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Operator: Good day, and thank you for standing by. Welcome to the EVgo Q1 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Heather Davis, Head of Investor Relations. Please go ahead. Heather Davis: Good morning, and welcome to EVgo's first quarter 2026 earnings call. My name is Heather Davis, and I am the Vice President of Investor Relations at EVgo. Joining me on today's call are Badar Khan, EVgo's Chief Executive Officer; and Keefer Lehner, EVgo's Chief Financial Officer. Today, we will be discussing EVgo's first quarter 2026 financial results and our outlook for the year, followed by a Q&A session. Today's call is being webcast and can be accessed on the Investors section of our website at investors.evgo.com. The call will be archived and available there, along with the company's earnings release and investor presentation after the conclusion of this call. During the call, management will be making forward-looking statements that are subject to risks and uncertainties, including expectations about future performance. Factors that could cause actual results to differ materially from our expectations are detailed in our SEC filings, including in the Risk Factors section of our most recent annual report on Form 10-K and quarterly reports on Form 10-Q. The company's SEC filings are available on the Investors section of our website. These forward-looking statements apply as of today and we undertake no obligation to update these statements after the call. Also, please note that we will be referring to certain non-GAAP financial measures on this call. Information about these non-GAAP measures, including definitions and applicable reconciliations to the corresponding GAAP measures can be found in the earnings materials available on the Investors section of our website. With that, I'll turn the call over to Badar Khan, EVgo's CEO. Badar Khan: Thank you, Heather. EVgo's first quarter was in line with our expectations. We delivered solid results, headlined by record first quarter revenues of $110 million, a 45% year-over-year increase. Increased revenues were largely driven by the continued growth of our operating network, eXtend and 2 new contracts at dedicated AV hubs locations. Throughput on our public network increased to 91 gigawatt hours in the quarter. Stores in operation across the EVgo network were 5,280 with over 200 new stores added in Q1. Adjusted EBITDA was negative $7 million in the quarter as we continue to invest in the long-term growth of the business by expanding our operations and deployment teams and our next-generation charging architecture. We ended the quarter with a healthy balance sheet with $150 million in cash. We continue to make great progress on our next-generation charging architecture that we expect to start rolling out to the field by the end of the year. This will not only deliver improved reliability and an enhanced customer experience, but is also expected to lower CapEx per store and will further underpin our long-term unit economics that we believe will result in recurring adjusted EBITDA generation at the $0.5 billion level by 2030. We've achieved some noteworthy milestones on the next-gen architecture, including completion of the first system build of the power cabinet and dispenser, successful vehicle charging with EVgo developed controllers and firmware and the start of long-term reliability testing. EVgo has excellent partnerships with rideshare companies who we believe partner with us in part because of our enormous scale advantage versus the dozens of smaller operators and because of the value their drivers get on the EVgo network. Rideshare drivers are already around 1/4 of our network throughput and we continue to deepen our partnership with Uber, where we are working towards finalization of an agreement where they guarantee a minimum level of utilization that incentivizes us to build more and larger charging stations in key urban metros. This would not only meet rising demand from the segment, but further accelerate the electrification of rideshare. We have excellent relationships with our site host partners from grocery stores to retail stores. And this quarter, we had a record number of new stores signed under long-term leases, around 3x the same quarter last year, most of which will come online 9 to 12 months after signing. This level of site lease signings is an indication of the value our site partners believe EVgo brings and their confidence in our ability to deliver fast-charging stores as we continue ramping up store deployments. We have over 100 stores operational with NACS connectors and continue to target having over 500 NAC stores available across the network by the end of the year at approximately 15% of our sites. Strategically, by deploying NACS connectors across our network, we are effectively more than doubling our addressable market where drivers with cars with NACS inlets can charge without an adapter. And importantly, we've agreed an amendment to our loan with the DOE Office of Energy Dominance Financing with the current administration, which we believe increases certainty and reduces complexity of go-forward draws and further enhances our already strong liquidity profile. DOE's loan program has historically been designed as a bridge to commercial finance ability. In the case of EVgo, this is exactly what happened. Less than a year after closing the DOE loan, we closed our commercial bank financing of up to $300 million. The combination of the amended DOE loan and commercial bank facility gives EVgo the capital it needs to deliver on our previously communicated build targets. EVgo successfully drew under the loan 3 times in 2025 and this amendment is a reflection of 2 things: first, the success we've had in securing additional private market funding and acknowledgment that debt -- additional debt capital is available to EVgo in the commercial markets. And secondly, it reflects the current administration's view of the importance of this essential infrastructure build-out across the U.S. Our fast-charging infrastructure is performing well and better than originally modeled when the loan was underwritten. Much of the loan remains the same and I'll highlight a few key updates. The size of the loan has been updated to $750 million, which includes $625 million in borrowings and up to $125 million in capitalized interest. EVgo can draw up to 80% of total eligible project costs. However, because the loan is currently overcollateralized, we can draw up to 95% of eligible project costs on an incremental basis until total leverage hits the 65% loan-to-value ratio. A redundant construction risk-related reserve account of $35 million is eliminated because debt funding occurs after store completion, which reduces restricted cash for EVgo, further improving our liquidity profile. On May 1st, EVgo received our next advance of $81 million, bringing our cash balance on May 1st to $223 million. Other key terms remain the same as the original agreement. The availability period remains 5 years with a term of 17 years. The interest rate on the loan remains very attractive at treasury plus approximately 1.2% and we're able to request advances quarterly. We already have the strongest balance sheet we've had in many years and these changes result in even more free cash available to be reinvested into the business. EVgo has ample liquidity with the DOE loan and our commercial facility. And as of May 1st, we currently have up to $640 million available principal capacity on our 2 credit facilities, inclusive of the incremental availability. Between the DOE loan and our commercial credit facility and reinvestment of profits, we expect to have 12,500 to 13,900 EVgo public sold by the end of 2029, which is unchanged from our previously stated build targets. Given the strong recurring and high-margin cash flows being generated from our charging infrastructure, we believe and the market has acknowledged that this is an infrastructure asset class that should be levered. We will continue to explore other nondilutive financing, all while maintaining a healthy balance sheet to reduce our cost of capital to even lower levels or allow us to grow faster or both. We believe the long-term growth outlook for EVgo remains very attractive. Projections for 2030 EV VIO are near $16 million, representing a 20% CAGR. Recent volatility in the oil market makes the ongoing TCO for EVs even more compelling for American drivers. Sales of new EVs in Q1 are rebounding from the Q4 lows and are expected to accelerate throughout the year, adding to VIO. The market for used EVs has been very strong and we can see that over the past few quarters, quarterly sales of used EVs has approached the 100,000 units level with Q1 just under half the level of new BEV sales. Q1 used EV sales have more than doubled versus 3 years ago and are projected to continue to accelerate going forward. Drivers of used EVs are often customers of public charging networks. This is because used car buyers are more likely to live in multifamily housing and multifamily residents tend to charge more frequently on public networks. As a result, we expect to see the serviceable addressable market for public fast charging to increase faster than overall VIO growth, with growth in public fast charging remaining more resilient compared to growth in the overall EV market. Prices for used EVs have nearly reached parity with their ICE counterparts, given the surge in EV leases following the passage of the IRA. Approximately 1.5 million leases are expected to expire between 2026 and 2028, resulting in a significant number of these cars switching hands from their original owner to an owner that is more likely to utilize public fast charging. As a reference, there's no reason why the battery electric vehicle market over time will not resemble the broader automotive market, where the vast majority of all cars on the road are used. This is a significant tailwind for the business as it was not long ago that a secondary market for EVs did not exist. So not only do we see enormous growth in overall BEV/VIO, but we expect that the average car will be charging more, both of which result in a favorable long-term outlook for EVgo. Now I'll turn it over to Keefer to share more details on the quarter and EVgo's 2026 outlook. Keefer Lehner: Thank you, Badar. We ended Q1 with 5,280 stalls in operation, a more than 3x increase compared to the end of 2021. We added 200 new total stalls to the network in Q1 2026, including 100 new public EVgo-owned stalls. Our customer base continues to grow and we look forward to welcoming more native NACS drivers to our network as we deploy more sites in 2026 with NACS connectors. Total energy dispensed on EVgo's network was 373 gigawatt hours for the trailing 12 months, a 21% increase from the TTM period ended Q1 2025. Charging gross margin was 39% over the last 12 months, expanding by 2 percentage points over the prior year's TTM. Adjusted EBITDA margin improved to 3% on a trailing 12-month basis as we get closer to the operational inflection point where charging network gross profit alone is expected to cover all of our G&A costs. Our throughput on the public network during the first quarter was 91 gigawatt hours, a 10% increase compared to last year. Throughput per stall per day was 257 kilowatt hours in the quarter. Q1 2026 throughput was impacted by the ongoing maturation of the record high number of new stalls deployed in Q4 2025 as we elected to select sites with slightly lower throughput potential in order to capture a higher amount of state grant funding as expected lifetime economics were attractive. It was also driven by lower usage of our legacy equipment, several severe winter storms as well as seasonally lower vehicle miles traveled. Revenue for Q1 2026 was $110 million, which represents a 45% year-over-year increase with growth across all 3 revenue categories. Total charging network revenue was $56 million, an 18% increase versus prior year, driven primarily by a larger operating network, representing our 17th consecutive quarter of double digit year-over-year charging revenue growth. eXtend revenue was $33 million, delivering growth of 41% over the same period in 2025, driven by an increase in construction revenues and equipment sales. And AV and ancillary revenue was $21 million, up over 300%, driven by gain on sales for 2 dedicated AV hubs locations. It's important to note that almost half of the anticipated 2026 AV ancillary revenue was recognized in the first quarter. Charging network gross profit was $20 million, a 15% increase compared to the prior year. Charging network gross margin was 36%, a percentage point lower than last year. First quarter adjusted gross profit was $30 million, up 17% against the prior year. Adjusted gross margin was 27% in Q1, a decrease of 660 basis points over the same period in 2025, driven primarily by higher non-charging revenue contribution. Adjusted G&A for the quarter was $37 million, an increase of 19% compared to prior year as we are investing in network scale and accelerating cell deployment. As a percentage of revenue, the first quarter of 2026 was 34% compared to 42% in the first quarter of 2025. The above resulted in an adjusted EBITDA loss of $7 million in the first quarter of 2026. Turning to our outlook and guidance for 2026. Our new stall guidance remains unchanged from the last quarter with 1,400 to 1,650 new stalls expected to be added over the year, including 350 to 400 eXtend stalls, approximately 100 of which were deployed in Q1. The growth in public stalls deployed is expected to be around 70% year-over-year and the vast majority of the 2026 public build plan is expected to be deployed in the back half of the year with a significant weighting towards Q4. We are reaffirming our recently provided 2026 total revenue and adjusted EBITDA guidance of $410 million to $470 million and negative $20 million to positive $20 million, respectively. Charging network revenue should be around 70% of 2026 total revenue. Charging revenue is expected to increase each quarter sequentially and on a year-over-year basis. At the midpoint, charging network revenue are expected to be up 40%. eXtend revenue for 2026 is expected to be $80 million to $90 million. AV and ancillary revenues are anticipated to be $40 million to $50 million for full year 2026 with just under half that amount realized in Q1. Adjusted G&A for the year is still anticipated to be $150 million to $155 million as we continue to invest in our scale and deployment of new chargers. Q1 and Q4 are expected to be the strongest quarters for the non-charging business, eXtend and AV and ancillary, representing approximately 75% of our non-charging revenues. As a result, we expect Q2 to be our softest quarter of the year with revenue and margins leading to an estimated Q2 revenue of $75 million to $85 million and an adjusted EBITDA loss of $12.5 million to $7.5 million. We expect modest sequential improvement into Q3. Q4 is expected to be our strongest quarter of the year by a wide margin. We should drive improved incremental margins and sustainable profitability on a go-forward basis. With that, we will open the call to Q&A. Operator: [Operator Instructions] Our first question will come from the line of Chris Dendrinos of RBC Capital Markets. Christopher Dendrinos: Maybe to start out here and I'm just kind of looking at the charging network performance and 2 things stand out. I think you kind of talked through a little bit of the dynamics around the lower throughput this quarter, but maybe talk to the cadence of that increase going through the rest of the year? And then separately, just on the margin performance in that segment as well. Are you seeing some of the, I guess, call it, leverage or operational leverage points that you're kind of expecting to see in the longer-term outlook? Badar Khan: Yes. Let me just touch on the first point and just kind of reemphasize for the quarter, daily throughput per stall, it's about 3.5% lower than last year. And that's really driven by 3 or 4 things, none of which really are long-term issues. As we said on the last earnings call, we did have more severe winter storms this quarter than we saw in the same quarter last year. We also had a record number of stores deployed in Q4 that they always take -- new branding stores usually take 3 to 6 months to ramp up. So that's a little higher impact this quarter than prior quarters just because of the record deployment we had in Q4. And we also mentioned a couple of times last year that many of these Q4 deployments in 2025 came with much higher CapEx offsets which is obviously great from a returns perspective, but they also come with lower productivity in throughput for the first year or 2. So that's really what we're seeing. One additional thing that we're calling out here is that we are seeing lower throughput from our legacy 50 and 100-kilowatt store, especially as we're actually putting in a whole bunch of faster 350 across the network. I think the good news is that today, in Q1, about 65 -- almost 65% of our throughput is already 350-kilowatt machines. That's up from kind of low 20% range 3 years ago and it will be in the 95% range by 2030. So in the long term, the performance of the kind of sub-350 just becomes immaterial. So I'd say none of these factors really are issues in the long term. For the full year, we do expect daily throughput per store to grow versus last year at the bottom end of guidance in the kind of mid-single digit percentage range to high teens in percentage range growth over '25, top end of guidance, that hasn't changed since the last quarter. Keefer, do you want to just address the market? Keefer Lehner: Yes, to follow up on the second part of your question. We did experience slightly lower charging network gross margin in Q1. It was down 1 percentage point on a year-over-year basis. We did have higher ASP in Q1. It came in right around $0.61 on a fully loaded basis, which was offset by increased energy costs and solid payment costs given some of the noise that we experienced in the quarter. We don't see that as kind of a structural or long-term shift in the cost structure. Last quarter, we did provide long-term outlook of a 50% to 60% CAGR for gross network -- or gross margin at the charging network level and we wouldn't really expect that to be changing as we look out to the future. Christopher Dendrinos: Got it. And then maybe just as a follow-up, on the NACS deployment, I think previously you kind of spoke to slightly lower charging rates on that segment of the market initially. Are you still kind of seeing that? Or is adoption on the NACS portion of the network increasing? Badar Khan: Yes, Chris, it's -- we are just taking a very quick step back with NACS. We're really very excited about deploying NACS stores across the network because effectively, we double our addressable market for people choosing to charge their vehicles without an adapter, which is the majority of people. I said last quarter that we deployed NACS like a little pilot 100 stores in kind of the fall of last year. And since then, we've seen throughput on those NACS stores rise. That's continued to rise since we talked about this last quarter. So we still remain very excited about the deployment of NACS stores. They are still below the level of throughput that we see in our CCS stores. As I said last time and saying again this time, it does take customers who have not been used to charging in our network to become familiar with our network and to charge if they've got these NACS cables. Tesla drivers continue to charge at a higher rate every month. So we're very excited. And so we're very much intending to continue with the rollout of these NACS cables. We'll look to do about 400 more to get to around 500. That will be about 15% of our sites. That will be pretty broadly spread between Q2, Q3 and Q4. We do expect that within maybe 2 or 3 years for all of our sites to have both NACS and CCS cables. And that's the point where I'd look at the addressable market having doubled. So hopefully, that answers that question. Operator: And our next question will come from Andres Sheppard of Cantor Fitzgerald. Unknown Analyst: This is [ Anadan ] for Andres. Congrats on the quarter. So I wanted to touch on a little bit of the AV charging. So with Uber partnering with a variety of OEMs for EVs and we noticed you were named as a partner as well, we were wondering maybe if you could give us some granularity on what you expect from charging demand for yourselves on this front from the AVs? Badar Khan: Yes. Yes, look, I think that the sort of autonomous vehicle space, I remain of the view that it is a very interesting and potentially very significant source of upside to the forecast that we have put out previously. I think that the AV space grows as pretty many people are expecting. We've been operating dedicated sites for autonomous vehicle partners for a number of years. We talked about it in the last quarter, last call. We have separated out the number of dedicated hubs and stores that are dedicated hubs for AV partners for over a year now. We expect that we'll add another 50 to 75 stalls. We did get a little gain on sale from some of the stores that were in operation in the last quarter in Q1. I will say it's still -- we're still in the infancy of the potentially huge market opportunity. We're evaluating the best contract structures. As you know, the contract structures that we have today are really long-term contracted cash flow, which represents kind of good margin with not a lot of risk for us. And so as this grows, we'll be looking at different contract structures that make sense for both ourselves and the AV partners or maybe also continue with what we have today. I do expect that over the long term or midterm or long term, just as we've seen with rideshare, where really I think EVgo has become the partner of choice for rideshare companies, I do expect that there's really no reason why we wouldn't become the partner of choice for AV companies, just given our scale, the balance sheet, our emphasis on reliability and so on. Unknown Analyst: Got you. I appreciate the detail. And maybe as a quick follow-up, with respect to the DOE loan amendment, you talked about this for quite a bit on the call. You guys eliminated the cash trap, received an $81 million draw on May 1st. Maybe can you walk us through how that amendment changes your practical liquidity, maybe the timing of your draws and ability to fund the accelerated owned and operated build-out? Badar Khan: Yes. Look, [ Anand ], just a comment here. I'm really pleased with where we are with this loan with the DOE. If you compare us to where we were a year ago, so today versus last year, this time last year, it's really just quite a change. A year ago, we had $170 million of cash on the balance sheet as of Q1 and we had $1 billion loan with the prior administration that was largely undrawn. And I would get questions on these calls about whether the current administration supported it, even though the performance was very strong. A year later, we have an agreement that's signed with the current administration. We continue to have a great productive collaborative relationship. It's now been drawn on 4 times. The principal is reduced by $425 million, but we've -- since last year, we've also got a commercial bank facility for up to $300 million. I think more importantly, we've demonstrated the bankability of the company with this continuous inbounds from people interested in financing the business. I think because it's a new asset class and maybe also because we're probably the only ones in the asset class that's actually financeable, today, as of May 1st, we have $223 million in cash, including the $81 million that we received last week with up to $640 million of remaining capacity between these first 2 facilities. That means we have enormous runway to continue to build out this infrastructure really to a point where we're generating adjusted EBITDA in the hundreds of millions. And I think as you say, in the short term, some of these amended terms will result in better liquidity to really an already very strong liquidity profile. So I'm really quite thrilled with where we are today. In terms of your question around -- in terms of deploying capital, we just received $81 million from the DOE. We've got a very strong balance sheet today. We will be disciplined in our approach to capital allocation with the timing of advances just driven by balance sheet needs, which you can see is quite strong. I think one of the great attributes of this loan is that there's no time limit on when we request advances other than the 5-year availability period. So between that, the commercial bank facility, the fact that we're able to advance at a higher rate and if you translate -- if you kind of work out that math, it's about another $20,000 per stall that we're able to advance versus what we had before. We -- there's really no concerns that we have at all about financing the build program we previously discussed or near-term liquidity. Operator: [Operator Instructions] Our next question will be coming from the line of Chris Pierce of Needham. Christopher Pierce: Badar, I just want to get a sense, you highlighted the EVs in the deck and you spoke about it on the call a little bit. Is there something specific you need to do to market towards these people? And/or is this sort of just a sweet spot of customers that are potentially going to be using the network? And have you seen anything? Or is it too early to sort of see a ramp in new customers from these new EV owners that are buying used EVs? Badar Khan: Yes. Look, I think that there's a few things in here in terms of marketing to these customers. We -- I think, as you know, we have more -- the same or more charging sessions on our network than everybody else in the industry combined with the exception of Tesla and Electrify America. And the reason for that is that we've really spent a lot of time building a very productive customer engagement sort of platform. We've got the ability to identify drivers of electric -- battery electric vehicles. We know how to reach out to them. I've mentioned before in previous calls that we've been deploying AI agents that are increasing our level of sophistication in how we reach out to customers and that's why we've got such phenomenal engagement and demand on our network versus pretty much everybody -- almost everybody else in the space. In terms of used electric vehicle drivers versus new EV drivers, there's no distinction. We will deploy the same methodology that's delivered such great success for us for used EV drivers as new EV drivers. I think what's really interesting that we just -- that we're really pointing out here is that for us, it's not just about the growth in battery electric vehicles, used VIO that drives the business. It is expected to grow. It has grown fourfold. It will likely grow another 2.5 to threefold over the next 5 years. I do think these 2030 forecasts swing like a pendulum. They were -- the 2030 forecast was 30 million vehicles 3 years ago. Today, it's 15 million or 16 million. But what's important for us is how many of those vehicles are charging in public fast charging. Rideshare electrifying means they'll charge more at public fast charging, charge rates mean they'll charge more at public fast charging. And as vehicles go from new to used, they'll charge more at public fast charging. What we're seeing is that used vehicle -- used EV owners tend to live in multifamily housing. And from our own data, we can see that drivers who live in multifamily housing charge 1.5x more than drivers who live in single-family housing. And so I'm really quite excited by this. There's probably around 1 million used EVs out of the roughly 6 million today with all of these leases rolling off post the IRA, we're looking at maybe up to about 3 million used EVs out of total EV VIO 3 years from now, which is probably 25%, 30%. And so if you look at the market, there's no reason why the EV market won't resemble the broader market where the vast majority of cars are used. And so I think that represents just another tailwind that I think it's worth bringing out when we think about our long-term growth prospects. Christopher Pierce: Okay. Perfect. And just one. I mean, I think complexity is the wrong word, but if you look at the model, you've got the core charging business, then you've had the eXtend business, which was sort of in the end sort of kind of -- we're in the later innings of that rolling off so investors can focus on the charging model. If we think about the AV line and the ancillary line, is there a way to kind of know what that's going to look like? Could you -- could that be a construction business similar to eXtend and then you have gain on sale when you flip it back to the end user? Or should we think of that -- like I just want to understand as AV grows, will we get to a point where that sort of becomes a new [Technical Difficulty] and you've got to sort of guide in different pieces? Or like when can charging revenue be just the story a little cleaner for new investors looking at the model? Badar Khan: Yes. Well, look, if I just take that apart, you're right, the eXtend business has been a very valuable source of revenue for the last couple of years and will be for this year, too, and for a portion of 2027. But at some point in 2027, the eXtend -- the majority of the revenue from eXtend will sort of drop off. It will become O&M, which will be quite a bit smaller. Charging revenue, I think you just said that we've had the 17th consecutive quarter of year-over-year growth. So we will continue to see the charging revenue, the charging network just continue to grow quarter-over-quarter over the next several years. I think this AV piece is really interesting because as you know, Chris, and I think many people have commented, there's a significant amount of capital that needs to get deployed to build out this autonomous vehicle opportunity from the vehicles themselves, the technology in the sort of autonomous vehicle technology whether it's LiDAR or elsewhere for rideshare will be the capital required for the technology stack as well as fleet operations, capital required for charging. Our perspective is that that's a ton of capital required to get deployed. We have the capital available for a piece of that, which is the charging infrastructure. And we're quite excited about it because we're such a large player doing this sort of charging infrastructure. We -- the contracts that we signed to date are these long-term contracts that have contracted cash flow. So we've got -- we're generating $1 per stall per month, if you will. And that doesn't have to be the contract structure for this space going forward. So we're quite excited by it because these are likely to be very heavily utilized vehicles that will have very strong demand in our network. I think that I would be open to exposure to utilization and throughput from this space. So it may look like a -- look a little more like our regular charging business as opposed to, as you're saying, a construction business like eXtend. We're in the early innings of this. As you can see, we've built a very strong competitive advantage with rideshare where we're really the kind of partner of choice for rideshare companies. I see no reason why we wouldn't be a partner of choice for the AV companies, many of whom we've been working with for years already. Operator: And I would now like to turn the conference back to Badar Khan for closing remarks. Badar Khan: Great. Well, thank you, everyone. EVgo had yet another strong and record quarter. We're expecting 2026 to be an inflection year with around 70% growth in new public stores added, supported by strong site post and rideshare partnerships. We continue to see a very strong long-term growth outlook and we're pleased to have reached an amended agreement with the DOE, allowing us to scale the company to that $0.5 billion or more in adjusted EBITDA by 2030. I look forward to sharing our progress with you on our future calls. Thanks very much, everyone. Operator: And this concludes today's program. Thank you for participating. