarter. At the same time, we haven't seen a rebound, where they're back to the inventory levels that they were in before. So that could potentially be something that could be a net positive if we see the market return more strongly as we get into the year. Operator: Your next question is coming from Doug Tsao so from HC Wainwright. Douglas Tsao: David, you touched on it a little bit. But obviously, last year, you had the competitive entrant from the Korean manufacturer, which was a, what I would sort of characterize as sort of an undifferentiated neuromodulator. I guess when you think about both the Galderma as well as Allergan expected launches of RELFYDESS as well as BoNT/E. They're coming at it with sort of this fast onset, one is going with short duration and one is making longer duration claims. I guess I'm just curious if you have a perspective on how those will shape up or influence the market? David Moatazedi: Sure. Yes. I mean look, never take any competitor lightly, let's start there, and never take a moment like a new entrant coming in to capitalize on an opportunity, and I'm really proud of what the team did last year with the entrance of a new toxin player in the space we maintain our focus and you saw us continue to gain share despite the market declining. And I attribute a lot of that to the intensity that we bring to the way that we think around any new competitors. It starts with a heavy review of the science and clinical data. As you said, there are claims that are made around onset or claims that are made on longevity. And in the end, the question is, does the data support some of those claims. And I think that's our job to make sure that we provide a counter to some of the claims that are made in the space, but also to ensure that clinics are focused on the long game. You want to deliver high-quality products, that deliver high patient satisfaction in a profitable way to grow your practice. And we believe that's where we're incredibly well positioned in this space. We're the only company that's reinvesting back into these clinics to help drive that growth. we're reinvesting back and retaining those patients to continue to build on those practices and we're doing it with a broad portfolio. So it will be up to the new players to establish their value proposition in this space vis-a-vis the current products they have, but we think this creates an opportunity for us. And I know the team is very excited for it, and it's something we won't be talking too much about until we get to the middle of the year, but we'll certainly be prepared. Operator: Your next question is coming from Serge Belanger from Needham & Company. Serge Belanger: I guess the first one, David, can you just talk about maybe the seasonality trends for what we've seen so far in Q1? I know some other companies have talked about the winter storms affecting volumes for the early part of the year. Just curious if that's also been an issue in aesthetics. And then secondly, regarding the European market, just curious if they've experienced the same kind of macro headwinds that we've seen in the U.S. on the toxins and especially on the fillers if they've seen that same -- those same headwinds that have affected the U.S. market? David Moatazedi: I want to turn it over to Tatjana to talk a little bit about the seasonality, and then I'll take the comments around it. Tatjana Mitchell: Yes, yes. So what we're seeing in Q1 really is similar to what we saw exiting Q4, which is the toxin market is showing solid demand, right? We do not believe this market is declining. And then the filler market is still pressured, but not seeing those double-digit declines that we saw for most of 2025, and that is consistent with our guidance. also consistent with our plan. We rolled out these plans at the national sales meeting, similarly at the international sales meeting. And we feel good about these and we're executing on them. I can't necessarily say we've seen issues related to the weather. David, maybe you can comment on the European markets. David Moatazedi: That's right. And in Europe, the overall economic environment has been stronger in Europe relative to the U.S. So when you think about the toxin space as an example, we don't believe that the toxin market declined in Europe last year. And at the same time, we do believe that there are signs that the HA market did recover towards the end of the year. And we do believe that it could have been flattish to exit the year in the HA market. And it's been a pretty sharp reversal from what was a decline in Europe in procedure volume for HA products as well. So that gives us some level of optimism that we're trailing about 6 to 12 months behind Europe in terms of our recovery of the HA market. And that's something we're going to watch closely. But as it relates to our guide for this year, just to reiterate, we assumed that the filler market would decline low single digits over the course of this year. Operator: Thank you, and thank you for all your questions. At this time, I'd like to turn the call back to Nareg Sagherian for details on upcoming IR events. Nareg? Nareg Sagherian: Thank you. We look forward to continuing the conversation at the Leerink Global Healthcare Conference in Miami on Wednesday, March 11. We hope to see many of you there. Thank you for joining us today. Operator: Thank you. We reached the end of our call. You may now disconnect your lines.
Operator: Greetings and welcome to Fuel Tech, Inc.'s 2025 Fourth Quarter and Full Year Conference Call and Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Devin Sullivan, Managing Director at The Equity Group. Thank you. You may begin. Devin Sullivan: Thank you, Rob. Good morning, everyone, and thank you for joining us today. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, www.ftek.com. Our speakers for today will be Vincent J. Arnone, Chairman, President and Chief Executive Officer, and Ellen T. Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I would like to remind everyone that matters discussed on this call, except for historical information, are forward-looking statements as in Section 21E of the Securities Exchange Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and reflect Fuel Tech, Inc.'s current expectations regarding future growth, results of operations, cash flows, performance, and business prospects and opportunities, as well as assumptions made by and information currently available to our company's management. Fuel Tech, Inc. has tried to identify forward-looking statements by using words such as anticipate, believe, plan, expect, estimate, intend, will, and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to Fuel Tech, Inc. and are subject to various risks, uncertainties, and factors including, but not limited to, those discussed in Fuel Tech, Inc.'s Annual Report on Form 10-K’s Item 1A under the caption of Risk Factors and subsequent filings under the 1934 Act, as amended, which could cause Fuel Tech, Inc.'s actual growth, results of operations, financial condition, cash flows, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Fuel Tech, Inc. undertakes no obligation to update such factors or to publicly announce the results of any forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in the company's filings with the SEC. With that said, I would now like to turn the call over to Vincent J. Arnone. Vince, please go ahead. Vincent J. Arnone: Thank you, Devin. Good morning, and I would like to thank everyone joining us on the call today. 2025 was a year of multiple achievements for Fuel Tech, Inc., marked by an expanded opportunity set in our Air Pollution Control business segment driven largely by anticipated growth in data center development and construction, a resurgence in revenue for our FUEL CHEM operations, revenues for the year exceeded our expectations and reached their highest levels since 2018, and tangible progress at our Dissolved Gas Infusion business. We maintained a strong financial position with cash, cash equivalents, and investments of nearly $32,000,000 at year end and no debt. Our FUEL CHEM segment ended an already strong year on a high note. Across the country, the useful life of coal-fired units is being extended to satisfy growing energy demand, and many of these units were dispatched at levels that have not been realized in several years. Our results for the FUEL CHEM segment benefited from this phenomenon, in particular for our legacy units. In addition, 2025 results were favorably impacted by the full year performance of a U.S. commercial unit that we added late in 2024 and from a new U.S. customer that is currently operating with us under a six-month commercially priced demonstration program that commenced in 2025. As we have discussed previously, the annual revenue potential from this commercial opportunity, should it convert from a demonstration, is expected to be approximately $2,500,000 to $3,000,000 based on the customer running the program full time, with the revenue expected to generate historic FUEL CHEM gross margins. I want to share a bit of additional color regarding our FUEL CHEM demonstration program. This customer was interested in our program as a means to improve boiler availability and reliability, and to reduce maintenance downtime for offline boiler cleaning, in particular during periods of high power generation demand. This customer utilizes a source of coal that is high in sodium and is prone to extensive slagging and fouling. To date, the customer has realized a material reduction in downtime and maintenance costs due to a reduction in offline cleaning, which bodes well for a successful demonstration. Revenues generated by our APC segment rose in the fourth quarter but declined annually reflecting customer-driven delays and project award timing. We secured $8,800,000 of APC awards during 2025 from new and existing customers in the U.S., Europe, and Southeast Asia. Our near-term sales pipeline of APC contracts, exclusive of data center opportunities, is between $3,000,000 and $5,000,000. While we had hoped to close on these opportunities by year end, discussions remain active and we expect to close before the end of the current second quarter. Even with these delays, we ended the year with a consolidated APC segment backlog of $7,000,000, up from $6,200,000 at the end of 2024. As we announced last quarter, we expanded our APC portfolio through a small strategic acquisition of complementary intellectual property and customer-related assets from Walco Inc., a well-established environmental equipment and services company with several hundred project installations worldwide. As we continue to integrate WALCO's operations, we have been encouraged by the pace of project inquiries from their client base and others, including a number of near-term needs. The value proposition for us in acquiring WALCO was in securing these high-value assets at a modest price, strengthening our technology portfolio, and attracting a broader base of potential customers. This proposition seems to be playing out thus far. With respect to the data center opportunity, these facilities will potentially require emissions control solutions to mitigate their environmental footprint, comply with federal, state, and local regulations, and align with corporate sustainability mandates. Our sales pipeline for these opportunities remains strong and approximates $75,000,000 to $100,000,000 per project integrating our SCR technology with power generation sources. Please note that the value of the pollution control scope of supply represents a very small fraction of the estimated total AI infrastructure spend. I want to provide a little more information about our data center opportunity. First, think that we have been clear that any material near-term growth for our company will likely derive from our success in addressing this opportunity. As such, we have been, and continue to, devote substantial internal and external resources to position Fuel Tech, Inc. with data center developers, and turbine and engine providers, to deliver NOx reduction technologies as part of a data center's power generation platform. One point that I want to highlight is that Fuel Tech, Inc. is a subcontractor in the data center ecosystem. In all instances, we are a subcontractor to the data center integrator or to the turbine or engine OEM. This relationship limits our knowledge of the development of the data center opportunity, its funding, its phase of approval, and its timing. Our role remains the support and education of our direct customer regarding the design and delivery of a pollution control system that can best fit the application. This does not dilute the opportunity landscape or temper our enthusiasm in any way, but it does make providing specific insights with respect to the timing of awards more challenging. This is what we can currently share about the opportunity. At present, we are in various stages of participation in project opportunities with more than ten different data center integrators and turbine and engine OEMs, including some of the largest companies in the industry. All of these inquiries are for pollution control systems, primarily SCR, in support of the development of on-site power generation. The size of these projects runs the gamut, as little as two to five units per project to as many as 30 to 40 NOx reduction units, with pricing predominantly in the range of $1,000,000 to $2,500,000 per unit. Regarding timing, the earliest we expect any of these inquiries to convert to a commercial award based on our conversations with the various parties involved is Q2 2026, as the schedule requirements for at least two of the projects would necessitate the receipt of an award by then. The remainder of the inquiries will develop further as we move throughout the year. To the best of our knowledge, with just one exception, none of the inquiries that we are currently involved with have been awarded. More specifically, we are still very much in the running to capture our share of these opportunities, and we remain optimistic about our prospects for 2026. On the regulatory front, we have seen that the current administration is currently pursuing both the rollback of specific regulations that had been put in place previously and the implementation of new regulations that are less restrictive than those currently in place. Regarding the rollback of regulations, EPA announced the rescission of rules related to the reduction of greenhouse gases. Regulation of these emissions started in 2009 with the EPA endangerment finding based on a 2007 Supreme Court ruling. EPA has also announced the repeal of the 2024 mercury and air toxic standards for coal-fired units. It is important to note that both of these proposed rollbacks do not loosen the nitrogen oxide emissions reduction requirements for any sources and could potentially extend the life of some coal- and natural gas-fired units that may not have to reduce their emissions profile. We will take the opportunity, where applicable, to offer retrofit and maintenance solutions to accommodate the extensions of useful life. Now, regarding the implementation of new rules, earlier this year, EPA issued new source performance standards, also known as NSPS, for new gas turbines, which were published in the Federal Register on January 15. The NSPS was required per EPA consent decree with Sierra Club and the Environmental Defense Fund and were in response to the proposed rules that were issued in November 2024. A new category of gas turbines was created called temporary power turbines and is applicable to units below 85 megawatts installed to run for 24 months or less. These units will be required to achieve NOx levels of 25 ppm, which in some cases may not require SCR for all turbines. Turbines greater than 5 megawatts with high operating capacity will need to meet 15 ppm of NOx, which will likely require SCR, and turbines greater than 85 megawatts will need to get to 5 ppm NOx, which will require SCR in almost all cases. So what is the impact of the new regulation? First of all, several organizations including the Clean Air Task Force, Sierra Club, and the Environmental Defense Fund have filed a petition for reconsideration with the EPA, and the hard deadline to file a formal lawsuit challenging these amendments in the U.S. Court of Appeals for the D.C. Circuit is March 16. It is certain that lawsuits will be filed. And second, with this rule in place, power generation developers will need to decide how best to proceed with their pollution control solutions for their new sources of power generation. Based on the discussions that we have had with our potential client base, we are not aware of this new regulation having a significant negative impact on decision-making regarding the implementation of pollution controls. It is important to note that state-specific permitting requirements can vary from the new federal regulation. And it is also important to note that, outside of the NSPS requirements, the use of multiple gas turbines working together classify them as a major source for NOx. Major sources are governed by other regulations and are often required to meet more stringent NOx emissions which would require SCR. We continue to pursue additional new awards driven by industrial expansion globally and by state-specific regulatory requirements in the U.S. We are continuing to monitor the progress of the EPA's rule for large municipal waste combustion units. This rule reduces the nitrogen oxide emissions requirements for up to 150 large MWC units across the country. Fuel Tech, Inc. has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning. The final rule is currently in the White House Office of Management and Budget and is expected to take effect before March, with NOx emission levels likely requiring advanced SNCR technology to meet compliance deadlines three years from the date of issue. Moving over to DGI. We are continuing the extended demonstration of the technology at a fish hatchery in the Western U.S., which remains on track to conclude in the second quarter of this year. The system is performing well, meeting customer expectations for the precise delivery of concentrated dissolved oxygen and generating positive results in terms of reduced operational costs and improved fish growth. A second trial that commenced at a municipal wastewater site in the Southeast U.S. was successfully completed in January and converted to a six-month rental contract that is expected to run through the beginning of the third quarter of this year. Our DGI system is delivering the designated volume of oxygen, and the client reports that odor-related complaints in the areas surrounding the plant have been dramatically reduced. We are currently in discussions with multiple other end markets of interest for DGI, including pulp and paper, food and beverage, petrochemical, and horticulture. We have been supported in these efforts with the addition of representative firms with end-market expertise. As we look ahead to 2026, we are optimistic about our potential financial outlook. Our FUEL CHEM business is expected to continue to perform well, driven by the performance of our base accounts and by the expectation that we convert another demonstration account to commercial operation. Our APC business development activities, including our standard opportunities, those associated with respect to the Walco acquisition, and potential tailwinds from data center opportunities, are at the highest level that we have experienced in several years. And regarding DGI, based on progress at our demonstrations, it is expected that we will have our first commercial contract in 2026. Overall, we expect that revenues for 2026 will exceed the level of 2025, with FUEL CHEM approximating 2025 revenues and APC exceeding 2025 performance, without considering the benefit of data center awards, which would be additive to the forecast. Before turning things over to Ellen, I want to thank the entire Fuel Tech, Inc. team for their dedication in advancing our strategic objectives and our shareholders for their patience and support. Now, I would like to turn the call over to Ellen for her comments on the financial results. Ellen, please go ahead. Thank you. Ellen T. Albrecht: Thank you, Vince, and good morning, everyone. I will start off today by reviewing our fourth quarter results. For the quarter, consolidated revenues rose 37% to $7,200,000 from $5,300,000 in the prior-year period, reflecting growth from both our APC and FUEL CHEM segment revenues. APC segment revenue increased 37% to $2,400,000 from $1,800,000, primarily related to timing of project completion. FUEL CHEM had a very strong quarter, generating a 37% increase in revenue to $4,900,000 from $3,500,000, reflecting contributions from our legacy portfolio and the six-month commercially priced demonstration program that commenced in early November. Consolidated gross margin for the fourth quarter rose to 45% of revenues from 42% in last year's fourth quarter, with APC and FUEL CHEM each producing higher margins for the quarter. FUEL CHEM gross margin increased to 46% from 45% in 2024 due to the increase in the revenue base. APC gross margin expanded significantly to 42% in the fourth quarter compared to 36% in the prior-year period as a result of project and product mix. Consolidated APC segment backlog on December 31, 2025 was $7,000,000, up from backlog of $6,200,000 on December 31, 2024. Backlog at 2025 included $3,400,000 of domestically delivered project backlog and $3,600,000 of foreign-delivered project backlog, compared to $1,900,000 of domestic-delivered project backlog and $4,300,000 of foreign-delivered project backlog at 2024. We expect that approximately $6,000,000 of current consolidated backlog will be recognized in the next twelve months. SG&A expenses were $4,200,000 in the fourth quarter compared to $3,900,000 in the prior-year period. As a percentage of revenue, SG&A expenses declined to 57% from 75%, reflecting higher consolidated revenue in the current period offset by the timing of certain expenditures. Research and development expenses for the fourth quarter rose to $504,000 from $405,000 in the same period a year ago, mainly attributed to our commercialization efforts for our DGI technology. Our operating loss narrowed to $1,400,000 compared to a loss of $2,100,000 in last year's fourth quarter, reflecting higher revenue and margin contributions from our operating segment. We continue to take advantage of the favorable interest rate environment and, as of December 31, 2025, have invested a majority of our $31,900,000 in held-to-maturity debt securities and money market funds. This generated $288,000 of interest income in the fourth quarter and $1,400,000 of interest income for 2025. Moving to the results for full year 2025. Consolidated revenue rose 6% to $26,700,000, in line with our most recent guidance provided in November. The increase in full year revenue was driven by a 28% rise in FUEL CHEM segment revenue to $17,800,000, exceeding our guidance for the year. This increase in revenue was partially offset by a decrease in APC segment revenue. Consolidated gross margin for 2025 rose to 46% from 42% in 2024, with higher margins for both the FUEL CHEM and APC operating segments. SG&A expenses for 2025 modestly increased to $14,100,000 from $13,800,000 in 2024, within the guidance range we provided at this time last year. The increase was mainly attributed to employee-related expenditures. As a percentage of revenue, SG&A decreased to 53% from 55%, reflecting higher consolidated revenue. For 2026, we expect SG&A expenses to increase modestly from those in 2025. Research and development expenses for the year were $2,000,000 for 2025, compared to $1,600,000 in 2024. As we move closer to fully commercializing our DGI segment technologies, in addition, we also continue to invest efforts related to our legacy technologies as necessary. Operating loss narrowed to $3,700,000 for 2025 compared to a loss of $4,700,000 in 2024, reflecting higher segment revenues and relatively flat total costs and expenses. Net loss for 2025 was $2,300,000, or $0.08 per diluted share, compared to a net loss of $1,900,000, or $0.06 per diluted share, in 2024. Adjusted EBITDA loss was $2,700,000 in 2025, compared to an adjusted EBITDA loss of $2,200,000 in 2024. Lastly, moving to the balance sheet. Financial condition remains very strong. As of December 31, total cash and cash equivalents, total cash and investments was $31,900,000, comprised of cash and cash equivalents of $11,900,000 and short- and long-term investments of $20,000,000. Net cash provided by operating activities was $3,000,000 for the year as compared to a use of total cash of $2,800,000 in the same period last year. Shares outstanding at quarter end were approximately 31,100,000, equating to cash per share of $1.03. Working capital was $25,700,000, or $0.83 per share. Stockholders' equity was $40,000,000, or $1.29 per share, and the company continues to have no outstanding debt. We remain fully confident in our ability to uphold a strong financial condition and continue funding both short- and long-term growth initiatives across FUEL CHEM, APC, and DGI. I will now turn the call back over to Vince. Vincent J. Arnone: Thanks very much, Ellen. Operator, let us please go ahead and open the line for questions. Operator: Thank you. At this time, we will be conducting a question-and-answer session. Before pressing the star keys. Our first question comes from Sameer Joshi with H.C. Wainwright. Please proceed with your question. Sameer S. Joshi: Hey, good morning, Vince, Ellen. Thanks for taking my call. Good morning. So first, the data center opportunity should be significant for the company. You mentioned you are reliant on these integrators or OEMs for getting the final order. My question is, are you already designed in with these participants or is there further sort of competition once those guys get the orders from data center? Vincent J. Arnone: I cannot say that we are specifically designed in for these operators at this point in time, Sameer. What we are doing is, we would obviously like to be at the point whereby we are designed in with an integrator or operator that is looking to build several sites. But right now, at the beginning phase with some of these operators, what we are doing is establishing ourselves as a potential trusted partner to be able to do the design pollution control system for them. A lot of the parties that are coming to us are not necessarily very familiar with pollution control requirements. So we are definitely playing an education role as we work with some of these parties at this point in time. But we are hoping that the upfront time that I mentioned that we are investing with these opportunities is going to pay off a little bit longer term as these projects actually do come through their evolution and are ultimately awarded. So that is where we stand today. And the situation I would say is slightly different across the different parties that we are dealing with. Sameer S. Joshi: Got it. Understood. And I do not want to conflate this, but the requirements for the less than 85 megawatt plants and short term working less than 24 months, does that in any way affect or impact these data center opportunities? I just do not want to conflate those, but is there any relation? Vincent J. Arnone: Right. Ultimately, on a long-term basis, should not have an impact, Sameer, because most of the projects that we read about, most of the projects that we are having discussions about, are intended to be long-term power generation solutions for that particular data center, right? It would only be in the instance whereby a potential operator or integrator needed that to meet perhaps a very specific startup date and they had the ability to have some power generation equipment up and running for a short period of time to meet that startup date. Again, perhaps, right? But again, from our perspective, the people and party that we are dealing with, they are looking at long-term power generation solutions that are indeed not temporary in nature because they are looking to support that data center long term, not just for less than 24 months. Sameer S. Joshi: Got it. Sticking to sort of regulatory environment, with the PPA declaring carbon dioxide not a pollutant and you talked about the mercury's doctrines, and it indirectly helping you because it does not require NOx reductions, and so existing plants may have extended life because of the other reductions in requirement or loosening of requirement. Are you already seeing any increased activity as a result of this where some of the plans that may be on the way to shut down are now saying that, hey, we can continue to function, and reaching out to you? Vincent J. Arnone: At this point in time, Sameer, it is a little bit too early to assess the impact of those relatively recent rollbacks. We just wanted to point out very specifically that those rollbacks do not impact Fuel Tech, Inc.'s opportunity to capture prospective awards that are specifically related to nitrogen oxide reduction opportunities. So we just want to ensure that there is not confusion related to those rollbacks which are not going to impact Fuel Tech, Inc. business opportunities. Longer term, those rollbacks, they could indeed have the impact of possibly extending the useful lives of some facilities. Sameer S. Joshi: Got it. Moving to FUEL CHEM, it is nice to see the six-month sort of trial order and likely because they are seeing the results likely to convert. Are there more such potential customers that you have in the pipeline or are at least talking to in terms of getting because each additional customer could bring two plus million or almost four plus million in orders annual recurring revenues? Vincent J. Arnone: So at this point in time, yes, we are very optimistic about converting this demonstration to a commercial contract. Hopefully, that will bode well for us here in 2026. But incrementally, as I have said on prior conference calls, the coal-fired base-loaded unit, just call it phenomenon, it is not as robust as it used to be a decade or fifteen years ago. So many coal-fired plants being shut down. We are looking for these pockets of opportunity whereby we can, on an incremental basis, add these one-off opportunities for us. Sameer S. Joshi: Okay. Vincent J. Arnone: And we need to be a little bit careful about saying that each unit is going to be between $2,000,000 and $3,000,000 per opportunity in revenue, because it does vary by unit size and the specific runtime of that unit. I just wanted to qualify that. So to specifically answer your question, we do not have anything of what I would call specifically that we are looking for imminent demonstration, but we are looking at some other opportunities that could be for us, and perhaps with the same body of plants that we are doing business with today, to add another unit or two at plant sites. So there is opportunity there, but again, as I have said previously, we have not looked at FUEL CHEM as being what I would call a material growth opportunity for the past several years. What we are seeing here in the recent term, we are very, very pleased with. We finished 2025 at just under $18,000,000 revenue, which if you would have asked me that question five years ago, I would have said it would not have been possible. So we are very pleased with where we are. And there is some, I will call it, moderate upside opportunity. Opportunity, but it is moderate. Sameer S. Joshi: I am guessing this outlook for 2026 where FUEL CHEM is expected to be at same level as 2025 does not include this incremental opportunity that may convert into, like, from trial to full time. Vincent J. Arnone: Yes. We are looking at it right now very, very conservatively, Sameer, without knowing exactly what the outcome is going to be as we sit here today. We will have more information to share in early May when we have our first quarter conference call. Sameer S. Joshi: Yes. That is fair. And just squeezing in one last one on DGI. It seems this municipal wastewater is working well as well as the fishery seems to be working well. Should we expect revenues from DGI during 2026? Because on the outlook, you did not mention any of that. Vincent J. Arnone: Right. So we are going to recognize, hey, a small dollar value of revenue from the rental of the system at the municipality. That is only $10,000 per month. As we look at the remainder of the year, we are hoping to have a system sale between now and the 2026 of one of our DGI units. It is not going to be material to our overall results. But what is important regarding that activity is it sets the platform for us to be able to further and go ahead and discuss a success story specifically with the end markets that we are looking to chase. And we have not had the opportunity to do that yet. So that moment is extremely critical for us as we look to further develop and commercialize DGI. Sameer S. Joshi: Thanks, Vince, for taking my questions. Congrats on a strong year and good luck. Vincent J. Arnone: Thanks, Sameer. Operator: Our next question comes from Adam Waldo with Lismore Partners. Your line is now live. Adam Waldo: Good day, Vince. I hope you can hear me okay. Your stock trades at $1.20 to $1.25 a share. You have about a dollar a share in cash on your balance sheet. You have reasonable prospect of being cash flow positive in 2026, and you articulate a sizable new business pipeline in the data center area. I would argue that with your stock trading where it is, the market does not believe you are going to close any of that pipeline. You are very optimistic that you can. Over the balance of 2026, and you were optimistic in the 2025 as well. The timing of these projects is very hard to predict. What gives you so much confidence and optimism that you are going to close, you know, a sizable number of data center projects over the next twelve to eighteen months. Vincent J. Arnone: Adam, thanks very much for the question. Yes, you are correct. I mean, we are in a position whereby, yes, we are trading just a little bit above cash value today. We as a company have not been able to go ahead and bring to the table any material award as of yet as to the data center opportunity. So in response to your question, my level of confidence lies in a couple of areas. First of all, as we have seen this opportunity develop, and literally over the past nine to twelve months because it is still what I would call a new opportunity and it is one that we do not believe for Fuel Tech, Inc. is a short-term opportunity, it is one that is going to develop over the next five to ten years. But what we have seen over this past nine to twelve months is more and more players, if you will—players defined as data center integrators, parties that have access to power generation equipment in the form of turbines or engines—and just then the OEMs of those turbines or engines themselves. There have been more inquiries come our way literally over this past three months than we saw come our way over the initial six to nine months, relative to parties seeking to take advantage of the opportunity to provide a power generation solution to the data centers that are going to be built out. Okay. So point number one is just the volume of activity, the different types of parties and players that are coming to the table, and also what I would call the caliber of the parties that we are dealing with as well, in terms of them being in some cases multinational organizations with scale and capability, that give us the confidence that at some point in time here, just given the demand, that Fuel Tech, Inc.'s products and solutions are going to be pulled into this ultimate data center solution. Okay. So number one, the volume of activity gives me a very high level of confidence. Point number two is my confidence in the Fuel Tech, Inc. team to be able to go ahead and basically assimilate all of the inquiries that have been coming our way and determine our best path with these data center integrators and/or engine or turbine suppliers to be able to position us well with those organizations and give these organizations the confidence that we, as Fuel Tech, Inc., can deliver on our air pollution control solution for them. So it is twofold. And yes, I am optimistic. I mean, the level of inquiry is indeed extraordinary. And so it is up to us to capitalize on it, and we are doing everything that we can to do so at this point in time. I hope that answers your question. Adam Waldo: Thank you very much. Vincent J. Arnone: Thank you, Adam. Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Vincent J. Arnone for closing comments. Vincent J. Arnone: Thank you, operator. In closing, I want to thank, obviously, our Fuel Tech, Inc. team for their continued support and dedication. Thanks to all of our stakeholders, again, for your patience. We are doing what we can to create shareholder value. And we have an opportunity landscape in front of us today that we know we need to capitalize on, and we are going to do everything that we can. Thanks to our Board for support as well. With that, I want to wish everyone a good day, and thanks for participating in the conference call. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good morning, and welcome to Advanced Flower Capital Inc.'s fourth quarter and fiscal year 2025 earnings call. At this time, all participants are in listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Gabriel A. Katz, Chief Legal Officer. Please go ahead. Gabriel A. Katz: Good morning, and thank you all for joining Advanced Flower Capital Inc.'s earnings call for the quarter and fiscal year ended 12/31/2025. I am joined this morning by Robyn Tannenbaum, our President and Chief Investment Officer; Daniel Neville, our Chief Executive Officer; and Brandon Hetzel, our Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our 02/10/2026 press release and is posted on the Investor Relations portion of Advanced Flower Capital Inc.'s website at advancedflowercapital.com, along with our fourth quarter and full year earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, anticipated market developments, portfolio yield, and financial performance in 2026 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to Advanced Flower Capital Inc.'s most recent periodic filings with the SEC, including our Annual Report on Form 10-K filed earlier this morning, for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections. During this call, we will refer to distributable earnings, which is a non-GAAP financial measure. Reconciliations to net income, the most comparable GAAP measure, for distributable earnings can be found in Advanced Flower Capital Inc.'s earnings release and investor presentation available on our website. Today's call will begin with Robyn providing a high-level recap of our 2025 fiscal year, including the conversion to a BDC. Dan will then provide an overview of our portfolio. Finally, Brandon will conclude with a summary of our financial results before we open the lines for Q&A. With that, I will now turn the call over to our President and CIO, Robyn Tannenbaum. Robyn Tannenbaum: Thanks, Gabe, and good morning to all our investors and analysts that have joined us today. Looking back on 2025, Advanced Flower Capital Inc. was focused on, one, reducing our exposure to underperforming credits through active portfolio management, and two, converting from a real estate trust to a business development company, or BDC, to expand the universe of transactions Advanced Flower Capital Inc. could invest in. We continue to focus our portfolio management efforts on underperforming credits in order to preserve capital. We believe that as we begin to get repaid on some of these underperforming assets and reinvest that capital into performing credits, we may unlock future earnings potential. I am pleased to announce that we received $117,000,000 of paydowns from performing and underperforming credits from the start of 2025 through today. During fiscal year 2025, Advanced Flower Capital Inc. originated $53,000,000 of new commitments, and subsequent to year end, we have closed on $89,700,000 of new commitments in the lower middle market, which Dan will describe in further detail. Turning to our conversion to a BDC, as of 01/01/2026, we completed our previously announced conversion from a REIT to a BDC. Our conversion expands Advanced Flower Capital Inc.'s investment flexibility to pursue opportunities beyond real estate-backed loans, including a broader universe of operating businesses aimed at enhancing long-term shareholder value. Before turning the call over to Dan, I want to touch upon our earnings for the quarter and fiscal year. For the quarter and full year ended 12/31/2025, Advanced Flower Capital Inc. generated distributable earnings per basic weighted average share of negative $0.12 and positive $0.39, respectively. Primarily due to realized losses from two underperforming credits recognized during the year, our 2025 dividends were characterized as a return of capital, making the 2025 distributions to our shareholders tax-free. Future dividends may receive similar treatment if Advanced Flower Capital Inc. recognizes additional losses in 2026. Looking ahead, the Board of Directors has declared a first quarter dividend of $0.05 per share, which will be paid on 04/15/2026 to shareholders of record on 03/31/2026. With that, I will turn it over to Dan, who will discuss our portfolio management efforts, strategy expansion, and new deals we have recently invested in. Daniel Neville: Thanks, Robyn, and good morning, everyone. I will begin with an update on our portfolio, then turn to our expanded strategy and deals we recently completed. Looking at our existing portfolio, from 2025 through today, we received $117,000,000 in paydowns. This includes the repayment of two loans subsequent to year end at par plus accrued, with an additional $1,800,000 in prepayment and exit fees from those two loans. We currently have three loans on nonaccrual and are focused on receiving paydowns on those loans to redeploy that capital into performing credits that should contribute to current income. We have continued the liquidation process for Private Company A. From 2025 through today, we have received $6,300,000 of paydowns. The borrower is still in receivership, and the distribution of proceeds needs to be approved by the court. We currently have a pending motion for an additional distribution of $6,400,000 in proceeds. While we are frustrated by the pace of distribution to date, I am happy to report that all of the operating assets of the estate are under agreement, and we expect distributions will continue to flow in over the course of 2026 as regulatory approvals and other milestones are met. Regarding Private Company K, two of the three Massachusetts dispensaries have signed purchase agreements approved by the court and are awaiting regulatory approval to effectuate the sale. We expect the sale of all of the collateral of Private Company K to be completed sometime in 2026. Lastly, we wanted to take a minute to touch on Justice Grown. In February, one of Justice Grown's claims was dismissed in the New Jersey action, and we also had oral arguments on the appeal of the preliminary injunction. We expect a ruling on the appeal in the coming months, and the Justice Grown mature loan matures on 05/01/2026. We continue to actively manage these positions to preserve shareholder capital and maximize recovery value. Our earnings may continue to be affected by the underperformance of some of these legacy loans and any realized losses we take on assets. However, as we begin to get repaid on some of these loans on nonaccrual and reinvest that capital into performing credits, we may unlock future earnings potential. Since expanding our investable universe, our active pipeline remains strong, with over $1,400,000,000 of deals as of today. We are focused on sourcing deals and backing companies in the lower middle market across a variety of industries. We are primarily focused on providing loans to cash-flowing borrowers with $5,000,000 to $50,000,000 of EBITDA. These financings are often used for expansion capital, acquisitions, refinancings, and recapitalizations. Turning to our activity after converting to a BDC, I would like to discuss two loans that we closed in Q1 2026. In January, Advanced Flower Capital Inc. closed a $60,000,000 senior secured credit facility to support the combination of Stat and the Morsby Group, which is backed by Cambridge Capital. Stat is a leading revenue recovery specialist servicing the Walmart, Target, and Amazon ecosystems. Morsby is a procurement specialist that focuses on long-tail supplier negotiations and savings for Fortune 1000 clients. Advanced Flower Capital Inc. provided the $60,000,000 to finance the acquisition of Morsby and refinance existing indebtedness. In February, Advanced Flower Capital Inc. committed $30,000,000 to a $60,000,000 senior secured term loan to support the acquisition and growth of a leading healthcare benefits platform tailored toward hourly and sub-$50,000 salaried employees, which is a large and underserved segment of the workforce. At closing, Advanced Flower Capital Inc. funded $20,000,000 of this commitment supporting a top-tier sponsor. In closing, we remain focused on unlocking value from underperforming loans and are excited about the new lending opportunities that we are seeing. Now I will turn it over to Brandon to discuss our financial results in more detail. Brandon Hetzel: Thank you, Dan. For the quarter ended 12/31/2025, we generated net interest income of $5,200,000 and distributable earnings of negative $2,800,000, or negative $0.12 per basic weighted average common share, and had GAAP net income of $900,000, or $0.04 per basic weighted average common share. For the full year ended 12/31/2025, we generated net interest income of $24,600,000, distributable earnings of $8,700,000, or $0.39 per basic weighted average common share, and had a GAAP net loss of $20,700,000, or $0.95 per basic weighted average common share. As previously mentioned, we believe providing distributable earnings is helpful to shareholders in assessing the overall performance of the business. Distributable earnings represents the net income computed in accordance with GAAP, excluding noncash items such as stock compensation expense, any unrealized gains or losses, provision for current expected credit losses, also known as CECL, taxable REIT subsidiary income or loss net of dividends, and other noncash items recorded in net income or loss for the period. We ended 2025 with $317,400,000 of principal outstanding spread across 15 loans. As of 02/25/2026, our portfolio consisted of $366,400,000 of principal outstanding across 15 loans. During the quarter, we repurchased $13,000,000 of our unsecured bonds. Currently, $77,000,000 of our unsecured bonds remain with a maturity in May 2027. We continue to evaluate and explore options to refinance that bond prior to maturity. As of 12/31/2025, the CECL reserve was $46,100,000, or approximately 18.2% of our loans at carrying value, and we had a total unrealized loss included on the balance sheet of $27,700,000 for our loans held at fair value. As of 12/31/2025, we had total assets of $275,600,000, total shareholder equity of $175,600,000, and our book value per share was $7.46. Lastly, on 03/02/2026, the Board of Directors declared a first quarter dividend of $0.05 per share, which will be paid on 04/15/2026 to shareholders of record on 03/31/2026. With that, I will now turn it back over to the operator to start the Q&A. Operator: We will now open for questions. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Our first question comes from Aaron Thomas Grey with Alliance Global Partners. Your line is open. Aaron Thomas Grey: Good morning. Thank you for the question. This is John on for Aaron. So the active pipeline increased meaningfully with $1,400,000,000, up from last quarter's $400,000,000. Could you provide some color on the key factors that led to this increase, and how quickly you believe this could potentially translate to closed originations? Robyn Tannenbaum: Sure. Thanks for the questions. Daniel Neville: So, the pipeline increased meaningfully. That is primarily a function of our conversion from a REIT to a BDC. As you know, and as we have discussed, the investable universe within a REIT-only framework and the associated restrictions on real estate coverage was limiting to the loans that we could do within our portfolio. Upon converting to a BDC, that investment universe has been expanded beyond cannabis, which happened in August, but also allows us to invest in cash flow loans that are not fully covered by real estate as they were under the REIT framework. Aaron Thomas Grey: Great. Thanks. And then is there a split you could provide between the cannabis and non-cannabis pipeline, and what the expected yields for the non-cannabis, how those would compare to the legacy portfolio? Robyn Tannenbaum: Sure. So this is Robyn. We view the active pipeline as an active pipeline for lower middle market companies regardless of industry and spreads across a few. We are not going to break out what industries those are associated with, including cannabis. And as for yields, I would point you to page 14 in our deck. Yields that we have invested in are obviously not indicative of future yields, but Private Company X and Private Company Y were the last two loans that we did, which were in the lower middle market. One loan's yield to maturity per the deck is 14%, and one is 19%. Aaron Thomas Grey: Great. Thanks. I will jump back in the queue. Operator: Thank you. As a reminder, to ask a question, please press 1-1. Our next question comes from Pablo Zuanic with Zuanic and Associates. Your line is open. Pablo Zuanic: John, can I just follow up on—you gave good color there? About the loans on nonaccrual. In the case of Private Company A, what is left then is $4,400,000. There is nothing else to recover, right, if you can confirm that? In the case of Private Company K, you said two dispensaries are in the process of being sold. The third one, I guess, is still pending. The principal is over $12,000,000. Can we assume that when you are talking about process that you will recover and redeploy, that for Private Company K you will be getting the $12,000,000? And then any further color you can give on Justice Grown? From our start, it seems unlikely that you will be paid $78,000,000 or $79,000,000 principal in May. But if you can just give me—give color—correct me if I am wrong in my assumptions. Thank you. Robyn Tannenbaum: So this is Robyn. I will let Dan answer a few. On Private Company A, I believe what Dan was referring to is the amount that is currently pending in front of the receiver, not the total amount that we expect to get over time. Okay, and then I will let Dan take Private Company K. And then in terms of Justice Grown, we commented all that we are going to comment, and that is we really do not have anything to expand upon there aside from the loan is due in May. Daniel Neville: Yeah. So just to elaborate on Company A, we commented on the amount that was distributed in 2025, which was, I believe, $6,800,000. We have a pending motion for $6,400,000 that we expect to be distributed in the coming months. And then there were various other assets within the estate, both operating assets and financial assets, that will be monetized over time, and as those proceeds come in, we would expect additional distributions. We did not make a commentary on what the expected amount of the proceeds from the balance of the assets would be relative to what you see in our disclosures. Regarding Private Company K, which is the Massachusetts operator, as I discussed, two of the dispensaries are under APA and have court approval to effectuate those sales. Both are pending regulatory approval in front of the CCC, which typically is a three- to four-month process, although it can be longer, can be shorter. And then the third dispensary, we are receiving final LOIs in the coming weeks and expect that sale to also be effectuated in the 2026 timeframe. We do not break out reserves with respect to individual loans, but I would say that we believe that we are appropriately reserved on our portfolio as everything stands today. Pablo Zuanic: Thank you. That is good color, Dan. And then just, I know you are not going to guide for future loans, but is the first quarter pace based on the two facilities you extended to low middle market companies—is that cadence, call it $100,000,000 per quarter, is that something that you think can be sustained for the rest of the year? And just remind us how that would be funded in terms of your credit facilities and, of course, the proceeds you may receive. Daniel Neville: Yeah. So, Pablo, I think you can look at cash on the balance sheet and the capacity of our credit facilities. As it stands today, the $100,000,000 per quarter pace is not something that we currently have capacity to sustain outside of—obviously there are some loans that are on nonaccrual today, and we could receive proceeds from those loans over time, but it is very difficult to predict. But I would say that we are pleased to come out of the gate and start the year on a strong footing with two solid loans in the lower middle market to sponsors that we like and companies that we like at attractive yields. And I think, again, as Robyn said, I would point folks to page 14 of the deck and some of the terms associated with those loans, and that is the kind of deal that we would like to do going forward as we deploy capital over the course of 2026. Pablo Zuanic: Thank you. And then just two more if I may. One, again, I know you are not going to give guidance in terms of pipeline between cannabis and non-cannabis, but given everything that is happening on the regulatory landscape, do you foresee making any new loans in cannabis this year? I mean, I think the fourth quarter activity in terms of new loans was minimal in cannabis, right? So just your macro outlook in cannabis and whether that indicates that there would be opportunities to make loans in cannabis or not. And then the second question, which is unrelated, but does the whole Blue Owl Capital situation—how does that—obviously it does not affect your performance directly, but it does affect sentiment. Do you want to make any comments on that in terms of how investors should think about that situation relative to Advanced Flower Capital Inc.? Thank you. Daniel Neville: So in terms of the cannabis loans and the question regarding that, I think it is something that is in our pipeline that we continue to evaluate. But as we have said previously, the bar is very, very high for making any new loans into cannabis. Unfortunately, the regulatory approval that everyone is talking about first happened in August 2023, and there really has not been a ton of incremental progress since then. And so while we are hopeful and optimistic that there is regulatory approval, I think the lack of equity capital in the industry over the last three years, combined with the burgeoning tax liabilities that some of these companies are carrying, make it a very difficult sector for us to deploy fresh capital into. Robyn Tannenbaum: And then in terms of the BDC question, I think that each BDC speaks on its own credit performance and credit portfolio, just as we have. The middle market loans that we have made are new, and we feel good about those loans and where we invested. I am not going to speak on the industry or any other companies. They know their book a lot better than we do, so I will leave it to them to discuss on their earnings call. Operator: Alright. Thank you. This concludes the question-and-answer session. I would now like to turn it back to Daniel Neville, CEO, for closing remarks. Daniel Neville: Thank you for joining us today, and we look forward to talking to you on future earnings calls. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning. And welcome to Orion Group Holdings, Inc. Full Year 2025 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce, Investor Relations for Orion Group Holdings, Inc. Please go ahead. Margaret Boyce: Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings, Inc. full year 2025 financial results. We issued our earnings release after the market last night. It is available in the Investor Relations section of our site at oriongroupholdingsinc.com. I am here today with Travis J. Boone, Chief Executive Officer of Orion Group Holdings, Inc., and Alison G. Vasquez, Chief Financial Officer. On today's call, management will provide prepared remarks and then we will open up the call for your questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts are forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q and 10-Ks. With that, I will turn the call over to Travis. Travis, please go ahead. Travis J. Boone: Thank you, Margaret. Good morning, everyone. Thank you for joining us today to discuss our 2025 results and 2026 guidance. Before we begin, I want to acknowledge the ongoing conflict involving Iran and the Middle East. We extend our sincere appreciation to the men and women bravely serving our country. We recognize the situation remains very fluid, and we are actively monitoring developments and evaluating any potential impacts on our business and markets. Now on to my prepared remarks. 2025 was a year of strong operational execution and meaningful advancement of Orion Group Holdings, Inc.'s long-term strategic priorities. We drove both top- and bottom-line growth and generated good free cash flow. Across the organization, our team delivered with predictable excellence, executing projects safely and profitably, strengthening our balance sheet, and taking important strategic steps that position our company for continued growth ahead. Over the past several years, we have been very clear about what we set out to do: improve execution, strengthen margins, professionalize the organization, and build a platform capable of capturing the significant opportunities across mission-critical marine infrastructure, defense, and concrete construction. In 2025, we translated that strategy into results. Importantly, we took decisive strategic actions that advanced our long-term growth plan. In December, we closed a new $120,000,000 senior credit facility that improves our liquidity, lowers our cost of capital, and provides flexibility to support both organic growth and accretive acquisitions. We also purchased a derrick barge in December to further increase capacity and execution flexibility. As many of you are aware, we have been on the hunt for a large Jones Act derrick barge that will enable our team to pursue a broader range of marine and defense-related work. The barge is currently undergoing some refurbishments, and we expect to deploy it into our operations later this year. Last month, we completed the acquisition of J. E. McAmus. The transaction greatly enhances our marine platform, particularly in complex jetty and breakwater construction where McCamis has deep, proven expertise. Their strong Pacific footprint, experienced workforce, and high-quality equipment fleet expand our ability to execute large, technically demanding projects. Integration is well underway and we are very encouraged by the strong cultural alignment and the collaboration we are seeing across the combined organization contracts awarded to McKamis over the last several weeks. In 2025, we consolidated our Houston footprint into our new headquarters office, implemented a modern project management platform, favorably settled multiple litigation matters, and monetized non-strategic real estate. Collectively, these deliberate actions improve our readiness for the next wave of large-scale, mission-critical marine and concrete infrastructure opportunities and reflect tangible progress for our strategic plan. While most aspects of our performance met or exceeded expectations in 2025, backlog was the one area where results were not as we anticipated. Even though our win rate in 2025 improved over 2024, for the year, we booked just over $763,000,000 in new contracts and change orders across the company, which represented a 0.9x book-to-bill. Customer decisions moved to the right, primarily due to tariff-related uncertainty in the private sector at the beginning of the year, followed by the prolonged U.S. Government shutdown later in the year, which delayed public sector bidding and awards. Importantly, we believe this is only a timing issue, with the work simply moving to the right as opposed to going away. We remain confident in our strong demand outlook, which is supported by the tailwinds we are experiencing across our markets. In addition, recent developments in the Middle East may accelerate the government to approve additional defense funding. We remain bullish on our backlog trajectory and long-term growth outlook, with a vibrant, growing pipeline that is currently at $23,000,000,000, which includes the J. E. McAmus pipeline of $1,400,000,000. Our marine opportunity pipeline increased $3,000,000,000, or 21% sequentially, to over $19,400,000,000 as of December 31. This does not include the McAimis acquisition, which we closed on in February. This growth reflects building demand and urgency across both public and private sector clients, and we are pleased with the 2026 funding for the Department of War Pacific Operations. Across our operating regions, we have a healthy volume of opportunities expected to be awarded throughout the year for clients spending in the U.S. Navy, the Coast Guard, regional port authorities, state departments of transportation, and private energy and chemical clients. Moving on to concrete. Our opportunity pipeline grew to over $2,400,000,000 at the 2025. Over the last several years, our team has built a strong and expanding position in data centers and the mission-critical construction market. The team produced good bookings throughout 2025, increasing year-over-year backlog by 10% with recent awards spanning data centers and other commercial structures. Our expansion into Florida and Arizona is paying dividends, fueled by a growing project pipeline and solid execution. I would like to drill down into our data center work, a real highlight in our concrete business that is improving literally by the day. I spent a good amount of time with the team last week and let me tell you, they are killing it. Today, our data center count stands at 46 projects, either completed or in progress across Texas, Iowa, and Arizona. We are seeing a shift toward larger campus-style developments for which execution and schedule certainty reign supreme. And our team has earned an outstanding reputation as a reliable delivery partner on mission-critical programs. In addition to construction of the buildings and foundations, we are increasingly engaging with key clients earlier to address constructability concerns and to implement targeted design improvements. To support these strategies, we have recently expanded into site civil and earthwork to strengthen execution certainty for our clients and also to broaden Orion Group Holdings, Inc.'s scope of services. We expect to see data centers contribute even more significantly to our concrete business this year, with some large opportunities developing in our markets. In closing, as I reflect on the year, I am excited about the deliberate execution of our strategic priorities buoyed by building momentum in our key end markets. With a $23,000,000,000 pipeline inclusive of Mecamis, a healthy balance sheet, and the best client-centered execution team in the business, we have an excellent runway for 2026 and beyond. I will now turn the call over to Alison to talk through our financial results and our 2026 guidance. Alison? Alison G. Vasquez: Thanks, Travis. We were pleased with the financial and operational progress we delivered this year, reflecting disciplined execution across the organization and continued focus on profitable growth, cash generation, and balance sheet health. For the full year 2025, revenue increased to $852,000,000, operating income to $15,000,000, adjusted EBITDA to $45,000,000, and adjusted EPS to $0.25 per share. I am also very pleased to report that we generated full-year operating cash flow of $28,000,000 and free cash flow of $14,000,000. Across all metrics, these results were a notable improvement over last year. From a segment perspective, in 2025, Marine delivered $545,000,000 of revenue, a 4.5% annual growth, and more than doubled its adjusted EBITDA to $56,000,000 for the year. This represents a 10% adjusted EBITDA margin compared to about 5% in 2024. The improvement in adjusted EBITDA was driven by favorable revenue mix, excellent execution, favorable equipment utilization, and positive project closeouts. For reference, Marine's contribution adjusted EBITDA margin for the year was 15%. In 2025, Concrete revenues increased 12% annually to $307,000,000, and Concrete reported an $11,000,000 loss in adjusted EBITDA. The reported adjusted EBITDA loss is primarily attributable to the impact of corporate allocations in 2025 and favorable project closeout benefits in 2024 that did not reoccur this year. Concrete's contribution adjusted EBITDA margin for the year, excluding corporate, was 4.5%. To provide increased transparency on segment operating margins, we plan to update our reportable segments beginning in 2026. Specifically, we plan to break out corporate expenses separately as a non-operating segment and will no longer allocate those costs to Marine and Concrete for external reporting purposes. This change is intended to increase transparency of our operating segments' results. Moving on to the balance sheet. As many of you are well aware, late in the fourth quarter, we entered into a five-year $120,000,000 credit agreement with UMB Bank. This facility meaningfully improves our liquidity, reduces borrowing costs, extends maturity by two years, and positions the balance sheet to fund future investments. It includes a $60,000,000 revolving line of credit, a $20,000,000 equipment term loan facility, and a $40,000,000 M&A term loan. It also includes an additional $25,000,000 uncommitted accordion to fund future growth. The UMB facility refinanced and replaced our previous $88,000,000 credit agreement, which was scheduled to mature in May 2028. Borrowings under the UMB credit facility bear interest at a rate of SOFR plus 2.5% to 3%, a 40% reduction in our borrowing cost compared to the prior credit agreement. A big shout out to our treasury and legal teams for getting this across the line. In connection with this refinancing, we paid off our $23,000,000 term loan and ended the year with net debt of just about $6,000,000. I would like to point out that subsequent to year-end, in February, we increased our senior borrowings by $47,000,000 to fund the McCanis acquisition. I will wrap up with our guidance update for 2026. We are very pleased to provide our full year 2026 guidance as follows: revenue in the range of $900,000,000 to $950,000,000, a 9% increase from 2025 at the midpoint; adjusted EBITDA in the range of $54,000,000 to $58,000,000, a 24% increase from 2025 at the midpoint; adjusted EPS in the range of $0.36 to $0.42, a 56% increase from 2025 at the midpoint; and capital expenditures in the range of $25,000,000 to $35,000,000, consistent with last year. That is it for me. Back to you, Travis. Travis J. Boone: Thank you, Alison. We are very proud of what we accomplished in 2025, and we view this year as a bridge, not a destination. Over the past twelve months, our operations team executed projects safely while growing revenues and adjusted EBITDA. Meanwhile, our corporate team sold the East West Jones property, restructured our credit facility, purchased the derrick barge, and acquired J. E. McAmus. None of this progress would have been possible without the hard work, dedication, and commitment of our people, and I want to thank them for their outstanding efforts. With a strong operating platform, expanded capabilities, and favorable market tailwinds, we are excited about the opportunities ahead and believe Orion Group Holdings, Inc. is well positioned as we look to capture more work and continue to execute for our employees, clients, and shareholders in 2026 and beyond. We will now open for questions. Thank you. We will now begin the question and answer session. The first question will come from Tomo Sano with JPMorgan. Please go ahead. Tomo Sano: Hi, good morning everyone. You talked about some of the delay of the revenue recognitions for awarded projects and could you talk about the impact your reported sales and margin in Q4? And could you specify which segments or projects experienced that delay and quantify the revenue and margins impact in 2026, please? Thank you. Alison G. Vasquez: Sure, Tomo. I will start, and Travis, feel free to add in. From a Q4 perspective, the fourth quarter came in generally in line with what we expected. We did not see a lot of softness in the quarter, and it was generally in line with what we were targeting and the guidance that we had set out for the full year. I will say that things do typically, in construction, move around a bit in terms of timing and cadence. You probably saw some of that in terms of margin profiles for the individual segments. But from an overall perspective, things came in in line, including from a corporate perspective. There were a few opportunities that— Travis J. Boone: That split out in Q4 that we were pursuing, but that is more on the pipeline side of things. Tomo Sano: Yep. Thank you. So could I double click on your commentary about the margins? Alison, if you could talk about the 2026 outlook by segment in terms of the margin expansions from 2025 to 2026? Alison G. Vasquez: Sure. I would be happy to. We are continuing to expect that we will have modest margin expansion across the business, both from the favorable impacts of blending McCamis into the Marine business. As you probably well recall, McCamus operates at a meaningfully higher margin than the rest of Orion Group Holdings, Inc., so we are expecting to see some favorable blend associated with that acquisition and the incorporation of their results. And then from a Concrete perspective, we do expect that Concrete will deliver margins in the mid-single digit for the year. In 2025, Concrete delivered margins of right around 4.5%, and we do expect to nudge that up in 2026 just as a function of some favorable demand signals that we are seeing in terms of the work that we are bidding on, the work that we are winning and bringing into backlog, as well as just continued growth and scale, which benefits our Concrete business pretty meaningfully. Tomo Sano: Thank you. If I may squeeze one more on data centers, Travis, you talked about data centers. Could you quantify the impact in 2026, in terms of the revenue compositions as well as some competitive advantages in data center projects for Orion Group Holdings, Inc., please? Travis J. Boone: I am not sure if I am ready to point to the fence yet on where we are going to land with data centers. As Alison just mentioned, we are seeing a large amount of opportunities that are lining up well with our capabilities and relationships. We have started doing site civil work on some of these data centers, which has been very well received, and we are doing well with that work. I think that will expand and continue. And I think we are going to keep seeing just a large amount of data center work happening. Right now, it is about 40% of our Concrete business. I expect that to probably go up a little next year. Tomo Sano: Thank you. I appreciate it. Travis J. Boone: The next question will come from Aaron Michael Spychalla with Craig-Hallum. Please go ahead. Aaron Michael Spychalla: Yes, good morning, Travis and Alison. Thanks for taking the questions. Maybe first for me, just on the pipeline, can you talk a little bit more about that? It sounds like the expansion is pretty broad-based. Any thoughts on kind of timeline, conversion to orders? I know you have had a slide that kind of has laid out timing potential there. And then just maybe talk about the kind of market and margins you are seeing—quotes and kind of backlog-wise? And then, you know, outside of McCamish, on margins as you are going to bid projects, how is that looking? Travis J. Boone: Yeah. So the pipeline has expanded. Some of that has been because things have slid, right? So it is kind of building, but there is also some things sliding, which makes it look like it is getting even bigger. But we have quite a few near-term opportunities, as in 2026, that are $100,000,000-plus projects. More than a dozen very real opportunities that are over $100,000,000 in size, which gives us a lot of confidence even though our backlog is down. We are one project win away from the backlog being in good shape. So we are not worried. We are bidding projects in the near term here that we feel good about. With our Marine business, and our Concrete business pipeline is growing and looking really strong. As you may recall, our Concrete pipeline is typically fairly small because there is a lot of book-and-burn, and it is private sector opportunities which are not super visible long in advance. So we are excited to see the Concrete pipeline creeping up, as well as the Marine pipeline continuing to expand, and then we added in McCamis that gives us even more opportunities to pursue. On the McKayman side of things, nothing has changed as far as the margins, bid margins, and things like that. They are going to continue pursuing projects as they have and— Alison G. Vasquez: And then on the rest of the business— Travis J. Boone: The rest of the business looks good. We are not seeing any downturns. In fact, I would say more the opposite in several of our markets. Aaron Michael Spychalla: Good. And then, you know, maybe second, on the data center side of things, you kind of talked about an expansion—site and civil and earthwork. Any thoughts high level what that means for maybe average project size or how quickly these projects can continue to turn with that dynamic? Travis J. Boone: Probably not going to give too much information just for competitive reasons, but I think it depends on where the data center is and how much infrastructure and dirt work needs to be put in before the concrete and foundations happen. There can be fairly significant amounts of work that go into that, and it gives us something else to sell to our customers. And as many of them are shifting to bigger campuses, sometimes those get to be much larger. Even though it may be a really large data center, they kind of go a little piece at a time—one little piece and another little piece—and then you look back six months later and you have done a ton of work over a period of time. So these things turn from a $500,000 task order, and next thing you know, you have done $50,000,000 worth of work—a little at a time, but very quick. Alison G. Vasquez: Yeah, and I think the other important thing there is, because our team has such a high level of credibility in this really critical aspect on the critical path of these projects in terms of building the structure—the infrastructure to support all the really important internal things—we are being engaged earlier in terms of some of the constructability concerns and the things that we have seen over the now 46-and-counting data centers or campuses that we have worked on. Incorporating those lessons for our clients is a really valuable level of expertise that we bring to the table, which means we become a trusted partner in this aspect of the building and the construction. So it is a pretty exciting time. My hat is off to that team who built very strong relationships with a number of key players. Aaron Michael Spychalla: That sounds great. Thanks for taking the questions. I will turn it over. Alison G. Vasquez: Thanks, Aaron. Travis J. Boone: Next question will come from Gerry Sweeney with ROTH Capital. Please go ahead. Alison G. Vasquez: Good morning, Gerry. Travis J. Boone: Hi, Gerry. Gerry Sweeney: Just a couple of follow-up questions maybe, but looking at the Marine side, obviously, pipeline is growing, you said some of the projects pushed to the right per se. But are you hearing any—or do you have any anecdotal commentary on maybe when some of these projects may come to fruition? Obviously, they are quite large, complicated. We have had a government shutdown, and then we have, you know, escalating in the Middle East. But all that said and done, just curious as to maybe some of the anecdotal items that you are hearing on those opportunities. Travis J. Boone: We are bidding a nice project this week. There are things moving forward now. There is not a single theme for why they moved—different reasons in different cases—but they are just shifting to the right. It is not a never-ending shift. They are actually coming to roost at some point, like the one I just mentioned that was originally supposed to be last year and we are bidding it this week. We are bidding quite a few jobs in the next six months—pretty nice ones—along with the normal run-of-the-mill projects that we always go after. I do not know if I answered your question, but— Gerry Sweeney: Yeah. Was talking to you. Yeah. Sorry. Go ahead. Alison G. Vasquez: I would just add, Gerry, that as we look at the pipeline, it continues to be very robust. We continue to have good line of sight into $8,500,000,000 of opportunities that we expect to be awarded in 2026. That is pretty normal. We have seen some clients really engage in a more meaningful way, which to us signals that decisions are likely going to be made in the near term. The pipeline sets up to be probably about a 40/60 split in terms of awards in the first half versus the second half, which is pretty normal—there is usually a spike in the federal government’s third fiscal quarter. We also often talk about the number of opportunities where we have provided all information and are just awaiting award from the client, and that number continues to sit at right around $1,000,000,000. That is a little bit higher than normative, but it has been consistently at that $1,000,000,000 mark throughout 2025 and continues to be around $1,000,000,000 now. That might just be the new norm in terms of holding the pipeline a little longer. We are seeing some awards, some clients moving and being more active. Gerry Sweeney: Gotcha. And at some point, that building kind of breaks loose, which is positive, obviously. Right? So— Travis J. Boone: That is right. Gerry Sweeney: Okay. That is it for me. I appreciate it. Thanks. Alison G. Vasquez: Thanks, Gerry. Travis J. Boone: The next question will come from Alexander Rygiel with Texas Capital. Please go ahead. Alexander Rygiel: Travis, your historical win rate on bids is sort of in that mid-teens range. Is there any reason to believe that historical win rate will be any different going forward? Travis J. Boone: No. We saw that win rate tick up between '24 and '25. Even though our backlog was down, our win rate was up, which tells you that things were sliding. We have seen it head in the right direction by a percent or two. I do not expect it to change much. It might continue to go up a little, but I do not expect any large jump up or down. We like to be in that 15% to 20% win rate sort of range, and that is where we are. We feel pretty good about it. Alexander Rygiel: And then, as it relates to your adjusted EBITDA guidance of $54,000,000 to $58,000,000, can you bridge that delta from the $45,000,000 you just reported and help us to understand what is organic versus inorganic? And as it relates to the organic, how that is broken out by segment? Alison G. Vasquez: Sure. I will give some high-level commentary. We are always gearing the business toward what we view as good organic growth—first and foremost investing to position the company for organic growth. Organic growth in 2026 is good; stepping back, it is probably in the upper single- to low double-digit range from an organic perspective, just because some opportunities are moving a bit to the right, specifically in the Marine business. We do think that Concrete will grow very favorably in 2026. We have signals that that is happening, and that is real. For Marine, those opportunities take time to get through the pipeline and the client’s process to bring them to market and ultimately get awarded. Some of those we expected in '26 have moved a bit to the right. That said, we do expect our Marine business to continue to grow in 2026. Will it be at the dynamic growth rates we anticipate with many things coming to market in '26 and '27? You will probably see that over the midterm, but that is not built into our 2026 guidance today. From a McKamath perspective, we have good line of sight into what we expect they will deliver, which is right in line with what we set out in the call back in February. They come with a highly qualified, reputable, credible group of people—a phenomenal team and leadership organization. We are very excited about bringing them into the portfolio and about some of the projects they have won recently. They continue to perform well, and we will look forward to bringing them into more of our opportunities and projects to make our pursuit teams even stronger as we look ahead. Alexander Rygiel: Very helpful. And then the outlook for backlog near term—I get a sense it is probably flattish to maybe trending a little bit down in the first quarter, but you expect a strong rebound in the third and fourth quarters. Is that a fair conclusion? Alison G. Vasquez: From a backlog perspective, we are gearing the organization around a book-to-bill that is greater than one. Our objective is to always be booking more than we are burning. Quarter to quarter, it is hard to predict backlog—it moves around based on burn, operational cadence, and what gets awarded within the quarter. From a full-year perspective, we expect to deliver good bookings that will elevate backlog balances. I will also say from a Concrete perspective, and from a dredging perspective as well, those businesses have a very quick book-to-burn, so they may have phenomenal years, but you may not see a lot of that manifested in the backlog at quarter-ends or year-end because of the amount of book-and-burn projects. Are we targeting elevated backlog through the year? Yes, absolutely, and we will track that through book-to-bill and how the organization is delivering on that. Alexander Rygiel: Thank you. Alison G. Vasquez: Thank you. Operator: The next question will come from Liam Burke with B. Riley Securities. Please go ahead. Alison G. Vasquez: Good morning, Liam. Travis J. Boone: Good morning. Liam Burke: Travis, you talked about closing on the derrick in late 2025. It is a fairly significant capital commitment—how quickly do you anticipate that investment turning into some sort of measurable return? Travis J. Boone: We have got some work being done on it for the next, let us say, six to eight months. Once it is in the condition and ready to go, we will get it busy and get it working somewhere in our business. As far as payback, we think we got a pretty good price on it, so I do not think it is going to be a long time to get a return on the investment. Liam Burke: Great. Thank you. And on the M&A front, the McCamish was opportunistic. Obviously, you do not have a pipeline of opportunistic acquisitions, but what does the acquisition pipeline look like? Travis J. Boone: It is a pretty active market out there at the moment. Lots of different things happening. It seems like acquisitions have really gotten pretty strong across all sectors—lots of different acquisitions and activity happening. We saw Great Lakes just recently get acquired and go private, and just lots of things happening out there that will potentially give us opportunities to do more in the next year or so. Liam Burke: Thank you, Travis. Operator: This concludes our question and answer session. I would like to turn the conference back over to Travis Boone for any closing remarks. Travis J. Boone: Thank you all for joining us today. We look forward to talking to you again soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us today for the Mayville Engineering Company, Inc. fourth quarter and full year 2025 results conference call. My name is Sami, and I will be coordinating your call today. During the presentation, you can register a question by pressing star to remove yourself from the question queue. Your host, Stefan Neely with Valem Advisors, to begin. Please go ahead, Stefan. Stefan Neely: Thank you, operator. On behalf of our entire team, I would like to welcome you to our fourth quarter and full year 2025 results conference call. Leading the call today is Mayville Engineering Company, Inc.’s President and CEO, Jagadeesh Reddy, and Rachele Lehr, Chief Financial Officer. Today’s discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Operator: Further, this call will include the discussion of certain non-GAAP financial measures. Stefan Neely: Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release, which is available at mechinc.com. Following our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Jagadeesh. Jagadeesh Reddy: Thank you, Stefan, and good morning, everyone. The fourth quarter represented a transitional period for Mayville Engineering Company, Inc. While demand in our legacy end markets remained muted during what is typically a seasonally softer quarter, our team remained focused on positioning the business for successful execution and growth as we enter 2026. Over the past six months, we have experienced robust and sustained demand momentum within our data center and critical power end market. In response, we have proactively reallocated available capacity and resources to support successful project launches and meet the evolving needs of our OEM customers in this market. As a result of these actions, our fourth quarter margin performance was pressured. We incurred and retained cost that would typically be flexed with softer demand, reflecting deliberate investments to support program readiness and execution. Importantly, this margin pressure is primarily driven by early-stage project inefficiencies and project launch costs as we prepare for higher-volume programs rather than pricing or structural cost challenges. As these programs ramp and utilization improves, we expect margins to normalize in line with our long-term expectations. These margin dynamics are transitory in nature and, importantly, position Mayville Engineering Company, Inc. to deliver profitable growth in 2026 and beyond as we capture demand in the rapidly expanding data center and critical power market. In addition, we remain focused on executing our MBX operational excellence framework, driving disciplined process improvements across our plants, and advancing initiatives to optimize and rationalize our manufacturing footprint, which we expect will further enhance operating leverage as end market demand recovers. Now turning to a review of our key markets and the respective end market outlooks. Starting with commercial vehicle, we continue to see net sales to this end market declining approximately 19% versus the prior-year period. In their most recent report, ACT has revised its full-year 2026 outlook upwards, now projecting a 3.4% increase in Class 8 production in 2026. This improved outlook reflects greater clarity surrounding the 2027 EPA emission standards, resulting in anticipated pre-buy activity and improved macroeconomic conditions. In contrast, our construction and access market revenues increased approximately 15% year over year during the quarter. This is supported by the AccuFab acquisition and strong nonresidential activity. Organic net sales growth in this market was approximately 11% in the quarter. In the powersports market, net sales grew approximately 20% year over year, driven by the impact of incremental volumes from new business wins and stabilized customer production schedules, as dealer inventory levels are now in line with current demand. This was partially offset by a decrease in sales within the marine propulsion market. Net sales in our agriculture market were approximately flat year over year amid signs that demand is reaching a cyclical trough. Within our data center and critical power end market, our business saw growth of approximately 13% year over year, supported by legacy OEM demand growth and early project launches on AccuFab-related cross-selling opportunities. Overall, demand from OEM customers in the data center and critical power market remains strong. Our qualified opportunity pipeline now exceeds $125 million, and the value of projects scheduled to launch in 2026 is approximately $40 million to $50 million. Combined with organic growth from our legacy OEM customers, we expect data center and critical power to represent more than 20% of our revenues in 2026. Looking ahead, we expect this end market to remain a consistent growth opportunity for Mayville Engineering Company, Inc. Based on recent market studies, we estimate our serviceable addressable market to range from $115 million to $185 million per gigawatt of new data center capacity installed. Given the number of new data centers expected to come online in the U.S. in 2026, this represents a total market opportunity of approximately $3.2 billion. We expect this market to grow at a compound annual rate of approximately 16% from 2026 to 2030. Please note these estimations exclude server racking opportunities, which represent additional incremental upside. While we will continue to take a balanced approach to allocating capacity to this end market, the robust demand growth allows us to proactively manage our commitments. This approach ensures us to maximize footprint utilization, deliver consistent profitable growth through the cycle, and continue to invest in growth initiatives that unlock long-term value. Before turning the call over to Rachele, I want to highlight several areas of commercial momentum that give us confidence in our growth trajectory for 2026 and beyond. Across all of our end markets, customer engagement and bidding activity remains strong. During the fourth quarter, we secured approximately $15 million in new project awards with data center and critical power customers. Year to date, total awards across our legacy markets were more than $108 million, exceeding our annual target of $100 million. Looking ahead to 2026, we expect total bookings across our end markets to be approximately $140 million, supporting profitable growth as our legacy markets move toward a cyclical recovery exiting 2026. Within our legacy end markets, we have continued to expand our share with our commercial vehicle customers as they launch new products heading into the 2027 EPA regulation changes. These products support future growth and are scheduled to begin production in late 2026 and 2027. In addition to the future expansion in commercial vehicle revenues, we secured new agriculture business on new model introductions and additional service business for a military customer. Within the data center and critical power market, approximately $15 million of awards secured in the fourth quarter were primarily driven by demand from major AccuFab customers. These substantial scopes of work span power distribution units, static transfer switches, busway components, and data center cooling. Turning to capital allocation. We closed 2025 with strong free cash flow generation. While we expect free cash flow to be softer in the first quarter, we continue to anticipate full-year free cash flow conversion of approximately 50% to 60% of adjusted EBITDA. As we progress through the year, our primary use of free cash flow will remain focused on debt reduction. As we progress toward our long-term target of 2.5 times leverage, we expect to become increasingly opportunistic deploying capital towards M&A, with an emphasis on further diversifying our end market exposure and supporting consistent profitable growth. In the meantime, our priority remains disciplined capital deployment, ensuring that growth investments are targeted, return-driven, and fully aligned with maintaining balance sheet strength. With respect to guidance, to provide investors with greater visibility into our business trends, we are introducing quarterly financial guidance in addition to our full-year outlook. This is due to the fast-moving data center and critical power environment and developing improvements within our legacy end markets. Rachele will cover our guidance in more detail, but I would like to highlight a few key elements of our expectations for 2026. Inclusive of a full year of AccuFab and associated data center and critical power cross-selling synergies we expect to realize in 2026, we anticipate full-year net sales to increase relative to 2025, along with margin expansion and improved free cash flow. These expectations assume an improvement of our legacy end markets primarily during the second half of the year. In summary, Mayville Engineering Company, Inc. is entering an important transitional year, one that is shaping the next phase of our growth and value creation. While we are intentionally investing both capital and operating resources ahead of anticipated demand, we believe the foundation for sustainable growth and improved profitability is firmly in place. With disciplined execution and a clear strategic focus, we are well positioned to deliver long-term value for our shareholders and our customers. With that, I would like to turn the call over to