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to Black Stone Minerals First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Natalie Liddell, Vice President, Corporate Planning. Natalie, please go ahead. Natalie Gentry Liddell: Thank you. Good morning to everyone. Thank you for joining us for Black Stone Minerals first quarter 2026 earnings conference call. Today's call is being recorded and will be available on our website along with the earnings release, which was issued last night. Before we start, I'd like to advise you that we will be making forward-looking statements during this call about our plans, expectations and assumptions regarding our future performance. These statements involve risks that may cause our actual results to differ materially from the results expressed or implied in our forward-looking statements. For a discussion of these risks, you should refer to the cautionary information about forward-looking statements in our press release from yesterday and the Risk Factors section of our 2025 10-K. We may refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliation of these measures to the most directly comparable GAAP measure and other information about these non-GAAP metrics are described in our earnings press release from yesterday, which can be found on our website at www.blackstoneminerals.com. Joining me on the call from the company are Tom Carter, Executive Chairman; Taylor DeWalch, Co-CEO and President; Fowler Carter, Co-CEO and President; Steve Putman, Senior Vice President and General Counsel; and Chris Bonner, Senior Vice President, Chief Financial Officer and Treasurer. I'll now turn the call over to Taylor. Taylor DeWalch: Thanks, Natalie. Good morning, everybody, and thank you for joining us. As detailed in our earnings release last night, we delivered a strong first quarter, highlighted by higher production across our mineral position. Our performance was driven by increased natural gas activity in the Louisiana Haynesville and Shelby Trough, along with strong oil production in the Permian. Looking ahead, we view 2026 as a year of production growth compared to 2025 as development across our core areas continues to ramp, and we maintain our production guidance outlined in February. Our multiple development agreements in the Haynesville and Bossier expansion play are progressing well, and we remain positioned for meaningful production growth over time. We are seeing continued delineation and also increased activity across the broader Shelby Trough, which reinforces confidence in our long-term inventory profile and growth outlook. This outlook is bolstered by our constructive view on the long-term natural gas backdrop. We are witnessing the industry react to the structural demand growth, which is supported by accelerating LNG export growth, increasing power demand, including data center-driven load growth and continued strength in U.S. industrial activity. These demand drivers continue to highlight the Gulf Coast as a key market for natural gas, where we maintain a significant acreage position and development agreements with direct proximity to premium demand centers. Additionally, we continue to closely monitor the potential long-term implications of supply disruptions in the Middle East and how that could add incremental demand for secure U.S. molecules. We believe each of these drivers, coupled with premier natural gas assets in close proximity to the Gulf Coast and infrastructure projects to transport those molecules positions us well to benefit from the structural demand over time and provide significant value to our unitholders. With that, I'll turn it over to Fowler to walk through additional details on the commercial front. Fowler Carter: Thanks, Taylor. Well, it was a great quarter, and we executed across our commercial initiatives, building on the momentum established last year, including continued activity under our Haynesville expansion acquisition program. During the quarter, we acquired an additional $12 million of mineral and royalty acreage. This brings total development -- excuse me, total deployment under the program since its inception in '23 to more than $250 million, further strengthening our positioning across the Haynesville and expanding Shelby Trough area. Operators under our development agreements in the Shelby Trough continued to advance multiple programs during the period. Adamas spud 4 wells during the quarter and turned online 7 wells. This included the Congo wells in Southern San Augustine County, which continued to push the historical extent of the Shelby Trough and delivered strong initial results, reaching 30 MMcf per day. Additionally, Caturus is preparing for their initial activity to begin in June with a pilot hole and several commitment wells. Revenant also spud 2 wells during the quarter. And as mentioned in the press release last night, one of those wells experienced a loss of well control incident. We are assessing the potential impact on their first year development program. More broadly, we have continued to see an increase in activity within the legacy Shelby Trough area and the emerging Haynesville/Bossier expansion resource play, connecting the Shelby Trough to the Western Haynesville. Currently, there are 13 active rigs across Angelina, Nacogdoches and San Augustine counties under Adamas, Apex, EXCO and Rockliff. Expanse is also actively drilling in the Southern Anderson County area, while Comstock continues drilling throughout the Western Haynesville. Across the broader portfolio, we also saw strong leasing activity and remain encouraged by continued interest in the Permian. Building on that activity, we progressed the opportunity highlighted last quarter in our Shelby Trough expansion area, which includes another approximately 300,000 gross mineral acres. We are currently marketing this project to experienced Haynesville operators to secure an additional development agreement, which we believe would be comparable in scale to our other programs and provide meaningful incremental production growth over time. With that, I will turn the call over to Chris to cover the financial results. Chris Bonner: Thanks, Fowler, and good morning. As highlighted earlier, we saw strong production in the first quarter with mineral and royalty production of 35.9 MBoe per day, which is up 16% from the prior quarter. Total production was 37.0 MBoe per day. The period was also marked by significant commodity price volatility. Natural gas pricing was impacted by extreme weather-driven swings, including Winter Storm Fern, which created regional pricing dislocations and temporarily pressured our realizations relative to Henry Hub in February before conditions moderated in March. Oil pricing meanwhile reflected broader geopolitical developments that intensified later in the quarter to remain ongoing. As we navigate this environment, we are actively managing our hedge position as part of our broader risk management approach and monitoring pricing and operator activity across the portfolio. Turning to the quarter's financial results. Net income was $13.3 million for the quarter with adjusted EBITDA of $87 million. 54% of our oil and gas revenue in the quarter came from natural gas and natural gas liquids. As previously announced, we declared a distribution of $0.30 for the quarter or $1.20 on an annualized basis. Distributable cash flow for the quarter was $76.5 million, which represents 1.2x coverage for the period. In the first quarter, we continued to execute across the business, positioning the partnership well for the balance of 2026 and remain confident that our diversified portfolio across multiple basins, together with our commercial strategy and the extended Shelby Trough supports our ability to deliver sustainable long-term value for unitholders. With that, we'll open it up for questions. Operator: [Operator Instructions] Your first question comes from the line of Tim Rezvan with KeyBanc Capital Markets. Timothy Rezvan: For my first question, I was hoping you could provide maybe a little more context on what exactly the outcome is with the loss of well control incident from one of a Revenant's wells. Does that well, once you get, like abandoned? Or is there still a hope of salvaging it? And then when you talked about assessing the potential impact, can you talk about what that means? Does that mean some sort of like deferral or delay? Just any more context would be helpful. Fowler Carter: Tim, this is Fowler. I'll tackle that. Right now, it just happened. So the truth is we don't know. There is an investigation currently ongoing. Right now, I'd say there is potential for going back into that well and there may be potential for not going back into that well. We just don't know yet. It is too early to tell. And that's really it, man. I'm really sorry, I can't give you more color. But as we get information back, we will be updating folks. Timothy Rezvan: Okay. Okay. I guess we'll stay tuned on that. And then as a follow-up, you had a very strong start to the year on the production front, and you laid out a pretty granular kind of cadence for your partnerships and their activity. So I know you're not a company that adjust guidance on a quarterly basis and you sort of reiterated it. But can you give us a little more color on maybe what the shape of 2026 production will look like? Does this Revenant potentially temper your enthusiasm on the outlook? I'm just trying to get a little more color on that. Fowler Carter: Sorry. I wouldn't say our enthusiasm is tempered in any way, shape or form. But again, since this just happened, we are actively discussing these things and what that profile will look like this year. And as you said, Tim, we don't adjust guidance quarter-to-quarter, but we will get back to you once we have something firmly in place and can understand the situation more clearly. Without putting anything of real substance out there, it might be a bit of a speed bump. But over, I'm going to say, a 2-year period, you won't see any difference. Taylor DeWalch: Yes. Tim, this is Taylor. I'll just add to that a little bit. I think when we look back at our original guidance, which contemplated quite a bit of production growth kind of throughout the year, even if it was flat compared to 2025, certainly, starting out the year with a pretty nice production number helps. And as we think about the rest of the year, I would go back to, kind of, what we thought from just a production growth standpoint, given we're getting these development programs off the ground and excited about what that means for production, especially as it looks to the end of 2026 and going into 2027. I think the other piece of the equation that we're really trying to understand right now is, kind of, operators' reaction to pricing right now with, kind of, geopolitical events going on in the commodity strip. So I think more to come on that. Certainly, trying to guide within a pretty volatile environment can be difficult, but we're excited about where we think we're headed for the rest of the year. Operator: [Operator Instructions] Our next question comes from the line of Derrick Whitfield with Texas Capital. Derrick Whitfield: With the change in ownership at Aethon and now Adamas Energy, could you speak to what changes, if any, you're seeing in behavior around the desire to grow? Taylor DeWalch: Derrick, this is Taylor. I'll jump in first and just say, I think that given our contractual commitments there, we certainly have at least some expectations on their cadence of operations and excited about them continue to move forward in developing the area. I think to be determined on excess growth beyond the commitments, that's a conversation we're having, and we'll continue to, kind of, update as that becomes available. But overall, excited about the transaction and the team and continuing to move forward with our contract. Derrick Whitfield: Great. And then with respect to the well control incident, and it feels like the market today is treating this as an issue that impacts a swath of your acreage. As I understand, this is more isolated in nature, is that a fair characterization? Taylor DeWalch: Yes. Yes. Thanks, Derrick. What I would say is when you look at that area and where the well is, it's fully surrounded by development by the likes of Adamas, EXCO and historically others. So I think that the area is pretty well delineated from a subsurface standpoint. And we certainly look forward to kind of further development in that overall area. Derrick Whitfield: Great. And maybe just one last, if I could. So as you guys think about the broader expansion from Shelby Trough to Western Haynesville, could you speak to midstream egress for this region and if it's adequate to meet the needs of where you think growth is headed? Taylor DeWalch: Good question. There's certainly plenty of -- there's quite a bit of infrastructure out there. But as you think about the area growing by potentially several more gross Bcf a day over the coming years, there's a number of other midstream projects that I think are in the queue and probably more to come on exactly what those projects look like. But I'd say there's existing plus additional infrastructure kind of underway. Operator: There are no further questions at this time. I will now turn the call back to Taylor for closing remarks. Taylor DeWalch: Thanks so much. Once again, thanks, everybody, for joining us this morning. It was a great quarter and look forward to the rest of 2026. Talk to you all again soon. Thanks. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Neuronetics First Quarter 2026 Financial and Operating Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today. Mark Klausner: Good morning, and thank you for joining us for the Neuronetics First Quarter 2026 Conference Call. Joining me on today's call is Neuronetics' President and Chief Executive Officer, Dan Reuvers. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics' business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K, which was filed in March and the company's quarterly report on Form 10-Q for the quarter ended March 31, 2026. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we'll also discuss certain information on a non-GAAP basis, including EBITDA and adjusted EBITDA. Management believes that non-GAAP financial information taken in conjunction with U.S. GAAP financial measures provides useful information for both management and investors by excluding certain noncash and other expenses that are not indicative of trends in our operating results. Reconciliations between U.S. GAAP and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website. With that, it's my pleasure to turn the call over to Neuronetics' President and Chief Executive Officer, Dan Reuvers. Daniel Reuvers: Thanks, Mark, and welcome, everyone, to our first quarter 2026 earnings call. I'll begin by sharing some perspectives on my background and why I joined the company, discuss some early observations, and then I'll walk through the key drivers of our performance in the quarter. Then I'll walk through our quarterly financial results in greater detail, and I'll conclude with my perspective on the rest of 2026 before opening the line for questions. This is my first earnings call as CEO of Neuronetics, and I'm pleased to be here. I've spent about 35 years in the med tech industry, and most of my career has been in businesses where patient impact, execution and operational rigor drive the outcome. Most recently, I served as CEO of Tactile Medical, where we grew revenue from $187 million to approximately $300 million. During that time, we expanded patient reach, grew gross margins, delivered record earnings and cash flow generation. Before that, I spent 12 years with Integra LifeScience, where I led the $1 billion Codman Neurosurgery division. And earlier in my career, I held leadership roles at several other med tech companies. There were a couple of things that drew me to this role. First, our mission to renew lives by restoring hope for patients and their families is one that I'm passionate about. It's amazing how many people have reached out to me since taking the role, sharing their stories of how they or someone they knew have either suffered from depression or better yet benefited from one of our therapies. Second, I think my background gives me a great perspective on how to move this business forward. My experience in the device space will allow me to come up to speed on the NeuroStar business quickly. And it's notable that Tactile was vertically integrated, meaning we designed, manufactured and sold our therapy solutions, but also directly build third-party payers, an experience I expect to draw on as we continue to improve efficiency within our Greenbrook clinics. Since stepping into the role, I've spent the bulk of the last month on a listening tour. I've been on the road with our field team, inside our clinics and meeting with customers. I've also engaged with shareholders, analysts and others, helping me shape my understanding of the business. My approach has been deliberate and comprehensive, intended to allow me to fully understand this business before making decisions about where to lean in, where to adjust and how we maximize the value of what we have. With that said, what I've seen in my first few weeks has reinforced my conviction in the underlying opportunity that exists for us. First, on the NeuroStar side, I see a clear opportunity to broaden how we go to market and reach customer segments where we've not historically been positioned to compete. I'll talk more about that in a moment. Second, with the Greenbrook clinics, workflows are key to optimizing profitability in our clinics, not only ensuring that patients have an efficient path to initiate their treatment and gain relief, but also to minimize operational handoffs. Revenue cycle management is also an area where I've spent time in my previous role. And what I've seen inside our clinic operations tells me there is more opportunity ahead. Lastly, we have a talented team that's focused and executing. And I've been genuinely impressed with the quality of the people and the conviction toward our mission across the organization. Now before I walk through the quarter, I'd like to briefly address 2 items. First, on our recently announced CFO transition. Steve Fansteel departed earlier this month to pursue an opportunity outside Neuronetics. We've initiated a comprehensive search to identify his successor. We appreciate Steve's contributions during his time at Neuronetics, and we'll provide updates as the search progresses. Ultimately, this allows me to select a partner that I'm confident, can help me lead our next chapter. Second, I want to share some perspective on the comments made by certain shareholders about our business. While we believe that the integrated NeuroStar and Greenbrook businesses provide us with a strong foundation to grow from, we respect some shareholders' views that the separation of the business could potentially unlock shareholder value. The Board and I are aligned on operating this business with discipline and on making decisions that create long-term value for our shareholders. I assure you that I'm evaluating this business with an open mind, and I appreciate everyone's patience as I work through my process. With that context, let me share a bit more about our performance in the quarter. Our Q1 results were largely in line with expectations, and we're making progress on the commercial and operational priorities already in motion. Starting with the NeuroStar business. During the quarter, we shipped 34 systems, up 10% year-over-year. We continue to support our installed base with the most comprehensive training and clinical resources in the category. We're also modernizing how we deliver that support with more virtual, on-demand and real-time engagement tools that provide customers with choices on how they want to be supported. We're piloting an expanded set of commercial models for NeuroStar. Customers exist with a range of needs. And while we have a history of providing unparalleled ongoing support to our customers, we also know that not all customer's needs are the same. So expanding our go-to-market menu is a priority. I'm convinced that we can compete on a broader horizon by listening to customers and responding in kind. Early feedback has been positive, and I'll have more to share in August. Now a few comments on Greenbrook. Clinic revenue grew 15% in the quarter. Growth in the quarter was driven by continued strength in SPRAVATO with treatment growth year-over-year and expansion of buy-and-bill. On the TMS side, within our clinics, volumes were modestly below prior year levels in the quarter, which we attribute in part to weather disruption across portions of our footprint during the first 2 months of the quarter. We saw patient flow normalize as the quarter progressed, and we expect to return to more typical volume trends as we move into the second quarter. Within our clinic operations more broadly, the focus remains on workflow and revenue cycle management. The team has made real progress on collections and operational efficiency, and we see continued runway. We've also leveled our marketing investment across the year rather than front-loading it, which we believe is the right cadence for the business. We acted during the quarter to better align our cost structure. These steps are expected to deliver annualized savings of approximately $2.5 million to $3 million with net savings beginning in the third quarter. Profitability and cash are top priorities and will be a focus of mine going forward. Taken together, the quarter reflects a business that's executing on the priorities already in motion while we lay the groundwork for our next phase of growth. With that, I'll walk through the financial results in greater detail. Unless otherwise noted, all performance comparisons are being made to the first quarter of 2026 versus the first quarter of 2025. Total revenue in the first quarter was $34.5 million, an increase of 8% compared to revenue of $32 million in the first quarter of 2025. The increase in revenue was primarily driven by higher U.S. clinic revenue. Total revenue from our NeuroStar business, inclusive of our system revenue as well as treatment session revenue was $12.9 million in the first quarter of 2026. This represents a decrease of 3% versus the prior year. U.S. NeuroStar system revenue was $3.2 million, an increase of 13% on a year-over-year basis, and we shipped 34 systems in the quarter, an increase of approximately 10% versus the prior year. U.S. treatment session revenue was $9.1 million, a decrease of 5%, while system treatment utilization increased 3.5%. This was offset primarily by a reduction in customer inventory levels. U.S. clinic revenue was $21.5 million, a 15% increase year-over-year. The results were driven by continued strong SPRAVATO growth and overall pricing improvement. Gross margin was 46.9% in the first quarter of 2026 compared to 49.2% in the prior year quarter. The decrease in gross margin is a result of revenue mix with clinic revenues representing a higher portion of our overall revenues. We also saw some negative impact from the increase in SPRAVATO buy-and-bill from Q1 of last year when we were still launching that offering. Operating expenses during the quarter were $25.1 million, a decrease of $1.6 million or approximately 6% compared to $26.8 million in the first quarter of 2025. The decrease is primarily attributable to savings in SG&A expenses, where we have driven and will continue to drive efficiencies. Net loss for the quarter was $10.8 million or $0.16 per share as compared to a net loss of $12.7 million or $0.21 per share in the prior year. First quarter 2026 adjusted EBITDA was negative $6.6 million as compared to negative $8.6 million in the prior year, an improvement of $2 million. Moving to the balance sheet and cash flow. As of March 31, total cash was $19 million, consisting of cash and cash equivalents and restricted cash as compared to $34.1 million as of December 31. Cash used by operations in the first quarter was $9.4 million. This compares to an operating cash use of $17 million in Q1 of 2025, an improvement of $7.6 million versus the prior Q1. As previously disclosed, in March 2026, we amended our debt agreement with Perceptive Advisors, which reduces our outstanding debt obligation and interest expense. Under the amendment, we made a one-time principal payment of $5 million to Perceptive Advisors, along with adjustments to the existing debt covenants. Now turning to guidance, which remains unchanged. We continue to expect total revenue between $160 million and $166 million, gross margins to be between 47% and 49%, operating expenses in the range of $100 million to $105 million, inclusive of approximately $8.5 million of noncash stock-based compensation. Cash flow from operations between negative $13 million and negative $17 million. As a reminder, our operating cash flow is projected to improve beginning in the second quarter and then sequentially through the remainder of the year, with operating cash flow being flat to positive during the second half of the year. And in the second quarter, we expect to see mid-single-digit growth. As we look ahead to the remainder of 2026, our priorities are clear. We're focused on disciplined execution, sharpening how we go to market and continuing to drive the business towards being cash flow positive. The pilots we have underway in the NeuroStar side of the business are designed to expand our reach and within our clinic operations, we'll continue to focus on workflow, collections and operational efficiency. We expect these benefits to continue building throughout the year. Looking further out, I want to briefly touch on COMPASS Pathways pending psilocybin therapy. The regulatory process is Compasses to navigate, but the Trump administration's recent executive order prioritizing such submissions is certainly encouraging. If approved, we believe Greenbrook is among a very small number of providers genuinely equipped to deliver it. The protocol requires certified settings, trained clinical staff and a proven back-office infrastructure for benefits investigation and prior authorization, all of which we already have in place through our SPRAVATO operations. While we will be prepared to execute if the product is approved, similar to SPRAVATO, we'd expect the revenue ramp to be measured in the first year of launch, but the narrow pool of providers capable of delivering this therapy represents a durable advantage for our business. As I mentioned earlier, my approach in these first few weeks has been deliberate. I'm committed to making decisions that balance the interest of our patients, physicians, colleagues and shareholders. And I expect to be able to share an even more grounded view of where we're headed when we report next quarter. I want to thank the Neuronetics team for the work they've put in this quarter and for the welcome they've given me. I look forward to updating you all on our progress in August. And with that, I'll open the call for questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Bill Plovanic from Canaccord Genuity. William Plovanic: So 3 questions for you, Dan, if I could. One is just clarity on the performance in the Greenbrook sites. I just want to make sure I heard that the -- was it the treatment revenue and number of treatments was down year-over-year, backing out the SPRAVATO. I just want to get -- to make sure I heard that correctly. Daniel Reuvers: Yes. Overall, we were pleased with the Greenbrook performance. We were up double digits, as we said, about 15%. The TMS volumes were off a little bit, Bill. And we think that, that was related to a couple of things. One, weather, which we -- pretty concentration up here in the Northeast. And then we were a little lumpy in our ad spend as we exited last year. So smoothing that this year, I think, is going to bring that more in line with consistency. But we also saw better performance in March than we did in January and February. So it was -- we don't think that, that was a trend as much as an event. On the SPRAVATO side, we saw growth in both the buy-and-bill and the A&O segments, double digit in both segments. And yes, buy-and-bill was up as a mix compared to Q1 of last year. But I think it's worth noting that we've also seen that kind of equilibrate over the last couple of quarters as far as mix between that and A&O. William Plovanic: Okay. Great. And then just secondly, one of the biggest challenges new executives face when they come into a company is just making sure to keep the team intact and turnover. And I just wanted to see if you could provide any color on what you've seen thus far. I know it's only been 45 days, but just kind of what you're seeing across the organization thus far. Daniel Reuvers: Yes. It's -- first of all, I've been really impressed with how much the mission permeates through the company. People are really connected with the impact that we're making on patient's lives. I mentioned in my opening comments that I was on -- I've been on a listening tour for the first month for the most part. And that gave me an opportunity to go out and spend time with folks in the field as well as having spent a good amount of time in the office. So I've met with a lot of people, have been trying to connect as best I can with things like podcasts and town halls. And so far, I've been pleased with, as I said, kind of where people's attitudes are. I think there's an anxious enthusiasm to think about how we might do things different, how we might continue to find ways to get better. So overall, I would say, quite good. And I don't -- I haven't seen anything as far as turnover spikes or anything that would have, I would say, raised an eyebrow for me. William Plovanic: Okay. I think just the last question is really elephant in the room. I mean you addressed it, but I just wanted to hit home on it. Just you ended the quarter with $19 million of cash, $13 million unrestricted. It sounds like given the guidance that would tell us you'll use $4 million to $8 million of that during the full year. I would expect most of that would be in the second quarter given the guidance that the back half would be positive. I just -- any thoughts, comments? Is that enough to get you through with working capital? And just how are you thinking about that today? Daniel Reuvers: Yes. I mean we're always evaluating the balance sheet. But I think as we shared at the midpoint of $15 million of burn for the full year, the math would lead you to $14 million at year end. So -- and you're also right in that our assumptions are that we would be flat to positive in the second half of the year. So based on the current plan, we feel like we've got sufficient headroom in the balance sheet to get us -- to take us through the year. Operator: Our next question comes from Adam Maeder of Piper Sandler. Adam Maeder: Congrats on the new role and look forward to working with you again. Two for me, one kind of housekeeping question and one bigger picture question. Just on the housekeeping item, weather. It sounded like there was an impact to TMS volumes at Greenbrook clinics. I was hoping you could kind of quantify that for us. Is it also reasonable to assume that your stand-alone NeuroStar business also saw some headwind from weather? And how do we think about how quickly these patients can potentially kind of be -- their sessions can be recaptured? And then I had a follow-up. Daniel Reuvers: Yes. I'm not going to quantify on the Greenbrook side, Adam, but we did see -- we do think that there was some of the impact there, particularly because we saw more of the weakness in January and February than we did in March. It's also worth noting on the NeuroStar side that TMS patients are coming in every single day. So trying to manage a schedule around weather is more difficult than SPRAVATO patients that are coming in more episodically and have a lot more latitude in scheduling. So I think that was one of the reasons that we saw the impact within Greenbrook. On the NeuroStar side, we think that we saw some of the same kind of impact from weather. But that said, from a total utilization standpoint, we were actually up low single digits on absolute utilization within our NeuroStar business as far as treatment sessions were concerned. We saw a little softness in the revenue [ rec ] just because we had a little bit of customer inventory on hand that folks are working through. But overall, I would say the business held up quite well in spite of the weather. Adam Maeder: Okay. Fantastic. And then for my follow-up, Dan, in the press release, you talked about significant value in the business that's yet to be fully realized. You also have a large shareholder who issued a letter last month for -- asking for a strategic review and potentially a sale of the TMS business. And you touched on it in the prepared remarks. I think I heard you're evaluating the business with an open mind. I guess I was hoping you could share a little bit more color here on your early learnings and thoughts as you think about kind of the broader makeup of Neuronetics. And one question that I sometimes get from investors is the NeuroStar business, the stand-alone business, why can't that business grow faster given the size of the total addressable market? And what are the plans to kind of catalyze that business? And sorry for the multipart question. Daniel Reuvers: Yes. Yes, no problem. So first, as it relates to the shareholder letter that we saw. As I said in my opening remarks, I mean, I really have been on a listening tour, and I've had outreach to that shareholder along with others just to make sure that I'm hearing some of their thoughts and concerns. I think there's some frustration there. And quite frankly, I appreciate it. I think that what I'm still trying to do is really look at the business through a variety of different lenses, and I'm pretty pragmatic about it. I mean I'm not wed to a predetermined conclusion, but I'm also not inclined to be impetuous and make sure that I look at the business overall. I think as it relates to what can we do to continue to demonstrate strength and growth, which under any outcome scenario adds long-term value for shareholders, it's looking at the NeuroStar business, I do think that we probably under punched our weight here lately. The opportunity to expand our go-to-market menu is one of the things that I believe is going to be a helpful catalyst for us. And we're still in pilot phases on that, Adam. But ultimately, we have taken an approach that has conveyed what I would call unparalleled support to our TMS customers. I don't think any other competitor out there comes even close to the kind of support we provide to our customers. But that said, not all customer's needs are the same. So I think it's important for us to expand our menu and allow customers to kind of establish which parts of value they want and make sure that we've got kind of a broader girth of go-to-market menus that they can select from. So we're in the midst of doing some pilots right now. I think we'll have a lot more clarity over the next couple of months, but it includes making sure that we're looking at incentive comp that it's aligned with our direction, that we have an opportunity to revisit our funnel and make sure that we've slotted those in the right spaces. So more work to do, but I think that as we continue to really reevaluate our go-to-market and with an open mind look at how we can make sure that we're matching the right level of support to that, which the customer wants to pay for. I think that's a ratio that I expect will bear some fruit. Operator: Our final question comes from the line of Danny Stauder of Citizens JMP. Daniel Stauder: Just my first one, following up on kind of the TMS question. But Dan, I wanted to ask about the commercial strategy for TMS. We know there was a realignment of the capital sales team and system sales have been strong the last 2 quarters. But as you sit here in the early days of your tenure, just broadly, how do you think about the balance between focusing on driving utilization per site versus expanding the installed base? Are there any potential strategic changes here? Or how do you think about that balance? Daniel Reuvers: I think continuing to drive utilization is an important one because whether we're on a sessions model or otherwise, it's what's the underlying creation of demand and the more utilization our customers continue to find more patients they can help. One way or another, that's going to lead to an expansion of our business. So I think we're going to continue to look to how we can expand our socket placement or placement of new capital units. I think that's one of the places where we've probably slipped a bit and focusing on new placements and expansion of capital and making sure that it's our unit that resides in those clinics. Whether regardless, I guess, of what economic model is in place, we just want to make sure that we're demonstrating the most value across the competitive landscape. And I think that between the support we provide with our account managers in the field with benefits investigation, our co-marketing, training, service, the cloud-based TrakStar utility that we've got, I just don't think anybody can compare there. And we're going to, as I said, continue to work through a couple of pilots. But the things that got us there, I think, will continue to be durable areas of value and how we structure that, I think, is some of the things that we're still titrating a bit. Daniel Stauder: Great. Appreciate that. And then just one on the Compass collaboration. Obviously, the recent update from the administration is good news. But I just want to get a sense of how meaningful this could be? Obviously, Compass is already pretty far along in terms of the approval process, but do you feel this recent update could be more important on the reimbursement pathways? I know that's been a focal point for eventual contribution. So just any thoughts you have there would be appreciated. Daniel Reuvers: Yes. Well, first of all, I think that the whole Compass opportunity and psychedelics at large represent a big opportunity for us given our footprint and our infrastructure. I was really excited in my first month to see the Trump executive order leaning into the FDA process on some of these. So I think that it probably adds or it shortens the fuse. How much? I don't know, but it probably shortens the fuse on the path to approval, which I think is encouraging for all of us that are in this space. I'm not sure how much it impacts reimbursement. I think that's probably a separate track, but certainly, the pursuit of that in tandem on Compass' behalf, all of those things sort of point to faster than slower. And as we get into 2027, we'll certainly look forward to being able to try and better quantify what we think that means to us. I think if you look at the SPRAVATO rollout from the early days, as much enthusiasm as there was, it's a bit measured in its early adoption. But I think that the momentum is certainly moving in the right direction on this one. Daniel Stauder: Great. I appreciate that. And just one last one for me. I just wanted to ask on some of the TMS coverage expansion to include nurse practitioners. I was just curious, high level, if there have been any incremental conversations with accounts on this topic? Have you seen that customers are waiting for this, maybe somewhat higher demand? Just anything more on how this could impact utilization and how you think it will play out in '26 and beyond, would be great. Daniel Reuvers: Yes. So that's the reference to the UHC and the Optum coverage policy change where nurse practice can now be eligible to deliver TMS versus licensed psychiatrists. I think it's a good move. We've got a lot of really quality nurse caregivers out there. I don't know that they were waiting for it as much because maybe they didn't -- sometimes you never know if it's ever coming, but there are 35 million covered lives in the 26 states that will be affected. And I think what it will allow us to do or has allowed us to do is go revisit some of those clinics that are managed by nurse practs where TMS just wasn't a viable option because of the reimbursement limitations. So I think it probably added a number of accounts to our target list, but still early days since we're, I think, a month in. Operator: This concludes the question-and-answer session. I would now like to turn it back to Dan Reuvers for closing remarks. Daniel Reuvers: Yes. I just wanted to thank all of our employees for a hard-fought quarter as they all are as we continue to try and restore hope to patients and their families. And I wanted to thank our shareholders for their support, and I look forward to sharing an update on our progress when we have an opportunity to share the results of our second quarter. Thank you. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Thank you for standing by, and welcome to Enlight Renewable Energy's First Quarter 2026 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the call over to Limor Zohar Megen, Director of Investor Relations. Please go ahead. Limor Zohar Megen: Thank you, operator. Good morning, everyone, and thank you for joining Enlight Renewable Energy's First Quarter 2026 Earnings Conference Call. Before beginning this call, I would like to draw participants' attention to the following. Certain statements made on the call today, including, but not limited to, statements regarding business strategy and plans, our project portfolio, market opportunity, utility demand and potential growth, discussions with commercial counterparties and financing sources, pricing trends for materials, progress of company projects, including anticipated timing of related approvals and project completion and anticipated production delays, expected impact from various regulatory developments, completion of development, the potential impact of the current conflict in Israel on our operations and financial condition and company actions designed to mitigate such impact and the company's future financial and operational results, and guidance, including revenue and adjusted EBITDA are forward-looking statements within the meaning of U.S. federal securities laws, which reflect management's best judgment based on currently available information. We reference certain project metrics in this earnings call and additional information about such metrics can be found in our earnings release. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our 2025 annual report filed with the SEC on March 30, 2026, and other filings for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with IFRS. Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our Investor Relations web page. With me this morning are Gilad Yavetz, Executive Chairman and the Co-Founder of Enlight; Adi Leviatan, CEO of Enlight; Nir Yehuda, CFO of Enlight; and Jared Mckee, CEO of Clēnera. Adi will provide a summary of the business results and turn the call over to Jared for a review of our U.S. activity, and then Nir will review the first quarter results. Our executive team will then be available to answer your questions. I will now turn the call over to Adi Leviatan, CEO of Enlight. Adi, please begin. Adi Leviatan: Good morning and good afternoon, everyone, and thank you for joining us to review Enlight's first quarter 2026 results. We are off to a very strong start to the year, delivering excellent financial performance and continued execution momentum across our global platform. Our results this quarter clearly reflect the strength of our operating assets, the scale and quality of our development portfolio and our ability to consistently convert projects into cash-generating capacity. Before diving into the numbers, I want to briefly address the broader environment. The first quarter once again demonstrated the resilience of Enlight's diversified platform. Despite ongoing geopolitical and macroeconomic uncertainty, our assets continue to operate reliably. Our projects advanced according to plan, and our financial performance remains strong. This resilience is the result of geographic and technological diversification and the fact that renewable energy and storage assets provide stability even in volatile conditions. Turning now to the quarter. In Q1, revenues and income increased 54% year-over-year to $200 million, while adjusted EBITDA reached $154 million, representing 58% growth year-over-year, excluding the impact of the sell-down of the Sunlight cluster. This growth was driven primarily by new projects entering operation in the U.S. alongside strong wind conditions in Israel and Europe, increased electricity trading activity in Israel and supportive foreign exchange effects. Importantly, this was organic operating growth and reflects the continued expansion of our income-generating portfolio and the future potential of advancing projects in our development portfolio over time. The U.S. became our largest geographic segment this quarter, contributing 37% of total revenues following the ramp-up of Roadrunner and Quail Ranch. This marks a meaningful milestone in the scaling of our U.S. platform. Beyond the financials, Q1 was another strong execution quarter. During the quarter, we grew our U.S. portfolio that successfully passed system impact studies by approximately 2 factored gigawatt, reaching a total of 20 factored gigawatt, significantly increasing interconnection certainty. More than 60% of our advanced development and development portfolio completed the system impact study. We expect additional projects to be safe harbored in 2026, bringing the total to 15 to 17 factored gigawatt or about 80% of our U.S. advanced development and development portfolio. Our U.S. portfolio expanded by 2.6 factored gigawatt, more than 10% sequentially and expanded in additional demand areas outside of WECC, supporting our medium- to long-term growth in the market. Last, we started construction at CO Bar 3, the 475 megawatt PV phase of the CO Bar complex, fully in line with our execution plan. These developments further reinforce our ability to deliver large-scale solar plus storage projects with speed, discipline and attractive economics and supports our growth potential beyond 2028. In Europe, the opportunity is equally compelling. While renewable generation continues to expand rapidly, energy storage deployment has not kept pace, creating a systemic need for flexibility and balancing capacity. According to Wood Mackenzie, this need amounts to 1.4 terawatts of storage capacity by 2034 globally. This gap is structural, not cyclical and supports attractive long-term economics for well-positioned storage projects. During the quarter, we continued to advance our European expansion and are now in advanced negotiations to expand our business in additional markets, including Finland and Romania as part of our strategy to deepen our presence in high potential storage markets. Energy storage remains a core growth pillar for Enlight in Europe with a vast portfolio of 14 gigawatt hour, of which 4.9 gigawatt hour in the mature portfolio fully aligned with our focus on disciplined capital allocation and attractive returns. In Middle East, North Africa, we are deploying the full scope of Enlight's capabilities, leveraging our position as a leading and trusted energy player. Israel remains a core market where we are active across utility scale wind and solar, energy storage, agrivoltaics and high-voltage infrastructure. Enlight's position in Israel, combined with our unique expertise in different energy generation applications enable us to significantly grow in Israel and develop new and innovative growth engines. In agrivoltaics, specifically, we continue to scale rapidly with dozens of land agreements signed over the past year, representing approximately 3 factor gigawatt of future solar capacity while strengthening synergies between energy generation and agriculture, enhancing food security and energy security at once. The agrivoltaics opportunity in Israel is huge. We estimate more than 120,000 acres will be needed to meet renewable energy targets by 2050 with a market size estimated at several billion dollars. At the same time, we're advancing high-voltage storage projects in Israel totaling more than 2 factor gigawatts, which enhance grid flexibility and resilience while enabling us to optimize revenue generation. Looking ahead, we believe Israel is on track to become one of the countries with the highest energy storage capacity per capita globally, and we are well positioned to take advantage of this opportunity. Across the portfolio, execution continued at a strong pace. We advanced 0.5 a factored gigawatt into construction during the quarter, mostly attributed to Phase 3 in the CO Bar complex advancing to construction and expanded our total portfolio to over 41 factored gigawatts, a sequential increase of 8%. Looking ahead, we expect approximately 7 factory gigawatts to be under construction during 2026, with over 90% of our mature portfolio either operating or under construction by year-end. This level of visibility is the outcome of years of disciplined development, extensive grid interconnection work and proactive risk management. Stepping back to the broader demand environment, we continue to see structural growth in electricity demand, driven in part by the rapid adoption of AI and data-intensive applications and the resulting expansion of data centers. Industry forecasts indicate that U.S. data center electricity consumption could triple by the end of the decade, requiring more than 300 terawatt hour of new capacity that is fast to deploy, scalable and cost effective. In this environment, solar combined with storage stands out. Compared to other generation technologies, it offers shorter time to market, meaningfully lower LCOE and the flexibility required to support modern grids. Enlight is well positioned to capture this demand, leveraging our large grid-ready sites, proven execution capabilities and deep experience delivering solar plus storage at scale. The business environment in which we operate remains extremely favorable with rising demand, constrained supply and attractive equipment costs. Recent geopolitical disruptions, together with the sharp increase in oil and gas prices have underscored the strategic importance of renewable energy as a reliable and competitive source. Turning to outlook. We are reaffirming our full year 2026 guidance. Revenues and income of $755 million to $785 million and adjusted EBITDA of $545 million to $565 million. More importantly, we continue to stand firmly behind our long-term growth trajectory. With approximately 7 factored gigawatts expected to be under construction in 2026 and the vast majority of our mature portfolio either operating or under construction, we see a clear and credible path to more than $2.1 billion of annual revenue run rate by the end of 2028. This growth is anchored in projects already in hand, supported by strong and increasing returns and executed with discipline. Before I wrap up, let me summarize the key takeaways. We delivered a strong start to 2026 with excellent financial performance and execution momentum. We continue to expand and derisk our U.S. portfolio, advancing key milestones, including system impact study completion, safe harbor progression and the start of construction at CO Bar 3. We see utility scale growth opportunities in Middle East, North Africa, a market in which we have a significant competitive advantage. We are well positioned to capture structural demand growth and systemic grid needs, leveraging the speed, cost and flexibility of solar and storage. And we remain focused on disciplined growth and long-term value creation while not compromising on returns, profitability and the strength of our balance sheet. With that, I will hand the call over to Jared. Jared McKee: Thank you, Adi. In the U.S., Clēnera continues to execute on its long-term growth strategy and remains firmly focused on disciplined construction execution, while at the same time, expanding our portfolio and customer base. This quarter, we have continued to grow and advance our development portfolio across U.S. markets, led by significant progress in PJM. We submitted interconnection applications within PJM for an additional 2,500 factored megawatts across 5 projects. PJM is a market with exceptional opportunities for new solar and storage, characterized by sustained utility demand, tight capacity dynamics and attractive power pricing that supports long-term profitability. Our operating assets continue to demonstrate the quality and durability of our portfolio. Energy generation across operating projects has been stable and predictable. We continue to monitor uptime closely. Clēnera is currently constructing 6 projects totaling 3.4 factored gigawatts. Our construction portfolio reflects deliberate investments in our internal processes, targeted hiring and retention and long-standing relationships with Tier 1 suppliers and contractors. It also demonstrates our ability to consistently deliver approximately 2 factored gigawatts annually. As a result, the construction progress we are reporting today reflects our expected baseline delivery level and our confidence in achieving commercial operations year-after-year. At the CO Bar complex in Northwest Arizona, ground clearing and other site construction activities are underway on the third phase of the project. Phases 1 and 2 are in full construction and making steady progress. Combined, these 3 phases include nearly 1.5 factored gigawatts. Initial CODs are on track for the second half of 2027 with CODs for the following phases in first half of 2028. For the final 2 phases of the CO Bar complex, CO Bar 4 and 5, we have secured a domestic source for the batteries totaling 3,176 megawatt hours. Our sourcing strategy mitigates tariff and supply chain risks for these critical phases. In Northeast Arizona, progress is steady at the construction of the Snowflake complex. The first phase, Snowflake A includes 594 megawatts of PV generation and 1,900 megawatt hours of energy storage. We are near the halfway mark of installing both the PV and battery components and remain on target for COD in the second half of 2027. The Country Acres project outside of Sacramento, California remains on schedule for COD at the end of this year. This project includes 403 megawatts PV and 688 megawatt hours of energy storage. When operational, it will generate enough energy to power over 85,000 California homes. Finally, work is underway at Crimson Orchard project located in Elmore County, Idaho. This project includes 120 megawatts of PV generation and 400 megawatt hours of energy storage. Spring weather has allowed us to make significant progress on the project's civil work and prepare the site for major equipment deliveries. Foundation work has begun for the batteries and switchyard. Our market strength has once again been confirmed with the closing of the construction financing package in March, totaling $304 million for the Crimson Orchard project. This clears the path for the project's successful commercial operation in 2027. Taking a step back from specific projects, I want to offer an update on our supply chain. Despite global disruptions in shipping due to geopolitical conflicts in the Middle East, we have seen limited exposure to availability or pricing of our materials. Looking ahead, we may see ripple effects on the supply chain and logistic inputs. Nevertheless, we continue to enhance our diverse pool of supplier resources, including U.S. domestic manufacturing to give us flexibility and resilience in the face of uncertainty. With one of the largest U.S. solar and storage construction pipelines, we are well positioned to be a preferred counterparty for our suppliers and vendors. To close, Clēnera remains firmly focused on what matters most to our investors. executing large-scale construction projects on schedule, maintaining reliable operating performance, advancing a deep and diversified development pipeline and expanding our customer base thoughtfully and strategically. I will now turn the phone over to Nir. Nir Yehuda: Thank you, Jared. Q1 '26 delivered a strong start to the year, setting the foundation for the quarters ahead. The company's total revenues and income increased to $200 million, up from $130 million last year, a growth rate of 54% year-over-year. This was composed of revenues from the sale of electricity, which amounted to $157 million, an increase of $47 million from the first quarter of '25 as well as recognition of $43 million in income from tax benefit, an increase of $23 million from Q1 '25 attributed to the new operational project Roadrunner and Quail Ranch. The increase in revenues from the sale of electricity was driven mainly by new projects, which contributed $16 million to revenues growth. It was also a strong quarter for our wind project with increased generation contributing $14 million. Electricity trade activity in Israel roughly doubled from last year, contributing $6 million to revenues growth. And finally, the appreciation of the Israeli shekel and euro versus the U.S. dollar contributed $12 million. The company adjusted EBITDA grew by 70% to $154 million compared to $132 million for the same period in '25, excluding the contribution of $42 million from the sale of 44% of the Sunlight cluster in Q1 '25 and follow-on sale of 11% of the cluster in Q1 '26, which contributed $12 million. EBITDA in Q1 '26 grew by 58% or $52 million. The increase of $70 million in revenue was offset by an additional $70 million in cost of sales linked to new projects and to the increase in electricity trade activity in Israel, while G&A and project development expenses increased by $6 million. In contrast, other income increased by $5 million. First quarter net income amounted to $38 million compared to $102 million in Q1 '25 and $21 million excluding the Sunlight cluster sale contribution. An increase of $52 million in EBITDA was partially offset by an increase of $70 million in depreciation and amortization attributable to the start of operation of new projects as well as an increase of $4 million in expense related to share-based compensation. Additionally, net financial expenses increased by $12 million, mainly as a result of the commercial operation of new projects and tax expenses increased by $4 million, net of the Sunlight sale impact. During the first quarter, Enlight continued to solidify its financial position, raising approximately $740 million, mainly from a private placement of 6 million shares to Israeli institutional investors for $422 million and $304 million from project finance. In total, our cash and cash equivalents at the topco level increased to $709 million. Additionally, we have $270 million held by subsidiaries. In addition, we have $525 million of credit facility with $360 million available and approximately $1.6 billion in LC and surety bond facility, including $1 billion available, further enhancing our financial flexibility. Our solid financial position and internal resources will continue to support our growth towards the $2 billion revenue mark and beyond. I will now turn the call over to the operator for questions. Operator: [Operator Instructions] Our first question comes from the line of Justin Clare of ROTH Capital Partners. Justin Clare: Congrats on the strong results. I wanted to started off... Adi Leviatan: Thanks, Justin. Nice to hear from you. Justin Clare: Yes, likewise. So I wanted to start out just asking about the unlevered returns here. It looks like the expectation for under construction and preconstruction projects increased to 13%. I think that's up from 12% to 13% last quarter and then 11% to 12% a couple of quarters ago. So just wondering if you could speak to what's driving the improvement? Is this better PPA pricing, lower equipment costs or other factors here? And then are you seeing further opportunity for improvements in the return profile, let's say, for future projects that are moving through the pipeline today? Adi Leviatan: Yes. Thanks again for the question. I will give a little bit of an answer, and I will also pass it over to my colleague, Itay Banayan, the Chief Corporate Development Officer. So we are constantly working on improving the rates of return in our projects. The projects that are currently under construction and preconstruction, we continue to do optimization work on the capital expenditure and on other aspects. Specifically, in this case, we did significant work to further improve the profitability or the -- to further reduce the CapEx on CO Bar's storage components of these projects, changing the sources of supply for the batteries to different suppliers, also making us eligible in this case for domestic content. So a double win in that sense. And we did additional moves, which we constantly again do to try to improve the economics of our projects, thereby reaching this 13% solidly. I'll pass it over to Itay Banayan, our Chief Corporate Development Officer. Itay Banayan: Justin, good to hear from you. Yes, everything that Adi said, and in general, it's something that we're very proud of. On the same slide, you see that the first 3.9 factored gigawatts that we connected to the grid over 17 years or so. And now we are in the process of the construction and preconstruction of 7.7. So almost doubling in 1 year or in 2 years, everything that we did in 17 years. And at the same time, we're improving and enjoying the economies of scale and the reduction in CapEx and the increase in the PPAs, and it's a global phenomenon. So we're not only growing, but we're constantly improving and taking a lot of -- putting a lot of attention on profitability, on cash flows, on the balance sheet and so on. Justin Clare: Okay. Great. Yes, it's good to see the improvements in the return profile here. Maybe just shifting over to the operational capacity here. It looks like the outlook for 2027 was reduced a little bit to 7.3 factored gigawatts, down from 8 last quarter, and then the ARR was stepped down to $1.4 billion from $1.6 billion. Wondering if you could just walk through that change, what potentially shifted out of the 2027 time frame? And then it does look like 2028 is -- remains intact in terms of your outlook there. So just wondering, is this a matter of just a project timing or any other factors? Adi Leviatan: Yes. And it actually relates to the previous point as well for specifically the purpose of improving further the rate of return on the CO Bar 4 and 5, the parts of the -- that are standalone storage in CO Bar, we actually did change the suppliers of the BESS, the battery energy storage system, and therefore, had to do some reengineering on site, which pushed the project's COD, like commercial operation date just from the end of '27 into the beginning of '28. And similarly, one additional project in Europe project, Bertikow which was also pushed forward just by a very short amount of time. Generally speaking, we like that these projects -- we have one chance to get them right and then they're going to be producing electricity and revenues for us for 20, 25, 30 years. So to push them out by a month or by a couple of months is something that we sometimes do in order to improve them. And they are all connecting just a very short delay, which is a natural normal course of the developer's life. Operator: Our next question comes from the line of Jon Windham of UBS. Jonathan Windham: I guess sort of a bigger picture question. Through your Clēnera subsidiary, you're going to be one of the largest customers for stationary storage in the United States over the next 5-plus years. I'm wondering, there's been a number of announcements of new entrants into the stationary storage market, namely LG Energy Solutions, General Motors and Ford. Have you had dialogues with any of these potential new suppliers? And how do you think that plays out in the supply-demand balance and pricing for batteries in the future? Adi Leviatan: Thank you for the question. I would like to ask Jared if you are comfortable taking this question forward. Jared McKee: Absolutely, Adi. Thank you for the question, and thank you for your insight into the market. We are constantly talking with potential suppliers on the battery and on the PV side. Specifically on the battery side, we welcome new domestic suppliers opening operations and manufacturing facilities in the U.S. It both adds rigidity and robustness to the supply chain and allows us to secure both domestic sources and reduce our risk overall from any sort of geopolitical occurrences throughout the world. We are engaged with multiple suppliers on the battery side. And as these battery manufacturing facilities get built out, the supply continues to grow. And so this supply is being distributed to the same amount of projects. And so we do like the supply and demand curves that this provides for us, and we expect that we will have very effective negotiations over the next period of time with our potential suppliers. It gives us the ability to leverage our portfolio, as you mentioned, we will be one of the larger customers in the United States for stationary BESS. And we intend to continue to deliver results like we shared today, where we are constantly increasing the profile of our projects and making them better. Operator: Our next question comes from the line of Corinne Blanchard of Deutsche Bank. Corinne Blanchard: The first question, can you talk about the cadence that you're expecting for the rest of the year? I think 1Q is showing a little bit of better seasonality maybe than we had anticipated. So just wondering how the rest of the year is going to shape up? And then maybe second question, can you talk about the safe harbor in your portfolio and how that has evolved during 1Q? Itay Banayan: Corinne, good to hear from you. This is Itay. What was the second part of the question? Adi Leviatan: Safe harbor. Itay Banayan: Safe harbor, okay. So with the first half of the question, in terms of the seasonality, the quarter and the year indeed started very strong and exceeded our expectations. Nevertheless, we do anticipated seasonality over the year. The first quarter is usually a very strong quarter in terms of wind, and it was even better than we anticipated. And in general, as Adi mentioned during the call, we are keeping our guidance for the year intact. It is only the first quarter. And as I mentioned, there was some -- I think there was some gap with the consensus, but our internal expectations were not that far away. And in terms of safe harboring... Adi Leviatan: We do have the opportunity to safe harbor an additional 2 to 4 factored gigawatt in the next couple of months until basically the end of June. And it is completely at our discretion. Obviously, as you know, projects that are being safe harbored, we need to then maintain like full activity, construction activity at the site from when we safe harbor them until their completion, and we need to make sure that they are connected that they arrive at commercial operations before the end of 2030. So we are taking our decisions to -- from the 2 to 4 factored gigawatt additional that we have options to safe harbor to bring the total amount to 15 to 17 factored gigawatts of safe harbor. We're taking those decisions in the next couple of months. Jared, anything to add on the safe harbor point? Jared McKee: Yes. Just that we are actively [indiscernible] the projects are being safe harbored through physical work of a significant nature, both on-site and off-site. Adi, I think you shared the numbers most accurately. And yes, we are excited to have this large portfolio of projects to be able to pull from over the next really several years of commissioning and CODs. Adi Leviatan: And I will come back just to say, Corinne, that when the One Big Beautiful Bill Act came out in May last year, exactly a year ago, there was obviously concern. And at the time, we promised or we anticipated that we would be able to safe harbor 6 to 8 factored gigawatt of projects by the end of 2028. We're now standing here towards the 16 -- sorry, 15 to 17 factored gigawatts that we would be able to safe harbor by the end of 2030. So significantly more than we predicted at the time, and we're really making the most of the safe harbor regime as long as it's in place. And we also are very confident about our ability to successfully develop and execute projects in the United States after the end of that regime, but we have enough time for that in solar projects after the end of 2030 and for storage projects even after the end of 2032. Corinne Blanchard: Right. Can I ask one more follow-up question? Can you talk about the 2028 target? It seems like you might be able to raise it or we kind of felt from the presentation like you are like $100 million ahead of the target. Can you just like give a little bit more thought on that one? Adi Leviatan: So we give the 2028 annual run rate as we forecasted today. The component that is today -- the $2.1 billion of this is already today in the mature portion of our portfolio. And then there's additional projects that are currently not yet in the mature, they're in advanced development. But nevertheless, they will make it to be connected by the end of 2028, which is why there's that $2.1 billion to $2.3 billion range. At this point, we cannot give a more accurate number, but that is the composition of the number. Itay Banayan: But Corinne, you can see that over the last couple of quarters, the percentage of the mature portfolio outside of the 2028 road map has increased over time. And with the start of construction of additional 3 factored gigawatts this year, the vast majority of the 2028 plan is going to be either operating or under construction this year, and thus reducing significantly any development risk and increasing the certainty that stand behind this road map. And again, you can see with all of the safe harboring that we're doing and the increase of the portfolio in the development and the advanced development that we are looking ahead at the growth beyond '28. And there is a lot of materials in the presentation and the earnings release when you analyze the portfolio to see that there is significant potential beyond 2028. Operator: [Operator Instructions] Our next question comes from the line of Maheep Mandloi of Mizuho. Maheep Mandloi: Maybe just like a follow-up on this safe harbor and on Slide 16. I presume like the main bottleneck for new projects is the interconnection of the completed system impact study, right? So I'm just trying to -- curious like if you could see more of the safe harbor come through before June and kind of hit this 19.9%, which you already have completed the system impact study for. Just curious like what would it take for safe harbor to ramp up to match that number? Adi Leviatan: Maheep, it's nice to hear from you. Jared, I'm going to please redirect the question to you. Jared McKee: Yes, no problem. Maheep, my apologies. I had a hard time hearing. Do you mind actually rephrasing the question? I just want to make sure I can answer it accurately. Maheep Mandloi: Yes, sure. I mean like talking to some of the developers or the industry, it looks like the interconnection is probably like a bigger bottleneck to get projects online by 2030 rather than just safe harbor. So was curious like if you have -- given you have 19.9 factored gigawatts of completed system impact study, can safe harbor ramp up to match that 19.9 by July 4 of this year? Or just curious like what would it take for safe harbor to grow from this 15, 16 -- 15, 17 gigawatts to the almost 20 factored gigawatts you have completed system impact study. Jared McKee: Got it. Okay. So just to confirm, it's really asking, is there the ability to match the safe harbor numbers with the completed system impact study that's sitting right around 20 factored gigawatts. Is that accurate? Maheep Mandloi: That's right. Jared McKee: Okay. So as you can see, one, we are very proud of the fact that we have 20 gigawatts of projects that have completed system impact study. This actually shows the success of what we are doing here in the U.S. at the Clēnera side, along with everyone at the Enlight team is to really go through and successfully go through that part of the process. On the safe harbor side, as Adi mentioned, we have optionality. What we are looking at is we are making a very strategic decision project by project to make sure that invested dollars into safe harbor and the work of significant nature is for projects that have ability to advance and COD by 2030. There are going to be some projects out of that 20 factored gigawatts that have time lines due to interconnection or other criteria that is going to be beyond the 2030 time frame. And so we probably won't see the safe harbor number go up to 20 gigawatts because there is going to be some projects. But as Adi mentioned, we are already significantly farther along on the safe harbor process for the majority of our portfolio than we had previously announced. There is some opportunity to hit that top end and maybe even a little bit more of the safe harbor on that 15 to 17 that Adi mentioned. The likelihood that it gets up to the 20 from a strategic standpoint is not completely likely just due to the fact that some of those 20 factored gigawatts are going to come online after 2030. Maheep Mandloi: Got it. Helpful. And are you seeing any interest from customers to have behind-the-meter solar, presumably that might not require interconnection study, right, I think. The limit over there would be how much would be able to safe harbor, right? So curious if you're seeing any customers ask about Island [indiscernible] behind-the-meter solar for you? Jared McKee: Yes. We've definitely seen this in the marketplace. I think our focus has been we have enough projects that are already through the system impact study that the projects that we are looking at by 2030 are those that are going to be connected to the grid, but we have seen interest in the marketplace, both from large load customers to really look at behind-the-meter solutions. We are always actively looking at ways to expand and to grow. And so we are looking at those types of opportunities. But our focus is really on our core business, which is very, very robust projects through the interconnection balanced by utilities that we can deliver on, and we have 20 factored gigawatts of projects that we can choose from. And out of that 20 factored gigawatts, we have another 15 to 17 that were going to have safe harbor. And so that is a very robust pipeline through the next 4 years. Maheep Mandloi: I appreciate that. And just one last one, just on cash sources, if you can kind of comment on how much of the current cash or what you might have in years can support growth beyond this 12 to 13 factor gigawatt post 2028. Itay Banayan: Maheep, so to remind, we have very strong access to capital globally, both at the assets level with project finance from Tier 1 lenders and at the corporate level with the access both to the Tel Aviv Stock Exchange and the NASDAQ, which we're seeing an improved liquidity -- significantly improved liquidity in the past year. At the moment, and there is -- there are details in the earnings release on the sources that we have on hand. At the moment, we have significant amounts to support the 2028 plan and beyond. So we don't need any outside resources of capital in order to support the 2028 plan and a significant factored gigawatts beyond it. Operator: Thank you. I would now like to turn the conference back over to the CEO for closing remarks. Madam? Adi Leviatan: Thank you. We highly appreciate your questions and also participating in our 2026 Q1 earnings report. We hope that you can also join us on May 19 for the investor conference where we plan to share more exciting content about our strategy going forward, and we highly appreciate you joining us here today. Thank you so much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Lluc Sas: Welcome to Sabadell's results presentation for the first quarter of 2026. Joining us today are our CEO, Cesar Gonzalez-Bueno; and our CFO, Sergio Palavecino. The presentation will follow the same structure as in previous quarters. Our CEO will begin by highlighting the key developments of the quarter and discussing the most relevant topics. Then our CFO will review financial results and the evolution of the balance sheet. The presentation will conclude with closing remarks from our CEO, after which we will open the floor for a live Q&A session. So Cesar, over to you. Cesar Gonzalez-Bueno Wittgenstein: Thank you, Lluc. Good morning, everyone. I will begin by outlining the 4 highlights of the quarter, which we will discuss in more detail during today's presentation. First, the sale of TSB is now complete. Therefore, we will pay the extraordinary cash dividend of EUR 0.50 per share at the end of May. Second, as we already anticipated, Q1 will mark the bottom of our core revenues. We expect these items to increase in each quarter over the course of the year. Third, we have launched an early retirement plan, which would improve efficiency in '26, but mainly in 2027. Fourth, we commit our full year guidance. Indeed, beyond the ups and downs of any given quarter, we have a sound, secure and proven growth strategy to deliver a 16% return on tangible equity in 2027. Slide 5 shows the key financial messages for the quarter. Just to remind everyone, all figures and results presented now exclude TSB. Supported by strong commercial momentum, performing loans and customer funds recorded year-on-year growth in the mid-single digits. In this context, core revenues are expected to have reached in this quarter their lowest point of the year. We see core revenues improving going forward as repricing pressures on NII ease and fee performance normalizes. Recurrent costs performed well in the quarter and reached EUR 569 million. We recorded one-off costs in the quarter of EUR 55 million related to the early retirement program underway. Our fundamentals remain solid. Our recurring return on tangible equity stood at 14.1%, and our capital position remains strong with a core Tier 1 at 13.2%. This performance is underpinned by strong asset quality that keeps on improving. Cost of risk and total NPAs both showed a reduction year-on-year. We continue to build up our Stage 3 coverage, which now stands above 70%. Finally, as I said before, we will distribute EUR 0.50 per share as an extraordinary dividend by the end of May. In parallel to this cash dividend, we keep executing our share buyback programs. We have already completed EUR 267 million out of the approved EUR 800 million. On Slide 6, financial implications of the now completed TSB transaction. Let me start with the sale proceeds. The initial agreed price was GBP 2.65 billion. This figure was agreed to be increased by the tangible net asset value generated since April 25. Taken together, this results in a final sale price of GBP 2.9 billion. Now let me emphasize the strategic and financial merits of the transaction. Firstly, the sale has generated significant value for shareholders. Transaction multiples are above both peer transactions and Sabadell's own trading multiples. In addition, the transaction is expected to generate more than 400 basis points of capital. This is driven by capital gains of more than EUR 300 million and the deconsolidation of risk-weighted assets. As approved at the Extraordinary General Meeting held last August, we will return this capital to shareholders. Accordingly, we will pay an extraordinary dividend of EUR 0.50 per share on the 29th of May. To conclude, following the sale of TSB, Sabadell now represents a more focused and simplified equity story with a clear strategic profile centered in Spain. In Slide 7, we see the details of the early retirement plan. We executed our last efficiency program as you remember, back in 2022, which included an early retirement plan. Since then, circumstances such as the demographics of our workforce prevented us from executing additional early retirement plans. Circumstances have changed and a structured early retirement plan is already being implemented in 2026. Importantly, this approach supports workforce optimization in line with the evolving business models and digital transformation. In terms of financial impact, we will incur in one-off costs in 2026 of approximately EUR 90 million. Meanwhile, we will generate gross annual savings of approximately EUR 40 million. Approximately 1/3 of these savings are expected to materialize in 2026 as the program is rolled out with a full run rate savings achieved in 2027. On Slide 8, we talk about new lending. Starting with mortgages, new lending decreased by 24% year-on-year. We remain focused on managing new lending through risk-adjusted return on capital, ensuring that growth is delivered in a profitable manner. As a result, we have continued to reduce our market share in new mortgage lending over the past months as front book yields have compressed. Origination of consumer loans decreased both year-on-year and quarter-on-quarter. We introduced changes to the application process this quarter, which temporarily impacted on conversion rates. We have already improved the process again and conversion rates and origination volumes are picking up again. Quarterly new loans and credit facilities granted to SMEs and corporates increased by 1% year-on-year and by 5% quarter-on-quarter, while working capital performance was more subdued. Overall, as we share on the next slide, these volumes of new lending allow us to continue growing our loan book. On slide 9, we see the loan book and starting with Spain on the left-hand side of the slide. Performing loans increased by 0.8% on the quarter with positive growth across all segments. Performing loans in Spain increased by 4.3% year-on-year. Our international operations are experiencing good momentum as well with performing loans rising by more than 7% quarter-on-quarter and by double-digit figures year-on-year. Overall, our total loan book showed a positive trend during the quarter, growing by 1.6%. Annual growth rate reached 5.6%. Moving on to customer funds on Slide 10. First, on balance sheet, customer funds ex-TSB remained broadly stable quarter-on-quarter and increased by 4.3% year-on-year. The Spanish perimeter showed an increase of 4.7%. Second, our balance sheet funds also remained broadly stable in the quarter, as market volatility has had a dampening effect on net subscriptions. We posted an increase over 10% on a year-on-year basis. All in all, total customer funds grew by 5.9% year-on-year. Looking at on-balance sheet funds breakdown on the right-hand side of the slide, non-remunerated deposits reached EUR 83.9 billion. Those non-remunerated deposits are almost completely located in Spain. This highlights the high proportion of low-cost funding within our deposit base. The cost of customer funds stood at 78 basis points in the quarter in the ex-TSB perimeter. Let me note that this includes higher yields in U.S. dollars and Mexican pesos. Therefore, the cost of customer funds in Spain was significantly lower and stood at 59 basis points. On Slide 11, we make a summary of our quarterly results. We recorded a net profit of EUR 284 million or EUR 347 million, including the contribution from TSB. Let me emphasize two points. Firstly, as I had previously explained, revenues have bottomed out with improvements expected in the coming quarters. Secondly, Quarterly results include EUR 70 million pretax in one-off charges, nonrecurring costs related to efficiency initiatives and FX hedge on the proceeds from the sale of TSB. Underlying profitability remains solid and recurring return on tangible equity stood at 14.1%. This keeps us on track to reach our full year guidance of 14.5%. And with that, let me turn it over to Sergio. Sergio Palavecino: Thank you, Cesar. And good morning, everyone. Let's move on to the financial results on Slide 13. Before going through the different lines of the P&L, I would like to explain the extraordinary items that Cesar has just mentioned. First, within the trading income line, we recorded an expense of EUR 14 million related to the foreign exchange rate hedging of the full proceeds from the sale of TSB. Once the sale has been completed, next quarter, we will record only EUR 5 million corresponding to the month of April. Second, we recognized EUR 55 million of nonrecurring costs related to the early retirement program in Spain. Overall, recurring ROTE stands at 14.1%, which is in line with our expectations and our year-end target of 14.5%. We will now review the main P&L items in more detail, focusing on Sabadell's performance, excluding TSB. Starting with NII on Slide 14. NII bottom out this quarter as expected, decreasing by 2.5% quarter-on-quarter and by 3.5% year-on-year, which is mainly explained by the final headwind of lower interest rates repricing as well as the seasonality of Q1. On the top right-hand side of the page, you can see the drivers that explain the quarterly evolution. Moving from left to right, customer NII had a negative contribution of EUR 8 million due to lower customer margin. This was driven by loan book repricing at lower rates and a slightly higher cost of deposits following the success of the last digital current account campaign. Then the day count effect on customer NII resulted in a EUR 6 million negative impact. Regarding ALCO liquidity and wholesale funding, we have seen a net impact of also minus EUR 6 million, mainly attributed to liquidity, reflected increase in borrowing in dollars and Mexican pesos, which carry higher interest rates. Going forward, this will no longer be a headwind and we are expecting tailwinds from customer NII as explained in the next slide. Indeed, looking ahead on the left-hand side of the Page 15, the expected quality evolution throughout 2026 is shown. As anticipated, after reaching a low point this quarter, we now expect NII to grow at a low single-digit rate quarter-on-quarter. From there, NII should increase steadily over the year, ending the fourth quarter of 2026 with a mid-single-digit increase compared with the fourth quarter of last year. This outlook is based on the current macroeconomic environment where we are assuming interest rates will stay at higher levels than we had previously expected. The slightly higher rate environment, together with ongoing uncertainty and volatility may affect loan volumes. We now expect growth to be slightly below our initial plans, but still at mid-single digits. At the same time, on balance sheet customer funds are expected to grow between 3% to 4%. Higher interest rates should support loan yields with a steady quarter-on-quarter improvement starting from the beginning of the second quarter already. Regarding deposit costs, we now expect a lower pass-through compared with our existing book, which should support customer spread. Overall, customer spread is expected to improve quarter-by-quarter and reached levels above 290 basis points by year-end, slightly better than initially forecasted. Finally, noncustomer NII, which includes ALCO, wholesale funding costs and the liquidity contribution is expected to remain broadly stable around current levels. Taking all of this together, we are maintaining our NII guidance and continue to expect more than 1% year-on-year growth in 2026. Moving on to fees. posted a quarter-on-quarter decrease, mainly driven by the absence of success fees recorded in the previous quarter by seasonality and by a one-off cost in the payment service business. Looking ahead, we expect this line to improve, supported by increasing activity, particularly in the Payment Service business and in Corporate and Investment Banking, which has already been seen in March. In Asset Management, we also expect a continued positive trend in net inflows. To sum up, while we acknowledge a lower quarter than expected, we believe this marks a trough that will serve as an inflection point. Looking ahead, we expect fees to increase and land at the lower end of the mid-single-digit growth range. Moving on to cost. The key developments this quarter is the launch of the new efficiency initiatives in Spain. However, let me first focus on the underlying evolution of recurring costs. Total recurring costs decreased by 3% quarter-on-quarter when excluding EUR 55 million of nonrecurring costs and for comparability purposes, also excluding the reclassification related to the end of the agreement to sell the merchant acquiring business at the end of last year. On a year-on-year basis, total recurring cost increased by 3.4% mainly driven by inflationary pressures on personnel expenses as well as higher amortization and depreciation costs, which already reflect the current quarterly run rate. Looking ahead, as Cesar mentioned earlier, we expect that circa 1/3 of the total savings from the efficiency initiatives will fit through in 2026. Overall, this evolution is fully aligned with achieving our year-end targets. On the next slide, we covered the cost of risk, which remains at contained levels supported by solid underlying asset quality despite the increased uncertainty. Total cost of risk for the quarter was 38 basis points which includes all provisions and impairments across all categories. Looking specifically on loan provisions, the credit cost of risk was 27 basis points. Turning now to the bridge of the different components of total provisions for the quarter shown on the top right-hand side. We booked EUR 94 million of loan loss provisions after reviewing carefully the macroeconomic scenarios. Then we had EUR 4 million of provision reversals driven by the real estate asset disposals at a premium. In addition, we recorded EUR 23 million in NPA management costs and EUR 19 million in other provisions mainly related to litigation. Overall, the quarterly evolution of total cost of risk is fully aligned with our year-end target of around 40 basis points despite the increased uncertainty. Moving on in the next section, I will walk you through asset quality, liquidity and solvency. On Slide 20, we see a continued improvement in both the NPL ratio and coverage levels. The NPL ratio reached 2.55% representing a reduction of 10 basis points compared to the previous quarter. We can also see that Stage 2 exposure declined by more than EUR 1.2 billion year-on-year. Finally, the coverage ratio calculated as total provisions of Stage 3 exposures continued to improve and reached 71%, rising by more than 1 percentage point during the quarter. In terms of total NPAs in Slide 21, you can see the continued reduction of foreclosed assets. We have sold 24% of the stock of foreclosed assets in the last 12 months at an average premium of 8%. At the right-hand side of the slide, we can see that the ratio of NPAs as a percentage of total assets declined to just 0.7% which is a record low. Turning now to Slide 22. All liquidity ratios remain comfortably above requirements with a net stable funding ratio at 135% and the liquidity coverage ratio at a strong 186%. Credit ratings remained stable during the quarter. All rating agencies have assigned a stable outlook, except for S&P, which maintains a positive outlook, reflecting the possibility to achieve further uplift based on ALAC. I will also highlight that Moody's upgraded our deposit rating in April, and it has reconfirmed our Baa1 long-term rating following the application of the new EU depositor preference regulation. Finally, year-to-date, we have issued EUR 500 million in covered bonds. Given the sale of TSB, this 2026 will be a year with lower MREL funding needs. And therefore, less affected by potential market volatility. To conclude this part of the presentation, let me walk you through the evolution of our capital ratios during the quarter. This time around, this slide includes both the quarter-on-quarter variation and the expected impact of the TSB sale and the extraordinary dividend on the CET1 ratio. We will start by reviewing the quarterly evolution. This quarter, the CET1 ratio increased by 7 basis points, while generating 32 basis points before accounting for the dividend accrued. This includes 42 basis points from organic generation after deducting 81 coupons, minus 4 bps from fair value reserves adjustment in the fixed income portfolio due to higher interest rates at the end of the quarter and minus 6 basis points from higher risk-weighted assets, mainly driven by volume growth in our international businesses, where loans carry higher density. The accrual of a 60% dividend payout ratio had a negative impact of 26 basis points, bringing the CET1 ratio to 13.18%. Now looking at the capital effect of the sale of TSB. The transaction will unlock more than 400 basis points of capital for shareholders, as already anticipated when we announced the transaction. The sale generates a positive capital impact of 369 basis points this year driven by the release of risk-weighted assets, a net capital gain of more than EUR 300 million and the reduction of intangibles. This will be offset by the extraordinary cash dividend distributed to shareholders which represent a reduction of 378 basis points, bringing the pro forma CET1 ratio to 13.09%. Finally, the release of operational risk-weighted assets over the next 2 years will add a further 36 basis points, lifting the pro forma fully loaded CET1 ratio to 13.45%. With that, I will hand over to Cesar, who will conclude today's presentation and probably say goodbye after 5 very successful years leading Banco Sabadell. Cesar Gonzalez-Bueno Wittgenstein: Thank you, Sergio. Continuing after that phenomenal waterfall is very interesting. So to conclude this presentation, I would like to briefly review the bank's transformation journey over the last few years. Our growth strategy has proven to be successful and has structurally transformed the bank. First, we are delivering lending growth while reducing the cost of risk. Performing loans have increased by more than EUR 11 billion since 2021, while the cost of risk has declined by more than half. This improvement reflects stronger underwriting standards and a higher quality loan portfolio. Second, the bank is showing a consistent increase in capital generation. Indeed, we are delivering high and sustainable profitability, along with strong capacity to remunerate shareholders. In this context, we have committed to distribute EUR 2.5 billion of ordinary remuneration over the next 2 years, representing an average yield of more than 9% when adjusted for the upcoming extraordinary dividend. In short, a solid performance supported by 2 key levers. We have gradually shifted the organization towards profitability-focused metrics, and we have significantly transformed our risk processes and models. The benefits of these 2 elements will continue to gradually improve the quality of our loan book over time. Finally, let me emphasize our full commitment to delivering the full value of this plan through 2027 as we enter a new phase under a new leadership. We are well positioned to create long-term shareholder value. To conclude my last quarterly results presentation at Sabadell, I would like to share some words on a more personal note. Looking back at the last 5 years, I am honestly proud of the results we have achieved. Sabadell was going through difficult times in late 2020. During this 5.5 years, we, as a team, have managed to deliver on our strategy. We have deployed the profound transformation of the bank, which has enabled our financial turnaround. And now I would like to thank you for the interactions we have had during this period. The team and I feel we have been treated with utmost fairness and respect and I honestly thank you for that. I will now hand it over to Lluc start the Q&A section. Lluc Sas: Thank you, Cesar, for your commitment and for everything you have accomplished this year. We will now open the Q&A session. I would kindly ask you to limit your participation to a maximum of two questions. So operator, could you open the line for the first question, please? Operator: First question is coming from Cecilia Romero from Barclays. Cecilia Romero Reyes: I have two, one on volume growth and the second one on cost. On the first one, on the asset side, loan growth in Spain has been modest quarter-on-quarter. While some peers point to raising competition in both corporate SME deposits. And how are you seeing competition evolve across SMEs and corporates? And how are you balancing pricing, funding costs and returns? And how do you think about your appetite to compete in mortgages where cross-selling helps the economics? And finally, how do you see growth evolving across segments to deliver mid-single-digit growth this year? And then on costs, following the restructuring announcement and the EUR 40 million expected annual savings, could you help us understand how this fits within your current cost targets? Are these savings incremental or already factored in your 2027 guide? Cesar Gonzalez-Bueno Wittgenstein: Thank you very much. So on -- let's go one by one. On Corporates and SMEs, I think if you look at it, we've increased by 5% quarter-on-quarter and 1% year-on-year. And looking ahead, loan demand from Corporates and SMEs remains solid. We keep a strong pipeline of medium- and long-term loans. Therefore, we are confident that growth will accelerate back to mid-single-digit levels and the front books and yields and spreads remain stable. You have to understand that the change in model is a long-term element. So the cost of risk going forward will be much lower. There has been a phenomenal transformation in the strategy of the bank. In terms of mortgages, to your question, the average front book yield on new Spanish mortgage lending is currently below swap rates, as you all know. And pricing conditions remain very competitive, even after taking potential cross-selling benefits into account. Therefore, we have intentionally reduced our market share of new mortgages lending from approximately 9% at the end of '24 when the yields were positive to below 6% this quarter when our natural market share is around 7%. And we will continue to adjust our appetite according to market pricing as we have done over the past year. On the consumer lending, I mentioned before that during the quarter, we introduced changes in the application process. And although the demand -- the upfront demand remained stable and strong, we had lower conversion rates. We have adjusted for these new changes and now conversion is back to where it was, and we expect healthy growth from now on. And in the cost of deposits and in the deposits, I think we've grown healthily in deposits, and that has been somewhat on the back of the growth of the digital account. We have been very successful in the growth of the digital account during the quarter. And as we have mentioned many times, this is not to increase the volume of deposits. This is to attract new customers that then become transactional and that allow for further growth. More than 60% of our acquisition is now through digital accounts when it was 0 a few years ago. And these clients behave well. They have strong transactionality, more than 50% have payrolls, 45% use payments every month and 40% use Bizum through Sabadell, which is a big sign of being engaged with us. And despite the fact that we have done this campaign at a high rate, it has been at the rate that we could obtain in the wholesale market. So it makes lots of sense. I will let Sergio to develop a little bit more on the cost side. But I think we are not -- just to make it very brief, I don't think we are adjusting our forecast now despite this one-off. Of course, that would imply that there is some room as the year progresses to review. But for the time being, we leave it untouched. Sergio Palavecino: Thank you, Cesar. A couple of comments to the first one, Cecilia. The first quarter is typically because of seasonality, probably one of the sort of slower in terms of volumes. In any case, we've been able to grow a little bit the loans and a little bit the deposits. And when you look at the year-on-year growth rate, it's at 5.6%. So it is actually absolutely in line with our expectations. And as Cesar mentioned, the pipeline is good. So regarding volumes. As of today, there isn't anything that makes us think that we're not going to grow in line with expectations. And then as per the cost to your question, this efficiency initiative, so the early retirement, the EUR 40 million in 2027 was not included in our guidance when we detailed the guidance of 2027 by the different lines. We think it's early to update guidance per lines in 2027 given the different changes that we're seeing in the market. Of course, this is a positive because then it allows us to have a buffer and then we see how inflation plays out in the different lines of the cost. But again, I think it's a buffer, and we feel optimistic about it. Lluc Sas: Okay. So operator, could you switch off the microphones when the analysts are asking the questions because we've been told that there's some feedback that analysts cannot hear the questions when they do the Q&A. So we can jump to the next question. Thank you. Operator: Next question is coming from Francisco Riquel from Alantra. Francisco Riquel: Yes. So I just wanted to say goodbye to Cesar and congratulations for the last 5 years' performance. So my first question is on NII. You maintain your guidance of plus 1% in '26 but Euribor rates are now higher than expected, and you used to have a positive sensitivity. So I wonder if you can elaborate on NII dynamics in coming quarters? And what is the offset to the higher Euribor rates? And in the case, the margin uplift is delayed, if you can update on the risk to your '27 NII guidance as well? And my second question is capital distributions, the EUR 90 million of restructuring charges that you will book in '26, I wonder if that is compatible with your distribution targets? You did not specify how much of the EUR 2.5 billion will be paid out in '26 and '27. So I wonder if top-up share buybacks will be postponed to '27 after the winding of operational risk-weighted assets or not? Sergio Palavecino: Thank you, Paco, for your questions. Regarding NII, NII sensitivity, you're absolutely right, it's a positive one. So when interest rates go up, we expect NII to be higher. Actually, for 100 basis points immediate uplift in all rates, then we expect a 6% increase in the second year. And the first year is less. So the first year is somewhat more stable. So the first year is more stable as said. Looking at the evolution of NII, we initially expected NII to grow by more than 1% and keep on growing into next year. And that was basically based on volume growth, while rates were expected to be stable. This time around, what we are seeing and when we look at the yield curve to update our expectation, the yield curve was reflecting two hikes from the ECB. So now we have updated our model with two hikes. So the ECB at 2.5%, which is definitely a higher rate. For the first quarter and the second quarter, volumes are not changing in our view. They are absolutely in line to our expectations. And then I think the question mark is whether at some point at the end of the year may be somewhat less volume. And as particularly, we are growing a little bit less than expected in mortgages because we want to be really prudent with prices, particularly in this environment. So the movements that we are seeing are not going to affect 2026, cost of deposits, the market looks good. In the past, this rate have had a very gradual pass-through into the deposit cost and from everything that we're looking at, this seems to be the case this time around. So the pass-through at the beginning is less than the pass-through that we have in the book, which is close to 30%. And then for 2027, we feel positive, but it's a bit early to say. Definitely, the higher yields is going to be a tailwind and then remains the question mark on volumes that we had expectation for a continuous mid-single digit at so far, we maintain, but I think we need a bit more time to have visibility in 2027 and also cost of deposits, although we feel very comfortable for cost of deposits. So I think those are the moving pieces that taking all that into account, we feel that the outlook is solid for this year. And then for next year, as said, we feel somewhat optimistic, but it's early to be precise. And regarding capital distributions, EUR 90 million is the one-off cost. But already in the period, we are expecting the benefits -- part of the benefits, EUR 40 million in 2027, EUR 15 million, almost EUR 15 million in 2026 million. So that combined is EUR 55 million. The net is only EUR 35 million, which net of taxes, is less than EUR 25 million. So yes, it's going to have a bit of an effect, but we are talking about less than 1% of the distribution. So we think that at this point moment in time, there might be some organic capital generation that can offset that small deviation. So we maintain the target of the EUR 2.5 billion distributions, which we have always seen them being higher in 2027 than 2026. In 2026, we have the extraordinary of the TSB distribution, EUR 0.5. We're actually distributing a little bit more than what is generated in 2026. So it's -- I think the balance between timing of the distributions are also quite sensible. Lluc Sas: Perfect. So let's take the next question, please. Operator: Next question is coming from Maks Mishyn from JB Capital. Maksym Mishyn: All the best to Cesar in the new chapter. Two questions from my side. The first one is, maybe I've missed it, but on the digital campaign for the deposits, could you give us a bit more color on pricing and volumes you were able to achieve with the campaign in the first quarter? And the second question is on cost of risk. Have you updated your macro models in the quarter? And can you provide us with some comfort that macroeconomic turbines may not push your cost of risk higher? Cesar Gonzalez-Bueno Wittgenstein: Thank you very much. So I think we have never been too transparent on the numbers of the digital account. It's quite successful. And we have now more than 600,000 digital customers. And what I could say is that it has increased overall by around 2 basis points to cost of deposits in the quarter. And let me leave it at that. It has been quite successful. We are very happy, and it is fulfilling all its purposes. Lluc Sas: And then we also had the questions on cost of risk and macro models. Cesar Gonzalez-Bueno Wittgenstein: Yes. Thank you, Maks, for your question. Regarding cost of risk and the macroeconomic models, we have, of course, reviewed carefully the scenarios and taking into account what is going on, the conflict and the uncertainty. For the basic scenario, we have kept it unchanged. We are -- we built this scenario during the second half of last year, and we built it on a quite a prudent basis. In