Rachele. Thank you, Jag. Rachele Lehr: Good morning, everyone. Total sales for the fourth quarter increased 10.7% on a year-over-year basis to $134.3 million. Excluding the impact of the AccuFab acquisition, organic net sales declined by 5.3% compared to the prior-year period. Our manufacturing margin rate was 6.6% for the fourth quarter of 2025, compared to 8.9% for the prior-year period. The decrease in our manufacturing margin rate was due to $1.2 million of data center and critical power-related project launch costs and $1.7 million of early-stage project inefficiencies on a commercial vehicle project. This was partially offset by higher-margin net sales contribution from the AccuFab acquisition. Excluding these temporary launch phase dynamics, our manufacturing margin rate would have been approximately 9% during the quarter. Other selling, general, and administrative expenses were $9.7 million, or 7.2% of net sales, for the fourth quarter of 2025 as compared to $7.9 million, or 6.5% of net sales, for the same prior-year period. The increase in these expenses primarily reflects $200,000 in nonrecurring costs and $1.1 million in incremental SG&A expense, each associated with the AccuFab acquisition. Interest expense was $3.8 million for the fourth quarter of 2025, as compared to $2.0 million in the prior-year period. The increase was driven by higher borrowings resulting from the AccuFab acquisition, partially offset by lower SOFR base rates relative to the prior-year period. Adjusted EBITDA margin was 4.7% for the quarter, compared to 7.6% in the prior-year period. The decrease reflects lower legacy market volumes and $2.9 million of project launch costs and early-stage project inefficiencies, partially offset by the benefit of the AccuFab acquisition. Excluding these items, adjusted EBITDA margin would have been approximately 7%. Turning now to our cash flow and the balance sheet. Free cash flow during the fourth quarter of 2025 was $10.2 million, as compared to $35.6 million in the prior-year period. The year-over-year decline primarily reflects the receipt of $25.5 million in settlement proceeds in the fourth quarter of last year related to a former fitness customer dispute. Excluding this item, free cash flow was approximately flat year over year. During the fourth quarter, we used available free cash flow to repay approximately $10.0 million in debt, resulting in net debt at the end of the quarter of $205.3 million, up from $82.1 million at the end of 2024. Our increased debt resulted in a net leverage ratio of 3.7 times as of December 31. Now turning to a review of our 2026 financial guidance. As Jag previously mentioned, we are introducing quarterly guidance in addition to full-year guidance. For the first quarter of 2026, we currently expect net sales of between $137 million and $143 million and adjusted EBITDA of between $5 million and $7 million. Our first-quarter outlook reflects continued project launch costs and margin pressure ahead of the majority of data center and critical power project ramps, which begin in the second quarter. Additionally, free cash flow is expected to reflect normal seasonal working capital usage, incremental working capital investments to support the data center and critical power ramp-up, and planned capital expenditures of $3 million to $5 million. For the full year, we expect net sales of between $580 million and $620 million, adjusted EBITDA of between $50 million and $60 million, and free cash flow of between $25 million and $35 million. This outlook reflects a full year of AccuFab ownership, $40 million to $50 million of incremental cross-selling revenue, and a gradual improvement in the legacy end market demand, primarily in the second half of the year. Additionally, embedded within our 2026 adjusted EBITDA guidance is $2 million to $3 million of cost improvements driven by our NBX operational excellence and strategic value-based pricing initiatives, net of inflationary pressures. As it relates to free cash flow, we expect our free cash flow conversion for the full year to be between approximately 50% to 60% of adjusted EBITDA, coupled with full-year capital expenditures to be between $15 million and $20 million. Given this outlook and our priority of repaying our debt, we expect to achieve a net leverage ratio of three times or lower by the end of 2026. Again, 2026 will be a transitional year for us. We believe that our cost structure and working capital discipline will position us for profitable growth, strong free cash flow yield, and improved adjusted EBITDA margins as we enter a phase of cyclical recovery and growth across our legacy end markets, supported by elevated growth in our data center and critical power end market. With that, operator, that concludes our prepared remarks. We will now open for questions as we begin our question-and-answer session. Operator: Thank you very much. To remove yourself from the question queue, please follow the prompts. Our first question comes from Michael Shlisky from D.A. Davidson. Your line is open. Please go ahead. Linda (D.A. Davidson): Yeah. This is Linda. My first question, starting with the commercial vehicle market. In your remarks, you noted the revised ACT outlook, and from the data we got overnight, it shows that Class 8 truck orders for February were one of the top ten months of all time. Does this change your view on 2026, and do you think any of it pulls from 2027 orders if this is just an emission-related pre-buy? Jagadeesh Reddy: Yeah. Great question, Linda. And I was expecting that question this morning. You know, I did not see the ACT report until I got up this morning. Right? So, obviously, it is fresh off the press. I was not surprised by the increase in orders in February, but, obviously, we were surprised by the magnitude of increase of orders in February. We have seen signals from our OEMs in the last month or so inquiring us and other suppliers about capacity, utilization, and we have seen signals from them of potential build rate increases. What I can tell you is we have not seen any of those signals translate into demand yet. Having said that, we expect again, given this morning’s news, we expect some of this demand to accelerate the build rate increases from our CV customers, and we expect that to start showing up in mid to late Q2. Usually, for most suppliers, there is a six-week lead time, and hence, we have not seen that yet in our EDI feeds. But we do expect that. So with that in mind, you know, we came into this call expecting approximately a 230,000 build rate. We will have to wait and see if that estimate changes in the coming quarters. And that is one of the reasons why we came out with our quarterly guidance, which is new for us. These are fast-moving developments in our legacy end markets. We are seeing similarly green shoots in construction and small ag as well. So with all of that, we wanted to be more nimble, not only internally, but also externally in how we are communicating with our shareholders. Linda (D.A. Davidson): Great. Yeah. I appreciate the color. That is very helpful. Then, switching to ag, we keep hearing about ag getting better, whether that is from John Deere or other suppliers getting a little more bullish. Do you see any light at the end of the tunnel on that end market? Jagadeesh Reddy: As some of our customers have indicated, the large ag will still be down this year, double digits. That is our customer forecast, what they have publicly communicated. But we are seeing signs of improvement in small ag, lawn care, turf, and forestry equipment. So we do see some green shoots, as I mentioned, in the ag business. I also want to remind you that our ag business is close to 5% of our overall sales, as much as it used to be a much larger piece of our business. With our data center business and other end markets continuing to grow and ag continuing to stay down in the last 18 to 24 months, it is now a much smaller piece of our business. Linda (D.A. Davidson): Got it. And then, my last question will be on critical power. You mentioned some launch cost in critical power providing a margin headwind in 2026. Do you think that would be complete by 2027, and what kind of margin tailwind might that be next year? Rachele Lehr: Linda, this is Rachele. Just, you know, as we look ahead into 2026, we really see that being ahead of the program launches. And we really expect and anticipate most of that to start taking place, to be at full run rate at the end of the second quarter. So we really expect to be at full run rate for the second half of the year. So we expect to incur more of those costs having the margin pressure in the first half. We do anticipate a little bit trailing into the second half of the year, but it is really going to be a first-half impact. Linda (D.A. Davidson): Got it. Thank you so much. Thank you for your time this morning. Jagadeesh Reddy: Thank you, Linda. Operator: Our next question comes from Greg Palm from Craig-Hallum. Your line is open. Please go ahead. Greg Palm: Yeah. Thanks. Good morning, everybody. You know, you incurred more cost and recognized lower margins than expected back from the November call. So I guess, looking back, what surprised you relative to that outlook? And then maybe you can just help unpack the EBITDA guide specifically for Q1 and maybe more specifically, what that margin progression looks like in sort of the Q2 to Q4 time period. It sounded like there are going to be some costs that you incur in Q2, and those mostly trail off in the second half. So just wanted to be sure we understood that right. Jagadeesh Reddy: Yeah. Let me start first, Greg. The headline really for us is we have won more business in data centers than we anticipated coming out of our November call. We expect our Q1—we are not obviously talking about Q1 bookings here—but our Q1 bookings for data centers will be significantly higher than what we have seen in the second half of last year after the acquisition. So in preparation for those, we are in the middle of many of those launches already. The business we have won in Q1. So we had to bring on significant resources online, not only in December, also in Q1 as we sit here. And that is the primary reason why we are showing the margin profile that we are showing in Q1. Rachele Lehr: And I would add, you know, our legacy business, we always had product launches, but we are doing that over, you know, 12 to 18 months, a much longer time, and we are able to do that. This, you know, this business is 8 to 12 weeks. And so we have had to expedite that and really make investments. We have a product launch team specific to this, more than we have ever had before, because of the speed and the intensity of which our customers are asking for things. Again, as Jag mentioned, this really did exceed our expectations and what we are winning. We first acquired this business, you know, we have said, hey, it is going to be $1 to $2 million in cross-selling synergies in 2026, and here we now are at $40 to $50 million. So we have just had to invest more, and we are seeing that continue into Q1 because a lot of these will not be at their full run rate until the end of the year, but we want to nail it and want to make sure we hit it out of the park with these new customers in our locations. Jagadeesh Reddy: And we are retooling six of our legacy plants—Mayville Engineering Company, Inc. plants. That is a significant effort to put data center work, not only what we have won so far year to date and last year, but what we are anticipating in 2026. Right? So it is great news, obviously, for the rest of the year and long term, that we are able to quickly convert six of our facilities for cross-selling synergies. Greg Palm: Okay. That is great color. And you already mentioned you are expecting that end market to represent more than 20% of revenue. I am just curious, as we sit here today, what kind of visibility do you have into that, you know, call it a $125 million revenue number if you want to use that. And, you know, there is a sentence in the press release that talks about pipeline and multiple large opportunities. Are these multiple large opportunities within that $125 million number, or is that something separate? Jagadeesh Reddy: So I would say with very good confidence that we have good line of sight to that $120 million worth of data center business for the year. So that is number one. Number two, very little of significantly large opportunities are in that qualified pipeline number we put out. Greg Palm: Sorry. Say that one more time. Jagadeesh Reddy: So some of the significant and large opportunities that we are pursuing, those are either—it is, you know, one or zero, right? So we did not want to take into account those opportunities—we do not want to inflate our pipeline with those large opportunities. Right? So when we talk about the $125 million of qualified pipeline, most of that is visibility and greater than 50% confidence that we could win those opportunities. So we are excluding some significantly large opportunities in that qualified pipeline. Greg Palm: Okay. And just to be clear, like, is there—when you talk about expectations for the year, if you were to, you know, win more small business or win, you know, one or a few of these large— is that something that could translate into more revenue this year above and beyond that $120 million number, or should we think of that more like a 2027 event? Jagadeesh Reddy: Yeah. It is possible, Greg, and hence our effort at quarterly guidance here. This is a fast-moving end market, and we do know, though we laid out $40 to $50 million cross-selling synergies, our expectation is that if we continue to win at the existing win rates in this end market, right, there could be upside to that number. Greg Palm: Okay. Perfect. Alright. I will leave it there. Thanks. Jagadeesh Reddy: Thank you. Operator: Our next question comes from Ross Sparenblek from William Blair. Your line is open. Please go ahead. Sam Carlevon: Good morning. This is Sam Carlevon for Ross. Thanks for taking my question. Jagadeesh Reddy: Hey. Morning, Sam. Sam Carlevon: Maybe starting with Rachele, can you help us parse out some of the moving pieces within the EBITDA guidance? I mean, how should we build to just an $8 million year-over-year step up considering 2026 includes a full year of AccuFab and incremental $40 million to $50 million of margin-accretive cross selling. Rachele Lehr: Sure. I think there are a couple of things to take into account here. One is our legacy business. The volumes continue to remain muted as we budgeted today. Now, of course, we just talked a little bit about what we learned on CV overnight—that there is some upside there. But as we look through the year, our customers are saying, our guidance is saying, that we expect most of those to start to rebound sometime in the second half of the year. So we have that pressure continuing on that piece of our business. We have a high fixed cost—55% of our costs are fixed—and so when we have that lower utilization, we really have ongoing under-absorption associated with that. The other piece is preparing for that legacy rebound. We are carrying some talent that we continue to hold on to because it is coming. And then the third piece is those launch costs. We, like I said, really want to make sure we hit it out of the park. The speed is faster. We are ramping up talent. We are learning as we go with this, and it is exciting to see the growth that we have with that, but we really need to be focused on delivering that. So first half is really pressured by the absorption, the launch cost, and getting ready for the rebound. Sam Carlevon: Got it. Have you given kind of what those launch costs are expected to be for the full year? Or just any sort of range there would be helpful. Rachele Lehr: Not full year, but we expect the first quarter to be very similar to the fourth quarter of launch costs for data center and critical power—$1 million to $1.5 million. We expect that to taper down through each of the quarters of the year. Sam Carlevon: Okay. Got it. I guess switching gears then. I mean, the $40 million to $50 million of in-year revenue synergies sounds like that is back-half loaded. I mean, it seems like that implies a pretty healthy exit rate exiting 2026. So I do not know if you could kind of help us size that ramp and kind of what that means as we enter 2027 of the business you guys have already won? Rachele Lehr: Yeah. I think, you know, as we look at—and we are seeing—by 2026, data center and critical power could be 20% of our total business, so that is significant. The adjusted EBITDA margins on that business are between 20% to 22%. So when you take that into account, knowing that the majority of that $40 to $50 million is going to come in the second half of the year, we will be exiting with margins in excess of our historical. If our historical business continues to come up, that will only additionally be upside. Sam Carlevon: Okay. From a revenue perspective, though, if we say, call it, you know, $20 million in the third quarter, $20 million in the fourth quarter, something like that, that implies an exit rate of, like, call it $80 million. Is that the right way we should be thinking about it into 2027? Jagadeesh Reddy: Yeah. That is, I think, a pretty good assumption, Sam. Sam Carlevon: Okay. Got it. That is what I thought. That is helpful. I will leave it there. Thanks, guys. Operator: Thank you. Our next question comes from Andrew Kaplowitz from Citi. Your line is open. Please go ahead. Natalia Bak: Alright. Good morning. This is Natalia on behalf of Andrew Kaplowitz. Jagadeesh Reddy: Morning, Natalia. Natalia Bak: Maybe just first question on data centers. As data centers and critical power segment grows and represents more than 20% of revenue, should investors expect more customer concentration to increase as well? Or is the opportunity pipeline diversified across multiple customers within that end market? Jagadeesh Reddy: Yeah. Within that end market, it is reasonably diversified. You know, not only are we working with some of the blue-chip names in the critical power end market, we also are working with the next tier of OEMs within that end market. So I do not expect a significant concentration in that end market for us. Natalia Bak: Got it. That is helpful. And then just maybe switching over to your access end market and then the recovery as well. You are expecting a modest recovery driven by infrastructure spending and potential rate cuts. But are you already seeing early signs of improvement in customer order patterns or conversations, or is that recovery more of a second-half expectation at this point in time? Jagadeesh Reddy: In the construction portion of that end market, we are already seeing the build rates increasing. You have seen public comments from our customers that are bringing back capacity online, bringing back employees online. Right? So we are seeing that already hitting our demand and EDI rates. In access, there were some, you know, starts and stops, if you will, with particularly the rental houses increasing their demand in Q4, but then, you know, some softer commentary from our customers on the access side of the end market. So we will have to wait and see and watch how access develops. But, you know, in general, we are positive on the construction and access end market. Natalia Bak: Great. Thank you. Appreciate it. That is it on my end. Jagadeesh Reddy: Yep. Thank you. Operator: Our next question comes from Ted Jackson from Northland Securities. Your line is open. Please go ahead. Ted Jackson: Thanks. I came in with 10 questions to ask and checked every one of them off. So, anyway, here is a couple for you, Jag. With regards to the 20% of revenue for ’26 that could be coming from data center and power, will that—are you going to be turning down in your legacy business to be able to ramp and hit that, or is that just on top of what is going on within the footprint that you have? For a lot of your legacy businesses, you know, then going even a little further, it is like, if we do see a stronger turnaround in, say, commercial vehicles, which, you know, my personal opinion is that we will, you know, will that preclude you from being able to get any additional business? And then I have got a couple more. Jagadeesh Reddy: Yeah. At this stage, Ted, we believe we have enough capacity to be able to ramp up data center business while we see improved run rates within our legacy business. It is not a question for 2026, I believe. It is really for us to figure out a way to continue to expand our capacity as we go into 2027. Our teams have been working feverishly for the last couple of quarters using our MBX framework to increase throughput, increase productivity. We are bringing on additional shifts in some of our plants. We are hiring more employees in some of our locations. So we are planning accordingly. And at this point, we are not going to have to turn down any of our legacy customer business. But that is something that we will continue to watch. And it also presents us some choices as we go into 2027, not necessarily for capacity reasons, but perhaps for margin and pricing reasons. Right? So we will continue to evaluate those opportunities as we go into 2027. Ted Jackson: I think the adding shifts is interesting to me. I mean, and, obviously, employees too. You know, I recall in the past, some of your locations, you only were running at one shift. And, honestly, adding additional shifts was kind of difficult because of labor constraints. You know, where are you in terms of, you know, kind of current utilization? You know, where are you in terms of kind of adding production shifts, and what are some of the hurdles you are having to overcome to make that happen? Jagadeesh Reddy: Yeah. Without the two AccuFab facilities, right—if you exclude them for a second—I would say we are still around 55% on a 24/7 equipment capacity basis. Right? So as we ramp up some of these volumes in our legacy factories, we are looking at automation. We are looking at, you know, extending our shift schedules. Not all, but many of our plants coming out of COVID went to two 10-hour shifts for four days a week. Right? So that is 20 hours a day, four days. But what we are doing is standardizing our shift schedules across the company. Now we are going to three eight-hour shifts, five days a week. That is one way we can immediately increase our run capacity in these plants. We are looking at automation, as I mentioned. We are looking at weekend shifts. We are looking at third shifts in some of our plants. So, you know, it is a mix of different strategies depending on where we see capacity needed and where we see demand coming in. Ted Jackson: Okay. Going over to when you talk about, you know, having to put resources to ramp up and incurring margins—so we are kind of dancing around all this—so it is people, you know, more labor cost. Is there—what other things go into, you know, the resources needed to position yourself to capture this growth that is impacting margins beyond, you know, obviously, the order of additional— Jagadeesh Reddy: Right. You know, as we mentioned earlier, our traditional program launches would have taken 6 to 18 months in many cases. Now we are having to launch these new programs on a 6 to 12 week basis. I will give an example. We have one data center customer that in January came to us and then essentially quadrupled their demand for one of the product lines we used to make in Raleigh. So we had to shift that product line to Defiance, Ohio, one of our, you know, traditionally commercial truck plants, and we went in full force. You know, I was part of a 15-member Kaizen team. I was on the plant floor for a full week figuring out how do we, you know, quadruple our output in that plant for that customer. So, you know, we are rethinking how we assemble components. We are rethinking how we do product flow through the factories. We are rethinking logistics. Right? We are having to rethink everything from scratch compared to what we used to do in any of our previous operations. Right? So that needs project management resources. That needs engineering resources. That needs MBX resources. So all of this, we are trying to do at six different locations, as I just mentioned, as we ramp up data center work. Right? So that is the initial investment we are making. We are obviously having to put in some additional capital to improve productivity. We have most of the capital needed to produce these parts, but sometimes additional capital—new types of machines or automation—improves throughput and product. We are also thinking about how do we get more volume out of our factories as well for these customers. So those are all the things that we are doing. And all of that is investment we are making upfront. Ted Jackson: Okay. And then my last question, which is kind of a silly one, but just to make sure—I want to make sure I understand what the term revenue synergies mean. So when you say that, you know, you are going to have $40 to $50 million in the revenue synergies in 2026, can you just give me a quick definition of what that— Rachele Lehr: Yeah. Jagadeesh Reddy: Anything from a data center customer that is going to be made in a legacy Mayville Engineering Company, Inc. plant. That is how we define that. As we mentioned, you know, last year, the two AccuFab plants we acquired were at capacity when we acquired them. So we are, of course, trying to drive additional throughput through those two plants, and that is not considered in the cross-selling synergies. That is just productivity improvement at those two plants. But anything we are moving out, increasing volume, and, you know, new programs from data center customers that we are putting into Mayville Engineering Company, Inc. plants, you know, that is where we consider cross-selling synergies. Ted Jackson: Thought I had it right. Just wanted to make sure. That is it for me. Thanks a lot, Jag. Jagadeesh Reddy: Thank you, Ted. Operator: We currently have no further questions, so I would like to hand back to Jag for some closing remarks. Jagadeesh Reddy: Before we conclude, I want to again thank our employees for their continued strong focus and execution, and our shareholders for their ongoing support. While we recognize the near-term challenges in several of our legacy markets, we are confident in the progress we are making to position Mayville Engineering Company, Inc. for durable, higher-margin growth in the years ahead. We look forward to sharing our continued progress with you. Thank you for joining us today. Operator: This concludes today’s call. We thank everyone for joining. You may now disconnect your lines.
Michael Preuss: Hello, everybody, and welcome to our Financial News Conference for the Full Year 2025 and the Outlook for 2026. Many thanks for joining us today. To begin, Bill Anderson will share his perspective on our performance and the path ahead of us. Heike Prinz will provide an update on the progress of our Dynamic Shared Ownership operating model; and Wolfgang Nickl will provide an overview of our financials in 2025 and the group outlook for 2026. We will then hear from Rodrigo Santos, Stefan Oelrich, and Julio Triana on the performance of our divisions and the plans going forward to execute their respective strategies. We also have a chance to briefly hear from our new Board member, Judith Hartmann, who joined the company on March 1. Now before starting, I would like to briefly draw your attention to the cautionary language included in our safe harbor statement. And with that, over to you, Bill. William Anderson: Thanks, Michael. Thank all of you for joining us today, and we're really happy to go through our 2025 results and provide an outlook for 2026. But before doing that, I want to share a short update on company leadership. As we announced in November, Judith Hartmann has joined the company and the Board of Management as of March 1, and she'll take over as CFO in June. But between now and then, she'll be busy getting to know the company and its stakeholders. But we wanted to give you the chance to hear from her today. So before getting into our results, I'm going to turn it over to Judith, who's joining from one of our pharma facilities here in Germany. Judith Hartmann: Thanks, Bill. And yes, I have started my discovery tour of Bayer today here in Buckautal, Germany. It's an impressive site, and I have already had some great conversations here this morning with our Pharma R&D team. I'm eager to learn much more about all of the businesses, of course, in the next few weeks ahead of me. So yes, this is only my third day, but I'm very pleased to have joined Team Bayer. Health and Nutrition are personal passions for me, and I am very excited to contribute to a company that truly makes a difference in people's lives. The mission, Health for All, Hunger for None, really resonates with me, and I can already see many great things happening at Bayer. Our novel operating model, Dynamic Shared Ownership, our investment in AI, both of these are very important levers to accelerate our business. And most importantly, I have already been impressed by our passionate and talented people. I'm looking forward to continuing my onboarding over the next months as I prepare to take over as CFO from Wolfgang in June. I will have the opportunity to meet many people: customers, stakeholders, employees, and I'm sure many of you over time. Until then, I'll turn it back over to you, Bill. William Anderson: Great. Thanks, Judith. Well, let's start with 2025. In July, we upgraded our currency-adjusted sales and earnings guidance for the year. Today, we're announcing that we delivered that guidance, landing comfortably within the improved corridor. Sales came in at EUR 45.5 billion, and we posted core earnings per share of EUR 4.91. And our free cash flow came in at EUR 2.1 billion. Here's a picture of our businesses. Crop Science progressed in the first year of its profitability improvement program, a rejuvenated picture of our Pharmaceuticals business emerged with launch medicines establishing themselves as growth drivers and others advancing through our pipeline to the market. Our Consumer Health business suffered from market softness in the United States and China, but maintained the bottom line. And across the firm, we're seeing improvements to the way we operate. Launches are moving with great speed. Resources are moving more fluidly. Our organization is considerably flatter and leaner, less managerial and more mission oriented. We have roughly half as many layers and have reduced management by 2/3 compared with when we kicked off this work. The 88,000 people of Bayer are doing more faster with less. All-in-all, we recognized progress on our comprehensive turnaround plan, but the journey is far from over. There's much more to do in each of our priorities, in each of our businesses. Our focus is on the important work ahead. One of those key priorities is significantly containing litigation. Two weeks ago, Monsanto and plaintiffs lawyers in the U.S. announced a nationwide class settlement to resolve eligible, current and future cases in the glyphosate litigation. Today, I want to reiterate a few key points. First, the class settlement is moving through approvals. Just as we said 2 weeks ago, we're confident in the merits of the agreement. We await the judge's ruling and will be ready for any scenario. Second, Monsanto has filed its opening briefs with the U.S. Supreme Court, and the case has received strong support in the form of amicus briefs from the U.S. government, Attorneys General in 15 states the U.S. Chamber of Commerce and many others. We will continue preparing our case in anticipation of a ruling likely in the second half of June. We're particularly grateful for the backing we've gotten from farmer groups across the United States who know better than anyone how important glyphosate is for their work. In fact, the White House recently recognized how essential glyphosate is for U.S. Food Security with an executive order. We share that view, and we're fully prepared to comply. Overall, our multipronged strategy proceeds at pace. We know we have some important milestones ahead of us. We'll stay focused on taking the right steps for the company and remaining prepared for all outcomes. Beyond that, this issue has garnered a lot of attention lately. And in the coming months, we expect a rigorous debate about American agriculture and what's needed to create a food system that's robust, sustainable, healthy and regulated by sound science. We appreciate that people come to this issue with a range of opinions, and we welcome that conversation. Most importantly, we've got to be clear on the facts. Fact one, glyphosate safety is resoundingly confirmed by regulators, more than 50 countries, including the U.S., Canada, countries across Europe, all say so. These are thorough reviews, not designed at getting clicks or going viral, but carefully assessing risk and reaching scientific assessments. Fact two, Glyphosate is essential for agriculture and food systems. It keeps carbon in the soil and protects harvest from being wiped out by weeds. It keeps a trip to the grocery store affordable at a time when food prices are a topic of concern. American farmers are a bedrock of the nation's economy and a force for food security around the world. We want to keep it that way. Fact three, litigation in the U.S. is big business. Litigation costs amount to more than $600 billion a year. That's taking more than $4,000 out of the pockets of every American household every year. And it's growing, thanks to backing by private equity and foreign investors who enjoy tax-free returns. Last week, the Washington Post called on Congress to pass tort reform and specifically cited the glyphosate litigation as an example of how this system has gone wrong. The next time the narrative is framed as sticking it to the big corporation, people should question who is actually the big corporation here and who's ultimately bearing the cost. For years now, we've been on the record on this issue and many others surrounding the glyphosate litigation. We've made our case to politicians across political lines and the general public. We'll continue to be clear and transparent about our interests. We'll engage with people of different opinions, and we'll hope to find common ground. Most importantly, when it comes to questions this big, we will always start with what's true. Beyond litigation, we have a full agenda for 2026. We have ambitions to help many more patients with Nubeqa and Kerendia. 2026 will be the first full year of sales for both Beyonttra and Lynkuet, and we want to launch Asundexian as soon as possible. Our Crop Science business set the foundation in 2025, establishing its 5-year framework. Execution is underway and will continue in 2026 with the goal of improving the top and bottom line in 2026, all while preparing important launch plans scheduled for '27 and beyond. Consumer Health plans to advance its Road to Billion strategy, offsetting an uncertain market by making the right investment decisions in categories where we have the most to win. And in a year where we're bearing the brunt of the litigation-related impact, we're exercising vigilant discipline in how we manage our resources. Cash conversion is of the utmost importance. Deleveraging remains a big focus area and Wolfgang will tell you more about our financing plans for this year. And we're laser-focused on delivering the EUR 2 billion in organizational savings through our operating model. In terms of our outlook, we expect a solid performance in 2026, with product declines in Pharma and Crop Science due to loss of exclusivity and regulatory pressure in the EU, offset by continued strong performance of our launch products in our annual portfolio refresh. In addition, we want to ensure continued investment in our pipeline and launch products in 2026 to set ourselves up for growth in 2027 and beyond. Before accounting for FX changes, we see our core earnings per share landing roughly in line with last year. And as we shared 2 weeks ago, we're expecting a negative free cash flow this year due to the litigation-related payouts. So that outlook is emblematic of the company's current strategic position, strong signs of progress, but still working on a comprehensive turnaround. We've made major gains across the company, but that work is not yet complete. We focused on delivering what we've committed for 2026 and making the right long-term decisions to set Bayer up for sustained profitable growth. We have a clear picture of what needs to be done in every area. We're dialed in on the tasks at hand, and we're ready to deliver. Wolfgang will walk you through the numbers. But before that, Heike is going to tell you more about our progress in implementing our new operating model. So over to you, Heike. Heike Prinz: Thank you very much, Bill. And ladies and gentlemen, let me give you a brief overview of where we stand with the transition of Bayer to our new operating model, Dynamic Shared Ownership or DSO for short. Today, 2.5 years after its announcement, DSO is the operating model of the Bayer Group in all countries, in all divisions, in all enabling functions. We are now organized as an agile network of teams. And with redesigned HR processes, we are placing more and more decisions in the hands of our employees. The reduction in bureaucracy is also reflected in our costs, which we were able to reduce by a further EUR 700 million last year. By the end of this year, the savings achieved through DSO will total EUR 2 billion, as announced previously. But DSO has not only reduced cost. Bayer has become noticeably leaner, more flexible and more effective overall. An outstanding example of this are the recent product launches by our Pharmaceuticals division, some of which took place in record time. I myself worked in the pharma business for a long time, and I know what an enormous achievement this is and how important it is to get a new product to market and to patients quickly. With DSO, innovations are created more quickly, and they reach our customers in the shortest possible time, directly benefiting patients, farmers and consumers. And with that, I'm handing it over to you Wolfgang. Wolfgang Nickl: Thank you very much, Heike, and also a warm welcome from my side. Let's together, take a closer look at the group financials for the full year 2025. In the pivotal year, we fully achieved our raised financial guidance for all group KPIs. Group net sales grew by 1% year-over-year in currency and portfolio adjusted terms. All divisions delivered their adjusted guidance. Let me briefly highlight the main business drivers by division. For Crop Science, the anticipated regulatory headwinds from the dicamba label vacatur and the Movento expiration were offset by strong corn seeds and traits growth. That was driven by several factors. First, we had historically high corn acreage in North America; strong performance of our corn seeds and traits globally; and finally, a portion of incremental licensing revenue from the resolutions with Corteva in Q4. Let me pause here for a few additional comments on the Corteva resolutions. First, the resolutions represent licensing fees rightfully owed to us for the usage of our proprietary technology across multiple periods, including the years '25 and '26. Licensing fees are an important element of our business model and thus are accounted for as operating revenue. Second, based on content and timing of the resolutions about EUR 300 million, supported our corn performance in Q4 '25, and as you may have read in the annual report, about EUR 450 million will support our soy performance in Q1 '26, which is reflected in our outlook. We always had a high level of confidence that we would prevail, but these numbers were higher than what we had modeled before. Third, given the positive impact, we decided to advance certain strategic measures like product portfolio streamlining together with an impact on incentives. This is largely offsetting the positive effect on licensing income in '25. It is important to note that the underlying operational targets would have been achieved without these effects as well. Our Pharma business fully delivered on its raised guidance. Nubeqa and Kerendia continued their significant growth momentum and finished the year ahead of our raised expectations. With that, the launch assets performance more than offset the expected decline in Xarelto as well as headwinds in Eylea. Our Consumer Health division delivered a resilient performance in a challenging market environment with net sales stable year-over-year and in line with our revised guidance. Nutritionals were particularly affected by difficult market conditions in China and the U.S., while softer seasonality in cough, cold and allergy led to a decline in this category. As previously indicated, our group top line was impacted by material FX headwinds of around EUR 1.7 billion, largely driven by the depreciation of the U.S. dollar, the Brazilian real and hyperinflation currencies. Let's now move to the bottom line. Group EBITDA before special items came at EUR 9.7 billion compared to the prior year negative foreign exchange effects of around EUR 500 million weighed on profitability. We also saw higher incentive provisions and growth investments compared to the prior year, while top line growth and cost savings helped to compensate. An important year for our transformation, all our divisions and the enabling functions delivered on their profitability commitments, balancing necessary growth investments with disciplined resource allocation and cost savings. Core earnings per share came in at EUR 4.91. The decline versus the prior year was driven by the expected lower EBITDA before special items and includes FX headwinds of about EUR 0.30. Our core financial results came in better than expected. The core financial result improved markedly over the prior year due to lower interest expenses and positive changes in equity results. Reported earnings per share were at minus EUR 3.68. Main drivers for the delta next to the regular amortization of intangibles, other significant litigation-related provisions and our liabilities classified as special items. Litigation-related special items amounted to EUR 7.5 billion in total, including the increase that we announced 2 weeks ago. Let me also clarify that our litigation-related provisions and liabilities are based on a comprehensive assessment. The provision liabilities of EUR 11.8 billion contain all litigation-related costs we know today and can reliably forecast. Also covering past glyphosate verdicts either settled or pending in appeals. Our free cash flow came in at the upper end of our guidance range at EUR 2.1 billion. The anticipated year-over-year decrease is mainly driven by the expected higher incentive and litigation-related payouts. Net financial debt was reduced below EUR 30 billion by the end of '25. And that was due to the cash flow contribution and about EUR 1.4 billion in foreign exchange tailwinds driven by a weaker U.S. dollar. Let's now move to the outlook for 2026. Let me start by explaining the background for a methodology change that we will implement for our core earnings per share KPI as of this year. What we want to achieve is to provide enhanced transparency around our operational performance, reflecting necessary cost of doing business and moving core EPS closer to the reported EPS. Previously, our core EPS definition only included the core depreciation linked to usual depreciation of property, plant and equipment. All amortization of intangibles were excluded. As of this year, we will also factor in the amortization of certain intangible assets, in particular, software. The change in methodology leads to an approximately EUR 0.35 step-down in '25. Adjusting for the new methodology, we come from the EUR 4.91 that I just mentioned to EUR 4.57 for core EPS in 2025. For '26, we anticipate stable core earnings per share at constant currencies on a like-for-like basis. All businesses plan to further progress in their transformation, continue to execute the strategic agenda and set the basis for future growth. This includes continued savings as well as investments in innovation and launches. Overall, expected higher earnings contributions from Crop Science and Consumer Health will be offset by anticipated lower earnings in Pharma, in line with the divisional strategies. On the corporate level, our outlook assumes higher long-term incentive provisions due to the increased share price compared to the end of '25. This also results in higher reconciliation costs. We also expect higher interest expenses impacting our core financial result. This is driven by an anticipated increase in net financial debt due to the substantial litigation-related payout and the resulting negative free cash flow for 2026. Finally, on geopolitics. Let me start by addressing the recently started war in the Middle East. Our thoughts are with the people across the region. Our focus is on ensuring the safety of our people and the continuity of our business. At this point in time, we do not see a material impact on our business, and we will continue to closely monitor the situation. We are in close contact with our people on the ground and ensure continued supply of our essential products. Regarding tariffs and FX, we are prepared to deal with a new dimension of volatility across businesses and regions. In '25, we successfully managed a dynamic trade environment and limited the impact of additional tariffs. This was achieved through a combination of mitigating measures by our cross-functional teams as well as tariff exemptions based on the relevance of our products. Our new way of working provided extremely -- was provided to be extremely helpful, handling the situation, and we will continue to build on that strength going forward. For '26, our outlook includes our latest assessment of estimated direct and indirect geopolitical impacts. As mentioned previously, we expect foreign exchange rate fluctuations to remain a major swing factor based on year-on-year spot rates, we anticipate continued foreign exchange headwinds of about EUR 0.30 to our core earnings per share, as shown on the right side of the chart. Managing our FX exposure and geopolitical context has been a major priority for us in '25 and will continue to be a priority for us in '26. Overall, we will continue to monitor the situation very closely. This includes the future of the U.S. EU trade relations following the recent court ruling on our tariffs. Let me summarize with the outlook for the group KPIs for '26. We anticipate net sales of EUR 45 billion to EUR 47 billion at constant currencies, representing a gross range of 0% to 3% in currency and portfolio adjusted terms. For EBITDA before special items, we target between EUR 9.6 billion and EUR 10.1 billion in '26 at constant currencies, representing a minus 1% to plus 4% development versus the prior year. As mentioned, core earnings per share are expected to come in between EUR 4.30 and EUR 4.80 at constant currencies. Now free cash flow outlook of minus EUR 1.5 million to minus EUR 2.5 billion at constant currencies, we account for the expected significant litigation-related payout of around EUR 5 billion as we also announced 2 weeks ago. With the negative cash flow, we expect net financial debt to increase to between EUR 32 million and EUR 33 billion at constant currencies. As also announced 2 weeks ago, ultimate financing for the litigation resolutions is planned to rely on senior bonds and instruments receiving equity credit by the rating agencies and not on the AGM authorized capital increase. While finalizing these measures, please note that the current net financial debt outlook for now is conservatively reflecting straight debt financing. And with that, I'll hand it over to you, Rodrigo. Rodrigo Santos: Thank you, Wolfgang. In Crop Science, we have built a more agile organization through our DSO and strengthening our operational discipline through our 5-year framework. That discipline is already delivering tangible impacts. It shows up in three areas of our core business and the differentiated growth we see through the end of the decade. Number one, in the resilient performance we delivered in 2025. Number two, in the clear step forward, we expect in 2026. And number three, in the progress already made against our 5-year framework, laying the foundation for a stronger performance through the midterm. So before turning to 2026 specifically, let me anchor us in where we stand in the 5-year framework. Because this is the lens through which we manage the business and the road map that guides every decision we make. We are on track to deliver across the triangle, sales growth, margin and cash. We strengthened the operational foundation of the business by simplifying the portfolio and sharpening our footprint, we are firmly on course to deliver the more than EUR 1 billion margin improvement. Actions included divesting and outsourcing multiple activity ingredients exiting nearly 200 crop protection products and streamlining our global site footprint from crop protection to seed production. We are also exiting lower-return vegetable crops and the non-core seed treatment equipment business. As we advance our efforts, portfolio is streamlining and go-to-market models will largely complete by year-end. Innovation remains our engine for future growth. Protecting our proprietary traits and R&D capability is critical. Simply put it, the recent resolution with Corteva is licensing revenue for the use of our technology. It does not changes our growth outlook or license expectation. It does ensure fair compensation for our technologies today and well into the future. And it safeguards the value of our innovation engine, which advanced six projects and introduced 470 new hybrids and varieties last year. Our industry-leading pipeline position us for differentiated durable growth. Our first blockbuster Plenexos is now launched, and we will expand into Brazil this year. The icafolin submissions are complete, and the new gold Camelina is now in the market for biofuels. And the nine additional blockbusters are on track for upcoming introductions. That includes the Preceon Smart Corn introduced with biotech approach and also the Vyconic in '27 and '28. As followed closely by our fifth-generation herbicide-tolerant soybean trait, position us for double-digit share growth and put us firmly on our path to reclaim the #1 soybean trait position in North America. This is the strength of our pipeline. We have unprecedented number of market-shaping innovations on the horizon with a clear pathway for growth. So 2026 represent another step forward in delivering our 5-year framework. We expect Ag market fundamentals to remain challenging and project below average market growth. However, our resilient base and focused execution give us confidence. While we benefit from the license income, we will continue pushing hard on our 5-year framework measure. Overall, 2026 is another year of diligent execution of our strategic plan setting us for the future. Our core business growth is expected at 1% to 4% currency and portfolio adjusted. An important contributor for this growth is the recent approval of the Stryax dicamba formulation. This marks the first step in reestablishing the momentum of our North America soybean business, giving farmers the added flexibility they've been waiting for. And for 2026, we expect Stryax herbicide growth as well as pricing gains in soy and cotton. Still, we do expect -- we do not expect full recovery yet preparing for the Vyconic introduction in 2027. For corn, we expect low single-digit growth globally based on anticipated price and market share increases despite the acreage reduction in the U.S. In core Crop Protection, we anticipate softer growth on higher volumes driven by new products, offset continued pricing pressure and the EU regulatory impact, as previously expected. For glyphosate, tariffs recently have been reduced on China imports in the U.S. and the generic PRC pricing has been declining below the historical median. With that, we currently expect glyphosate sales to decrease by 2% to 6% comparing to the prior year. We will continue to monitor the situation and adjust pricing as needed to the separately managed commodity business. As we look at calendarization, the noted soy licensing revenue will benefit the first quarter. However, lower tariffs and generic price declines are adversely affecting glyphosate sales. In addition, we expect a soft start to the crop protection season on top of the continued regulatory effects in Europe. Our growth drivers, such as the Stryax sales will only emerge later in the season. On the bottom line, within our margin profile, we expect EBITDA margin before special items of 20% to 22% at constant currency inclusive of the dilutive glyphosate margins. This reflects continued cost discipline as well as pricing and mix benefits from portfolio streamlining in line with our 5-year framework. For example, in soy, we are focused on pricing to value and improved utilization rates over top line growth. We will monitor currency closely as sales seasonally in the soft currency markets like Brazil can create volatility in both top and bottom line results. Taken together, these factors underpin a realistic execution-focused 2026 outlook and underscore the momentum we are building for the years ahead. Our sharpener portfolio, leaner footprint and increasingly resilient earnings model gives us a strong confidence in delivering our midterm targets and navigating x cycles with a greater consistency. With that, over to you, Stefan. Stefan Oelrich: Thank you, Rodrigo. In the Pharmaceuticals division, we continue to make really great progress on our strategic agenda. We have now entered the last year of what we are calling our resilience phase. We're well on track in renewing our top line and our strategy of balancing expected declines for our mature products with growth from new products, which is well working out. I will shortly provide more details on our expectations for 2026. However, I want to also highlight that we're well set for our next wave of growth into the next decade. This is driven by significant sustained growth momentum of Nubeqa and Kerendia, a very successful launch of Beyonttra, the first launch of Lynkuet in the U.S. as well as very positive data presented for Asundexian only a few weeks ago. We've also demonstrated great successes in our efforts to grow our pipeline value and nourishing our foundation for future growth. Driven by our new innovation model, we have progressed 16 clinical programs across the development phases and achieved approval for five new key indications or products in 2025. I already mentioned Asundexian, but I do want to reiterate the genuine excitement we witnessed among attending physicians at ISC in New Orleans just a few weeks ago. Not many were expecting such groundbreaking results. With this potential new treatment option in secondary stroke prevention, we may have an opportunity to truly rewrite the future for stroke survivors and their families. In addition, we're continuing to leverage our new operating model for increased performance. And we have consequently been able to sustain our margin in the mid-20s range. All of this despite facing continued loss of exclusivity and pricing pressures, while we continue to invest in our launches and also in our pipeline. Moving into 2026, we expect an unbroken growth momentum for Nubeqa and Kerendia, amounting to an expected growth of approximately 50% at constant currencies. This will be driven by continued market penetration and indication expansions such as the upcoming EU approval for Kerendia in heart failure, following the recent positive CHMP opinion. This growth momentum will be further supported by the continued launch dynamics of Beyonttra and also Lynkuet. While we were able to defend Xarelto well in 2025 overall, we experienced the expected increased generic pressure towards the year-end. We, therefore, also expect a slight acceleration of relative declines in 2026 in comparison to last year, being in a range of minus 35% to minus 40%. Given the accelerated pricing pressures we have seen for Eylea with the entry of 2 milligrams biosimilars since Q3 2025, which we may have slightly underestimated, we will focus our activities to build on the strong clinical profile and unparalleled label of Eylea 8 milligrams. We plan to significantly expand Eylea 8 milligrams contribution to the Eylea franchise to approximately 70% and sustain our market-leading position in volume shares. Despite these efforts, we will likely see declines for Eylea franchise in the range of approximately 20% to 25% at constant currencies in 2026, with the pricing pressures somewhat leveling out thereafter. Since 2 milligrams biosimilars only entered the market fairly recently, we will continue to closely observe and evaluate the evolving situation and will provide updates as we gain more clarity as per our usual reporting practice. In line with the stringent shift of resources to focus our activities on our current and future growth drivers as well as our continued pricing pressures and declines in our mature product portfolio, we expect a modest contraction of our base business in 2026. In sum, we're expecting growth of 0% to plus 3% at constant currencies for this last year of our resilience phase before returning to mid-single-digit growth as of 2027. And we're hovering over a prior year during which the pricing pressures increased over the quarters and Nubeqa and Kerendia will continue to grow as this year progresses. We expect the top line for the second half of 2026 to come in stronger than in the first half. Looking at our 2026 margin, we would expect that the impact of a changed product mix and increased growth investments throughout the year will only be partly balanced by cost savings from efficiency measures. We, therefore, expect a 2026 EBITDA margin before special items of 23% to 25% at constant currencies as we keep working to expand our margin as of '28 towards 30% by 2030. And with that, over to you, Julio. Julio Triana: Thank you, Stefan. As we review our performance and set our priorities, I want to begin with the progress we're making on our Road to Billion strategy. Last year's market environment was challenging for two reasons. First, market dynamics in the U.S. and China; and second, the continuation of seasonal softness in cough, cold and allergy. Despite these obstacles, we have stayed committed to our strategic approach focusing on areas where we can create the most value and actively respond to evolving market conditions. By focusing our efforts on the highest potential categories, we continue to advance our goal of reaching billions of consumers and creating sustainable value for our business. Across markets, consumers are more deliberate in their spending. They compare, they seek more, and they have more ways to shop. E-commerce continues to scale quickly, while traditional retail consolidates. Retailers and pharmacies, particularly in the U.S. and China have reduced inventory levels to manage working capital more tightly. Despite this backdrop, the fundamentals of our business remain attractive. A growing middle class, rising self-care, adoption and constrained health care systems continue to support durable demand for our categories. In the near term, we expect continued volatility in China and the United States with performance likely to contract. Over the long term, we expect both markets to return to a sustainable healthy growth pattern. While allergy, cough and cold have been soft for 2 years, the fundamentals underlying our categories remain very solid. As one of the top 3 global players in fast-moving consumer health, we're well positioned to capture this growth. We hold leadership positions in categories such as dermatology, digestive health and cardio. Our balanced portfolio across seven treatment and prevention categories pairs global mega brands with very strong local heroes. This mix gives us resilience in the short term and significant room for expansion over the long term. A Road to Billion strategy is designed to convert this foundation into sustainable value creation. At its core, the strategy aims to increase household penetration by reaching billions of consumers through both online and offline channels as well as through our strong presence in pharmacy and health care professional settings. In the medium term, this support consistent sell-out growth and more predictable sell-in. Looking ahead to 2026, we expect continued macro geopolitical volatility. Given our geographic footprint and the segments where we compete, we expect our relevant market to grow by about 2% to 3%. This is about 100 basis points slower than the total Consumer Health market. Category dynamics, geographic mix and elevated volatility underpin our net sales growth outlook of 0% to 4% in currency and portfolio adjusted terms. Building on our 2025 base, we aim for continued value recovery. In the United States and China, our two biggest markets will play a crucial role in our overall performance, slowing growth and market volatility there could heavily influence our results. Consumer confidence remains soft. If consumer spending picks up and seasonal categories see higher incidents, we might achieve the higher end of our growth forecast. If not, growth could be toward the lower end. Given the volatility and its impact on our top line, our EBITDA margin outlook before special items for 2026 is 22% to 24% on a constant currency basis. Savings from our new operating model and active cost management are expected to offset annual cost increases. We continue to reinvest portions of these efficiencies to strengthen brand equity and gain market share. We will continue to accelerate investment in e-commerce and AI across brand building and activation, customer engagement and product supply. Prioritizing self-care and empowering people to take control of their health has never been more important. Through our Road to Billion strategy, focused on building trusted brands we're uniquely positioned to meet needs of consumers, creating lasting impact and long-term value. And with that, over to you, Michael, for the Q&A. Michael Preuss: Thank you very much, Julio, and thank you to all the Board members for the presentations. And let's now start the Q&A session. [Operator Instructions] So we have the first question coming from Annette Becker from Borsen-Zeitung followed by Antje Honing from Rheinische Post. So first question, Annette, over to you. Annette Becker: I hope you can hear me. Michael Preuss: Yes, we can hear you. Annette Becker: Okay. I have two questions. First, I'd like to know why your Q4 results are in operating version, so extremely weak? The EBITDA reduced to 16%. And then the second one, what does the negative free cash flow for this year mean for the dividend you're paying out next year because your shareholders have now 3 years of minimum dividend. And I think that's not so good for time lasting. William Anderson: Yes. Let me comment on the second one first, which is that the dividend decision will be taken at a later date when we have results of the year. But -- so we'll be making a recommendation regarding that in due time, but we don't have any comment on that right now. I'll turn it over to Wolfgang for a little more perspective on the Q4 results. You have to remember that because a large part of our business is in agriculture and agriculture is seasonal, that the EBITDA margins go up and down accordingly. But maybe Wolfgang, you could provide a little more color. Wolfgang Nickl: I think you're absolutely right. I mean, as a matter of fact, we also don't look at quarterly results too much. We were really focused on the annual results. And as we said, we fully achieved everything on every KPI. And there was nothing extraordinary in Q4 worth mentioning. William Anderson: Yes. I think we have to say we increased our results -- sorry, we increased our expectations in August of 2025. And we fully delivered on those increased expectations. So I think we feel quite good about our Q4 results. Just some historical perspective, if you go back a year to what the expectations in terms of profit for Bayer were 1 year ago, we over-delivered that by about 9%. So I don't think we would characterize it at all as weak, but rather strong. Michael Preuss: Okay. So the next question comes from Antje Honing, Rheinische Post, followed then by Jonas Jansen from Frankfurt Allgemeine Zeitung. Antje, you are next. Antje Honing: I have two questions. One to Heike Prinz. How many jobs have been cut by DSO so far? And when will the cuts be completed? And how many jobs will then we have in totally? And to Bill Anderson, Bayer will sometimes have to repay the debts incurred in settling the wave of lawsuits. Will this lead to a cost-cutting program efficiency program and further job cuts? Heike Prinz: Yes. Thank you, Antje, for your questions. As I shared with you earlier today, DSO, our new operating model has been implemented in all parts of our organization. And I think right now, really the focus is on leveraging this operating model to drive performance in our businesses. Now you will see in our publication that we are at 88,000 employees across the world. But we've also shared with you previously that DSO is not about having a head count target or a job cut target. So really, the focus, as you've heard from also the divisional heads is on driving performance in our businesses. William Anderson: Yes. And Antje, our big focus is our mission. You see it here behind us, but this is what we and the 88,000 people of Bayer come to work for every day. And we're really committed to do that in the best way possible. And we are generating a lot of cash. Every year, we're generating cash from our operations, and we plan to continue to do that by getting more productive. But whether that productivity is going to be mostly driven by revenue growth, or whether there's going to be additional cost savings, we've announced cost savings that we plan to achieve by 2029 in Crop Science. We already announced that. But I think we've got a team that is really focused on driving this mission forward. And we've got exciting opportunities in Pharma, in Crop Science, in Consumer Health. And I think we will have no problem repaying our debt. I think our main question is how high can we go, and we're determined to go really far, really fast. And we've got an operating model in place that allows us to do that. And if you look across this company, whether it's in Consumer Health, where we're launching products now in well under a year that used to be 2 to 3 years of a life cycle to launch. We've got that under 1 year. If you look in Pharma at the progress we've made in the pipeline, but not only the progress in the pipeline, but how we're doing on launching those products, on bringing those to patients around the world. We've accelerated that dramatically by putting the power in the hands of our people. And in Crop Science, the work is really amazing what's happening throughout our world in product supply, in R&D just amazing stuff in terms of our people, having the power to make gains. So you hear about AI and productivity gains, and you hear about job losses. What we're looking to do with AI is put it right into the hands of every Bayer person to extend their impact to make them more effective every day for the mission. So I think we see an opportunity to dramatically increase productivity. But we want to do that a lot through growth. Michael Preuss: Right. The next question comes from Jonas Jansen, Frankfurter Allgemeine Zeitung, followed then by Sonja Wind from Bloomberg. Jonas, please go ahead. Jonas Jansen: Hello. Good morning, and thank you for taking the time. In the outlook, you have a China tariff effect on glyphosate sales expectation. Can you maybe explain this a little bit further because I thought there's kind of a Buy American movement right now in the U.S.? Or is that still a price topic. And then regarding to the White House, glyphosate letter, could you maybe explain what that could mean looking in the future with the plans you have there for the phosphate? And do you think that the latest efforts you had surrounding glyphosate and regulation and litigation, that will have an effect on the Supreme Court or is that not directly related at all? Thank you. William Anderson: Yes. Thanks, Jonas. I'm just going to try to answer these both really quickly. So in terms of the tariff effect on glyphosate, imports into the U.S. So last year, the rates of tariffs were generally 25% to 35% even, I think, for brief periods a bit higher. As a result of the IEEPA ruling from the Supreme Court recently, that rate has dropped to 3%. So it basically has a corresponding drop in the price of generic glyphosate in the U.S. And so that results in price or volume losses for us, and we just have to deal with it. So we're dealing with that. I would say that tariff rate remains kind of uncertain for the future, but at the moment, it's about 3%. So we have to deal with that by offsetting it with gains elsewhere, and we plan to do that. In terms of the letter, the White House letter on glyphosate production, yes, this has nothing to do with the Supreme Court and it actually has nothing to do with the settlement either. This is basically the U.S. government recognizing the vital importance of glyphosate to the American farming system. Frankly, the vital -- glyphosate is vital to farming systems outside of the U.S. as well, but the administration is taking a position and not wanting to be dependent on foreign sources, for something that's essential for food security and national security. So we've received the letter. We intend to comply with it, and there's not much else to say. So thanks for the questions. Michael Preuss: The next question comes from Sonja Wind, Bloomberg, followed then by Jens Tonnesmann, Die Zeit. Sonja, over to you. Sonja Wind: Bill, you said that you're ready for any scenario regarding the judge's decision for the settlement proposal. What is your plan in case it gets denied? And do you have a rough time line of when you expect the decision? And then also coming back to a broader question, which you said in February that you will look at the company's structure in the future. Will that be in 2026? Do you expect after the U.S. Supreme Court's decision? Or is that even further in the future? William Anderson: Yes. Thanks, Sonja. So we have plans for every scenario. I don't think we're going to speculate on a denial scenario, but I would say the time line is days. So you won't have to wait long for an answer there. In terms of the company structure question, basically, what it comes down to, and you've heard that from our division heads and from Heike and Wolfgang. I mean, we just -- we have so much going on. We have five big issues we're tackling. We've made remarkable progress in 2025 and 2024, we got more to do. So we're not going to be distracted by talking about structure right now. But that said, we are -- we remain very much committed to tackling that question in due time, but I couldn't give you a particular timing. So, thanks for the question, Sonja. Michael Preuss: Next question comes from Jens Tonnesmann, Die Zeit, followed then by Bert Frondhoff from Handelsblatt. Jens, you are next. Jens Tonnesmann: Yes, you can hear me. Well, I've got two questions that may sound like beginners questions to you. Bill, you were emphasizing how much support you feel in the U.S. regarding glyphosate. And the glyphosate has been proven safe by regulators of more than 50 countries, including the U.S., of course. So, can you please once more explain why then did you even agree to the recent settlement with the plaintiffs that are putting quite a strain on Bayer financially? And doesn't that contradict your commitment to focusing on the facts and your criticism of the litigation business? And second, would it be possible for Bayer to withdraw from the settlement partly or fully if the Supreme Court rules in Bayer's favor in June. William Anderson: Well, Jens, I think those are very reasonable questions. And I wouldn't categorize them as beginner's questions. But I think we can all recognize that the litigation situation in the U.S. is very complex. This is not a true phenomenon. I remember as a boy sitting at the dinner table here in a conversation about the tort system and some of the strange results that it could produce. So this is not a new thing. But the fundamental issue that's before the Supreme Court is whether the scientific endeavors of hundreds of scientists can be basically overturned by a jury of non-experts based on a very small set of facts as opposed to an exhaustive decades long set of facts. That's kind of what's at play. Nevertheless, the system is quite challenging for companies, and we believe that this settlement offer -- this settlement agreement is the right approach at the right time, because the company needs to move on. This has been a huge drag on Bayer for almost a decade, and that needs to stop because we have a mission that's more important than a court flight. And so we got to get on with it. But yes, the Supreme Court case and the settlement are distinct. They accomplish different things. The Supreme Court case is asking of the fundamental question about whether the EPA has the authority to govern pesticide labels and questions of pesticide safety or whether that gets played out in hundreds or thousands of courtrooms. So that's really important, not just for glyphosate or for our past verdicts, but it's also very important for the future of new and innovative tools like new crop protection products that we want to launch that are important for farmers as they continue to struggle to basically put affordable food on the table. So that's very important for that. The settlement is something that's important for Bayer in terms of moving on. So thanks for your questions, Jens. Michael Preuss: Okay. Next line is Bert Frondhoff from Handelsblatt, followed by Elisabeth Dostert from Suddeutsche Zeitung. Bert, over to you. Bert Frondhoff: I hope you can hear me. No, you can't hear me? Michael Preuss: Yes, we can. You can just go ahead. Bert Frondhoff: Okay. Good. Yes, Bill, can you give us another assessment on how Bayer views the conflict in the Middle East. I guess you source many intermediate products from Asia and the pharmaceutical business, the business via hubs in the Middle East. Are you concerned about problems in the supply chain? William Anderson: Yes. Thanks, Bert. I mean, first off, as Wolfgang mentioned, and I think we all share this. Our first concern is for the safety of our employees in the Middle East region and for all the innocents there. And we hope and pray a rapid cessation and a lasting peace. And there needs to be a solution for a lasting peace there. The short answer though, regarding your question, we're not particularly concerned about our supply chain. We're not heavily dependent on Middle Eastern hubs for our supply chain. So we don't anticipate any interruptions in supply. Michael Preuss: Okay. And next question then comes from Elisabeth Dostert, Suddeutsche Zeitung, followed by Isabella Bufacchi from Il Sole. Elisabeth, over to you. Elisabeth Dostert: Bill, what was your trip with Friedrich Merz to China and which role does China play for Bayer? Is it more for your Pharmaceuticals division or do you sell Crop Science products like glyphosate in China? William Anderson: Yes. Thanks, Elizabeth. Yes, it was a very eye-opening trip. Very interesting to see continued remarkable progress in China in building out infrastructure in the strength of various innovative industries. And I think, yes, it was very useful dialogue. And we have about 7,000 people in China working in Pharmaceuticals, Crop Science and Consumer Health. Our biggest division in China is Pharmaceuticals. And we have production there. Well, we have production for all three divisions in China, but it's an important market. It's an important innovative hub. And we have very good relations with our Chinese partners. And this is, again, we have a mission of Health for All, Hunger for None. That takes us pretty much to every corner of the globe. We see, yes, the need to feed the world in a way that is environmentally sustainable as something that's everybody's business. It's sort of every citizen of the world has a stake in that, likewise with medicines and every day, human health products that we have from our Consumer Health division. So we've got -- I think we've been in China for about 150 years. And we are very pleased with our, again, our great colleagues in China and the importance of continuing to drive innovation and access to these important, yes, tools for producing food and medicines. Michael Preuss: Okay. From China to Italy, we have next in line, Isabella Bufacchi from Il Sole, then followed by Andrew Noel from Chemical ESG. Isabella you're next. Isabella Bufacchi: Good morning. Thank you for the opportunity. I have two questions. One is on your net financial debt. It went below EUR 30 billion in 2025, and it was down a lot, 8.5%, but it's going up again in 2026. Now I was looking at your ratings. You have three ratings from S&P's, Moody's and Fitch, with a negative outlook. And the level that you are a downgrade would be quite painful because you would get to the last rate before speculative grade. So I've seen that you want to avoid that. I mean, you're looking for an upgrade. But I also saw that you were a solid A rating before the Monsanto. So I was wondering whether do you think that a good solution, final on litigation would have an impact on your ratings with the possibility of going back to A? And my second question is on Europe. As Europe as in a way it's own momentum, there are flows of capital coming back to Europe. Here in Europe, the growth is weak. But do you see any potential? Are you looking at Europe to increase your investments here? Wolfgang Nickl: Yes. Thank you very much for your questions, Isabella. I'll take the first one on the net financial that -- first of all, thanks for recognizing we came below EUR 30 billion. That was significantly better than the Street expectation. It was really driven by free cash flow performance, and we had a bit of a translation effect there as well. I think you have seen that we will be up slightly because we have a negative free cash flow expected for this current year, and that's largely driven by the EUR 5 billion expected payouts for settlements and defense costs and so on. So we could be higher up. But I also said in the script that will depend on the final takeout financing. This is all simulated based on straight debt. And like we said before, we will likely use instruments that receive at least partial equity rating by the rating agencies. That brings me to the rating agencies. You should expect that we have a very, very solid dialogue with the rating agencies on an ongoing basis. That's very valuable for us. And we keep them abreast of all the developments in particular as it relates to the financing as well. And of course, like every other stakeholder, they look at the developments on the litigation front as well. And as Bill said, hopefully, over the next couple of weeks and months, we see things going the right way there. And lastly, yes, the company has always been focused on A category kind of rating, so meaning leverage of something around 2.5 or less. We like that rating from an accessibility viewpoint from a flexibility viewpoint. And that's our midterm target. And probably the last thing is '26 will be the brunt of litigation payouts. We also said that, that EUR 5 billion will reduce to EUR 1 billion per year for the subsequent 5 years, and then it will be going down significantly. And if you pair that with the growth outlook that my colleagues have specified in particular for '27, you should see the company making significant progress in that regard, and that will hopefully also be realized and recognized by the rating agencies. Bill, I think you do the Europe piece. William Anderson: Yes. Yes, thanks for the question. I think Isabella, I think it's a mixed picture, the question of investment in Europe, and it's simple. We need basically more energy. We need lower energy prices in Europe and less regulation. And I think the experiment that's been run over the last decade the idea that sort of Europe could lead out in regulation and that, that would provide a competitive advantage, I think that's a failed experiment. And I think that's becoming more and more obvious every day. So I think those are some of the things that we would be able to invest more if we had better access on energy, less regulation, less bureaucracy. That being said, we're making major investments in Europe. So for example, in Monheim, very close to Leverkusen, we're building a new state-of-the-art chemical research facility that is going to be a base for crop protection, research and development for decades. We have cell and gene therapy production that's rapidly either being built or expanding in both Berlin and in San Sebastian in Spain. In Italy, I was in Italy, I can't remember, maybe 1.5 years ago, and I got to see some production we have there in the Milano vicinity that's sending really innovative healthcare products to the world. We also -- it's one of the few countries where we launched our short stature corn system, which is going to revolutionize corn production around the world and Italian farmers are some of the lead innovators there in adoption. So I think there's amazing potential for future innovation in Europe, but there's more work that needs to be done. Michael Preuss: Right. So next question comes from Andrew Noel from Chemical ESG then followed by Yonglong He from Xinhua. Andrew, you're next. Andrew Noel: I've got two, please. I understand now it's not the time for a decision on a split. But is the work that you're doing on Crop Science portfolio in line with getting the business ready for an IPO and making it more attractive to investors? I ask because BASF and Syngenta have been doing M&A in biologicals and that makes it more attractive to the sort of investor crowd. And the second question would be probably one for Rodrigo. Is there any interest in the new molecule opportunities at FMC, the partnerships they're talking about and perhaps the same for Corteva split, I guess? Thank you. William Anderson: Okay. Maybe I'll make a comment on the first one and then hand it over to Rodrigo. I think our basis for proceeding with all of our work at Bayer with respect to our divisions, our businesses, we need to be the best home for every business, and that means we have to be the -- yes, the most innovative, the leanest, the fastest. And so, I think all the measures that Rodrigo and his colleagues are taking in Crop Science, would be a benefit to Bayer Crop Science as part of Bayer or as a stand-alone entity. I don't think there's any kind of tension there. But that's the mentality we have to have with each of our businesses is we got to be the leanest, fastest, most innovative, simply put. Rodrigo, any comments on... Rodrigo Santos: Sure. Thank you, Andrew. And again, we are -- this is part of our 5-year framework. And I think the discipline that we are on the execution of that 5-year framework is very important. That includes, Andrew, that we have a very robust pipeline of crop protection, right? We talk about Plenexos, the first one that we launched. We have icafolin coming, Conventro, Stryax, and many other products that we have in our portfolio. We are always open for collaborations and with different companies on biologics. We have an open collaboration work that we do. No specifics to the two companies that you mentioned, but -- we have a strong portfolio coming in the next years. And I'm very excited about the work that we are doing on R&D on crop protection using AI to really move faster on the invention of new molecules. So I feel that we are -- we're going to be focused on launching these new technologies to the farmers in the next years, and this is really exciting and keeping the discipline on the execution that we lay out last year. Michael Preuss: Next question comes from Yonglong He from Xinhua, then followed by Anja Ettel, Die Welt. Yonglong, you're next. Yonglong He: I have two questions for Mr. Bill Anderson following the previous questions on your latest trip to China with German Chancellor. Well, the first one is, do you have any special impressions from this visit like an impressive moment or observation then stood out to you this time? And how have you observed the living and working conditions of people there in China? And the second question is, well, this year, China started its first year of the 15th year plan underscoring openness and innovation, which is also the innovation, which is also Bayer's core strategy. So would Bayer see this more opportunity and alignment or pressure competing with other international companies, there? William Anderson: Sure. Yes, I mean there were a lot of really impressive things to see. It was great to see, for example, the partnership between Mercedes and the local companies on autonomous driving. And so the Chancellor got to actually make a tour in the car that was basically driving itself. You just put in the destination and it goes. So that's obviously pretty cool to see. We were at Unitree. So we got to see the robot demonstrations, the humanoid robots which is -- yes, that's kind of cool to experience them up close and personal. I think the -- with respect to living and working conditions, it was a short trip. But I know that our 7,000 people at Bayer are -- yes, they're very excited about the innovation that they're doing. They've implemented dynamic shared ownership also in China, which is sort of unprecedented levels of empowerment for the individuals. It's not perfect yet. It's not perfect anywhere in the world, but I know they're excited to continue to work on that. And yes, we're -- I think we have five innovation hubs now in China. And so we're excited about the opportunities to continue to innovate together with many partnerships in China. I think we have over 100 collaborations with universities in China on various projects. But what they all have in common is they're all about Health for All, Hunger for None, which is why we exist at Bayer. We have 88,000 people in the world. We have 7,000 in China. We're all working on one mission. Thanks again for the question, Yunlong. Michael Preuss: So next, we have a question from Anja Ettel, Die Welt, and then we have a final question afterwards from Akash Babu from Scrip. Anja, over to you. Anja Ettel: Just a quick follow-up to Isabela Bufacchi's question. You spoke of the goal of less regulation in Europe as a failed experiment. And just to clarify, if you were to decide what would then be your top one priority in terms of less regulation in Europe. So what should be improved first here in your view? And a personal question, because Mr. Anderson, you have now been in office for about 3 years. Time is running fast. If you were to take stock of your tenure so far, how would you assess your performance? Where are you satisfied? And where maybe have you fallen short of your own expectation? William Anderson: Yes. Thanks, Anja. Well, I'm going to give you an answer that maybe is a little different than some that you'll hear on this question of less regulation in Europe and how do you fight this bureaucracy. And I think, by the way -- at Bayer, I think we're well, we're an interesting case study in how you fight bureaucracy, because -- let me give you an example. When we started our work almost 3 years ago, we had a rule book for Bayer that was -- I think it was 1,362 pages or something -- some number like that. And we could have said, "okay, we need to cut that back," right? And we probably would have spent the last 3 years taking that 1,300-page rule book and making it 1,100 pages, that would have made zero impact. You cannot fight bureaucracy with bureaucratic methods. Like, "Hey, let's form a bunch of committees, and let's see if we can write shorter rules or let's see if we can take the 26 rules about, I don't know, office furniture arrangement and make it 20 rules." Okay? That never works because by the time you would cut back 20% of the rules, the system would have generated another 30%. So I have to say, and I give this advice when I'm asked to policymakers, politicians, you've got to create kind of some sort of safe harbors for innovation. Because the amount of rules that exist -- and by the way, I'm not blaming -- some people blame Brussels and maybe Brussels blames Berlin and Berlin blames the state. Hey, there's too much everywhere. There needs to be some innovation zones created where whether large companies or new entities can come in and get going on things. I think AI is a fascinated example because everyone is racing to regulate it. We don't even know what it is yet. We're trying to write rules for things that haven't been done yet is the biggest folly. So I think there is a real rewiring that needs to be done. And I think there's there's a big wake-up call right now on that. So again, we could talk about that a lot, but I think this is something we have to get real about. We're never going to fight bureaucracy with bureaucracy. You got to make a clean sweep. What do we do with our 1,362-page rule book? We killed it, and we replaced it with a 14-page code of conduct that everybody needs to follow. All right? And so that is how you deal with bureaucracy. You have to basically clear it out and start over from scratch. And I think there's some real thinking that needs to be done on that. In terms of assessing 3 years, first off, I don't think of it as about me because when I arrived at Bayer, I sat down with some of these folks right here as well as a whole bunch of our other leaders and we basically said, "Hey, what do we want to do? What do we want to achieve together?" And we said, we identified four and then basically five things. We said we need to rejuvenate the Pharma pipeline. We need to really build up the productivity and profitability in Crop Science. We've got to get debt down. We've got to deal with the litigation situation. And we've got to tear out bureaucracy. And I think we've made tremendous progress on all five of those things. So I think we all feel really good about that. But when I talk to Bayer people, whether they're senior leaders or frontline workers, I always ask them, so how do you feel about the progress we've made and people say, yes, good, more than we thought we could do. Almost everyone says, "Wow, we've changed more than any of us thought we could do." But then I always ask, so how much more work do we have to do? And you might think people would say, "Oh, I'm tired. Can we just take a break?" But people tell me consistently we have more to do than we've done so far. And I actually find that exciting because I think we have a lot more gains to make, and I know my colleagues feel very similarly. We're going to -- we've made tremendous changes at Bayer in the last 2.5 years. We got a lot more to come, and we're excited about what those mean for our mission, for our customers and for our shareholders. So thanks for the question, Anja. Michael Preuss: So, and we have a last question coming from Akash Babu from Scrip. Aakash Babu: Perfect. I have two actually really quick ones. So in the past, you mentioned that you would be willing to walk away from the glyphosate business if things don't really improve or get handled. Especially, since you mentioned that it has been a drag on the business. So if everything doesn't go well in the next few days and weeks, is that something that still remains on the table for you? And secondly, I know you mentioned the 88,000 employee count right now. But I just wanted to understand if there was a to-date figure in terms of job cuts specifically as part of DSO, because I think you mentioned around 12,000 job cuts as part of the program back in August. William Anderson: Yes. So Akash, we -- what we said about glyphosate is that we've been dealing with litigation over claims that are historical claims or from historical use of glyphosate. And -- but we're still providing it because of its essential nature and because basically, the verdict of, from farmers and regulators is that this is a really important option. And we said, hey, but we -- there needs to be some sort of protection or some sort of change in the legal status. So we certainly see the settlement and SCOTUS are important topics. The recent executive order from the White House is also important on that. So we have to take that all into account. I think that it's important for these tools to be available for farmers and certainly, our actions will reflect that. I think what have we said -- I think we're saying, is it 14? There've been about 14,000 job reductions since we began implementing the new system. Some of those have to do with the new system explicitly. Others are things like facilities that we closed or things that we exited that aren't specifically related to DSO, but just have to do with the changing economics of different product lines. So thanks for your questions, Akash. Michael Preuss: Okay. So thank you very much for your questions and for your interest. Thank you very much also for your answers. This concludes our financial news conference for today, and we all wish you a great day. Thank you very much.