our base scenario, we're assuming GDP to grow, in Spain, 1.7%, unemployment to be a little bit above 10% and what consensus is delivering today is an expectation of growth above 2% in Spain and unemployment below 10% while the price of real estate will not be declining. That is the consensus. And we feel that we have seen that the assumptions in our macroeconomic base scenario are actually more prudent than what we're seeing in the market. Of course, this only affects Spain, which is our home market. So we have not changed the base scenario. What we have done is we have changed the probabilities of the upside and the downside scenarios. You know that under IFRS 9, you have the base at the downside and the upside, and we have a shift 5% probability from the upside to the downside. And with this, this has triggered a EUR 20 million provision that has been already incorporated in the EUR 94 million of credit loan provisions. So this actually 10% in the change of probabilities. And for the time being, we will monitor the situation and the development. But for the time being and as long as the GDP expectation in Spain is maintained at a growth of around 2%, we feel that the scenario is going to be good. Lluc Sas: Okay. So let's jump to the next question, please. Operator: Next question is coming from Ignacio Ulargui from BNP Paribas. Ignacio Ulargui: All the best of luck for you, Cesar, in your new adventures. I just have one question on fees and one questions on the deposit and one on interaction with lending. So on fee income, I mean how should we expect the improvement in coming quarters? Is it mainly driven by an acceleration of the asset management net inflows because you are launching a new product campaign or how should we think about fee progression basically coming in the coming quarters? And the second one on the loan to deposit. I mean do you have any target for loan-to-deposit ratio in the long run or in the medium term? Cesar Gonzalez-Bueno Wittgenstein: Yes. On the fee side, I think we are expecting an improvement in the recovery of CIB activity. There were quite a few things in the pipeline that are probably delayed. I think the payment business is also going to do better and certainly, the net inflows in asset under management. And we have already seen a recovery in the first two months -- I mean, in the first two weeks of March. Sergio Palavecino: Yes. So if I follow up on those, natural actually, we expect the credit services and assets under management, we expect the 3 of them to grow from this level. Services, the different business lines are working well. We had this one-off in the first quarter and seasonality. Seasonality affects very much our payment service business. And then we mentioned also the Corporate & Investment Banking, which simply was slow in January and February, and then is not picking up in March and therefore, the second quarter is expected to be good in terms of activity. So we also expect growth coming from that business line that is going to affect or is going to affect positively the credit, the services and then finally, the asset under management because of the growth in balances. And per the loan-to-deposit is 92%, very stable. It's been very stable already for many quarters where we've been able to grow mid-single digit in loans and sort of 4% in deposits with a higher base of deposits. So at the end of the day, quite stable. If we were in a situation where we had the opportunity to grow the loan portfolio, I think growing up to a loan-to-deposit in the range of 90% to 100%, it could be no problem. So we would also feel that, that's not an issue. However, our -- in our plan, we will try to grow as balanced as possible. Lluc Sas: Thank you much for your questions. Let's jump to the next caller, please. Operator: Next question is coming from Borja Ramirez from Citi. Borja Ramirez Segura: Thank you very much for taking my questions. I have two, please. Firstly, on the net interest income, I saw that your ALCO portfolio grew by roughly EUR 2 billion quarter-over-quarter. If you could kindly provide details on the yields at which you bought new bonds? And then also on NII, I would like to ask, I think it was mentioned in the previous results call that you had you're going to decrease the cost of digital accounts from 2% to 1%, and there was a EUR 30 million positive NII benefit on a -- basis from this. If you could kindly confirm this number? And then my second question would be, it is noted regarding the change in the scenarios of the IFRS 9 models. I would like to ask if you could kindly remind me the macro relay provision. Sergio Palavecino: Sure. May I start with the ALCO question? Thank you, Borja. Yes, we have increased a little bit our ALCO portfolio, in line with our plan. The ALCO, the size of the ALCO book is related to mainly the ALM, the hedging that we do, the size of our current accounts and deposits, which have been growing. And then on top of this year with the sale of TSB at the TSB level, we are selling the TSB MREL bonds at the ex-TSB and replacing them with cash from the transaction. So we wanted to put that money to work partially. So that's why we wanted to increase the portfolio this year. And we have invested in the typical investments that we do that mean Spain and other core European sovereigns with durations up to 10 years, some of them hedged. So at the end of the day, the duration of the portfolio that we buy is between 5 to 6 years and with yields above 3% and in the current environment, actually very close to 3.5%. And then as per the online current account, you are absolutely right. We have the intention to cut the remuneration on the previous campaigns from 2% to 1%. We did, and that took place in the month of March. So it was only one month in the first quarter and the benefits will keep on coming. The very good news is that -- the very good news is that after this cut, we're seeing a lot of stability in the balances. So I think it's working the strategy of buying customers and then keeping the balances. And finally, regarding your question on the macro provision, I think I mentioned that it was EUR 20 million, the provision that we took after changing the probabilities. And Cesar, I don't know if you'd like to add something? Cesar Gonzalez-Bueno Wittgenstein: I think you were spot on. I think on the digital account, what we said is exactly that there will be a EUR 30 million saving from the portion of that portfolio that we brought from 2% to 1%. And of that, we have seen 1 month and that EUR 30 million is over the course of the year. And as you mentioned also the very good news, as expected, is that the loss of volumes is low. And this proves again that this is a transactional account. It's not deposits. It's not to maximize returns. It's to have a full current account that, at the same time, has low costs and full services and at the same time, yields something that is above 0. And that is exactly what has happened. And now there are different tiers, and that is the strategy around this account, there are different tiers. Some for acquisition because to create the excitement to move the account, you need a slightly higher rate, but then everybody understands that the current account with a decent remuneration of 1% is attractive enough and they are becoming transactional. So as I mentioned before, we are very satisfied with the progress of this strategy. Lluc Sas: Operator, could we have the next question, please? Operator: Next question is coming from Ignacio Cerezo from UBS. Ignacio Cerezo Olmos: Two follow-ups on lending growth. The first one is on the SME and corporate book, the Spanish one. I mean you've got peers basically growing, I mean, significantly above that 2% so I just wanted to follow up a little bit actually on what do you think explains that gap right now? Is it risk profile, risk appetite by Sabadell? Is the fact that the incumbents in Spain have stepped up the pace. Is it related to the fact that your customers are requiring less credit than other type of corporates. So just a little bit of color basically on that. And then the second one is whether you're seeing actually the international book ex-TSB as a bit of an offsetting factor against and that we're seeing some degree of acceleration, especially in Miami and the foreign branches actually. So do you think there is a little bit of an offsetting actually coming from international book and the Spanish book or you treat those books completely separately? Cesar Gonzalez-Bueno Wittgenstein: I think reducing the probability of default by 50%, as we have done in new lending, of course, strengthens our asset quality. But for a period of time, makes the volumes slightly more subdued. And it makes a lot of sense to do that, but it's a transition in which we are still somewhat immersed. You have to take into account that, that probability of default improvement has a long tail it will take more than 4 years to see the full benefit in the SME portfolio, 7 years in mortgages and more than 2 years for consumer loans. And for sure, it's very difficult to separate off all the different factors that make that demand a little bit more subdued, but it is our impression that this is the main factor that reducing the probability of default of being more demanding on the quality, on the risk quality of the new loans is having certainly somewhat of a slowdown, which will fade over time. And regarding the growth abroad, not really. We have good business units abroad, Miami, Mexico in particular and we do what's right. And whenever we find the right project, so the right returns on capital with the right risk, then we're able to do it, and we are seeing an environment with a lot of activity and project finance, in structured finance and the corporate, our corporate customers that are doing business abroad. So we are taking advantage of that activity, but it's not really like that we see sort of offsetting. We don't look things that way, no. Lluc Sas: Let's go to the next question then. Operator: Next question is coming from Pablo de la Torre from RBC Capital Markets. Pablo de la Torre Cuevas: I have a couple of follow-ups on cost and distribution. So the first one was on cost. I just wanted to understand the phasing of any remaining one-off costs in 2026 and whether the plan as it stands now considers any further actions in 2027? And the second one was on distributions. I know you reiterated the EUR 2.5 billion in distributions for this year and next. But I just wanted to check that you also reconfirmed the previous dividend guidance of 2026 being above EUR 0.204. And then the last one on fees also, if you just can comment on the previous guidance of double-digit growth in asset management and insurance fee income growth from this year. I think that's growing only at 4% in Q1. Cesar Gonzalez-Bueno Wittgenstein: So you will complement to that. But on cost, we don't see further actions at this point in time in '27 and there will be a progressive deployment during '26, and we will accelerate it as much as possible. So we have incurred already in EUR 55 million of the EUR 90 million, and you should expect the greater start to happen relatively soon. And for '27 at this point in time, there's no expectation. That doesn't mean that there couldn't be later on. But at this point in time, there are no further expectations. And for the distribution, I think we have -- we are confirming everything, everything that we said in terms of distribution almost 6.5% of the total of the 3 years, the EUR 2.5 billion ordinary, the EUR 0.50, everything, I think, is being confirmed. Sergio Palavecino: Indeed. Yes. And finally, Pablo, I think you were asking for fees, which I think we've been discussing and the fee development -- I mean the expected performance of fee remains unchanged to what we said in the first -- at the beginning of the year, and for the year. So we expect fees connected with assets under management to grow linked to volume, but then we also expect a higher contribution from the different businesses that we run and in the presentation, we are acknowledging a slower start than expected. We were sort of expecting maybe a figure similar to the one that we have in the first quarter of last year. And the difference, which is some EUR 7 million is half that one-off and half a slow January and February in the import and export business and corporate and investment banking which has already get back on track from March. And with all this, what we are seeing is that we keep on targeting growth that might be close to the mid-single-digit range, probably the lower range -- the lower part of that range. So we are targeting close to 4% overall growth in the fee line for 2026. Lluc Sas: Let's go to the next question please. Operator: Next question is coming from Carlos Peixoto from Caixa Bank. Carlos Peixoto: Just a couple of questions from my side as well, basically focus on NII. I'd like to have a follow-up there. The first one is that your NII guidance is based -- or the above 1% growth is based on NII that was provided last year, excluding TSB or on the statutory NII that we now have? Just to understand the basis for the growth. And then delving into NII, just if you could remind us what type of savings you might be getting going forward from MREL instruments that you had to issue at the group level to finance the size of the group or when it includes the TSB and now with the sale you could have some savings on those instruments from maturing the instruments, basically, what -- how much could it be? And what will be the time line for those to kick in? Cesar Gonzalez-Bueno Wittgenstein: Thank you, Carlos, for your questions. Regarding the second one, MREL. We were done streaming an equivalent to EUR 1.4 billion of MREL to TSB, which is the MREL related to its risk-weighted assets. And that is the MREL that, therefore, we will be saving at the group level in the wholesale capital market, so EUR 1.4 billion. And that's why we're saying that we will not be active in the debt capital markets in 2026 as we don't need to get that. So if you apply the spread on the senior nonpreferred and senior preferred to that figure, it's something close to EUR 20 million per year that may take place already -- I mean, gradually from the second quarter of 2026, as we will not be issuing and we will have maturities. And then I think the first question, not sure if I got it fully right. I think you are asking about the perimeter for the NII, and we are trying to be comparable. So it's going to be the ex-TSB perimeter is the one that is going to remain. So that's the one we're being guiding on to try to make it -- [ PLs with PLs ]. Hopefully, that was your question, and I hope I answered otherwise, we can follow up on it. Lluc Sas: Thank you, Carlos. And then we have got one final question. So operator, please. Operator: Last question is coming from Britta Schmidt from Autonomous Research. Lluc Sas: Britta we cannot hear you. No? Well, so probably he's jumped to another call because we know that it's a busy day for you, so thank you for your understanding. And that concludes our presentation for today. Thank you, Cesar and Sergio, and thank you all for participating. If you have any further questions, the Investor Relations team remains available for any follow-up or additional information. Have a great day. Thank you. Cesar Gonzalez-Bueno Wittgenstein: Thank you.
Operator: Good morning, everyone, and welcome to the Gibson Energy First Quarter 2026 Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Beth Pollock, Vice President, Capital Markets and Corporate Development. Ms. Pollock, please go ahead. Beth Pollock: Thank you, and good morning, everyone. Thank you for joining us to discuss Gibson Energy's First Quarter 2026 results. Joining me on the call today are Curtis Philippon, President and Chief Executive Officer; and Riley Hicks, Senior Vice President and Chief Financial Officer. Additional members of our senior management team are also present to assist with the question-and-answer portion of the call. Listeners are reminded that today's call will reference non-GAAP financial measures and forward-looking information, which are subject to certain assumptions and risks. Descriptions and reconciliations of these measures as well as related disclosures are available in our investor presentation and continuous disclosure documents on SEDAR+ and on our website. I will now turn the call over to Curtis. Curtis Philippon: Thank you, Beth, and good morning, everyone. I'm pleased to be here today to discuss Gibson's first quarter 2026 results. Before getting into the quarter, I want to start with something that we are proud of at Gibson. This quarter, we reached a major milestone at our Gateway Terminal, safely loading our 1 billionth barrel. This achievement speaks volumes about the strength of our operations team, the trust of our customers and most importantly, the commitment of our people to safety and execution excellence every single day. Turning to the quarter. The macro environment was certainly eventful. We've all been reminded of the important role North America plays in supplying the world with reliable energy. Gibson's crown jewel assets are a critical part of this energy supply chain. Geopolitical developments created some headwinds. Unpredictable and chaotic markets make it challenging for customers to make long-term commitments. Shipping availability and market uncertainty temporarily disrupted exports from Gateway customers and negatively impacted Infrastructure results in the first quarter. This export disruption was a temporary trend that we are now seeing reversing in the second quarter. Gateway volumes have increased, and we expect to be setting new volume records, including pushing close to 1 million barrels per day in the back half of the second quarter. In December, we outlined our strategy at the Investor Day. Central to that strategy was a growth plan to achieve an over 7% infrastructure EBITDA per share growth rate through the deployment of capital across 5 different verticals and unlocking capital-free upside through the increased optimization of the business. The team has made impressive progress advancing this strategy. A few of the most meaningful steps we have taken were on people, progressing the Wink-to-Gateway project and closing the Chauvin acquisition. First, on people, we are continuing to build out our U.S. commercial and marketing team, including adding Andrew Morales in our Houston office to lead our U.S. marketing business. This investment expands our capabilities and has been instrumental in sourcing incremental supply and enabling volume for our customers at Gateway. During the quarter, we took an important step forward towards achieving the 2% capital-free upside target we outlined at Investor Day with the completion of an organizational restructuring, which reduced our headcount by 10% and will drive annual gross cost savings of approximately $10 million in 2027. The changes increased the customer focus of our teams, reduced overhead and reinforced our high-performance culture. The leaner organization now has both the customer focus and cost competitiveness necessary to win. Secondly, the Wink-to-Gateway growth capital projects that were sanctioned at Investor Day are tracking well. These projects involve adding additional tank capacity at the Wink Terminal and twinning a pipeline connection at Gateway. The basis for these projects is sourcing additional supply and removing bottlenecks to deliver more volume to Gateway customers. These were strong projects when they were sanctioned. And now in this crude export market, they are even more valuable. And finally, in Hardisty, the successful closing of the $400 million Chauvin acquisition is a milestone moment for Gibson. The acquisition includes a crude oil pipeline and associated infrastructure assets that connect Chauvin to the Hardisty oil hub, increasing our reach into the growing Mannville Stack area, supported by long-term agreements, the assets add stable contracted cash flows and provide a clear runway for additional optimization and growth capital deployments. Concurrent with closing, we sanctioned the Hardisty Connection Project. We have also started engineering work on a pipeline expansion project, which will increase effective capacity from 30,000 to 45,000 barrels per day. We anticipate sanctioning this expansion later this year. We expect to begin realizing the benefits from the acquisition in the second quarter. The integration work has gone smoothly, and we are excited to welcome Chuck Krahn's Chauvin operations team to Gibson. And with that, I'll turn the call over to Riley. Riley Hicks: Thank you, Curtis. I'll begin with a review of our first quarter financial results, followed by an update on our financial position and capital allocation priorities. We remain focused on disciplined financial management, maintaining the strength of our balance sheet and executing in accordance with our financial principles. In the first quarter, Infrastructure delivered approximately $156 million of adjusted EBITDA, a slight increase over the same period in 2025. We benefited from a full quarter of contribution from the Baytex partnership. However, as Curtis noted, this was largely offset by macro conditions and their impacts on crude exports at Gateway. While export volumes were strong in January and February, they declined in March, driven by elevated freight rates and shifting global trade flows, which temporarily reduced competitiveness from the U.S. Gulf Coast. Despite these near-term headwinds, we remain confident in our 7% plus growth strategy through 2030 as well as our 2026 infrastructure outlook of 5% EBITDA per share growth that we outlined at our Investor Day, which is supported in part by our recent acquisition. Turning to Marketing. The business continued to face a challenging operating environment during the quarter. A steeply backwardated futures curve where prompt crude barrels are priced at a premium to future delivery reduced the economic incentive for storage, while the seasonality of our asphalt business limited the performance of our refined products group. As a result, Marketing generated approximately $3 million of adjusted EBITDA, representing a $2.5 million increase compared to the first quarter of last year. Looking ahead, quarterly results in the Marketing segment are expected to be in line with previously communicated guidance given the current volatility of the commodity markets. We continue to remain confident in the fundamentals of the business and focus on delivering long-term consistent performance. On a consolidated basis, Gibson generated adjusted EBITDA of approximately $139 million during the quarter, a slight decrease from the prior year. In addition to the impacts from the Infrastructure and Marketing businesses discussed earlier, consolidated EBITDA was affected by higher G&A, which we expect to normalize over time as projects come online. A significant portion of the increase in G&A relates to targeted investments in technology and people, including upfront spending on automation and AI initiatives that are expected to drive savings over time. For example, we are currently implementing a new system that will automate thousands of marketing transactions per month, improving efficiency and accuracy. In addition to this, we continue to progress the migration of the majority of our IT platforms to cloud-based systems with associated costs now reflected in G&A under the rules of IFRS. From a people perspective, we made targeted additions across our commercial, marketing and finance teams to support the continued growth and execution of the business. And finally, and to a lesser extent, the restructuring resulted in some changes to cost allocations. As an example, we consolidated our corporate and operational accounting groups into a single team, enabling us to do more with fewer resources and at a lower overall cost to the company. While these changes create some near-term noise, the G&A was forecast and considered when we provided our guidance at Investor Day in December. We remain confident in our 5% infrastructure EBITDA per share growth outlook for 2026, and we also expect our consolidated EBITDA per share growth for 2026 to be 5% or greater. Distributable cash flow for the quarter was approximately $74 million, representing a $17 million decrease compared to the first quarter of 2025. This was primarily driven due to lower EBITDA and higher spending on replacement capital, interest and cash taxes as compared to the same period last year. Turning now to our financial position and capital allocation priorities. We continue to remain committed to our financial principles, maintaining a strong balance sheet, ensuring our growth capital is fully funded and supporting a sustainable dividend backed by stable long-term take-or-pay cash flows. We continue to take a disciplined approach to capital allocation, focusing on high-quality infrastructure investments that drive long-term shareholder value as reflected by our strategic acquisition of the Chauvin assets. Importantly, both S&P and DBRS reaffirmed our stable investment-grade credit ratings following the announcement of this transaction. At the end of the first quarter, net debt to adjusted EBITDA was approximately 3.8x, representing a decrease from 3.9x at year-end. And on an infrastructure-only basis, leverage of 3.9x remains below our target of less than 4x. Our dividend payout ratio was approximately 90% on a trailing 12-month basis, primarily driven by lower EBITDA and distributable cash flow mentioned earlier as well as the increased share count following the equity offering ahead of realizing the associated cash flow benefits from our acquisition. We expect the payout ratio to remain elevated until 12 months of trailing cash flow from the acquisition is reflected. Over the long term, we continue to target a sustainable payout range of 70% to 80% of distributable cash flow. On an infrastructure-only basis, the payout ratio was 83%, comfortably below our target of less than 100%. As the Infrastructure segment continues to grow as a proportion of our earnings, we expect consolidated payout ratios to trend back towards our long-term target range. I will now turn the call back to Curtis for his closing remarks. Curtis Philippon: Thank you, Riley. To close, the first quarter reflected both the strength of our underlying business and the impact of a more volatile macro environment, particularly at Gateway. Despite that, our Infrastructure platform continues to perform well, supported by high-quality assets and long-term contracted cash flows. We're making solid progress against our strategic priorities. Safety performance remains best-in-class. We continue to drive increased utilization across our system, and we are advancing key growth initiatives, including the Chauvin acquisition and our Wink-to-Gateway Integration project. At the same time, we are building for the future, advancing our technology and AI capabilities while continuing to strengthen our high-performance customer-focused culture. Looking ahead, we remain confident in our long-term outlook. While the current environment has introduced volatility, it has also reinforced the importance of secure, reliable energy supply, an area where Gibson is well positioned. Our assets, particularly Gateway, play a critical role in connecting North American barrels to global markets, and we have demonstrated our ability to adapt and capture value as conditions evolve. Our teams have responded well in a dynamic environment, leveraging our integrated platform to manage risk and capture opportunities across the value chain. With a strong balance sheet, disciplined capital allocation and a clear strategy, Gibson is well positioned to deliver continued infrastructure-led growth and long-term value for our shareholders. And with that, I'll turn the call back to the operator to open the line for questions. Operator: At this time, we will conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Jeremy Tonet of JPMorgan. Eli Johnson: This is Eli Johnson on for Jeremy. Just wanted to start on the export trends at Gateway. It looks like U.S. exports are at record highs. So can you just describe some of the upside for Gibson to capitalize beyond contracted levels? Any sensitivities or color on export upside would be helpful. Curtis Philippon: Eli, we're seeing that firsthand. As exports are increasing, Ingleside is exceptionally busy. I was down in Corpus a couple of weeks ago, and you can visually see the increased traffic that's coming to the U.S. right now and the increasing number of VLCCs that you're seeing transiting in the area. So it's quite impressive to see. We're feeling that uptick right now at our facility. As I mentioned, we expect that we'll be pushing 1 million barrels a day of throughput as you get into May and June. So new records for Gateway, quite significant. It's notable for what that means for our customers. The one thing I would temper a little bit on that there is a nice upside as you get some upside on that activity, but there is also a little bit on who's shipping the volume has an impact. And so typically, our customers are paying for an MVC, a guaranteed window of volume. And what you're seeing right now is virtually all customers are fully utilizing their MVCs. And so you're seeing very good volumes. But on some of that incremental volumes, that's just customers using their contracted volumes. And so there's not an incremental revenue associated with it. So we expect you'll see sort of normalization and a slight uptick from what you saw in Q1, but you shouldn't expect a sort of a dramatic uptick in Gateway as you get into Q2. Eli Johnson: Got it. That's helpful. And then maybe switching over to Marketing. I know you provided some color for the outlook to remain consistent with prior guidance. But just thinking about what would need to kind of change to see structural improvement in that business? Is it just the deeply backwardated curves normalizing? Or what else could we see that would lead to improvement in that business? Curtis Philippon: On Marketing, it's -- you're exactly right. It's the backwardated nature of the market is where you see still some limited opportunity. And in Western Canada, you still have a very efficient egress situation. And so some of those apportionment type plays are not there right now. And so we continue to do well in volatile markets, and our marketing teams do a good job of that. And also, as you look at sort of the refining crack spreads, you see some uptick in our Moose Jaw facility. But I would say it's still fairly incremental for us. So we're seeing some upside out of these things, but we still expect that our guidance of sort of 0 to 10 a quarter is still the right way to be thinking about it. Operator: Our next question comes from the line of Robert Hope of Scotiabank. Robert Hope: Maybe turning over to the higher corporate costs that we saw in the quarter. How should we think about these trending through the year and to what magnitude? I do appreciate the commentary that in the prepared remarks that they will normalize. And then also, just want to confirm that the higher corporate costs as well as the $10 million of incremental savings were part of the longer-term guidance presented at the Investor Day? Riley Hicks: Yes. Thanks, Rob. We can confirm that those were part of the presentation at Investor Day and our longer-term guidance. And then in terms of where we sit on corporate costs going forward for 2026, we would expect to be in the $17 million to $18 million range per quarter as we continue to work through some of these projects. We would expect to see the benefit of those projects in 2027 and beyond. But I would note that there's the opportunity for us to continue to evaluate solid IT automation and cyber projects going forward that we might invest capital in as well. Robert Hope: All right. Appreciate that. And then maybe moving back over to Gateway. Just changes in the geopolitical dynamics there, does that have you rethinking longer-term expansion plans at the facility as well as -- can you remind us kind of how you would look to expand that facility? Curtis Philippon: So when we think about Gateway right now, we're pushing 1 million barrels a day. You've got very high utilization of the facility. I would point towards the Wink-to-Gateway Integration project is something that we'll do that will drive some additional volume and help us debottleneck in particular, the Eagle Ford supply coming to that facility. So those are some nice incremental growth that we'll see as those come online in the back half of the year. Some of the larger scale projects we've talked about sort of longer term sort of plus 5 years out on the dock expansion. I think those are still really interesting projects. I think as the world needs U.S. crude, the Permian is a prolific play that will drive additional barrels to export over time. And I believe that Ingleside is the most cost competitive way to go export barrels. And I believe that Gibson has got the most capital-efficient way to add additional export capacity in Ingleside. So I think that still looks very good, but I still put it in the 5-year-plus territory, Rob, because you still fundamentally need to see production uptick a bit more in the -- you need to see production uptick in the Permian. You need to see pipes expanding from the Permian to Corpus or you need to see other supply coming into the Corpus market to drive additional barrels because right now, you still have very good capacity at our terminal and our neighbor's terminal in Ingleside. So we're able to sort of effectively keep up with the current amount of Corpus pipe capacity with the current docks that are in place. Operator: Our next question comes from Aaron MacNeil of TD Cowen. Aaron MacNeil: Maybe big picture, just given that we've got a lot of potential brownfield expansions and even potentially new greenfield crude oil pipeline expansions in Canada. Can you speak to the potential opportunity pipeline at Hardisty and Edmonton? And sort of within that, I'd be most curious about potential timing. Like I'm just giving an example here, but let's say, like a pipeline expansion comes online in 2 years from today, when would we sort of need to see an announcement or a positive FID for a new sort of tank expansion at one of your hubs? Curtis Philippon: Aaron, yes. I think clearly, the sort of overall macro backdrop of the world needs oil, the political environment in Canada getting considerably better than it's been for a decade has a lot of optimism out there right now that you're seeing some very interesting egress projects getting advanced that I think have some good legs to them, and you're seeing all of our customers talking