Operator: Good morning, everyone. Welcome to DRI Healthcare Trust 2025 Fourth Quarter and Full Year Earnings Call. Listeners are reminded that certain statements made in this earnings call presentation, including responses to questions, may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for this quarter, the Risk Factors section of Annual Information Form and DRI Healthcare's other filings with Canadian securities regulators. DRI does not undertake to update any forward-looking statements. Such statements speak only as of the date made. Today's presentation also references non-GAAP measures. The definitions of these measures and reconciliations to measures recognized under IFRS are included in our earnings press release as well as in our MD&A for this quarter, both of which are available on our website and on SEDAR+. Unless otherwise specified, all dollar amounts discussed today are in U.S. dollars. I want to remind everyone that this conference call is being recorded today, Wednesday, March 4, 2026. DRI's quarterly results press release and the slides of today's call will be available on the Investor page of the company's website at drihealthcare.com. I would now like to introduce Mr. Ali Hedayat, CEO of DRI Healthcare. Please go ahead, Mr. Hedayat. Ali Hedayat: Thank you, operator, and good morning, everyone, and thank you for taking the time to join us today. Joining me here on the call are Navin Jacob, our Chief Investment Officer; and Zaheed Mawani, our Chief Financial Officer. On the call today, I will provide a recap of our 2025 highlights, followed by financial performance for the full year. Navin will then discuss our portfolio assets and share insights into our market outlook. Zaheed will cover off our key financial highlights for the fourth quarter, and I will close out the prepared remarks with our 2026 financial outlook and share some thoughts on our longer-term growth framework before moving on to Q&A. Looking back on 2025, we worked through a year of exceptional change for the company while executing at a high level across the organization. Our investment team continued to deliver on innovative and well-structured transactions, leading us to exceed our 5-year deployment goal of $1.25 billion with the upfront and committed capital deployments in our Viridian and Ekterly deals. Beyond the capital deployed, these deals demonstrate DRI's leading capacity to structure win-win solutions that advance the needs of our counterparties and provide our unitholders with great returns. On the operational side, we continue to execute at a similarly high level. The internalization of our manager was a large and complex step for the organization, but a critical one to align both our governance and incentives with unitholders and to achieve a meaningful uplift to our economic returns. This year has already demonstrated significant gains from that process, and we feel better about the pace and magnitude of benefits than we did when we first presented the transaction. We optimized our cost structure, leading to our highest ever margins on a normalized basis and made improvements across processes in every functional area. One achievement I'm particularly proud of is the establishment of our proprietary risk assessment framework introduced this year. This data-driven framework helps us to evaluate risks across our royalty assets, the broader royalty market, our balance sheet and the overall backdrop for our business. It guides our decisions on where to invest, which deals to pursue, how to price them and how to manage sizing in our portfolio. Lastly, we continue to lead the sector on the integration of AI into our workflows with 2 dedicated team members and internal compute now working to make our execution better in speed and in quality. I would also like to take a moment to discuss the investments we are making internally to strengthen our bench and fuel our growth agenda. In early January, we welcomed Wesley Nurss as our new SVP, Head of Research. Wes brings a deep investment background in the biotech space and will lead our commercial and pre-commercial diligence efforts as part of Navin's investment team. On the balance sheet side, we also took steps to increase unitholder value through a series of meaningful transactions. We repurchased and canceled roughly 1.4 million units, reducing our unit count by nearly 3%. This comes in addition to our regular dividend of $0.10 per quarter, which we are increasing to $0.11 per quarter starting in the first quarter of 2026. Between these 2, we have returned in excess of $36 million to unitholders over the year. We reduced the number of preferred shares outstanding in the second quarter by redeeming and canceling $10 million of face value of our Series C preferred securities for $9.5 million, along with outstanding and accrued interest. Subsequent to the end of the fiscal year, the trust entered into an agreement with a private placement investor to partially redeem and cancel an additional $9.9 million face value of preferred securities for $9.8 million plus accrued interest. As you have seen in Monday's press release, we have also reached an agreement with 2 of our preferred holders to swap the vast majority of the remaining preferred share balance into a convert at attractive terms that further reduces both our coupon payments and extends our maturities. We expect that the small residual preferred share balance will be paid down at or before its call date in 2029 with cash on hand. Turning to our credit lines. We have further amended them in the fourth quarter to allow greater flexibility and to unlock the remaining gap between our effective capacity and the headline size of the overall facility. Lastly, we are pleased to announce that we have priced a private placement debt transaction with large institutional investors that terms out a portion of our bank facility to 5- and 7-year maturities with attractive costs and greater flexibility for the trust. We expect the private placement to have broadly similar covenants as the bank facility, but the terming of our financing allows us to invest more flexibly and provides us with more diversified sources of funding. Coming out of 2025, we continue to be well positioned to capitalize on the opportunities ahead of us. Turning to our full year financial performance. We delivered record performance across all our financial metrics. Total income of $198.6 million grew 6% over last year and together with disciplined expense management and internalization synergies led to an adjusted EBITDA margin of 84%. Normalized for nonrecurring costs, that adjusted EBITDA margin was 88%, which is the highest annual margin in our history as a public company. These outcomes are underpinned by our resilient portfolio with several assets delivering double-digit cash receipt growth, including our Orserdu, Xenpozyme and Xolair franchises. Notably, as of the fourth quarter, we have now fully returned our investment on Orserdu I. Partially offsetting these strong comps, we had softer performance from Omidria, Oracea and Zytiga. Regarding Omidria, we have been closely monitoring the structural challenges affecting the asset performance throughout the year, and we believe it was prudent for us at this point to take an impairment in the fourth quarter of $9.7 million. While this is always disappointing, it is important that we adjust the performance expectations going into 2026, given the sequential softness throughout 2025. Navin will provide more color on this shortly. But as a reminder, our policy is to never write up assets. So our balance sheet adjustments will only reflect negative revisions while our outperformance is only captured at the level of receipts and EBITDA. We made big strides this year operationally, financially and in our investment strategy. I will come back shortly to talk more about how that feeds through to our 2026 outlook and our longer-term growth agenda. But for now, I will turn the call over to Navin Jacob, our Chief Investment Officer. Navin Jacob: Thank you, Ali. Touching first on our portfolio performance. Slide 8 shows the individual royalty receipts for the fourth quarter and full year 2025 compared to the same periods in the previous year and the previous quarter. For the full year, our portfolio generated total cash receipts of more than $196 million, an increase of $6.5 million or 3.4% growth versus 2024. The increase was driven by several factors, including: one, strong Orserdu sales and removal of certain deductions previously incurred on the Orserdu II transaction; two, growth from the additional Xenpozyme II royalty stream; three, growth of Xolair following its launch for the food allergy indication; and four, additional receipts earned from the Casgevy and Ekterly assets, which both earned their first receipts in 2025. These increases were partially offset by the following items: one, the timing of Empaveli payments; two, weaker-than-expected Omidria royalty receipts; three, a nonrecurring milestone of $5 million from Vonjo II received in 2024 that makes for a tough year-over-year comparison; four, increased competition and generic entry impacting the sales of Oracea and Zytiga; and finally, five, Rydapt, which is nearing the end of its royalty term and has an expected step down in its royalty rate. Turning to specific individual product performance. Let me start with Omidria, which was, as we have indicated before, has been performing below our expectations for several quarters now. As we have previously communicated, Omidria has been the subject of continued impact from the Merit-based Incentive Payment System, or MIPS. Consequently, there has been a resetting of the demand by physicians as they calibrate the demand such that they are not penalized by the MIPS program. The MIPS program is the basis for physicians receiving reimbursement from cataract surgeries. As a result, through the first 3 quarters of 2025, we experienced cash receipt declines from Omidria. While we have seen some stabilization, what we're not seeing is a significant amount of growth in the HOPD or hospital setting. Our original forecast driven by payer and physician feedback was that new Medicare reimbursement in 2025 would generate growth in the HOPD setting. But thus far, we're not seeing material growth. Rayner is actively taking steps to improve the performance by continuing to leverage the Omidria sales force to maximize the number of surgeons and market access coverage within each account. Importantly, Rayner is looking to negotiate payer contracts to ensure inclusion of separate reimbursement associated with the HOPD Medicare reimbursement. While these steps are encouraging, we are taking a conservative stance with our updated forecast, which now predicts flat sales or no growth for Omidria over the next few years. This has led to a $9.7 million impairment, which was booked in Q4 2025. Vertex reported Q4 2025 sales of $54 million for Casgevy. Recall, we are paid in 2 ways for Casgevy. Firstly, DRI is entitled to an annual license fee for which we will record $5 million in Q1 2026. Secondly, we may be eligible in the future for annual sales-based performance fees if annual sales are over $1 billion. Casgevy uptake to date is roughly 1 year faster than we anticipated. And as such, DRI may be eligible for one more sales-based payment than we had built into our acquisition forecast. Looking now at Ekterly, we began earning royalties in the third quarter of 2025 and recorded our first cash receipt of $0.8 million in Q4 2025. Since its approval, Ekterly has shown strong performance with KalVista's U.S. business receiving 1,318 patient start forms as of December 31, 2025. KalVista reported Q4 2025’s Ekterly sales of $35 million, which results in DRI receiving cash royalties of $1.8 million in Q1 2026. Q4 '25 sales imply an annual run rate of over $140 million, which is above our acquisition forecast for 2026. As of February 2026, KalVista has received regulatory approval for Ekterly in several key markets outside the U.S., including the United Kingdom, European Union, Australia, Singapore and Japan. Orserdu continues to outperform our expectations with royalty receipts reaching $19 million in Q4 2025, a 38% year-over-year increase versus Q4 2024. Q4 '25 sales were also strong, and we anticipate receiving approximately $22 million in royalty receipts in Q1 '26. Furthermore, Q4 '25 sales were so strong, it triggered a milestone payment to DRI of $5 million, which will be received in Q1 '26. So in total, for Q1 '26, we anticipate receiving approximately $27 million of cash receipts for Orserdu consisting of $22 million of royalties and $5 million from the milestone payment. Despite the continued outperformance, we maintain our view that 2025 is a peak year for Orserdu due to competition from other oral SERDs as well as other mechanisms such as novel PI3K inhibitors. With that said, we note that the outperformance has led to the Orserdu I transaction breaking even on an earned basis in Q4 '25, which is near record speed for DRI. The oral SERD market has been receiving meaningful attention over the past few months, driven by data generated by Roche and AstraZeneca. There is increasingly a belief among industry experts and analysts that this market could be significantly larger than initial expectations. Roche recently noted that its oral SERD giredestrant could be its largest drug ever, which implies giredestrant peak sales of over $8 billion. This is driven by giredestrant's data in the adjuvant setting of HER2-negative/HR-positive breast cancer and by its data in combination with everolimus in all-comer second-line HER2-negative/HR-positive breast cancer. As a reminder, Menarini is running studies of Orserdu in similar settings and combinations as Roche. ELEGANT is a Phase III study of Orserdu versus standard endocrine therapy in patients with ER-positive/HER2-negative early breast cancer with high risk of recurrence. ADELA is a Phase III trial of Orserdu in combination with everolimus in advanced breast cancer patients with ER-positive/HER2-negative ESR1 mutation. These studies, if positive, could represent substantial upside to our expectations. Turning to Spinraza. In the fourth quarter of 2025, the cash receipts were essentially flat year-over-year as Spinraza revenues were significantly impacted by the timing of shipments outside the U.S., while increased competition from Roche's Evrysdi continued to impact Spinraza's market share. Spinraza's performance is in line with our expectation. Moving on to Vonjo. Q4 '25 cash receipts were 11% lower versus the same period last year. Sobi recently commented development work continues with the confirmatory Phase III study PACIFICA, which, if successful, is necessary for regulatory filing outside the U.S. Clinical trials to investigate the potential for Vonjo in new indications are underway. These new indications were not included in our original acquisition forecast. Sobi reported Q4 '25 sales of $35 million, which should translate to royalty receipts of $3.7 million in Q1 '26. Recall, during Q3 '25, we had lowered our expectations on Vonjo and the latest quarter's estimates are in line with our reforecast of the asset. Finally, on Xempozyme, we recorded $2.5 million of royalty receipts for Q4 '25, which is a marked increase versus the prior year, driven largely by ex-U.S. launches that have been faster than our expectations. Sanofi reported worldwide Xempozyme sales of $71 million for Q4 2025 and over $250 million of sales for full year 2025, which is ahead of our expectations. Before I close, I'd like to touch on thoughts regarding the market and our positioning for 2026. Citing just the fourth quarter of 2025, there have been approximately 8 royalty deals for a total of $1.5 billion in announced value and at least 70 equity deals for a total of $13 billion raised by biopharma companies. 2025 was a banner year for royalty deals with a total value surpassing $8 billion. In closing, we expect the market to continue to grow, driven by favorable industry tailwinds and amplified by continued market awareness for royalties. We remain well positioned to capitalize on the $3 billion pipeline. Notably, we are experiencing significant volume of inbound calls, but we remain, as always, selective for the right opportunities. I will now turn the call over to Zaheed Mawani to review our fourth quarter financial performance. Zaheed Mawani: Thank you, Navin. Turning to the fourth quarter results. We are pleased with our overall performance during the quarter. Our total income was $61.7 million for the quarter. On a reported basis, this was flat versus the fourth quarter last year. However, notably in the Q4 of 2024, our royalty income included a onetime $18.2 million back payment related to our Orserdu asset. Of that $18.2 million, $2.5 million was related to the fourth quarter of 2024, but the balance of $15.7 million was associated to prior quarters. Normalized for this onetime $15.7 million item from the fourth quarter of 2024, our total income in the quarter increased 35% year-over-year. As Navin mentioned, royalty income in our fourth quarter also included a $5 million milestone related to Orserdu, which will be received in Q1. Turning to expenses. Our total expenses were $54 million, approximately $0.5 million lower year-over-year. This was primarily driven by internalization synergies, including the elimination of performance fees as well as lower compensation, being partially offset by higher unit-based compensation as a result of mark-to-market adjustments and higher other expenses. We're pleased with our progress on the internalization savings, which continue to pace ahead of our expectations. All in, our adjusted EBITDA for the quarter was $46.2 million, which was a 25% increase over the fourth quarter last year. On a rate basis, our adjusted EBITDA margin was 91% versus 83% in the fourth quarter of 2024. Key drivers for this positive outcome, as mentioned, was our strong top line performance, coupled with prudent expense management and a 14% increase in cash receipts. The increase in cash receipts was partly attributable to the onetime $15.7 million of cash receipts received in the first quarter of 2025 for the prior period catch-up of Orserdu as referenced earlier. In addition, as mentioned earlier by Navin, we also posted increases on Xolair, Xempozyme and Ekterly. We generated adjusted cash earnings per unit of $0.77, and we were pleased to announce yesterday an increase in our quarterly distribution to $0.11 per unit payable on April 20, 2026, to unitholders of record on March 31, 2026. Turning to Slide 12. We continue to generate strong cash flow from our assets. Over the last 12 months ending December 31, 2025, we recorded royalty income of $188.9 million plus the change in the fair value of financial royalty assets and the unrealized and realized gains on marketable securities and other interest income for a total income of $198.6 million. After adjusting for receivables, the unrealized and realized gains on marketable securities, the net change in the financial royalty asset and other noncash items, we achieved normalized total cash receipts of $196.4 million. After taking our operating expenses, management fees and performance fees, which totaled $31.4 million net of performance fees payable into account, adjusted EBITDA was $165 million with a trailing 12-month adjusted EBITDA margin of 84%. We also generated adjusted cash earnings per unit of $2.26. Moving to Slide 13. As of December 31, we had $42.4 million of cash and cash equivalents. We also had $59.7 million of royalties receivables and $239 million of credit availability from our bank facilities. We continue to be well capitalized and well positioned to fulfill any forthcoming milestone commitments as well as continue to invest in new assets. During the year ended December 31, 2025, the Trust acquired and canceled 1.4 million units at an average price of $9.82, totaling $14.2 million. As of December 31, 2025, in aggregate, we have acquired and canceled 4.6 million units at an average price per unit of $7.08, totaling $32.7 million under all current and previous NCIB plans. From December 31, 2025, to February 26, 2026, we acquired an additional 75,938 units under the May 2025 NCIB plan at an average price of $11.31 totaling $859,000 under the AUPP. As part of our overall capital allocation strategy, we expect to renew our NCIB program into 2026. We will provide an additional update on our Q1 conference call in May. With that, I will turn the call back to Ali Hedayat to discuss our 2026 guidance longer-term growth aspirations and key priorities for 2026. Ali Hedayat: Thank you, Zaheed. Before I turn to our 2026 guidance and long-term view on the business, I would like to recap our 2025 performance against the targets we communicated. As I mentioned earlier in the call, inclusive of our Viridian commitments, we are pleased to achieve our deployment target of $1.25 billion over the last 5 years. Our royalty income target as defined for 2025 was between $172 million and $182 million. We surpassed the high end of this target with our 2025 royalty income coming in at $188.7 million. Finally, we set out a CAGR guidance of high single-digit royalty income growth through 2030 off a 2022 base. At the end of 2025, we are currently tracking well above this target with our current view indicating a 12% CAGR. I would like to take a few minutes to lay out how the work we have done over the course of 2025 lays the foundation for driving our investment capacity and the results in the years to come. First, we have achieved meaningful margin expansion after internalizing the manager. While we don't expect our current quarter's low 90s adjusted EBITDA margin to be our baseline going forward as we intend to reinvest in our team, we do expect our run rate EBITDA margins to be roughly 500 basis points higher than the low to mid-80s margins of our pre-interalization model. At our current scale, each percent of EBITDA margin adds a little shy of $2 million to run rate cash flow and can be passed through our leverage covenants on a backwards-looking basis, meaningfully increasing our credit capacity. Similarly, we have achieved significant reductions in our debt amortization payments and interest costs between the private placement I mentioned earlier and the cancellation of the preferred shares we retired. While these don't pass through our leverage ratios, they do add in excess of $25 million to our annual cash flow relative to last year's run rate. While some of this is offset by the reduction in Omidria cash flows linked to our forecast revision, we will still exit the year in a substantially better cash flow position than we entered it. These improvements help to drive our guidance for 2026 and our long-term 2030 aspirations on Slide 16. The guidance for 2026 shows meaningful growth over our 2025 baseline. Now turning to our 2030 aspirations. We aim to invest between $800 million and $1 billion in the 2026 to 2030 period, a number that is fully funded with our existing capital structure and cash flows. Based on our current expectations for deal mix and returns, we believe this should underwrite a low teens CAGR in adjusted EBITDA from now through 2030 with sequential growth rates that accelerate through that period and beyond. Importantly, none of this requires any additional equity. And even in the absence of any further investment, we believe our portfolio EBITDA will grow organically through 2030 with the current perimeter of assets. Slide 17 helps to bring this all down to a set of priorities. We intend to compound cash flow per share meaningfully over the coming years by focusing on a combination of best-in-class operational and financial execution and continuing to allocate capital in a disciplined and innovative way to further our mission of funding innovation in the industry. We can only do that because of the hard work our team has done. And I want to take a moment to thank all of my colleagues at DRI for putting up a fantastic year in 2025 across all of our functional areas. We have great things ahead of us, and I couldn't be prouder of what we have done together this year. That concludes our prepared remarks. And with that, let's open the call to questions. Operator: [Operator Instructions] Your first question comes from Douglas Miehm with RBC Capital Markets. Douglas Miehm: My first question just has to do with the new guidance. Management is typically quite conservative. And when you do look at what was spent on a per year basis versus what the guidance is, it is a bit lower. So would it be correct in characterizing the pacing and overall expected investment as being conservative? And -- or is this a function of changes within the market in terms of increased competition? Ali Hedayat: Doug, it's Ali. Thanks for the question. I think there's a few ways to put a lens on that. The first is really when you compare the current guidance on deployment to what we achieved over the past 5 years, I think one of the things that's worth keeping in mind is we started the prior 5 years with an underleveraged balance sheet. And in the middle of it, we had the TZIELD transaction, which was essentially a round trip that added something on the order of $250 million to $300 million on a levered basis to our deployment. And I think those 2 effects basically caused the backwards-looking deployment numbers to be a little bit higher than what we're forecasting over the next 5 years. The second one, which is relatively important, is also the mix of deals that we're doing. So to the extent that we do a deal that is earlier stage, either immediately preapproval or, let's say, early in the launch of a drug, those deals obviously don't have backward-looking cash flows. And as a result, it's difficult to lever those transactions based on the way that our financing works. It's still attractive to do them given the higher leverage -- sorry, the higher returns and the duration, but it's definitely something that sort of feeds through the capacity to deploy via the leverage covenant. So I think when you put those 2 things together, you get a bit of a sense of where that number is coming out. And I think those bands reflect a bit the variance in the mix. So to the extent that we do a higher number of approved deals, you should expect us to be sort of towards the higher end of those bands. And to the extent that we do a higher number of preapproved deals, we'll sort of be towards the lower end of those bands, and that's the way to think about it. Douglas Miehm: Okay. And when you think about the lower end and the preapproved deals, you are anticipating higher returns. My follow-up question has to do with Orserdu. And when I think about that product, you seem to be faring quite well relative to the Lilly launch, but you're still contemplating a down year this year. I recognize that as we get into 2027 with what's coming from Roche and also Astra in the form of Cami, we are going to see definitely increased competition. But do you think there's a chance here given the strength of the Lilly product relative to Orserdu that you might do a little bit better than anticipated? And I'll leave it there. Ali Hedayat: Yes, Doug, I'll let Navin answer that one in detail. But one framing point, and I think this feeds a little bit into our '26 numbers in terms of guidance is, look, we have obviously revised our Omidria and our Vonjo numbers over the course of the year, and that's baked into our guidance numbers. When you think about the things that could be a positive variance for us over the year, we have been relatively conservative in the way that we assume the competitive environment for Orserdu evolves. And despite excellent execution out of the gate by the KalVista management team on Ekterly, we have not really factored in that cadence into our guidance either. So I would say that the range of things in terms of potential positive outcomes, those are the 2 biggest variables to think about. And Navin, I don't know if you want to dig into OSEDU in a bit more detail. Navin Jacob: Sure. Thanks for the question, Doug. So on Orserdu, remember that when -- the asset has been almost from day 1 outperforming our expectations. And so it's easy to get excited by that and assume that it's going to continue to outperform our expectations, entirely possible, right? But what we're confident about is that this is the year, this is sort of the dynamic year for Orserdu, for lack of a better term, the time lines of when we anticipated these competitor oral SERDs to come into the market are exactly what we anticipated at the time of the acquisition. And so while the launch has gone faster than expected, the competition and how that is -- how heavy that competition is, is exactly as we anticipated. And all of those start hitting this year. Well, Lilly, this is going to be their first full year and it is Eli Lilly. So Roche, obviously, as you pointed out, is coming in 2027 and with very different data and differentiated data that we've seen thus far. So there is -- I think it would be imprudent of us to change our outlook that this is going to be a down year relative to our -- relative to 2026 -- 2025, excuse me. Having said that, I think what we were trying to provide in our commentary is to suggest that, look, the Menarini has been performing quite well, both commercially, but also with regards to their clinical strategy. You can see the strategy that they've taken forward, which is different than Eli Lilly or AstraZeneca is much more in line with Roche. And Roche is now talking about giredestrant being the largest drug they've ever had. And from a risk-reward perspective, given that we've been conservative, that kind of level of upside is nowhere near close to any of the upside that we had anticipated for the product. So all of that just speaks to the risk reward that we try to build in for investors. Operator: Your next question comes from Erin Kyle with CIBC. Erin Kyle: I wanted to ask on the pipeline. And maybe if you can just dig into that $3 billion pipeline and how much of that -- what the split is between pre-commercial and commercial deals in it, how many deals you're tracking in there and what the range is per transaction? And then just whether your near exclusivity on any deals would be helpful. Navin Jacob: Erin, thanks. So on the pipeline, a large proportion of the deals are skewed towards pre-commercial. Having said that, I would argue that the nearer-term pipeline, call it, over the next 6 to 8 months is more skewed to post-approval drugs. So I would say that the deals in, call it, month 8 and beyond that could come to fruition are definitely skewed towards pre-commercial, but more near term, again, 6 to 8 months where the deal pipeline has shaken out, so it's closer to being commercial assets. Erin Kyle: Okay. That's helpful. And then just the sort of the range of size in the pipeline, is it kind of in line with your historical acquisition size? Navin Jacob: Correct. It's in line with our acquisition size of $50 million to $150 million has been the sort of sweet spot we played in. And I neglected to answer your question on exclusivity. We're not in exclusivity with someone. I'll just leave it there. Erin Kyle: Okay. And then I just wanted to ask another question on kind of the competitive environment. And I hate to be the one to ask an AI question here, but with AI fears kind of hitting nearly every industry here, I did want to ask if whether you see any risk to your business from the possibility of it possibly being easier to build a database to track existing royalties or biopharma companies that are capital constrained. Yes, I'll leave it there and ask the question. Ali Hedayat: Erin, I'll take the AI one. I think we actually see AI as an opportunity. We spent a lot of time investing in that over the past year, year and a bit. As I mentioned on the call, we have 2 team members who are basically solely dedicated to improving throughput and efficiency of our various processes with AI. We actually have bought a number of GPUs and are using them to sort of run models that have been trained and modified to work on our own data sets. I think in terms of lowering the competitive barrier, I think there's probably areas in which that will be easier, if you will. So processing large amounts of patent filings and the like. I never really viewed those things as something that were a material edge for us. They were just hard in the sense that you required dedicated people to go through large amounts of paper. I think the edge is really a combination of relationships, industry expertise, deal structuring capacities and the like, which I don't think really will be particularly impacted by AI. But if you will, the velocity and sort of speed of processing through a deal will be impacted by AI. But I would say we are probably, at this point, doing a better job than most in terms of adapting our processes to that. I think in terms of the pipeline, I'll let Navin take the question or the competitive environment, rather, I'll let Navin take the question. Navin Jacob: Yes. With regards to how that affects our ability to compete, we have not thus far seen anything remotely close to affecting our ability to compete with regards to AI. If anything, Ali has been well ahead of, I'd say, most folks on the AI front and him and the management team at large, prior management had been investing in this space. And so it's -- we've been working on this for a couple of years. So if anything, we're ahead. Operator: Your next question comes from Michael Freeman with Raymond James. Michael Freeman: Congratulations on the year. I wanted to -- maybe following on Erin's question. I wonder if you could dive into the risk assessment framework that you discussed, Ali. Maybe give some examples of how you're using the tool? And what areas maybe in the current pipeline you're looking at, areas that you're seeing this tool steer you toward investing in maybe areas that it's steering you away from? Ali Hedayat: Yes. Thanks for the question. I think the right way to look at this is if you think about the business and you think about the various range of degrees of freedom that we have in terms of our balance sheet and leverage covenants and the like, that range will always be bigger than, let's say, what we should do. And what we should do, I think, is defined by a combination of thinking through risk, thinking through cash flow dynamics, portfolio construction and the like. And really, the purpose of the risk framework is to say, all right, yes, we could, let's say, this year, deploy another $150 million into pre-approval deals, should we do that? Because we already have one large preapproval asset on the portfolio right now. And even though we could technically let's say, do more, is that the right decision? And the answer to that, I think, depends on where we are in terms of our leverage ratios and our current exposures, where we are in terms of the ability to unlock our balance sheet based on trailing 12-month cash flows and feeding through our debt covenants and various things like that. And what the risk framework does is it pulls all of that together and says, all right, here's the current parameters in terms of various risks to the business, and that could be approval, it could be things like regulatory risk, pricing risk for the various drugs given what's going on in the world. It could be some bigger picture factors, performance of our specific assets. And it says, given all of that and given what we have on deck in terms of potential avenues of future deals, which one should we be chasing? How should we be sizing them? How should we be structuring them? And it's sort of an overlay that I think takes our degrees of freedom and focuses them down on 2 or 3 things that we think will be the best risk-adjusted decisions to make for the portfolio overall. Michael Freeman: Okay. All right. Maybe this one could be for Navin. Looking at the Viridian assets, I wonder if you could just give us a view of the pipeline dynamics in this space. In December, we saw the failure of argenx thyroid eye disease assets. I wonder if that -- how that and maybe other action in this space adjusts your market share expectations for Veligrotug? Navin Jacob: Well, to be honest, we had built in a fair amount of competition, including Roche's satralizumab into our expectations. That asset has played out not particularly well. One trial was successful, one trial was not. This is the anti-IL-6. So there is potential upside to our expectations. With that said, given the changes with the FDA moving towards Phase III trial being enough for approval, perhaps satralizumab gets approved. With that said, the data there for that drug was not as good as Veligrotug, and we don't anticipate we'll be close to Veligrotug, which is the new asset that we also have a stake in that was formerly called VRDN-003. All this to say that there is certainly upside to our acquisition forecast with the failure or weak data, let's put it, of the Roche asset and what looks to be like mediocre assets as well in the rest of the pipeline. Operator: Your next question comes from Nate Po with National Bank Capital Markets. Nathan Po: So you spoke to record margins this year. And if your prior aspirations for high single-digit royalty income growth still stand and you pair that with your new aspirations for low teens EBITDA growth, where -- can you expand on where you see incremental margin accretion opportunities coming from? Ali Hedayat: Nate, like I said on the prepared remarks, our objective really isn't to grow margins meaningfully beyond where we're at right now. If anything, I think we'll probably -- relative to sort of this low 90s number that you're seeing now, we'll probably reinvest a bit into the business on the team side. I think when you think about that low teens aspiration out to 2030, I think that's really being driven by the top line. We probably have a little bit of both operating leverage and 1 or 2 remaining bits of low-hanging fruit. But I think what you're really seeing there in that longer-term aspiration is confidence around the top line rather than further margin expansion. Nathan Po: Great color. And you did also -- you mentioned reinvesting in your team as well. So to support the deployment aspirations you guys have, how do you see your current deal teams capacity? Or if you're investing in other places, could you just expand on that? Ali Hedayat: I think the deal team capacity is pretty well matched to the balance sheet capacity. I think one of the things that we're thinking about a lot is, a, in an AI-centric world, what the mix of people on the team should be. So as these tools expand our capacity to do things, for example, do we need more vertical domain expertise and the ability to assess pre-approval assets, for example, or do we need other areas of vertical expertise. So I think what you'll see us do is maybe fill in various areas of the deal team to match where we're trying to take the business. And I think that will be very much with the mind of -- to use the [indiscernible] expression, skating where the puck is going in terms of AI expanding our capacity to do things. Operator: Your next question comes from Louise Chen with Scotiabank. Louise Chen: Congratulations on all the progress this quarter. I wanted to ask you first on Viridian's product. And if the Veligrotug, if it gets approved this year, will there be upside to your adjusted EBITDA guidance? Or is it already incorporated into there? And then on the VRDN-003 product, just curious what you think might be a clinically meaningful outcome? Do you expect to have efficacy advantage over a drug like TEPEZZA? Or is it more the convenience? Ali Hedayat: I think in terms of thinking about our guidance, we don't tend to price in things where we don't have a lot of visibility, right? And as I mentioned earlier on the call, even areas like the launch of Vector, which the execution there has been superb out of the gate without getting a few quarters behind us that really feed into a well-grounded set of assumptions, it's pretty hard for us to sort of tweak things up. So I think when you put a lens on the Viridian portfolio or any of our earlier-stage assets or assets that are sort of early in their launch curve, you should assume that we're not sort of taking a very dynamic pricing up or revising up of our forecast based on things coming out of the gate a little bit stronger until we get some data behind us to justify that. Navin Jacob: And Louise, on elegrobart, which is the new name for VRDN-003, our expectation is that, listen, if it achieves what TEPEZZA has achieved in the active TED setting, it's a home run, right? But we don't necessarily need it to achieve that for this to be a very big drug because of the convenience factor. Veligrotug, just to be clear, we think is a superior product to TEPEZZA given both its activity in active TED and in chronic TED. And it has -- as a reminder, both trials were static positive, while with regards to the Amgen trial, the chronic trial was -- had mixed results. Furthermore, you have diplopia data with Veligrotug, which you don't have very clear efficacy on with TEPEZZA. So elegrobart, if it comes even close to that, it will be a fantastic product given significant convenience advantages. Operator: Your next question comes from Justin Keywood with Stifel. Justin Keywood: Nice to see the results. My question is around some of the initiatives for the business model improvement and capital structure refinement. It appears to be leading to somewhat better valuation in the shares, but still lagging certain peers, including the largest one out there. And depending on what metric you look at, DRI could be valued at half that peer. I'm wondering if there's any remaining initiatives that could help bridge the valuation gap? And is a NASDAQ listing potential in the future as well? Ali Hedayat: Thanks for the question. Look, we're constantly thinking about things that could help to bridge that valuation gap. And I personally agree with your assessment there in terms of where we sit in terms of valuation. I think in terms of the NASDAQ listing, I think the scale of the business probably needs to reach a point that will attract more attention from the U.S. investor base. And I think we're not quite there yet. I think we're well on track to get there. But I think we don't want to put ourselves in a position where we're sort of orphaned as a smaller and less focused on equity in the U.S. market because it's just not productive to be there. I think we have good support across all aspects of the capital markets in Canada, whether it's sort of debt or equity. I think our financing partners here have been fantastic across the spectrum. I'm really happy to see the reception that we got for the private placement. Those are all top-tier big U.S. institutional investors. And I think we'll continue to sort of penetrate that market on the debt side as we grow the business. And that's a very encouraging step for us in terms of broadening our capital base. Operator: The next question comes from Leszek Sulewski with Truist Securities. Leszek Sulewski: Congrats on the progress. Ali, maybe on the near-term pipeline, where are you seeing the better risk-adjusted spreads right now as it relates to categories of assets and perhaps indication areas? And how would you rate the quality of the assets from what you framed as increasing inbounds? And then as a follow-up, to the extent that you can share, can you provide or walk us through where you are standing on the early stage versus late-stage due diligence process? And what have been some of the gating factors on closing a transaction? Ali Hedayat: Yes. I'll let Navin take those. But I'd broadly say in terms of return and risk characteristics, I don't think we have seen a significant move one way or the other. I think the business -- the inbounds of the business remain very attractive from a risk-adjusted return perspective. I think the need for capital as Navin addressed in the call earlier, is still very significant. We've seen the royalty market grow in terms of penetration pretty meaningfully over last year, right, like we exited at something around $8 billion of deals in the sector. So we're pretty happy with what we see out there in terms of pipeline. I don't know, Navin, if you want to get into some of the granular aspects. Navin Jacob: I wouldn't -- I would characterize this as mid-stage on a couple of potential deals. But everything else, I would characterize as somewhat early stage. For the reasons that Ali had pointed out, our pace of deployment over the next 1, 2 years may be a little bit slower than what we had been conducting for the past 3, 4 years, largely because of being -- as I'll just reiterate, we were highly under-levered before at the start of that 4-, 5-year period. And then we benefited from TZIELD, which gave us more capacity. And while the capacity exists and as we -- today, because we're going through this transition of taking on a greater proportion of pre-approval deals, that's not to say, just to be very clear, that we're not going to be doing approved drug deals, we are. And as I noted, our near-term deals are more weighted towards approved drugs. There is a bit of a transition going on. And as that transition goes on, because of the shape of the cash flows associated with the preapproval drugs, versus approved drugs and the subsequent leverage capabilities, there is sort of a 1- to 12-month to 24-month period where we have slightly slower deployment pace than we have historically seen. And then after that, it will be back to normal as these preapproval drugs kick in as we're seeing with KalVista and with what will hopefully be the Veligrotug in the second half of this year. So you can understand why there's a slight bit of change in pace for the next 12 to 24 months. Ali Hedayat: And I think one thing just to round out the color there. When you look at that $8 billion of deals last year, it was actually while a significantly higher dollar value of deals, it was a lower number of deals, right? And that's kind of interesting. And you see that migration in deal size, which is something that we've consistently seen over the past 2 or 3 years to bigger deals. And I think that feeds in a little bit to Navin's comments, which is I think the kind of [indiscernible] cadence of a small- to medium-sized deal every 6 months or something like that is probably while still possible, a bit less likely, I think what you'll see is larger transactions with a bit more spread out time lines from us because I think that's really what we're seeing in the market. Operator: Your next question comes from David Martin with Bloom Burton. David Martin: First question, does Sobi have any upcoming new program initiatives to reverse the Vonjo weakness, excluding any new indications? Navin Jacob: Excluding new indications, I would argue that the new indications are the largest driver of growth on a go-forward basis. They do have some life cycle management programs where they expand beyond not just new indications as in true new indications, new therapeutic areas, which they're working on. But there are some life cycle management programs that, for instance, ensuring that physicians understand the value of the product in the anemic setting, which we would argue is as good as momelotinib. However, GSK took full advantage of the profile of momelotinib and have penetrated there. We firmly believe Vonjo has a similar product profile as that product in the anemic setting, but there is work that's being done by Sobi to ensure that physicians understand the strength of the asset in that setting. David Martin: Second question, you're doing some pre-commercial deals, and they're relatively new for you. Are your competitors following that as well? Are you seeing them chasing those same types of deals? Ali Hedayat: Our competitors have been in that space for some time in varying ways, right? And I think there are some competitors who operate in more sort of fixed income adjacent spaces who don't do that, but the ones that have operated in what I would say are more equity-like in philosophy, they have been reasonably active in that space to varying degrees. I don't think our exposure or direction stands out in any way there. I think if anything, we are sort of reasonably conservative in our pre-approval exposure as a percentage of assets. But it's nothing sort of hugely new for the industry. And frankly, nothing new for us, right? We have had implicit exposure to new indications in many of our prior deals has been combined with some existing cash flows from potentially those same assets. But a lot of our prior deals, the economics have been driven in no small part by a broadening of the indications for a given therapy. So I would say it's not a huge divergence from the industry or even from our history in many ways. Operator: [Operator Instructions] Your next question comes from Ash Verma with UBS. Ashwani Verma: I was just like trying to understand the top line. So I see a lot of these assets, the cash receipts when you look at Slide 8 are declining and bulk of the growth is coming from a handful of key products. So as you think about 2026, just on a product basis, is it a continuation of the same trend? And just like when you are talking about the 2026 outlook, how much of your EBITDA growth is coming from the internalization savings as opposed to top line growth? Ali Hedayat: Ash, I think it's a mix of things. I think naturally, our seed portfolio, as we've stated many times, was always going to decline at some point, and you're seeing some degree of that as we work through the next couple of years. We obviously have 2 very early-stage assets that we're very excited about, the strong out-of-the-gate performance you're seeing from Ekterly and what we view as a tremendous potential in the Viridian portfolio. I think Orserdu is probably a big potential variable there in terms of rate of decline. We don't have full visibility on that, but we think we've been relatively conservative in the way that we're looking at it. I would say when you think about '25 through '26, the role there is going to be probably a mix of top line and margin expansion. I think the year-on-year margin expansion probably will account for, let's say, something in the region of half or maybe a little bit more than the EBITDA growth and a little bit of top line will account for the rest, and then that accelerates sequentially through the rest of our sort of aspirational guidance horizon. So as you get into '27, '28, especially that sort of '27 to '30 period, you're really seeing a lot of top line expansion. Sorry, as I mentioned on the call as well, even in the absence of any further investments, we do believe we can grow EBITDA through 2030. I mean, obviously, not at the rates that we laid out because those imply reinvestment, but we do think the current perimeter of the business is growing. Operator: There are no further questions at this time. I will now turn the call over to Ali for closing remarks. Ali Hedayat: Thank you all for joining us, and thank you again to the DRI team for a great year, and we look forward to speaking to you on our next call in May. Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Roy Bagattini: Good morning and welcome to our 2026 Interim Results Presentation. I'll start with a high-level overview of our performance for the period, after which our Group Financial Director, Zaid Manjra, will take you through the detailed financial results for the half. I will then provide an update on how we're tracking against our various strategic priorities and offer some thoughts on the outlook before we open the floor to questions. To put our results into context, I would like to remind you of our starting point, our recent focus areas and how, as promised, our initiatives are now driving results. Going back just a few years, we were operating with businesses that had historically underinvested in their back-end capabilities while still navigating the legacy impacts of the David Jones era. As a result, strengthening our foundational infrastructure was our foremost priority. So in recent years, we've undertaken a series of deliberate initiatives to rebuild and modernize the operating backbone of our group, particularly in our apparel businesses. These investments have materially strengthened our core, creating a powerful platform for sustained momentum and value creation. As you may recall, we also have new leaders in our group, notably CEOs in CRG and FBH and a Chief Customer Officer in Woolworths, all of whom already are having an impact. And together with the rest of our leadership team are relentlessly focusing on both leveraging past investments and driving future growth. And we are now seeing this translate into improved top line momentum. We grew group sales by 6% in constant currency, well above inflation with each of our businesses outperforming their respective markets over the period. While there was some benefit from a marginally improved macro, particularly in South Africa, the primary driver of improved performance has been internal, the result of disciplined execution and self-help initiatives that are gaining traction. That said, as expected, and as I've shared before, we've had to contend with a few headwinds to our gross profit margins. Firstly, the impact of the significant capital investment we've made in our Food's Midrand distribution center at which we've now begun to depreciate. Secondly, we've taken deliberate actions in this past half to clear excess inventory in our apparel businesses. And then we have also invested in pricing in key categories. These, together with ForEx impacts, which Zaid will unpack a little later, has resulted in a more moderate aEBIT growth of just over 4% in constant currency. Growth in aEBITDA, however, is stronger and a much fairer reflection of our underlying operating performance. From a divisional perspective, our world-class Food business achieved yet another good result, notwithstanding the lower inflationary environment. We continue to take profitable market share month-on-month, and we continue to deliver leading returns on capital even as we invest in future growth. In FBH, as promised, we are seeing the benefits of the transformational investments in our value chain that we have made over the past 3 years, translating into improved availability and better trading densities. We've gained market share every month since May, including in our rapidly growing denim offering. And in fact, over the past half, our FBH business delivered by far the strongest total and like-for-like sales growth in the sector. Our Financial Services business, WFS, continues to perform well, delivering a strong underlying result and the healthiest impairment ratio in the industry. And Woolworths Ventures, which we'd like to think of as our strategic growth accelerator, continues to deliver double-digit growth. Turning to Australia. The retail sector remains challenging and highly promotionally driven. Against this challenging backdrop, CRG delivered an acceptable result and a much improved one from what we saw in FY '25, with benefits from both our brand repositioning and the restructuring of CRG's operating model now coming to the fore. So all in, this has enabled us to deliver positive earnings growth in the half with adHEPS up around 1% and almost 4% in constant currency terms. Maybe not quite the quantum of growth we would like to have seen on the bottom line, partly given the unforeseen ForEx impacts, but it does validate that FY '25 was our trough year. Our direction of travel has clearly shifted and we are delivering improved earnings, something you should expect to see continue from here onwards out. And importantly, cash earnings are improving, supported by, of course, the release of working capital, and that's resulted in a free cash flow. I'd expect this trend to sustain as our apparel inventory levels normalize in the second half and we move beyond the peak of our CapEx cycle. These results are indicative of the fact that we are very clearly and deliberately shifting the trajectory of our businesses with a lot more to come now that we have the foundational capabilities, structures and processes in place. But success isn't only about financial performance. We continue to lead the market in many respects, whether it's the external recognition of our quality and innovation from award-winning products to best-in-class marketing campaigns or the industry standard we set in sustainability. Our much loved and trusted brand is held in the highest regard. These attributes are entrenched right across our group, underpinned by our Good Business Journey, our GBJ. At Woolworths, our vision to be one of the world's most responsible retailers isn't a public relations line for us. It defines how we operate, and it is backed up by our Good Business Journey strategy, a commitment to care for this planet and the people who live on it. We strive to ensure that every decision we make, every product we source, every supplier we partner with is measured against the impact it has on people, on communities and on the planet. We don't get this right 100% of the time, but we strive to put checks and balances in place to help keep ourselves and our partners honest and accountable. You may recall, our GBJ encompasses 3 pillars, along with associated focus areas. Whilst we have umpteen initiatives across these 3 areas, one of our newer ones in building a thriving and resilient environment is what we refer to as green logistics. We now have 20 trucks like the ones you can see behind me, which use the momentum of their trailer wheels to generate energy for refrigeration, ensuring our uninterrupted cold chain. Added to that, more than 50% of our food online delivery fleet are now electric vehicles. Our inclusive justice pillar encompasses what we do in caring for our people and our communities and our commitment to being a more diverse and inclusive business. At its core, it's about elevating the focus on humanity. And so we were very proud when Woolworths was voted as the South African Business of the Year at the recent Standard Bank's Top Women Award, acknowledging our commitment to championing gender equality and women empowerment. And in January of this year, we were once again accredited as a Top Employer for 2026 by the Top Employers Institute, marking our second consecutive year of recognition. This accolade reflects the meaningful strides we are making in shaping a world-class organization and fostering a supportive inclusive environment where our people, our brand ambassadors can thrive. And on that note, I'd like to take a moment to express my sincere appreciation to our people who are simply put the most outstanding in the industry, our suppliers who play a vital role in creating the exceptional Woolies difference and of course, our customers, you are at the heart of our business. Thank you. Thank you for loving our brand as much as we do. And with that, I'll now hand over to Zaid to take you through the financial performance for the half in more detail. Zaid Manjra: Thank you, Roy. Hello, everyone, and welcome again to the Woolworths Holdings 2026 Financial Year Interim Results Presentation. Today, I will take you through our results for the half year ending December 2025 and provide some insight on our performance and key financial metrics. I will also give you a view of how we have traded for the first 8 weeks of the second half. Before I get into the numbers, I would like to start with the key financial highlights for the period, which Roy has briefly spoken about in his overview. When we delivered our FY '25 results last September, we indicated that the year marked a trough for the group. So it is very pleasing to see each business now in positive territory, growing both the top and the bottom line, although sales grew at a faster pace than earnings. All our businesses have increased sales ahead of their respective competitor set and grown market share. We, however, had gross margin pressure in each of our businesses for different reasons, some temporary and some structural. The Food margin has been impacted by the investment in expanding our Midrand DC, which is now operational. In addition, the increasing proportion of online sales continues to dilute the Food GP margin. In FBH, as we had previously advised, we invested quite heavily in price to further grow the kids wear and baby categories. This, together with the continued growth in Beauty, diluted the GP margin. During the period, we also incurred additional short-term storage costs as a result of the DC issues we experienced last year. In both FBH and in CRG, we also deliberately accelerated the clearance of excess inventory during our promotional periods. While our overall profit growth was positive, it was negatively impacted by the unforeseen strength of the rand in addition to weaker currencies in some of the African territories in which we operate. We will cover this later in the presentation, and there is also a consolidated view available in the appendix to the presentation pack. As we've previously called out, the elevated CapEx spend over the last few years and the consequential increase in depreciation charges has also affected near-term profitability, which is quite evident in our higher EBITDA versus EBIT growth in the Food and FBH businesses. Our focus on reducing working capital, particularly inventory levels has resulted in a ZAR 300 million cash flow release. This, together with our strong cash conversion has enabled us to maintain a healthy balance sheet. We have also improved our returns to shareholders by buying back shares and increasing the interim dividend by 10%. Looking at the key financial metrics for the half. Group turnover of ZAR 42.5 billion was up over 6% in constant currency. And within this, Woolworths South Africa increased sales by 6.8%, which is excellent growth in the current tough environment. From an earnings perspective, adjusted EBITDA of ZAR 4.6 billion was up 4.2% in constant currency and adjusted EBIT of ZAR 2.9 billion was 4.1% higher on the same basis. Our group earnings growth was impacted by the loss of rental revenue following the sale of the Bourke Street property last year, which contributed ZAR 108 million in rental income in the prior period. We used part of the sale proceeds to support the share buybacks, while repatriation of the remaining funds was deferred as the CRG business was being stabilized. However, these funds are now incrementally flowing back to South Africa. Consequently, adHEPS of ZAR 1.70 per share increased by a slightly lower 3.8% in constant currency and by 0.7% in rands. Our interim dividend is ZAR 1.18 per share, which is in line with our dividend policy of a 70% payout ratio. Our balance sheet remains healthy with group net borrowings of ZAR 5.8 billion. We are comfortable with our level of borrowings with net debt-to-EBITDA of 1.48x, including lease liabilities, which is well within our internal limit and covenants. We also achieved a significantly improved cash conversion ratio of 110% in the half. Notwithstanding an intensive investment phase, our return on capital employed of 16.6% remains in excess of 5% above our cost of capital despite being diluted by the Country Road Group. Woolworths South Africa's return on capital employed is much stronger at 25.7%. Looking at segmental earnings for the period, aEBIT for Woolworths South Africa, which comprises the Food, FBH and WFS businesses grew by 2.7% on last year, while EBITDA increased by 5.9%. The gap between the 2 reflects the impact of higher capital investments. The Food EBIT at ZAR 1.8 billion is up by 3.5%, while FBH is 1% higher at ZAR 771 million. The underlying profit after tax in Woolworths Financial Services was up 1.5% on last year. The Country Road Group EBIT was up 4.2% in Australian dollars, but currency translation had a negative impact at group level, resulting in a 0.6% decline in rand terms. I will now cover the Woolworths South Africa segment, providing some macroeconomic context before taking you through each of the business units and thereafter, looking at the Australian environment and the performance of the Country Road Group. The South African environment will be familiar to most of you, so I won't dwell on it other than highlighting that even though the macroeconomic indicators are showing early signs of improving, they are still below historic averages. These are not yet translating into consumer spend, which continues to be constrained, especially for middle-income consumers who are particularly hard hit, although we are very encouraged by the tax relief measures announced in the budget last week. Turning to our sales performance. Woolworths South Africa sales increased by 6.8%, dipping slightly in the last 7 weeks. This is in line with the overall sector as consumers constrained their spend over the holiday period. Our Food business achieved total sales growth of 7% and like-for-like stores were up 5.2%, which is well ahead of the market. We achieved this through positive underlying volume growth, which is supported by continued investment in our premium food offering and our customer experience. Internal price inflation moderated to 4.6%, driven largely by high meat prices. It's a key category in our predominantly fresh offering. Excluding just this category, price movement was 3.4%. Woolworths Dash, our on-demand offering continued to grow its customer base, delivering a 23% increase in sales. In Fashion, Beauty and Home, sales increased by 6.2% in total and by 6.4% on a like-for-like basis as we continue to rationalize trading space. These growth rates are significantly higher than our competitors. And notwithstanding the promotional intensity, our full priced sales improved this half and trading densities increased by 8.4% as FBH delivered pleasing volume growth in fashion with price movement of 1.3%. Our Beauty business delivered another strong performance with sales up 8.9%, and we were delighted with the continued strengthening of our Home business, which grew by 14%. Let me now turn to the segmental results for Food, FBH and WFS. I will focus on the key highlights with further detail available in the appendix to the presentation pack. Starting with our world-class food business. This segment delivered another good result, driven by strong top line performance, a testament really to the strength of our brand and customer proposition. As mentioned earlier, Food gross margin was impacted by the investment in the Midrand DC and continued strong growth in the online channel. Expenses grew by 7.9%, which includes store costs, which was driven by the opening of new formats, including those within W Ventures and incremental online costs. Adjusted EBIT grew by 3.5%, while EBITDA was pleasingly in line with sales growth of 7%. Our EBIT margin was at 6.5%, and our return on capital in this business continues to be best-in-class at 41%, notwithstanding the elevated CapEx investments we are making. Our recent acquisition, Absolute Pets, continues to grow ahead of expectations and contributes positively to the overall Food performance. Turning to our FBH business. We continue to make meaningful progress in resetting the foundational capabilities of this business to enable us to deliver more consistently, which is now reflected in our top line performance. GP margin reduced by 0.5 percentage point to 45.8%, and this was due mainly to our price investment in kidswear and baby, our successful promotional campaigns, including Black Friday and the dilutive margin effect of a growing beauty business. We also incurred additional short-term storage costs arising from the DC issues last year. We will continue to further reduce inventory levels and distribution costs in the second half. Expense growth was contained to 5.5%, notwithstanding the impact of investments in strategic projects and ForEx losses. As mentioned earlier, the movement of ForEx rates between the South African rand and the currencies of some of the African countries we operate in had a material effect on our profitability. This was mainly in Botswana and in Mozambique. Excluding this, the adjusted EBITDA would have been up 6.7% with adjusted EBIT increasing by 4.6%. Our broader African operations remain profitable and continue to contribute positively to the FBH performance, notwithstanding the currency challenges. The return on capital for FBH was 13.5%, which remains above the cost of capital. Turning to Woolworths Financial Services. This has continued to deliver a steady contribution to the group. The closing book was 1.8% higher and grew by 2.6%, excluding the book sales. However, net interest income declined by 0.7% due to continued cuts in interest rates during the period. We have continued to manage our risk exposure prudently. And while the impairment rate increased by 1 percentage point on last year at 6.4%, it remains sector-leading. The WFS business had strong growth in noninterest revenue of 19%, which enabled a 1.5% increase in profit after tax and a return on equity of 21.4%. Turning to Australia and the Country Road Group. Australia also had benefited from the commodity boom. However, inflation has surprised to the upside. And consequently, there has been a recent shift in the interest rate cycle. The rising cost of living pressures and the elevated household debt levels have weighed on consumer spending, while an intense and prolonged retail discounting environment has further shifted consumer shopping behavior. Moving on to the Country Road Group. We have successfully transitioned to the new operating model and the repositioning of the underperforming brands is delivering positive results, particularly in Witchery and in Politix. There has been positive growth in the half being particularly strong in November over Black Friday and Cyber Monday before slowing sharply in December. You can see from the graph on the right-hand side that the trajectory over the last 18 months has improved with growth in positive territory this past half. Country Road Group's gross profit margin was impacted by the higher level of promotional sales, but we managed to achieve a 15% reduction in inventory as a result. Expenses were held flat to last year. The operating model change allowed us to take out the stranded and dis-synergy costs as promised. We have also upped our marketing spend to drive top line growth. The Country Road Group delivered an EBIT of AUD 14.8 million, which is 4.2% up on last year, and we returned to profitability from a loss in the previous half. The return on capital employed is weighed down by the loss incurred in the second half of last year. We would expect this to return to above our cost of capital in Australia as profitability improves. Let's have a look at our capital expenditure, balance sheet and cash flow. A number of our multiyear strategic projects are nearing completion. The level of capital spend on value chain capabilities in FBH, the food DC expansion and loyalty is therefore declining. We continue to spend CapEx on customer-facing investments, including in the next-generation store formats while pursuing further opportunities in AI and other digital initiatives. We have spent ZAR 1.4 billion in the first half and forecast to spend a further ZAR 1.2 billion in the second half across the group. Our balance sheet remains healthy. Net borrowings for the group are ZAR 5.8 billion and broadly in line with the position at the end of the last financial year. The gearing metrics remain well within our target range and covenants. We focused on strategically managing working capital during the period and reduced inventory by 1.4%. Our return on capital employed for the year of 16.6% is adversely impacted by the returns of the Country Road Group, as referenced earlier, but benefited from ZAR 356 million of share buybacks in the period repurchased at an average price of ZAR 51.23 per share. In terms of cash flow, we generated ZAR 4.8 billion of cash from trading in the 6 months and free cash flow of over ZAR 2 billion, a really pleasing outcome. A highlight for me was the release of over ZAR 300 million from working capital management. As mentioned earlier, during the half, we spent ZAR 356 million on share buybacks. And cumulatively, over the last 4 years, we have bought back shares to the value of ZAR 4.2 billion. In addition to this, we have also repurchased shares for our employee share schemes on which we purchased over ZAR 500 million of shares in the first half of the year. We also paid the FY '25 final dividend of ZAR 733 million to our shareholders out of operating cash flows, and we'll be paying a dividend of ZAR 1.18 per share out of our first half earnings. Importantly, we have a very cash-generative business with a healthy cash conversion rate of 110% and a free cash flow per share of ZAR 2.31, which is more than 3x that of last year. Before handing back to Roy, I want to end with an update on recent trading for the first 8 weeks of the second half as well as share with you our expectations of price movement and space growth. Food growth is 5.4%, which is marginally ahead of the last 7 weeks of the first half. Price movement for Food in H2 is expected to be in the range of 3% to 4%, excluding the meat category, which remains uncertain depending on how quickly the foot and mouth disease is brought under control. The growth of 12% in FBH sales in the first 8 weeks has been enhanced by the earlier summer clearance sale in the current versus the prior period. The price movement in the next half is expected to be in a 3% to 3.5% range, and the Country Road Group sales for the first 8 weeks are up by 1.6%. This is ahead of the last 7 weeks growth with the quality of sales also improving. In closing, while our customers remain under pressure, we are pleased with the strength and the resilience of all our brands and the positive growth across all our businesses. The challenges of operating in a lower inflation environment in South Africa will be a key consideration, especially for our Food business. We remain firmly committed to executing our clear strategies to grow the business, and we will continue to focus on further reducing working capital and improving cash flow while maintaining a healthy balance sheet. Thank you again for joining us today. Back to you, Roy, for the strategy update. Roy Bagattini: Thank you, Zaid. As you may recall from our FY '25 final results presentation, and as I discussed earlier, our heavy lifting is behind us, which is why I'm no longer talking to you about fixes, repositions or turnarounds, no longer talking about the inputs. It's now about the outputs, the outcomes of that heavy lifting and how they're translating into proof points into tangible results. But we are not only leveraging past initiatives, we're also looking towards the future. Our focus is squarely on key drivers of growth and how we will continue to differentiate ourselves in the market. First and foremost, we remain deeply committed to protecting and growing what we are already known and loved for, our core businesses, which consistently deliver innovative, high-quality and sustainable products that customers love and trust. At the same time, we are expanding into new opportunities, whether through adjacent categories, new formats or selected strategic market opportunities. And this is all anchored in delivering a leading customer experience across all channels, enabled, of course, by our new loyalty program and more importantly, our exceptional differentiated in-store service, the type of service you just don't find anywhere else. Starting with CRG. As you may recall, we've had a very deliberate 4-step plan that we implemented in Australia to lay the foundations for CRG's long-term success. This culminated last year in the transformational reconfiguration of CRG's operating model, setting it up as a standalone business with the ability and the capability it needs to execute on its potential as a true House of Brands. CRG has exceptional competitive advantages, strong omnichannel capabilities, scale and expertise in sourcing and distribution and now also a fit-for-purpose operating model and structural economics. This is already driving increased alignment, faster decision-making, greater efficiency and critically, a stronger culture of accountability. And as we said, albeit somewhat early days, we're already seeing the benefits of this in our latest results. Whilst Australian retail foot traffic is still subdued, we're seeing improved conversion rates in our core businesses and improved top line momentum, particularly in Witchery and Politix which are benefiting from a more distinct market position and style aesthetic. We're expanding our wholesale presence in Australia and New Zealand and leveraging our unique and market-leading position in South Africa, where sales already exceed ZAR 1 billion and where we drive good cross shop with our premium foods customer, and I'm very pleased with how these channels are performing. We're seeing double-digit growth across our Myer pads and wholesale business in general and have had a very successful launch of Politix in South Africa with more to come. CRG houses a portfolio of iconic brands that are deeply embedded in Australian society with a legacy that underpins its continued relevance and resilience. We now have a solid foundation in place. We have new leadership in place, and we're entering H2 with significantly better inventory, both in quantum and quality. We've reduced our cost of doing business, and we've improved efficiency. And I have every confidence that as momentum continues to build through the second half, we will deliver a much improved result in FY '26 and beyond. Turning now to FBH, where we have spent the past couple of years fundamentally fixing and repositioning our fashion business. It is a business which has immense potential, but which wasn't delivering consistently to this in the past. And that inability to protect and grow our core business came down to outdated systems and processes and an underinvestment in core foundational capabilities. We've addressed that by investing over ZAR 1.5 billion in our value chain transformation, enabling multiple capability shifts across our organization, and that has fundamentally transformed our ability to execute. And we can see the impact of that across a number of metrics. On-shelf availability is now well over 90%, 20 percentage points higher than it was just 2 years ago. Trading densities continue to improve and are up almost 10% on last year in this past half. We've gained market share consistently since May and have delivered the highest total and like-for-like sales growth across the peer group in the half. A key initiative to further protect and grow our core lies in our clearly defined must-win categories, where through targeted price investment and range improvements, we're strengthening relevance and competitiveness where it matters most. You'd recall from our last results presentation, we spoke about the opportunity we saw in our kids and baby business. We're now offering the same Woolies quality at more compelling prices across essential kidswear. This is not only strengthening our leadership in the category, but it is also driving a halo effect across the broader fashion business. And we're increasingly leveraging technology to improve how we manage our FBH business. Using AI-generated product insights, we're optimizing sell-through rates in season, which in turn also reduces post-season clearance. And we're using AI to refine our clearance pricing based on customer behavior and trade patterns to drive improved markdown mix, all of which ultimately goes to margin. So we're doing a lot to protect and grow our core fashion business. But equally, we're pursuing a number of growth opportunities. Our business in the Rest of Africa presents significant scope for further expansion, notwithstanding the inevitable challenge of having to navigate exchange rate volatility. We trade in 10 other African countries, all established markets for us, which we know and understand well and where the Woolworths brand is highly regarded. We've recently opened our first Beauty flagship store in Nairobi, Kenya, and we've rolled out our WBeauty range across a further 33 doors in the Rest of Africa during the last half. WBeauty is now in 45 stores outside South Africa and trading really well for us. We're now trialing our branded Beauty range across the continent, too. Importantly, Africa delivers higher EBIT margins, making this a margin-accretive growth opportunity for us with returns set to strengthen further as we scale. We're also expanding our smaller format WEdit stores, which are housed under Woolworths Ventures and which are trading very well, delivering like-for-like growth ahead of the main FBH business and growing total sales by almost 50% in the past quarter alone, a truly remarkable performance and the result not just of our continued rollout, but how the more curated offer of WEdit and its high-touch service is really resonating with our customers. We've been clear for a while that our opportunities aren't limited to apparel. Our discrete Beauty and Home strategies are clearly paying off for us and not just from a top line perspective, but in the role these categories play in further enhancing our position as a quality lifestyle brand. We have become the beauty shopping destination in the market. We not only offer the strongest proposition of beauty brands, service and experience, but our WBeauty range is increasingly sought after. Our Home business delivered double-digit growth again this past half. And like Beauty, we have plans in place to double it in the next few years, leveraging the strong cross-shop opportunity with our frequent food shopper. We're selectively expanding both our home product range and our in-store space allocation to create an even more inspiring lifestyle destination, bringing the Woolies difference to all aspects of our customers' lives and homes. We recently invited some of our top customers, media and industry and social influencers to the launch of our autumn/winter homeware range. Let's take a look. [Audio Gap] Turning now to what is effectively the powerhouse of our group. Our market-leading Food business, which continues to go from strength to strength, gaining profitable market share month after month, bringing new customers into the brand and increasing share of wallet from existing ones. And that's driven largely by our unassailable competitive advantages built over decades, which are incredibly difficult to authentically replicate. Our unmatched expertise in food science and technology, a best-in-class cold chain, our unrivaled quality, innovation, food safety and sustainability credentials as well as the overall customer experience, the very fundamentals which truly set our Foods business apart. And we're leveraging these differentiators to protect and grow our core. We continue to drive innovation across our business with strong uptake in new lines, including our very successful air fry and braai range, and we continue to own the market in special occasions. We increased on-shelf availability yet again while simultaneously reducing waste year-on-year. We've added to our marketplace presence, bringing greater convenience to more and more customers with Woolies After Dark, now available until midnight in over 70 locations. And we're continuing to uphold the highest food quality, safety and sustainability standards in the industry. And on that note, I am very pleased to share the recent launch of our advanced AI agent, which we call Labtrace. We already conduct close to 5,000 routine food safety tests each year across products like meat and chicken as part of an established food safety assurance program. Our Labtrace agent monitors these results as they come in from the laboratories, immediately flagging anything that falls outside specification. Further, leveraging 5 years of historical testing information and continuous machine learning, it assists our teams to trend results over time and identify patterns or emerging risks across products, suppliers or regions. This is another way we are ensuring that we are providing our customers with the best products and the highest safety standards in the industry, the quality standards that have defined our food brand for generations. A critical enabler of our growth is our new state-of-the-art Midrand DC, where we've invested over ZAR 1.7 billion in almost doubling our footprint to support future volume growth. To give you an indication of its sheer size, it stretches over a kilometer in length and can house almost 20 full-sized rugby fields under roof, one of the largest single roof buildings in Africa. Clearly, a sizable investment for us and one which does impact GP margin in the short term, but it is critical to supporting the future scale of our food business. We are also expanding for more, whether it be in our African markets, which are delivering double-digit growth or in WVentures which houses WEdit, Food Services, WCellar and our pet businesses and where we've opened almost 50 new locations this past half. Our Food Services business, which includes our Cafe, Coffee and NowNow formats continue to deliver double-digit like-for-like growth, and we're very excited by the opportunities we're exploring beyond our traditional store footprint. be it showing up at events, on Uber Eats or our more recent pilot into school tuck shops, accessing our future or next-generation customer, all with the objective of building a really big food services business that is anchored in and amplifies our iconic Food brand. We continue to take market share in WCellar and we are very pleased this past half to see Absolute Pets open its 200th store with the business continuing to deliver double-digit margin accretive top line growth. The true potential of these ventures isn't just in accelerating near-term growth, but also in bringing new and future customers into the brand. It's about reaching our customers where it counts, whether it's our conveniently located WEdit stores, our expanding NowNow footprint or our food trucks and tuck shops. It's a strategic move to grow brand love and loyalty amongst the future generation of Woolies customers. So when we think about our key sources of growth, we're doing a lot to protect and grow our core and also expand for more. But the area where I believe we really lead is in creating a truly exceptional customer experience across all touch points. It is after all through the combination of compelling in-store experiences and strong digital innovation that ensures we stay connected with our customers in every way that matters. Our new loyalty program MyDifference marks a major shift in how we reward and engage our customers, moving beyond a traditional points-based model towards a more personalized, transparent and insights-driven approach. It's already driving incremental sales and improved cross-shop with more to come as we deepen engagement and provide even greater value to our customers. We continue to invest in our data and analytics Center of Excellence and various digital initiatives, including our online and on-demand offerings, and that's resulting in better delivery times, improved stock fulfillment, increased returning shoppers and in fact, a more than 20% uplift in average basket value this past half. Importantly, Dash is also bringing in a new generation of younger customers into our brand. A noteworthy stat, the average customer value of our omnishopper is almost 5x that of a store-only shopper. So Dash is not only just important to our customers as a channel, but it is increasingly important to us, too, and one that's becoming more profitable as we enhance our mix and operational efficiency. This past festive season also saw us launch Online Discovery Miles redemption, a first in SA for online food, attracting almost 10,000 customers, a number of whom are entirely new to our online channel. In our last update, we gave you some insight into our next-generation store formats, including our reimagined full-line Tygervalley store, our flagship Durbanville Food's Emporium and recently opened Ballito store, all of which have meaningfully elevated the role our stores play in our customers' lives. I'm very pleased to share these stores have sustained growth rates multiples of that of our overall portfolio, a testament to the benefit both we and our customers derive when they experience the full Woolies difference. We've launched over 20 of these so far with a further 10 in the pipeline. So you can expect to see a lot more in this space, particularly as we now double down on leading in customer experience. Before I share some final thoughts with you regarding our outlook, I'd like to reflect on our investment thesis, which we haven't shared with you for some time. Firstly, at the heart of our group's value creation is our premium Foods business with strong runway for continued above-market growth and sustained best-in-class return on capital. Our transformed Fashion, Beauty and Home business with its strengthened foundational capabilities and the benefit of our new loyalty program is now well positioned to drive greater cross-shop across all our businesses and deliver sustained profitable growth. And our reconfigured Country Road Group has a clear pathway to margin recovery with opportunity to unlock value for the group. With a robust balance sheet and disciplined capital allocation, we generate strong cash flow to fund investments, both organic and inorganic. We've proven our ability through the acquisition of Absolute Pets to make easily digestible acquisitions in geographies and market segments we know and understand and which complement our existing businesses. And that's something we're giving increasing attention to. But even beyond investing in future growth, we have potential to return excess cash to shareholders above our already sector-leading payout ratio as we've