about very good rates of return paths to increasing production in some pretty substantial ways. And so we see the production coming at us from our executing and sanctioning additional capital on our side, some of the very near-term things we're seeing is the Chauvin acquisition provides us runway of additional capital projects that we see that's sort of effectively extending that Hardisty platform. We've talked about adding this Hardisty connection on Chauvin, but also this pipeline expansion for Chauvin. But I think what's really interesting and exciting for us around Chauvin is now that we're through the Competition Bureau, we can actually start talking to customers. And I see us spending -- we're already -- we're sort of 1 week into this, and we can now start talking to customers about, okay, what can we do to tie in more production to the Chauvin pipeline and more production into Hardisty and what does that drive? And so I know I'm diverting a little bit from your question, Aaron, but I think that's some of the near-term sanctioning things that I can see right in front of us that you can see us doing over the next 12 months. As over longer term as some of these big egress projects get sanctioned, I think there's probably some good activity inside the terminals that we're going to see. I think in particular, if I had to see firsthand, I think that the TMX projects are really quite attractive for our customers. Sort of getting volume to the West Coast is the hottest ticket in town here that the people want to get more volume to the West Coast. I expect you're going to see that growth in TMX volume nicely drive some need for additional tankage for us in Edmonton. And you would have heard us talk about before that we've done a lot of work to get ready to add a couple of new tanks in Edmonton. And so all the optimism around expanding TMX nicely leads into needing to do some additional tank expansions in Edmonton over the next year or 2. So those are probably the nearer term. In Hardisty, we're pretty well set up right now. So I think we can supply a good amount of additional expansion on egress with current tank capacity and nicely add, I think, even higher rates of utilization and some competitive tension in Hardisty is a good thing. And so I think you're a little further out on need to sanction new tanks in Hardisty, but I think you see new tanks in Edmonton faster. Aaron MacNeil: Got you. Okay. You referenced it in passing, Curtis. But as we swing into warmer weather, I'm hoping you can just give us a bit more of a status update at Moose Jaw. Like where are sort of the, I don't know, 2-1-1 crack spreads or other relevant benchmarks versus historical in the markets you serve? And is there any sort of -- I don't know what to call it, but like an inventory-based margin pickup that we should expect because you're building inventory earlier in the year and then prices inflected later in the year? Like how should we be thinking about sort of the profitability of that asset over the next 2 quarters? Curtis Philippon: There's a couple of things I think about our Moose Jaw. So one, overall, yes, this is a better environment for the Moose Jaw refinery. I think for all refiners in North America, you're seeing it in the world, you're seeing an uptick. What the big thing that we will watch is, one, what does road construction look like across North America? That's -- we're a significant player in that market. I think what we're seeing right now, early feedback from customers is costs are up and customers are sort of reevaluating what is the scale of their road construction projects for the summer. So Q1, obviously not a big road construction quarter. So we didn't see a lot of activity around that as you get into Q2 and Q3, just how active our customers are going to drive just what the asphalt side of that business is. That's obviously the biggest product line coming out of Moose Jaw. And then the second one that we watch closely on Moose Jaw is our drilling fluid business. And so that typically follows more of a diesel crack spread price. And that -- so obviously, pricing is attractive on that. And what we'd be watching for now is just what does activity look like. And I think everybody is watching what do rig counts do in Canada and the U.S. over the coming quarters. I'm a believer that you're going to see an uptick in activity. These prices are going to be stronger for longer, and that's going to ultimately drive more activity in both Canada and the U.S. on the drilling front, and that will be beneficial to our drilling fluid business. But I would say we haven't seen that yet that we're still seeing a fairly muted response from producers to the increased pricing and some of the rig activity has not significantly upticked and impacted the drilling fluid business yet. Operator: Our next question comes from the line of Robert Catellier of CIBC Capital Markets. Robert Catellier: Yes. I just have one follow-up question here. With the geopolitical events really resurfacing the importance of North American oil exports, you talked about what you're seeing in activity levels. But I'm curious to see -- to learn from you if there's -- the customer interest is leading to longer-dated commitments at Gateway. Is that entering the discussion? Or is it still skewed to a bit shorter duration optionality here? Curtis Philippon: Rob, yes, it's one of the things we've seen is definitely in this amount of market uncertainty, you're seeing people really just focused on the very short term right now. And so initially, you saw just sort of a pullback in the uncertainty in the market caused people to pull back initially for us, our customers anyway. And now we're seeing them rushing to go find supply, but they're still very much living in the prompt here right now and trying to find ways to solve short-term problems and people are having difficulty sort of determining what does the long-term situation look like and make long-term commitments is a challenge for our customers right now. The one -- the one really notable trend, though, I would say for us is we've seen a real uptick in the number of customers at Gateway. And so if you look at Gateway historically, it's been a relatively small group of customers that we've supported and probably over time, there's probably been no more than a dozen different customers that have loaded out of Gateway. Over the second quarter, we will load over 5 or more new customers out of Gateway. So almost a 50% increase in the number of customers that are touching the terminal. And we're going out of our way to try and help people out here right now and find ways to squeeze in additional cargoes. And to be clear, these are, for the most part, sort of relatively short-term sort of spot volumes and things we're doing to help people out in sort of this crisis moment. But I believe there's going to be a long-term payoff from that. You're going to -- I think people have long memories, and we're helping people out in times where they're having some challenges. And these are some really notable customers, including some supermajors that we're going out of our way to help out. And I think it's also given them a chance to get a taste of Gateway. And I think we've got an impressive facility, an impressive team out of Gateway and getting used to working with that group and getting that into the flow of their operation really sets us up nicely to think about longer-term arrangements with these customers in time. But for full transparency, I think right now, people are very focused on meeting their short-term needs and a lot of the activity has been very short-term focused right now. Robert Catellier: Yes, that's helpful context and it makes a lot of sense. And hopefully, that converts to something longer term. Operator: Our next question comes from the line of Sam Burwell of Jefferies. George Burwell: Apologies if I missed this disclosed anywhere, but curious if you could share with us Gateway volumes for February, March and April, if you have them? And if you can't quantify it, just sort of a trajectory over the past few months would be helpful. Riley Hicks: Yes. Thanks, Sam. I think we saw some really nice volumes at Gateway in January and February, touching kind of on average, 800,000 barrels a day or so, which was a nice uptick and kind of what we expected with some of the projects we've done over the last year. And then with the spiking freight rates and some of the other geopolitical events that happened, we saw that drop down to kind of what would have been closer to our prior run rate before all those projects, around kind of 600,000 a day. And so a meaningful drop in March really around kind of those freight rates and some of the tensions politically. But certainly, as Curtis has mentioned, we've seen that recover quickly here in April and see it pushing up closer to the 1 million barrels a day in the back half of this quarter. George Burwell: Okay. Got it. And then shifting over to Chauvin. Would you -- is it fair to say that the Hardisty connection and the pipe expansion would fill the growth CapEx budget for 2027? Just curious if you're able to essentially fill your capital spending needs through just stuff tied to Chauvin or if we need to see additional other projects sanctioned to get CapEx flushed out next year? Curtis Philippon: So on CapEx for 2027, so it will flow into 2027, the CapEx related to those projects. But no, there'll be additional sanctioning over and above those projects. I think those are a nice base load to start and help us, as we've talked about, those 2 projects alone, we expect that brings the acquisition multiple on Chauvin down below 7. So quite attractive projects, but there still will be additional project sanctioning you can expect to see from us over the next year as we go feed into the 7% plus growth rate. Operator: Our next question comes from the line of Maurice Choy of RBC Capital Markets. Maurice Choy: Just apologies if I missed this, but I just wanted to follow up on an earlier comment about how shippers have changed their attitudes since the war began and how the volumes have gone up to 1 million barrels a day. Have you actually seen customers change how they look at contracting, wanting to contract longer and perhaps willing to take higher rates? Or has that not led to that just yet? Curtis Philippon: Maurice, right now, I would say we're just seeing people scrambling to find supply right now. So you're just seeing a mass scramble across the world as people are trying to find supply. And so it's fairly short term in nature right now as they're repositioning their supply chains to point them towards the U.S. They're repositioning their VLCC fleet. They have it come to the U.S. And so we're seeing a fairly significant shift on people trying to find that. There are margin opportunities within some of those, within some of that. But I think it's a lot of very short-term activities right now. Our people are just really just trying to deal with an energy crisis right now and find ways to get supply. Maurice Choy: I suppose if you look beyond the short-term effects, what are the long-term effects -- more durable long-term effects that you're anticipating for Gateway? Curtis Philippon: Well, I think clearly, from our view, and I think you're seeing the impact of the world seeing that you need North American energy supply in a bigger way. So I fully expect you're out of this, you will see people looking for ways to derisk their supply chain on oil. You're going to see an increasing shift on supply coming out of the U.S. And I do expect that will translate into more longer-term arrangements coming out of the U.S. to supply customers. I think no matter what happens in Iran, and there's all kinds of different scenarios that will play out here. But no matter what, there's a lot of work to do in the world here to sort of replenish some of the supply that's been lost over the last number of months. And then on top of that, I expect you're going to see people need to not only refill their strategic reserves, but you're going to need to see -- I think people are going to want to have even more strategic reserves on the other side of this disruption in the world. And so I think you've got a pretty long runway in front of us where there's going to be a big pull on U.S. exports and Gateway is going to be a good beneficiary of that. I think one interesting observation we've seen from our customers is that we've seen some of our Asian customers be a little bit more front foot on this and some of the increase in activity has been focused on supply in Asia. And we actually have seen a little bit less from some of the European customers. I think that's sort of notable interesting trend out of this. But I think in time, I think the entire world has an oil supply problem, and that's going to drive all kinds of demand from all over the world on U.S. supply. So I think that's a trend that is still -- we're still see play out over the next number of months. Maurice Choy: Understood. If I could just finish off keeping this theme about derisking the supply chain. I recognize that you do have some DRUs in your $1 billion 5-year backlog. Given your comments about potential for incremental pipeline egress in the years ahead from Canada, how do you see the outlook for DRUs, especially like would you and your partner ever consider proceeding with these DRUs if they aren't fully long-term contracted competitively? Curtis Philippon: So I think when you look at the sort of the stack of the 5 verticals on where we see capital opportunities, I think the DRU would be on the back end of those opportunities that we see probably more actionable things upfront for as far as new DRU development, I think, is sort of on the back end of the 5-year time frame. But I still think there's a position for additional DRU phases to sort of solve the overall egress solution out of Western Canada that I think you're going to see a number of these pipe projects go forward that's going to drive some good efficient flow of barrels to the U.S. And I'd be a believer that you're going to see some good expansion for producers to be able to get barrels to the U.S. But I think you're going to be limited on what you can get to the West Coast beyond sort of expanding TMX. And I think the play for the DRU for additional phases sort of 2 parts. One, it allows you perhaps to give you a way to expand additional export capacity to the West Coast that there's a way to use a DRU to feed additional export capabilities. Or two, is a bit of a very custom supply option to some refinery that want sort of a neat product that can come out of the DRU and a bit of a custom solution. But I think those are probably a little bit further down the pecking order related to things that are going to get sanctioned over the next few years, though. So I think it's one to watch and one that I think still has legs, but I think you're going to see other pipeline expansion, other tank expansion type projects from us before you see the DRU. Operator: [Operator Instructions] Our next question comes from the line of Patrick Kenny of NBCN. Patrick Kenny: Just maybe back on the Marketing business. You mentioned the headwinds from backwardation, which makes perfect sense. But I guess what I'm not clear on is this dislocation we've seen between the physical spot markets versus the financial prompt markets. And maybe you could just walk us through what's been going on there? And if this unusual dynamic does continue going forward, if that represents any incremental opportunities for your team? Curtis Philippon: Pat, I think we're all seeing the same thing that there is this dislocation and just what is the reality of how these markets will play out. That's something we watch. I think there's -- within there, there's there is volatility opportunities for our Marketing customers. I also think clearly, within that, there's opportunity for our producer customers to realize a higher price for their barrel as you look out further in the curve, I think that's quite healthy for our customers. And I don't believe that's properly priced into the curve yet. So I think that's probably where you see the bigger impact relative -- sure, there's some -- our marketing group does a great job in volatile times. And so I think there'll be some small wins around volatility that the marketing group will take advantage of. But the far bigger impact for us is sort of healthy opportunities for Infrastructure customers that I think you'll see as sort of actual prices start to get realized. Patrick Kenny: Got it. That's helpful. And then I guess just back on the back of the Chauvin acquisition and as your team looks for that next tuck-in opportunity, wondering if you could just help us compare and contrast the Canadian versus U.S. landscape right now, if you might be seeing more attractive acquisition multiples in either jurisdiction, more buyers than sellers in either market? And if labor availability also has any impact on how you're thinking about monetizing any growth potential off of any asset that might be acquired down the road? Curtis Philippon: M&A is a good question. I think the Chauvin acquisition was a great one for us. We're just getting our hands around it a week in. But it -- I think it gets a message to the market that we're very open for these types of things. Like we are a crude-focused business, and we love assets that potentially tie into our current crown jewel assets, both in Canada and the U.S. And so we spent a lot of time with our team looking around at various assets and being proactive, reaching out like we did with Chauvin to see, is there a potential fit that we can find a home for those assets within Gibson. That's -- I think that's something we'll stay active with. I think in general, you probably heard me talk before that I think there's opportunities that come up out there right now where we have some other gas-weighted names that are maybe a little bit more focused on building up their gas portfolio and perhaps we can we can help them with sort of finding a different home for some of their crude assets. And so we look at those sorts of things across Canada and the U.S. to try and find a fit. I think in Canada, just in general on both M&A and on sort of organic growth capital because of just the overall growth that you're seeing right now in Western Canada, I'd say there's probably a little bit more active environment in Canada related to M&A and organic growth capital, just growth drives lots of interesting opportunities that fit in well with Gibson. So we're seeing a bit more of that. So we're staying active on the M&A side, looking around. I think we saw with the Chauvin deal that our shareholders will be very supportive of finding other deals like this, and so we'll be very open to that. But I just caution around that, that it takes 2 to do a deal, and there's only so many great assets out there. And so I think there's nothing imminent that I would be messaging that we're going to go fine. But we're going to stay proactive and look for good fits. Operator: I am showing no further questions at this time. So I would like to turn the conference back to Beth Pollock for closing remarks. Beth Pollock: Thank you. Thanks, everyone, for joining us today. Supplemental materials are available on our website at gibsonenergy.com. If you have any additional questions, please reach out to our Investor Relations team. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Greetings, and welcome to the Enpro First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to James Gentile, Vice President, Investor Relations. Thank you. You may begin. James Gentile: Thanks, Jessie, and good morning, everyone. Thank you for joining us today as we review Enpro's first quarter 2026 earnings results and discuss our improved outlook for 2026. I'll remind you that this call is being webcast at enpro.com, where you can find the presentation that accompanies the call. With me today is Eric Vaillancourt, our President and Chief Executive Officer; and Joe Bruderek, Executive Vice President and Chief Financial Officer. During this morning's call, we will reference a number of non-GAAP financial measures. Tables reconciling the historical non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials. Also, a friendly reminder that we will be making statements on this call, including our current perspectives for full year 2026 guidance that are not historical facts and that are considered forward-looking in nature. These statements involve a number of risks and uncertainties, including those described in our filings with the SEC. We do not undertake any obligation to update these forward-looking statements. It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer. Eric? Eric Vaillancourt: Thanks, James, and good morning, everyone. Thank you for your interest in Enpro, as we discuss our first quarter results, provide an update on strategic initiatives and share our current views for the balance of 2026. Before we discuss our results for the first quarter, I would like to recognize our 4,000 colleagues across the company who are accelerating their personal and professional growth, while contributing to Enpro's strategic and financial successes. Momentum and excitement is showing up throughout the organization. And we are off to a strong start in the second year of Enpro 3.0. We are energized to continue providing critical products and solutions to our customers, while driving significant enterprise value creation, by unlocking compounding strength of our portfolio. Our leading market positions, committed colleagues and strong balance sheet support the continued execution of our multiyear value creation strategy. After my update, I will turn the call over to Joe for a more detailed discussion of our results and drivers of our increased guidance for 2026. Now on to the highlights for the first quarter. We started 2026 off on the front foot with reported sales up nearly 11% year-over-year. Improving demand in semiconductor markets drove sales in the Advanced Surface Technologies segment up over 11%. Additionally, the contributions from the 2 businesses that we acquired in the fourth quarter, AlpHa Measurement Solutions and drove Sealing Technologies sales up 10.8%. Total company adjusted EBITDA increased nearly 13% to over $76 million at a margin over 25% for the first quarter. We are pleased with these results, especially as we continue to invest in growth opportunities across the company at high-margin return thresholds, while accelerating investments in the development and growth of our colleagues. Throughout our organization, teams are excited to drive our 3.0 strategy forward. Our early progress shows the benefits we expect to unlock as we move into this phase of our strategy. We are confident that our proven excellent execution will allow us to continue to succeed in a variety of macroeconomic backdrops. In AST, positive trends across the segment's portfolio of products and solutions are translating into strong performance. The slope of the demand curve has steepened with order patterns accelerating during the first quarter ahead of our expectations at the start of the year. For us, execution is top of mind. And we began building inventory during the first quarter to ensure that we can effectively deliver for our customers and proactively manage potential capacity, supply chain and labor constraints as demand increases. We are already seeing the investments we made in AST during the downturn begin to bear fruit in the early stages of the recovery cycle. We expect these investments will position us well to capture opportunities from the acceleration of semiconductor capital equipment spending for the balance of the year and beyond. We also believe that, our vertical integration model is a key differentiator for Enpro in the next phase of the semiconductor industry growth, as many of our new business wins are using more of our solutions to drive value for our customers, enhancing our specified position in critical in-chamber tools, including gas dispersion and wafer handling applications. In addition, hard work to qualify and earn processor record designations solidifies our position in leading-edge precision cleaning solutions, a business that is currently strong and accelerating. Our capacity expansion in Taiwan, California and Arizona, both executed and ongoing, position us to participate in the rapid expansion of leading-edge chip production, capacity supporting advanced computing and artificial intelligence. In Sealing Technologies, segment revenue of 10.8% was primarily driven by the first full quarter contribution from the acquisitions of AlpHa and Overlook completed in the fourth quarter of 2025, recovering nuclear solutions sales and currency tailwinds. Commercial vehicle sales were down year-over-year, below our expectations as demand remains slow, although we're cautiously optimistic that we are nearing the bottom in commercial vehicle markets. Aerospace sales in Sealing were flat year-over-year, reflecting a difficult year-over-year comparison in commercial aerospace, which was partially offset by continued acceleration in demand for products supporting space applications. Total Sealing segment orders were up double digits during the first quarter. Sealing Technologies segment profitability remained strong at 32.5% with disciplined execution helping to offset continued growth investments, softness in commercial vehicle sales and tepid general industrial demand internationally. Aftermarket sales represented 60% of Sealing segment revenue in the quarter. Integration is going well at AlpHa and Overlook. And we are making the appropriate investments to fully integrate these businesses into Enpro and unlock additional growth opportunities. Our new colleagues are already finding ways to leverage Enpro network, including our sourcing, supply chain capabilities and operational expertise while delivering strong top line growth during the first quarter. Additionally, AMI, which we acquired in January 2024, continues to perform above plan. We expect the Sealing Technologies segment to continue to deliver continued best-in-class performance. Our growth priorities underpinning the Enpro 3.0 strategy remain unchanged and will guide our performance through 2030. Over the long term, we are positioned to generate mid to high single-digit organic top-line growth with strong profitability and returns complemented by capability expanding acquisitions that meet our rigorous strategic and financial criteria. We are targeting mid-single-digit organic growth in Sealing Technologies. While at AST, we are targeting at least high single-digit organic growth, with both segments capable of generating 30% adjusted segment EBITDA margins plus or minus 250 basis points through 2030. Our cash flows allow us to maintain our strong balance sheet with a net leverage ratio currently at 1.9x after taking into account the fourth quarter acquisitions of AlpHa and Overlook. Our first capital allocation priority is to reinvest in the business and our people, while pursuing select strategic acquisitions that expand our leading-edge capabilities and meet our stringent criteria, without the use of excess leverage to drive growth in line or above Enpro 3.0 goals. We are excited to deliver on our promises and continue to execute our strategic plan. Life is good at Enpro and the future is bright. Joe? Joe Bruderek: Thank you, Eric, and good morning, everyone. Enpro started 2026 with strong results and consistent execution despite a dynamic macroeconomic environment. For the first quarter, sales of $303 million increased nearly 11%, supported by strong year-on-year revenue growth at AST of over 11%. The contributions from the recent acquisitions and steady overall performance in the Sealing Technologies segment. First quarter adjusted EBITDA of $76.4 million increased nearly 13% compared to the prior year period. Total company adjusted EBITDA margin of 25.2% expanded by 40 basis points year-over-year, driven by consistent performance in the Sealing Technologies segment and a nearly 20% increase in AST segment EBITDA, which includes expenses tied to growth investments, both executed and ongoing. Corporate expenses of $13.7 million in the first quarter of 2026 increased from $11.3 million a year ago, primarily driven by higher incentive compensation accruals and $1.2 million in restructuring costs. Adjusted diluted earnings per share of $2.14 increased 13%, largely driven by the factors behind adjusted EBITDA growth year-over-year. Moving to a discussion of segment performance. Sealing Technologies sales increased 10.8% to $199 million. Growth was driven by the contributions from the AlpHa and Overlook acquisitions, a recovery in Nuclear solutions sales from the choppiness experienced last year, strength in compositional analysis applications, as well as strategic pricing actions. These gains more than offset soft commercial vehicle demand and slower general industrial sales internationally. Foreign currency translation was also a tailwind. North American general industrial, aerospace and food and biopharma sales were firm throughout the quarter. For the first quarter, adjusted segment EBITDA increased over 10%, driven by favorable mix, strategic pricing initiatives, contributions from AlpHa and Overlook and foreign exchange tailwinds, partially offset by lower commercial vehicle volumes and investment in growth initiatives. Adjusted segment EBITDA margin was 32.5% and remained above 30% for the ninth consecutive quarter. Turning now to Advanced Surface Technologies. Sales for the first quarter were up over 11% and orders during the quarter hit a clear inflection point. Demand for precision cleaning solutions tied to advanced node chip production is accelerating. In addition, our outlook for semiconductor capital equipment spending has improved. And we built inventory of key products during the first quarter to prepare for the expected increase in demand. For the first quarter, adjusted segment EBITDA increased 18.5% versus the prior year period. Adjusted segment EBITDA margin expanded 140 basis points to 23.3%. Operating leverage on higher sales growth and higher production volumes, as well as favorable mix were offset in part by $2 million of increased expenses tied to growth initiatives. Our #1 priority is to serve our customers and remain agile as we enter this period of unprecedented demand for our semiconductor products and solutions. Moving to the balance sheet and cash flow. Our balance sheet remains strong. And we have ample financial flexibility to execute on our long-term organic growth initiatives and consider select acquisitions that align with our strategic priorities and deliver attractive returns. We generated strong free cash flow in the first quarter, more than doubling from last year to $26.5 million, while capital expenditures increased nearly 40% to $13.1 million, largely supporting growth and efficiency projects. During the first quarter, we repaid $50 million in revolving debt, bringing our leverage ratio to 1.9x trailing 12-month adjusted EBITDA. We expect to continue generating strong free cash flow in 2026 with an unchanged capital expenditure budget of around $50 million this year as we continue to invest in the company at solid margin and return thresholds. Finally, our strong balance sheet and cash generation provide us with ample liquidity to make these investments, while continuing to return capital to shareholders. In the first quarter, we paid a $0.32 per share quarterly dividend totaling $6.9 million. We also have an outstanding $50 million share repurchase authorization. Moving now to our increased guidance. We are raising our total year 2026 guidance issued in mid-February and now expect total Enpro sales to increase in the 10% to 14% range, up from 8% to 12%. Adjusted EBITDA in the range of $315 million to $330 million, up from $305 million to $320 million previously and adjusted diluted earnings per share to range from $8.85 to $9.50, up from $8.50 to $9.20. The normalized tax rate used to calculate adjusted diluted earnings per share remains at 25% and fully diluted shares outstanding are 21.3 million. In Sealing Technologies, shorter cycle order patterns remain solid as we enter our seasonally strong second quarter. As Eric mentioned, we are seeing double-digit order growth year-on-year despite a slightly softer commercial vehicle outlook than previously expected. And we expect mid-single-digit revenue growth, excluding the contributions from AlpHa and Overlook in the Sealing Technologies segment for the year. We are encouraged by positive order momentum in domestic general industrial, aerospace, food and biopharma and compositional analysis, as well as smaller but improving pockets of earned growth in areas such as communications and data center infrastructure. We expect these elements to support improved sequential sales performance in Sealing Technologies into the second quarter while not factoring in any recovery in commercial vehicle markets in our improved guidance ranges. Finally, we expect Sealing segment profitability to remain towards the high end of our long-term target range of 30%, plus or minus 250 basis points for the year. In the Advanced Surface Technologies segment, we are seeing significant order momentum with strong acceleration in Precision cleaning solutions and critical in-chamber tools. New platforms and capacity expansions that we have invested in will begin to generate revenue in the second half of 2026, with ramp schedules dependent on underlying volume into 2027 and beyond. At this time, we expect AST revenue growth in the mid-teens range year-over-year, with segment profitability improving to a run rate close to 25% by the end of 2026 as capacity and supply chains aligned to meet elevated demand levels. Thank you for your time today. I will now turn the call back to Eric for closing comments. Eric Vaillancourt: Thank you, Joe. We are excited to demonstrate our strength and agility as we continue to accelerate our personal and profitable growth in the second year of Enpro 3.0. Thank you all for your interest in Enpro. We'll now welcome your questions. Operator: [Operator Instructions] Our first question is coming from the line of Jeff Hammond with KeyBanc Capital Markets. Mitchell Moore: This is Mitch Moore on for Jeff. Obviously, just really nice margin progression sequentially for AST. Could you help us just unpack a little bit how that inventory investment helped margins in AST? And then separately, just could you help us understand the margin trajectory kind of through the balance of the year? Is it kind of a linear progression to that 25% you talked about? Joe Bruderek: Yes. Thanks, Mitch. As you noted, we did see progression from the low 20%s to 23% and change