demonstrated again in our share buyback. This is not only value accretive to our shareholders, but clearly demonstrates the confidence we have in the future of our own business. And finally, our Good Business Journey program, which is embedded across the group and reflects our commitment to being one of the world's most responsible and sustainable retailers. Our investment thesis is clear and compelling, precisely because of the significant work we've undertaken and the investments we've made to set ourselves up to grow our difference for good. Turning now to the outlook for the balance of FY '26 and beyond. Whilst macro indicators in South Africa are looking more positive, trading conditions across both our geographies, but particularly in Australia, are likely to remain somewhat constrained. Lower inflation does impact top line growth for retailers, particularly in the case of food retail. And naturally, we're not immune to the competing threats for the discretionary wallet from online gambling to the discount online players. That said, our group is stronger and better positioned to compete than it has been for some time. The heavy lifting is behind us. We have clear and compelling strategies and a strengthened foundational capability to execute them. I have every confidence in our collective ability to deliver against our commitments and achieve an improved performance for the full year and beyond. And as we've demonstrated, we'll keep evaluating and refining our capital allocation towards return-accretive investments and as we continue to enhance our group's value creation prospects and profile. And with that, we'll now open up for questions. Jeanine Womersley: Good morning, and welcome to the Q&A section of our interim results presentation. Our first question, Roy, your GP margin in FBH is down on last year. How much of this can be ascribed to your price investment in kids? And how confident are you that this is still the right strategy? Roy Bagattini: Yes. I mean it's still relatively early days, but the results we're seeing are pretty encouraging. I think you'd recall, we saw an opportunity to take meaningful market share in key categories like kids and baby. These are categories which play to our strengths really. And when one thinks about the distinct competitive advantages we have, we believe we have the right to win in these categories. It's really about our quality credentials, our ability to drive cross shop and obviously, a bigger halo back into the brand. When one thinks about the size of the prize, you really need to think about it not so much in terms of GP percentages, but more in terms of GP rands. Obviously, percentages are a big feature in a lot of our metrics. But as a retailer, we obviously have bank rands, not percentages. And the value of the opportunity we see here far outweighs the opportunity in other categories where margin may be higher, but growth potential is lower. I also think, though, that when one steps back and looks at it, for us, it's both a customer and a commercial decision for us. And it's translating into results. We've gained market share in kidswear and that's notwithstanding lower pricing. So on a volume basis, our share gains would even be higher. The past summer season, in fact, we sold 30% more volume in our kids price investment basket. And that trend has sustained, and we've recently launched our winter basket, and that's already trading up 28% in volume terms. So to answer your question, yes, we have a lot of conviction that this is the right strategy. It did cost us some margin, but we banked a lot more rands. Jeanine Womersley: Thanks, Roy. One of your foods competitors recently reported results, and they seem to have sustained their momentum into the start of the new calendar year. Your momentum appears to have slowed somewhat by comparison. Can you comment on this, please? Roy Bagattini: Yes. I mean, look, I mean, you would have seen that, in fact, our momentum into the start of H2 has picked up a bit compared to where we finished the first half. But you're right that when you do step back and look at the overall picture, growth has slowed versus the start of the financial year. And in fact, there are a couple of reasons for that. Firstly, you know that we're a 70% fresh business. And so weather events generally have greater bearing on us than a primarily sort of non-fresh or long-life business. We've experienced some very significant cold and wet weather up north in the country, which has impacted certain categories and the availability within those categories. In some cases, entire crops were lost. And in other cases, quality was affected. And so there were batches of produce, which we couldn't take on simply because they didn't meet our specification, and that has had some impact. Secondly, meat. Meat is a big category for us, and we've seen the impact of reduced volumes as a result of foot and mouth in that area of our business. And then, of course, there's the overall impact of easing inflation. So net-net, those are the -- I think, the key areas. But clearly, I think there has been some slowing trends across the market more generally, particularly in terms of like-for-like sales. But I think you've seen that we've continued to outperform the market on a relative basis and again, particularly in terms of like-for-like sales, albeit that in absolute terms, revenues have obviously moderated somewhat. Jeanine Womersley: Roy, we have a couple of questions related to Food inflation. Well done on the results. A few questions from me. What is the inflation in Food currently? In other words, from Jan to Feb? Another question, your price movement in Food of 4.6% for the half is well above competitors. Why is that? Roy Bagattini: Okay. Zaid, I'll pick this up and then you can add if there's anything from your end. But to answer the first question, inflation for the first 8 weeks of this second half is broadly in line with what we've reported for H1. And I guess our guidance for the year that we've given for H2 rather is somewhere between 4% to 5%. Then on to the question as to why our Food inflation is above that of our peers. There are several reasons behind this. I mean, mix effect clearly is one of those. We have a very different basket to that of our more traditional peers. And we're seeing relatively higher inflation on key categories where we have inherently higher market share, particularly in meat, in fact, which accounts for more than 10% of our sales and where core meat inflation is up almost 30% on a year-over-year basis as a result of foot and mouth. So excluding meat, though, our price movement is a little bit more than 3%. We are seeing price declines, particularly in some of the more commodity lines like maize and rice, which account for a bigger share, in fact, of our peers' baskets. And remember, our Woolworths internal inflation typically lags that of our peers. When inflation typically ticks up, we're a little bit behind that. And when it comes down, we're a little bit behind that. And that's primarily as a function of our exclusive supplier arrangements. Importantly, we're also driving much more effective promotions. So we're obviously selling a lot more at full price. Jeanine Womersley: Thanks, Roy. A question on cost expense growth in the WSA businesses is ahead of sales growth. What was the cause of this? And can costs be brought under better control going forward? What can we expect from costs in H2? Zaid Manjra: I'll take that question. Thanks for the question. Yes, I think as we shared at the results presentation last year, we expected the expense growth in FBH and Food to be in the upper single-digits. So a 7% growth was not entirely unexpected. Our top line growth was a bit softer than we had anticipated, particularly in Food, as inflation eased and which we spoke about, which admittedly led to expenses growing ahead of sales. There are a couple of factors to consider within this. Firstly, as I've said in my presentation, we've made a number of significant investments in strategic and growth-enabling initiatives over the last few years, including in the value chain, next-generation stores and new format stores. So that has contributed to that. We've had above inflation employee cost growth. And again, there's higher depreciation charges from the investments we've made. And this has, of course, impacted the growth. I've also called out the impacts of the movement in exchange rates that's very much within costs, and that has certainly contributed to that. And were it not for these impacts that I've just spoken about, cost growth would have been between 5% and 5.5%, so about -- well in line with inflation. The second half is likely to be broadly similar to the first half. And having said that, I think it's -- we always endeavor to contain cost growth within sales growth. And we are undertaking a series of cost containment initiatives in the second half to ensure that we deliver to our commitments of a better full year result. Yes, thanks. Jeanine Womersley: Thanks, Zaid. Roy, quite a topical question. How is foot and mouth disease impacting your Foods business? Roy Bagattini: Yes. No, I mean, obviously, this has been devastating for our industry and particularly for our country's farmers. Our availability, though, has not really been affected as we've been able to switch supply from farms and abattoirs to those that haven't been affected. And that's one of the benefits of our largely exclusive supplier arrangements and supplier base that we have. But the impact we are seeing is on pricing and resulting volumes. Pricing in our core meat business, as I said a little bit earlier, is up around 30% on last year, and that's impacting our overall inflation numbers. And we're probably selling around 70 tonnes less meat per week as a result of that. And I think everyone is facing an ongoing risk until the entire SA herd is vaccinated. The good news is that we have already received over 1 million vaccines, which are being distributed to the key hotspot areas and government has allocated additional funding to support this drive. The opportunity we have as well, I mean, we have an in-house veterinary team. And given our expertise in this area, we're actively engaging with the Minister of Agriculture to see how we can assist. Jeanine Womersley: Thanks, Roy. Why are you so bullish on the rest of Africa and growing space there when other South African retailers are closing stores? You're also clearly seeing the negative impact of the currency volatility in these countries. Roy Bagattini: Yes. Well, firstly, our peer markets may differ to ours. I mean, so it's not necessarily you're comparing exactly the same markets for markets, so direct comparison isn't relevant. The African markets that we operate in are all markets where we have an established track record. And in some cases, we've been there for 30 years. And we trade very profitably there. So there are markets where our brand, Woolworths is known and loved in high regard. So we're also very clear about the markets we want to be in. We're not venturing beyond the frontiers at the moment. We're very comfortable in the 10 markets that we currently operate in. Our approach has also been a very measured one. It's about being really building strong relationships with key stakeholders from government, landlords, suppliers. We built a resilient supply chain to support those businesses. We've also established in-country local sourcing where we can and manufacturing capabilities. And we've very importantly, curated our offer to be more directly appealing and relevant to local consumer needs. So again, I mean, for us, a really compelling customer and commercial opportunity. Also, I mean, to be clear, we're not in these markets as a rand hedge, but rather because of their growth potential. And certainly, by nature of these markets, one must expect some degree of volatility. But notwithstanding the ForEx impacts that we have here, these markets are still margin accretive for us and will become increasingly so as we scale further. Jeanine Womersley: Thanks, Roy. A question on Country Road Group costs. You've guided to removing AUD 30 million of annualized cost from CRG, but that doesn't appear to be the case. Why? Roy Bagattini: Zaid, you want to pick that up? Zaid Manjra: I'll take that as well. I see another question on cost, interesting focus on costs. Absolutely, I think what -- when we spoke previously in the last financial year, we had indicated that we had removed between AUD 15 million and AUD 20 million of costs in Australia. And we did say as well at the same time that on an annualized basis, that would have been circa AUD 30 million, which you are correctly pointing out. And we also, I think, indicated that this was primarily to offset the post David Jones separation stranded and the dyssynergy costs we are seeing coming into Country Road. We have largely achieved this with savings still to flow through the next 12 months. Our year-on-year Country Road costs are flat on last year at just under AUD 320 million for the half. And if you want to kind of work the numbers out, if you take last year's number and you reduce it by the sort of the pro rata share of the cost that we -- the AUD 30 million you spoke about. So if you take out AUD 15 million from that and then if you add and take into account the normal inflationary and staff cost increases of circa 4%, you'll get a number that's not far off from what we have reported. And the difference is really due to some additional marketing that we have invested in, in order to drive top line sales. Jeanine Womersley: Thanks, Zaid. Roy, congrats on a really encouraging FBH results, particularly versus the peer group. What gives you the confidence you can sustain this level of performance? Roy Bagattini: Yes. Well, firstly, I mean, thank you. We're certainly very pleased with the performance we've turned in, particularly again on a relative basis. Look, it's a great question, and we've had a number of these questions in the past. Of course, any fashion business has a degree of cyclicality. You're never going to get 100% right 100% of the time. I mean apparel is quite susceptible to shifts in trends in discretionary spend, too. And if you go back to my presentation, I alluded to the fact that we are seeing more demands on the discretionary wallet from the likes of gambling -- online gambling and certainly some of the newer online entrants. But I do think we have fundamentally strengthened the core disciplines and capabilities particularly given the investments we've made over the past few years in this business. You'd recall, perhaps when we spoke about our turnaround in the context, we were talking about 2 phases of the turnaround. The first one being about the market, a deep understanding and appreciation for the market and the opportunities for the customer and who we are as a brand and then really focusing on getting product increasingly right. That was all in that first phase. And then the second phase really shifted to us being really more operationally competent and capable and improving operational performance, fundamentally targeted at driving up availability. And it has been heavy lifting. And there's no doubt there's always going to be more to do, but it's fundamentally transformed our ability to execute and deliver a more consistent more sustainable level of performance. And in fact, that's evident -- well evident in some of the score you're seeing on the Board, both operationally and financially. And so I guess, yes, I mean, my answer is clearly, yes, I do think this is something that is sustainable. Jeanine Womersley: Thanks, Roy. You break out growth in the Beauty and Home subdivisions. Please, can you give us the growth number for fashion clothing? I'm happy to take that. It's just over 5%. Your Home business has grown well. You've also said that you would give this business more trading space. How much of Home's stronger top line performance came from the reallocation of space? Roy Bagattini: Yes. I mean, great question. I mean I think you're right. We saw really good growth from Home this past half. I think we're up about 14%. But in fact, that was actually mainly driven by like-for-like growth, which is close to 11%. And that was underpinned, I guess, by our product, particularly in kitchen and dining categories, where we are really driving the cross-shop opportunity with our food customer very, very strongly, leveraging our loyalty program, too. I guess -- I mean, that aside, I mean, the opportunity we see for Home and increasing space for Home, in fact, is very significant. And in fact, we're looking at the opportunity to pursue a number of standalone stores as part of that strategy. Jeanine Womersley: Roy, another fairly topical question. How do the recent events in the Middle East impact your business? Roy Bagattini: I'll pick that up, Zaid. Maybe if there are anything you can add too. Well, I mean, I think our different businesses will obviously be impacted in different ways. If you take a look at our Foods business, I mean, we are in a very fortunate position in that more than 90% of our products in our Foods business is locally sourced, and we have largely exclusive relationships in our supply base, which gives us great visibility and security over our supply. Naturally, however, I mean, there will be indirect impacts from higher energy costs, which could play through to higher food inflation at an industry level. From an FBH perspective, a little different in that we could see upward pressure on carrier costs, container costs and congestion, I think, at ports. impacting both container availability and consequently, delivery delays. We're seeing the intent to sort of move shipping lines around the Cape of Good Hope, so being rerouted whilst, I mean, obviously, this hasn't officially hit us yet, but it could do so clearly if things endure and continue to escalate. So yes, I think from a sustained oil price, that ultimately will play through into broader inflation, potentially the interest rate outlook, which could be impacted. But I think really the more immediate factor I would be concerned about is consumer confidence, which is likely to, therefore, remain subdued as we sort of navigate this pretty uncertain global context. Jeanine Womersley: Thanks, Roy. We have a number of questions on inventory levels in apparel and the outlook for GP margins. Does stock clearing in FBH continue into second half with a similar margin impact? Can you comment on the health of the inventories at WHL FBH as it rose at period end? Can we expect further GP margin dilution in H2? Can you comment on your inventory levels specifically in FBH versus CRG and the progress you've made to clear excess inventory? What can we expect from H2 GP margins? So I think a similar theme there, Zaid. Roy Bagattini: Great questions. Zaid Manjra: Shall I take that one? Roy Bagattini: Give it a go. Zaid Manjra: Yes, I'm glad to say I think inventory levels have come down across the group. And we've made very, very pleasing progress to clear excess inventory as we have guided and particularly in CRG. CRG's inventory levels are actually 15% lower than they were last year. and they've done a phenomenal job to really clear that. And again, when you look at the results, we call it out very much in the sales that we've had in the first half, which impacted our margin. But we're getting into the second half with much, much cleaner stock. In FBH, inventory levels are broadly in line with last year at December '25. But compared to June '25, we're actually 7% down. So that's also a very healthy improvement from where we were 6 months ago. Post clearance sale, which we were in sort of summer clearance now, inventory is actually lower than it was at the same time last year. So again, I think we've done a good job in clearing that inventory. And again, I think to point out that the FBH inventory is predominantly -- it's all year product. There's a bit of seasonal stock, but we clear that within this so we can work through the all year product during the course of the next 6 months. In FY '25, we saw a number of headwinds to our GP margin, and we've spoken about that. It was the higher levels of promotion, the one-off supply chain cost, a weaker dollar. And you won't comp this to the same degree looking forward. Looking forward, in terms of the second half, I expect the CRG gross profit to certainly improve in the second half from last year. As I said, they're coming into much, much cleaner and better stock. And while we will continue to clear excess inventory in the Fashion, Beauty and Home business, it is going to be to a much lesser extent than we had last year. So we're also expecting that to certainly improve in the second half, notwithstanding the investment we're making in kidswear. Jeanine Womersley: Thanks, Zaid. Maybe sticking with Australia, how much of the proceeds from your sale of Bourke Street or the Bourke Street building have you repatriated to South Africa? And how should we think about the balance? Zaid Manjra: Yes, I'll talk to this one again. I'm glad it's not about costs but about funds that we've got in Australia. Look, I think we mentioned we've realized over AUD 220 million from the sale of the Bourke Street property. We have repatriated AUD 50 million in the first half, and we've also repatriated a further AUD 55 million since then. So we have just over AUD 100 million left in Australia. And as the Country Road Group's performance improves and its cash generation continues to improve, which it is, we'll continue to repatriate the balance over the course of the next while. Jeanine Womersley: Thanks, Zaid, Given the EBIT drag CRG provided to the second half and the prior period and the growth reflected over first half '26, is it reasonable to assume second half '26 is at worst break even and I think a similar question here. Roy and Zaid, thank you for the presentation. Considering seasonality and the circa 1.6% sales growth achieved in the first 8 weeks, do you expect CRG to be profitable at the EBIT level for H2? Roy Bagattini: Yes. Well, the answer is simply, yes. Jeanine Womersley: Great. Thanks Roy. We have a question here on capital allocation, and I suggest we probably close after that. We're almost 30 minutes on Q&A alone. Roy, you've made significant investments in your core business over the past few years, and you're now alluding to the opportunity for inorganic growth. How should we think about your priorities now from a capital allocation perspective? Roy Bagattini: You're right. We've invested roughly ZAR 10 billion over the last 3 years across a number of sizable initiatives. These have largely been back end or what we call growth enabling investments. And we're starting to see the benefit of these already. We are nearing the end of our heavier CapEx cycle and the extent of investment will certainly ease, which is equally important for us, though, is the fact that the nature of the investments will shift to more front-end and customer-facing, particularly in terms of our physical stores and online, where we see significant scope here to obviously attract new customers and increase share of wallet from existing ones. So investing in our core businesses really and our existing front-end growth initiatives remain a significant opportunity and priority for us. I think in terms of the M&A component of the question, we're not actively looking for acquisitions to grow. Significant runway for organic growth within all of our businesses. But naturally, we do get a number of opportunities coming our way and that we take a look at from time to time. And certainly, if something like another absolute pets had to come our way, we would absolutely take that pretty seriously. So when we think about this sort of thing, I mean, it's about bolt-on acquisitions, an existing category in which we may be underpenetrated or a newer category that is complementary to our business. Either way, it needs to sort of being able to leverage off our core competencies and our existing strengths. And of course, it needs to make both operational and financial sense for us. And then importantly, we will continue to sort of evaluate track and ensure that it contributes accretively from an investment perspective. Jeanine Womersley: Roy, Zaid, thank you. That brings our interim results presentation to a close. Thank you to everyone online for joining us this morning. We do have the opportunity of engaging with a number of you over the next few days, which we look forward to. Thanks again. Zaid Manjra: Thank you. Thank you very much. Roy Bagattini: Thanks, Jeanine. Thanks for the questions, and thanks for everyone for tuning in. Thank you. Zaid Manjra: Cheers. Bye-bye.
Martina Kalkhake: Good afternoon, ladies and gentlemen, and welcome to our webcast on Bilfinger's Full Year and Q4 2025 results. My name is Martina Kalkhake, and I'm joined today by our Group CEO, Thomas Schulz; and our Group CFO, Matti Jakel. We will start with the presentation of the quarterly highlights and also the full year financials and then open up the call to your questions. [Operator Instructions] The event will be recorded also as usual. Now I hand over to Thomas. Thomas Schulz: Thank you very much, Martina. Hello, everybody out of the sunny Mannheim here in Germany. When we look into the year 2025, we can say that we achieved all financial targets what we set out for the year. It was a year with clear market -- our market position expanded, but in a very volatile environment. Our orders received went up 6%, revenues 8%, EBITDA margin up by 30 basis points and free cash flow significantly up to EUR 330 million. We propose a share increase from EUR 2.40 to EUR 2.80 per share. The outlook for 2026, we fixed with EUR 5.4 billion to EUR 5.9 billion, and the EBITDA of 5.8% to 6.2%. On our list, where in the last year acquisitions, we did 3 acquisitions, and we announced 1 signing in that case for Turkey. When we then look into the targets a little bit more detailed, you see on the left side, the revenue development, '24 full year to '25 full year. We achieved an 8% growth and a 4% organic. In EBITDA, we are up 13%. This proves that our system, our strategy with operational efficiency is actually working quite well. Our free cash flow made a significant jump upwards from EUR 189 million to EUR 330 million, which is a 75% increase. Our outlook was EUR 300 million to EUR 360 million but that was actually brought up during the year. When we then look into that what we do as a company, you know that sustainability is the core. Efficiency is the core of the Bilfinger Group to improve that on our customer site and customer businesses. On that very lively slide, I would like to have your focus on the left down part, the greenhouse gas emissions, Scope 1 and 2 intensity measured in CO2 versus million euro revenue. And there, we have a significant step improvement by minus 15% from '24 to '25. The second thing is in the middle of the slide, you see more than 0.5% of our revenue as an investment in learning and development for our people. Our people are our assets. Our people are our reputation, our competence and, in that case, our future. That target, of course, we fulfilled for 2025, and we will fulfill it for 2026 too. Above that, it's about safety. Safety is not only important that all our employees and people related are safe and in safe working conditions, it is actually for our customers a quite good KPI to see how our performance as a company, as a group on customer side is working. And we can announce with, yes, quite a lot of being proud of our own people that we had one of the best years ever in the Bilfinger Group. We actually improved the TRIF from 1.12 down to 0.91 and the LTIF significantly from 0.32 to 0.18, which is both world-class and shows the position of us to help customers to get more efficient. Next thing is that we measure our business in 4 categories because for mechanical industrial service, the European taxonomy and classification out of Brussels just forgot about that part of the industry, which, of course, is quite important. So we introduced, at the beginning of '23, our own classification. What you actually know when you buy, for example, a fridge in an electronic store. A is very environmental friendly, D is not environmental friendly. And here, you see the year '23, '24 and '25 on the left side. And you see that we are in the categories with the darker blue color, step-by-step going up when the gray one, which is actually the coal and fire energy generation-related business is slightly going down. To give you a little bit more information you have on the right side, some of the orders. For, a, it's a clear energy generation CO2 reduction direct business; and, b, it's enhancing energy efficiency and then, c, is all the support for that work. If we then go further to the industry outlook and industry development, how is the business going? We use, for quite a while, the production index and you have that on the left side and its index the first time here to the year 2023. Before it was 2019, the last year before COVID and '23 is the first year after COVID, hardly can say it was completely over, but a good measurement. And you see 4 graphs and the graphs actually symbolize the different industries. Of course, the most sticking out is, of course, the green one, pharma, biopharma with quite an increased outlook to EUR 130 million up in the index up to 2030. Then you have energy, then you have oil and gas and then you have chemicals and petrochem. On the right side, you see very much what our share is. The biggest industry we are operating now in is energy with 24%. The demand is okay and good. And then we have chemicals and petrochem, which is 23%. Demand goes sidewards. And here, the sidewards movement is predominantly out of Germany. We don't see further going down but we don't see a significant up no matter that they are the first positive signs at the end of the tunnel. Then we have oil and gas with 18% where the demand is good, too. And of course, pharma, biopharma, where we still see quite a positive market. Important in that is our outsourcing potential, the potential where customers decide or could decide to give us, Bilfinger, a big part of their complete maintenance business because we are experts in it. We do it more than 1,000 times per day, and that actually generates for the client a lot of positive profit impact. These outsourcing potentials are significant good in the chemicals and petrochem because they are -- our customers are there for quite a while under pressure. And you see energy is good. Oil and gas is good and pharma and biopharma is good, and it's part of our growth story. Then we go further. It's about selected orders. We always show you free orders of different geographies and different industries. On the left side, it's from our dear client, Borealis in Sweden. It's actually about the responsibility of Bilfinger to create an increase in production capacity in chemicals and petrochem. In the middle part, it's about energy. It's Estonia, our customer, Utilitas, and again, it's about district heating. We in Bilfinger a believe strongly that district heating is an ongoing positive development. And it makes actually from an energy point of view, a lot of sense. On the right side, we have oil and gas out of Germany. It's the company, Gassco, and it's about the reliability of the gas supply and gas infrastructure, which is nowadays more important than ever before. Out of that, we go to innovation because we, as an industrial service provider, have a fantastic position by having most of our people permanently on customer side, to create ideas and to make products out of it. This product, what we show today, is the Bilfinger Acoustic Corrosion Detection System. When you are in a processing plant, you have pipes, you have containers, you have storage tanks with material in it, liquids, gas, powder, partly flammable, partly quite aggressive in the environment. And when you try to detect corrosion, which is, of course, important to know what happens, you have normally in regular operation to empty all of that so that you can make your measurements. We developed together with other partners, a special acoustic emission sensor where we can go in a current environment in operation into the plant and measuring the effect of corrosion as a potential threat, leakage and so on. That is not only reducing the downtime for the customer and bringing up cost savings for the client, it is a significant safer approach and fits very much into our safety story. Out of that, we come to the figures. On the top line is our more or less already quite famous opportunity pipeline, what we invented several years ago. It shows actually indexed to 2 years before the amount of possible opportunities for the Bilfinger Group judged by if they will, out of our point of view, happen and if we have a chance to take the order. And when you see the development of the fourth quarter in the last 2 years, we actually improved with that potential what we have in front of us to roughly 110 versus that what we had at the beginning of the year -- at the end of the year 2024 or in the year 2025 -- or '23 and '24. When you look into it, a part of that improvement, of course, comes through our quite active M&A strategy, what we drive. Each M&A is, of course, adding us more potential. Out of that, the orders received, when you look here, we actually had a good year, but as it is typical for us as the Bilfinger Group, we have quite a fluctuation between the quarters in the order intake. It is based on the fact when milestones or contracts are dropping into a quarter from a timing or not. So out of that, we had organically and inorganically negative development versus the quarter 4 in 2024. But our order backlog throughout the year and versus the quarter actually improved by 5% or 4%, which shows a very good stable development of our group and is fully in line with our growth story. Out of that, I would like to give to Matti, our CFO. Matti Jakel: Yes. Thank you, Thomas. Good afternoon also from my side here. Yes, let's take a bit of a deeper look into the numbers. As Thomas said before, the orders received in the fourth quarter were a bit, let's call it, softish based on timing of contract awards and volatility in the markets that we have, I think, communicated quite well over the last 2 years, at least. For the full year, orders received increased by 6% in total, 2% organically. The acquisitions play a role in here, but also we had a little bit of a negative impact from the weakening U.S. dollar. Order backlog reached EUR 4.3 billion after EUR 4.1 billion in 2024, so a very nice increase. Revenue, a strong increase of 8% and 4% organically to EUR 5.4 billion. Growth in the energy sector, in the pharma and biopharma sector and obviously, due to the cost pressure, some decline in chemicals and petrochemicals. As part of our derisking, we introduced to report our revenue shares by a remuneration type. Early on, we just differentiated between projects and service and frame contracts. This year is a better picture almost 50%, 44% to be exact, is time and material, close to 20% is unit rates, 70% is mixed elements in the remuneration and only 20% is lump sum, which gives you a fairly good picture how well our contract portfolio is risk-managed. On the profit side, our gross profit increased from 10.9% to 11.3%. That's an increase on the absolute terms of 13% and again, what we announced during the strategy, product mix improvements, derisking, standardization, all of these do drive our margin improvement across all segments. On the SG&A side, we remained stable across the year at 6.3%. However, we have to say that the acquisitions, the 3 acquisitions that we did in 2025 came in with higher SG&A ratios which does give us opportunities for cost efficiencies in the future years. And EBITDA developed very well from 5.2% to 5.5%, and the last quarter at 6.1% was the strongest quarter sequentially. We had 4.5% in the first quarter, 5.5% in the second, 5.8% in the third quarter and then 6.1% in the fourth quarter. So a very nice development sequentially. Important also is to look at the adjustments. As you know, we do report on the reported numbers, but to give you a full picture here, we had last year a positive contribution from those adjustments of EUR 7 million and this year of negative EUR 8 million. So that's a swing of EUR 15 million. If you factor that in, then you see the real operational improvement, which is then more than the 30 basis points here. If you refer it to EBITDA, then the improvement is 50 basis points. Take a brief look into the segments. You will know that we have changed the segment structure effective January 1, 2026. Here is 2025, so it's the pre-existing segments. Europe, a very large segment with orders received of close to EUR 4 billion. That's a slight decrease organically, but overall a 6% -- a strong 6% increase. Revenue, very similar, organically, a slight decrease, but overall, 6% increase for the full year. Book-to-bill at 1.06, stable, same as last year, 1.06 and the order backlog reached EUR 2.9 billion, so almost EUR 3 billion in the segment. On the profitability, in margin numbers, a slight decline, from 5.9% to 5.8%. But what I mentioned before in terms of the adjustments, here, we have a swing of a total of EUR 17 million. So again, if we look at EBITDA adjusted, that improved from 8.1% to 8.5%. You find those numbers in the backup to the slide deck. International, very nice performance across all KPIs, 17% increase organically, 13% in total when we look at orders received. We did quite well on frame contracts in the United States. The government customers still are hesitant to award contracts. We had the shutdown, shutdown ended and then there was another one. So that takes a little while for this process to restart again. But very good new orders from oil and gas and energy industry in the Middle East. Revenue grew by 6%, 10% organically to EUR 742 million. And the profit from a breakeven position last year to almost 4% for the full year. And again, it's operational excellence that's driving margin expansion not only in the United States but also in the Middle East. And then technologies, also a very nice performance on all KPIs, 6% increase in orders received, nice growth, in nuclear and in biopharma and pharma and the revenue increased by a stellar 17% to EUR 856 million. Book-to-bill at 1.0 is lower than last year, but you know the business is more volatile than the other ones, so nothing to be concerned about. Profit, very stable in the fourth quarter at 8%. But overall, throughout the year from 6.2%, 80 basis points up to 7.0%, a very nice performance in our Technology segment. For the group, net profit for the year, in 2025, we achieved EUR 176 million for the full year. There is an impact in there that I need to mention. We bought back shares from minority shareholders in one of our larger entities that had a negative impact on the financial result and it had a negative impact on our tax rate. So consequently, the earnings for the year and the earnings per share are down by 1% for 2025. Cash flow. I think Thomas mentioned it before, we achieved EUR 330 million free cash flow for the year, a 75% increase, 110% cash conversion rate, some positive effects in here, a large payment from a dispute in the United States that we settled in 2024 and the cash came in, in 2025, so that certainly helped to improve the cash flow. But more importantly, our working capital efficiency that we measure in net trade assets over revenue has improved from 9.6% to 8.3% as we had planned and announced it last year. On the net liquidity or net cash position, no change on the debt side, very stable on the financial debt and also on the leasing liabilities, they fluctuate a little bit with the acquisitions. But we had payouts for the share buyback program. We had payouts for M&A, and we had payout, obviously, for the dividend but still, we increased our net liquidity position from EUR 88 million to EUR 146 million by almost EUR 60 million despite those payouts that we had. No change on net debt and consequently no change on the leverage. We're down to 0.3 at the end of 2025. Capital allocation, very important. No change there. Dividend, very important. We will propose EUR 2.80 per share. That's up 17% from last year where we proposed and paid out EUR 2.40. We are funding our organic growth in terms of sales improvements, people development, innovation, digitalization. M&A plays a significant role. And more importantly, and as we announced at the Capital Markets Day, we will accelerate there. And then obviously, if something is left then we have all kinds of options in terms of shareholder returns, but it's also very important that we maintain no matter what we do, we maintain our investment-grade rating. Let's take a quick look into 2026. The updated segment structure, as shown on the left-hand side. The segments are in size more equal than before. Western Europe is about 1/3 of the group, Central Europe a bit less than 50% and international is about 20% of the group. So it's more balanced than what we had before. We are working on a full restatement, and that restatement will be made available in the week of April 20 to everyone who is interested and we will publish this on our website. So for the Western Europe segment, which includes countries, Holland or Netherlands, Belgium, and the U.K. We see revenues of EUR 1.8 billion to EUR 2 billion for next year and an increased margin of 7% to 7.4%. Central Europe, which includes Scandinavia, the Nordic countries, Germany, Switzerland and Austria, we see a revenue of EUR 2.5 billion to EUR 2.7 billion and an increased margin of 5.8% to 6.4%. And for international, EUR 1.05 billion to EUR 1.2 billion and also an uptick in EBITDA margin of 4.2% to 5.0%, and then reconciliation is just for completeness sake. So that, I think, good targets and what it does for the group. I'll turn over back to Thomas. Thomas Schulz: Thank you, Matti. So this is the group outlook. You see here on the right side of the slide, the full year '24, '25, the outlook for '26 and of course, the midterm targets for 2030 because that is where we run to. When you look to the outlook, the EUR 5.4 billion to the EUR 5.9 billion reflects that what we see in a volatile business market, but at the same time, the growth potential, what we initiate to have. On top of it, an improvement in the EBITDA margin from 5.8% to 6.2%. For us, always as in the year 2025, the midpoint is the most important in that guidance and the free cash flow, EUR 250 million to EUR 300 million because we don't repeat or we can't repeat each year, any legal dispute where we get then cash paid in the year after. Important for us here is the cash conversion. And there, we target, of course, more than 90% towards the year 2030. Important in that is our development as a company. And this actually is the whole strategy of the Bilfinger Group. As simple as it should be, it shows that we work on our own efficiency, what we call operational excellence at the bottom as well as the market expansion and then you see 3 boxes with '25 results just delivered. Then the midterm targets, '25 to '27, what we gave at the beginning of '23, and we gave new midterm targets to 2030 in December last year. You see that the targets what we have from '23 are still on the list, and we achieve. The same we will do, of course, with the 2030 targets. Out of that, summary, again, we expanded sustainable profitable growth in a quite volatile market and the volatility will not end as we are well aware. Our orders received went up 6%, revenue 8%; EBITDA 30 basis points up versus the reported 5.2%, proposal for the dividend is still the same payout ratio of 53% from EUR 2.40 to EUR 2.80. Free cash flow is targeted is EUR 330 million in '25 and quite up from the year before. Outlook, I just explained. And of course, M&A is on our list. We did 3 in last year. And actually, we had one signing of a larger one in just before Christmas. And with that, I would like to give back to Martina. Martina Kalkhake: [Operator Instructions] The first question comes from Michael Kuhn from Deutsche Bank. Michael Kuhn: Starting with E&M International in the fourth quarter, I think quite a standout results contribution. You mentioned operational excellence. Any other things you would like to point out or any more details also on Middle East versus North America performance? Thomas Schulz: So the -- at first, our colleagues did a great job that where we are coming from, especially in U.S., great job. But -- and that's the thing and that's the reason why we keep our strategy target and prioritization target for M&A in North America as well as in the Middle East. We are still too small to be sustainable big player in that market, what has to be with our competence. So the improvement, as Matti said, is predominantly out of the operational excellence, how we are organized, how we work, how management layers, how competence is placed, how the global product centers are working with these parts of the world. And in -- I have to say that, in the situation what we have since Saturday morning in the Middle East, where all our people are safe, and we are very happy and was the first thing what we did in the crisis management. We see that our way of having a decentralized organization, especially with the new segment structure, makes it clear and easy or easier to manage, and that all contributes into a better performance. Michael Kuhn: Understood. Then on the margin improvement in '26, maybe some idea on gross profit versus SG&A/overhead. You mentioned some of the acquisitions you did came with higher SG&A rates. Any cost savings targeted here? And also on top line performance, you mentioned cross-selling initiatives at the CMD. Do you see those initiatives already bearing fruit? Thomas Schulz: With the cross-selling. Yes. Cross-selling is -- actually, it means that we are selling the good products, what we have in some spots to all the customers in the Bilfinger geography. The new segments will enable that because they are more balanced. They are more balanced in size. They are more balanced and competent. They are more focused on the customers. And there are less layers in between us and the customer, which always helps. This cross-selling is not really into the figures from the last few years. It's not really in that what we have in 2025. It improved, but you now, as it is an improvement on very little is still little. So there is more to come. It's actually part of the strategic lever market expansion. Matti Jakel: On the margin side, Michael, and thanks for the question. We continue to drive operational excellence to see margin progression in our gross profit. On the SG&A side, we see a few notches that we can improve year-over-year, and that is what we are also doing. Yes, it's true that the acquisitions came in with higher SG&A cost and we'll take a deep look at what we can do there. And I'm sure we'll find good things that will bear fruit in 2026 in the years following. Michael Kuhn: Understood. And then 2 on M&A. Firstly, on Teknokon. From today's perspective, when would you expect the closing? And can you provide us with, let's say, a few more details or at least an indication on Teknokon annualized top line contribution and profitability? Thomas Schulz: The -- we expect the closing, of course, this year if everything goes well. It should be up to the mid of the year, if things are going as expected. Regarding Teknokon's business performance, we actually gave to the market the information that is in the higher double-digit million range in revenue, but the profitability we will not disclose. Teknokon is -- and Turkey is when you look on a map, easy to understand between our growth areas Eastern Europe to the Middle East. When you look on a map, Eastern Europe for us, potentially at the moment, Czech Republic, Romania and especially Poland. But in the future, Ukraine and all the countries in between to the Middle East is building a bridge and starting with that bridge, Turkey is a very important partner. Michael Kuhn: And then lastly, again, sticking with M&A. How does the pipeline currently look like? Obviously, it can't be too precise, but let's say, is there a realistic chance for further deals over the next few months? Thomas Schulz: Yes. There's definitely a lot of chances, and I can explain that very short. At first, we work for quite a while, very professional and concentrated on filling up the funnel. Second, we are quite clear what we want to have, or we are quite clear what we don't want to have. We actually gave it on the Capital Market Day with 7 strategic points, which gives the parameter set for M&As. And third, it's a market situation. The industry, our end customers are going more and more for the larger service providers based on CSRD reporting, human rights reporting, equal pay reporting, all the reporting which makes it fairly difficult for smaller suppliers to be competitive. So the ones having multi-service in the offering as we up to being the solution provider are easier than that. So we actually have quite a lot of demand and questions from smaller companies to join us to be part of the Bilfinger family. And that is, as you know, a very important part for us because we are a people company. The ones we acquire, we would like to have that they want to be acquired by the Bilfinger Group. Martina Kalkhake: We have further questions on the line. So the next question comes from Olivier Calvet from UBS. Olivier Calvet: Just a couple left. Firstly, can you give us some more color on the hesitant customer behavior you mentioned in North America? Is that from a specific customer type? Or any color you could give us there, that would be great. Thomas Schulz: Yes. Olivier. Thanks for the question. What Matti rightly said is that you all remember, Mr. Elon Musk, coming into the White House at the end of '24, beginning of '25 with the DOGE program. And in that announcement was to cut positions in government-related offices by 50%. We have in U.S. quite a larger business, which is like commercial contracting, where we actually work throughout these offices and on top of it, some of our clients need, of course, permitting and approvals from these offices. And based on the fact that then the people who were on the target list of Elon Musk at the beginning of '25, they said we will work not that much any longer as before and not over time and so on. A lot of approvals, a lot of things just slowed down significantly. And despite the more positive result, we saw that actually in the figures. Olivier Calvet: Okay. That's helpful. And then just to come back on your Middle East exposure, obviously, good to hear that your staff is safe there. Can you shed some light on how you're thinking about risk? How you're thinking about country exposure in the current situation? Thomas Schulz: Yes. The -- at first, again, a big thank you in the Bilfinger Group, very professional risk management, very professional crisis management. The monitoring, the reporting, the taking care of own individuals in the Middle East as well as here in the headquarter and in Europe was outstanding positive. It shows a strong company. When we look into the Middle East, we cover there or we are acting in 7 countries, not in Iran, to make that fairly clear. We are not in Iran. Second, we are doing maintenance predominantly on customer sites and helping them to keep the sites up and running. We help them in engineering. We help them in turnarounds. We do a lot of work on the customer side. That work is still ongoing. And it's not impacted our business through logistics hurdle or traveling people in or out or goods in or out because our organization is acting local in a decentralized manner and on top of it, if we need support, which is always the support out of the competent centers then we do that digital or by phone. When we look into the risk in the Middle East, it's too early to say. But as we know, at the beginning of the crisis, it gets always very hot in the media. And then the dust has to settle and then to see how it goes on. We will go on and not changing our point of view regarding the Middle East as a growth area where we will be bigger, where we have a lot of fantastic great customers and a lot of business with a lot of investments. Olivier Calvet: Yes. Okay. And then just on the margin guidance, I'm not sure you'll be able to or willing to give us that, but just trying. Are you able to quantify how much of a headwind is the chemical business and how much support you're getting from energy in your full year '26 EBITDA guidance? Matti Jakel: Olivier, we're not guiding on industries, as you well know. And as you could see, the development in 2025 that we were moving that the revenue share between the industries were shifting from 28% in petrochemicals and chemicals in '24 to 23% in '25 and conversely, the energy industry from 21% to 24%. So we are -- our business model allows us to deploy resources between the industries. So from that point of view, we feel very well protected against those headwinds, but we don't guide on individual industries. Olivier Calvet: Okay. And maybe final nuts and bolts, just for you Matti. Tax rate you expect for '26. And I am correct in assuming there is no one-offs you expect in the free cash flow guidance for the year? Matti Jakel: Yes, no one-offs on the tax rate and/or the cash flow -- free cash flow. Olivier Calvet: Tax rate you expect for '26 is -- what do you expect? Matti Jakel: 24%, 25%, that's the usual. Martina Kalkhake: And the next question on the line is from Craig Abbott from Kepler Cheuvreux. Craig Abbott: A couple of remaining. Once again, this year, similar to last year, your guidance spread from the low end to the upper end is quite large. I appreciate it's still early in the year and obviously, there's a lot of geopolitical volatility out there. So that's understandable. But I just wondered if you could shed some more color on there about what your scenario assumptions are as to like what would happen to only have a flat top line and what will happen to be able to reach that upper end? That's my first question, and I have one more. Thomas Schulz: Yes. Thank you very much, Craig. As you know, when we give a guidance for us, the most important is the midpoint. And the -- and that is what we actually calculate and then we look around what is the volatility in the market and that gives the spread. So out of that, what we see is, of course, the high volatility in the market and Saturday morning last week was not helping in that to make it like this. Not that we are from a business point of view really heavily impacted as far as we see it at the moment. But of course, it brings uncertainty into the world. And we all know uncertainty is not a good food for investment on our customer side. On the other side, we see the dramatic need and demand for better energy solutions, not only more or lower in cost actually more to be safe that energy is always available at the right amount at the right location, especially in Europe. And that is what we not only have in Europe, we have that in the U.S. too and the thing when we look into that is positive from that. Second in that is the chemical industry, which suffered a lot reached a level where we see and we hear from our customers that their restructuring programs and efficiency improvement programs are taking actually quite a positive development. So slight -- a little bit light, a very small light at the end of that long tunnel we see. So that is another positive in it. Then we go on with the strategy execution. We did by purpose, as we explained it in December, an upgrade of our strategy to be better positioned to that what happens in the next few years, especially our sales force. We will be closer to the client. We will help them more, and we can show them with digital products to be more efficient, which is for us then a more profitable business, too. Last but not least, of course, things like long winter time, high volatility are more on the negative side. On the positive side are the developments, what we see to come, Ukraine, the Baltic states, infrastructure packages and so on. So it is quite a balanced outlook what we think, no matter that we have a very volatile market. Craig Abbott: Okay. And the second question is rather specific, but it was specifically mentioned in your detailed outlook report in the annual report where you were talking about the various end market investment programs. And I'm referring to the U.K. oil and gas services business, which you suggest is expected to decline by 1/4 over the next 3 years, while the industry and therefore, the industry spend would decline, obviously, by a similar amount. I just wondered if you could give us some indication of how significant this end market has been for you? Thomas Schulz: Yes. Actually, this whole oil and gas market in the U.K., when you look 20 years back and where it is now, significant less providers are in that business, a lot are out or completely gone as a company. Actually not so long ago, we saw that with peers. Second, we know that it will go down and we work for years, of course, to counteract on that, as Matti rightly said, to go into other industries, process industries where we were not so focused before on it. But actually, it's the same 80%, 90% of the same work, food, pharma, hydropower, nuclear, there is a lot what we can do more as Bilfinger in the U.K. and actually in Benelux, too and what we call in the Western European segment, which is one of the arguments why we have that as one segment because it's the same thing, shift slightly from one industry into multiple different ones where we have a lot of good experience and already some of it in the top line. So the fact is the U.K. oil and gas business will go down in that service part but the fact is that we were and we are further able to counteract and actually to put something on top of it. Craig Abbott: Okay. And that's very specific U.K. You're not seeing the Norwegian business or other decline? Thomas Schulz: So the -- actually, Statoil just came out that they found another oilfield or another carbon hydrogen field, oil and gas. And there's no intention at the moment that they really go into it like we see it in the U.K. At the same time, we should not forget that the oil and gas industry works very much on expanding their business model into carbon capture, but will be more and more important, similar technology, same customer, similar 80%, 90%, the same work for us. It's actually for Bilfinger quite a good news. So we see an industry going a little bit down and [ others ] will come up. And that is, as we saw in the last few years, helping us a lot. Give you one example in that, that we are not, how to say, playing too much Oracle on U.K. and Norway. Take Germany. When I joined, I think Germany was in the top line, 26%, 27%, and now it's 21% and the group still was growing 8% per annum since 2022. So we are, as Bilfinger with our business model, definitely able to adopt to new situations and to capture opportunities to make out of challenges, actually good opportunities as it should be. Martina Kalkhake: [Operator Instructions]. And the next question comes from the chat from [indiscernible] from AlphaValue and I will read that out. If high energy prices need to lower industrial output in Europe, could that eventually reduce maintenance demand for Bilfinger? How do you see sustained high EU energy prices affecting plant utilization and maintenance? Thomas Schulz: Yes. Let's start with the high energy prices, lower output. It is a relative game. If the prices in Europe are relatively higher than in other parts of the world, our customers are more under pressure with their production cost. So if the world suffers not to get enough oil and gas, then it hits the whole world and maybe some parts more to the east, more based on Iran than actually Europe or the United States at all. Yes, there is a connection in it. But if customers are coming under pressure, regarding the output and the energy costs, they actually get from us more support. They get from us more support. This is a pressure market as we enjoyed already since years in Germany. What is the difference for the Bilfinger Group? We -- I look into Germany now, which is under pressure and was under pressure in the last few years. We actually got more orders in the amount of orders, but they were smaller, significantly smaller in size because in a recession market, if you get an order for 100, you finalize it for 100. In an expanding market, you get an order of 100, you finalize it on 130. That's the big difference. But workload, we have a lot. Then regarding energy prices, plant utilization and maintenance, same thing, same part. We are looking into very much when customers plan to shut down complete plants and where then the lack of capacity, which is then shut down in that location is going. And what we see, it is not all going. It's wrong information to say everything goes to China. We don't see that. We see it in other parts of Europe and other plants to get a higher utilization where we help to shut down as well as to increase the higher utilization. And on the other European plants as well as into the United States. And of course, more and more still from a lower scale, the Middle East plays a more important role in what we call the regular chemical and petrochem business. Martina Kalkhake: Thank you, Thomas. I hope this answers your question, [ Igor ], but feel free to add a follow-up in a chat, if you like. At this time, there is no further question in the chat or also on the line. So let's probably give it a few seconds to add further questions, if you like before concluding the call. So I see there's a further question coming up in the chat. Let's give it a moment. The question is from Gerard O'Doherty from Metzler, Bankhaus Metzler. I don't see a question here in the chat yet. But I think he wants to ask via audio. So I'll ask technicians to open his line. He's dialed in as well. Gerard, can you -- yes, and line open. We need a few more seconds. Gerard we don't see you see dialed in per phone. Would you mind to type your question on the chat, please? Let's give it a few seconds. Otherwise, we can also bilaterally follow up. So unfortunately, that doesn't seem to work. I suggest we conclude the call now as there are no further questions. Now it's coming up. So I suggest we take it. So the question from Gerard is on working capital improvement. What we should expect this year on working capital improvements? Matti Jakel: We continue to work on the working capital management and on the improvements. We had a significant improvement in 2025. That will definitely stick in 2026. A similar improvement, I think, would be more difficult to repeat. Otherwise, our free cash flow guidance would be higher. So you can expect it to stick and we're happy to improve year-over-year. Martina Kalkhake: Thank you, Matti. And there's also a further question from Gerard whether the order pipeline has picked up in January, February of 2026. Thomas Schulz: Yes. We will give comments on the first quarter when we announce the first quarter. I think you expected that answer. The -- yes, not more to say on that. Martina Kalkhake: And another follow-up from Gerard, whether on the FX development in '26, we can give comments regarding the weak U.S. dollar. Matti Jakel: If I knew where the dollar would go, I'd not be standing here, I guess. Well, we have all seen the weakening in 2025 that has sort of come to a plateau. With the events and developments of the last few days, the dollar has strengthened somewhat. But I guess that's the normal volatility in volatile times. It's anybody's guess. So I think there are so many economists out there who are much better suited to comment on where the dollar versus the euro will be in 2026. I think if you ask about exposure as our business is very local, and we're not relying on materials and exports and imports, our exposure is very, very small on the fluctuations of currencies. Thomas Schulz: Yes. We go in line with that, what market in general expects for the dollar development. We work here with the standard agencies about it because in a volatile market to forecast is -- it's [indiscernible]. Matti Jakel: Yes. From -- maybe just one addition here, from an operational point of view, as far as our contracts are concerned, we are not hedging currencies. It's not necessary because we work in a local currency. We are being paid in local currency. So our hedging volume is very, very limited. Martina Kalkhake: We have one further question on the line from [ Andreas Wolf ] from Bereberg. Unknown Analyst: Congratulations on the achievements in 2025. It has now been nearly a year since the U.S. administration introduced its tariffs. Let's see whether those will remain in place. But my question is related to the client behavior that you might have observed since then. What implications does the globalization and location have for Bilfinger's business prospects? Thomas Schulz: Actually, no direct impact. We are a people company. The competence what we have to send around the world, we do digital or by phone. We have a few people who can travel in and out, but the flow of goods of hardware in our group is very, very, very limited. So the tariffs are not hitting us directly. When we then look on the customer side, it is a lot of debate about which impact that has on the different products and the different production costs, et cetera, et cetera. But at the end of the day, it actually focus our clients to get more efficient. And this is the core of what we offer, efficiency improvement and efficiency enhancement on the customer side. It is actually quite a good entry for us to go to the client and saying and talking with them, you have tariff headwind. We can help you to maneuver to monitor -- digital monitor the performance of your site, no matter where they are located and you can let us call it play it in the operation more from an international point of view, which definitely helps customers. So out of that headwind in tariffs, we can do some more products. But it is fair to say that any disruption in the global business always is not a good food for investment. And so the mood on some customer groups is, of course, not that positive, but it's that long, not that positive that we actually don't think that '26 will be a different year than '25. Martina Kalkhake: Thank you very much. That also was the last question on the line and also in the chat. So we conclude today's Q&A session. Thank you all very much for your participation this afternoon. As usual, if there are any further questions, the IR team is here to help you with your models and to answer further questions. Thank you very much, and goodbye. Thomas Schulz: Goodbye. Matti Jakel: Bye. Operator: The conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
Operator: Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions S.A. fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Michelle D. Esterman, Chief Financial Officer. Please go ahead. Michelle D. Esterman: Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Please review the forward-looking statements section in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2025 Form 10-K. These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events. During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. Joining me for today's call is William B. Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to William. William B. Shepro: Thanks, Michelle, and good morning. I will begin on slide four with our 2025 highlights. We are pleased with our full-year 2025 results. We grew service revenue, adjusted EBITDA, and GAAP earnings compared to 2024. These improvements reflect disciplined execution, lower interest expense, and strong sales wins across both business segments. The strong sales wins, including fourth quarter wins estimated to generate $13,200,000 in stabilized annual revenue, should put us in a strong position to mitigate the impact of anticipated legacy revenue losses, materially diversify Altisource Portfolio Solutions S.A.'s revenue base, and support our growth. We are particularly excited by the growth of our HUBZU inventory from recent sales wins. HUBZU's foreclosure auction and REO inventory grew by 137% since the end of the third quarter to 13,500 assets as of mid-February. Turning to slide five. Service revenue for 2025 increased by 7% to $161,300,000 with sales wins in both segments contributing to the growth. The business segment's adjusted EBITDA improved by $3,000,000, or 7%, to $47,600,000, and total company adjusted EBITDA improved by $900,000, or 5%, to $18,300,000, driven by higher revenue, partially offset by revenue mix and modestly higher corporate costs. Moving to slide six, we improved total company 2025 GAAP loss before income taxes to $14,100,000 from $32,900,000 in 2024. This was primarily driven by lower interest expense from the new capital structure, partially offset by $3,600,000 of debt exchange transaction expenses and a $7,500,000 loss from a legacy litigation settlement. 2025 net cash used in operating activities would have been close to zero if you exclude the debt exchange transaction expenses and $1,200,000 of higher first quarter cash interest expense related to the prior debt agreement. Adjusting for these items, net cash used in operating activities improved by approximately $60,000,000 over the last five years. We ended the year with $26,600,000 in unrestricted cash. Turning to slide seven. Fourth quarter 2025 service revenue was $39,900,000, up 4% from the fourth quarter of last year, driven by growth in the origination segment. Fourth quarter 2025 business segment adjusted EBITDA of $11,400,000 was flat to the fourth quarter 2024, while higher fourth quarter 2025 corporate segment costs resulted in total company adjusted EBITDA of $4,000,000 for the quarter. The corporate segment's costs were $700,000 higher than the prior year primarily from foreign currency fluctuations. Our fourth quarter GAAP loss before income taxes and noncontrolling interests improved to $8,100,000 from $8,400,000 in the fourth quarter 2024, primarily from lower interest expense partially offset by a $7,500,000 loss from a legacy litigation settlement. Before turning to the segment updates, I want to address developments related to Rithm. As we discussed last quarter, the cooperative brokerage agreement between Altisource Portfolio Solutions S.A. and Rithm, which I will refer to as the CBA, expired on 08/31/2025. Despite the expiration of the CBA, at Rithm's discretion, we continue to manage CBA REO assets and receive new referrals with limited exceptions. From a 2026 guidance perspective, which I will review shortly, we assume that this business will roll off during the first half of this year. With respect to Onity, Rithm provided notice in the fourth quarter that it is terminating its servicing agreements with Onity. As the service transfers occur, we expect a reduction in our foreclosure trustee, title, and field service referrals from Onity tied to these portfolios. Our 2026 guidance assumes that the Onity-serviced Rithm-owned MSRs transfer to Rithm during the first half of this year. Although we would prefer to retain this business, we believe that our sales wins, once stabilized, should more than offset the anticipated reduction in service revenue and EBITDA from the Rithm- and Onity-related changes. As a result, the midpoint of our 2026 guidance reflects service revenue growth and close to flat adjusted EBITDA, with Rithm and Onity representing a significantly smaller share of our revenue base by 2026. Turning to slide eight in our countercyclical Servicer and Real Estate segment. 2025 service revenue of $126,000,000 increased 5% from last year, reflecting a full year of the newer renovation business and growth across foreclosure trustee, Granite, and field services, partially offset by fewer home sales in the marketplace business. 2025 Servicer and Real Estate segment adjusted EBITDA increased by 6% to $44,600,000, with adjusted EBITDA margins higher due to revenue mix. Slide nine summarizes our Servicer and Real Estate segment wins and pipeline. In 2025, we won an estimated $20,600,000 in annualized stabilized service revenue wins, including $11,500,000 in fourth quarter wins. Two of the larger fourth quarter wins were in our higher-margin marketplace business unit, which we also refer to as HUBZU. The first was an REO asset management and foreclosure auction agreement with a residential loan servicer, and the second a CWCOT first-chance foreclosure auction agreement with an existing customer. We ended the year with a Servicer and Real Estate segment total weighted average sales pipeline of $19,300,000 on a stabilized basis. The pipeline includes a couple of larger opportunities for our trustee and title businesses that we are optimistic should close in the second quarter, if not sooner. Turning to slide 10 and our growing HUBZU inventory. We onboarded the two new HUBZU wins I just discussed and are off to a strong start. As of February 15, total HUBZU inventory stands at 13,500 assets, compared to 5,700 assets as of September 30. These two wins were significant contributors to this growth. We anticipate revenue from these customers to grow during the year as REO and foreclosure referrals proceed to sale. Moving to slide 11 and our Origination segment. 2025 service revenue grew 16% to $35,200,000. Adjusted EBITDA increased 19% to $2,900,000, with margins improving modestly. Service revenue growth was driven by continued expansion in the Lenders One business, including onboarding the forecasted $11,200,000 in third quarter wins. Due to these wins, the Origination segment service revenue growth accelerated in the fourth quarter, increasing 40% year over year. For 2026, we anticipate strong year-over-year service revenue and adjusted EBITDA growth for the Origination segment as recently won business continues to grow and scale, and we convert our sales pipeline to wins. Slide 12 outlines our Origination segment sales wins and pipeline. We secured an estimated $1,800,000 in wins, primarily in Lenders One, and ended the year with an estimated $14,900,000 weighted average sales pipeline. We are actively engaging with several large prospects and anticipate additional wins in 2026. Turning to slide 13 in our Corporate segment. 2025 corporate adjusted EBITDA loss was $29,300,000, reflecting a year-over-year increase in costs primarily related to nonrecurring benefits in 2024 and higher foreign currency expenses in 2025. We believe corporate costs should remain relatively stable as revenue grows. Moving to slide 14 and the business environment. We have been operating in a challenging environment with both low delinquency rates and origination volume, though recent indicators are improving. Ninety-plus-day mortgage delinquency rates modestly increased to 1.45% in December 2025. As of 12/31/2025, there were 560,000 late-stage delinquent mortgages, the highest level since February 2023. In 2025, foreclosure starts grew by 25% and foreclosure sales grew by 17% compared to 2024, although still significantly below pre-pandemic levels. We believe the increase over 2024 reflects the end of the VA foreclosure moratoriums, rising FHA delinquency rates, and a softening real estate market. We anticipate that borrowers may face additional pressure in 2026 given the fourth quarter implementation of the April 2025 FHA mortgagee letter that extends the time between loan modifications from every 18 months to every 24 months. For the origination market, total 2025 mortgage origination unit volume increased 19%, driven by a 92% increase in refinance volume, partially offset by a 2% decline in purchase volume. For 2026, the MBA projects 5,800,000 loans originated, or 7% year-over-year growth, with a forecasted 8% increase in refinance volume and a 6% increase in purchase volume. Turning to slide 15 and our 2026 outlook. We are forecasting service revenue of $165,000,000 to $185,000,000 and adjusted EBITDA of $15,000,000 to $20,000,000. At the midpoint, this represents 8.5% service revenue growth and close to flat adjusted EBITDA. Revenue growth assumptions include roughly flat industry-wide rates, the MBA's forecasted origination volume growth, and our estimated timing for the onboarding and ramp of sales wins, conversion of pipeline opportunities, and price increases for certain services, partially offset by the assumed loss of business related to the CBA and Rithm's termination of its servicing agreements with Onity. The projected adjusted EBITDA reflects forecasted service revenue growth and scale efficiencies, partially offset by product mix and modest growth in corporate segment costs. The forecast range for service revenue and adjusted EBITDA primarily reflects timing differences in the potential loss of business related to the CBA and Onity service transfers and the ramp in business from sales wins and pipeline conversion. At the midpoint of the guidance, we are forecasting to generate positive operating cash flow for the year. Moving to slides sixteen and seventeen. Our 2026 outlook is supported by momentum in the businesses we believe offer the greatest long-term growth potential: Lenders One, HUBZU Marketplace, foreclosure trustee, title, Granite, renovation, and field services. The anticipated growth of these businesses forms the foundation for Altisource Portfolio Solutions S.A.'s Project 45 strategic initiatives, our company-wide objective to achieve a run rate of $45,000,000 in adjusted EBITDA by 2028. While individual businesses and support group contributions to this initiative may vary, we believe the businesses we identify best position Altisource Portfolio Solutions S.A. for meaningful, diversified growth. Turning to slide 18. We believe we are positioned to diversify our revenue base, ramp newly won business, maintain cost discipline, and lower corporate interest expense in 2026. The Project 45 initiatives, supported by our 2025 sales wins, should help mitigate the impact from anticipated Rithm-related revenue losses and support a stronger, more resilient Altisource Portfolio Solutions S.A. I am proud of what the team has accomplished in 2025, and I am excited about our prospects for 2026 and beyond. I will now open up the call for questions. Operator? Operator: Please press 11 on your touch-tone phone and wait for your name to be announced. To withdraw your question, please press 11 again. Showing no questions at this time. I would like to turn the call back to William B. Shepro for closing remarks. William B. Shepro: Thank you, operator. We are pleased with our 2025 performance and believe we are set up well for continued growth. Thanks for joining our call today. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to Ocugen, Inc.'s Fourth Quarter and Full Year 2025 Financial Results and Business Update. All participant lines are currently in listen-only mode. Following the speakers' commentary, there will be a question-and-answer session. I will now turn the call over to Tiffany Hamilton, Ocugen, Inc.'s Head of Corporate Communications. You may begin. Tiffany Hamilton: Thank you, Operator, and good morning, everyone. Joining me on today's call and webcast is Dr. Shankar Musunuri, Ocugen, Inc.'s Chairman, CEO, and Co-Founder, who will provide a business update and an overview of our clinical and operational progress. Rita Johnson Green, our Chief Financial Officer, is also on the call to provide a financial update for the quarter and full year ended 12/31/2025. Dr. Huma Qamar, Chief Medical Officer, will be available to answer questions following the presentation. This morning, we issued a press release detailing associated business and operational highlights for the fourth quarter and full year 2025. We encourage listeners to review the press release, which is available on our website at ocugen.com. A replay of this call, along with the accompanying slide presentation, will be available on the Investors section of the Ocugen, Inc. website at investors.ocugen.com. Before we begin, please note that certain statements made during today's discussion may be forward-looking in nature, including those related to our clinical development pipeline, regulatory timelines, commercialization strategy, and financial information and our anticipated cash runway. These statements reflect management's current expectations and are inherently subject to risks, uncertainties, and assumptions that may cause actual outcomes to differ materially from those expressed or implied. We encourage you to review our filings with the Securities and Exchange Commission, including the risk factors detailed therein, for a more comprehensive understanding of these potential risks. Finally, Ocugen, Inc.'s Annual Report on Form 10-K covering the full year 2025 will be filed today. I will now turn the call over to Dr. Musunuri. Shankar Musunuri: Thank you, Tiffany. And thank you all for joining us today. I am pleased to share an update on what was a transformative year for Ocugen, Inc. Considerable development across all of our modifier gene therapy programs, including licensing and financing agreements to strengthen our financial position and meaningful appointments to our leadership team, made 2025 a year of real momentum for Ocugen, Inc. We are now poised to leverage upcoming catalysts and advance the business as we near the first half of our three BLA filings. I am proud of what this team has accomplished, and I am confident that with the full range of experience in retinitis pigmentosa, which I will refer to as RP going forward. It is important to note that the Phase 3 Limelight clinical trial is the only broad RP gene-agnostic trial, and the largest known Phase 3 orphan gene therapy trial. Approximately 300,000 people in the U.S. and Europe are living with RP, which is caused by mutations in more than 100 genes. OCU400 is designed as a modifier gene therapy utilizing NR2E3, a central transcriptional regulator of retina-specific pathways, to address multiple genetic mutations with a single one-time treatment. The only approved gene therapy approach for RP today targets a single gene, RPE65, which accounts for just 1% to 2% of the total RP patient population. We believe OCU400 has significantly wider commercial potential, as it is intended to provide a therapeutic option for 98% to 99% of all RP patients. I am pleased to report that enrollment is now complete for the OCU400 Phase 3 Limelight trial. As a one-year clinical trial, top-line data will be available in 2027. These data are anticipated to support the Biologics License Application (BLA) filing for OCU400 and potential approval in 2027. The Limelight clinical trial enrolled 140 patients who were randomized 2:1 into the treatment group and untreated control group across mutations, including RHO, and gene-agnostic arms. The gene-agnostic arm includes many genetic mutations, including those most prevalent: USH2A, XLRP, and PDE6B. The target population included patients with early- to late-stage disease among a broad RP population, including pediatrics. The primary endpoint is 12-month change in visual function assessed by LDNA (luminance-dependent navigation assessment), with improvement in lux level from baseline to 12 months. We also released positive long-term three-year Phase 1/2 data for OCU400 that build on our prior two-year results. The data demonstrate a sustained, clinically meaningful approximately two-line LLVA gain, reinforcing durable gene-agnostic benefit. OCU400 maintained a favorable durability, safety, and tolerability profile, with no new treatment-related serious adverse events or adverse events of interest emerging. With enrollment complete and these strong long-term data in hand, we are on track to begin the rolling BLA submission in 2026. Process validation and manufacturing activities are progressing well in support of the timeline, and planning and marketing initiatives are scaling up as well. We anticipate commercialization in 2027 in line with our commitments. As we prepare for what will ultimately be the global rollout of OCU400, we are pursuing regional partnerships that preserve Ocugen, Inc.'s rights to larger geographies while also generating near-term value for our shareholders. In 2025, we executed our first regional licensing agreement with QuanDan Pharmaceutical Company Limited for the exclusive Korean rights to OCU400. With upfront fees and near-term development milestone payments along with royalties, this was a valuable collaboration for Ocugen, Inc. and a critical step in the company's business development strategy. There are an estimated 7,000 individuals in the Republic of Korea with RP, equal to approximately 7% of the addressable U.S. RP market. This approach allows us to maximize total patient reach while retaining full commercial rights in the U.S. and Europe. Now let us move on to OCU410ST for Stargardt disease. OCU410ST holds the potential to target over 1,200 pathogenic mutations in the ABCA4 gene associated with Stargardt disease and other ABCA4-related retinopathies with a single one-time treatment. Stargardt disease affects approximately 100,000 patients in the U.S. and Europe combined, and approximately 1,000,000 people globally, with no approved treatment options available. The Phase 2/3 Guardian-3 pivotal confirmatory trial remains ahead of schedule. We anticipate top-line Phase 2/3 data in 2027, followed by the BLA submission. In January, we announced the peer-reviewed publication of our Phase 1 Guardian trial results in Nature Eye, which supports a favorable safety, tolerability, and efficacy profile of OCU410ST and its potential to provide clinically meaningful functional and structural benefits in Stargardt patients. This independent validation further strengthens the scientific foundation supporting the ongoing pivotal trial. Importantly, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency confirmed that data from our single U.S.