for the first quarter. The inventory build, which is really important as we head into significant demand in the second quarter and more specifically for the back half of the year, contributed about 150 basis points to the margin increase in the first quarter. We also saw Precision cleaning continue to be very strong, tied to advanced node precision cleaning work, both in Taiwan and the U.S., which helped margins. And we're also seeing a little bit of leverage on the revenue growth. We expect to continue to build inventory a little bit in the second quarter. It might be a little bit less than we had in the first quarter. And then revenue increasing to offset any lower inventory build potentially in the second quarter. So margins relatively similar in the second quarter and then seeing incrementally throughout the second half, pointing towards that roughly 25% run rate that we expect to exit the year at. Mitchell Moore: Great. That's helpful. And then maybe just the Sealing. I think orders were up double digits in the quarter. Could you just expand on the order activity you saw there, where you're seeing it, if it's concentrated or more broad-based? And then if you could just talk a little bit about your confidence in Sealing kind of picking up through the remainder of the year with a little bit slower start here. Eric Vaillancourt: Very confident in Sealing picking up throughout the year. Our order rate is very strong, exiting the first quarter and building throughout the quarter. So very positive on the year. I don't have any concerns there. Very strong in North America, space, aerospace in general. General industrial in the U.S. is still pretty strong. Only area of weakness really is general industrial and a little bit in Europe, a little bit in Asia. But it still doesn't have any meaningful impact to our overall results. Operator: Our next question is coming from the line of Steve Ferazani with Sidoti & Company. Steve Ferazani: Appreciate the detail on the presentation. Eric, I understand commercial vehicles still being weak. Obviously, we've seen 3 or 4 quarters -- 3 or 4 months of much stronger Class 8 truck orders, obviously, coming off of a significant trough. When would you start seeing that? And do you -- is that built in at all that CV comes back at all in the second half? Eric Vaillancourt: It's not built into our projections at all, as we said in the script. Although, I am cautiously optimistic that it does start to pick up in the second half of the year. Keep in mind, the reason for the acceleration in truck orders is really to avoid the extra cost dilution enhancements in the trucks. And so right now, people are prioritizing trucks versus trailers. But that demand will normalize over time to roughly -- if you look over a 20-year cycle, it's about 250,000 units a year, we're somewhere 170,000 to 180,000 now. So I expect next -- at the end of this year, beginning of next year, somewhere in that time frame, you'll start to see some momentum build. I mean, the ratio between trucks and trailers really doesn't change much. We expect to have about 1.1 trailers per truck. So you would expect that to come back. And our aftermarket business remains very strong. Steve Ferazani: Got it. How are you feeling about the 2 acquisitions now with the quarter under your belt? I know that with Overlook, they had made some pretty significant capacity additions prior to the acquisition. In terms of those 2 businesses, do they require significant investments to grow moving forward? How do you feel about them? Eric Vaillancourt: Very, very strong. Very excited about them going forward. They don't require significant investments. Overlook, they made a pretty significant investment and moved into a new building or did move into a new building in the first quarter. But that was already ongoing before we closed on the business. So it really, it was just a move at this point. And so most of the upfitting that already done and their backlog and their performance is really impressive. AlpHa continues to go well. And so we're still excited about those businesses going forward. Joe Bruderek: And I'll just add, Eric, the integrations are going well. I think the teams are joining our functional support, we're helping where we can there. We're already seeing some supply chain opportunities. In addition, we're making some smaller investments. But investments in their commercial organizations to help expand growth opportunities and enter a few new markets and new customers. So we expect that's an area that we can add value and help them grow over time. Steve Ferazani: And I think you mentioned in the script that AMI since the acquisition was 2024, I believe, continues to outperform in general. How are you thinking about that compositional analysis market? Eric Vaillancourt: Love the space. We just would like to do more. And we continue to have a very active pipeline and we continue to look for the right opportunities to meet all of our criteria that are exciting. And there's several opportunities in our pipeline exciting and the more and more opportunities seem like to come to the market. So there's more momentum in that space. Joe Bruderek: Overall, if you take into consideration the compositional analysis growth perspective. We're looking for a kind of minimum high single-digit organic top-line growth moving forward with incremental investments to expand end market positions and commercial expertise. Steve Ferazani: Got it. That's helpful. Just if I get one more in, in terms of where you are with the various qualifying processes to meet advanced node production. Is there a lot more to go there? Eric Vaillancourt: I don't think it ever stops. So I start by saying that. So no, Arizona is getting fully qualified now. I don't know how much longer -- it shouldn't be long at all. But at the same time, there's new investments in Taiwan that are just starting. There's new customers that are starting as well. So I don't think it ever ends, 2-nanometer is going to start to ramp at some point in the next little bit and then you're already trying to qualify 1.4. So it's -- I don't it stops. I think of that as continued investment. Operator: [Operator Instructions] Our next question is coming from the line of Ian Zaffino with Oppenheimer & Company. Isaac Sellhausen: This is Isaac Sellhausen on for Ian. Just on the updated guidance, if you could unpack a little bit more on what has changed with regards to the outlook for the AST business. Maybe if you could parse out the demand drivers between cleaning and coating and the semi cap side. It sounds like visibility is a bit better in capital equipment. Joe Bruderek: Yes, we're clearly seeing increased order momentum and longer lead times. And demand is inflecting significantly sooner and higher than we expected coming into the year from an AST's perspective. And it's coming from both. It's coming from precision cleaning and semiconductor capital equipment in really all geographies. So our increased guidance is pretty much all driven by AST. Our teams are rallying around meeting the higher demand, working with our customers and the entire supply chain and all of our partners to kind of meet the overall industry demand. The outlook is really bright for the rest of the year. The second half is firming up where when we had the call in February, we talked about we saw orders for the second half and really starting in the end of the second quarter. Well, the second quarter is filling in nicely. We're seeing some of that demand come a little sooner into the second quarter. And the second half is clearly going to be significantly increased over the first half in the magnitude of double-digit increase second half versus the first half. And the industry is all talking about rallying to meet this higher demand and out through the end of '26 and really into '27. So there's tremendous optimism. And we expect to participate and even outperform what the market expects. Isaac Sellhausen: Okay. Great. And then just as a follow-up on the margin outlook for both businesses, obviously, it sounds like you guys are managing any kind of inflationary pressures just fine. But is there anything to call out maybe on the cost side with regards to whether it's fuel or equipment. But yes, that would be helpful. Joe Bruderek: No, there really isn't anything that's going to be meaningful from the supply side or cost side. Like I said, we do a very good job in general. Operator: We have no further questions at this time. So I would like to turn the floor back over to James Gentile for closing comments. James Gentile: Thank you, everyone. We're seeing strong momentum across Enpro and look forward to updating all of you when we report second quarter results in early August. Have a great rest of your day. Operator: Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. And you may disconnect your lines at this time.
Operator: Welcome to JBT Marel's Earnings Conference Call for the First Quarter 2026. My name is Ben, and I will be your conference operator today. As a reminder, today's call is being recorded. [Operator Instructions] I will now turn the call over to JBT Marel's Senior Director of Investor Relations, Marlee Spangler, to begin today's conference. Marlee Spangler: Thank you, Ben. Good morning, everyone, and thank you for joining our first quarter 2026 conference call. With me on the call is our Chief Executive Officer, Brian Deck; President, Arni Sigurdsson; and Chief Financial Officer, Matt Meister. In today's call, we will use forward-looking statements that are subject to the safe harbor language in yesterday's press release and 8-K filing. JBT Marel's periodic SEC filings also contain information regarding risk factors that may have an impact on our results. These documents are available on our IR website. Also, our discussion today includes references to certain non-GAAP measures. A reconciliation of these measures to the most comparable GAAP measures can be found on our IR website. With that, I'll turn the call over to Brian. Brian Deck: Thanks, Marlee, and good morning, all. We got off to a solid start in 2026. We demonstrated our commercial momentum with a second consecutive quarter of orders exceeding $1 billion, including continued robust global demand from our poultry customers. We captured meaningful year-over-year margin expansion, enabled by further synergy savings and strong execution. Additionally, cash flow was extremely strong, allowing us to make further and significant progress in reducing our financial leverage. As a result, we remain confident in delivering our original earnings guidance for the year. Before we talk more about the first quarter, I'd like to thank everyone who was able to participate in our Investor Day in late March. It was an important milestone for JBT Marel as we unveiled our NextGen strategy and detailed our 2028 financial targets. And as we discussed, we are very pleased with our progress integrating JBT and Marel, which underscores the commercial, operational and financial benefits of the combination, and provides confidence in the journey ahead. I'll now turn the call over to Arni to provide details about our NextGen strategy, then Matt will follow up with a financial recap of our first quarter performance. Arni Sigurdsson: Thank you, Brian. At our Investor Day in March, we detailed our plans for profitable growth and continued margin expansion through 2028. Our food and beverage customers are shifting to an outcome-based model that increases the demand for integrated solutions across the value chain and requires full life cycle support, high uptime, and data and processing insights to run at the highest performance level. JBT Marel is uniquely positioned to deliver these comprehensive solutions, and our NextGen strategy will strengthen our competitive position even further. The key pillars of the NextGen strategy are, first, advancing our customer-centric service model by building on our large global installed base to deliver a better customer experience through prescriptive maintenance, improved parts delivery performance and more regional accountability. Second, it is enhancing our product offering, full-line solutions and digital capabilities with targeted innovation through our food application expertise. Third, it is capturing commercial opportunities through cross-selling and growth in emerging markets, and delivering end-to-end solutions that optimize customer performance. Then, of course, our culture of continuous improvement will further enhance the efficiency of JBT Marel, allowing us to invest in the business and be more competitive. And finally, at the right time, we plan to pursue strategic and disciplined M&A to build an even more comprehensive offering and strengthen our value proposition of integrated line solutions. Putting this all together, we expect our revenue to grow at a 3-year organic compound annual rate of 5% to 7%, and we are targeting an adjusted EBITDA margin of 20% in 2028, supported by our margin enhancement initiatives and volume growth. We're confident that our strategy positions us to deliver profitable growth and value creation for both customers and shareholders, and we look forward to updating you on our progress. Now let me turn the call over to Matt to discuss our performance in the quarter. Matthew Meister: Thanks, Arni. As Brian mentioned, we're off to a good start in 2026. Our first quarter consolidated revenue was $936 million, an increase of approximately 10% year-over-year. Organic revenue growth was 4%, with foreign exchange contributing an additional 6%. Consolidated adjusted EBITDA of $142 million improved 27%, and adjusted EBITDA margin of 15.2% improved by 210 basis points. From a significant -- from a segment perspective, Protein Solutions revenue of $460 million grew 22% year-over-year, which included an approximate 8% benefit from foreign exchange. Organic growth was primarily due to higher poultry volume as we executed on strong backlog built in 2025. Protein Solutions segment adjusted EBITDA margin improved by more than 500 basis points year-over-year to 21.7%. This significant improvement was driven by large -- by volume leverage in poultry and the results from synergies and continuous improvement initiatives in our meat and fish businesses. Prepared Food and Beverage Solutions segment revenue of $476 million was flat year-over-year, which included an approximate 4% benefit from foreign exchange. As we've discussed on previous calls, we experienced softness in the CPG end market during 2025, which contributed to the lower volume. Adjusted EBITDA margin for the segment declined 170 basis points year-over-year to 14.7%, which included the expected impact of higher tariff costs, the volume decline and underperformance in our warehouse automation business. For the quarter, we generated free cash flow of $100 million, driven by our earnings performance and an increase in customer advance payments from our strong order intake. This resulted in free cash flow conversion to adjusted EBITDA of 70%. We continue to make great progress deleveraging our balance sheet with our leverage ratio at 2.6x at the end of the first quarter, and we remain on track to reduce leverage to approximately 2x by year-end. Given our first quarter performance and strong orders, we are maintaining our full year 2026 guidance. At the midpoint, that reflects revenue growth of 6%, adjusted EBITDA margin expansion of 145 basis points, and an adjusted earnings per share improvement of 29%. For the second quarter, we anticipate revenue of $975 million to $1 billion and adjusted EBITDA margin of 17% to 17.5%. Now regarding the impact of tariff changes on our guidance. We are forecasting that the benefit from the elimination of IEEPA tariffs will be essentially offset by incremental Sections 122 and 232 tariff increases. Additionally, we have not factored in any IEEPA tariff payment refunds. Therefore, our full year guidance remains unchanged and continues to reflect a 25 to 50 basis point headwind from tariffs after all mitigation actions. With that, let me turn the call back to Brian. Brian Deck: Thanks, Matt. Speaking of the outlook for JBT Marel, let me comment on our commercial momentum. As I mentioned at the top of the call, orders exceeded $1 billion in the first quarter, a year-over-year increase of 17%. That gain reflects continued robust demand from our poultry customers globally, driven by unabated demand from end customers. And beyond poultry, the benefits of our diversified model are also playing out with broad-based order strength as we experienced double-digit year-over-year growth from both our Protein Solutions and Prepared Food and Beverage segments. Specifically, we saw a pickup in investment in Prepared Foods as well as the meat and fruit and vegetable end markets. Geographically, investment was strong in most regions with a sequential increase in demand from Europe, North America and Latin America. Additionally, we continue to capture synergistic orders as our go-to-market strategy promotes cross-selling of legacy JBT and Marel solutions. As it relates to the conflict in the Middle East, we are not experiencing any noteworthy impact on our order book and pipeline. As a reminder, the Middle East region has historically accounted for less than 5% of total JBT Marel revenue. But even today, we continue to progress on opportunities in the region. Moreover, we have not seen an impact to broader customer investment trends in Europe as the demand to meet the needs for protein output, automation and efficient operation continues. However, the conflict is resulting in a more challenging logistics, fertilizer and energy inflationary environment, which heightens our attention to any implication for these cost dynamics for both JBT Marel and our customers. So far, it seems our customers remain confident in their ability to pass these costs along or otherwise manage through them. With all this said, our teams are executing well despite the dynamic macro environment, which speaks well to our prospects for the remainder of 2026 and beyond. Thank you to our talented people across the globe for making it possible. Now let's open the call to questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of Ross Sparenblek with William Blair. Robert Samuel Karlov: This is Sam Karlov on for Ross. Really great to see the strong orders in the quarter. I mean, you kind of touched on this, but we have been hearing some concerns that input cost inflation may have been impacting our customers' willingness to order. Can you maybe walk through how this current inflationary trend compares to 2022? Brian Deck: Sure. Happy to do so. So two things, I would say, first, specific to our poultry customers, they are in a much stronger position today versus a few years ago. With excellent customer demand, down supply, good price/cost spreads and strong balance sheets. More specifically, corn and soybean are in abundant supply and remain in that low-cost position here in 2026, versus high prices in 2022, which, if you recall, were exasperated by the Russia-Ukraine conflict. And wholesale prices for poultry today are -- while off its highs are still at a level where producers are making really nice money. And in part, you saw the Tyson report yesterday, a nice quarter. And again, balance sheets remain strong, and there's still a continued bias towards investment in all the things that we've talked about. I'd also say from a -- specific to JBT Marel standpoint as a combined company, we really now have the benefit of a more diversified product portfolio within poultry because now we have primary, secondary, all the way to end of line and including a much deeper further processing portfolio, and we're seeing a lot of investment on further processing coming along. But also, remember, we've got much broader end market exposure outside of proteins, a better mix of recurring revenue, a broader geographic and a broader geographic exposure. Additionally, if you recall, back in 2022, 2023, Marel meat and fish, they weren't really contributing much to the situation from an earnings perspective. And now while we've got a lot of room to go on those businesses, they're both contributing nicely. So we're simply more diversified financially as well. Really, what I'm saying is the combined benefits of the scale and diversification of both the product and the market side, we've severely derisked the company compared to where we were in the past. And that was a big part of the industrial logic of the two businesses coming together. So while I'm not saying that we're immune to cyclical forces, I'm just saying we're a better business today and more diversified than we were back then. Robert Samuel Karlov: Got it. That's super helpful. And kind of sticking on the same theme, has your ability to internally pass through your own inflationary costs meaningfully changed since 2022 following the Marel acquisition? Brian Deck: I would say, generally, we're more competitive than we've ever been by virtue of just our continuous improvement efforts, and we have strong market positions. So yes, I think we do have a good ability to pass things along. We're obviously very conscious of where we sit in the marketplace from a competitive pricing situation. So that always comes into play. But certainly, we feel we're in a good spot generally. Arni Sigurdsson: And maybe just to add a little bit because like if you look at, kind of maybe, more specifically to the end markets that Marel was focused on back in 2022, there was basically a perfect storm. There was like a headwind in most of our markets. If you look at the pork business, obviously, the war with the sanction on Russia and kind of the Ukraine market closing down, that was north of 10% of the meat business at the time. But what was also happening, which was an extra headwind was that China really cut down on their imports of pork because they were built -- kind of China was building up the herd after the African swine fever. So there was an oversupply of pork in Europe and North America, kind of independent of what was going on from a cost standpoint. The beef cycle was turning at that point kind of to a more negative environment. And then on the fish side, you were seeing, quotas being cut for the first time for a few years on the white fish side. And Norway introduced a 40% tax on salmon farming, which is close to 50% of the salmon farming in the world. So there was also just like a very specific dynamics if you were looking, kind of, more specifically at the model business back in the day. But like Brian said, we're a different company and much stronger from a scale, from a diversification standpoint. Not only from an end market standpoint, but also across kind of the value chains in those end markets. Operator: Your next question comes from the line of Justin Ages with CJS Securities. Justin Ages: I was hoping we could get a little more color on some of the headwinds in Prepared Food and Beverage Solutions. What's causing these persistent headwinds in warehouse automation? Matthew Meister: Well, I think in warehouse automation specifically, that business had a bigger impact from the tariff changes on its customers than the rest of our business did. So they've been really impacted by demand because of the impacts on its market. And they've also had a few discrete projects that they've been working through over the last 2 quarters. We think that's largely behind us now. And the business is taking some actions to try to address the lower volume and improve margins going forward. And we should expect those actions to start to impact late here in Q2, and then going on in Q3 and Q4. Justin Ages: Thanks for that Matt. And then switching to poultry, good to see strong robust demand. Is it possible to get a little more color on where that is geographically? Is it broad-based in all your regions? Is it specifically in one region, leaving an opportunity to grow more in another region? Just looking for any color there. Brian Deck: Sure. So the demand is fairly broad-based. The -- Europe is strong. North America is, I would say, even a little earlier in the cycle than the European cycle, and we expect continued demand there, especially with some of the opportunities with line speeds and whatnot. So I would say they're actually earlier in the cycle than Europe. And South America is very strong for us right now. We may have a record year -- this year down there. I would say Asia is a little earlier, or a little -- not as quite strong. But good opportunities, especially in the Australia, New Zealand area. Operator: [Operator Instructions] Your next question comes from the line of Mig Dobre with R.W. Baird. Mircea Dobre: Brian, just maybe, tacking on to those last comments that you had on poultry. I'm sort of curious as to what your visibility is here at this point, right? I mean we -- just in speaking with investors, I think this is kind of like the primary concern that we've had a pretty decent poultry cycle here going for more than a year. And the question is kind of on sustainability. Maybe you can talk a little bit about that and what you're hearing from customers. I mean what is driving this investment? And can you put a finer point on what's happening with the line speeds in terms of how that manifests itself in incremental business for you guys in terms of orders either for 2026, or maybe even beyond 2026? Brian Deck: Sure. From a demand profile, there's a couple of things happening and this is global. There is a true insatiable demand for poultry right now just in terms of all the benefits that go along with incremental -- the protein aspect to it, the flexibility and flavor profiles, the religious -- I'll say, no restrictions there. As well as the continued progression of people going from grain-based diets to meat-based diets. So those secular tailwinds continue to benefit, and I think that will go on for a long time. And now that the -- I'll say that the industry got the supply-demand balance fixed after their strugglous 2023 through '22 -- to early 2024, we're just in a, I'll say, more normal cycle in that regard. And I would further say that the most recent, I'll say, demand real strength has been on that primary and secondary side, which is really supporting automation, but also just the pure volume needs for the industry. As we go further into the cycle, what we're now seeing is the need and desire for some of the downstream further processing. You heard that a little bit from Tyson yesterday, where there's -- we do expect some real strength there here later in the cycle as they look to do value-added to their portfolio and because they make more money in that regard. So I do think that we're going to see some strength in that side over the next several quarters. Sorry, what was the second part of the question? Matthew Meister: Line splits. Brian Deck: Line speeds and line splits. Yes. So we're still waiting for the USDA to make final determination, which we expect here in the next few months. The open comment period has now since closed. We met with the USDA giving our opinion on the matter and put forth our comments. And our position on this is that our technology and the line speeds, they're built for the higher line speeds, which we currently use in Europe and elsewhere. And really the line speeds in North America are a constraint on productivity and -- it actually increases food costs. So -- but what would manifest if we see some success on the line speed rules is immediately go from 140 birds per minute to 175, and that would precipitate investment all around -- you don't just turn the switch and make it go faster. The entire system has to be harmonized in order to get the productivity that you need in order to execute on that. So the shackle lines themselves, but everything around that. The deboning, everything associated with that, we think that's an opportunity. And even without, I would say, the waivers, we are still seeing demand for line splits, which effectively allows the increased speeds under the current rules of 140 birds per minute where you split the line where the USDA inspection occurs to slow it down for a period and then you join those lines back up. So we actually had a deployment in Q1 in that regard. So that was nice to see. One of our customers deploying that. So we do think independent of what the USDA decides, we think there's some opportunity to invest, which will allow our customers to get that productivity regardless. Mircea Dobre: Okay. Is it fair to think about this line speed issue as just kind of fundamentally altering the poultry investment cycle in North America? Or is this something that perhaps doesn't really have that much of an impact in -- for the overall guidance I'm talking about here? Brian Deck: This is one of the reasons why I mentioned we're earlier in the cycle in North America compared to Europe because Europe has been up these higher speeds. I think this is a multiyear investment opportunity because of the 300 or so processing lines out there, only handfuls are running at higher speeds. So we do think this is a longer cyclical tailwind specific to North America. Arni Sigurdsson: It is kind of -- how you think about it is kind of a transformation because all the infrastructure around, kind of, the farming side, ensuring supply and the current facilities are not necessarily set up in the right way to deal with the -- kind of the technology that you need and the speed and so on. So it will be kind of a gradual kind of shift in the market, we believe. So it is not -- like Brian said, it's not like you buy one piece of equipment and you swap it out. It's really -- you need to think about it much more broadly. So it has -- it will take time to progress over the whole industry. Mircea Dobre: That's very helpful. And maybe one final follow-up on Prepared Food and Beverage segment. It sounds like demand is getting a little bit better. You talked about some challenges in '25, but demand gets a little bit better. How should we think about organic growth here in terms of what's embedded in guidance? Maybe you can comment on Q2 specifically and then the rest of the year as well? And how do we also see margin progress? We started clearly slower in Q1. Do we revert to some year-over-year margin expansion at any point in time in fiscal '26? Brian Deck: Sure. I'll speak and then let Matt talk specifically about some of the trends here. But we are seeing some, I'll say, recovery in some of those end markets that were a little bit more challenged in 2025. So some of the CPG, QSR, we are starting to see improved pipeline and that manifested in stronger orders in Q1, which is nice to see. Matthew Meister: Yes. Just to add on that, I think we saw close to double-digit order improvement in Prepared Food and Beverage in Q1. So that's the positive momentum that we're seeing in the segment overall. From an organic growth rate, it will be sort of in that, call it, sort of mid-single digits, probably a little less than the average that we're looking at for the total business at 6%, if that's our midpoint. It will be higher in protein, a little bit lower on the Prepared Food and Beverage side, probably closer to 3% to 4%... Brian Deck: Especially given the slow start, right? Matthew Meister: Correct in Prepared Food and Beverage side. So that's why I would see it, but it's going to progressively improve because we have built some backlog here in Q1, and we're starting to see some positive momentum in their primary markets. Brian Deck: And the margins? Matthew Meister: Yes. And from a margin perspective, again, Q1 was certainly a bit lower than we expected. Certainly, we had some expectation with the AGV business, in warehouse automation being down, but that volume decline did have an impact on margins. But with the improved volume significantly in Q2 and Q3 and Q4, we should see sequential improvement going forward from Q1 all the way through the year. So I would expect to continue to see significant progress in Q2 and then sequential progress from there in 3 and 4. Mircea Dobre: But to be clear, do you expect to be up margin-wise here? I understand the sequential comment. At what point in time do we get margins up year-over-year? Matthew Meister: Yes. Margins will be up year-over-year in Prepared Food and Beverage. That is our forecast for that segment, yes. Operator: There are no further questions at this time. I will now hand the call over to Mr. Brian Deck for closing remarks. Brian Deck: Thank you all for joining us this morning. As always, our IR team will be available if you have any additional questions. Operator: This concludes today's call. You may now disconnect.