-based trial can also support an EMA application. This alignment allows us to maintain the same timeline and budget efficiencies in Europe as we have with the OCU400 hurdle trial, streamlining our development efforts and bringing OCU410ST to patients in Europe sooner than originally anticipated. The program has also received Rare Pediatric Disease designation, further strengthening its regulatory positioning. I would like to explain ellipsoid zone (EZ) analysis in greater detail, as this is now an exploratory endpoint for both the Guardian-3 and ARMADA clinical trials. The ellipsoid zone is a hyperreflective band representing photoreceptor inner and outer layer segmentation. It indicates photoreceptor health and is a biomarker for photoreceptor structural integrity and metabolic health. EZ disruption precedes RPE loss and visible atrophy in geographic atrophy and Stargardt disease. EZ measurement is important because it provides early and sensitive detection. EZ changes occur before visible RPE atrophy expansion in GA and Stargardt progression. It also enables earlier intervention and more sensitive treatment effect detection in GA and Stargardt. Finally, EZ correlates to earlier functional therapeutic benefit, with an effect as early as one year compared to other measures such as visual acuity, with clinically meaningful effect at two years or more. Since all of our clinical trials aim to demonstrate benefit at one year, and we are targeting significant unmet medical needs, EZ is a relevant measure to show functional outcome in these trials. As EZ analysis has been established as a clinically relevant endpoint for dry AMD clinical trials, it was critical to incorporate this measure for both our Stargardt and GA trials. As shown in this bar graph, change from baseline at 12 months in treated fellow eyes across doses, excluding two subjects lost to follow-up and one subject with retinal detachment, demonstrated a mean of approximately 16% in lesion reduction in available treated eyes relative to untreated eyes. Specifically, 50% of OCU410ST-treated eyes achieved EZ preservation exceeding expected disease decline or atrophy progression at 12 months. This change-from-baseline structural preservation on spectral-domain OCT, quantified as approximately 16% lesion reduction in ellipsoid zone integrity, highlights meaningful photoreceptor protection and functional therapeutic benefit in Stargardt disease, underscoring the key differentiator of modifier gene therapy. Now let us turn to OCU410 in GA secondary to late-stage dry AMD. With approximately 2 million to 3 million GA patients in the U.S. and Europe combined, OCU410 represents a significant market opportunity. OCU410 is specifically designed to address multiple pathways implicated in the pathogenesis of dry age-related macular degeneration and offers a promising advantage over current treatment options that target only one pathway, the complement system. Currently approved treatment options require frequent intravitreal injections, about 6 to 12 doses per year, and are accompanied by various safety risks. For example, roughly 12% of patients develop wet AMD following treatment. There are no treatments approved for GA in Europe, and existing FDA-approved options have failed to demonstrate meaningful functional outcomes. OCU410 is therefore well-positioned to address this critical unmet need. In January, we announced positive preliminary 12-month data from approximately 50% of patients evaluated to date in the Phase 2 ARMADA clinical trial evaluating OCU410. The key findings were compelling. We observed a 46% reduction in lesion growth at 12 months across the medium- and high-dose groups combined versus control, with statistical significance at p = 0.015 in a cohort of 23 patients. We also saw a 50% responder rate, with patients achieving greater than 50% lesion size reduction versus control. To put this in context, currently marketed products have demonstrated only a 22% lesion reduction in two years. So at one year, OCU410 is already delivering more than double the benefit seen with existing therapies in twice the time. A subgroup analysis of patients with baseline lesion size of 7.5 mm² or greater, representing advanced atrophy, demonstrated a 57% reduction in lesion growth for the medium dose and a 56% reduction for the high dose compared with control. This suggests OCU410 may be even more effective in patients with substantial disease burden. The dataset also included encouraging 12-month Phase 1 findings, where OCU410-treated eyes demonstrated 60% slower loss of the ellipsoid zone, or EZ, compared to untreated fellow eyes. The 60% reduction in EZ loss rate indicates that OCU410 treatment is substantially slowing the rate of photoreceptor degeneration compared to the natural history observed in the untreated fellow eyes. We look forward to reporting the complete dataset from the OCU410 Phase 2 ARMADA trial this month and anticipate initiating Phase 3 in 2026. Let me also provide a brief update on our other programs. For OCU200, no serious adverse events or adverse events related to OCU200 have been reported to date across the Phase 1 dose-escalation cohorts, and trial enrollment is expected to be completed in 2026. Regarding our enhanced vaccine candidate, OCU500, NIAID intends to initiate the Phase 1 clinical trial in 2026. Finally, we created Arthroselix as a wholly owned subsidiary for our regenerative cell therapy assets, including NeoCart, with the goal to be independent through financing that will maximize value for Ocugen, Inc. shareholders and patients. We will provide further details as the process progresses. Across the portfolio, 2026 represents multiple defined inflection points. These include completion of enrollment for OCU410ST in early 2026, full Phase 2 data for OCU410 this month, interim pivotal data for OCU410ST in the third quarter, initiation of Phase 3 for OCU410 in 2026, and start of rolling BLA submission for OCU400 in the third quarter. Each of these milestones builds towards longer-term regulatory and commercialization objectives, and reinforces our commitment to file three BLAs in the next three years. Operationally, we also strengthened our executive leadership team with several appointments, including Abhi Gupta to Executive Vice President, Commercial and Business Development, bringing more than 20 years of experience across commercial strategy, gene therapy, and corporate development in the biopharmaceutical industry. Recently, Rita Johnson Green was named Chief Financial Officer. Rita's experience in financial strategy and capital planning supports our continued focus on disciplined resource allocation as our programs advance toward late-stage development and potential commercialization. And just this week, Paul Halsted joined us as Executive Vice President, Operations. Paul has more than 20 years of leadership experience in biologics and cell and gene therapy technical operations. He joins from Bristol Myers Squibb where, for over 16 years, he held leadership roles in manufacturing, launch, scale-up, and orchestration of reliable global supply chains, with a CAR T focus for the last five years. He will lead operations to strengthen execution and support the company's transition toward regulatory approvals and commercialization. I will now turn the call over to Rita Johnson Green to provide an update on our financial results for the quarter and full year ended 12/31/2025. Rita? Rita Johnson Green: Thank you, Shankar. I am thrilled to join the Ocugen, Inc. team and support the company through its imminent transition into a commercial enterprise. Starting with our fourth quarter results, research and development expenses for the three months ended 12/31/2025 were $10,700,000 compared to $8,300,000 for the three months ended 12/31/2024. General and administrative expenses for the three months ended 12/31/2025 were $6,100,000 compared to $6,300,000 for the three months ended 12/31/2024. Ocugen, Inc. reported a $0.06 net loss per common share for the three months ended 12/31/2025 compared to a $0.50 net loss per common share for the three months ended 12/31/2024. For the full year ended 12/31/2025, research and development expenses were $39,800,000 compared to $32,100,000 for the full year ended 12/31/2024. General and administrative expenses were $27,600,000 compared to $26,700,000 for the prior year. Ocugen, Inc. reported a $0.23 net loss per common share for the year ended 12/31/2025 compared to a $0.20 net loss per common share for the year ended 12/31/2024. Our current cash and cash equivalents extend our runway into 2026. This includes the recent raise of $22,500,000 through an underwritten registered direct offering of common stock led by RTW Investments. In addition, if the $30,000,000 in warrants from the prior Janus Henderson raise are exercised in full, it will extend cash runway into 2027. That concludes my financial update. Shankar, back to you. Shankar Musunuri: Thank you, Rita. We will now open for questions. Operator? Operator: If you would like to ask a question, please press star and the number 1 on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question or your question has been answered, please press star and the number 1 again. We will take our first question from Michael Okunewitch from Maxim Group. Please go ahead. Michael Okunewitch: Hey, guys. Thank you so much for taking my question today. Congrats on all the great progress you have made. I guess to start off, given it is a 12-month primary endpoint for the Limelight study, how confident are you in the ability to turn around the data from when you hit on that top-line endpoint to actually releasing the top-line data within first quarter 2027? Shankar Musunuri: Thank you for the question. We are very confident that we will be able to hit our timeline. Michael Okunewitch: Alright. And then just for that endpoint, could you remind us of some of the modifications that you made for that particular navigation assessment course and why you decided to go with it as a primary metric for RP? Huma Qamar: In terms of the mobility test that we are using, proprietary to Ocugen, Inc., that is luminance-dependent navigation assessment (LDNA). It is the mobility test that was approved as the primary endpoint for Luxturna; that was called MLMT at that time. That was only designed for RPE65 mutation that covers only 1% to 2% of the RP landscape. This is a very sensitive and specific test. As you can see, this is the broad RP indication trial, covering all clinical syndromic, nonsyndromic, all the genetic mutations that cause RP are included. So this has uniform lux levels and intensity and lux levels from 0 to 9, and that has the ability to capture the change in real time, which is from the baseline up to 52 weeks. This was also aligned with FDA, a validated test, as well as this was approved by FDA, and the only test that can capture the real change with functional outcome, demonstrating the functional outcome in these mutations. We are the only trial globally that is covering the majority of the gene-agnostic mutations as we have covered this morning in one of our slides as well. Thank you. Michael Okunewitch: Thank you. That is certainly very helpful. And then last one before I jump back into the queue. For the Stargardt program, it is looking like there could be an approval from another company for a chronic therapy by the time you file for OCU410ST. So I wanted to know how this might impact the opportunity or pricing potential and if there is any reason that OCU410ST could not be complementary with other therapies as they come to market. Shankar Musunuri: I will take that. There are other therapies out there. Obviously, what we have shown—if you look at the data we published in Eye—in one year, again, I want to restate all our trials were able to show treatment benefit in one year, unlike other trials out there of two years or more. The data we showed in one year are compelling. It looks superior. Our goal is to show functional benefit. With the gene therapy, we are targeting the major pathways, which are complex in Stargardt and GA. With our modifier gene, we also have the ability to reset the homeostasis and create a healthy environment for retinal cells to survive. That is very important. We are not just trying to slow down the disease progression. Our genes have the ability to control the internal network, so there is a big difference. Also, this is one-and-done. If you have a one-and-done therapy, this will set the standard of care. We are not worried about other therapies if they come to the market first. It is good—those therapies will educate the market and create market education. We may be behind them, but it is okay, because we believe we are going to set the standard of care for Stargardt patients globally. Huma? Huma Qamar: Yes, I would like to add that this is the trial that we are also having the population three years of age and above versus the other trials that are very limited in the age population. Also, the inclusion/exclusion criteria are very globally representative. Other than that, OCU410ST is targeting early to advanced cases of Stargardt disease. If you look at the comparison, the safety, tolerability, and efficacy that we have seen in terms of lesion growth reduction and also the functional and structural outcomes have been trending in the right direction and are promising from the clinical standpoint as well. Michael Okunewitch: Thank you. It is certainly an exciting time for the space. I am looking forward to any further updates that you have. Huma Qamar: Thank you. Operator: Thank you. Our next question comes from the line of Boris Peaker from TD Cowen. Please go ahead. Shankar Musunuri: Boris? Mr. Peaker, you might be on mute. Boris Peaker: Apologies—just came off mute. So for the RP OCU400 rolling BLA, when would we get the FDA feedback on your CMC part of the filing? Shankar Musunuri: Typically, the CMC will be filed this year. Obviously, FDA has the right to request comments before, or they will wait for the entire BLA to be filed. Even though they are internally reviewing, you may not expect anything before the actual final clinical module is filed. Boris Peaker: Got it. And, speaking of the FDA, have you discussed the ellipsoid zone as an endpoint with the Agency? I am just curious what their thoughts are about it as maybe a secondary endpoint. Is it something that could be incorporated into a label claim? Would that make any kind of a difference from the commercial perspective? Just general thoughts on that endpoint. Shankar Musunuri: Ellipsoid zone—obviously, as we stated before, in all our clinical trials we are trying to show benefit because the diseases we are targeting have significant unmet medical needs. More delays and doing longer trials will take not only the resources from our perspective; it is not doing benefit to the patients. If you are able to show a benefit using primary endpoints we picked, which are acceptable, the EZ will be a secondary and some other analyses just to further support that we are demonstrating a good functional outcome or related to functional outcome. That is important. If you do longer trials, like two or three years, sure, we can look into multiple options. From FDA's perspective, they really focus on the primary endpoint. If you hit the primary endpoint, you will get the approval. If you hit the secondary, yes, you can include it in the product insert and the label. However, remember, in all our clinical trials, we have an obligation to continue them for five years for safety monitoring. That means one-year data are needed for filing. After that—second year, third year, fourth year, fifth year—we monitor the patients. We will continue to monitor them with these secondary endpoints. At any point the data are supportive, we can always add it to the label. From FDA's perspective, you have to hit the primary endpoint to get the product approved. Secondary is not necessary for approval. If you hit it, it is good; you can put it in the label. Boris Peaker: Got it. But I just want to understand also, have you spoken to docs—what is the commercial value? Let us say you could get an ellipsoid zone label claim—not the primary endpoint, but still mention this positive in the label. Would that really make a difference? Is this something that the docs actually care about, or is it just kind of scientifically nice and it raises curiosity more than anything else? Huma Qamar: Boris, this is Huma. So in terms of your question, with FDA alignment, yes, all the protocols are approved with exploratory secondary endpoints. In terms of EZ, it is the new hot topic for the clinicians in terms of functional outcomes and structural integrity for photoreceptors and retinal pigment epithelium. This is where FDA is leaning a lot based on these particular conditions such as Stargardt disease and geographic atrophy secondary to age-related macular degeneration. In fact, there has been buy-in and consensus from the IRD physicians as well as the geographic atrophy AMD surgeons as well. There is a real benefit to it, not only from the structural perspective but also from functional. This is now being taken not only nationally in the U.S., but also in Europe as well. Of course, there is clinical meaningfulness in terms of functional outcome for EZ. That is what we are seeing that could have potential meaning when we are going to file our claim commercially. Shankar Musunuri: Also, for geographic atrophy, Phase 3 has not started. That is why we are going to look at the entire Phase 2 dataset this month, and then we are going to propose the endpoints with FDA and EMA. We do have an opportunity to introduce EZ as a secondary endpoint if the data are trending the way we anticipate. Michael Okunewitch: Great. Thank you very much for taking my questions. Shankar Musunuri: Thank you. Huma Qamar: Thank you. Operator: Our next question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Please go ahead. Swayampakula Ramakanth: Thank you. Good morning, Shankar, Rita, and Huma. A couple of questions from me. Looking into the OCU410 program, in the Phase 2 study, the medium dose showed a 54% reduction versus the high dose, which showed a 36% reduction. I am trying to understand, as you go into your Phase 3 study, what is going to impact your decision for dose selection? Also, do you think that between these doses you are actually seeing some sort of a plateau effect in the transgene expression? Shankar Musunuri: Good morning. The data we released—obviously, the high dose had fewer numbers in there. I would wait until we get the complete dataset this month to make an inference. From the Agency's perspective, if the lower dose is showing equal or better effect, you would take that into Phase 3. That is standard practice. I suggest we wait. Typically, for our genes—and what we have seen in our RP studies too—these genes require a threshold. Once you hit the threshold, we did not see any dose response. We are going to evaluate carefully once we get the full dataset. Swayampakula Ramakanth: Thanks for that. In the subpopulation where the baseline lesions were greater than or equal to 7.5 mm², you saw a 57% reduction in lesion growth. As you get into the Phase 3 study, would you have any restrictions in terms of the size of the lesions, or do you plan to use the same criteria as in Phase 2, which was all comers? Shankar Musunuri: That is a good question. This is why we do Phase 2. We are going to carefully evaluate. We go from 2.5 to 22 mm², and we are going to evaluate and see. On the lower side, as you know, analytically, you will have more variability. Of course, we are going to look at where the average patients fall, even though in the larger trials people have done with a lot of data. We are going to look at all those metrics and see what is the right group to go into Phase 3. Swayampakula Ramakanth: Alright. The last question from me is on the OCU410ST program, where you are expecting to get the enrollment done this quarter and put up some interim data in Q3. In that dataset, what are we really looking for which can give us some indication of how the 2027 BLA filing is going to go, especially signals on either the structural side of things or on the functional side of things? What do you weigh more, and how should we be thinking when the data come out? Huma Qamar: In terms of the masked interim analysis that is coming later part of the year, it will be for 24 subjects—16 treatment and 8 in the control. This is the adaptive design; that is a unique approach we have taken. The data points we are going to present, as we have presented this morning as well, are the primary endpoint—the lesion growth reduction—as well as structural and functional outcomes, which include visual acuity. We are also looking into the ellipsoid zone, which is the functional outcome that is very unique, and that data were very well received from the Stargardt perspective that we recently presented at one of the conferences as well. We are going to look at all of that, and, of course, safety and tolerability will be there as well. As of right now, it is trending in the right direction. This is what we are looking to release as masked interim analysis for those subjects later part of the year. Swayampakula Ramakanth: Perfect. Thank you very much. Thanks for taking all my questions. Operator: Our next question comes from the line of Elemer Piros from EF Hutton. Please go ahead. Elemer Piros: Good morning. I would like to ask a question about the primary measure of visual function in the RP study. What would be a clinically meaningful improvement? Where do you draw the threshold toward that? Huma Qamar: Thanks for your question. As we said, it is a change in lux level improvement from baseline. There are a lot of mutations we are looking into. LDNA—luminance-dependent navigation assessment—is a validated protocol. That is what we are aiming for, and that is what our analysis is going to be based on. As I said earlier as well, there is a lot of heterogeneity with clinical diagnoses, and syndromic and nonsyndromic forms. The clinical meaningfulness is greater than or equal to one lux level. Shankar Musunuri: As Huma has stated, we validated this course during Phase 3 with real patients, and the course looks very robust. Based on our KOL input, they are extremely happy with this. Elemer Piros: Thank you. What are some of the secondary endpoints that you would also look at to support that primary? Huma Qamar: The secondary endpoints are visual acuity, low-luminance visual acuity, and patient-reported outcome scores. We will be looking into these, and that is very well agreed and aligned with the FDA. Elemer Piros: One last question. Are both eyes treated? Could you remind us? Huma Qamar: Yes, that is correct. Yes, if both eyes meet the inclusion/exclusion criteria, both eyes are treated. It is a 2:1 randomization, a single subretinal injection, and the control group will have a crossover after one year. Elemer Piros: And then— Shankar Musunuri: The study is the worst-eye for analytic analysis per SAP. So you would compare the worst eye to the control group. Elemer Piros: The worst eye in that group. Shankar Musunuri: Yes. The study eye is compared to the control group. Elemer Piros: Thank you so much. Shankar Musunuri: Thank you. Operator: Our next question comes from the line of Daniil Gataulin from Chardan. Please go ahead. Daniil Gataulin: Hi. This is Steven on for Daniil. Thanks for taking my question. For dry AMD, you mentioned a 50% responder rate. Were there any underlying characteristics that made a patient more likely to be a responder? Huma Qamar: Are you talking about OCU410 GA? Yes. In terms of the responder rate, we have the inclusion/exclusion criteria, which were very uniform across the groups. Baseline characteristics included the mean age—we were looking at GA diagnosed at a certain age, with the mean in the mid-70s. We were also looking at the lesion size, which is pretty much well-versed with the OAKS and DERBY trials that Apellis got approval on—7.5 mm² was the mean, up to 8.03. In terms of the baseline characteristics, the responders responded on the medium dose as well as on the high dose. There was not really any other unique criterion that we would cite at this point until we get our final clinical study report. At this point, it seems like it was uniform across all dose groups. Daniil Gataulin: Got it. Thank you. Shankar Musunuri: Thank you. This concludes the Q&A portion. Operator: I will now turn the call back over to Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri. Shankar Musunuri: Thank you, Operator. 2025 was marked by important clinical progress, strategic business development, and essential financing accomplishments across the organization. We are entering 2026 with strong momentum and a clear line of sight to multiple catalysts that will further advance Ocugen, Inc.'s position as a biotechnology leader in gene therapy for blindness diseases. We expect to deliver full Phase 2 data for OCU410 this month, complete enrollment for OCU410ST, initiate Phase 3 for OCU410 in geographic atrophy, and begin a rolling BLA submission for OCU400. I want to thank our employees, investigators, patients, and shareholders for their continued support. We look forward to updating you on our progress. Have a great day. The meeting is now concluded. Operator: Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by, and welcome. At this time, all participants are in listen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that today's conference call may be recorded. I would now like to hand the conference call over to Anne Marie Fields, Managing Director at PrecisionIQ. Please go ahead. Anne Marie Fields: Thank you, operator. Good morning, and welcome to Cellectar Biosciences, Inc.’s fourth quarter and full-year 2025 Financial Results and Business Update Conference Call. Joining us today from Cellectar Biosciences, Inc. are Jim Caruso, President and CEO, who will provide an overview of the company's progress before turning the call over to Chad Kolean, CFO, for a financial review of the quarter and the year. Following this, Jarrod Longcor, Chief Operating Officer, will give an update on the company's progress and plans for its promising clinical development pipeline of radiopharmaceuticals. Cellectar Biosciences, Inc. issued a release earlier this morning detailing the contents of today's call. A copy can be found on the investor page of Cellectar Biosciences, Inc.’s corporate website. I want to remind callers that the information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. I caution listeners that management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and in our SEC filings. The content of this conference call contains information that is accurate only as of the date of this live broadcast, 03/04/2026. The company undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances after the date of this conference call and webcast. As a reminder, this conference call and webcast are being recorded. We will begin the call with prepared remarks and then open the line for your questions. Let me now turn the call over to Jim Caruso. Jim Caruso: Thank you, Anne Marie, and thank you all for joining us this morning as we review Cellectar Biosciences, Inc.’s progress throughout the year. 2025 was a productive and strategically meaningful year for Cellectar Biosciences, Inc. Across the organization, we executed with focus and discipline, advancing our lead asset, Iapocin, I-131, strengthening our regulatory position in both Europe and the U.S., and progressing our next-generation radiotherapeutic programs supported by our proprietary phospholipid drug conjugate platform. Let me begin with iapocene I-131, our late-stage in Waldenstrom's macroglobulinemia, or WM. As discussed in this morning's press release, we ended the year with regulatory alignment in Europe. Following guidance from the EMA's Scientific Advice Working Party, or SAWP, we remain on track to submit a conditional marketing authorization application in 2026, positioning iapopacine for potential approval in European commercialization as early as 2027. This EU regulatory clarity together with iaupopasim's PRIME designation underscores both the strength of the CLOVER-WaM dataset and the significant unmet medical need. As the full twelve-month follow-up data become available in early 2026, we are even more convicted on our plans to pursue an NDA under the accelerated approval pathway. These assumptions are supported by hypopacine's FDA Breakthrough Therapy designation for WM, and by our agency dialogue. In addition, we continue engagement and partnering conversations to support the program globally. Beyond iapofacine, we also made important progress across our broader PDC-based radiotherapeutic pipeline. We initiated the Phase 1b study of CLR125 in triple-negative breast cancer, or TNBC. CLR125 is an iodine-125 Auger-emitting agent designed for highly precise tumor targeting, and its initiation represents a key milestone for this second asset. The dose-finding study is ongoing, and we expect early interim data in mid-2026. We also strengthened the infrastructure supporting our alpha-emitting program, CLR225, through new supply partnerships with ITM Technologies and Ionectics, providing commercial-scale access to 225 and astatine-211 for future clinical development. Importantly, 2025 also marked significant expansion of our global intellectual property estate with new patents issued across Europe, Asia Pacific, the Middle East, as well as the Americas. These patents bolster the protection of ibuprofen I-131, CLR125, and the broader PDC platform. Finally, we raised approximately $15.2 million over the course of the year, extending our cash runway and enabling ongoing advancement of our pipeline, which positions us to achieve a number of value-creating milestones throughout the year. With that brief overview, I will now turn the call over to Chad to review our financial results. Chad? Chad Kolean: Thank you, Jim, and good morning, everyone. I will address our financial results for the year ended 12/31/2025. We ended the year with cash and cash equivalents of $13.2 million, as compared to $23.3 million as of 12/31/2024. In the fourth quarter, we raised $5.8 million and now expect that our cash on hand is adequate to fund budgeted operations into 2026. Turning to our results from operations, research and development expenses for the three months ended 12/31/2025 were approximately $11.5 million, compared to approximately $26.6 million for the year ended 12/31/2024. The overall decrease in research and development was largely driven by the conclusion of patient enrollment and declining patient follow-up for our CLOVER-WaM clinical study, modestly offset by increased activity in our preclinical development project costs. General and administrative expenses for the year ended 12/31/2025 were $11.5 million, compared to $25.6 million for the same period in 2024. The decrease in SG&A was primarily driven by deemphasizing pre-commercialization efforts and related personnel cost reductions. Other income was approximately $1.1 million for fiscal 2025, while in 2024, other income was $7.3 million. These amounts are non-cash and largely a result of the impact of issuing and marking to market certain warrants. The warrants we issued in 2025 were classified as permanent equity upon issuance, reducing the impact on the statement of operations in comparison to fiscal 2024. Net loss for the full year ended 12/31/2025 was $21.8 million, or $8.35 per basic and diluted share, compared with $44.6 million, or $36.52 per basic share and $41.89 per diluted share during 2024. Now I will turn the call over to Jarrod for an operational update, including plans for our pipeline of radiopharmaceuticals. Jarrod Longcor: Thank you, Chad, and good morning, everyone. As Jim highlighted, our regulatory and clinical progress in 2025 positions us well for important advances across our pipeline programs and for a milestone-rich 2026. Starting with iapobicine I-131, our EMA and FDA have provided us with clear, actionable regulatory paths. In Europe, we are planning to submit this conditional marketing authorization application later this year. In the U.S., we continue to make strong progress in our regulatory engagement as we work with the FDA on the accelerated approval pathway and the design of our confirmatory Phase 3 trial to support full registration. As requested by the FDA in November 2024, we have now collected twelve months of follow-up on all patients and, based upon further review of the data, agree that a confirmatory study evaluating iapocene I-131 in a post-BTKi treated patient population in the second-line setting is appropriate. Importantly, this earlier line more than doubles the potential addressable population in the U.S. As mentioned, we have been analyzing the more mature CLOVER-WaM dataset, including the full twelve-month follow-up for all patients, and are very encouraged that the results continue to demonstrate robust and durable clinical benefit over time in this salvage treatment setting where there are no approved drugs. In addition, new subgroup analyses, particularly within defined high-need patient segments, are emerging as especially promising. We look forward to sharing these findings with regulators as part of our ongoing discussions. Taken together, we believe the strength and consistency of these data provide a robust foundation for our U.S. and EU registration strategy. Over the remainder of the year, we intend to present our findings, including a minimum of twelve-month follow-up on all patients, updates on response data, duration of response, progression-free survival, and detailed outcomes in various patient subsets at major medical meetings. We expect these results to be highly compelling to both the clinical community and regulatory decision makers. Beyond WM, ibuprofen continues to show potential across multiple oncology indications. Prior data sets in multiple myeloma and diffuse large B-cell lymphoma demonstrated strong activity in these hematologic malignancies, and recently, I presented data at the AACR Special Conference on Pediatric Cancer from a study of iapopacine in relapsed/refractory pediatric high-grade glioma that showed IFOP seemed to provide meaningful improvements in progression-free survival and overall survival and to be well tolerated with a consistent safety profile. Iapofacine remains an asset with tremendous global market opportunity, and its success supports other assets in our radiopharmaceutical pipeline, including CLR125 and CLR225, and further validates our proprietary phospholipid delivery mechanism. Turning now to CLR125, our Auger-emitting asset for solid tumors, which has the potential to provide extreme precision targeted radiotherapy due to the short-distance Auger emission travel, meaning the isotope must be delivered within the cell and near to the nucleus. As Jim noted earlier, we initiated a Phase 1b dose-finding study in TNBC at two sites, and we will be adding additional sites in the second quarter. This study is evaluating three dosing regimens with an expansion arm planned once the recommended Phase 2 dose is determined. We anticipate a steady cadence of results throughout 2026, including early, interim dosimetry, safety, and preliminary efficacy data. For CLR225, our alpha-emitting asset, we completed IND-enabling work and are ready to initiate a Phase 1 trial pending available funding and continued strategic alignment with corporate objectives. Preclinical studies in pancreatic cancer models have shown compelling tumor inhibition at multiple dose levels, further demonstrating the potential of targeted alpha therapy within our platform. Across the pipeline, our expanded global patent estate provides long-term protection for ibuprofen, CLR125, and dosing regimens central to our PDC technology. Combined with strengthened isotope supply partnerships, we believe we are well positioned to build sustainable value. 2025 was a year of significant regulatory, clinical, and operational advancement, and we look forward to continuing this momentum throughout 2026. Jim, I will turn it back to you for closing remarks. Jim Caruso: All right. Thanks, Jarrod, for that overview. As you have heard today, 2025 was a year defined by meaningful progress across the entirety of our radiotherapeutic pipeline, with strong execution across the organization. We advanced iapoficine toward key regulatory submissions that would accelerate its market approval and get this much-needed therapy to patients. We initiated the CLR125 Phase 1b trial for triple-negative breast cancer, expanded our intellectual property, strengthened supply chain infrastructure, and extended our cash runway. We are entering 2026 with clear vision, strong momentum, and a pipeline supported by robust science and regulatory engagement. We expect multiple value-creating milestones in the months and year ahead, and remain focused on delivering transformative therapies to patients with difficult-to-treat cancers. I want to extend my gratitude to our outstanding Cellectar Biosciences, Inc. team whose commitment and hard work continue to drive our programs and the company forward. We remain deeply committed to the WM community and are grateful for their strong support and encouragement as we work to bring hypophasine to patients. We will now open for questions. Operator, we are ready to open the call for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the queuing process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Aydin Huseynov with Ladenburg. Please go ahead. Aydin Huseynov: Hi. Good morning, Cellectar Biosciences, Inc. team, and congratulations for the progress in 2025 and so far in 2026. A couple of questions I have regarding apofacine. So you are planning to submit in the third quarter for EMA. I am just curious to understand, can you use the same package that you will submit to EMA? Can you use exactly the same package for the FDA submission as well? And how long after you start the Phase 3 trial can you actually initiate that process of submission with the FDA? Jim Caruso: Sure. Aydin, first of all, thank you for participating in the call. As always, we appreciate that and your coverage of the company. Let me start, and then we will turn it over to Jarrod to provide some additional details relative to your question. As you may recall, we have already built out substantial portions of our NDA application, and although the format with the EMA is different, there are a lot of similarities in terms of the requested data. So a lot of the work that we have already done in preparation for our NDA submission, we can also apply to the EMA. Jarrod has been providing oversight on this process and I will turn it over to him to provide greater detail. Jarrod Longcor: Good morning. Great question. So the very short answer is yes. The data itself is essentially the same, and so it is all, obviously, it is all the CLOVER-WaM data. There will be some different, what I will call subset analyses, that the EMA may have requested that might be a bit different than what the FDA might request. So we are executing on that. And as Jim said, the standard packages are a little different, the ordering and how things come together for the EMA versus the FDA. The actual NDA is a little different from the CMA package development, but otherwise, it is all the same. So, as you said, that is pretty much largely taken care of at this point. And then your second part of your question was, I think, how long to submitting in the U.S. post the initiation of the confirmatory study? Is that correct? Aydin Huseynov: Yes. Yes. Jarrod Longcor: Okay. So the way we are doing that, just to share, back when we met with the agency in November 2024, where they basically outlined for us a handful of criteria that were necessary for us to achieve in order to be able to submit for the accelerated approval, part of what they shared was that, for an accelerated approval, a study must be initiated at the time of submission and ongoing, meaning enrolling patients, at the time of regulatory action. So what we have taken, or the way we are approaching this, is about a month or two post the initiation of the study, having a handful of sites open, we would then submit the NDA to the FDA. That should allow us to have enrolled one or two patients essentially at that point, and then, over the intervening six months, because we now have Breakthrough—remembering that we got Breakthrough designation in May 2025—we are now eligible and have the guaranteed six-month review under the accelerated approval pathway, and so we would then expect that that feedback would come in six months, and we would want to make sure that we had about 10% of the patients enrolled. Jim Caruso: So, Jarrod, to summarize that, within seven to nine months of initiation of the study, assuming we submitted the NDA a month or two post initiation, we would have a response from the FDA regarding the accelerated approval. And I think, Aydin, it is also important to point out that at that point in time they are not reviewing any data out of the confirmatory study. It is just a function of the study being initiated, is ongoing, and patients are successfully being enrolled. Aydin Huseynov: Understood and very helpful. And for the Phase 3 confirmatory study design, I mean, it seems like the design is okay with both U.S. and EU to get the full approval. But just for modeling purposes, you are getting into an earlier line of therapy, second line for BTK, and comparing this to rituximab and standard of care. I am trying to understand what it is that we should model in terms of the differences in PFS on evapofolcin versus the standard of care, and, you know, just to get a better sense in terms of what to expect down the road. Jarrod Longcor: Absolutely. And another great question. So, until recently, it was very difficult to give a definitive answer here because nobody had really evaluated any salvage therapy in a post-BTKi exposed patient population. However, earlier this year, or late last year, I guess early 2025—I have to remember we are in 2026 now—a group out of Italy, where the lead author's name was Fristauchi, produced data looking at seventy-eight post-BTKi patients, irrespective of what salvage therapy they got. So these patients received rituximab, chemo, combinations like RCD, or rituximab-bendamustine. They also received subsets of them also received pirtobrutinib, so a noncovalent BTKi. They also received proteasome inhibitors. They received venetoclax or BCL-2 inhibitors. So they basically got every alternative salvage therapy. In all cases, these patients, as a median, their PFS was eight months if they were a second-line patient, irrespective. And what you see is when it was RCD or any of the rituximab combinations, it was sub-eight months as progression-free survival. And so you can clearly model that number because it was a significant patient population, approximately seventy-eight patients again. Jim Caruso: I think, thank you, Jarrod. Very helpful. And I think I can provide some additional color relative to our data. Obviously, I cannot report because we have not publicly disclosed the updated twelve-month data, but it will include what we believe to be some very robust durability elements associated with the twelve-month data. So we are really excited about the data package. If everyone was impressed with our clinical data, Aydin, that we have put in play to date, I think the subsequent data based on the twelve-month follow-up is going to be viewed as very, very exciting. And the other element here, and you brought this up, is significant. As you recall, in the CLOVER-WaM study, on average, we were the fifth line of therapy, which means four lines of therapy prior to the utilization of ibuprofen on average. However, under Jarrod's leadership, the team has done substantial analysis, and we have really been able to segment, based on the latest data cut that occurred in December 2025, these patients and the variety of subsets, but also importantly, where they sat in terms of the number of prior treatments. And we will tell you that, as you would expect, as you advance further upstream, the data is more and more impressive. And, as you cited, second line in the U.S. the patient population is double that of third line plus. So it really not only does it create opportunities for clinicians to provide their patients with a meaningful treatment option, there are also going to be a lot more of them in the U.S. and globally benefiting from this treatment. Jarrod Longcor: And just historically, so that we do not lose that, currently, right now in the United States, and it is increasing in Europe, the BTKis are being predominantly prescribed in the first-line setting. Whether that is in combination with rituximab or as monotherapy, since the ibrutinib-rituximab study came out showing that potential in the first-line setting, most of the U.S. physicians have transitioned into a BTKi in the first-line setting in some form or fashion, which means the second-line setting is a BTKi patient population today. Aydin Huseynov: Thank you. Very helpful. And looking at your prior major response rate, they were already high, in our eighties, and you are going to move to the earlier line of therapy. And, typically, the responses increase in earlier lines of therapy. So just curious to understand your sort of benchmark in the earlier line of therapy, and whether this Phase 3 trial design will have some sort of top-line major response rates first before we see the PFS, maybe at some point one year after we start the trial. Jarrod Longcor: So the primary endpoint for the confirmatory study is progression-free survival. Obviously, a secondary endpoint is going to be major response rates or response rates as a whole, and, obviously, major response rate is one of them. What I would say is we will not be announcing data from a confirmatory study during enrollment because, obviously, that can result in bias being introduced into the study, and especially in a comparative study. And that would be problematic and would actually negatively impact the review eventually for full approval. Jim Caruso: And so, Aydin, I will add to that. You know, and it is going in a potentially different direction. Based on the primary endpoint, progression-free survival, in that confirmatory study, you can take a look at the Fristauchi data, and you will get a sense as to the progression-free survival there. And so this study is powered in such a way, as we introduce our PFS and durability performance for this drug out of the CLOVER-WaM study, I think it will very quickly determine that, the way the study is powered for the confirmatory study, we are setting ourselves up for a high probability of success, assuming the PFS remains consistent with all of the literature and data that we have seen. And best case there for PFS, as Jarrod discussed, was 8.1 months. So we feel very, very comfortable with PFS being the primary endpoint based on the literature. Aydin Huseynov: Thank you. Very helpful. And the last question I have regarding the current environment in post-BTK in U.S. and EU, what do you feel in terms of the enrollment speed and level of interest of PIs and among patients to be participating in this trial once you start it. Jarrod Longcor: I can say directly that, having spoken with every one of the PIs that were in the CLOVER-WaM study, the interest from the physician side is extremely high. I can say in a number of cases, when I have talked with them recently, they have all felt that the delay from a regulatory standpoint in getting to this point is largely unwarranted and that this drug absolutely has a spot in the marketplace and a significant need to fill. And so I think that that is important from that perspective. I think, again, as patients, this is a very active patient population. They are very engaged as a community and in looking at new therapies. I think as patients and these physicians get a look at the new data that is coming out later this year, as we were talking about, so over the remainder of this year, I think everybody is going to be very excited about the ability to participate and have the impact that ibuprofen can have for them and their disease in this setting. Jim Caruso: And I would add that, in addition to the thought leadership that are very excited about this because they are on the cutting edge, they understand and observe the performance of existing salvage therapies, especially just post first line. And as I think Jarrod cited earlier, BTKis are used predominantly now either as a monotherapy or in combination with rituximab in first line. So you are already, for many of these patients, in a salvage therapy mode in the second line. But interesting here, Aydin, in addition to key thought leadership around the globe really appreciative of the feature benefits that this product provides their patients as early as second line, this also tested extremely well with community-based physicians. So we really see this transitioning out of a controlled clinical environment at these world-class institutions or WM catchment centers. Because of the ease of administration and, quite frankly, the lack of artistry required here relative to other drugs—the four simple doses—our community-based physicians are as excited as the thought leaders as well. So I think all constituents, including nuclear medicine and radiation oncology that have a seat at the table in terms of the utilization of this drug, all constituents are really excited about the opportunity to bring this patient to the many patients that will benefit from treatment. Aydin Huseynov: Thank you. Super helpful, and congratulations with the progress so far, and we will be looking forward to seeing your twelve-month data later this year. Thanks so much. Jim Caruso: Thank you, Aydin. Operator: Thank you. The next question comes from Edward Andrew Tenthoff with Piper Sandler. Please go ahead. Edward Andrew Tenthoff: Great. Thank you, guys, for taking my question, and congrats—my congratulations too on the very hard work and steady progress. You guys deserve a persistence award for sure. I wanted to follow up, two questions if I may. So firstly, and I apologize if I missed this, but what would be the plans to distribute in Europe, and can you walk us through a sense of what that second line now in Europe—would it be second line too, or there it is actually a little different where you would be getting approved? And what does that patient population look like? Thank you very much. Jim Caruso: Thank you, Ted. Great to have you on the call. Appreciate your interest, your continued interest in the company. You have been very supportive, so we are appreciative of that. I will have Jarrod launch into this, and then I can fill in any blanks or provide additional color. Jarrod Longcor: Great, and thank you, Ted. From a distribution plan, the idea here is that, obviously, Cellectar Biosciences, Inc. itself, we will not really commercialize it ourselves in Europe. We are in discussions with various parties that we would partner with to actually do the commercialization in Europe on our behalf, in one way or another. So we are looking at partnership as the main thing. Just to give you a sense, we have set up our distribution of a radiotherapeutic in a global sense. I will remind you that the CLOVER-WaM study was run as a global study where we had approximately 25 sites in Europe. We had a handful of sites also in Asia and Australia. And so we have set up a logistical chain that allows us to ship and cover the globe easily with this product. And I will remind you, for folks that may have forgotten, that we have a unique competitive advantage in the marketplace that is often overlooked, which is our shelf lifetime. Most radiotherapies have a shelf life of about three to seven days max. Ours is 21 days. That allows us—and it is not cold chain; it is at room temperature. It allows us to more easily distribute this product globally and make sure that it is conveniently handled by the physicians and by the patients. So that sets up the distribution. Now, the second part of your question was really about, in Europe, where would the approval be, and what is the size of the market? So in general, just to give you a sense, the size of the European market is generally about 10,000 or so patients in total greater than the U.S. I would say that when we look at the second-line setting, the U.S. market is just a bit south of 12,000 patients. In Europe, its second-line setting is generally a bit over 12,000, approaching 13,000 patients, is what we have come to learn. And so it is a meaningful patient subset. Now, the conditional marketing authorization would actually be a later line utilization, so it would be a third line or later post-BTKi patient population. That is largely because still in Europe, they are transitioning. They are using BTKis more in a first-line setting, but they are more evenly split right now between first-line and second-line utilization of BTKi. So the median would likely be a third-line or later sort of position. Upon the confirmatory study, I think we would be shifting to a second-line setting in Europe. Edward Andrew Tenthoff: Great. That is very, very helpful color. Appreciate it. Thank you. Jim Caruso: Alright. Thanks so much, Ted. Operator: At this time, Jim will address questions sent electronically. Please go ahead. Jim Caruso: Alright. So if there are no other questions, I have some that are in the inbox. Jarrod, you up for another question, or—alright. I think I will decipher this one. What is the benefit of the twelve-month data cited in the press release versus your December 2024 data? Jarrod Longcor: Good question. So what I would say is that, reminding folks that in the December 2024 data, most of the patients that we had enrolled at that point did not have twelve months of follow-up data on them. They were still essentially shortly post their treatment segment and therefore did not have the twelve months. Since that time, we have all patients with at least twelve months of follow-up, and while the data presented at ASH was very good in 2024, I think, as Jim alluded to earlier, this follow-up data is even better. And what I mean by that is there are improvements in the response rates, there are improvements in durability, there are improvements in progression-free survival. So across the board, we are seeing depth and durability of the responses going out and looking stronger than they did in December 2024. Jim Caruso: Jarrod, could you elaborate on the benefit relative to the regulatory pathway with the FDA in the U.S. on the twelve-month data. Jarrod Longcor: So, in November 2024, the FDA laid out essentially a pathway for accelerated approval that really had two key components to it. One was that we needed to have twelve months of follow-up on all patients, which obviously we now have, which allows us to then take that next step. And the next step was really that we needed to have an ongoing confirmatory study in an earlier line of patients, so as to not be between our study and commercially available product. At the time, we were a little worried about moving to a second-line setting because we did not really have data that would say whether we would be better or worse in that line of setting or the same. Now, with the analysis and the twelve-month follow-up data, we now know exactly that we performed better in an earlier line of setting, as one might expect, but with the confidence now we have the data sets that show and validate that approach. And I think sets us up very nicely for both the confirmatory study, but then also the accelerated approval and moving forward. Jim Caruso: Alright. We have one more here. It is a layup, which means I will handle it. Will this data include durability, such as PFS and DOR? So PFS, progression-free survival, and DOR, duration of response, the answer is yes. Beyond the response data such as major response, complete responses, very good partial responses, the overall response rate metric, and clinical benefit rate, we will be providing progression-free survival and duration of response, not only in the broader population, but in important subsets like post-BTKi and refractory BTKi patient populations where this drug is, or appears to be, naturally falling post-BTKi based on the regulatory path both in the EU and here in the U.S. So with that, I will turn it back over to the operator. Operator: Thank you. We have reached the end of the question-and-answer session. Let me turn the call over to Jim Caruso, President and CEO, for closing remarks. Please go ahead. Jim Caruso: All right. Thank you, operator. Thank you, everyone who participated in today's call. We appreciate your time. Have a good day. Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Genius Sports Limited Fourth Quarter 2025 Earnings Results. After today's prepared remarks, we will host a question-and-answer session. To withdraw your question, please press 1 again. I will now hand the call over to Brandon Bukstel, Head of Investor Relations. Please go ahead. Brandon Bukstel: Thank you, and good morning. Before we begin, we would like to remind you that certain statements made during this call may constitute forward-looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our annual report on Form 20-F, filed with the SEC on 03/14/2025. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius Sports Limited's operating performance. These measures should not be considered in isolation or as a substitute for Genius Sports Limited's financial results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures is available in our earnings press release and earnings presentation, which can be found on our website at geniussports.com. With that, I will now turn the call over to our CEO, Mark Locke. Good morning, everyone, and thank you for joining us today to discuss our Q4 results. Mark Locke: On today's call, we would like to cover three topics. First, we will take a moment to highlight the strong Q4 and full-year results, which we preannounced last month. There are two main takeaways from our 2025 results. Revenue growth of 31% is our strongest annual increase since 2021, and our full-year 20% EBITDA margin is our highest annual margin. Second, both the betting business and the media business are on great footing, which enables us to reaffirm our 2026 guidance of continued top-line growth and margin expansion, exactly in line with what we communicated on the Investor Day in December and preannounced last month. And finally, I want to provide additional perspective on our recently announced acquisition of Legend, addressing directly the key questions raised by investors and discussing the confidence we have in the financial and strategic rationale of the transaction. I will come back to this later in the call. But first, I will turn to Bryan to discuss our financial results. Bryan Castellani: Thank you, Mark. First, we achieved group revenue of $669 million in 2025, representing 31% growth, as Mark said, our strongest annual increase since 2021. This translated to $136 million of group adjusted EBITDA, representing a 20% margin, also, as Mark highlighted, our highest annual margin as a public company. Group revenue growth was well balanced across betting and media. Betting revenue increased 33% in 2025, marking its strongest year since 2021, our first year with exclusive NFL data rights. Our strong betting revenue was primarily driven by growth with existing customers, who benefit from the increasing suite of innovative products such as BetVision, which is now available for NFL, Serie A, FIBA Basketball, and dozens of other soccer, tennis, and esports competitions. BetVision is consistently increasing engagement and driving greater in-play wagering for our sportsbook partners, so we are excited to continue expanding our coverage. 2025 marked another strong example of our ability to outpace the 24% growth of global online sports betting GGR, further demonstrating our consistent and predictable commercial model. Our Media business delivered a strong performance in 2025, increasing 37% to $144 million. This represents our strongest annual growth since 2022, supported in particular by execution in the second half of the year, where revenue nearly doubled compared to the second half of 2024. While our fourth quarter delivered exceptional results, we do not expect that exceptionally high growth rate to continue. The second half benefited from a combination of new partner launches and market conditions that created a particularly strong comparison period. As a reminder, we are also making certain changes in how we recognize revenue in the Media segment, transitioning some arrangements from gross to net reporting. This will impact reported top-line growth rates but is expected to improve our margin profile and better reflect the economics of those contracts. We continue to partner with some of the world's largest advertising agencies including PMG, Publicis, and most recently WPP. We are also partnering with the largest independent supply-side platform, Magnite. This partnership embeds our real-time sports signals directly into Magnite's platform, allowing advertisers to activate against official, real-time sports moments inside a scaled programmatic infrastructure. Importantly, this places Genius Sports Limited directly in the flow of billions of dollars in advertising spend. Additionally, we recently partnered with NBC Sports regional networks to power AI-driven augmented advertising across 600 live NBA games. Genius IQ turns real-time moments into premium, data-driven sponsorship inventory integrated directly into the broadcast. As you can see, Genius Sports Limited is deeply embedded in the media infrastructure, controlling several of the monetization layers within live sports, a category that has quickly become a priority for the biggest brands and agencies. Overall, we are encouraged by the momentum in media and the progress we have made in demonstrating performance outcomes for partners. And lastly, it is worth highlighting the diversified growth by geography. While the Americas accounted for most of our growth this year, up 41%, our established European markets also delivered strong performance, with growth exceeding 20% in 2025, up from 15% in 2024. We expect this momentum to continue into 2026. As we said last month, we expect the organic business to generate between $810 million and $820 million of revenue and $180 million to $190 million of adjusted EBITDA. This represents growth of 22% and 36%, respectively, right in line with the expectations from our Investor Day, and balanced across betting and media. On a related note, beginning in 2026, we will report revenue across two product groups, betting and media, which more closely reflects how we operate the business today. Our existing Sports Technology revenue will be allocated across these groups based on a thoughtful assessment of where each technology application is best suited to sit. To support this transition, we have included historical quarterly financials in the appendix recast under the new reporting structure. And finally, we expect the addition of Legend to be immediately accretive to this guidance post close in Q2 of this year. On an annualized basis, we expect the combined entity would achieve group revenue of $1.1 billion, group adjusted EBITDA of $320 million to $330 million, with group adjusted EBITDA margin of approximately 30% and free cash flow conversion of approximately 50%. This is an acceleration of our financial targets by two years. And on that note, I will now turn the call back to Mark to discuss Legend in more detail. Mark Locke: Thanks, Bryan. Before we conclude, I want to speak clearly and directly about our acquisition of Legend. Legend is not simply just a media business. It is a technology company that is built around large, loyal sports and iGaming audiences. Legend operates an audience monetization platform that is built off of two decades of technological investment. This is where the value of Legend's business is. Legend's tech engine captures how users engage with content in real time. This content is not static information pages. They are environments that are built for participation around live sports and gaming experiences. For example, a user may analyze real-time data in a community discussion around a major sporting event, repeatedly explore new online casino titles, demoing the ones that best suit their taste, or follow specific personalities tied to teams or games, celebrating the latest win or jackpot. These actions ultimately generate rich signals of intent inside environments designed for repeat interaction. Legend uses these signals to continuously upgrade the experience and recommend personalized transactions. When a user ultimately completes the transaction with a gaming operator or bookmaker, that outcome feeds back into the system. Over time, Legend's models get better at understanding which engagement patterns lead to action and Legend can rapidly optimize commercial models. That feedback loop is where long-term value is created. It is not about answering factual queries. It is about facilitating participation inside owned environments and continuously improving the economics behind it. This technology is the result of 20-plus years of and data training and over $300 million of invested capital. Outside of Legend's own properties, the application of this technology carries enormous value to third parties. In one example, a well-known brand in the gaming integrated Legend's software into its own digital properties and within six months experienced a 50% uplift in revenue from higher conversion. This plug-and-play model is also proven with brands like Sports Illustrated and Yahoo Sports, just to name a few. When combined with the reach and distribution of Genius Sports Limited's network across the sports ecosystem, this can potentially be scaled and replicated hundreds of times. More on this later when we would discuss revenue synergies. The value of this technology is further enhanced by engagement metrics on slide 12. Legend has created a natural, organic destination for high-quality users who deliver long-term value for operators. In fact, one of Legend's top customers, a well-known global operator, has reported that customers acquired through Legend have a 60% higher value after one year compared to all other customer acquisition channels. Because of the value that Legend delivers to its customers, they command premium economics. There are four key components of its commercial model. First is sponsorship and ad placement. Operators pay a premium to have prominent placement on Legend's properties because they want to be up front and center to reach high-intent users. Second is upfront commitments. When a user makes a first deposit, Legend gets paid. Third is revenue share. Legend delivers quality users with long-term value. Once acquired, Legend shares in the operator's revenue from those users every time that they play the casino or bet on sports, and in many cases, Legend shares its revenue in perpetuity through lifetime revenue share contracts. This results in high-quality, predictable, and recurring revenue. Next, I want to be explicit about the comparison to traditional affiliate businesses. We understand that the word affiliate has been the simple default comparison, but that framing misses what actually drives Legend's model. The key issue is not the monetization label. It is traffic durability and depth of engagement. Traditional affiliate models rely heavily on SEO and paid marketing, often spending between and 40% of revenue to sustain traffic. Legend spends approximately 5% because its traffic is direct and repeat. Engagement is technology-driven, optimized in real time, and built on owned environments. That creates durable economics. The metrics very clearly speak for themselves. Look no further than the data sourced from SimilarWeb comparing session depth and session time across Legend properties. As you can see, this level of engagement is more comparable to a booking.com or FanDuel rather than a simple odds comparison website or even the digital property of the most popular sports leagues. Again, we will revisit this when discussing revenue synergies. The last point that I would like to address is the risk of disruption from AI LLMs or changing search algorithms. This is yet another key difference from a traditional affiliate business, which often rely heavily on search engine. If search visibility changes, their traffic can disappear. Legend is different. Engagement is recurring. Revenue is diversified across operators and geographies and tied to lifetime value, not one-off clicks. The economics are built on participation, not page views. That participation takes place across a wide range of experiences, everything from tournaments to live dealer streams, community engagement, and more. These are all deep, immersive experiences that cannot be replicated by LLMs. So if you believe AI will make this kind of business obsolete, you should consider this. AI actually makes this model more valuable, not less. As LLMs commoditize information retrieval, competitive advantage shifts to owning environments where 118,000,000 users actively participate and to the proprietary intent signals that those interactions generate. Generic answers are free. Proprietary behavioral data is not. Over the past decade, digital businesses have moved from monetizing attention to capturing intent. Advances in AI accelerate that shift, enabling better prediction, deeper personalization, and more efficient commercial outcomes. In sports and iGaming, this transformation is now happening in real time. Legend operates at the precise moment when participation turns into action. Based on this, we are very confident in Legend's proven business model. Our 2028 guidance is underpinned by the predictable operating leverage and increasing cash flow that both Legend and Genius Sports Limited can achieve independently. The combined business is expected to sustain 20% revenue growth, strong EBITDA margins, and over 50% free cash flow conversion, and growing. A financial profile that is rare in public markets. And this is before we account for any synergies. We have identified four specific revenue synergies that we believe are executable immediately post close and capable of driving incremental upside beyond our 2028 increased guidance. The first is customer cross-sell. Genius Sports Limited's official data rights and product suite will sit alongside Legend's scaled, high-intent acquisition funnel. This unites premium content with proven customer intent. Upon closing, we can activate cross-sell across our sportsbooks and gaming relationships, improving acquisition efficiency and increasing customer lifetime value. Importantly, this positions Genius Sports Limited to participate in the large and growing iCasino market, expanding our total addressable market by approximately 70%. In addition, players who engage in both iCasino and online sports betting are estimated to be roughly 15 times more valuable to operators than sports-only bettors. This places Genius Sports Limited at the center of our partners' highest value customer acquisition efforts. Next is monetization of a combined audience asset. Legend will materially expand our first-party audience reach. Combined with Genius Sports Limited's proprietary data graph, this creates a scaled, privacy-compliant audience asset that can be activated across the advertising ecosystem. This is expected to drive higher yield on traffic already within our control and allows Genius Sports Limited to bring a unique and powerful audience graph to other leading ad-driven platforms. In other words, Legend further strengthens our value to brands and agencies. We know who the fans are, we know when, and we know where they are engaged, and we are activating them at scale through Fanhub and in partnership with large global agencies like Publicis, WPP, and PMG. Third is scaling Legend's technology across leagues and teams to monetize their underutilized digital assets. Legend's technology platform has demonstrated its ability to drive engagement and conversion across owned and operated properties. If you recall the SimilarWeb data, many of our 400-plus league and team partners face the same structural need to better understand and monetize their fan audiences. Applying Legend's platform across our rights portfolio will extend the Genius Sports Limited model from data capture and distribution into audience activation and conversion. This shift is from selling audience access to selling influence over identifiable individuals whose behavior and propensity are measurable. And, finally, we will be able to distribute Genius Sports Limited's data and products through Legend's channels. We have spent years embedding Genius Sports Limited's data and products across the global sports ecosystem, from BetVision to broadcast augmentation and integrity services. Legend will provide a scaled, high-traffic distribution service. Integrating our data and product suite will further strengthen Legend's acquisition funnel while expanding the commercial distribution of Genius Sports Limited's assets. As we execute, we will quantify the impact of these four opportunities with discipline. We are confident that this combination will enhance both the growth rate and the cash flow profile of the business relative to our standalone trajectory. In the meantime, I will leave you with this final thought. The future economics of sport will be determined by the infrastructure through which fan participation flows. At its core, that infrastructure is shaped by three elements: official data, authenticated identity, and intent at the moment of transaction. Together, Genius Sports Limited and Legend operate across all three layers. This acquisition is a deliberate acceleration of the strategy that we outlined at our Investor Day and have been executing for years. By integrating data, identity, and intent at scale, we are positioning Genius Sports Limited to capture a greater share of the economic value flowing through global sports and gaming. We have proven our ability to execute, and with this added scale and capability, we will have a business that we believe is built to continue that track record of execution and compound value for years to come. And on that note, now open the line to Q&A. Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, please press star 1 again. Please pick up your handset when asking a question. And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jordan Bender from Citizens. Jordan, we are just opening your line, and your line is now open. Jordan Bender: Thanks. I want to start on free cash flow. That was down in 2025. If we think through the standalone business, how much investment or one-time costs are in that number that might have held back free cash flow growth in the year? And just went through the Investor Day back in December. Can you remind us of the levers to organically increase free cash flow from here outside of the Legend acquisition? Bryan Castellani: Hey, Jordan. It is Bryan. On free cash flow, as we had announced that $281 million balance and our focus is growing that year to year. As we defined at Investor Day, we take EBITDA minus the cap software and CapEx and PP&E, as well as changes in working capital and taxes. And so for the year, that included some nonrecurring exceptional legal expense, or litigation related. If you exclude those, and I think you can see that was about a $30 million swing. The other thing we do adjust for is obviously M&A, like the Sports Innovation Lab acquisition, as well as the share raise. We do not want to take credit for that, nor on the M&A piece where those are longer-term strategic and so one year may have a bigger investment into that. But that is how we think about the free cash flow and those one-time nonrecurring impacted the year about $30 million. Jordan Bender: Understood. Thanks. And I want to switch over to the media business for a second. I assume you are not going to give us the actual numbers here, but maybe holistically, how much contribution did some of the new media agreements with, like, PMG and Publicis add to the total growth in media in the back half of the year? Bryan Castellani: Those scaled up, and they are early. We just announced those, and so they do take some time to ramp and work with them on onboarding clients and campaigns. So fairly muted, if any, impact on those. Jordan Bender: Understood. Thank you very much. Operator: Thank you very much for your question. Your next question comes from Jed Kelly from Oppenheimer & Co., Inc. Jed, your line is now open. Jed Kelly: Hey. Great. Thanks for taking my question. Can you give us an update on how partner conversations are going, particularly your media partners and media agencies, following the Legend acquisition? And then as my follow-up, you mentioned you expect some moderation of growth in the second half for the Media business. However, it seems there is going to be a decent amount of advertising around prediction markets given what the bigger players are saying. How much have you embedded that in your guide? Thanks. Josh: Sure, Jed. Let me take them in reverse order. On the prediction market piece, we are already seeing spend flowing through from advertisers activating in that space. That is through the historical Genius Sports Limited media business, and when Legend closes, we will have access to the activity they are running there as well. We expect to capitalize on the spend boom around prediction markets—we already have campaigns in market. Operators are talking about increasing spend on that activity, and we expect to be part of that. In terms of media partnerships and conversations, if you are keeping track of the big agencies, we have knocked a few down and there are a few more to go. All of those are progressing nicely. The Magnite announcement is a testament to the ecosystem buying into sports media and developing technologies on top of the Genius Sports Limited infrastructure. Our expectation is that we continue to see more of the ad tech and media community building on top of official data and our fan graph. Mark Locke: It might be worth taking a few minutes to explain that Magnite presentation in a bit more detail—how the economics work and why it is important. Josh: The way to think about our Genius Sports Limited sales channel for the media business is twofold. First, we go direct to agencies and brands with our own sales team, responding to large campaign briefs. Second, we are establishing a distributed sales channel through the ad tech ecosystem where we surface all of the Genius Sports Limited data and audience intelligence—what agencies are buying from us—inside platforms that already have scaled demand of billions of dollars. That allows our partners and their sales teams to take the Genius Sports Limited offering out to market. Operator: Thank you very much for your question. Your next question comes from Bernie McTernan from Needham. Bernie, your line is now open. Bernie McTernan: Great. Thanks for taking the question. At the Investor Day, there was a target of slightly more than half of the $500 million in total ad spend for media coming from self-service. How do you think this is going to break down between agencies and other ad tech players like Magnite? And are there any other buckets in there that are large that we should be aware of? And then I have a follow-up. Josh: It is hard to give an exact number right now because everyone in the industry works together. For example, we might be working with Coca-Cola—demand can come direct from the agency as part of a specific brief, but it can also come from other activity via the ecosystem. Our goal is to capture as much demand flow as possible across the ecosystem by covering both direct relationships with agencies and building into the ad tech ecosystem. We are indifferent where the spend comes from between those channels. Our goal is broad distribution. Over time, we will be able to get more accurate on exact splits across those sales channels. Bernie McTernan: Understood. Thanks, Josh. And as a follow-up, I believe the expectation is that betting tech revenue should grow faster in the first half of the year versus second half. Can you provide commentary on how we should expect rights costs to grow on a full-year basis and the sequencing between the first half and the second half? Bryan Castellani: On rights growth, you saw some of the year-to-year impact. Remember we onboarded or acquired Serie A and EPFL in late summer, so that influenced Q4 and will influence the first half. It is also the first year of our new term on the EPL, which impacts the first half as well as Q4. But that is all phasing and inside of the strong guide we have for 2026. Bernie McTernan: Okay. Understood. Thank you. Operator: Thank you very much for your question. Your next question is coming from the line of Ryan Sigdahl from Craig-Hallum Capital Group. Ryan, your line is now open. Ryan Sigdahl: Good day, guys. On March Madness—you have been partnered with TMCA for many years and had exclusive distribution last year—how are you thinking about March Madness this year from a betting standpoint and separately from a Fanhub ad tech standpoint? And is BetVision potentially an opportunity there? And then I have a quick follow-up. Josh: We see March Madness as a big opportunity. We expect consistency with what we have seen across the betting business in previous years on betting activity, in line with market growth. On the advertising side, the first major event where our moment engine is widely available is March Madness. It is early days, but we expect to pick up a few test campaigns this year, with us going harder next year. It is incremental revenue monetized across multiple distribution channels for us with no additional rights fees. Mark Locke: And from that point of view, it is a powerful endorsement of the strategy we have been outlining over the last few years. Ryan Sigdahl: For my follow-up, a quick one for Bryan—how should we think about litigation costs as we head into 2026, given that was a pretty big one-time in 2025? Bryan Castellani: We will update on any litigation-related activities as appropriate. Those are live, and I will not comment further here. As we say, we are focused on growing that cash balance year to year. Josh: And to the extent those drive swings, we will communicate that as such when we know it. Ryan Sigdahl: Fair enough. Thanks, guys. Good luck. Operator: Thank you very much for your question. Your next question comes from Clark Lampen from BTIG. Clark, your line is now open. Clark Lampen: Thanks for taking the question. Maybe we could take a step back around the media business and agency relationships. For a lot of us that are newer to this rapidly growing component of your business, could you give us a 101 on how these relationships work and evolve over time, and how they are augmented by things like augmented advertising? You are clearly going after the agency holdco ecosystem and already have relationships with two of the big five. How should we think about the practical workflow and impact on your business? Josh: Happy to. We are building our advertising business through two channels: direct to agencies and brands, and integrations across the ad tech ecosystem. Our ethos is the same across both: Genius Sports Limited is the infrastructure layer for sports media. Commercially, we take media packages to market as curated deals. A curated deal bundles our audience data—our fan graph and understanding of fans—with inventory. That inventory can be Genius Sports Limited-owned, like BetVision and augmented ads, or premium third-party inventory. On top of that sits our moments engine, which we historically used in-house but are now externalizing so anyone can transact on it. Workflow-wise, we bundle audiences, inventory, and our intelligence layer based on an advertiser brief, and provide a unique code or deal ID that agencies input into their buying platforms. Over time, you build a portfolio of curated deals, creating ongoing money flow from campaigns across the ecosystem, buying Genius Sports Limited audiences and inventory. Growth comes from two levers: more active deals tapping more demand flow, and expanding the share of unique inventory we control within those deals, which drives revenue and margin expansion. Mark Locke: It may also help to explain how media buyers actually operate and how that evolves. Josh: Buyers at agencies work across multiple platforms and advertisers. As they expand campaigns, they often duplicate campaigns, carrying our deal IDs across. That helps keep deals active. The Legend acquisition enhances this further: we gain new intent signals and audience data that can be fed into curated deals to improve performance and address a wider variety of briefs. And as we create more unique inventory with the Legend tech stack, we can feed that into deals with an instant monetization path. Clark Lampen: Really helpful. And as a quick follow-up on Legend, there are a couple of levers for revenue synergies: applying Legend tech to Genius properties, expanding properties, and backlog monetization. As we think about the second half of the year, which of those is most addressable or accretive in 2026? Josh: The most immediate impact will be cross-sell to the existing customer base. From a technology perspective, access to Legend’s audience data is next—expect that to flow into our moment engine as soon as the deal closes, like we highlighted in the Magnite announcement. The slightly longer-tail synergy is building hosted solutions with our league partners—those integrations take longer than plugging audience data into our platform. Mark Locke: One immediate application of the Legend engine is in BetVision. We get paid roughly three times more for in-play betting. BetVision is now knocking on the door of 25,000 events and growing. The Legend engine will optimize BetVision in real time to maximize commercial returns, increasing the proportion of in-play betting. We are a bit over 30% in-play in the U.S. today; Europe is 70%–80% in some cases. We expect to accelerate toward those levels, which compounds our revenue shares. Operator: Thank you for your question. Your next question comes from the line of Eric Handler from Roth Capital. Eric, your line is open. Eric Handler: Thank you very much. Good morning. Two questions. First, with regards to advertising inventory, you have a good amount of first-party inventory and some third-party inventory with Yahoo Sports and SI. Do you have enough inventory at this point to achieve your financial targets, or will you need more? And are you talking to any new leagues or teams about inventory? Second, on BetVision, you mentioned around 25,000 events. Over the next 12 to 18 months, how high can that number go, and which sports are next? Josh: On inventory, we always want more unique inventory because it provides a competitive moat. Do we need more to deliver our numbers? Not necessarily. The beauty of the moment engine is we can apply our models across our own inventory and third parties. Premium publishers are reaching out to run our moments engine across their inventory, which brings us into additional demand flow. So we have multiple commercialization paths without requiring more owned inventory. Mark Locke: And Legend gives us a massive amount of unique inventory that we own and control, further strengthening our position. Bryan Castellani: On BetVision, in the materials we mention a path to around 300,000 events. A big driver of that is esports competitions. We recently added tennis and continue to build out across FIBA and others. We are always looking for more ways to expand our owned and operated inventory. Esports was a relatively easy bolt-on and delivered a significant number of events. Eric Handler: Thank you. Operator: Thank you very much for your question. Your next question comes from the line of Trey Bowers from Wells Fargo. Trey, your line is now open. Trey Bowers: Hey, guys. Thanks for the question. Another BetVision question—any chance you could dig into what you learned from this most recent NFL season? Around engagement, interaction—how did that progress as the season went on? Any metrics you could provide would be helpful. Bryan Castellani: We continue to see year-over-year engagement improvement on NFL as we ramp implementations and users get more familiar with it. Session times and repeat visits are increasing as we add more events. We also saw a 32% increase in unique plays on NFL and 62% across soccer. Trey Bowers: Great. And a follow-up for Bryan: any early sense of potential one-timers for 2026 free cash flow so we are not surprised as the year progresses? M&A costs, etc.? Bryan Castellani: Not at this time. We are focused on continuing to grow the year-to-year cash balance. We have given the annualized impact of the pro forma business—reaching about 30% EBITDA margin with near 50% free cash flow conversion. It is too early to specify any one-timers for 2026 today. Trey Bowers: Thank you. Operator: Thank you very much for your question. Your next question comes from the line of Barry Jonas from Truist. Barry, your line is now open. Barry Jonas: Hey, guys. On Legend, can you talk more about the reaction of your league partners to the deal and specifically address Legend’s work in prediction markets and sweepstakes and the comfort level there? Mark Locke: There are two distinct parts. First, league partners are very positive about our ability to drive wider viewership and get messaging out to a much larger audience we control—that was a big attraction for us. If you are a league and want to access sports fans in North America, the chances are we have them, and we can talk to them for you. On prediction markets, that is separate from league partners—I would not conflate the two. We see the advertising opportunity in prediction markets as significant, and Legend’s role in capturing that marketing spend is clear. More broadly, ask whether prediction markets are increasing the number of people making wagers on sports in the U.S. If the answer is yes, that is good for our market and our business, increases TAM, and increases the requirement for data—both marketing and market-making. We are watching a rapidly evolving regulatory transition with what we think is an obvious medium-term outcome. We have seen this journey before. The value of our data to sportsbooks today is a multiple of what it was a decade ago. We see an interesting opportunity to distribute data to prediction markets as regulation evolves. Our data will be needed. Operator: Thank you very much for your question. Your next question comes from the line of Chad Beynon from Macquarie. Chad, your line is now open. Chad Beynon: Hi. Good morning. Great to see you continue to outpace the betting market. From partners, we have heard about high hold and lower volumes across NFL this season. What are you seeing from an engagement standpoint? Is there any concern that volumes have decelerated, and could that impact your 2026 betting guidance? And then a quick follow-up. Mark Locke: Short answer: no. If you look at our numbers, we are not seeing an impact and do not expect to. Remember, we are a global business—not just U.S. The South American market is growing quickly, Europe is still growing nicely, and there are many global opportunities. We see ourselves as the picks and shovels and somewhat immune to handle volatility. On your broader point, our global betting growth was 33% in 2025; U.S. betting growth was 50% versus roughly 30% for the U.S. market. That reflects additional products like BetVision and in-play, more content like Serie A and EFL, and pricing. These support a sustainable, stable, predictable business. Chad Beynon: Thanks, Mark. And as a housekeeping item, what are the final steps to close the Legend deal? You mentioned Q2—what remains? Mark Locke: Simply regulatory approval. Chad Beynon: Thank you very much. Operator: Thank you very much for your question. Your next question comes from the line of Jason Bazinet from Citi. Jason, your line is now open. Jason Bazinet: Thanks. Two quick ones. You mentioned migrating from gross to net revenue recognition. Can you confirm that was contemplated in the guide? And when does that go into effect, and what is the magnitude? Bryan Castellani: Jason, it is in the guide. We spoke about it at Investor Day. Some curated deals include placing our IDs and moments engine on third-party sell-side platforms. There we take a lower share of the overall campaign but at higher margins. That dynamic was implied at Investor Day and is reflected in the 2026 and 2028 guidance. Jason Bazinet: Thank you. Operator: Thank you very much for your question. Your final question comes from Gregory Gibas from Northland Securities. Greg, your line is now open. Gregory Gibas: Great. Thanks for taking the questions. First, could you provide color on Legend’s revenue breakdown—how much is derived from media/advertising placements versus revenue share and lifetime revenue share? And second, how did self-serve versus managed trend in Q4 versus prior periods? Mark Locke: Roughly 50/50 between media/advertising and revenue share, including lifetime revenue share. Josh: On self-serve versus managed, self-serve is still a smaller share today. Much of the incremental gross revenue we are adding is coming from building out the self-serve, curated-deal portfolio, which takes time. In Q4, we still had a decent amount of managed service as we picked up scatter budgets at year-end. Over the longer term, we expect steady growth by distributing curated deals and gradually shifting the mix toward self-serve. Operator: Thank you for your questions. There are no further questions at this time. This concludes today's call. Thank you for attending, and you may now disconnect.
Operator: Thank you for standing by, and welcome to National Vision Holdings, Inc.'s fourth quarter and fiscal 2025 earnings conference call. At this time, participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Tamara Gonzalez, Investor Relations. Please go ahead. Tamara Gonzalez: Thank you, and good morning, everyone. Welcome to National Vision Holdings, Inc.'s fourth quarter and fiscal 2025 earnings call. Joining me on the call today are Alex Wilkes, CEO, and Chris Laden, CFO. Our earnings release issued this morning and the presentation accompanying our call are both available in the Investors section of our website, ir.nationalvision.com. A replay of the audio webcast will be archived in the Investors section after the call. Before we begin, let me remind you that our earnings materials and today's presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, are not limited to, the factors identified in the release and our filings with the Securities and Exchange Commission. The release and today's presentation also includes certain non-GAAP measures. Reconciliation of these measures is included in our release and the supplemental presentation. I would like to draw your attention to slide two in today's presentation for additional information about forward-looking statements and non-GAAP measures. Further, please note that all financial measures in today's commentary are based on a continuing operations basis unless otherwise noted. As a reminder, National Vision Holdings, Inc. provides presentations and supplemental materials for investor reference in the Investors section of our website. I will now turn the call over to Alex. Alex? Alex Wilkes: Thanks, Tamara, and good morning, everyone. Thanks for joining us today for our fourth quarter and fiscal 2025 earnings call. I'll start off by saying we had a great year. We enhanced our leadership team, laid out an ambitious transformational roadmap, and rallied the entire organization around initiatives focused on modernizing every aspect of the business, from customer engagement and in-store digital tools to product, pricing, presentation, data, and technology infrastructure. We delivered strong mid-single-digit comp store sales and modernized our business, all while driving significant operating margin expansion. I'm proud of how our teams executed with urgency, and I'm confident in our ability to continue expanding our market share as we close the gap in areas where we are underdeveloped compared to the category. In 2025, the number of exams performed by our doctor network increased over last year, and metrics across ticket, NPS, and conversion moved in the right direction, contributing to healthy profit expansion, a key tenet of our path forward and in line with the expectations we set out to achieve. I am also pleased with how our target customer cohorts are embracing the changes underway. We're expanding our customer base with more profitable customers, such as those who use managed care, progressive lenses, or bring in a prescription from another doctor, or what we call Outside Rx. This highly intentional customer mix shift we are driving resulted from key initiatives around new selling techniques in our store and a new approach to merchandising to give these customers the products they want. These initiatives were instrumental in driving the strong results we reported in fiscal 2025. Our 2025 results exceeded the expectations we laid out at the start of the year and are proof points to the power of our transformation. In fiscal 2025, net revenue grew 9% to $1,990,000,000. Adjusted comp store sales were 6%. Adjusted operating income grew 56% to $102,500,000 versus $65,500,000 in 2024, with AOI margin expansion of 160 basis points over 2024, landing at 5.2%. This all contributed to adjusted EPS of $0.80 for fiscal 2025, compared with $0.52 in 2024. We finished the year strong with fourth-quarter comps tracking as expected within our long-term financial algorithm, and bottom-line results supported by our initiatives and strong execution. In the fourth quarter, net revenue grew 15.1% to $503,000,000. Adjusted comp store sales were 4.8%. Adjusted operating income was $17,600,000, with AOI margin improving to 3.5% compared to 0.7% in the fourth quarter last year, and adjusted EPS in the fourth quarter came in at $0.15 per share compared with a loss of $0.04 per share last year. It's important to call out that in the fourth quarter, we saw traffic growth in our managed care, progressive, and Outside Rx customers combined, along with strong average ticket growth. Overall, I'm incredibly pleased with the performance, consumer resilience, and the execution of our strategy during the fourth quarter. Chris will cover more detail on the quarter in just a few minutes. We're happy with the execution of our strategies and the results they are delivering. And first quarter to date, we're seeing continued confirmation of our strategy with comp store sales in the mid-single-digit range despite the weather challenges we've experienced so far this year. The success we saw in 2025 reflected early wins on the strategy we laid out at our Investor Day last fall. As we shared, our strategic initiatives are focused on four growth vectors, each with long runways, which include expanding with underdeveloped customers, evolving our product offering where we are underdeveloped, enhancing the patient and customer experience, and new store growth, while also remaining disciplined and intensely focused on operating margin expansion. During 2025, we began to expand with underdeveloped customers. Through data-driven insights, we recognized that our customer audience is skewed more middle-income and was much broader than our historical targeted approach reflected. This intentional shift in customer mix delivered exactly the kind of performance we expected, driving stronger comps and healthier traffic from higher-value segments such as managed care, Outside Rx, and progressive customers. During fiscal 2025, we saw the benefit of our initiatives reflected in average ticket growth of 6% for the year and driven by meaningful progress to close the pricing and product mix gap relative to the category. Managed care comp sales grew low double digits in 2025, and we ended the year with 42% of revenues attributable to managed care. Traffic declined half a percent overall for the year, reflecting declines with self-pay customers offsetting strong traffic gains with our more profitable customer cohorts. While some attrition among less profitable self-pay customers is anticipated and is reflected in our overall traffic results, the growing influx of more profitable customers is strengthening the quality of our business, and it is reflected in the profit expansion we are achieving. On the product side, our strategy to target areas of underdevelopment versus the category is paying off. We made a significant pivot in fiscal 2025 to attract a greater share of the more profitable customer cohorts already shopping in our stores, notably those paying with insurance. As we refocused on attracting a broader, more profitable customer base, we transformed our merchandising strategy to better meet their needs. These are customers who seek premium frames and can spend more, whether through insurance benefits or higher disposable income. This evolution in customer and product approach allows us to better serve more profitable customers while still delivering compelling value to customers across all income demographics. In 2025, our shift towards more premium frames and branded assortments drove higher ticket and resonated strongly with existing customers while attracting new customers in the higher-income band demographics. With a higher mix of our customers using insurance, we evolved the mix of frames sold in our stores to better serve their needs. We ended the year with approximately 40% of frames for sale in our stores priced above $99, up from 20% at the start of the year, and we have more to do on that front to continue modernizing our stores. We introduced more branded products, new brands like Lam, Ted Baker, Hugo Boss, Jimmy Choo, and, in the fourth quarter, Kendra Scott, and we're really excited that in early innings, these are turning above market benchmarks. These products proved critical to serving our target customers. The timing of our business modernization could not be better, from expanding our premium assortment and refreshing our brand to strengthening the selling capabilities required to win in the premium and in particular in smart eyewear. Since launching Meta AI glasses last spring, our sell-through has exceeded expectations. As of the fourth quarter, Meta is available in 300 stores, and, based on this performance, we expect Meta will be available in all stores by the end of the second quarter. Our early success in smart glasses is a proof point to the attractiveness of America's Best to these customers. We're proud to offer this technology with access to eye care at scale in the U.S. As we look ahead, we're being methodical and strategically phasing efforts to enhance our offerings across frames, lenses, and contact lenses. In 2026, we have an exciting year lined up for frame introductions. Some of the new frame brands coming to America's Best include a range of sought-after premium, fast fashion, and lifestyle brands like Burberry, True Religion, Kate Spade, Polo Ralph Lauren, and Costa. These advancements to our product mix also complement our pricing strategy, which progressed over the year from no-regrets pricing actions to modernizing our ticket on the bundle, and ultimately to enabling us to implement product segmentation in our stores. Together, pricing, product mix, and the influx of targeted customers has driven comp store sales as reflected in the higher average ticket we saw over the course of the year. Looking to 2026, our pricing actions have become more sophisticated. This year, we're simplifying lens pricing and insurance pricing constructs to remove friction and make lens selection and upgrades easier for customers to understand. Throughout 2025, we made significant progress in our lens leadership initiative, and we have plenty of runway to grow. We grew in key lens products like anti-reflective coating, advanced materials, transitions, and progressives. For 2026, I think about our ambition for lenses similar to what we did in 2025 on frames. We are going to begin providing more premium lenses within our assortment. We designed and executed tests for our lens leadership strategy around pricing and assortment simplification. In the coming months, we expect to begin offering Stellest, an FDA-approved lens designed to slow myopia progression while correcting refractive error in children with myopia. We are also offering more premium lenses to help managed care customers get more out of their benefits. One example of this is we plan to introduce a tier-four progressive lens later this year, which offers the widest, most natural, and distortion-free vision across all distances. This is a highly sought-after lens for progressive customers, reflecting strong demand for premium performance and a comfortable vision experience. Our initiatives that enhance our lens offerings extend to key areas where we are underdeveloped when compared to the rest of the category. By 2026, we expect we will have made meaningful progress to close the gap versus the category when it comes to lenses. We expect lenses sold with premium materials to approach 60% from 50% today, which includes migrating from plastic to polycarbonate, and we expect anti-reflective would approach 50% of mix from approximately 40% today. In addition to specific frame and lens product enhancements, our focus for 2026 is to continue to build our retail excellence muscle to meet customers where they are. We've changed how we think about product assortments in our stores and are moving to frame assortments by lifestyle or category and not just price point alone. Our goal is to drive greater relevance at the local level by aligning assortments more closely with the customer profiles we serve in each market. We're doing this through a disciplined, data-driven approach to segment assortments in both America's Best and Eyeglass World. We've identified distinct store merchandising clusters and expect to begin tailoring assortments later this year. Stores will be aligned into five merchandising tiers, each designed to serve defined customer cohorts. As a result of this work, depending on the cohort of a store, the mix of branded frames is expected to increase from approximately 40% today to approximately 70% by the end of the year. Our merchandising strategy is working. By upgrading our frame and lens assortments, aligning pricing with higher-value customer needs, and tailoring assortments at the store level, we're driving higher ticket and healthier mix while preserving our overall value proposition. As we move into 2026, we're building on this momentum with disciplined product innovation and segmentation that we believe will position us to continue closing the gap versus the category and drive sustainable growth. Importantly, our merchandising strategy only works if it shows up in the experience. That's where our focus on customer and patient experience becomes a critical growth driver. In early 2025, we began implementing a more consultative selling model in both our America's Best and Eyeglass World brands, which has played a meaningful role in closing the gaps across underdeveloped customer segments and product categories. These changes are taking hold in our stores, with a noticeable shift in frontline associates' behavior as they move beyond purely transactional interactions. The evolution of our selling approach is showing up in our average ticket, contributing meaningfully to our comp performance, and it is being well received by store teams. Importantly, our consultative selling approach really allows our associates to provide exceptional value for customers across demographics. It's about creating a joyful shopping experience where you get the product that best meets your lifestyle needs. To support this transformation, we deployed iPads and digital tools enabling associates to more effectively match customers with products that best meet their needs. These tools, along with enhancements to our selling processes, have strengthened associate effectiveness and reinforced our move toward a consultative selling model. In parallel, we refreshed the in-store environment, updating visual elements such as graphics, pricing presentation, signage, and associate dress standards. The overall look and feel of our stores is materially different from a year ago. Importantly, these improvements were achieved with relatively modest investments and without significant capital intensity, demonstrating our ability to drive meaningful change efficiently. Overall, these initiatives are improving performance with strong capital discipline. Our remote exam technology continues to provide important capacity flexibility across our network and remains integral to how we deliver care at scale. We are pleased with the progress our teams are making on our remote hybrid model where in-store doctors also perform exams in other stores remotely, and we continue to expand the number of doctors trained and participating in this program. We believe this is an important way to deliver care more efficiently and give us greater flexibility in how we deploy our doctor network going forward. At our Investor Day, we shared that the Eyeglass World brand is a part of our portfolio that we call emerging brands, which today also includes the Vista Optical brand, with locations on select military bases and within select Fred Meyer stores. The foundational efforts in Eyeglass World to strengthen operations really gained traction, delivering solidly positive comps throughout the year. The focus has been on building a culture centered on accountability and ownership, implementing retail best practices, and driving overall operational execution. During the year, we took a meaningful step to an employed OD model at our Eyeglass World locations, helping to standardize store execution and the patient experience. We are refining the Eyeglass World brand positioning. That work is underway now. We are thrilled with the work VML did for America's Best, and we'll share an update on what's coming with Eyeglass World later this year. We made tremendous strides in 2025, successfully transforming our brand marketing, shifting from a primarily promotional posture to a more strategic brand-led approach. Our focus in 2025 was on redefining the America's Best brand, including the launch of a new logo, a refreshed design, and our national creative campaign, Every Eye Deserves Better. This campaign was designed to expand our audience targeting, allowing us to reach higher value such as managed care, Outside Rx, and progressive lens wearers, while remaining true to our value proposition, and performance of the campaign has been phenomenal. Since the launch, America's Best unaided awareness saw a noticeable uptick, reaching the highest in the category. Importantly, we continued targeting pragmatic buyers, those that are value-seeking self-pay consumers, reinforcing that our value proposition is compelling for customers across income demographics. As we reflect on the year, it's worth noting the journey we have taken at America's Best. Up until this past fall, America's Best was essentially a promotional all-the-time banner with the two-pair and eye exam offer. In 2025, we started redeploying these promotional dollars to more targeted advertising, improving both efficiency and effectiveness. As a result, America's Best brand awareness is at its highest in recent memory, and a great accomplishment that we believe is yielding the traffic that we want. With America's Best new brand identity and campaign now launched, we're able to more fully leverage these refreshed assets to drive greater impact. This updated identity gives us significantly more flexibility to personalize our messaging and increase relevance with target customers. These are capabilities that were more limited under the prior Owl-led campaign. This is a multiyear transformation, and in 2026, we're taking the next bold step forward with the addition of a new media partner, Infinite Roar, who brings a fresh perspective and more innovative thinking to how we deploy our marketing spend. Underpinning this evolution is a more segmented approach to messaging. Our 2026 strategy is designed to bridge broad brand awareness with more targeted content designed to engage our target customers. Importantly, we're also expanding into mid-funnel activities, with increased emphasis on influencers, social media platforms, audio, and sponsorships, creating a more balanced and effective media mix. In parallel, our recent CRM improvements are designed to drive improved engagement post-purchase, including annual eye exam bookings and more tailored journeys designed to reactivate lapsed customers. Following the launch of our new CRM platform in 2025, we began with initial journeys focused on reengaging lapsed customers. In fact, in the fourth quarter, early results from our new lapsed customer journey were nearly twice as effective as our old approach, albeit on a smaller base as the program has just kicked off. Those early efforts delivered meaningful insights that sharpened our messaging and segmentation. That learning in hand, we're expanding our CRM activation to include enhanced lapsed customer outreach, post-exam engagement, and journeys tailored to our highest-value customer cohorts. You've heard us talk about modernization a lot, and a big piece of that is expected to come from our technology strategy. Our goal is not just to keep pace with the industry, but to become an innovation leader supported by industry-leading technology foundations. This starts with an unwavering focus on creating a joyful customer experience, starting with our online presence where millions of customers begin their journey with our brands. It continues through a seamless experience into our retail locations and is maintained by meaningful ongoing connection points. In 2025, we launched the first phases of our elevated customer experience efforts rooted on the industry-leading Adobe Digital Experience Platform. In 2026, we plan to expand that across all our brands and deepen the integration with our in-store experience. Complementing our digital experience platform, we're integrating Adobe CRM capabilities to enhance our customer insights, create more meaningful customer interactions, and build increased brand loyalty. To support the transformation across our customer experience, we are modernizing our foundational platforms, beginning with the launch of a new end-to-end Oracle ERP platform in 2025 with expanded capabilities planned in 2026 and 2027. We continue to deepen our investments in our modern data platforms, including our Microsoft and Databricks-based data warehouses as well as our data analytics and visualization platforms. These investments are intended to create ongoing agility to allow us to continue to innovate quickly and realize the optimal benefit from emerging technologies, including AI and agentic commerce, among others, and we believe they provide us with the scale needed to meet our planned growth for years to come. We believe the work we've done across operations, merchandising, marketing, and modernizing our technology capabilities creates a more optimal environment for our customers. This is critically important where it matters most, helping our doctors deliver exceptional eye care for our patients. We had a strong year in 2025, with doctor retention and recruiting achieving well beyond our expectations, including over 10% of the recruiting class for new graduates. Our doctor coverage remains healthy and stable, supported by innovative recruiting and retention strategies. To close, fiscal 2025 was a defining year for National Vision Holdings, Inc. We did what we said we would do. We executed our strategy, modernized our business, improved the quality of our customer base, delivered strong top- and bottom-line results. These results are the outcome of disciplined execution across merchandising, pricing, marketing, customer experience, and technology. I'd like to thank our teams for their dedication and continued commitment to our transformation. Your efforts have been instrumental in driving the progress we've seen. Just as important, the progress we've made this year positions us well for what's ahead. We have clear opportunities to close the gaps and drive profitable growth. With our distinct growth vectors, strong industry tailwinds, and a team that has proven it can execute with urgency and precision, we're confident in our ability to deliver sustainable long-term value. Thank you for your time and continued support. With that, I'll turn it over to Chris to walk through our 2025 results and 2026 outlook in more detail. Chris? Christopher Laden: Thank you, Alex, and good morning, everyone. As Alex shared, fiscal 2025 was a year of significant progress for National Vision Holdings, Inc. When I first spoke with you less than one year ago, I reinforced our commitment to a clear and focused mandate to expand our operating margins through disciplined execution and operational excellence. Through the collective efforts of our entire organization, we successfully rallied around this objective and implemented the foundational changes necessary to drive sustainable margin improvement in 2025. Key to our success has been instilling a culture of strong financial discipline across all levels of the enterprise. We strengthened our organizational processes to ensure every dollar spent drives measurable value creation. The culmination of these efforts resulted in a 160 basis point expansion in operating margin in 2025. This progress reflects the dedication and alignment of our entire team, and I'm confident in our ability to build on these achievements as we enter fiscal 2026. Before I provide our outlook for 2026, let me first turn to our fourth quarter and fiscal year 2025 results, which, as a reminder, include an extra week compared to the prior year. The 53rd week represented $35,600,000 in net revenue and $3,500,000 in adjusted operating income. All results reported today are inclusive of this 53rd week impact, with the exception of our comparable sales and adjusted comparable sales metrics, which are reported on a 52-week calendar. In addition, I will be referring to certain non-GAAP metrics in my discussion, and would refer you to today's press release for reconciliations of all non-GAAP financial measures to their most comparable GAAP financial measures. For the fourth quarter, net revenue increased 15.1% with adjusted comparable store sales growth of 4.8% and growth from new stores. During the quarter, we opened 12 new America's Best stores and closed four America's Best stores. We ended the quarter with a total of 1,250 stores. Adjusted comparable store sales growth in the period was driven by an increase in average ticket of 5.8%, which reflects continued strength in the managed care cohort, including operational improvements that led to higher revenue in the quarter, along with execution of our pricing and merchandising initiatives. We expect to continue to benefit from improvements in our managed care operations going forward, though likely not to the magnitude we experienced in the fourth quarter. The increase in average ticket was partially offset by a 2.5% decline in overall customer traffic compared to the prior year, as healthy trends in our managed care business continue to offset softer traffic in our cash pay business. As we have discussed, this intentional evolution of our customer mix to more profitable target customer cohorts is expected to create a healthier overall business, even if we see short-term traffic decline. To that end, in the fourth quarter, we saw traffic growth for managed care, progressive, and Outside Rx customers combined. As a reminder, the fourth quarter is unique for us, as it is typically our lowest revenue quarter of the year and one weighted toward the end of the period given seasonality with customers using benefits before expiration. To provide some additional context to our comps in Q4, there was a negative impact to our results driven by the calendar shift of the 53rd week. We lost one of the highest-volume selling days in the comp calendar, which, for context, normalized, would have driven an additional 50 basis points improvement in our Q4 traffic comp. Overall, the trends we have talked about throughout the year remain consistent. We are excited about the revenue and operating margin performance for the quarter and the year. Our eye exam conversion to product sales has remained consistent with prior quarters, which is another key indicator of customer acceptance of our merchandising and pricing transformation. As a percentage of net revenue, costs applicable to revenue decreased approximately 40 basis points. The resulting increase in gross margin is driven by our growth in average ticket from higher managed care revenues in the quarter and execution of pricing and product mix initiatives, partially offset by the expected slight increase in optometrist-related costs as we lapped a prior-year onetime benefit related to doctor incentive true-ups. Adjusted SG&A was $251,900,000 in the fourth quarter, and as a percentage of revenue, leveraged 180 basis points. This performance was primarily driven by operating leverage on lower associate-related expenses and advertising, partially offset by higher variable incentive compensation and health care expenses. Adjusted operating income, reflecting the benefit of the 53rd week, increased to $17,600,000 compared to $3,200,000 in the prior-year period, and adjusted operating margin increased 280 basis points to 3.5% for the quarter. Net interest expense was $4,200,000 compared to $4,600,000 in the prior year. During the quarter, we entered into an interest rate hedge on a portion of our outstanding debt. This $100,000,000 hedge is at a fixed rate of 3.43% and is intended to reduce exposure to short-term rate volatility. Adjusted EPS was $0.15 per share in the fourth quarter, up from negative $0.04 per share last year. Turning now to our financial results for fiscal 2025 as compared to fiscal 2024, we delivered adjusted comparable store sales growth of 6%, adjusted operating margin expansion of 160 basis points to 5.2%, and adjusted EPS growth of approximately 54% to $0.80 compared to the prior year. Turning next to our balance sheet, we ended fiscal 2025 with a cash balance of $38,700,000 and total liquidity of $332,000,000, including available capacity from our revolving credit facility. During fiscal 2025, we repaid $101,300,000 in long-term debt convertible notes, bringing our total debt outstanding, net of unamortized discounts, to $245,900,000 at the end of 2025. We ended the year with a net debt to adjusted EBITDA of 1.1 times. For the full year, we generated operating cash flow of $146,300,000 and invested $72,800,000 in capital expenditures, primarily driven by investments in new and existing stores and information technology. We also had non-capital investments related to our IT infrastructure, including our finance ERP and new CRM and our e-commerce platforms during the year. We continue to maintain a strong balance sheet and healthy cash flow to support our growth and capital allocation priorities. Our Board of Directors recently approved a new share repurchase authorization following the expiration of our prior authorization on January 3. While our priorities are focused on the growth initiatives underway, we are pleased to have the authorization in place to repurchase up to $50,000,000 of shares until December 28, 2030. Moving now to our fiscal 2026 outlook, which is consistent with the initial view we shared at our Investor Day last fall, reflecting continued momentum from our transformation initiatives, confidence in our strategic direction, as well as consideration for a range of scenarios with respect to the macro environment and consumer demand. For fiscal 2026, which, as a reminder, is a 52-week year, we currently expect net revenue between $2,030,000,000 and $2,090,000,000, supported by adjusted comparable store sales growth of 3% to 6%. Our comp outlook assumes a similar mix of ticket and traffic as we saw in 2025 and incorporates strong quarter-to-date results despite the significant weather events during the quarter. With respect to profitability for 2026, we expect adjusted operating income between $107,000,000 and $133,000,000, which includes a range for depreciation and amortization of $88,000,000 to $92,000,000. At the midpoint, our outlook assumes fiscal 2026 adjusted operating margin expansion of approximately 100 basis points relative to fiscal 2025, excluding the 53rd week. This expansion in adjusted operating margin is expected to be primarily driven by SG&A leverage. Our guidance takes into account our multiyear cost savings plan, and we remain on track to realize approximately $10,000,000 in annualized savings this year. Interest expense is expected to be between $14,000,000 and $16,000,000. We expect our effective tax rate to be approximately 28%, excluding the impact of vesting of restricted stock units and stock option exercises. Bringing this all together, we expect adjusted diluted EPS to be between $0.85 and $1.09 per share, which assumes approximately 82,000,000 weighted average diluted shares outstanding. We expect capital expenditures to be between $73,000,000 and $78,000,000, which includes investments to open approximately 30 to 35 new stores this year. Store openings will be relatively balanced throughout the year and will be weighted towards America's Best brand stores. We also expect to close approximately 10 to 15 stores as part of our ongoing fleet optimization efforts, resulting in net new store growth of approximately 20 to 25 stores. We expect store closures beginning in the second quarter, continuing with a relatively balanced cadence through the fourth quarter. As we consider the impact of returning to a 52-week fiscal year, the quarterly profile of the business will be affected. Taking into account factors such as the loss of the 53rd week, holiday shifts, changes in selling days, and the timing of our investments, our expectation for adjusted operating margin is for Q1 and Q3 to drive more favorable year-over-year growth, with Q2 and Q4 yielding flat to modest growth. In summary, we are proud of the results we have delivered for fiscal 2025. We believe the strategic initiatives we have put in place position us well to deliver on both our near- and long-term targets and will drive shareholder value. And with that, I would like to thank you for your participation in today's call. Operator, we're now ready for questions. Tamara Gonzalez: Thank you. Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. Please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Our first question comes from the line of Michael Lasser of UBS. Please go ahead, Michael. Michael Lasser: Good morning. Thank you so much for taking my question. You're providing a lot of evidence that your strategy is working and leading a very effective performance. The key question from here is going to be whether there could be a pause in the trade-off between the growth you're getting from the insurance, more richer-pay customers versus the traditional customers that National Vision Holdings, Inc. has served. So are you seeing any evidence of that, whether it was the shape or cadence of the fourth quarter or what you've seen quarter to date, that there could be a disruption in this growth rate as you have that potential handoff over time? Alex Wilkes: Hey, Michael. Good morning. Thanks for the question. I will address a bit of the shape of the fourth quarter and step a little bit through what we are seeing in the first quarter and then provide a little bit of color on the cash pay customer versus the managed care customer. So, the fourth quarter certainly was an interesting quarter for us. We started October off actually pretty darn strong, and were happy with the results. November kind of as expected, but then we did see some slowing in December, in particular with the cash pay customer. An important nuance of December, though, was as soon as we cleared Christmas, actually, our week 53 was pretty darn fantastic, and we saw consumer demand come back. I think a little bit of that was related to the compressed timeline between Thanksgiving and Christmas where folks might not have been as much in the optical game as we would have liked, and there was a fair amount of macro noise. As we moved into January, that demand continued. We were super happy with our results all through essentially January 22 when winter storms, I think, put not just our business but a lot of other businesses a little bit on our heels with the winter weather that impacted, frankly, a large swath of the U.S. Again, super pleased with where we are sitting through the first quarter, two months in, sitting in the mid-single-digit range, seeing sequential acceleration in traffic. So really, really quite pleased with that. Now a little bit deeper into your question on the managed care versus the cash pay cohort. Again, continuing to see strength with the managed care consumer. The cash pay customer is still a bit more fickle than what we have previously experienced in years past. We did start to see a little bit of improvement last year, and then late last year, there was a little bit of continued macro wobble. But we do think that we will comp positively with the cash pay consumer in 2025. One of the interesting things that we have talked about is that the cash pay consumer has actually opted into some of the more premium products that we have rolled out at a faster clip than what we had anticipated, and that was also a contributor to our success in 2025. So, Michael, I hope I got to most of your question. Michael Lasser: You did. You did a great job, Alex. So you expect cash pay to comp positive. What would that compare to the comp from that cohort of consumers in 2025, just so we have a relative frame of reference? And what have you factored in from both the tax refunds as well as smart glasses that will be fully deployed to your stores by the second quarter into your guidance for this year, just to help us assess the degree of conservatism that could be baked into the outlook? Thank you so much. Alex Wilkes: You got it. So on the cash pay consumer side, again, it is a combination of both traffic and ticket. As we are introducing more products and rolling out smart eyewear to more stores, we absolutely think that cash pay consumer is going to participate in that. We are still being a bit more conservative on our traffic expectations with the cash pay consumer until we start to see a bit more acceleration in the repurchase cycle of that consumer cohort. But, again, on an overall comp basis, because they are opting into the more premium offerings we are launching, we do feel positive about the cohort on a comp basis. On the second point on tax refunds in 2026 outlook as that relates to smart eyewear, clearly, we think having more money in the consumer's pocket is a good thing for us and a good thing for consumption of the category in general. As we step through the next couple months, we will hopefully see some of that flow through at a higher rate to our business than what we have even experienced quarter to date. Again, optimistic. We obviously think cash in the consumer's pocket is a good thing. But with our stronger resiliency with the managed care consumer, we are not necessarily as dependent on the tax refund tax seasonality now as we may have been in years past. As it relates to smart eyewear and 2026 outlook, we are super excited that we are going to be deploying Ray-Ban Meta to the balance of our fleet by the end of the second quarter. Again, this has been one of the really pleasant surprises of our business, that it is one of the hottest-selling products that we have in our assortment. We are ecstatic with the performance of Ray-Ban Meta within our stores. The transaction value of that consumer is significantly higher, among the highest of our consumer types. So nothing really but enthusiasm and good news for us as it pertains to that product category. Michael Lasser: Understood. Thank you so much, and good luck. Alex Wilkes: Thanks, Michael. Operator: Thank you. Our next question comes from the line of Simeon Siegel of Guggenheim Securities. Please go ahead, Simeon. Simeon Siegel: Thanks. Hey, good morning, everyone. Nice job. Sorry if I missed it, Alex. I know, and maybe this is following up on the last one a little, but just any way to help us think about how you're breaking apart the pieces of that net traffic between those two pieces? So thinking about the puts and takes of the gains from the profitable target customers versus what you think you will walk away from. This is something about for the future: what you think you will still walk away from? I'm just curious when we can start having the reset offset behind us and the traffic is more of a simple story of the new target customer growth. Then maybe, Chris, really impressive SG&A leverage. How much of that was cutting expenses versus leveraging fixed costs on higher sales? And how are you thinking about that SG&A dynamic into next year? Maybe the same idea of leverage versus opportunities to cut costs? Thanks, guys. Alex Wilkes: I will take the traffic one and then turn it to Chris on the leverage question. We think we have multiple years of work ahead of us to be very deliberate on our consumer cohort shift. Again, I spoke a little bit about this in my prepared statements, that historically we were really an always-on promotional company. When you market two pair of eyewear for a certain price including an eye exam, and that is your primary lead offer that you deploy most of your marketing spend against, you are speaking to one customer type that is really sensitive to price. As you begin to shift that marketing expense into a marketing expense that is more targeted, you are making a conscious decision to walk away potentially from some of those cash pay consumers as you are reinvesting into the acquisition of the more valuable customer group. So, yes, Simeon, we do believe that this is a multiyear strategy. We are winning with the more profitable customers that we are seeking. We have rebuilt our acquisition platform to accomplish just that, and not just my message externally but internally to the team here has been we need to ensure that we are winning with the customer cohort to drive the profitability of the company. Again, Chris talked about this at length too. That is the primary mission of this management team: to continue to expand operating margin, and we are doing that through this intentional shift of the customer cohort. Long story short, we think we have multiple years of runway to go as we work on this customer shift, and what we are measuring ourselves on is our effectiveness at driving the customers that we want into our stores. Christopher Laden: On the cost front, the operating leverage expansion that we are seeing is really a healthy mix of both things. Our comps at 6% for the year certainly help leverage our more traditional fixed costs, but we have unpacked every line item within our SG&A portfolio over the course of the last twelve months. We have seen in 2025, and we expect to see over the next couple of years, about $20,000,000 of cost out in those line items. We joked a little bit at Investor Day: things as big as relooking at our logistics contracting for national freight to something as minor as looking at what kinds of paper our stores are ordering and making sure that we are optimizing there. What we see in the future is a continued ongoing, precise view of how we spend, both at the support center and our stores. The team has embraced it with open arms. It is something that the entire enterprise has rallied around and is excited about. Simeon Siegel: Great. Thanks so much, guys. Congrats again. Best of luck for the year. Alex Wilkes: Thanks, Simeon. Operator: Thank you. Our next question comes from the line of Dylan Carden of William Blair. Please go ahead, Dylan. Dylan Carden: Thanks. Alex, what do you make of the projections for sort of a softer end market this year? I think some of the ones out there are down low single digits for the total industry, and then obviously last year was sort of soft. Is that sort of the corollary that you see in traffic being kind of your cash customer more subject to those types of declines, and your business is sort of staying above the fray given all your initiatives? Is there sort of more of a turbocharge capacity for the other end of it? Alex Wilkes: You know, Dylan, first and foremost, I think we control our own destiny on a lot of these elements. One of the things that I was most pleased by in 2025 was, in a category where eye exams were declining between the mid- to high-single-digit range, we actually grew eye exams in the plus-one range. I think that speaks to the strength of our brands. It speaks to the strength of our strategy and how we are communicating with the consumer about the offerings that we provide across our banners. Even in the face of some macro challenges and some uncertainty, I think our strategies are paying off, and it is showing in outstripping the category from an acquisition and eye exam growth perspective. When we think about things that can help us to continue to outperform, it is that we are the obvious destination for value in the category. We are not shifting away from that, but we are refining exactly what that means. We think elements like continuing to introduce more premium products—to your question on turbocharging our business—continuing to introduce more premium products, making the in-store environment a bit more joyful. We did not talk about it at length during the call, but I am happy with the momentum we are seeing at Eyeglass World and the change in trajectory there. In 2024, that was a negative-comping business, and Eyeglass World was plus 4.2% last year. I think all of those things are pulling in the right direction and cumulatively are having a nice strong impact on our business, even in the face of some macro uncertainty. That being said, as you know from following our story, we do prepare for all sorts of scenarios, which is why our guidance continues to be incredibly prudent. Dylan Carden: Excellent. And then CapEx stepping down for kind of a second year in a row, is there any bigger lift or investment necessary for sort of store experience as you cater to a higher-income consumer? Alex Wilkes: I think we have been pretty intentional about the investments we are making in kind of refreshing the stores, particularly with the America's Best rebranding, have been intentionally focused on things that require minimal capital. So we can refresh these stores, we can introduce some of the new branding assets at a pretty nominal rate for CapEx relative to the size of the business. As we reported on CapEx, we said during Investor Day we are looking to spend 4% to 5% of revenue in CapEx over the next few years. In the very immediate term, when we are directing more of those investments at modernization of the business and organic investments, you will see a lot of this show up in our traditional CapEx. Also, some of that does not come through kind of traditional CapEx. There are still cash investments we are making that we will see build through other assets in the balance sheet. Christopher Laden: So the dollars are still being reinvested in the business, but unlike when we were growing at a faster pace with new stores, not all of that is showing up in the CapEx line. Alex Wilkes: And then, Dylan, I want to double down on something again, a statement I made during my prepared remarks. One of the things I am super proud of this company for having done over years is investing in doctor equipment, ensuring that the stores are well maintained, ensuring that our stores are orderly and clean. We do not have anything that is massively out of sorts. Where we did have opportunity is to make the environment a bit more joyful by modernizing the dress code of our associates. Again, those are not capital- or even expense-intensive items. These were minor investments along visual merchandising. For those of you who have not been in one of our stores recently, I would say go into one of our stores and take a real look around at the environment, at our people, at our teams, and compare them to what it looked like a year ago. I think you will see and feel a noticeable difference in the environment, again, even in context of some very, very cost-efficient and minor tweaks from a capital structure. Dylan Carden: Really appreciate it. Thank you. Operator: Thank you. Our next question comes from the line of Brian Tanquil of Jefferies. Your line is open, Brian. Brian Tanquil: Hey, good morning, guys, and congrats. Maybe just as I think about the comment you made that what you're realizing is that your current target customer is probably more of a middle-class or middle-income customer. How durable do you think that is? I mean, as we think about maybe a down trade that is happening right now, and then how do you mesh that with all the strategies that you're putting in? Just trying to get a sense of the stickiness of this customer base that is now showing up at your stores. Alex Wilkes: Brian, I will tell you this. Thanks for the question. I think we feel even better about it today than we would have a year ago because that middle-income consumer has higher expectations of product. They have higher expectations of experience, and those are all things that we are continuing to deliver on. Again, it is important to think through the lens of our price and value gap versus the category. We are delivering better products, a better experience. We are delivering better stickiness through our investment in CRM and shifting our marketing and acquisition expense into areas that are in particular pointed at the notion of retention, all while maintaining a significant gap versus the category—an intentional gap versus the category—in terms of average dollar ticket transaction. Again, yes, we are absolutely focusing on driving our ticket growth through introduction of more premium frames and being more deliberate on pricing. That being said, we still are the obvious destination for value in the category. Introducing more premium product while still maintaining our value positioning in the market—we actually think that is the winning recipe to continue to be a destination of choice, in particular for that consumer that you spoke of. Brian Tanquil: Got it. And then just on the weather impact from the quarter, looks like you have a decent number of stores in the Northeast, New York, New Jersey. So just curious how you think, or how we should be thinking about the impact from that from a modeling perspective. Thanks. Alex Wilkes: We had probably about 15% of our fleet that sat right in the crosshairs of the winter storms that we had to weather through the end of January and even into February. Again, I am really happy with how the team has responded to call patients back and get them back in stores for appointments that potentially they could not make due to store closures and road closures and all those things that we had to manage through. Sitting here today, two months through the first quarter in the mid-single-digit range with sequential traffic acceleration from the fourth quarter, I could not be more pleased with how the team has responded to those challenges that we faced in the first couple months. Tamara Gonzalez: Thank you. Operator: Our next question comes from the line of Robert Ohmes of Bank of America. Your question please, Robert. Robert Ohmes: Good morning. Thanks for taking my question. Actually, Alex, and maybe Chris, just on 2026 and thinking about the most important potential tailwinds, or maybe just highlighting more of the tailwinds. How significant—you mentioned simple lens pricing—could you give us maybe some more color on that? Also, remote exams, is that a driver still or sort of tailwind for 2026? And then maybe just a little bit more on the advertising. You mentioned a new media partner. As you go through 2026, what incremental could we see on the marketing side? Alex Wilkes: Thanks, Robbie. On tailwinds, we are really excited about the new product introductions that are coming throughout the year. Similar to last year, those new product introductions are going to be phased in throughout the course of the year, and we think we are going to see continued momentum from that. On the lens side, lens purchasing in this category is a very complicated and non-consumer-friendly activity. With our deployment of iPads with the OptiCam, all intended to demystify the lens shopping experience, we think that is going to continue to help. We are looking at simplifying our lens assortment, especially once we have our tier-four lens introduced, so that we can create a more simple lens hierarchy so that consumers understand the good-better-best architecture a bit better than what they do today with all the different degrees of add-ons and lens materials and all the different combinations that exist today. We are testing our way through that at the moment to understand exactly how to create that narrative and create that experience the most efficient way for the consumer. We think that will be ready for commercial application towards the back half of the year. Certainly, we think that is a win for our consumers. We think that is a win for the business as well and helps us towards our goal of migration to more premium lens materials and lens add-ons. Remote exams continue to be a winning recipe for our business, and, frankly, I think it is one of the reasons that we were able to weather the weather impact of the first quarter in the way that we have, by having doctors that could see patients remotely when they may not have been able to travel into a location. What a great asset to have during that time period. Again, super excited about the opportunity that we can provide doctors to both practice in store and practice remotely. We think that is a differentiator and, frankly, one of the reasons that we had a really strong recruiting class in 2025. Our doctor retention and doctor recruiting was at an all-time high for the year, and we think offering remote as a mode of practice is certainly one of the contributors to that. On your last question on advertising and the media partner, I think this is our next bold step in the transformation of our marketing capabilities. If you think of 2025 as really a year around creating new brand assets and a new identity and a new campaign, 2026 is around how we take those assets and deploy them differently. I have spoken about this in the past. Historically, we spent a lot on linear TV advertising, we spent a lot on search, and we have not really done a particularly good job in mid-funnel activation and digital, in targeted advertising where more and more consumers are actually consuming their media. With our new partner, we are making some deliberate shifts this year in how we deploy our acquisition expense, in particular, in the mid-funnel range of acquisition. All of that is intended to pull in the same direction and help us to attract those customers that we spoke about: the managed care, the Outside Rx, and the progressive customers that are so important to our profitability expansion story. Robert Ohmes: Sounds great. Thank you. Operator: Thank you. Our next question comes from the line of Anthony Chukumba of Loop Capital Markets. Please go ahead, Anthony. Anthony Chinonye Chukumba: First off, thank you for taking my question. Second off, congrats on a really wonderful 2025, and it is very encouraging to hear that you are doing mid-single-digit comps in the first quarter given the weather challenges that have impacted so many retailers. I just wanted to drill down a little bit on smart glasses. Obviously, you are selling the Ray-Ban Meta. It is going really well for you. You are expanding to all your stores. I just want to clarify—two parts to the question. First off, you do not have any type of exclusive arrangement with Meta, do you, where you can only sell their smart glasses? Related to that, obviously, there is going to be Android XR that will be coming out. Do you foresee a scenario in which you could potentially be selling some of those glasses as well? Thank you. Alex Wilkes: We do not have an exclusive relationship with Meta, but we are super happy with the partnership that we have with Ray-Ban Meta and with our partners at EssilorLuxottica. Again, I think it is just a great proof point for us that we can be highly successful in selling smart eyewear in our store environment. I cannot wait for this to be scaled to the remainder of the fleet by the end of the second quarter. Absolutely, we believe that we will be participants in the smart eyewear space across different platforms, and the success that we have had with Meta so far is the proof point that we will be a very meaningful player in smart eyewear for years to come. Anthony Chinonye Chukumba: Got it. Keep up the good work, guys. Alex Wilkes: Thanks, Anthony. Operator: Thank you. Our next question comes from the line of Adrian Yee of Barclays. Please go ahead, Adrian. Angus Kelleher: Hi. This is Angus Kelleher on for Adrian Yee. You talked about consultative selling driving higher ticket and better mix. How scalable is that across the full fleet? How many stores were you deploying that in at year-end? What is the level of investment or turnover or upskilling needed to roll that out nationwide? Alex Wilkes: Angus, great question. We are rolling it out nationwide. However, as you can imagine, moving 14,000 people along the journey of consultative selling is quite the task. It requires reinforcement. It requires focus. It requires center-stage activity during our national sales meetings. This is not a one-and-done thing. Our field sales organization is continuously focused on ensuring that we are sustaining those behaviors, but it is a multiyear journey to get our associate base to the point where we want them to be. OptiCam and the launch of OptiCam in Q4—one of the things that we really loved about that is that it becomes the tangible tool to help our associates along with that journey. It is really the combination of a selling tool with content that we have created to, again, demystify the experience and help consumers through the journey combined with the behaviors and the selling techniques and the consultative selling techniques that we are teaching and reinforcing. That will help along the journey of consultative selling. By simplifying the lens experience, we will make it easier for our associates to engage in consultative selling because it just makes it that much easier to have the conversation with the consumer. Angus Kelleher: Great. Thank you. Good color. Then just a quick follow-up. Can you help us size up how much of your managed care customer base is Medicare Advantage or skewed to older demographics? As you think about potential changes to Medicare Advantage plan benefits, do you see any potential risk to vision coverage or customer retention within that cohort? Thank you. Alex Wilkes: We really do not see any risk in changes to Medicare Advantage as they participate in the managed care realm. Medicare Advantage generally participates in managed care through a third-party TPA relationship with a managed care provider. It is not something we, frankly, track, but the conversations that we have with our managed care partners indicate this is not something that we should be concerned about or believe that will be a material impact to our business. Angus Kelleher: Okay. Sounds good. Best of luck. Operator: Thank you. Our next question comes from the line of Matt Koranda of Roth Capital. Please go ahead, Matt. Matthew Butler Koranda: Hey, guys. A lot has been asked and answered, but I wanted to hear, as it pertains to the mid-single-digit comp guide for 2026, how important the continued frame assortment optimization is in that plan versus the premium lens penetration assumptions that you are making. Then, did you explicitly have any tailwind baked into the comp from AI glasses? Let's start there. Christopher Laden: A couple of things to unpack there. First of all, when we think about our average ticket increase through 2026, it is really going to be a healthy mix of both our frame assortment evolution and lens leadership. Something to keep in mind is we still have tailwinds coming from 2025. We started last year with about 20% of our frame board priced over $99. We ended the year at 40%. That was a phased approach throughout the year. We are continuing to see tailwinds even in Q1 and the first half of the year from some of that evolution. At the same time, we are continuing that evolution through the rest of this year, targeting around 60% of the frame board by the end of this year. I think we will continue to see some tailwind on the frame side, as Alex mentioned. The simplification of our lens portfolio and some of our selling tools and techniques around simplifying the customer journey on lenses, we think, will ultimately yield improvements in average ticket as well. As we think about the AI impact and smart glass impact to our comp, we could not be more excited about the acceleration of that product category. At the same time, it is in 200 stores today, and it does not represent a material impact to the business, but we are super excited about its contributions over time. That is likely a multiyear journey where that becomes something that is a material impact to our comp. Matthew Butler Koranda: Okay. And then on AI glasses, what are you seeing in terms of prescription lens attach rates? I know you guys are very different than some of the traditional venues in which the Meta product is sold, which is more sun-related. Are you seeing higher rates of prescription lens attach rates? How do you think about premium lens attach rates to AI glasses as you move forward with the strategy? Alex Wilkes: Matt, it is a really, really good question. One of the reasons we are most bullish on this technology is that, in fact, we are seeing a very high degree of premium lens attachment with the Meta smart eyewear glasses that we are selling. The vast majority of what we are selling is coming with a prescription lens, and the vast majority of those lens sales are coming with the attachment of premium lens additions and lens products. The overall package purchase of a Meta AI transaction is among the highest-value transactions that we are seeing, and it is significantly, in part, related to what we are seeing from a lens attachment perspective. Matthew Butler Koranda: Great to hear. Thanks, guys. Operator: Thank you. Our next question comes from the line of Simeon Gutman of Morgan Stanley. Please go ahead, Simeon. Lauren (for Simeon Ari Gutman): Hi. This is Lauren on for Simeon. Thank you for taking our question. Just first, really quickly, curious on the managed care versus self-pay consumer in 2026 as it relates to your 3% to 6% comp. Could you elaborate more on the comp expectations for managed care versus self-pay at the low end versus the high end of the guide? Thanks. Alex Wilkes: Our planning scenarios assume with the high end that we can see a positive comp across both consumer cohorts. Again, what we saw in 2025 is that our self-pay consumers were leaning into some of our more premium assortments at actually a faster clip than even some of our managed care consumers. That being said, at the low end of our range, our assumptions for negative traffic would likely come out of the self-pay cohort. To unpack that a little bit further, we are trying to drive the right traffic within the business. When we think about our guide of 3% to 6%, we are still anticipating and feel confident that we are going to drive the right traffic with our customer cohorts that we are targeting, even at the low end of the range. But at that point, you are still essentially in the negative traffic comp for the self-pay consumer. Lauren (for Simeon Ari Gutman): Okay. Great. Thank you. Then you also previously shared expectations for managed care to reach around 50% of revenues, and today you shared it is around 42%. So is 50% still the right goal? If so, what is your line of sight to achieving that 50%? Alex Wilkes: We still feel great about 50% being the North Star. The 42% is on a base where both self-pay and managed care are growing. In order for managed care to hit that 50%, we expect to see disproportionate growth in there, but we still feel great about 50% being a North Star. We still look at a multiyear journey to get there, but all the strategies we discussed at Investor Day are specifically targeted at exactly that, and all the proof points thus far have been very positive. Lauren (for Simeon Ari Gutman): Okay. Great. Thank you. Tamara Gonzalez: Thank you. I would now like to turn the conference back to Alex Wilkes for closing remarks. Sir? Alex Wilkes: You got it. Thanks so much, and thank you for your questions today. Let me just wrap with this. To my National Vision Holdings, Inc. teammates listening to the call today, thank you for your dedication in 2025. It was a remarkable year, and to the 14,000 people who contributed to this, thank you on behalf of the leadership team for remarkable performance, and I cannot wait to see what we do in 2026. Thank you, guys. Tamara Gonzalez: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, and welcome to the Abercrombie & Fitch Co. Fourth Quarter Fiscal Year 2025 Earnings Call. Today's conference is being recorded. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star-11 again. I would now like to turn the conference over to Mohit Gupta, Vice President of Investor Relations. Please go ahead. Mohit Gupta: Thank you. Good morning, and welcome to our fourth quarter 2025 earnings call. Joining me today on the call are Fran Horowitz, Chief Executive Officer; Scott D. Lipesky, Chief Operating Officer; and Robert J. Ball, Chief Financial Officer. Earlier this morning, we issued our fourth quarter earnings release, which is available on our website at corporate.abercrombie.com under the Investors section. Also available on our website is an investor presentation. Please keep in mind that we will make certain forward-looking statements on the call. These statements are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions we mention today. These factors and uncertainties are discussed in our reports and filings with the Securities and Exchange Commission. In addition, we will be referring to certain non-GAAP financial measures during the call. Additional details and reconciliations of GAAP to adjusted non-GAAP financial measures are included in the release and the investor presentation issued earlier this morning. With that, I will turn the call over to Fran Horowitz. Fran Horowitz: Thanks, Mohit. Good morning, and thanks for joining us today. Before we begin, I do want to acknowledge the situation in the Middle East, with associates and stores in the region. Our focus continues to be on their safety and well-being. Returning to our results, I am happy to report the fourth quarter finished on the higher end of the ranges provided in our early January update. Once again, we accomplished exactly what we set out to do. Holiday product acceptance drove record fourth quarter net sales with balanced growth across regions, brands, and channels, along with growth in earnings per share. As a company, our goal is to set clear commitments and then deliver on them, leveraging our strong foundation and operating model. We achieved another year of consistent results for 2025, with record sales, growth across regions and channels, and leading double-digit operating margins. Substantial operating cash flows also enabled strong returns of cash to shareholders via share repurchases. Looking forward to 2026, we expect to continue on a path of global growth and add to our track record of consistent strong profitability. For the fourth quarter, we delivered net sales growth of 5%, which was balanced across regions, brands, and channels. It was particularly great to see both brands deliver record fourth quarter net sales. At Abercrombie Brands, we achieved our goal of returning the brand to growth with 4% net sales growth on top of a record last year. Hollister Brand continues to deliver for the teen customer, producing an eleventh consecutive quarter of net sales growth at up 6%. With balanced top-line growth and continued financial discipline, we delivered an operating margin of 14.1%, including 360 basis points of tariff pressure. I have to recognize the team's incredible efforts here to meaningfully reduce the impact of these costs. On the bottom line, earnings per share of $3.68 improved 3% on last year's record quarterly results, demonstrating our ability to create value through a balanced combination of global growth, operational excellence, and disciplined capital allocation. Recapping the year, fiscal 2025 net sales were a record $5.3 billion, surpassing $5.0 billion for the first time in company history. We grew over 6%, exceeding our beginning-of-the-year growth projections provided last March. For the third consecutive year, our customers responded to the team's compelling product and engaging marketing, delivering net sales growth across regions led by the Americas, up 7%. Sales also grew across channels for the third year in a row. We continue to see great traffic on digital and in store and, importantly, we continue to see our highest value customers shopping across channels. We delivered an operating margin of 13.3%, or 12.5% adjusting for a one-time litigation benefit, a double-digit result for the third straight year, despite 170 basis points of tariff pressure. On the bottom line, we delivered full-year earnings per share of $10.46, our second consecutive year of EPS over $10, by far the strongest back-to-back performance in our 30-year history as a public company. We also remain committed to shareholder return. With $619 million of operating cash flow after investing back into the business, we returned $450 million to shareholders via share repurchases totaling 11% of shares outstanding at the beginning of 2025. The team worked hard all year, staying fully committed to our customer and our playbooks, and I am proud of the consistency of these results as a clear demonstration of our leading operating model and culture of financial discipline. From a regional perspective, 2025 was another year of progress. In the Americas, we grew net sales 7% on strong cross-channel traffic, driven by compelling marketing across brands and continued store expansion. In EMEA, net sales growth of 6% was driven by double-digit growth in the UK, along with good growth in the Middle East. APAC grew 5% this year, led by solid performance across our digital platforms. Moving on to brand performance, I will start with Hollister Brands, where we set records across the business. I am so proud of what the team has achieved with the global teen consumer. With two consecutive years of 15% growth driven by increases in unit selling and AUR and product, we delivered growth across genders and key categories, showing improved balance on both. We saw great response from a variety of exciting marketing campaigns supporting key product drops, like our Collegiate Collection, the Grad Shop, and an engaging collaboration with Taco Bell. We added millions of new customers in 2025, and importantly, we also saw improved retention. Simply put, Hollister's growth and scale stand out in the teen space and we are excited about what is ahead. At Abercrombie Brands, after a challenging start to 2025 up against a near-perfect 2024, the team rallied and committed to getting the brand back to growth by the end of the year. We did just that, achieving a return to net sales growth for the fourth quarter. As we have shared throughout the year, we believe Abercrombie remains a leader for our target customer. We continue to see strong traffic along with growth in customer counts and good retention trends. Reflecting our confidence, we invested across stores, digital, and marketing to bring the brand to life in new ways throughout 2025. Most recently, the brand hosted several amazing activations leading up to the Super Bowl. As an official fashion partner of the NFL, the first of its kind, we had players and their families, several celebrities and league figures, as well as our target customers at a series of events. I was there, and it was incredible to see Abercrombie at the intersection of fashion, sports, and culture. A great finish to our 2025 season and the perfect kickoff to 2026. Our ongoing investments across channels continue to pay off in 2025. We saw growth in the stores and digital direct channels for a third consecutive year, and both remain nicely profitable. In digital, we continue to see strong performance, finishing the year with that channel delivering 44% of total sales. We also surpassed 1 billion visits across our platforms for the first time, demonstrating the scale and direct reach we have with our customers. Stores matter to them too, and we were net openers for a fourth consecutive year, leveraging our digital demand to help us determine where we can better serve Hollister and Abercrombie customers with a physical location. At the center of all these excellent brand, channel, and regional accomplishments was our Read and React inventory model. For the third consecutive year, we chased millions of units to support product demand at healthy AURs, helping to drive top-line growth. Inventories remain tightly controlled, and we finished the year with units up in the mid-single digits. I cannot overemphasize how hard our team works at this, coordinating product across functions, geographies, channels, and partners, all while tariffs were changing the global supply chain landscape week to week. So looking forward, we are very excited for 2026. We entered the year with a strong foundation, which includes two globally relevant brands, a proven operating model, and a strong balance sheet, all managed by a world-class team. For the year, our goals for the company are as follows. First, to grow sales across brands with continued investments in owned and operated stores and digital businesses while adding growth from partnerships and new product categories, like our recent launch of baby and toddler in Abercrombie Kids. Second, to stabilize gross margins as we progress through the year by mitigating as much tariff impact as possible. Third, to continue to invest in tools and technologies to improve our speed and efficiency across the product and customer journeys. A good example of this is the go-live of our new merchandising ERP system this month. We are also moving quickly to leverage AI to benefit the customer, and we are modernizing systems to help us. And finally, to maintain our strong profitability by delivering another year of double-digit operating margins and expansion in earnings per share. We also expect to continue our track record of returning excess cash to shareholders through share repurchases. After closing another record year in 2025, we are off and running on these growth objectives for 2026. We have the team, the experience, and the track record of delivering for our customers and our shareholders. Many thanks to the entire organization that makes this happen every single day. The work continues. And always forward. I will now turn the call over to Robert J. Ball. Robert J. Ball: Thanks, Fran, and good morning, everyone. I would like to add my thanks to our associates around the world for staying agile and executing consistently throughout 2025. We are really proud of what we have achieved, and we have so much further to go. Starting with Q4 results, we delivered net sales of $1.67 billion, up 5% to last year on a reported basis. Comparable sales for the quarter were up 1%, with approximately 100 basis points of benefit from foreign currency. By region, fourth quarter net sales increased 5% in the Americas, 8% in EMEA, and 9% in APAC. On a comparable sales basis, the Americas was up 2%, EMEA was down 3%, and APAC was approximately flat. Within the brands, both Abercrombie and Hollister delivered record fourth quarter net sales. Abercrombie Brands returned to net sales growth, up 4% over last year on a comparable sales decline of 1%. Hollister Brands net sales grew 6% on comparable sales growth of 3%. Across the business, we saw mid-single-digit AUR growth and low-single-digit unit growth on increased traffic. Across regions and brands, the spread from net sales to comparable sales was driven by net new store openings, third-party channel performance, and favorable foreign currency. Operating margin was 14.1% of sales, coming in at the high end of the outlook we provided in early January, delivering operating income of $236 million, compared to $256 million last year. Adjusted EBITDA margin for the quarter was 16.6% of sales, on adjusted EBITDA of $276 million compared to $293 million last year. The 210 basis point year-over-year decline in operating margin was driven primarily by 360 basis points of tariff expense, which was partially offset in gross margin by 140 basis points of freight cost favorability, both included in cost of sales. Total operating expenses were in line with last year as a percentage of sales, with investments in stores offset by leverage in general and administrative expenses. Marketing was in line with last year as a percentage of sales. The tax rate for the fourth quarter was 28%. Net income per diluted share was above our outlook at $3.68 compared to $3.57 last year. We ended the quarter with inventory at cost up 5%, with approximately three points related to tariffs. Inventory units were also up 5%, including approximately three points related to strategically building receipts ahead of our planned ERP implementation this month. I will cover the rest of our results on an adjusted non-GAAP basis. For the year, we delivered net sales growth of 6%, reaching a record $5.27 billion. Growth was balanced across regions and channels, supported by mid-single-digit unit growth and low-single-digit AUR growth on increased traffic. On a regional basis, net sales were up 7% in the Americas, 6% in EMEA, and 5% in APAC. Across the business, we saw 70 basis points of favorable impact from foreign currency. Comparable sales for the year were up 3%, led by the Americas at 4%, with EMEA approximately flat and a 3% decline in APAC. For EMEA and APAC, the favorable spread between net sales and comparable sales was driven by net store openings and third-party channel performance. EMEA also benefited from favorable foreign currency. By brand, Hollister Brands delivered net sales growth of 15%, and comparable sales growth of 13%. At Abercrombie Brands, net sales declined 1% on a comparable sales decline of 7%, with the six-point favorable spread between net sales and comparable sales driven primarily by store openings and third-party channel volume. Operating income for the year was $661 million, an $80 million decline from 2024's record result, driven by approximately $90 million in tariff expense, included in cost of sales. Operating margin was 12.5% of sales, a 250 basis point decline from 2024, also driven by tariff expense totaling around 170 basis points of sales and additional cost of sales increase driven by product mix. Operating expense as a percentage of sales leveraged slightly, with investments in marketing and store occupancy more than offset by leverage on general and administrative expenses. Adjusted EBITDA margin for 2025 was 15.5% of sales on adjusted EBITDA of $816 million compared to $895 million last year. The effective tax rate for the year was 29%. Net income per diluted share was $9.86 compared to $10.69 in 2024. Moving to the balance sheet, we exited the year with cash and cash equivalents of $760 million and liquidity of approximately $1.2 billion. We also ended the year with current investments of $25 million. For the year, we drove operating cash flow of $600 million and free cash flow of $378 million. For the year, we used $450 million of cash to repurchase a total of 5.4 million shares of stock, 11% of shares outstanding at the beginning of the year. From a direct channel perspective, both stores and digital grew nicely for the third straight year. For the year, 44% of total sales were digital, with Hollister around 31% and Abercrombie around 59%. On the store fleet, we delivered 120 new store experiences including 62 new stores, 11 rightsizes, and 47 remodels. We also closed 22 stores, finishing as a net store opener for the fourth consecutive year. We ended the year with 829 stores, 523 Hollister and 306 A&F, across 5.3 million gross square feet, growing square footage by 4% to last year. Both the stores and the digital business remain highly profitable, with four-wall store operating margins around 30% in aggregate. Shifting to our 2026 outlook, for the full year, we expect net sales growth in the range of 3% to 5% from $5.27 billion in 2025, with full-year net sales growth expected across brands. We are investing for continued growth in the Americas and EMEA from both owned and operated stores and digital channels, as well as from wholesale and licensing partnerships. In APAC, while our business has delivered sales growth in recent years, we do not believe returns have fully reflected the level of investment. Consistent with our commitment to financial discipline, we are undertaking a review of potential strategic alternatives for the region, including the evaluation of options such as partnerships, franchising, and licensing, with a goal of enhanced profitability, optimized capital deployment, and a maintained focus on shareholder value creation. We currently anticipate 40 basis points of favorable impact to net sales from foreign currency. We have assumed modest AUR improvement for the full year, as we have taken some revised ticket pricing across brands largely focused on fashion elements of the assortment. We expect full-year operating margin in the range of 12% to 12.5%. At the midpoint, the year-over-year change reflects approximately 70 basis points of incremental tariff expense, or around $40 million incrementally from 2025, net of product mitigation. Our outlook assumes the 15% global tariffs announced by the administration are effective beginning February 24 and are assumed to remain in effect throughout the end of the fiscal year. No tariff refunds or recoveries are assumed for fiscal 2026. We also expect the first half will be favorably impacted by lower year-over-year freight costs, normalizing in the back half of the year. We are forecasting a tax rate of around 29%. For earnings per share, we expect diluted weighted average shares of around 45 million, which incorporates the impact of 2025 share repurchases as well as anticipated 2026 share repurchases. Combined with the tax rate, we expect earnings per share in the range of $10.20 to $11.00. For capital allocation, we expect capital expenditures in the range of $200 million to $225 million. On stores, we expect to deliver around 125 new experiences, including 55 new stores and 70 rightsizes or remodels. We also expect to be net store openers, with our 55 new stores outpacing around 25 anticipated closures. We do expect net store openings to be relatively balanced across brands, but tilted to the Americas. The company has a strong balance sheet and cash flows. We continue to expect share repurchases will be the primary use of free cash flow. For 2026, we are targeting share repurchases of around $450 million. Turning to the 2026 first quarter, we will go live with a new merchandising ERP this month, which will temporarily impact operations for approximately two weeks. During this time, we will limit inventory receipts and movement across the business, creating a temporary headwind of approximately one to two percentage points of growth for the quarter. We also have some incremental implementation costs in the quarter, so in aggregate, we expect the ERP project will have over 100 basis points of unfavorable operating margin impact, which is factored into our Q1 outlook. Including those impacts, we expect net sales growth in the range of 1% to 3% from the Q1 2025 level of $1.1 billion, with net sales growth expected across brands. We also expect slight AUR expansion for the quarter. On the evolving Middle East conflict, we currently anticipate a slight sales headwind. We will continue to actively monitor the situation alongside our in-market franchise and joint venture partner, with safety as our highest priority. We expect operating margin to be around 7%. In addition to over 100 basis points of impact from the ERP implementation, we expect tariffs will drive approximately 290 basis points of decline, or $30 million net of product mitigation. This will be partially offset by an expected freight tailwind of approximately 160 basis points for the quarter. Marketing investments will also be up around 50 basis points as a percentage of sales, with the remainder of expense in line with Q1 last year in total. We expect a Q1 tax rate around 26%. We expect earnings per share in the range of $1.20 to $1.30, with diluted weighted average shares expected to be around 46 million, including the anticipated impact of at least $100 million in share repurchases for the quarter. In closing, 2026 is underway, and we are executing from a position of strength, supported by a proven model, strong cash flows, and capital allocation. Our outlook is informed by a multiyear track record of delivering on our commitments and reflects our confidence in executing in 2026 and continuing to build towards long-term opportunities ahead. We will now open for questions. Operator: To ask a question, please press star-11 on your telephone and wait for your line to be announced. Press star-11 again to withdraw your question. We ask that you please limit to one question and one follow-up. The first question comes from Dana Lauren Telsey with Telsey Advisory Group. Your line is open. Dana Lauren Telsey: Hi. Good morning, everyone, and certainly nice to see the progress. Fran, after the building blocks that you put in place for 2024, for 2025, the collaborations that you did with the businesses, and frankly, returning to growth in the Abercrombie brand, and certainly saw what you saw with the Super Bowl and being the fashion partner. How do you think of the merchandising drivers of 2026 and what you are most excited about to drive growth? And then, Rob, as you think about the building blocks for margins in 2026, how do you think of AUR growth relative to price increases from tariffs and the impact of tariffs on margins going forward? Fran Horowitz: Dana, good morning. So excited about what we just delivered for both the fourth quarter as well as the year. Most excited that that was delivered with balance across regions, brands, and channels. What is driving our confidence as we head into 2026 is that it is the first time the company has ever done more than $5.0 billion in revenue. It is proof that our model is working. We delivered all of that, to your point, the last three years, double-digit margins, operating margins. Our playbook is working. Our model of chasing—we did not start the year with an expectation of Hollister to drive 15%. But with that model, we were able to chase millions of units to hit another 15% for Hollister. So I am excited about the opportunities ahead, and I am really looking forward to 2026. Robert J. Ball: Yeah, Dana. So on tariff impact here, our outlook does reflect that 15% being kind of held all the way throughout the balance of the year. Obviously, Section 122 here in the front half of the year, and then we are making the assumption of something pretty substantially similar to that carries us through the back half of the year. How that kind of cadences out: Q1, we talked about this 290 basis point impact on operating margins. That will be fully incremental year over year. We will start to lap small amounts of tariffs in Q2, early towards the back end of Q2. We talked about $5 million of tariff impact in Q2 of 2025, before kind of neutralizing in Q3 and then flipping to a bit of a tailwind for us for Q4. So that is kind of the cadence throughout the year. Total impact—incremental impact of about $40 million here for tariffs on a year-over-year basis. So that is roughly 70 basis points. We feel good about the mitigation strategies that we put in place here as it relates to country-of-origin changes, supplier negotiations, product costing, and then to your last point around pricing, we did take that pricing on spring products starting kind of late Q4. That will ramp as we move through Q1, so really only expecting some slight AUR improvement here in Q1, and then that will build throughout the balance of the year, so give us some modest AUR growth on the full year. We feel good about the mitigation strategies we put in place. We are tracking to another year of double-digit profitability, so excited to take that into 2026. Dana Lauren Telsey: Thank you. Operator: And the next question is going to come from Corey Tarlowe with Jefferies. Your line is open. Corey Tarlowe: Great, thanks, and good morning, everybody. Wanted to ask first on Hollister, how you think about the sort of the right growth algorithm, if you will, for that segment—areas of success from Q4 and then areas of opportunity in 2026? And then I have a follow-up. Fran Horowitz: Hey, Corey. Good morning. So, yeah, super excited. Big shout out to the Hollister team. I mean, congrats to them on the best year ever, eleventh consecutive quarter of growth. And what is driving that is really being dialed into that teen consumer. For holiday specifically, we saw winners in categories like fleece and graphics and outerwear. We have invested nicely into that business. We opened lots of new stores this year. We refurbished a bunch of stores, spent money on marketing. Our Taco Bell collaboration on Cyber Monday was a terrific success. So I am excited about the team staying dialed into that customer, staying close to that customer. Spring, we are already seeing some nice response from the consumer. So we are excited to see another year of growth. Corey Tarlowe: That is great. And then just more for Scott and Robert. There have been periods throughout, I guess, the last five-plus years where Abercrombie has invested in ERP systems, and you have not called out impacts. What is different about this implementation specifically? What does it allow you to do going forward? And then how should we be thinking about, again, that impact? Is it acute, or will there be any longer-lasting impacts from it? Thanks so much. Robert J. Ball: Yeah, great question, Corey. As you noted, this has been a multiyear undertaking for us, and it is great to have go-live in sight here. The system that we are replacing was originally built and released about fifteen years ago, and it was really architected for a very different business than what we are running today. This new ERP system allows us to support both the owned and operated omni business that we have, as well as the expectations of growth that we have across channels and categories, in a more efficient way. In terms of what you are seeing here in Q1 and the reason we have not called out any sales impact in the past is really it has been building. This has been building the system, getting ready for this go-live. What you are seeing here in Q1—we have been running parallel with this nonproduction instance for quite a while now. We have completed all the testing, final development, and now we are ready to go live, and that is what is coming up here in the next days and weeks. We feel like we have done the right work to ensure that we have got the units in the stores to support the sales during this transition. But the risk that we are calling out here in the outlook is primarily related to temporary interruptions in third party, some product interruptions in Chase over the next couple of weeks. In the end, it is all about making us faster as we think about new growth opportunities. So we are really excited to get this new system in place, and we feel like any sort of disruptions are contained to this couple-of-week period here in Q1, and we will be in good shape as we head into Q2. Corey Tarlowe: Okay. Great. Thanks so much, best of luck. Operator: Thank you. And our next question will come from Matthew Robert Boss with JPMorgan. Your line is open. Matthew Robert Boss: Great, thanks. So Fran, on your target for sales growth at both brands this year, how are you managing the intersection between Abercrombie's return to growth and the moderation at Hollister relative to last year? What do you see as normalized growth for the two concepts? Fran Horowitz: Hey, Matt. Good morning. I mean, our goal is obviously to grow both brands each year. Mid-single digits would be a definition of success for us. We are excited to see our model working. Coming out of fourth quarter where we grew the business again on top of a record and actually having another record year on top of 2024 is certainly proof that our operating model is working. I am excited that you are already seeing confidence in the consumer about some of our—you know, the increases in prices that Robert talked about a little while ago. Those are ramping up in our assortment, but the acceptance of spring has been good so far. So excited. I think Q4, what it defines, honestly, Matt, is a balanced performance, which is growth across brands, regions, and channels, and that is definitely our objective in 2026. Matthew Robert Boss: Great. And then maybe a follow-up for Robert. Could you just break apart the drivers by brand that support the embedded revenue improvement in the back half of the year? Robert J. Ball: In the back half of the year—in terms of sales, Matt, is that what you are looking at? Yeah. Matthew Robert Boss: Yeah, top-line improvement. About first quarter relative to the for the year. Robert J. Ball: Yeah, so again, if you think about where we came out of Q4, around that plus five and, again to Fran's point, balanced across brands, regions, channels—that is kind of what we are carrying into 2026. The big difference in what you are seeing in that step down from Q4 into Q1 with that one to three guide is really just that ERP impact that we are talking about. It is a couple of points here. But otherwise, it is a pretty consistent build as we think about the full year 2026. And that is how we are running this business. We are setting these clear expectations. We are going to control what we can control, and we have got the operating model that allows us to chase into revenue as we see those trends develop. So we feel like we are in a really good place, growth on growth, and excited to continue that trend here into 2026 in Q1. Scott D. Lipesky: Yeah, Matt. Hey, Scott. Just want to add towards the end there. As we think about store growth, as Robert noted, we are net store growers here for the fourth year in a row. We will do that again in 2026. And that store growth really ramps up towards the middle half. That is nice fuel to the fire there as we get into the back half of the year. Matthew Robert Boss: Great color. Best of luck. Thank you. Operator: Thank you. And the next question will come from Paul Lawrence Lejuez with Citi. Your line is open. Paul Lawrence Lejuez: Hey, thanks, guys. Robert, just a clarification on the ERP system impact. Is that something that we are going to see throughout the entire quarter, or is that still in front of us? And maybe if you can talk about what you are running quarter to date versus what you expect the next two months to be? Just want to understand the cadence of that impact. That is just the first question. Robert J. Ball: Yeah, I would say cadence is relatively consistent. Again, you know, we ended fiscal 2025 with Q4 and are carrying that into Q1. The ERP timing is really kind of a two-week period. We are right at the start of it here with the go-live, so it is really contained to that couple of weeks. We have gotten the inventory to our stores to support the Easter peak and the spring break timelines, so we feel good about providing and supporting our stores through there. It is really just a function of this third-party impact here over the course of the next two weeks. Paul Lawrence Lejuez: So is the right way to think about it that you are running up, let us say, 3% to 5% outside of that two-week period, and that two-week period has got to be down significantly to have a 100 to 200 basis point impact on the whole quarter? Is that the right way to think about it? Robert J. Ball: Yeah, I do not know if it is down significantly. It actually is more of a—because of the way the third party flows through, it is really more of a comp-to-non-comp compression that you will see here over the course of the next couple of weeks. Paul Lawrence Lejuez: Got it. And then can you just give us an update on your sourcing base, how you have made changes as we look out to fiscal 2026, just so we can monitor if there are any changes in tariffs by country that we might be able to keep tabs on that? Robert J. Ball: Yeah, so obviously we have talked a lot about our sourcing footprint over the course of the last year or so. Really proud of that diversified network that we have in place, and it has taken us years to build. We currently source from over 16 different countries. That has been a core enabler for us and our Read and React model. The approach is not changing, Paul. We are always evolving this network to make sure that we can service our brands, help with speed, and optimize costs. To your point, the tariffs have clearly introduced some complexity to the supply chain, but our position here has been pretty consistent, and changes here take time, and you obviously want to get them right and maintain quality levels. So we are focused on building the right partnerships for the longer term. I think as it relates to some of the more near-term news in the Middle East, we do have some sourcing operations there in the region. We have not experienced any disruptions that would have any sort of meaningful impact to the receipt plans that underpin our outlook, so we will keep monitoring that and keep agile with our sourcing base in total. Paul Lawrence Lejuez: Got it. And then last one, just on the APAC strategic review. What just prompted that? And when should we expect to hear something from you on the outcome of that review? Fran Horowitz: I will jump in on this one. We have just finished our third year of growth in that region, and we really do believe in a long-term opportunity there. I will tell you, it is just a matter of assessing our go-to-market strategy within that region. We currently go to market several different ways there, and it is our responsibility to make sure that we are doing that in the most proper way for our shareholders. And so that is what the announcement was about. Paul Lawrence Lejuez: Any timing on that front? Robert J. Ball: Early days, I would say. The process is just getting started, so we will provide updates as we go forward here as appropriate. Paul Lawrence Lejuez: Thank you. Operator: And the next question will come from Marni Shapiro with The Retail Tracker. Your line is open. Marni Shapiro: Hey, guys. I am curious if you could give us a little bit of an update on some of your licensing efforts, particularly in kids, and what that looked like. And then also just on international, you have had some wholesale efforts. I know I think you are on ASOS, for example. I am curious if your go to market in EMEA and APAC would include more wholesale opportunities like that to sort of build your brand regionally alongside your own efforts. Fran Horowitz: Hey, Marni. Good morning. I will pick that one off. So yes, to your point, we have launched a global licensing opportunity this year with our kids brand, and we were very pleased with the results. In fact, we think it has actually created a halo for many people who did not even know—many consumers that did not know—we carry a kids brand. We saw some nice growth in both our owned and operated as well as for our licensed partner. We recently launched baby and toddler, which is also very exciting, so we can now capture that customer from age zero and carry them all the way through for lifetime value. Regarding your second question, I would say we are entertaining all concepts—licensing, wholesaling, franchising—as we keep talking about diversifying our operating model. So all of those are opportunities. Robert J. Ball: Yeah, Marni, as you know, the Europe retail business is very different than here in the United States. So all of those different opportunities are available to us. We have done a few of them in the past, mainly the digital players that you called out. But there are opportunities in the future in each country to be in department stores, run wholesale businesses, potential concessions way down the line. So we are looking at all of that as we think about how we go to market in Europe. Fran Horowitz: Yeah, if you think about it, it is actually a very exciting time for us. We are getting lots of reach-outs with the health and strength of both of our brands. There is a lot of interest out there. So more to come on that. Marni Shapiro: Fantastic. And could I just ask you one follow-up on the tariffs? Once we get to sort of the back half of the year and we anniversary all the noise from 2025, and I guess we are more in a steady state as you think forward into, say, 2027, even after 2028. Should you be able to rebuild product margins, or is this kind of the new normal for you guys and for the world? Robert J. Ball: Yeah, I mean, we will see. We have a fantastic sourcing network. We have got a great sourcing team. We have been able to maintain these double-digit operating margins despite all of these different headwinds that we have faced, whether that be supply chain disruptions, input cost inflation, inflation across all of operating expenses, and now tariffs. So we are working hard. We feel like as long as we put great product out there, connect with our customers, continue to give them a great experience, we have got an opportunity to grow AURs and continue to grow this business and provide a really strong operating margin. The goal would be to try and offset as much of it as possible longer term, but that is a process, and that is what we are working towards here in 2026 with some of the modest AUR growth, and we will see how all that goes. Marni Shapiro: Great. Thanks, you guys. Thank you. Operator: And the next question will come from Mauricio Serna with UBS. Your line is open. Mauricio Serna: Great. Good morning. Thanks for taking my question. First, I just wanted to ask, what have you seen so far in terms of consumer reaction to your ticket increases? And just wanted also to make sure I understood—just by quarter to date, it sounds that the growth has continued to be consistent versus what you were seeing in Q4. Just wanted to get that clarification. Thank you. Fran Horowitz: Hey, good morning, Mauricio. So first on the ticket prices: we mentioned during our last call that our strategy was to start to see some of these ticket price increases for our spring product. As a reminder, we deliver spring around December week four, January week one. And it was going to be very judicious in things and categories like fashion, for example, and we are holding our commitment to our consumer. We did not raise prices in key categories like denim and opening price point T-shirts. So we are ramping up. It is a portion of our inventory today. The initial response has been good. And we are going to continue with this strategy, and we are going to continue to test and learn as we head through 2026. Robert J. Ball: Yeah, and on your quarter-to-date trends here, Mauricio, obviously very encouraged here coming off the record fourth quarter with balanced performance across brands and regions. Off to a good start here across both brands and regions for the first quarter. January and then February was a little bit choppy with the winter storms that we saw in the US, but as we have seen things pick up here once we have gotten out of that disruption period, most of the volume for the quarter is still ahead of us, and we are expecting growth in Q1 across brands. The only other piece of disruption would be this ERP implementation that we have got live here in the next couple of weeks, so that will provide a little bit of a one-time headwind for us. But by and large, happy with where we are and excited about how the quarter started. Mauricio Serna: Got it. And just a couple of follow-ups on the Q1 guide. On the freight, you called out a tailwind for the quarter. Is that based on contracted rate, and does that remain a tailwind for the year, or is that like Q1 peak? And then the other point on SG&A, excluding the marketing deleverage, should it be in line with last year in terms of dollars or percentage of sales? Just trying to get that point of clarification. Robert J. Ball: Yeah, so I will give you some of the building blocks here for Q1. You called it out. We have got this 290 basis points of tariff headwind—that is all incremental to last year. We do have offsetting tailwinds here. We have got freight—that is about a 160 basis points of tailwind. That has to do with how we have shipped product and our contract rates are in place, so that is a yes on that answer. We do have some slight AUR improvements as well that will help offset some of that tariff headwind. And then we have got this 100 basis points of headwind from the ERP go-live this month. On the expense, really flowing through on the expense side, you called out marketing—it is about a 50 basis point headwind for us in Q1. That is really just timing. On the year, marketing will be around flattish to last year as a percentage of sales. And then the rest of the expense base should be largely in line with last year's Q1 as a percentage of sales. Fran Horowitz: Thank you. Operator: And the next question comes from John Kippur with Goldman Sachs. Your line is open. John Kippur: Hi, everybody. Good morning. Thanks for the question. Just one more thing on the Q1 gross margin. Last year, you guys were lapping carryover inventory drag. It sounds like there will not be any benefit from lapping that. Just wondering how that factors in. And then as a follow-on, what does that sort of imply about your promotional levels going into Q1? And I guess if you could give a forward-looking statement about where you think promo may or may not be going the rest of the year. Thank you. Robert J. Ball: Yeah, John. You are right—we have talked about this lapping of carryover. That is really a 2024 Q1 dynamic. 2025 was kind of normal. That is the more normal base. So as you think about where we are coming into 2026, nothing that is a major mover up or down related to carryover levels or anything like that. In terms of promos for Q1, we feel great about where our inventory sits coming into the quarter. Again, once you pull out the kind of front-loading of the inventory that we had to execute here for the ERP, we are up 2% on units. That is a great place to be for us. Both brands are really in chase position now, and that obviously gives us the best opportunity to grow the AURs here. So from a promo standpoint, we feel good about it. All baked into that slight AUR improvement that we are expecting here for the first quarter. We are in a good position to get units flowing and inch that AUR up as we move through the quarter. John Kippur: Great. And then just one more follow-up if I can. Can you guys bracket out what the difference in your expectations between, for the full year, the low end and the high end of the guide? So what has to happen to hit the low end? What are you guys baking into to hit the high end? Robert J. Ball: I mean, at the end of the day, John, it is all going to be about product execution. We have to put the right product out there, which—we are off to a great start. Feel good about our assortments here in the first quarter. We have to keep doing it and keep executing as we move throughout the balance of the year. We have to make sure that our marketing is resonating. We have consistently driven positive traffic to these brands. We have got millions of customers coming into these brands, and we have to keep that going here. And we will do that with consistent marketing spend. And then we have to provide a great experience in our stores and all of those things. That three to five range—it is all just ranges of outcomes in terms of how we are executing here as we move throughout the year. Fran Horowitz: The exciting thing, John, is that the operating model that we have created and our ability to chase and stay very agile is key to winning for us. And the example with Hollister last year—we certainly did not set out expecting to pick up 15%, but our ability to chase millions of units and respond to the customer in real time has enabled us to do that. So we are approaching this year the same way, with the expectation from both brands, obviously, to grow in 2026. John Kippur: Thanks very much. Good luck. Operator: And the next question comes from Rick Patel with Raymond James. Your line is open. Rick Patel: Thanks. Good morning. Looking for more color on the building blocks of growth at A&F. Nice to see the expectation for growth. Do you anticipate growth in every quarter, and how do we think about the timeline for a return to positive comps? Fran Horowitz: Rick, good morning. So yes, excited. The team was hard at work last year. I am excited to see that the commitment that we made to returning to growth for the fourth quarter came to be. As a reminder, being down 1% on the full-year top line was up against our best year ever in 2024. It is just proof that the brand is healthy. We are going to continue to invest in stores and in marketing. Some of the strength that we saw in the fourth quarter were key categories: fleece, outerwear, YPB, and we are seeing nice acceptance already for spring. So our expectation is to continue to grow throughout 2026. Rick Patel: And just a follow-up on inventory. I appreciate that you are in chase mode, but how do we think about how you are planning units, as we think about the price changes that are happening and the potential for demand elasticity? Robert J. Ball: Yep. So thanks, Rick. Units in control. Nice, clean, up 5% on the print. Again, up 2% once you exclude that ERP. You know how we operate here. We will keep units tight and aligned with our forward growth for the brands. We are in good shape here, leaving 2025 and heading into 2026. We will continue to flex that muscle and make sure that we are ready to chase across both of the brands. Rick Patel: Thanks very much. Operator: Thank you. And the next question will come from Janine Hoffman Stichter with BTIG. Your line is open. Janine Hoffman Stichter: Hi. Good morning. So on the product execution, can you speak to what you have been seeing on conversion, particularly at the Abercrombie brand? I think it was down a bit in 2025, but you did see some improvement as the year went on. What did you see in Q4 into Q1? And maybe some comments on Hollister conversion as well. Thank you. Robert J. Ball: Yeah, I would say it is more of the same, Janine. We were making progress. The teams leaned in on the A&S side, stayed focused on that consumer, executed against key learnings all the way throughout the year, and at the same time, going back to Rick's point here, we kept units in control all the way through, and that allowed us to chase through. That drove improvements in conversion as we moved throughout the year, and we saw more of the same headed into Q4. And similar story there with Hollister. Conversion has been a nice—it has been something that has built as we moved throughout the year. So it reflects the confidence that we have in the assortments that we are putting out there for our consumers, and we are looking to do more of the same here as we move into 2026. Janine Hoffman Stichter: Okay, great. And maybe just a follow-up to Marni's question. It has been a while since you issued a long-range margin target. A lot has changed—12% to 12.5% this year. Is that kind of the right level for the business? And if we were to see upside to that, excluding changes to tariffs, where would that come from? Robert J. Ball: Yeah, great question. Not going to provide guidance beyond 2026 today, but I think we can talk through some of the underpinnings of the margin constructs that we are talking about, which I think addresses both yours and Marni's questions. I think it is important for us to anchor ourselves that over the past few years, this operating model has delivered double-digit operating margins across all different kinds of environments. So last three years, we have gone through freight changes. We have had inflation. Input costs from a product standpoint fluctuated all over the board, and obviously tariffs here for the last bit. As you think about what underpins this business, it is highly cash generative. We have got highly profitable stores and digital businesses, and we are building capabilities in third party to really accelerate that growth in more of a capital-light way. Our balance sheet is in great shape and allows us to fund into all of these things and invest in these brands and still return hundreds of millions of dollars to our shareholders through share repurchases, which I think is in our track record. We have returned over $1.2 billion back to shareholders through cash since 2021 through share repurchases, and we are looking to do more of the same here. So all of that really gives us a lot of confidence as it relates to the durability of this model. While I am not going to extend any sort of guidance beyond 2026 today, we do think that the fundamentals of this business are incredibly strong, and they position us well to maintain these healthy earnings growth as we continue to build here in the long term. Janine Hoffman Stichter: Perfect. Thanks for the color. Operator: I show no further questions in the queue at this time. I would now like to turn the call back over to Fran for closing remarks. Fran Horowitz: I just want to thank everyone for joining the call today, and we look forward to updating you all on our progress soon. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Hello, everyone, and welcome to Wallbox N.V.'s fourth quarter and full year 2025 earnings conference call and webcast. At this time, all participants are placed in listen-only mode to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Analysts who wish to ask a question can place themselves into the queue by pressing star one. I would now like to turn the call over to Michael Wilhelm from Wallbox N.V. Michael, please go ahead. Michael Wilhelm: Thank you, and good morning and good afternoon to everyone listening in. Thank you for joining today's webcast to discuss Wallbox N.V.'s fourth quarter and full year 2025 results. This event is being broadcast over the web and can be accessed from the Investors section of our website at investors.wallbox.com. I am joined today by Enric Asunción, Wallbox N.V.'s CEO, and Isabel Lopez Torghillo, Wallbox N.V.'s CFO. Earlier today, we issued our press release announcing results from the fourth quarter and year ended 12/31/2025, which can also be found on our website. Before we begin, I would like to remind everyone that certain statements made on today's call are forward-looking that may be subject to risks and uncertainties related to future events and/or the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including our annual report on Form 20-F for the fiscal year ended 12/31/2024 filed on 05/06/2025. We will be presenting unaudited financial statements in IFRS format that reflect management's best assessment of actual results. Also, please note that we use certain non-IFRS financial measures on this call; reconciliations of these measures are included in the presentation posted on the Investors section of our website. Also, a copy of these prepared remarks can be obtained from the Investor Relations website under the Quarterly Results section so you can more easily follow along with us today. I will now turn the call over to Enric. Enric Asunción: Thank you, Michael, and thanks everyone for joining us today. Before we go into the highlights of the fourth quarter, I would like to reflect on achievements and challenges that defined 2025. We have achieved many of the objectives we set out to do at the start of the year, which all have been focused on building a more resilient organization navigating a regionally volatile market backdrop. Throughout 2025, we executed with discipline across the strategic priorities. First, we focused on operational and leadership excellence. We continued the rightsizing of our organization, which directly improved our bottom line. Simultaneously, we strengthened our leadership team with senior talent across sales, operations, and finance to drive our next phase of growth. Second, we prioritized efficient innovation. Even as we streamlined our resource base, we remained committed to our innovative DNA. This led to the introduction of the Supernova Power Ring and the commercial rollout of our leading bidirectional charger, Quasar 2. Furthermore, we expanded our U.S. footprint by achieving CTEP certification for our Supernova DC fast charger, unlocking significant new opportunities in the American market. Finally, we took action to optimize our capital position and improve the financial stability of the company. We freed up capital by reducing existing inventory and improving working capital management. In addition, we secured $25,000,000 in new investments and reached an indicative commercial agreement with core banking partners and major shareholders for our new capital structure. Commercially, the highlight of the year is the growth in software, services, and others, with 18% growth compared to full year 2024. The North American market performed the strongest from a geographical growth perspective, up 16% year-over-year despite a flat EV market. Reviewing the overall results for 2025, revenue totaled €145,100,000 as we delivered approximately 144,000 units, of which 536 were DC units. While this reflects a decrease of 11% on revenue compared to last year, we significantly improved adjusted EBITDA by 51%, landing at negative €29,500,000,000. This result, which is more than double the adjusted EBITDA improvement we had in 2024, shows our cost optimization efforts are working well as labor and OpEx are down 25% compared to last year. In addition, we significantly improved the gross margin results, now landing at 38.3%, reflecting a 410 basis point improvement compared to last year. However, the significant efficiency gain partly explains the softer revenue results as well, as the transition to a more optimized organization did require a refocus on our business scope by filtering out non-core and system resources to key markets. Looking forward, we believe we can further clarify the slowdown in revenue growth as AC and DC sales are down 1,332% year-over-year, respectively. First, we need to improve our sales and service function, which has been impacted by optimization efforts in the recent years. It is not the only function that has been impacted, but we believe that if we want to restore our growth path, we need to shift resources to better support our customers, distribution partners, installers, and commercial partners. We have a strong product portfolio and customers trust our products. We need to do a better job in supporting them at the point of sale and service afterwards. The first improvements have already been made. As previously announced, with the appointment of our new CBO, Ignacio Alastair, the implementation of new sales leadership across the organization, and the hiring of additional sales and service personnel, we are now implementing the ReShape sales and service strategies, which we expect to start gaining traction in the near term. The second factor impacting revenue is the pending finalization of our capital restructuring. In the case of DC sales, customers continue to value our products and remain interested in ordering our products. However, we do face certain restrictions to participate in selected RFQs or tenders, the completion of order financing, and clarity on the long-term financial structure. Although the refinancing process currently has an impact on revenue, we believe the completion of this milestone, which is expected soon, will serve as a catalyst for growth as it strengthens our commercial standing. In addition, customers have shown strong interest in the recently launched Supernova Power Ring, which we expect to start selling soon. We believe that with the implementation of the new sales and organization and the closing of the refinancing, we can reestablish our growth trajectory. As the EV transition advances despite regional volatility, we expect to be in a better position to capitalize on the consistent demand for premium charging solutions across residential, commercial, and public sectors. In addition, we continue to improve all other aspects of the business as we keep implementing efficiency measures, improving gross margin, and developing our product portfolio. We recognize that much is still to improve and that we did not achieve our sales expectations. But operationally, we have a better business than we did in previous years, and revenue has been growing relative to cost. For that, we thank our suppliers, customers, employees, shareholders, and banking partners. We appreciate your support and for sharing our vision for Wallbox N.V. Now we will go into the highlights of the fourth quarter, share our perspective on the market, and provide additional details on the sales and service changes we are making. Afterwards, Isabel will offer a closer look at our financial results, our key financial metrics, and provide details on the current status of the refinancing process. And finally, I will return to close this conversation, share my expectations for the year ahead, and provide Q1 2026 guidance. Q4 revenue landed at €33,700,000, below guidance and down 10% compared to the same period last year. The performance of our different business activities are different if you compare sequentially or the same period in 2024. First, we have improved our AC sales compared to last quarter by 3% with a solid performance in Europe on the back of the continued momentum in the region, but down 15% compared to the same period last year. This has helped declined significantly sequentially, but up 29% compared to the same period in 2024. From a geographical perspective, the North American market viewed a significant decline in EV sales; APAC and South America, due to the shift in resources and priorities, all have been down quarter-over-quarter. In total, during the fourth quarter, we delivered over 33,000 AC units and 140 DC units in a flat sequential overall addressable market, which we define as all regions except China in terms of EV sales. Gross margin was 37.3% in the fourth quarter, landing in the 37% to 39% guided range. This is lower than the previous quarter, but approximately in line with average gross margin results during 2025. The main reason of the decrease is product mix, and an exercise in carbon credits. In contrast, we continue to improve the bill of material cost and have positive price effect. Isabel will come back to this topic later in the call. Labor cost and operating expenses landed at €22,100,000, improving 3% quarter-over-quarter and 23% compared to the same period last year. Cash cost, defined as labor cost and OpEx excluding R&D activation, non-cash items, and one-off expenses, improved 25% year-over-year. As highlighted in the previous earnings call, we are and have been making great progress on cost reduction while improving our revenue relative to labor cost and OpEx compared to the same period last year. While our primary objective is restoring our growth momentum, we believe that traditional efficiencies are possible by improving processes and systems as we reshape the organization for this new phase. In addition, we aim to continue to improve the revenue relative to labor cost and OpEx by investing in the sales and service organization while in parallel adjusting costs in the rest of the organization. Adjusted EBITDA loss for the 2025 was minus €7,300,000, missing our guided range and slightly up from last quarter. Compared to the same period last year, adjusted EBITDA loss narrowed by 46%. Softer than expected sales was the main reason for missing guidance this quarter. Reestablishing our growth is crucial for our path to profitability by investing in sales and service, finalizing our refinancing, and leveraging our existing position as leader in the EV charging market. For the 2025, Europe contributed €24,600,000 of consolidated revenue, or 73% of total top line. Compared to last quarter, this reflects a 4% growth for the division with markets such as Spain, France, UK, and Portugal showing strong results. Even though the growth in the results does not match the growth in EV sales in Europe, which is up 22% quarter-over-quarter, it shows the positive trend that we are recapturing our position in certain European markets. Looking forward, as the EV transition in Europe continues to have solid momentum, we believe the region will be an important driver for near-term growth, especially with our increased focus on accelerating cross-selling activities where we aim to sell more global products in the DACH region and cross-sell the commercially important product in others. The recent partnership announcement with Eneco for the scaling of commercial infrastructure with the AM 4 Challenge solution in the Netherlands underlines these efforts. North America contributed €8,500,000, or 25% of the total revenue, reversing the strong momentum of the last quarters as the region is down 90% compared to the same period last year. This is mainly driven by a 40% year-over-year decline in the U.S. EV market due to the removal of incentives and tax credits. In addition, the Canadian EV market remained soft as it has been all year. However, considering this market backdrop, the results have been solid and we even see opportunities to grow in the region looking forward. First, we expect additional growth in the U.S. resulting from our bidirectional charger, Quasar 2. We showed strong growth in Q4 compared to the previous quarter. This product is less correlated to EV sales as it is considered a home energy management solution, opening a different addressable market. In addition, we are working on a CTEP-certified Pulsar for commercial applications, allowing us to tap into the California market at a large scale. In Canada, a new EV incentive scheme has been introduced and a new trade agreement with China is in place, which we believe will boost the EV market. On top of that, we introduced a hybrid sales structure in this country to capture growth opportunities utilizing independent sales agents to increase our local presence. Consistent with the prior quarters, both APAC and LATAM are currently small regions for Wallbox N.V., now contributing approximately €87,000, or less than 1%, and €538,000, or approximately 2% respectively, for the quarter. The small impact on the overall results was expected as we shift our resources towards key markets. We continue to sell through distribution partners, allowing us to potentially accelerate growth in these markets in the future without the need for significant investments. AC sales of €23,100,000, including Pulsar and Quasar, represented approximately 69% of our global consolidated revenue, up 3% compared to last quarter. We are happy to see the first signs of the improvement in our AC sales. The Pulsar Max was the largest contributor to the overall revenue, with Pulsar Max Socket, Pulsar Pro, and Pulsar Pro Socket showing the strongest growth quarter-over-quarter. While the combined Pulsar category experienced a slower overall quarter in North America due to a significant drop in EV sales and a temporary slowdown of key account orders, the Pulsar Pro sales grew well compared to the previous quarter, reflecting our efforts in improving our foothold in the commercial market in this region. In addition, the contribution of Quasar 2 is growing more than 200% compared to last quarter, and we expect this trend to continue. Overall, Wallbox N.V. has a leading AC product portfolio with a wide range of smart charging and energy management functionalities, now with improved reliability and additional warranty for our best-selling product, the Pulsar Max. The value proposition of the products is very attractive and soon will be accompanied with an improved sales and service organization. We expect the AC category to perform well, which is already reflected in a stronger pipeline for the upcoming quarters. DC sales have been disappointing in the fourth quarter, landing at €3,400,000, or 10% of sales. The result reflects a significant reduction quarter-over-quarter of 41%, which is an unfortunate break in the improvement trend we have seen in the category in the first three quarters. However, it does reflect a 29% increase compared to the same period last year. We believe this mixed trend is related to certain restrictions to participate in select RFQs or tenders for DC fast charging solutions due to the pending finalization of our refinancing and also to seasonality. As touched upon earlier, customers remain interested in acquiring our DC fast charging solutions and Isabel will surely comment on the refinancing process in more detail to provide additional comfort on our financial stability. On the product development side, and following up on a preview we shared last quarter, we introduced the Supernova Power Ring, the next-generation DC fast charging solution of Wallbox N.V. This new charging solution is driven by DC Link, our proprietary technology that connects multiple Supernova chargers into shared power systems. In a Power Ring cluster, chargers exchange and use power in real time, ensuring every kilowatt is used efficiently. A cluster of two or three units can deliver a total capacity of up to 720 kilowatts or 400 kilowatts from any outlet, and capacity expands easily by adding more rings without major infrastructure upgrades. The category “software, services, and other” generated €7,200,000 for the fourth quarter, or 21% of the total revenue, approximately flat compared to last quarter. The installation and service activities grew modestly compared to last quarter with 6% and were down year-over-year. In the case of software, growth was 112% compared to the same period last year, continuing to show strong momentum. Overall, it continues to represent an important category where we see opportunities to grow both software and services. In our addressable market, which we define as all regions except China, 2,100,000 EVs were sold during Q4. While this represents an 18% increase year-over-year, growth stalled on a sequential basis, remaining flat compared to the previous quarter. The larger offender was the North American market, which showed a significant drop in unit sales due to removal of incentives and tax credits in the U.S. This was foreseen, as commented in our Q3 earnings call, and we expected this, including the rollback of federal emission rules, will impact the overall U.S. market in the near term. In contrast, on a state level, there are initiatives aiming to support development of the EV market such as in California. The state is proposing a $200,000,000 electric vehicle incentive program for first-time EV buyers. As mentioned, in the U.S., we plan to reprioritize our efforts in the states where the EV market remains solid, introduce a new commercial product for the California market, and expect growth opportunities with the Quasar 2 as a home energy management device. In Canada, the market has been soft all year, and the Q4 was no exception. However, recently, there have been two important developments that can revive the EV market in this country. First, the new Electric Vehicle Affordability Program was introduced, allowing up to $5,000 for battery electric and fuel cell electric vehicles. Second, Canada has announced a preliminary trade agreement with China, which we expect will allow introduction of affordable electric vehicles over time. The European EV market remains strong, growing 40% compared to the same period last year, and the largest contributor in our addressable market, with 1,300,000 EVs sold. Germany, Spain, Italy, and Portugal were amongst the countries that showed the strongest growth as the EV penetration rate is catching up with the northern countries. While the EU’s 2035 zero emission target did not hold up in its original form on a European Union level, individual countries have announced additional incentives to support the transition to electric vehicles. Germany has launched a new €3,000,000,000 EV incentive program. Spain announced its AutoPlus plan with €400,000,000 allocated in 2026 for direct subsidies for the purchase of electric vehicles. And France extended its existing EV purchase incentive scheme throughout 2026. Looking ahead, we believe the momentum in Europe will remain and that we can profit from this positive trend with our new sales and service organizations. The growth in the rest of world, which includes APAC and LATAM, slowed down in the last quarter of the year, but compared to the same period last year was up 47%. As mentioned in this call, at the moment, this division is not our core focus. We keep working with great distribution partners and key accounts. With the strong growth in EV sales for the region, we will have the ability to capture the opportunity while limiting our organizational exposure. Now I would like to touch upon an important topic, which is highlighting the changes we are making to improve our sales and service organization. As mentioned at the start of the call, we are happy with the progress we made on rightsizing the organization, but now need to reestablish our growth trajectory in this more efficient setup. With our new Chief Business Officer, Ignacio Lassouei, we have redefined our sales strategy and how we can best address our key markets, which are North America and selected European countries. The strategy centers around three pillars in conjunction with improving our service setup. The first pillar is recovering lost customers, where we aim to rebuild trust by focusing on our recent improvements and our strong commitment to quality of our service and products, including the extended five-year warranty on our most popular product, the Pulsar. The second pillar is the acquisition of new customers, where we, with the new sales development representatives, have adopted a more active approach to transfer our value proposition, which we consider to include the charging solution, sellout support, and strong service coverage, to the customer as we mature from a product-oriented company to a customer-oriented company. The third pillar is the consolidation and further development of existing customers by a stricter NPS monitoring, quarterly business review sessions, joint events, dedicated customer success managers, and introducing additional products and cross-selling opportunities. We believe this categorization of customers and improved serving of each category will allow us to reaccelerate the growth trajectory. However, this cannot be achieved without improving our service organization as well in parallel to the improvements we made in the quality of our product warranty offering. Therefore, we are implementing a new structure which includes doubling the existing capacity, realigning the service to the needs of each stakeholder, and insourcing more technical support capabilities. The key stakeholders in need of service are B2B customers, such as distribution partners or direct accounts, installers, and end customers. In the case of our B2B customers, we have introduced regional level-two support, bringing more technical support closer to the customer on a country level and working hand in hand with the sales team. For installers, we have introduced a highly technical level-two support hub in our headquarters to provide our certified installation partners with more in-depth knowledge. In the past, installers and end users have been supported at the same point of contact, but the service requests are materially different as installers face potential urgent technical questions during an installation process. Quicker and more tailored support is crucial to help our installation partners to be successful. In addition, we plan to make Cosmos, our product diagnosis system’s real-time telemetry, directly available for our certified installers for faster issue resolution without the need to interact with Wallbox N.V. first. In the case of the end user, we are improving our level-one support by introducing more automation and artificial intelligence. Most of the issues at the end user site are generated by misinterpretation or incorrect configuration, which we aim to solve quickly with multichannel problem-resolution information distribution. Customers will be able to chat and call with AI agents from the Wallbox app, watch, or just by dialing our number. More specific issues will be handled by the in-house level-one human support team. Now, before I turn it over to Isabel to comment further on our financial details, I would like to welcome her as she rejoins Wallbox N.V. as our new CFO. With twenty years of international financial leadership experience across the technology, industrial, and service sectors, Isabel returns to play a central role in supporting Wallbox N.V.’s next phase of disciplined financial execution and sustainable growth. She previously served as Wallbox N.V.’s Vice President of Finance from May 2021 to January 2025, where she oversaw global finance operations and supported key initiatives, including the company's transition to a publicly listed company and its international expansion. Isabel, over to you. Isabel Lopez Torghillo: Thank you, Enric. Good morning, and good afternoon to everyone. It is a pleasure and an honor to serve as the new CFO of Wallbox N.V., and I am excited to share with you today what we are working on to reestablish our growth trajectory, refinance the organization, and improve the finance function. We are at a turning point in the history of the company, and there are many things to be excited about looking ahead. For me, the objectives are clear, with the highest priority to close the refinancing as soon as possible, which I will comment on shortly. In addition, the objective for me and for my team is supporting the whole organization, especially the sales teams, by providing the financial base and insights to keep pushing for growth opportunities. Lastly, there continues to be an opportunity to streamline the organization by introducing the right systems and processes, which can enhance efficiency, support cost discipline, but also allow for strategic capital allocation. Wallbox N.V. is a great company with strong products and well-known commercial partners. The measurable improvements in our sales and service organization, coupled with the finalization of our refinancing, provide a solid foundation for me to contribute to our return to a growth trajectory. Now before I go into the details of our refinancing process, I would like to provide you with some color on the final quarter of 2025. The fourth quarter revenue missed our guided range by landing at €33,700,000, down 5% compared to last quarter and down 10% compared to the same period last year. The main offender was slower sales in DC fast charging, which was down 41% quarter-over-quarter. In addition, the softer EV market in North America is starting to be reflected in our results as Q4 was the slowest quarter of the year. On the opposite side, AC has shown a positive quarter-over-quarter trend, which we believe we can continue with the reinforcement of our sales teams and opportunities with commercial AC charging, especially in Europe. Gross margin for the fourth quarter was 37.3%, within our guided range. This reflects a solid result where improvements in bill of materials and pricing were offset by a negative impact from product mix. DC fast chargers are the products with the highest margin and a quarter-over-quarter decrease in DC sales impacted the group gross margin negatively. In addition, in the fourth quarter, the impact of carbon credits, as discussed in the last earnings call, has been limited due to lower sales in the Canadian market. Overall, we are satisfied with the positive trend in BOM cost improvements and higher prices. This means that fundamentally, the gross margins are improving. But now, this needs to be reflected in our results as top line growth will provide us more scale. Q4 labor costs and operating expenses totaled €22,100,000, representing a 23% improvement compared to the same period last year and a small improvement compared to last quarter. Cash cost, which is defined as labor cost and OpEx excluding R&D capitalization, non-cash items, and one-off expenses, was down 25% year-over-year. As communicated before, we continue to strike a balance between rightsizing the organization while investing in our sales and service organization. In addition, we see opportunities for efficiency enhancement by implementing more automation and the correct processes, not to reduce cost but to support growth with the same cost base. Consolidated adjusted EBITDA loss for the quarter was €7,300,000, outside the guided range. This reflects an impressive 46% improvement compared to the same period last year, a testament to our significant efforts in improving operating leverage. The top line was the main reason why we did not achieve our adjusted EBITDA guidance, and going forward, we expect most of the improvement on the bottom line will result from revenue growth. In December 2025, we reached a milestone commercial agreement with our core banking partners Santander, BBVA, and CaixaBank, alongside our major strategic shareholders, to renew our capital structure. This agreement provides a clear, sustainable financial framework and a solid financial base for the coming years, positioning Wallbox N.V. to grow in parallel with the maturing global EV market. Under this plan, we are restructuring and extending the existing debt through three key components: a €55,000,000 syndicated term loan maturing in 2030. This features a backloaded amortization schedule beginning with limited quarterly payments in Q3 2026 that scale gradually through 2030. A €63,200,000 bullet instrument maturing in December 2030. This utilizes payment-in-kind interest to preserve our immediate cash position. A €52,300,000 syndicated working capital line. This matures in December 2028 and includes two successive automatic twelve-month extensions to support our operational scale. In addition to the debt maturity extension, the structure includes a proposed €22,500,000 liquidity injection. This consists of €12,500,000 in new trade commitments from participating banks, and a €10,000,000 equity investment from existing and new shareholders. Over the last few months, we have worked hard to progress this agreement and incorporate additional debt holders. While our initial December announcement covered approximately 65% of our existing debt, I am pleased to announce that we have now secured participation from additional principal lenders, bringing our total to more than 86% of the company's total existing debt. We expect the remaining debt holders to follow as negotiations continue. Furthermore, we recently achieved another milestone with a commitment from the Institut Català de Finances to invest €5,000,000 as part of the €10,000,000 equity injection. We expect to finalize these negotiations and complete the refinancing in the coming weeks. This coordinated support from our lenders, long-term shareholders, and more recently, semi-public investment funds underscores confidence in Wallbox N.V.’s products, strategy, and business plan. With this new balance sheet structure and enhanced liquidity, we believe we have the necessary runway to drive the business toward positive cash flow generation. We expect this resilient foundation combined with our improved operational setup to put us in a position to capture global opportunities in EV charging and energy management. Considering the significant progress on the refinancing process and the context of how we are improving the financial stability of the company, I would like to comment on our Q4 2025 financial metrics. We ended the quarter with approximately $9,600,000 in cash, cash equivalents, and financial instruments. Loans and borrowings totaled €165,000,000, reflecting an 8% sequential decline consisting of €55,000,000 in long-term debt and €110,000,000 in short-term debt. The decline in cash and debt position is related to the retiring of a loan-based credit facility that was not adding any value to the overall cash operations. CapEx was nonexistent for the period, as spending remains limited, with a small negative impact due to an accrual adjustment during the quarter. While CapEx investment almost decreased by 100% compared to the same period last year, this does not mean that we stopped innovation. We keep introducing new products, such as the Supernova Power Ring, recently, and we keep developing the existing product portfolio. Inventory landed at €47,500,000, a reduction of 6% to last quarter and down 32% compared to the same period last year. With this result at the end of the year, we achieved our inventory reduction target, which reflects a significant release of cash from operations and opportunity for a more efficient bill of materials. In addition, we have focused significantly on our working capital management, also in relation to the overall cash management during the refinancing period. Many of our suppliers are cooperating with us in optimizing inventory levels and payment terms to be more resilient in a volatile EV market. We appreciate their continuous support. With all these efforts—sales expansion, operational discipline, cash management, inventory reduction, limited CapEx investment, and debt refinancing—we are significantly reducing our cash burn and improving the financial situation of the company. We believe we can have a long-term capital structure in place soon, which we expect to mitigate uncertainty and provide a solid foundation for the future of Wallbox N.V. Enric, I will turn it back to you to provide some closing commentary. Enric Asunción: Thank you, Isabel. While our 2025 results have been impacted by the volatility of the market and the tail end of the company's transition phase, the year has also been defined by foundational milestones towards a more resilient organization. We significantly improved gross margin and operational efficiency, resulting in a fundamentally better business on our way to profitability and cash generation. We started 2026 heading in the right direction where strategic investments in the sales and service organization are expected to return top line growth, leveraging our extensive product portfolio and existing market position. In addition, we are close to finalizing our new capital structure with the support of our banking partners and key shareholders. Once completed, we can shift our focus from stabilization to acceleration, and I believe we have all the components in place to achieve that. These last years have been challenging. We believe the global EV transition remains inevitable and the market opportunity is significant. Wallbox N.V. has navigated a necessary transitional period and, upon the finalization of our refinancing, will emerge as a stronger platform than before. With a leaner organization, high-margin product portfolio, and renewed sales leadership, we believe we are well positioned to capture the significant market opportunity ahead. With that, I would like to discuss next quarter's guidance. For Q1 2026, we have the following expectation: revenue in the €33,000,000 to €36,000,000 range, gross margin between 38% and 40%, and a negative adjusted EBITDA between minus €5,000,000 and minus €3,000,000. Thank you for your time. Operator: Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation.
Operator: Good day, and thank you for standing by. Welcome to the Riskified Ltd. Fourth Quarter 2025 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message device and your hand is raised. To withdraw your question, please be advised today's conference is being recorded. I would now like to turn the call over to your speaker today, Chet Mandel, Head of Investor Relations. Please go ahead. Chet Mandel: Good morning, and thank you for joining us today. My name is Chet Mandel, Riskified Ltd.’s Head of Investor Relations. We released our results and are hosting today's call to discuss Riskified Ltd.’s financial results for the fourth quarter and full year 2025. Our earnings materials, including a replay of today's webcast, will be available on our Investor Relations website at ir.riskified.com. Participating on today's call are Eido Gal, Riskified Ltd.’s Co-Founder and Chief Executive Officer, and Aglika Dotcheva, Riskified Ltd.’s Chief Financial Officer. Certain statements made on the call today will be forward-looking statements related to, without limitation, our operating performance, business and financial goals, outlook as to revenues, gross profit margin, adjusted EBITDA profitability, adjusted EBITDA margins, and expectations as to positive cash flows, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our expectations as of the date of this call, and except as required by law, we undertake no obligation to revise this information as a result of new developments that may occur after the time of this call. These forward-looking statements involve risks, uncertainties, and other factors, some of which are beyond our control, that could cause actual results to differ materially from our expectations. You should not put undue reliance on any forward-looking statement. Please refer to our Annual Report on Form 20-F for the year ended 12/31/2024 and subsequent reports we file or furnish with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations. Additionally, we will discuss certain non-GAAP financial measures and key performance indicators on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today, and also furnished with the SEC on Form 6-K and in the appendix of our investor relations presentation, all of which are posted on our investor relations website. I will now turn the call over to Eido. Eido Gal: Thanks, Chet, and hello, everyone. Ended the year strong, and this momentum positions us for continued success in 2026. Our fourth quarter non-GAAP gross profit of $57.3 million represented strong year-over-year growth of 16%, and our adjusted EBITDA of $17.7 million translated to a margin of 18%, demonstrating the scale and strength of the business. This quarterly amount alone exceeded our full-year adjusted EBITDA of $17.2 million in 2024. Our fourth quarter revenues of nearly $100 million were a record since inception, and contributed to our first ever quarter of GAAP profitability. These results are the culmination of consistent, high-quality execution across the year. In 2025, both annual dollar retention (ADR) and net dollar retention (NDR) improved year over year. ADR reached approximately 100%, up from 96%, and NDR significantly improved to 105% from 96% in 2024. Our go-to-market team had another successful year with particularly strong results in the fourth quarter of 2025. During the quarter, we won the highest quarterly amount of new business since our IPO, which represented approximately 55% of the total new business won for the year, and was driven by high competitive win rates of over 75%. This year, we won and onboarded several leaders across industries and geographies, including Aerolineas Argentinas, Abounds, Adastria, Ace Hardware, Bangsa, Qasem, David's Bridal, NetEase, Nintendo, Temu, TripAdvisor, and XTool. In addition, merchants such as Iberia Airlines, Meta, Fast Retailing, Viva Aerobus, Vivid Seats, and Zepz were all upsold in 2025, after landing on the platform over the past few years. We believe this demonstrates the power and ROI that our platform delivers to our merchants, once onboarded onto the Riskified Ltd. network. We have processed approximately $750 billion in GMV, and have over 1 billion unique customer interactions in our network since inception. I believe that this data moat has created a structural competitive advantage and that we are well positioned to capture even more of the large opportunity in front of us. That is why we are focusing our efforts on deepening our geographic presence, and growing faster in our newer verticals while identifying additional verticals to penetrate for continued market share gains. From a geographic standpoint, our non-U.S. regions collectively grew 22% year over year, driving faster, more diversified growth. Notably, APAC and LATAM were key regions of outperformance. We plan to expand further in these regions by developing localized products and features to boost pipeline generation. We have scaled our presence in the payments and money transfer category as evidenced by 66% growth in 2024, and 90% growth in 2025. Based on the current pipeline and the annualization of new business won in 2025, end-to-vertical I expect another strong year of activity in 2026. As we capture more data and payment types, leading to more refined models and bespoke features targeted to this vertical, I believe we are positioned to continue penetrating the significant white space. According to recent industry studies, there was a 27% year-over-year increase in fraud losses related to online transactions. The total losses attributed to fraud are expected to more than double in the next five years, well outpacing the expected growth of ecommerce. In addition, over two-thirds of U.S. companies experienced an increase in AI-related fraud attempts in 2025. We are witnessing escalating complexity of fraud schemes, which now target every touchpoint across the customer journey from account creation and stored value credentials all the way through the return, customer service, and dispute portals. Every part of the transaction process is at risk. Progress varies across payment types, including ACH, credit cards, digital wallets, crypto and stablecoins, agentic checkout, and other methods. We need to be prepared to support and manage risk across the full payment landscape. We are leveraging the capabilities of our AI ecosystem that has been continuously advanced for over a decade. This increase in fraud has further elevated Riskified Ltd.’s role, solidifying our positioning as a key partner for our merchants. I believe that the combination of a more pronounced and complicated fraud landscape, enhanced platform features and functionality, and a deliberate effort to expand the top of our front deal funnel has contributed to an increase in our new business lead generation of approximately 50% year over year. Furthermore, in line with our expectations at the beginning of the year, I am pleased that we generated nearly $10 million in aggregate annual revenues from Policy Protect, AccountSecure, Dispute Resolve in 2025. And we plan to continue to grow our revenues outside of our core fraud services in 2026. As we have expanded our offering, the benefits of having a platform are becoming even more pronounced. First, we saw an approximately 50% increase in the number of merchants who are now using more than one product during the year. This multiproduct approach has made us stickier. Second, each transaction processed across our suite of products strengthens our flywheel by expanding the breadth and depth of our datasets. This integrated dataset compounds across the network, enhancing our identity engine, and enabling us to develop dynamic components that can be utilized across the platform. Third, these cross-platform synergies lead to better performance for our merchants. This strong performance with differentiated capabilities allowed us to regularly outperform our competition. And fourth, merchants utilizing more than one product generally leads to higher contribution profit for those merchants. This is part of the reason why in 2026, we are focused on driving gross profit growth versus optimizing primarily for revenue growth. As Aglika will discuss shortly, we expect non-GAAP gross profit growth to accelerate double digits at the midpoint in 2026, demonstrating the continued leverage in our model. Now on to a very topical theme: artificial intelligence. Allow me to discuss how we are observing AI impacting the market and how Riskified Ltd.’s product platform and internal operations are positioned for success in this environment. There are two main dynamics that we are seeing. First is the increased utilization of agentic commerce through general purpose LLMs, but still primarily only for discovery purposes and not checkout. The second is the rise of merchant-native LLMs, which are advanced agents within a merchant's ecosystem designed to handle the full shopping journey from answering queries to completing the purchase, closing the loop completely within their ecosystem. Both flows present unique transaction risks that our platform aims to solve. In the first agentic flow, when customers do use general purpose LLMs for checkout, we have seen instances where fraudsters utilize AI to throw authentic traffic off script by generating synthetic IDs to bypass LLM verification. Our internal estimates indicate that approximately 30% to 40% of essential model features are lost when consumers transact through general purpose LLMs, increasing risk and escalating the prevalence of fraud like this. To combat this, we strive to help merchants by providing clear visibility into agentic traffic and emerging fraud MOs that they do not otherwise have on their own, proactively adjusting models based on low-signal environments, segmenting order flows, and rapidly developing features to identify emerging agentic fraud MOs. In the second flow, merchants are building out their AI shopping assistants to offer deep personalization and loyalty programs based on customer preferences. Riskified Ltd. provides a critical risk intelligence layer that helps make these transactions both smart and secure. This is especially critical when those interactions have financial implication. An example of this is providing merchant-native AI agents with real-time risk signals while they are in the conversation with customers to offer instant refund or exchange decisions, based on that individual customer's risk and eligibility. Because Riskified Ltd. analyzes the complete purchase history of the end customer across an expansive global network of ecommerce brands, including exact product list SKUs and cross-merchant behaviors, we can provide highly differentiated data that merchants cannot otherwise access on their own. We are able to provide a decision platform for their agents to make important and accurate financial decisions. We are excited about the continuous expansion and enhancement of our agentic commerce offering. Merchants are actively preparing and ready to support agentic commerce across its various forms and flows. Our ability to not only service the dynamic needs of an evolving market, but also to innovate in real time is generating an increase in merchant dialogue. I believe that this strategic engagement is a driver for our future business pipeline and growth. Internally, we continue to adopt AI to automate and scale complex business workflows across departments. This is intended to help drive operational efficiency and productivity, lower costs, improve response times, and enhance service delivery. For our engineering teams, AI has become a force multiplier. Our developers have moved from basic coding assistance to agentic systems that span the entire development life cycle, from discovery and requirements assessment to automated root-cause analysis for production alerts. In addition, by using agentic flows for code review and observability, we are reducing technical debt while increasing release velocity. The impact on productivity is measurable. Between Q2 and 2025 many of our engineers saw more than 2x increase in tickets completed. This enables us to focus on developing new product enhancements and features, and to test, train, and deploy them more efficiently, strengthening our relationships with the hundreds of enterprise merchants in our network. We are seeing similar functional leverage across the other business units. In finance and analytics, we have moved several initiatives into production to automate processes that reduce human error and manual labor to drive merchant inbounds, and the go-to-market team has found success utilizing LLMs in high-end queries. We have also developed agents that automate time-consuming cost-benefit analysis of merchant prospecting, minimizing manual work to drive quicker and more accurate outreach. And while we are getting leverage from general purpose LLMs in our own business, I do not believe that those same LLMs pose a true threat to our decision engine. In our view, LLMs lack calibration in the precise probability intervals required for fraud engines. Additionally, LLMs are optimized for text and image, while traditional AI fraud models like ours are much better at analyzing structured data inputs. The data we collect includes browsing behavior, account activity, checkout data, and post-fulfillment signals for every transaction. Our models learn from over 5 billion historical nonpublic merchant network transactions that have been labeled and tagged. With this data, we create, update, and continuously deploy features to be used by our models that solve the increasing complexities of fraud. To that end, as we announced yesterday, we have recently developed features to address this problem. Within our PolicyProtect Decision Studio, merchants are able to identify and apply business rules to manage the risk of order volume coming from their native AI shopping agent. This control will allow merchants to confidently deploy their branded conversational AI agents without exposing themselves to programmatic refund claim abuse, reseller arbitrage, or promotional abuse. We also expanded our AI agent identity signals, allowing a merchant's AI shopping agent to directly query the Riskified Ltd. identity graph to retrieve associated risk indicators and resolve an identity programmatically. The breadth and sophistication of our platform allows us to train, test, and deploy merchant- or payment-specific models. We also use this platform to retrain models with updated data, new features, and segment calibrations to protect from emerging fraud patterns across our network. All this helps us drive optimized merchant performance which, at the end of the day, is the key driver of merchant satisfaction. Our ability to rapidly adapt in the face of a shifting landscape does more than just protect our merchants. I believe it serves as the foundation for our sustained financial strength and disciplined execution. Over the past two years, we have repurchased shares representing approximately two-thirds of our current enterprise value. Based on our current expectations of improved free cash flow of approximately $40 million in 2026, we anticipate generating a free cash flow yield of approximately 10% relative to our current enterprise value. Looking ahead, I believe that our momentum remains strong. As a reflection of our confidence in Riskified Ltd.’s long-term trajectory, I am pleased to announce that our board has authorized an additional $75 million share repurchase program. This decision reflects our conviction in the fundamentals of the business, supported by strong free cash flow, a debt-free balance sheet, and a disciplined capital allocation strategy that we believe will prove beneficial for our shareholders. I want to thank our team again for their focus and strong execution against our 2025 financial plan. Our results reflected the top of our revenue and adjusted EBITDA guidance ranges, and we enter 2026 in a position to accelerate our performance even further. Now over to Aglika. Aglika Dotcheva: Thank you, Eido, team, and everyone for joining today's call. Unless otherwise noted, this discussion will reference non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial measures in our earnings release. We achieved fourth quarter revenue of $99.3 million and full year revenue of $344.6 million, up 65% year over year, respectively. And while we do not plan on reporting our billings going forward, our fourth quarter billings of $103.3 million grew 9% year over year. Our fourth quarter GMV of $46.7 billion was the highest quarter of volume reviewed in our history, and represented growth of 18% as compared to the prior-year period. For the full year of 2025, our GMV grew by 10% to $155.1 billion. During the fourth quarter, revenue growth was partially driven by strong performance in our travel sub-vertical, reflecting continued momentum from the third quarter. These gains were partially offset by softness in our tickets and live events sub-vertical which declined year over year, primarily due to tougher second-half comparable periods versus 2024’s record level of activity and larger live events. Overall, the total tickets and travel vertical was slightly positive in the period. Our money transfer and payments category grew 75% year over year driven by new business wins and upsell activity. Our fashion, cosmetics, and luxury vertical grew 8% year over year. This was primarily driven by new business and upsell activity, and 11% growth during the Black Friday through Cyber Monday period. This growth was partially offset by continued same-store sales pressure in our high-end and sneaker sub-verticals, similar to the first nine months of the year. That being said, for the second quarter in a row, we did see year-over-year improvements in some of our largest merchants in this category. Lastly, I am encouraged that we reverted to year-over-year growth in the home category as we have now fully lapped the dynamic that impacted the first nine months of 2025. For the year, our money transfer and payments, fashion and luxury, and tickets and travel categories were the largest contributors to our annual revenue growth. The combination of these verticals represented nearly 80% of total billings and are each expected to drive continued growth in 2026. For the full year, revenue in the United States declined 6% year over year primarily as a result of the contraction in our home category. Encouragingly, we continue to grow across all of our non-U.S. regions, with accelerated year-over-year growth as compared to 2024. During 2025, APAC grew 53% year over year, while Other Americas, which represents Canada and Latin America, grew approximately 13% year over year, primarily driven by the momentum in new business and upsell activity, with particular strength in the travel sub-vertical. EMEA grew approximately 18% year over year with the strongest performance concentrated in our money transfer and payments, tickets and travel, and fashion and luxury verticals, supported by both new business and upsell momentum. Our revenue derived from merchants headquartered outside of the U.S. was 46% in 2025, up from 39% in 2024. We believe that our continued international growth reflects ongoing progress in capturing global market share. During the fourth quarter, we achieved record quarterly gross profit of $57.3 million, up 16% from the prior year, and $180.3 million for the full year, representing a year-over-year growth of 4%. The full-year gross profit growth of 4% was driven by meaningful improvements in our core machine learning models with great performance in our money transfer and payments category, and within our 2024 cohort which delivered the most pronounced year-over-year improvement across cohorts. Our increased revenue from new products further contributed to our growth. This improvement was partially offset by the ramping of merchants in newer geographies, such as Latin America, and weaker performance in our 2022 cohort, which, while still maturing, has yet to reach the performance levels of the broader portfolio. As a reminder, I encourage you to continue analyzing our gross profit on an annual basis given individual quarters can vary due to the various factors, including the ramping of new merchants and the risk profiles of transactions approved. As it relates to 2026, for the full year, we are targeting non-GAAP gross profit growth of 7% to 12%, with each quarter at or near 10% growth at the midpoint. In addition, we estimate that each quarter in 2026 will approximate the same percentage of the total as they did in 2025. Moving to our operating expenses. We continue to manage the business in a focused and disciplined manner. Total operating expenses were $39.6 million for the fourth quarter, and $153.6 million for the full year, representing a decline of 2% from 2024. Our operating expenses as a percentage of revenue declined from 48% in 2024 to 45% in 2025, reflecting leverage in the business model. We ended 2025 with 617 global employees, a decline of 3% from the prior year. This was achieved through the increased utilization of artificial intelligence tools to maximize output and increase efficiency, and by strategically reducing headcount in areas that were less critical to our product development and growth strategy. Despite this nominal decline, we ended the year with an increase in our development capacity, which we believe is critical to advancing platform innovation, outperforming our competition, and improving product accuracy and customer service to deepen our merchant relationships. In 2026, we anticipate quarterly expenses to approximate $41 million to $42 million per quarter in the first half of the year, and $42 million to $43 million per quarter in the second half. The primary driver of the increase from 2025 relates to FX headwinds, mainly from the appreciation of the Israeli shekel compared to the U.S. dollar. The FX headwind is approximately 400 basis points to our annual adjusted EBITDA margin. On a constant currency basis, we anticipate relatively flat expenses year over year, as we continue to manage the business in a disciplined manner. We achieved adjusted EBITDA of $70.7 million in the fourth quarter, the highest quarterly amount in our history, which translates to an adjusted EBITDA margin of 18%. We believe that this quarter's results demonstrate that the business is positioned for continued adjusted EBITDA margin expansion and can achieve scaled performance like this over time. For the full year, our adjusted EBITDA was $26.7 million, representing a year-over-year increase of over 55%. On a GAAP basis, we achieved net profit of $5.8 million in 2025 as compared with negative $4.1 million in the prior year. I am encouraged about the progress that we have made on achieving profitability on both GAAP and adjusted EBITDA basis. Moving to the balance sheet. We ended the year with approximately $298 million of cash, deposits, and investments, and continue to carry zero debt. In addition, we continue to maintain a healthy cash flow model. In the fourth quarter, we achieved free cash flow of $10.7 million and $33.1 million for the full year. Looking ahead, I am encouraged that we expect our free cash flow to increase at least 20% to be approximately $40 million in 2026. During 2025, we repurchased approximately 22 million shares for a total price of $105.9 million, which contributed to a reduction of 8% in shares outstanding. Since the inception of our buyback program in 2023, we have repurchased approximately 52 million shares for a total price of $259.5 million, which helped contribute to a 17% reduction in shares outstanding over that time period. As Eido mentioned, I am excited to announce that our board of directors has authorized an additional $75 million of share repurchases, subject to the satisfaction of Israeli regulatory requirements. When combined with amounts that remain available under our existing share repurchase authorization, our total outstanding authorization is approximately $84 million. We believe that our strong balance sheet and liquidity position are strategic assets that provide us with the flexibility to navigate a range of operating environments. We intend to remain disciplined and thoughtful in how we deploy capital to create long-term shareholder value. On the topic of share-based compensation and earnings per share, share-based compensation expense of $51.6 million declined from $57.8 million in the prior year. As a percentage of revenue, this amount decreased approximately 300 basis points from 2024 levels. This was on top of a decline of 700 basis points over the prior two years. Looking ahead to 2026, we expect absolute share-based compensation dollars and as a percent of revenue to continue declining due to the gradual roll-off of expense associated with large grants made in 2021 and 2022 as the awards fully vest throughout 2026. Our total absolute share-based compensation dollars should approximate $40 million for the year. We expect our free cash flow generation to approximate our share-based compensation in the year. Our annual non-GAAP diluted net profit per share of $0.20 represents an increase of 18% in 2025. Now turning to our outlook. As we look forward to 2026, we currently anticipate revenue of between $372 million and $384 million, representing growth of 8% to 11%, with $378 million or 10% at the midpoint. Consistent with past years, we anticipate that our growth will continue to be driven primarily by new business activity, and at the midpoint of our guidance, we are forecasting a similar net dollar retention rate as in 2025. We currently expect all of the quarters in 2026 to reflect a similar percentage of the total revenue as they did in 2025, and growth to accelerate sequentially with each quarter throughout the year. The behavior of the microenvironment, our success in retaining our merchants, and the level of upsell activity relative to new logo wins will impact our net dollar retention rate and ultimately determine where we fall within our revenue range. In addition, we feel confident about the new business activity levels which is supported by a robust pipeline of new opportunities. Historically, the timing of when new merchants go live during the year can be difficult to predict, and may have an impact on our calendar year revenues. As always, we will continue to monitor the performance and health of our merchants, consumer spending and the broader ecommerce landscape, and the impacts on our results. Now let me discuss our adjusted EBITDA outlook. We currently expect adjusted EBITDA to be between $26 million and $34 million, or $30 million at the midpoint, representing a margin of 8%. This is inclusive of an approximate 400 basis points FX headwind to our adjusted EBITDA margin. Overall, I am encouraged by our AI advantage and market position, and I am confident that we can continue to execute on the elements within our operational control. We remain focused on identifying and executing on the many opportunities for long-term growth and our ability to deliver value to our shareholders. Operator, we are ready to take the first question, please. Operator: If your question has been answered and you wish to remove yourself from the queue, please press 1-1 again. Our first question comes from Terry Tillman with Truist Securities. Your line is open. Terry Tillman: Yes. Thanks for taking my questions, and congrats Eido, Aglika, and Chet. The first question, and hopefully you can bear with me because it is so topical around agentic commerce. It is a multiparter. And then I will have a follow-up question. As it relates to agentic, I appreciate kind of how you talked about two types of kind of agentic use cases. I am curious if you can quantify any early GMV from those two different scenarios. And then also, what would the monetization or take rate look like in transactions in that type of flow? And then how many merchants are you actually actively working with that are just trying this out at this point? And then I had a follow-up. Eido Gal: Sure. Hey, Terry. So I will take that. So maybe taking a step back. Right? We feel we are in a great position to talk to over 50 publicly traded companies and really understand what their agentic commerce strategy is. And the way they are laying it out to us is pretty clearly there are two main flows. The first flow, what we call the merchant-native AI agents, where they continue to own the relationship with the customer. And I think it shows a lot of promise in their mind. Right? And here, you would have an AI agent on their website that can support the entire life cycle from discovery to checkout to returns and customer support interaction, and this entire experience is happening on their website. So if they are a luxury fashion merchant, they can have the right type of images and product descriptions and flows and recommendations; if they are an OTA, they can have the right type of filters that are appropriate for traveling and routing. So I think they are putting a lot of emphasis on that area. What we are seeing there is, because LLMs are really—it is easy to challenge them and get them to move off script and make financial decisions that you did not intend them to make—we are serving really as this guardrail or intelligence layer that they are querying in real time to understand, hey, should I approve this transaction? What type of refund should I provide to this customer? And we are just really leveraging the entire network that we already have, making it even more unique, the value that we are providing in there. So that is kind of the merchant-native AI agent. The second flow is more kind of that general purpose LLM where it can either act as a good referral or do the purchasing on behalf of the consumer. There, to be clear, we are seeing predominantly referrals. Actually seeing agent traffic and purchasing is still extremely low and limited. From a take rate perspective, on the general purpose LLMs, we are seeing higher risk traffic there right now. So again, even if it is very small, whenever you have some of these newer flows, fraud tends to come in because there is more limited data. There is lack of experience. There is less control in those cases. And so I think on average, the take rate there would probably be higher right now, but over time, that might, you know, kind of shift. And to just a more general question around traffic, I think merchants are in a stage where they are trying to prepare and make sure that they are ready for the changes and put their best foot forward. But the traffic is probably not there yet. Terry Tillman: Very helpful. Thank you so much for that. And I guess just a follow-up, maybe for Aglika. It is helpful when you go through the different segments that you are serving and the growth rates. Money transfer and payments, it was another exceptional year of growth as you are onboarding strategic accounts, and they are growing. I am curious, though, do you see that outsized type growth continuing in your guide for 2026 on money transfer and payments versus the other end markets? Thank you. Aglika Dotcheva: Hi, Terry. So money transfer and payments was an amazing category for us this year. The growth was really, really strong. Kind of looking into 2026, we have a number of opportunities in the pipeline, and I expect the category to continue to grow, but probably just to normalize in terms of the total amount. Terry Tillman: Alright. Thank you. Operator: One moment for our next question. Our next question comes from Ryan John Tomasello with KBW. Your line is open. Ryan John Tomasello: Everyone, just following up on the agentic commerce topic. Can you talk about how you think about the potential for rising adoption there to either structurally reduce or increase the level of fraud in the system over the long run, notwithstanding kind of early days here? And then just your thoughts on the potential second-order impacts. There is a lot of talk on agentic AI agents utilizing alternative payments rails like stablecoins, you know, just how you view that also impacting, you know, structure of the system here. Thanks. Eido Gal: Right. Sure. Look. I think what we are seeing is that in order to be good at online commerce, and payments specifically, you need to be doing a lot of things well. And right now, something that is added is agentic, you know, kind of commerce. And you can add crypto and stablecoin. So if historically, you would need to be able to manage credit cards and credit card acceptance, you now need to be able to support ACH, and digital wallets, and crypto and stablecoins, and the agentic checkout. And with agentic, we are talking about a few different flows. And you know, you do not just need to think about the checkout. You also need to think about account creation and account login, and you probably have some stored value in the account that people can transfer in and out. You obviously have the checkout experience, but you also have all these various post-checkout flows—returns, refunds, leveraging the different discount codes and abusing that. You have the entire chargeback process, which is different between credit cards and ACH. It is not called a chargeback there; it is insufficient funds. You have issues around scams that are popping up. So I think we are seeing an increase in complexity. And I would just tie in the agentic checkout into that overall increase in complexity, and we are seeing an overall increase in losses within the merchant ecosystem. And I think that as merchants are trying to solve these different use cases and these various fraud patterns, it just becomes more complicated more quickly. So I think that is kind of a net benefit to Riskified Ltd. as we see this more complex environment increasing in the years ahead. On a bit more targeted and specifically on agentic, like we just mentioned, we do see an increase in fraud right now in agentic channels. Specifically when you have general purpose LLMs. It could be a combination because it is newer, and fraud, you know, tends to shift to that area, there is less control and gating there. So hard to say how that would kind of behave in the quarters and years ahead as it gains more traction. But as of now, it is probably, you know, kind of net incremental to general take rates. Ryan John Tomasello: Great. Appreciate that. And then you know, just an update if you can provide on the mid-market expansion strategy—how that plays into your 2026 growth and just broader investment plans in that category? Thanks. Eido Gal: Yeah. I think one of the unique things about Riskified Ltd. targeting the enterprises is that we are able to really customize to a high level the modeling and the performance for each individual merchant. As we have been getting much better at completely automating the life cycle of doing that, I think that is going to present opportunities to kind of continue and refine this model in more of a down-market and referral strategy. That is not something that is expected within our guide for the year. So the more we can accelerate that, that would be upside to current guide. Operator: One moment for our next question. Our next question comes from Will Nance with Goldman Sachs. Your line is open. Will Nance: First of all, I hope all the teammates in Israel are home and safe. I wanted to ask also on the agentic kind of topic of the day. I was wondering if you could just speak to status on integrating into some of the agentic protocols. So there are—you know, it is kind of—ICP, it is Stripe, GCP, Google, and any of the other relevant ones. I know a big part of the model is kind of taking all the different signals from the user behavior in those channels. So just maybe wondering if you could speak to that and maybe shed a little bit more light on kind of, like, the value of the data that might come through those protocols in detecting fraud vectors? Eido Gal: Yeah. Thank you for mentioning the team in Israel. We appreciate that. I think the issue right now that the market is seeing is, to your point, there are a wide number of multiple protocols and, you know, some of them, I think it is clear that they are already outdated. In the months, maybe quarters ahead, there will be new protocols that are probably even more updated than that. So, obviously, internally, we are doing everything we can to support everyone in that ecosystem, whether it is, you know, kind of AI agent-approved, AWS Marketplace, Google, you know, A2A protocol, just general RESTful APIs. We do see ourselves requiring to have that full spectrum to make sure we cover everything. Unfortunately, we do anticipate a somewhat continued fragmented approach here. So, you know, I think it is still early to say if there is anyone who is going to be a clear winner in that area. So there will probably need to be some optimization between the various protocols. Will Nance: Got it. That makes sense. And maybe just one for Aglika. The FX headwind on the margin is helpful quantifying that. Could you just remind us of the—it sounds like it is the FX exposure in the cost base that we should be thinking about there, shekel and otherwise. I was wondering if you could just update us on major currency weightings as we try to fine-tune the model. Thank you. Aglika Dotcheva: I will. So, I mean, first of all, I am so excited about the quarter, the guide, kind of the returning back to double-digit growth. And when I think about the FX headwinds, we kind of spelled it out as approximately 400 basis points, or $14 million to adjusted EBITDA. And it is frustrating. I mean, over the years, we focused and we kind of ran on a flat expense base for a period of time, and this FX headwind is really obscuring some of the progress. But the truth is that the underlying business momentum is strong, and we will continue to focus on optimizing. We will continue to focus on growth. And I am just excited about 2026. Will Nance: Yep. Got it. Appreciate it. Thank you. Operator: One moment for our next question. Our next question comes from Chris Kennedy with William Blair. Your line is open. Chris Kennedy: Great. Thanks for all the details and for taking the question. I will just echo Will's comment regarding Israel. The revenues from newer products—Policy Protect, AccountSecure—doubled in 2025. Can you talk about kind of the opportunity for that set of products in 2026? Eido Gal: Sure. So maybe just to refer back to kind of Ryan’s question where we said, hey, we are seeing an increase in complexity of forms of fraud. We are seeing it across different channels like ACH, digital wallets, crypto stablecoin, the agentic checkout. We are seeing it happen in different parts of the, you know, kind of shopping experience—not just checkout, but also account creation and abusive policy rules and things around dispute management. All this to say, I think it is leading to an environment where there is kind of more demand and more value and just basically more necessity for merchants to leverage the wider product platform. So if I think about the revenue that we anticipate from, you know, kind of PolicyProtect, AccountSecure, Dispute Resolve, some of the non-guaranteed payment flows that we now work with merchants on, you know, anywhere from $15 million to $20 million in 2026, I think, is a good range at this point. Chris Kennedy: Right. Thanks for that. And then just one for Aglika. If you think about the 2024 cohort, the CTB ratio really improved. Can you give us a little bit more color on what drove that improvement there? Aglika Dotcheva: Yeah. Of course. I am very excited about some of the improvements in that cohort, and we can see already the result of that in Q4. So there are some merchants there that are specifically about the money transfer and payments category, and we were able to kind of do significantly better there. It is kind of evident in the cohort. I think it is a great base for some of the merchants that are in the pipeline there, and just continuing to kind of optimize incoming merchants as well. Chris Kennedy: Great. Thanks for taking the questions. Operator: One moment for our next question. Our next question comes from Timothy Chiodo with UBS. Your line is open. Timothy Chiodo: Thanks a lot for taking the question. This one, we have brought this up in the past, but I thought it would be a good one just to check in on to see if anything is different in the agentic channel. My guess is it is the same, but the question is really the services that you are providing to merchants, do you consider them and/or see them operating in addition to value-added services coming from the card networks or instead of value-added services coming from the card networks? Eido Gal: Hey, Tim. So sorry. Could you rephrase—our services in addition to the services from the card networks? Timothy Chiodo: Sure. So if a merchant is working with Riskified Ltd., are they using Riskified Ltd. in addition to some of the fraud-related value-added services coming from the card networks, or are they using Riskified Ltd. instead of some of the fraud tools that are coming from the card networks? Eido Gal: Okay. Thank you for clarifying. So, look, I think there is no direct comparable in the stack of the card service providers right now to the spectrum of Riskified Ltd. One of them has more data-related features—so I think Mastercard acquired Ekata; Visa probably has Visa Verify. So those are, you know, kind of what we consider data features. You know, one of them has a more older-generation scoring tool that we do not really view as competitive. No one has a policy product. Definitely, no one has, you know, kind of what we would consider a modern machine learning type solution for fraud prevention. I think the dispute product also—there is nothing comparable. On the account side, there is nothing comparable. If you think about support for ACH, crypto stablecoin, you know, kind of the fiat conversion and account storage, there is nothing comparable. On agentic checkout, there is definitely nothing that we have seen comparable to some of the releases we have recently made. So I think overall, on the Venn diagram, it is pretty distinct and different. There could be different services that they provide, you know, maybe more towards financial institutions—anything around tokenization and rails for 3-D Secure. That is not in our wheelhouse. But hopefully that gives kind of a good mapping of what we do that they do not do. Timothy Chiodo: Excellent. That is a great answer. Thank you so much. My follow-up is around—you were talking around some of the other forms of payment, whether it be account-to-account, stablecoin—basically, alternative payment methods in general. I know that it is early, but in your experience and with your position in the industry, do you have any reason to believe that card mix within the agentic channel would be any different than the card mix is in traditional ecommerce? So whatever you believe the mix is to be in traditional ecommerce, do you think through the agentic channel that it would be roughly the same—maybe the card mix is a little lower, maybe the card mix is a little higher—and what would be the reason that would lead you to believe the answer to the question? Eido Gal: Yeah. Thank you. I think that is a great question, and obviously, a lot of debate on that. I think there are specific industries—and probably payments, remittance, you know, kind of brokerages—which would probably see an increase over time on whether it is kind of stablecoins, crypto. Those are also direct ACH connections, just because, you know, exchange fees, FX rates, everything that we know. So I think there probably is the potential for more to migrate. You know, maybe with long-term as things like ACH and others become easier, maybe merchants would have an easier time transferring some customers for, you know, kind of various discounts to that area. But overall, by and large, in most categories, I would not anticipate a shift. I think that overall consumer preference for cards, for rewards, continues to be incredibly high. And I think merchants adapt to that. I do not see that changing based on, kind of, you know, the LLM channel or merchant-native AI agents. I think merchants already have the ability, you know, to capture with extremely low interchange fees, debit cards. I think when you think about things like, you know, reward cards, the customer gets so much value from that. They have a clear preference. I think, you know, large merchants also have the ability to issue their own reward cards and take a meaningful portion of that interchange fee, and usually through agreements with, you know, kind of network or the issuers also take some, you know, kind of potential float or value of, kind of, installments or late payments there. So from an ecosystem perspective, I think, you know, cards are still around to stay in most categories. But there are probably a few specific areas where we will see an increased adoption in alternative payments. And I do not see a clear difference between kind of general purpose LLMs or merchant-native AI that would make them specifically work on, you know, kind of stablecoins or anything else relative to the existing rails. Timothy Chiodo: Thank you so much. Really do appreciate that. Operator: One moment for our next question. Our next question comes from Reginald Lawrence Smith with J.P. Morgan. Your line is open. Reginald Lawrence Smith: Yes. Congrats on the quarter and in achieving GAAP profitability. I guess I have got another question about agentic as well. So, you know, I get it, and I appreciate that there is not a lot of transaction flow coming from, I guess, third-party LLMs today, and so it is early days. Definitely get that. But I am thinking about—someone asked earlier about, you know, like, how pricing may work here. I am curious just, like, how that would roll out in general. And specifically, like, would merchants need separate contracts for agentic? Would it just be rolled into their standard, you know, ecommerce that occurs on their website? And then, you know, kind of beyond that, as you think about, you know, this new surface and these new potential risks, like, does that give you any pause at all, or concern around, like, what early losses could be like and what kind of differentiates you there, given that you will not have, like, a 13-year head start or, you know, backtesting history that you do on the traditional commerce side. So I am just curious, like, how you are thinking about that and, like, practically how this could actually roll out to your customers. Eido Gal: Sure. Thanks, Reggie. That is a great question. So I think there are two ways this can go. One is with the client that is on various submission plans and not giving everything right now to Riskified Ltd., and usually they would proactively come and say, hey, we are opening up this agentic channel or we are seeing some initial, you know, kind of traffic, or maybe we are even reaching out to them, and then they say, you know, we would want you to manage this, definitely, because, you know, we are not prepared to do that. And we have seen some of the larger clients that we work with approach us proactively with that. We are also in contact, you know, directly with some of our other merchants. And the pricing there, it is just, you know, slightly more flexible pricing to start. I think merchants are very open to having higher price initially, both because they understand there is an increased fraud in this day one and also because the absolute dollar amounts are still so small. It is, you know, less of an issue. And, obviously, we would kind of better negotiate mutually the fees once we understand the actual risk profile and the volume there. So that is one instance. The other one is merchants that, you know, already are providing all their volumes to Riskified Ltd. Yes, it continues to be the case that we would just see this traffic, and, you know, based on the risk profile there, if there is a significant increase, we might need to have a discussion with the merchant what that means from a commercial perspective. As I think about, you know, how do we anticipate some of this fraud, you know, on the one hand, you are right to say that it is still early stage, and a single merchant might only see, you know, a single transaction. But by that same token, you know, we are seeing it across the network of the largest merchants, and we are seeing some of the newer fraud MOs happen. And if you think about our system overall, what is unique and great about our system is that we are able to see fraud MOs in real time in one place, and then adapt features or create new segments and deploy that relatively quickly to other parts in the model. So even though this is something that is, you know, kind of newer, our system really is adept at learning new fraud rings, new fraud MOs, and, you know, pushing updates to the rest of the system based on that. It is what we have done as we have expanded into LATAM, into, you know, kind of other APAC regions. And you can continue to see that. I think Aglika mentioned on, you know, some of the CPB cohorts, some of that continued quick improvements there. In agentic, you know, it behaves the same. Right? There is, like, new fraud trends. You need to stop bleeding there, and then solve it for the rest of the portfolio. Reginald Lawrence Smith: Got it. Okay. And if I can ask one quick one on kind of FX. I appreciate that you guys are paid in dollars, but I was curious, is there any FX benefit to GMV growth next year? Or is that in U.S. dollars as well? Like, FX is not my strong suit. So anything you could share there would be helpful. Thank you. Aglika Dotcheva: Alrighty. I will take this one. So, specifically, the way I kind of view the FX, the fluctuations over the years have been something that we were able to absorb. Specifically this year, where I see the FX impact and kind of isolated it in this 400 basis points effect on adjusted EBITDA is around the strengthening of the Israeli currency, the shekel, versus the dollar. And since half of our expenses approximately are in Israel, it is impacting it more materially. So that is the main kind of FX impact that I talked about and it is worth mentioning. Without this, as I mentioned, on a constant currency basis, our expenses would have been flat year over year. Reginald Lawrence Smith: Got it. So, I guess, just to put a finer point on it, will there be a FX tailwind to revenue from the dollar just being weaker in general? Clearly, you have isolated the expense side, but I am just curious. Like, is there anything we should think about, you know, at the revenue line? Aglika Dotcheva: The revenue line, it is probably much, much minor. I would imagine it is, if anything, probably from the euro, but that will be probably less than half a percent, and it is something that we have already incorporated in projections as kind of, like, we are basing our projections on what we see today. Reginald Lawrence Smith: Okay. No. That is fine. Thank you so much. Operator: One moment for our next question. Our next question comes from Clark Joseph Wright with D.A. Davidson. Your line is open. Clark Joseph Wright: Thank you. At the beginning—or I believe this actually might have been Eido—you spoke about the fact that your strategy is more oriented going forward on gross profit growth versus revenue growth. What does that mean from a go-to-market perspective and your risk tolerance for specific product categories? Eido Gal: Yeah. Thanks for that question. Look. We have seen internally—I mean, we have always focused as a management team on gross profit, profit dollars, gross profit dollar growth. But it has probably been more of a focus recently over the past few quarters and will be over the next few quarters, just because we are seeing more demand and more bundling strategies for the, you know, kind of wider product portfolio. And overall, you know, there is a different margin profile within those products. So for us, it is clear we really want to focus on the gross profit dollars and that growth. From a sales perspective, you know, anything from how they target accounts to how they think about—how we think about—commission structures is more oriented in this direction now. Clark Joseph Wright: Awesome. Appreciate that. And then just on another topic that was already discussed partially earlier, but just wanted to understand the penetration rate on the non-chargeback guarantee products and the assumptions that you have for the 2026 guide. You referenced the $15 million to $20 million, but what does that mean in terms of the overall customer base and their willingness to accept, or to adopt these offerings? Eido Gal: Yeah. I think we shared on the script that we were seeing good progress of around 50% kind of increase in adoption. We have not really spelled it out by the specific product or what dual product, what single product. We will think about the best way to represent that to make it easier for investors to follow. But right now, we think that, you know, kind of revenue is probably the best proxy for that. And like we mentioned, it went from, you know, I think it was really, you know, low single-digit millions to $10 million, and we think we can continue to grow that to $15 million to $20 million this year. Clark Joseph Wright: Got it. Thank you. Operator: And I am not showing any further questions at this time. I would like to turn the call back over to Eido for any further remarks. Eido Gal: Thank you. Just before I conclude, I want to send my support to our team members in Israel and their families, and thank everyone for their hard work. And with that, just thank you everyone for joining us on today's call. I look forward to continuing to update you on our progress throughout the year. Operator: Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect, and have a wonderful day.
Operator: Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals, Inc. Fourth Quarter 2025 Financial Results and Recent Corporate Development Conference Call. There will be a question-and-answer session to follow. Please be advised that today's conference is being recorded at the company's request. I would now like to turn the call over to George Elston, Executive Vice President and Chief Financial Officer of EyePoint Pharmaceuticals, Inc. Sir, please go ahead. George Elston: Thank you, and thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals, Inc.'s Fourth Quarter and Full Year 2025 financial results and recent corporate developments. With me today is Dr. Jay Duker, President and Chief Executive Officer of EyePoint Pharmaceuticals, Inc. Jay will begin with a review of recent corporate updates and discuss our clinical programs for DuraVu in wet AMD and DME. I will close with commentary on the fourth quarter and full year 2025 financial results. We will then open the call for your questions where we will be joined by Dr. Ramiro Ribeiro, our Chief Medical Officer, and Mike Campbell, our new Chief Commercial Officer. Earlier this morning, we issued a press release detailing our financial results and recent corporate developments. A copy of the release can be found in the Investor Relations tab on the company website at ipoint.bio. Before we begin our formal comments, I will remind you that various remarks we will make today constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments, regulatory matters and timelines, the potential success of our products and product candidates, financial projections, and our plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, which is on file with the SEC, and in other filings that we have made or may make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I will now turn the call over to Dr. Jay Duker, President and Chief Executive Officer of EyePoint Pharmaceuticals, Inc. Jay Duker: Thank you, George. Good morning, everyone, and thank you for joining us. 2025 is defined by significant progress and achievement for EyePoint Pharmaceuticals, Inc. as we made important advances that set the stage for and potential value creation for the year ahead. As a result of our exceptional clinical execution, driven by our derisked and patient-centric programs, our lead asset DuraVu is on track to deliver top-line data in wet age-related macular degeneration, or wet AMD, beginning in mid-2026. In parallel, we advanced DuraVu as the only tyrosine kinase inhibitor, or TKI, program in diabetic macular edema, or DME. We are pleased to report that as of last week, the first patients were dosed in both pivotal Phase 3 DME trials. With a strong cash position that is expected to fund operations into 2027, and multiple inflection points on the near-term horizon, we are entering a transformative period for EyePoint Pharmaceuticals, Inc. with significant momentum. Our conviction in DuraVu’s blockbuster potential is underpinned first and foremost by its compelling clinical profile. In our Phase 2 trials in the largest retinal disease markets, a single dose of DuraVu demonstrated durable efficacy with improved vision and tight anatomical control. Importantly, DuraVu has a favorable safety profile with no safety signals in over 190 patients across four completed clinical trials. The safety profile so far remains consistent in the ongoing Phase 3 Lugano and LUCIA trials for wet AMD, based on continued masked internal safety review and two interim reviews conducted by the independent data safety monitoring committee. In addition to its robust clinical profile, we continue to believe in the potential for every six-month dosing via standard in-office intravitreal injection, a best-in-class delivery technology, and a novel multi-MOA that inhibits VEGF, PDGF, and IL-6 via the JAK1 receptor with no Tie2 inhibition, which are the key drivers of its differentiated profile. This unique profile positions DuraVu to address both VEGF-mediated vascular leakage and IL-6–mediated inflammation that contribute to disease pathogenesis in wet AMD and DME, thereby potentially enabling improved long-term outcomes for patients with fewer injections. Our confidence is also grounded in our established and clinically rigorous approach throughout DuraVu’s development. Our Phase 3 wet AMD program was intentionally designed to inform real-world practice and generate meaningful data for the retinal community by comparing DuraVu to on-label aflibercept as the control. Additionally, we will be evaluating statistical reduction in treatment burden and six-month redosing to support a compelling and relevant label. Based on the success of our large Phase 2 DAVIO-2 trial, and with our proven regulatory pathway and strong execution to date, we believe our wet AMD program is uniquely derisked and optimized to support success. We look forward to reporting top-line data beginning in mid-2026. The clinical and regulatory rigor that defines our approach also extends beyond wet AMD as we work to position DuraVu for multiple indications. We are pleased that randomization is now underway for both COMO and CAPRI, our two pivotal Phase 3 trials in DME, where we expect to drive rapid enrollment by leveraging our preclinical trial infrastructure and investigator network. In line with our wet AMD program, our DME program follows an established noninferiority design with an on-label standard-of-care control and redosing every six months. It was similarly informed by impressive Phase 2 data from the VERONA trial, where eyes treated with DuraVu demonstrated meaningful visual and anatomic improvements as early as four weeks. We anticipate top-line data in 2027 and look forward to building upon our strong track record of clinical execution as we advance DuraVu through our Phase 3 DME program. We believe that DuraVu is well-positioned to be the first to market among all current investigational sustained-release programs in both wet AMD and DME with a potential best-in-class profile, and we remain focused on building DuraVu into a durable franchise targeting the largest retinal disease markets. With a combined current global market of $10 billion and growing, wet AMD and DME make up the vast majority of the global branded retinal disease market. DuraVu’s unique MOA, robust clinical data package, proven release technology, and attractive storage and administration benefits offer a compelling value proposition that we believe will address the longstanding need for innovation and support strong commercial positioning. As part of our ongoing commercial readiness efforts, we are thrilled to welcome Michael Campbell as our new Chief Commercial Officer. Mike is a seasoned commercial leader with a proven track record of successful product launches and oversight of prominent ophthalmology franchises, including Lucentis and Xiidra. As we prepare to deliver on EyePoint Pharmaceuticals, Inc.’s next milestones, including potential approval and transformation into a fully integrated commercial organization, Michael’s deep commercial expertise will be instrumental as we position DuraVu for a successful U.S. launch. In addition to strengthening our commercial leadership, we continue to expand operations at our 41,000 square foot cGMP manufacturing facility in Northbridge, Massachusetts. The facility has been online for over a year, supported by about 60 full-time employees, and continues to not only support the CMC submission for a planned New Drug Application (NDA) but also commercial supply. As we near regulatory submission, we are preparing for pre-approval inspection, underscoring our growing independent commercial readiness and commitment to ensuring that we are well equipped to deliver DuraVu to patients if approved. Before passing it over to George to review our financials, I would like to thank the entire EyePoint Pharmaceuticals, Inc. team for your continued dedication to improving vision and patient outcomes. We are proud to advance our therapeutics for the benefit of the entire retina community and grateful to the patients, study coordinators, and clinical investigators who make our progress possible. As we look ahead, we are excited about the upcoming milestones and the opportunities in store for us to extend our leadership in sustained ocular drug delivery. I will now turn the call over to George. George Elston: Thank you, Jay. We ended 2025 with a strong balance sheet of $306 million in cash and investments, driven by continued stewardship of our resources and a $173 million follow-on financing in October. As the financial results for the three months and full year ended 12/31/2025 were included in the press release this morning, my comments today will be focused on a high-level review of the quarter. For the quarter ended 12/31/2025, total net revenue was $600,000 compared to $11.6 million for the quarter ended 12/31/2024. The decrease was primarily driven by the recognition of remaining deferred revenue related to the company's agreement for the license of YUTIQ product rights in 2023. Operating expenses for the quarter ended 12/31/2025 totaled $71 million compared to $57 million in the prior-year period. This increase was primarily driven by the ongoing Phase 3 trials for DuraVu in wet AMD and DME. Net non-operating income totaled $3 million, and net loss was approximately $68 million, or $0.81 per share, compared to a net loss of $41 million, or $0.64 per share, for the prior-year period. Turning to the full year ended 12/31/2025, total net revenue was $31 million compared to $43 million for the year ended 12/31/2024. The decrease was primarily driven by the recognition of remaining deferred revenue related to the company's agreement for the license of YUTIQ product rights in 2023. Operating expenses for the full year ended 12/31/2025 totaled $275 million versus $189 million in the prior-year period. This increase was primarily driven by the ongoing Phase 3 trials for DuraVu in wet AMD and DME. Net non-operating income totaled $12 million, and net loss was $232 million, or $3.17 per share, compared to a net loss of $131 million, or $2.32 per share, for the prior-year period. Cash and investments on 12/31/2025 totaled $306 million compared to $371 million as of 12/31/2024. We expect the cash and investments on 12/31/2025 will enable us to fund operations into 2027, well beyond key milestones and NDA preparation for the Phase 3 wet AMD program in 2026 and fully funding the Phase 3 pivotal DME program. In conclusion, we are incredibly pleased with EyePoint Pharmaceuticals, Inc.’s progress in 2025 and are well capitalized to continue advancing DuraVu through both of our late-stage development programs. I will now turn the call back over to Jay for closing remarks. Jay Duker: Thank you, George. EyePoint Pharmaceuticals, Inc.’s progress in 2025 reflects the strength of our programs and our consistent execution. As we prepare to drive value through transformative catalysts in 2026, we will continue to be guided by our derisked, clinically rigorous, and patient-centric approach. We are well positioned to deliver on our near-term priorities, including reporting top-line data for the Phase 3 Lugano trial anticipated in mid-2026 with LUCIA data closely following, completing enrollment in our pivotal Phase 3 DME program in 2026, and preparing for regulatory filing in wet AMD assuming positive Phase 3 data. Thank you all for your attention this morning. I will now turn the call over to the operator for questions. Operator: Thank you. As usual, we will try to get to as many questions as we can through the course of the call. Please limit the number of questions you ask to one, to give others a fair chance to participate. One moment while we compile our queue. Our first question is going to come from the line of Tessa Romero with JPMorgan. Your line is open. Please go ahead. Tessa Romero: Good morning, guys. Thanks so much for taking the question. Jay, George, can you clarify the rate of ocular AEs that you have seen across your cumulative safety database with DuraVu, in particular around the incidence of vitreous floaters and cataracts? And then, relatedly, what specifically has the physician's feedback been around your safety profile? Thank you. Jay Duker: Good morning, Tess. Sure, happy to address that. As you probably recall, we have treated over 190 patients and completed trials of one Phase 1 and three Phase 2 trials. And the number of cataracts that were measured by the 191 patients is 5.8%. In contrast, if you just look at the DAVIO-2 data, the cataracts in the DAVIO-2 study in the study arms was approximately 8%. In the EYLEA control arm, it was numerically higher; it was 9%. So this is an elderly population. You do expect cataracts. But, of course, in the controlled DAVIO-2 trial, there was no mismatch between the cataracts at all. With respect to vitreous floaters, once again, in the entire population, 5.2% of the DuraVu patients reported floaters, which is, again, consistent with what you might see in any type of study that has injections into the eye. So I think to answer the second part of the question, which is how do the clinicians perceive it, I think one of the main reasons that we were able to enroll the wet AMD trial so rapidly is the doctors had really good Phase 2 data to evaluate both the efficacy and the safety of our drug. And I think that gave them great confidence in enrolling patients. I think, again, I would like to make one more note on safety and efficacy. We think of visual acuity as the primary efficacy endpoint, which it is for all of these studies, but visual acuity also is a safety outcome. And, again, just to remind the listeners, in the DAVIO-2 trial, our treated patients in wet AMD gained vision. And, in fact, in the unsupplemented eyes in DAVIO-2, the treatment arms gained 2.1 letters over the course of the trial, which is actually numerically greater than the EYLEA arm gain. The EYLEA arm, again, at that point was getting three injections over that time frame because it was on-label EYLEA. So, to summarize, we are very comfortable with our safety. We have had no ocular or systemic SAEs attributed to our drug, and in those four prior trials, no safety signals. Thank you. Operator: Thank you. And one moment for our next question. Our next question comes from the line of Yatin Suneja with Guggenheim. Your line is open. Please go ahead. Yatin Suneja: Just a quick one on the regulatory front. Just love to hear from you how are you thinking about recent sort of FDA chatter around single study–driven regulatory approvals. Does that change your strategy? Just curious what is possible. And then, Jay, I appreciate your comment on the safety. Clearly, it has been pretty good across Phase 2 studies and also Phase 3 blinded review that you have provided. Anything on opacity that you can comment? Like, how are those numbers relative to what we see with other TKIs in development? Thank you. Jay Duker: Thanks for the question, Yatin. So for the first question, the regulatory front, yes, I think in general, we would all welcome a more rapid and less expensive pathway to drug approvals. But as you heard this morning, and I think most listeners know, we have two identical Phase 3 wet AMD trials underway that are reading out this year. If, in fact, the FDA would allow us to file with a single trial, our second trial is only two months behind, and so overall, I do not know that that would give us any particular advantage in the single trial. In DME, we have two simultaneous trials that we expect to read out in 2027. And given that other regulatory agencies around the world are probably still not aligned with single trial, we do not believe we have any reason to alter our approach for these two indications. Future indications, of course, we will discuss with the agency. With respect to single trial in retina studies, I think that it is certainly something the agency may be considering in the future. Of course, there are rules around single trial filing that the FDA updated in 2023. Those rules are already out there, and in order to do that, you not only need to have a large trial but you need confirmatory evidence that your drug is active if it is single trial. Of course, in the case of rare diseases, there are exceptions that are made, but wet AMD and DME, unfortunately, are not rare diseases. So with regard to the regulatory pathway, we think our pathway is derisked. We have taken the noninferiority approach, which is, you know, the approach essentially that five of the last approvals have taken, and we have two trials in each of those large indications already in motion. With respect back to safety for a second, opacity is a sign that the masked investigator can see when they look into an eye. They see if there is a blockage in their ability to look into the eye, either in the back of the eye in the vitreous or the front of the eye in the anterior chamber. In our DAVIO-2 trial, we had about a 1% rate of vitreous opacity. We had no rates of anterior chamber opacity. That has not been seen at all with DuraVu in any of the treated eyes, and we would not have expected it. DuraVu is designed to hold the drug until the drug is fully eluted, so we have no free-floating drug particles. We have not seen any migration of the inserts. The inserts so far, at least, have not been reported in humans to break up into pieces. They just slowly bioerode and release their payload, which again, I would like to remind everybody, our scientists have been able to upgrade the inserts so that they are 94% payload; they are only 6% matrix. So we have not seen any anterior chamber opacity, and we would not expect to. The vitreous opacity percentage is low. Operator: Thank you. And one moment for our next question. Our next question comes from the line of Yigal Nochomovitz with Citigroup. Your line is open. Please go ahead. Yigal Nochomovitz: Yeah. Hi, Jay and team. Thank you. I am just curious, with regards to the conduct of the wet AMD trials before they read out this summer and into the early fall, will there be additional looks at masked safety? What will the cadence of those be, and will you be reporting that to us as you proceed? Thank you. Jay Duker: Thanks, Yigal. We have got Ramiro on the line, our CMO. So, Ramiro, feel free to answer that question about continued safety looks in the wet AMD trials. Ramiro Ribeiro: Hey, Yigal. Good to hear from you. So we have, as a safety monitoring body for the studies, both internal masked review that we do on an ongoing basis as well as the independent data monitoring committee that reviews the unmasked data. The last DMC meeting was November. At that point, they reviewed the data from patients, and I remind you that at that point, we had over 25% of patients getting the second dose. The safety profile of DuraVu so far has been consistent with our previous experience in the Phase 1, Phase 2 studies with nothing new to be aware of. Our next DMC meeting is scheduled in May, so that is going to be the next opportunity for that group of physicians to review the unmasked data and provide updates to us. Yigal Nochomovitz: Okay. Thank you. And just one question on biomarkers. I know you identified IL-6 recently. I am just wondering what additional biomarker work may you be doing to further explore the activity profile of vorolanib. Jay Duker: You know, thanks for that question. Additional biomarker work around the JAK1 receptor and its ability to block downstream effects of IL-6. We will have additional data on that that we are presenting at ARVO in May. We have additional ongoing studies to really try to assess the impact of that in humans. With respect to the rest of the potential receptors, we did a very extensive evaluation of the kinome last summer at the time that we discovered that vorolanib was a potent inhibitor of JAK1 with an IC50 of about 80 nM, and we did not discover at the time any other significant receptors involved in retinal disease, either positively or negatively, that vorolanib was active against. Operator: Thank you. And one moment for our next question. Our next question will come from the line of Claire Dong with Jefferies. Your line is open. Please go ahead. Claire Dong: Hi, good morning, guys. Thanks for taking my question. So just in terms of the durable and multi-mechanistic profile beyond VEGF inhibition, how prominently do you expect this mechanistic differentiation to really be featured in your regulatory discussions and maybe eventual commercial messaging as well? And then, is there any plan for you to report more preclinical evidence of the IL-6 inhibition MOA in the future? Thank you. Jay Duker: Yeah, Claire, great question. Thanks for it. And a bit complicated because, you know, the story, I think, is still unfolding. Ultimately, what we all want is better visual acuity—our patients certainly, and the physicians who treat them. And so the great thing about what we do is eventually it is all about the data. And what we hope to show, and really, if we can show it, I think, primarily in our DME trials, is that that additional IL-6 blockage does give a more rapid onset of visual acuity improvement. That is what we showed in the VERONA data. If you recall, as early as week four, the treatment arms with DuraVu had already separated from EYLEA. We were already four to five letters better and about 40 microns drier than EYLEA. And we believe most likely that is the effect of the IL-6. IL-6 has also been implicated in wet AMD. I think it may be perhaps a little more difficult to winnow out the effects of IL-6 in the wet AMD population. But I certainly would not rule out that we might end up with better visual acuity in the wet AMD population overall. Again, I mentioned earlier with respect to subgroup analyses, the subgroup in DAVIO-2 that was not rescued ended up with slightly better vision than on-label EYLEA. With respect to regulatory, I am going to let Ramiro take a stab at that. And with respect to commercial, Mike Campbell is here, and maybe Mike can try to take a stab at how that might affect us commercially. Ramiro, why do you not go ahead first? Ramiro Ribeiro: Yeah. Sure. Thanks, Claire, for that question. So the regulatory path that we are following with both the wet AMD and the DME studies is a noninferiority approach. So if we show that BCVA are similar to the control arm, that, of course, might be sufficient for regulatory agencies. With that, for both wet AMD and DME study, as part of our analysis plan and hierarchical testing, we are going to be testing for superiority on the BCVA. And as Jay mentioned, there is a body of evidence suggesting that IL-6 has a role in both DME as well as wet AMD. So we are going to be investigating that in our Phase 3 clinical studies. Jay Duker: Thanks, Ramiro. And, Mike, if we are able to show this additional benefit of IL-6, can you perhaps comment on the commercial aspects of that? Mike Campbell: Yeah. Thank you, Jay, and hi, Claire. The commercial approach, specifically with visual acuity and safety—and as Jay mentioned, our unique MOA—gives us a real opportunity here with IL-6 as part of that complete package. I mean, the messaging around this and the opportunity to commercialize gives patients and providers a real opportunity potentially to have a best-in-class, durable approach to treating wet AMD and DME. As Jay mentioned, if there is an opportunity to be able to show the benefit of IL-6 in the DME population, that has a real meaningful commercial opportunity to really separate yourself in the marketplace. Operator: Thank you. And one moment for our next question. Our next question will come from the line of Graig Suvannavejh with Mizuho. Your line is open. Please go ahead. Graig Suvannavejh: Hey, good morning. Thanks for taking my question, and congrats on the first dosing in your DME Phase 3 studies. Maybe a question for Mike as the new Chief Commercial Officer. As you come into the company, how are you thinking about commercial prep for the potential launch of DuraVu? What are the key steps that are needed at EyePoint Pharmaceuticals, Inc. over, like, the next six, twelve, eighteen months to ensure an optimal U.S. commercial launch, especially when you might be going head-to-head in the competitive landscape versus a competitor? Mike Campbell: Yeah. Thank you, Graig. You know, there is a complete go-to-market strategy and approach, for sure. And as we think about the opportunity here—and to your point, potentially even having a competitor in the marketplace—there is a lot of precision that goes into a go-to-market approach, especially in the specialty retina marketplace. So it is areas, for example, around not only positioning and messaging, the market research, the pricing research; all of that is priority, along with patient access and services. I mean, we can have a fantastic—and we believe we will have a fantastic—opportunity here, but if you cannot really get good at allowing patient access through coverage and reimbursement, then it can really hinder you. And so there is a lot of effort that we are putting behind making sure we have the right rigor to come to market and make it easy for doctors to be able to use DuraVu, but also easy for patients to access DuraVu. And just lastly, I would also add that there is a lot of really good work that is going on and will continue to go on around coverage with the payers, and good payer research that we have done. Graig Suvannavejh: Jay, if I could just quickly follow up: your Phase 3 trial designs in DME are just slightly tweaked or different from the Phase 3 trial designs in wet AMD. Just wondering if you could point us to reasons why slightly different, in terms of kind of loading doses, maybe maintenance doses—just things like that. Jay Duker: Sure. Go ahead, Ramiro. Ramiro Ribeiro: Great. Thanks for the question. So when we look at our DME study in comparison to our wet AMD program, there are two main differences. The first one is on the control arm. For noninferiority studies, the FDA mandates that you use on-label medication, and the on-label regimen for aflibercept in DME is five loading doses followed by every eight weeks. So that is how we are going to be dosing patients in the control arm. The other difference is that for the DME study, we are now dosing DuraVu at day one. If you recall from the wet AMD study, we dosed DuraVu after the preloading dose at week eight. The reason for doing what we are doing in the DME study—which is to dose at day one—is to try to replicate the findings that we had in our Phase 2 study. If you recall from the Phase 2 study, we dosed patients on day one with aflibercept plus DuraVu compared to aflibercept alone. And then in that study, we showed a greater improvement in BCVA and CST early on in the study at week four. And we believe one of the reasons could be because of the role of IL-6/JAK1 in the DME disease. So we believe that if we can replicate those findings in the Phase 3 study, providing patients an earlier improvement in BCVA and CST is going to be something that is going to be advantageous for our patients. Operator: Thank you. One moment for our next question. Our next question comes from the line of Debanjana Chatterjee with Jones. Your line is open. Please go ahead. Debanjana Chatterjee: Hi, thanks for taking my question. One more on safety. So we saw a handful of cases of uveitis and iritis in a competitive trial. Could you just tell me again about your broader clinical experience in terms of this kind of inflammatory signals, even if mild or moderate, in your view? And also, is there anything intrinsic to your insert design or the overall product profile that you believe mitigates these kinds of events? Jay Duker: Sure, Debanjana. Thank you very much for the question. With respect to intraocular inflammation, the study is usually divided into iritis, which is inflammation in the front of the eye and, while somewhat troublesome, not typically sight-threatening; vitritis, inflammation in the back of the eye, a little more serious; and uveitis, which usually refers to inflammation in both those cavities. We do know historically biologics can cause inflammation, and there are various rates to the biologics. When they were first out, there were papers that were written that up to, you know, 10% or more of patients at certain times were getting at least mild inflammation. Obviously, inflammation is not ideal, and one of the real issues, even in mild inflammation, is the concern that it might actually be an infection, which can be much more serious. So with respect to the 191 patients that we have treated in those four studies, we had two cases of iritis, and both cases were mild, treated with topical drops, resolved quickly without any sequelae. We had no reported cases of uveitis, no reported cases of vitritis. So the overall intraocular inflammation rate is just those two patients, about 1%. We are optimistic and confident that our drug should not cause inflammation to any large degree because vorolanib, of course, is a small molecule. It is not a biologic. We are not gene therapy. And the matrix that we are using, that 6% matrix in the inserts—that matrix has been used in our prior FDA-approved products, and there were virtually no, very low rates of inflammation reported in those previous products. So, given that, and given the safety profile we have obviously seen in humans, which I just reported, and the safety we have seen in animals, intraocular inflammation is not something we are very concerned about. Thank you. Operator: Thank you. And one moment for our next question. Our next question comes from the line of Colleen Kusy with Baird. Your line is open. Please go ahead. Colleen Kusy: I know we still have a number of months before the top-line readouts of the wet AMD studies, but just a clarifying question on the reduction in treatment burden, the secondary endpoint. How do you plan on measuring that? Would that include the loading doses, or is that measured after the loading doses? Just curious on the math there and just what our expectations should be for reduction in treatment burden. And then just an addendum to that, what would be clinically meaningful? Thank you. Jay Duker: Colleen, thanks for the question. First of all, the reduction in treatment burden is to be measured after the load. Since all the patients in the wet AMD trials get loaded with three monthly injections, the treatment burden clock, so to speak, starts after that. So in the first year of the trial, the DuraVu patients mandated should receive two DuraVu injections. The EYLEA arm, the control arm, has a mandated five injections. So if there is no supplementation in the entire study, we would expect that 60% reduction in treatment burden in the DuraVu arm. I can tell you that our expectation is there will be some supplementation probably in both arms, just like there was in the DAVIO-2 trial, although we do believe it is likely that there will be less supplementation in the Phase 3 for various reasons. But if you apply the supplementation rates that we saw in DAVIO-2 to the Phase 3, we would have an approximate 40% reduction in treatment burden, which is excellent. So I think from the perspective of what the doctors want to see, I think any kind of significant reduction in treatment burden will be welcome because supplementation with a TKI in the real world is not failure. Doctors do not mind doing injections; they just want to do fewer, number one. And, obviously, the more important thing is they want to get better visual acuity for their patients in the long term. So the concept of sustained release is not about reduction in treatment burden. That is a positive side effect. But what we really want to see is better vision control in the long term, and we believe we can provide that. I think some doctors may be excited about the possibility of using two MOAs, having a ligand-blocker biologic and having a receptor-blocking TKI at the same time. And that may prove to be better long-term visual acuity results. So this whole idea of supplementation, it has a strict definition within the trials, but in the real world I think the doctors will approach it a little bit differently. Now, as part of the trial, I think, Ramiro, maybe can you comment on the superiority testing that we will be doing about treatment burden? Ramiro Ribeiro: Sure, Jay. So our hierarchical testing, number one, is going to be, as I mentioned before, the noninferiority on BCVA. The next one is going to be superiority on treatment burden. This study, of course, is well powered for the primary endpoint in noninferiority BCVA. For this key secondary endpoint, the treatment burden, the study is also well powered, and we should be able to detect the difference even if the difference is 10% or 7%. Operator: Thanks. One moment for our next question. Next question will come from the line of Lisa A. Walter with R. Your line is open. Please go ahead. Lisa A. Walter: Hi. Good morning, team, and thanks for taking our question, and congrats on the progress. Maybe just one on safety. Wondering how we should think about the safety profile in Lugano and LUCIA as it relates to DAVIO-2. I believe in DAVIO-2 the two milligram arm performed better on things like eye pain, cataract, and floaters versus the three milligram arm. But my question is, how much of the safety differences in DAVIO-2 are due to the two arms using a different number of inserts versus a different amount of drug? And how might this impact safety in Lugano and LUCIA where two inserts are being used, like the two milligram arm in DAVIO-2, but the amount of drug is closer to the three milligrams that was used? Any color here would be helpful. Thanks. Jay Duker: Sure, Lisa. First of all, with respect to dosage, we have animal data that shows no maximally tolerated dose of vorolanib so far, and we dosed animals with approximately ten times higher dosing than we have ever done in a human. So we do not believe there will be any sign of vorolanib toxicity at the current doses that we are using, even with reinjection. So, no, I do not believe any of the AEs reported have been due to vorolanib. And I would extend that to say, you know, so far, all the TKIs that have been used for wet AMD, as far as I know, there are no AEs that have been suggested to be due to the drug itself. So these drugs at the doses we are using appear to be very safe in the back of the eye. With respect to insert number, the numbers are too low to really know, and that is not something we, you know, are really essentially considering. There was a higher incidence of floaters in DAVIO-2 with the three milligram/three insert versus a two milligram/two insert, and, you know, maybe it had to do with the number of inserts. But given that we are using two inserts in the Phase 3s and ongoing, it is not much of a concern. And especially because the rates were low, and we had nobody report decreased vision due to the inserts. We had nobody leave the trials due to the inserts. Nobody has had to have the inserts removed. So from a clinical outcomes perspective, we are not concerned either about the number of inserts we are using or the doses of vorolanib that we are achieving. I think that the safety in the entire cohort really speaks for itself. Operator: Thank you. And one moment for our next question. Our next question will come from the line of Yale Jen with Laidlaw & Company. Your line is open. Please go ahead. Yale Jen: Good morning, and thanks for taking the questions. And I recall in the press release, you mentioned that there is a floater and the mechanism of action of the drug could potentially reduce that. So could you elaborate a little bit more on that? Jay Duker: I am sorry, Yale. You asked about the mechanism of action reducing the floater—something of that nature? No. I am not sure I followed that, Yale. The mechanism of action of vorolanib includes its anti-VEGF effect, potentially the anti-PDGF effect to give a benefit to fibrosis, and potentially the anti–IL-6 effect to give a better and quicker result in visual acuity. I do not think the MOA would have any effect on patients' perception of floater. And, again, given that the rate of floaters for the whole 191 patients was 5.2%, I just do not think it is a concern. Yale Jen: Okay. Yeah. I just meant it says the preventive free-floating drug particles. Jay Duker: Okay. That is the design of the inserts. And once again, the design of the insert, as we have already stated—we design these inserts so they control drug release until the drug is gone. That is the whole purpose of a sustained-release insert: to control the drug release at therapeutic levels for an extended period of time. And so we would not expect free-floating drug particles. We have not seen free-floating drug particles in any of the animal studies, and so far, there have been no reports of free-floating drug particles in the eye. So that is more of an effect of the delivery system, not the MOA of vorolanib. Yale Jen: Okay. Great. That is very helpful to clarify that. And then maybe a quick one. How many sites for the COMO and the CAPRI study in total? And are some of those ex-U.S. versus in the U.S.? Jay Duker: Yeah. Ramiro, why do you not take that question, please? Ramiro Ribeiro: Yep. So we have both studies as global studies. So we have sites in the U.S. as well as outside of the U.S. We are planning to have approximately 140 sites across both studies, and we are leveraging a lot of the infrastructure that we used for our wet AMD program. So a lot of these sites that are part of DME—most of them—were also part of our wet AMD program. And what was very interesting and very encouraging for us is that all sites from the wet AMD program that we invited to participate in the DME studies agreed to be part again of the DME program, which, again, I think highlights the confidence of the investigators in our clinical program. Operator: Thank you. And one moment for our next question. Our next question comes from the line of Daniil V. Gataulin with Chardan. Your line is open. Please go ahead. Daniil V. Gataulin: Hey, good morning, and thank you for taking my question. In your conversations with KOLs, what are you seeing in terms of which patients they would initially be willing to focus on when considering vorolanib? For example, are they thinking more of stable patients versus newly diagnosed patients or patients with high burden? And second part is, how do you expect the steps or requirements to affect the adoption of vorolanib? Thank you. Jay Duker: Thanks, Daniil. First of all, with respect to patient selection, I think we are all speculating a little here because we do not have the Phase 3 data and the label. But if one extrapolates from the Phase 2 data, I think that at the beginning, where most doctors will try it, is their patients who are being treated more frequently than they would like—every four weeks, every six weeks, every eight weeks. I think that will be the initial adoption of it. And as doctors get comfortable with its therapeutic profile and its safety, I think it will get expanded. Now I will modify that a bit, which is if we can show in the clinical trials that we can deliver better vision than EYLEA on-label, or that we are antifibrotic, or we have neuroprotection—other benefits that are potentially going to, that we might see—then I think the adoption will be much broader than that. I mean, if we can show that we are antifibrotic, I think retinal physicians will acknowledge the fact that fibrosis in the long term is an important cause of visual loss, and if you can prevent it from happening, you will result in improved vision over the years. So I think it will start off with the eyes that likely need a lot of treatment, but it may expand well beyond that. With respect to step therapy, we would not anticipate it would be an issue. First of all, again, we do not know what our label will look like, of course, but our study in wet AMD is being done with a three-injection load. So if the label contains use of DuraVu after three injections of an anti-VEGF, for example, then that automatically puts us beyond the initial injections into a branded drug. I will say we are looking into the possibility of our different MOA and our six-month efficacy, if it is there, in the IL-6 blockage—if we can show a benefit there—to be considered different than the ligand blockers, which may also be advantageous to us in the long term. But, of course, that is all dependent on the data we show in the pivotal trials. Operator: I am showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may now disconnect. Everyone have a great day.