Operator: Ladies and gentlemen, welcome to the Q1 2026 results conference call and live webcast. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. [Operator Instructions] At this time, it's my pleasure to hand over to Christian Stohr, Senior Vice President, Investor Relations. Please go ahead. Christian Stoehr: Good morning, ladies and gentlemen, and welcome to our first quarter 2026 results presentation. Hosting our conference call today is Yves Muller, CFO and COO of HUGO BOSS. Before we begin, please be reminded that all revenue growth rates will be discussed on a currency-adjusted basis, unless stated otherwise. In addition, starting with Q1, we have adjusted our sales reporting structure. BOSS Menswear and BOSS Womenswear are now reported jointly under BOSS, while digital sales are included within retail and wholesale. As usual, during the Q&A session, we kindly ask you to limit your questions to 2, allowing for an efficient discussion. With that, let me hand over to Yves. Yves Muller: Thank you, Christian, and a warm welcome from Metzingen, ladies and gentlemen. Thank you for joining us today to discuss our first quarter results. As outlined in our release this morning, Q1 marked the first full quarter of execution under CLAIM 5 TOUCHDOWN following its introduction at the end of last year. As such, the first quarter was shaped by implementation, translating strategic priorities into concrete actions across brands, distribution and operations. Accordingly, our focus in the quarter was on disciplined execution. We implemented targeted top line measures to strengthen brand equity, continued to advance sourcing efficiencies and maintained rigorous cost control across the organization. These actions represent the first concrete outcomes of our realignment and are already translating into structural progress, particularly in gross margin and cash generation, which I will come back to shortly. Overall, we are pleased with the progress made in Q1. At the same time, we recognize that there is more work ahead, and we remain cautious on the near-term visibility given a high volatile macroeconomic and geopolitical environment. Let me now walk you through the quarter in more detail. Under CLAIM 5 TOUCHDOWN, 2026 is designed as a year of deliberate realignment rather than a year of chasing volume. In the first quarter, we made progress across all 3 pillars: brand, distribution, and operational excellence. This included refining product assortments, reinforcing our focus on full price execution, and taking targeted steps to optimize our distribution footprint. As part of this progress, we closed a net 15 freestanding stores globally, largely through expiring leases. As expected, these deliberate actions were reflected in our first quarter performance. Group sales declined by 6%, driven by the intentional quality focus embedded in CLAIM 5 TOUCHDOWN, alongside continued muted consumer sentiment. EBIT amounted to EUR 35 million, reflecting the planned impact of our strategic measures, partly offset by solid gross margin expansion and rigorous cost management. While these actions have a temporary impact on our top and bottom line performance, they represent important building blocks in strengthening the fundamentals of the business and laying the foundation for improved profitability over time. Beyond these deliberate actions, the external environment also remained demanding in the first quarter. Consumer sentiment was subdued across most key markets with continued pressure on traffic levels. Over the course of the quarter, conditions became more challenging, driven by the geopolitical developments in the Middle East. In this context, let me briefly put our exposure to the Middle East into perspective. The region accounts for around 3% of group revenues and is served through a limited and well-defined store network, primarily in the UAE and Qatar. The Middle East is also a high-quality and very profitable business for us, reflecting an upper premium store portfolio, a favorable channel mix and disciplined cost structures. From March onwards, store traffic in the region declined sharply, leading to meaningful disruption to overall retail activity and weighing on regional demand. As a result, developments in the Middle East reduced group sales by roughly 1 percentage point in the first quarter. In addition to these direct effects, developments in the Middle East also contributed to increased uncertainty more broadly. In particular, we observed early signs of a softening in consumer sentiment in selected markets alongside some moderation in international travel flows, which began to affect demand outside the Middle East towards the end of the quarter. Against this backdrop, we actively steered the business while remaining fully committed to our strategic priorities within CLAIM 5 TOUCHDOWN. With that, let me turn to our first quarter performance, starting with our brands. At BOSS, revenues declined by 3%, reflecting the challenging market environment as well as deliberate strategic actions. Menswear performed comparatively better, supported by continued strong demand in casualwear and athleisure, underlying the relevance of our 24/7 lifestyle positioning. This resilience was particularly evident at BOSS Green and BOSS Camel, both of which recorded growth in the first quarter. Womenswear by contrast was more affected by intentional assortment streamlining and targeted distribution refinement, measures fully aligned with our strategic priorities and aimed at strengthening brand positioning and long-term profitability. Turning to HUGO. Revenues declined by 21%, reflecting the strategic repositioning of the brand. During the quarter, we further advanced the streamlining of HUGO's product architecture into one overarching brand line, creating a clearer, more focused brand proposition and a more consistent market presence. While these measures continue to weigh on volumes in the near future, they represent fundamental steps to strengthen brand relevance, operational effectiveness and scalability over time. Speaking about our brands, let me emphasize once more: investing in powerful brand moments remain a core pillar of our strategy. While marketing investments were below the prior year level in Q1, primarily due to phasing effects, marketing spend amounted to 7.3% of group sales, fully in line with our CLAIM 5 TOUCHDOWN target range of around 7% of sales. Also for the full year, we continue to expect marketing investments as a percentage of sales to remain broadly in line with last year's level. In the first quarter, our brand investments focused on key initiatives such as the BOSS fashion show in Milan, which ranked among the top 10 most engaging brands during Milan Fashion Week; the launch of our Spring/Summer 2026 collections; and the third, BOSS BY BECKHAM. Together, these moments generated strong social media engagement and brand visibility. Importantly, these initiatives are designed to drive long-term equity and relevance rather than prioritizing short-term volume. From a regional perspective, revenues in EMEA declined by 8%, reflecting targeted measures to enhance distribution quality as well as muted consumer sentiment across several key markets, particularly the U.K. Despite the solid start to the year, revenues in the Middle East declined by a low double-digit rate in Q1, reflecting a sharp decline in store traffic in March, following geopolitical developments, which also weighed on overall EMEA performance. In the Americas, revenues declined by 5%, largely reflecting deliberate CLAIM 5 TOUCHDOWN measures in the U.S. market aimed at improving distribution quality across both wholesale and retail channels. As a result, reported revenues were intentionally impacted in the quarter. In addition, developments around Saks weighed on our U.S. concession business. Importantly, underlying performance in our U.S. brick-and-mortar retail business remained resilient with comparable store sales up modestly in the quarter. Outside the U.S., Latin America saw a slight normalization following a strong period of strong growth. In Asia Pacific, revenues increased by 1%, marking a return to growth. This was supported by renewed growth in China, aided by a successful Chinese New Year, as well as early progress in strengthening brand positioning and enhancing relevance in the market. Modest growth in Southeast Asia Pacific, particularly in Japan, also supports our regional performance. Turning to our channels. In retail, which includes brick-and-mortar and self-managed digital, revenues declined by 3%, also impacted by a negative space effect. On a comparable store basis, brick-and-mortar sales declined by 2%, reflecting lower traffic and our deliberate focus on full price execution, partly offset by a higher average basket size. Retail performance was also impacted by developments in the Middle East. Self-managed digital on the other side declined by 5%, reflecting our continued prioritization of full price sales in support of brand equity and margin quality. In wholesale, revenues declined by 10%, reflecting our ongoing focus on enhancing distribution quality through greater channel selectivity, a more curated assortment and a stronger emphasis on strategic partnerships. Performance was also influenced by a more cautious order behavior in the current environment as well as the known delivery timing shift of around EUR 20 million into Q4 2025, which has supported our wholesale business in the final quarter of last year. Turning to profitability. Q1 delivered a notable improvement in gross margin. Gross margin increased by 110 basis points to 62.5%, primarily driven by additional sourcing efficiency, including a further reduction in the airfreight share as well as improved pricing associated with the Spring/Summer 2026 collection. A slightly more favorable channel mix provided additional support during the quarter. Importantly, this performance demonstrates that the structural margin improvement we have been driving over recent years remain firmly intact even in a lower volume environment. Turning to cost and earnings. We maintained strict cost discipline in the first quarter. Operating expenses declined by 4%, supported by lower marketing spending due to phasing effects, ongoing efficiency improvements and further optimization of our retail cost structures, including rent renegotiations and productivity measures across our store network. As expected in a lower revenue environment, operating expenses deleveraged as a percentage of sales. As a result, EBIT amounted to EUR 35 million, corresponding to an EBIT margin of 3.9%, while earnings per share totaled EUR 0.24. Overall, this performance is fully aligned with CLAIM 5 TOUCHDOWN and our full year 2026 outlook. Let me now turn to cash flow and working capital. Building on the meaningful inventory reduction achieved at the end of 2025, inventory developed more moderately in Q1, in line with expectations. Year-over-year, inventories declined by 13% on a currency-adjusted basis, reflecting prudent buying, more focused assortments and targeted inventory optimization measures. As a result, inventory stood at 22% of group sales at the end of March, while trade net working capital declined by 10% currency adjusted. At the same time, capital expenditure remained at 3.2% of sales, continuing its normalization and remaining fully aligned with our midterm targets. Supported by both the improvement in working capital and continued CapEx discipline, free cash flow before leases improved by nearly EUR 100 million year-over-year, amounted to EUR 33 million. Let me conclude with a brief look at the remainder of the year. 2026 continues to be a deliberate year of realignment under CLAIM 5 TOUCHDOWN. Following our first quarter performance, we reaffirm our full year outlook. We continue to expect currency-adjusted group sales to decline mid to high single digits, reflecting targeted brand and channel measures. Currency effects are anticipated to remain a moderate headwind for reported sales. We likewise confirm our EBIT outlook of EUR 300 million to EUR 350 million. Gross margin expansion and continued cost discipline are expected to support profitability, while operating expenses are anticipated to deleverage due to lower revenues. At the same time, we expect macroeconomic and geopolitical volatility to remain elevated with heightened uncertainties related to developments in the Middle East. In this context, we remain vigilant and continue to closely monitor both direct effects and broader implications for consumer sentiment, international travel flows and overall trading conditions. Against this backdrop, we maintain a clear focus on operational delivery and the strategic priorities set under CLAIM 5 TOUCHDOWN. We will continue to prioritize profitability, cash generation, inventory discipline and flexibility over short-term growth. Ladies and gentlemen, let me close with 3 takeaways. First, the execution of CLAIM 5 TOUCHDOWN is firmly underway. 2026 is a year focused on strengthening the fundamentals of the business and elevating its quality rather than pursuing growth at any cost. In this context, we have made initial progress in sharpening brand focus, enhancing distribution quality and structurally strengthening the earnings profile of the business, marking an important milestone in delivering our strategy through 2026 and beyond. Second, Q1 delivered solid underlying performance. Gross margin improved, cost discipline remained intact and cash generation strengthened despite intentional top line effects from our strategic measures. Third, based on our Q1 performance, we reaffirm our full year outlook for 2026. While the external environment remains demanding and volatile, we are confident in our strategic direction and our ability to translate execution into stronger brand equity, improved profitability and long-term value creation. With that, thank you for your attention. We are now happy to take your questions. Operator: [Operator Instructions] The first question comes from Thomas Chauvet from Citi. Thomas Chauvet: Two questions, please. The first one on your introductory remarks, you said that demand outside the Middle East weakened towards the end of the quarter. Can you elaborate a little bit on what that means in the various regions? And how much was retail in April compared to the minus 3% you registered in the quarter? Secondly, on your comments about the resilience of menswear, particularly with BOSS Green and B Camel positive, can you comment on whether this is due to a very different customer profile you're now seeing in the store purchasing these 2 lines that are quite differentiated, I believe, or rather you think some relative weakness perhaps of the offering of black and orange, whether that's -- I don't know -- product quality or value for money proposition or simply the creative part. That would be useful. Also that you perhaps elaborate a bit on the 2 divisions you've created with menswear and womenswear and how this new unit of menswear is helping on the creative side? Christian Stoehr: Excuse me, this is Christian speaking, but we have to quickly follow up on question one, which was obviously a long question, but the quality was really bad on our end. I'm sorry for that. There was a bit of constraining in it. I remember you asked for retail trends in April, but what was the beginning of your question, if you can recall that, please? Thomas Chauvet: Yes. Sincere apologies for that to everyone. Yes, the comment -- can you hear me better now? Christian Stoehr: Yes, I'd say so. I mean, it's still -- it's not perfect but. Thomas Chauvet: Otherwise move to another question or two. You commented on demand weakening outside the Middle East towards the end of the quarter. And could you elaborate on what that means in the various regions? And was retail overall in April very different from the minus 3% you registered in the period? Yves Muller: So Thomas, you're asking whether the retail performance in April was different from the minus 3% in Q1. Is this your question? Thomas Chauvet: Yes. You mentioned that things weakened outside the Middle East at the end of the quarter because of the war. So I suspect that the consumer may have been impacted in the U.S. and Europe. So could you comment on the various geographies in April, please? Yves Muller: Yes. So perhaps let's take the first question regarding, let's say, current trading question. So firstly, I think we have to see that, of course, our retail business and the Middle East business is -- the Middle East business itself is predominantly a retail business, was definitely affected -- ongoing in April. So I think this refers to everybody. We are not alone in this, but we see that traffic is very low. It has slightly improved over the latest weeks, but now the last 2, 3 days have been also bad. So I would say it's a very, let's say, volatile environment. Secondly, I think this is the question around what do we see in terms of consumer sentiment. I would say here, we see in some selected markets that consumer sentiment is also affected, for example, like U.K. is affected -- was already affected in Q1, especially March, and is also affected in April. And we see that actually also the international tourist flow is also coming down and affecting the business. On the other side, I think I want to make the comment in terms of our strategic priorities. I think for us, it's also important to stay on track with regards to our strategic execution of CLAIM 5 TOUCHDOWN. And this means also for us in April, which is the month of, let's say, mid-season sale that you see very often due to the summer. For the summer collections, we decided in executing our CLAIM 5 TOUCHDOWN for this year that we don't take part in mid-season sale. So that is also one of the deliberate decisions that we have taken in order to improve the quality of our business and to have this long-term focus on brand equity. So definitely, of course, we are looking at the current trends up and down. But I think for us, it's now very important to keep our compass and to keep the course of our strategic execution. And therefore, we do not participate in April. And therefore, the month itself, it's difficult to read between the different effects that we have been seeing. With regards to your second question, actually, we are very happy with the development of BOSS Camel and BOSS Green. BOSS Green was actually up mid-single digit. You can see that our 24/7 lifestyle image is really working, especially with younger consumers. And you can also see that this is the current trend of the business with, like sports kind of activities. You've also seen that we have announced now the cooperation with Australian Open for next year. So this creates BOSS. We are working on kind of tennis and golf collection. So we are really deliberately driving BOSS Green going forward. And on top of this, we also opened some BOSS Green stores, especially in the Asian markets, where you can see this kind of positive trend. And we are following this kind of trend. With regards to BOSS Camel, which is, I mean, the majority is definitely a retail business. You can really see because of the outpricing of the luxury players and luxury competitors that some of the high value, high affluent consumers are trading down to us, and that's also driving BOSS Camel in selected markets, especially also we saw this in Asian markets, but also in the U.S., where we are actually happy. So I would view this -- I would see this positively in terms of that we have a certain portfolio to offer, and price value proposition for Black, I think, is good. Please keep in mind that we also increased the prices for the Spring Campaign 2026. And we get actually good feedback for this kind of measurement, and this is also driving our business. Operator: Then the next question comes from Manjari Dhar from RBC. Manjari Dhar: I also had 2, if I may. My first question was on COGS and raw materials. I just wondered if you could give some color on how you see the outlook on the raw material side as a result of what's going on in the Middle East? And does that have any impact on your own sourcing facilities in Turkey? My second question was on tourism. Yves, I know you commented on international tourist flow weakness. I just wondered if you could give some color on sort of how much of the BOSS estate is exposed to international tourist flows and perhaps maybe some more color on how you're seeing the performance in some of those stores. Yves Muller: Yes. Thank you very much, Manjari, for your 2 questions. First of all, regarding the COGS. So taking your concrete question regarding Turkey. So we -- for the time being, we don't see any implications regarding our factory in Izmir. Regarding raw materials, please keep in mind that the majority of the products that we have are coming from cotton and actually wool. So they are not so much influenced by this kind of high oil prices. We only have, let's say, limited exposure to polyester. You see price increases there. We have to look at it whether it's -- whether the duration will be longer. But I think what remains is that we are not as much exposed as perhaps like other sports brands, for example, and we don't see major implications for the year 2026. I think we have to observe the situation, but rather from the COGS development and also -- this also includes freight. We feel that we can compensate those effects that we might be seeing and that from -- with regards to the COGS, that we see further improvements regarding sourcing efficiencies, further reduction in airfreight share, and that these developments will support gross margin also going forward, alongside -- although we know that the Middle East has somehow implications on the oil prices. Regarding tourism, we know that our business is around overall 20% to 25% is coming out of tourism flow. We have seen some implications because of the Middle East, because of the big hubs in Dubai and Doha were closed for a certain period of time, there's less traveling. I think this has impacted the business in March and also in April, and we have to see how long it will last. I think it will also be slightly compensated in domestic revenues then, because people might be staying more at home or might be traveling less. So we have to observe this kind of development. Operator: The next question comes from Grace Smalley from Morgan Stanley. Grace Smalley: The first one would just be a quick clarification, please. So you mentioned that you are -- you're starting to see some impact from the Middle East in regions outside of the Middle East. And I think, Yves, if I heard you correctly, the U.K. was the main region that you pulled out. I just wanted to see if there were any other regions where you're also starting to see an impact outside of the Middle East or it's mainly centered within the U.K. Also on the answer on current trading, appreciate it. It sounds like April is very difficult to read given the Middle East disruption, but also the changes in the seasonal sales. But just if there's anything you can say to help us with how we should think about modeling Q2 relative to current consensus? My last one would just be on marketing. I believe you mentioned that the lower marketing spend in Q1 was partially due to timing and phasing. So if you could just help us with how we should think about the cadence of marketing spend throughout the rest of the year and how we should think about marketing on a full year basis? Yves Muller: Yes, another 3 questions. Thank you very much. So regarding marketing, I think -- so first of all, like I said during my presentation, we invested 7.3%. We have had the Milan fashion show. We have had BOSS BECKHAM. We had also the HUGO campaign, Red Means Go. So we -- you can really see that we invested. I think we invested wisely, and we get more out of the euro spend. And regarding -- and actually, this is all well in line with what we have said during CLAIM 5 TOUCHDOWN. There will be definitely a focus on the second half of the year, especially in Q4, which is actually the holiday season, which, as you know, Grace, is the strongest quarter for us. So we will, in terms of phasing, focus broadly on the second half of the year and especially on Q4 where we have the commercial and holiday moments of the year and where you have also some gifting in this kind of big quarter because as we know, the fourth quarter is between 20% to 30% higher than the first 3 quarters. Regarding the comment in terms of global sentiment, I think, like I said, and I can just repeat this, that we have seen in some selective markets like the U.K., some implications of the Middle East conflict, also slightly less tourists from the Middle East coming into the U.K. So these were also some implications that we have seen. But I think it's -- I think we have to observe the situation. And I think nothing more to comment right now because it's really changing on a weekly basis. Then was the question, was that regarding Q2? What was that question again? Christian Stoehr: Yes. It was -- Grace, you got your question, right? It was a bit of a quarterly phasing question, right? How to think about Q2 in terms of modeling, but also for the remainder of the year given the current trading comments that were made. Is that right? Grace Smalley: Yes, exactly. Christian Stoehr: So I'll take that, Muller, if that's okay for you. So I think the 2 comments we can make is, Grace, one related to Q4. I start with the final quarter of the year. And that's basically a reminder of what we have already said in March, the comps are particularly difficult in Q4. So that's something you will have to bear in mind. And I'm sure you're doing that in any case. On Q2, I think only the comments we've made on the Middle East, I guess, you probably will try to find these numbers or these comments finding the way into your Q2 modeling numbers. But that's all the comments we are making. Hard to be overly precise on current trading given the volatility we're seeing in the markets, and you said it, weeks can be quite different from one week to the other. But like I said, I think the implications from the Middle East in April were pretty clear, and that is something you should bear in mind -- and then Q4, as I just alluded to. Operator: Next question comes from Anthony Charchafji from BNP Paribas. Anthony Charchafji: The first one would be on the guidance. Curious to know the breakdown between the gross margin expansion and the OpEx. I mean, we've seen that the OpEx were down 4% reported, but rather 2% at constant FX. Do you see the OpEx cut, I would say, fading and being a bit less of a tailwind going into Q4? And in terms of gross margin, just to know if you have in mind gross margin expansion to be really back-end loaded Q4. So can we see Q4 gross margin expansion above the 110 bps that you just delivered? My second question is on pricing, but also pricing net of markdowns. Do you expect it to be net positive like in Q1 in each quarter in 2026? And do you expect to do more pricing versus the one that you did beginning of Q4 of mid-single digit? Is there anything planned? Yves Muller: Yes, Anthony, thank you very much for your questions. So regarding pricing, we have done now the pricing in Q4 2025, which will prevail in due course for 2026. There will only be, let's say, some slight adjustments, but not this kind of broad-based adjustment we have made. We might do it smartly. We will observe, of course, the competition, but nothing that I would call out in terms of pricing. What I would also -- what I would call out is definitely that we will give less promotions. We have started this already. And I think markdowns will go down and will turn over the course of the year also into a tailwind for gross margin in comparison to last year. We will strictly actually execute our CLAIM 5 TOUCHDOWN strategy. This means less discounts in the online channels. This will be shorter sales period. This will mean not participating in mid-season sale, like I said. So these are several measurements that we are taking to reduce our markdowns, always with the implication to drive the long-term profitability and the brand equity of the company. So it's -- all the measurements that we are taking are directed to increase our full price sell-throughs, and this will also help the gross margin going forward. I think we have been happy with our gross margin development already in Q1, which was primarily driven by sourcing efficiencies. But I also expect that we will see a good performance regarding gross margin over the next quarters regarding gross margin. As we have the history of having the OpEx overall under control -- minus 4%. I think it's -- for us as a management team, it's important to have the costs under control and to reduce the costs. I think you have also seen kind of deleverage this year, but this was overall well expected also in our guidance, and we will focus on those things that we can control on our own. And these are definitely gross margin things and also OpEx. And you have seen the direction also in Q1, and you can expect that this will continue in the next quarters, meaning gross margin being up and costs going down. Operator: The next question comes from Andreas Riemann from ODDO BHF. Andreas Riemann: Two topics. One is the HUGO brand. So the HUGO brand is written in red letter. So my question would be what actually happened to HUGO BLUE? Is HUGO BLUE still relevant within HUGO? The second topic, the tariffs. So in the press call, I think you indicated that you expect that U.S. tariffs will be paid back. Can you help us to guess how much that might be? And linked to that, what was actually the impact from U.S. tariffs on your gross margin in Q1? You didn't mention it. So was it that small? That would be my second question. Yves Muller: Andreas, thank you very much for your questions. Well, I will start with customs. Yes, of course, like every other brand is expecting that this kind of surplus that was introduced last year will be paid back. I think this is what might be expected. We are not quite sure because as we all know, the administration in the U.S. is also very volatile. So no effects have been included in our numbers so far. And actually, we are not disclosing the exact amount of the customs that we are having, but it's not such a huge amount that you can expect. Regarding HUGO, definitely, we streamlined the assortment regarding HUGO. We have the big campaign Red Means Go in terms of HUGO, and we are integrating the HUGO BLUE products into our HUGO -- in our HUGO appearance and have a clear focus on contemporary tailoring. So this means that we're going to streamline the assortment going forward. This has been a kind of -- also kind of strategic measurement. And of course, the effect regarding the net sales at HUGO are visible, but they were more or less expected from our side. And on top of this, we are also reducing here and there some of our distribution points also with HUGO. So these are the effects that we have seen with HUGO, but I think the most important thing is that we are streamlining the assortment and integrate HUGO BLUE into HUGO. Christian Stoehr: Ladies and gentlemen, that actually completes today's conference call. There is no more people in the queue wanting to ask questions. So we leave it with that. And we thank you for your participation. And of course, if there's any further open topics or questions you have, please reach out to the Investor Relations team. Thank you for joining today. Thanks for your interest and speak to you soon. Thank you. Bye-bye. Yves Muller: Thank you. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Welcome to the MPLX First Quarter 2026 Earnings Call. My name is Julie, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Kristina Kazarian. Kristina, you may begin. Kristina Kazarian: Welcome to MPLX's First Quarter 2026 Earnings Conference Call. The slides that accompany this call can be found on our website at mplx.com under the Investor tab. Joining me on the call today are Maryann Mannen, President and CEO; Chris Hagedorn, CFO; and other members of the executive team. We invite you to read the safe harbor statements on Slide 2. We will be making forward-looking statements today. Actual results may differ. Factors that could cause actual results to differ are included there as well as in our filings with the SEC. With that, I will turn the call over to Maryann. Maryann Mannen: Thanks, Kristina. Good morning, and thank you for joining our call. MPLX delivered over $1.7 billion of adjusted EBITDA, which enabled a return of over $1.1 billion to our unitholders. 2026 is a year of execution with multiple investments expected to transition from construction to operations and EBITDA generation. With Secretariat I coming online in April, Harmon Creek III in the third quarter and the Titan gas treating complex reaching over 400 million cubic feet per day of treating capacity in the fourth quarter. This gives us confidence that year-over-year growth in 2026 will exceed that of 2025. The underlying fundamentals in natural gas and NGLs remain strong. We see strategic opportunity to support increasing demand for these commodities. As an example, in the Delaware Basin of the Permian we treated over 150 million cubic feet per day of our committed producer sour gas at our recently acquired Titan facility. Our third acid gas injection well in the Delaware Basin is expected to be completed in the third quarter. The expansion of the Titan complex is on schedule. Downstream, the 200 million cubic feet per day Secretariat I processing plant has entered service. Last quarter, we announced our intention to further expand our gas processing footprint with Secretariat II, an additional 300 million cubic feet per day of capacity expected online in the second half of 2028. Once in service, our total processing capacity in the basin will reach approximately 1.7 billion cubic feet per day. These investments meaningfully strengthen our position in the Delaware Basin, supporting activity in the low-cost sour gas windows and extending the competitiveness of our broader value chain. The Blackcomb natural gas pipeline continues to progress as planned, and is expected to enter service in the fourth quarter. Demand for firm takeaway capacity is driving expansions on several long-haul natural gas pipelines. Volume commitments from top-tier shippers underscore the competitiveness of our footprint as well as the long-term durability of our natural gas system. Within NGL, the expansion of the BANGL pipeline to 300,000 barrels per day is expected online in the fourth quarter, providing critical takeaway capacity as in-basin NGL volumes grow. Construction across our Gulf Coast fractionation and export facilities continues to advance on time and on budget. Our fully integrated NGL value chain provides high confidence in the volumes, utilization and durability of cash flows these assets will generate for years to come. Against the backdrop of ongoing geopolitical uncertainty, the strategic importance of U.S. energy infrastructure has never been clearer. Global demand for secure, reliable energy continues to grow, and the international customers are increasingly more dependent on the United States as a preferred supplier. MPLX is exceptionally well positioned to capitalize on this opportunity. Our joint venture LPG Export Terminal is favorably located along the Gulf Coast, providing meaningful, competitive and logistical advantages. In the Marcellus, construction of Harmon Creek III remains on track for a third quarter in-service date increasing our total processing capacity to 8.1 billion cubic feet per day in the Northeast. This project, along with our associated gathering and compression expansions enhances our ability to meet producer needs in liquids-rich areas and supports long-term throughput growth. Beyond 2026, the opportunity set for natural gas and NGLs remains robust. We are deploying 90% of our $2.4 billion organic growth capital plan toward these opportunities which will drive continued mid-single-digit growth. Now let me turn the call over to Chris to discuss our operational and financial results for the quarter. Carl Hagedorn: Thanks, Maryann. Slide 8 outlines the first quarter operational and financial performance highlights for our Crude Oil and Products Logistics segment. Segment adjusted EBITDA increased $14 million when compared to the first quarter of 2025. The increase was primarily driven by higher rates across the business units, partially offset by lower crude pipeline throughputs. Pipeline volumes decreased 4% year-over-year, primarily due to Marathon's refining turnaround and maintenance activities in the Midwest and Gulf Coast regions. Terminal volumes also decreased 4% year-over-year, primarily due to less favorable market dynamics and refining industry turnaround activity in the first quarter. Moving on to Slide 9. Segment adjusted EBITDA decreased $42 million compared to the first quarter of 2025. 2025 included a onetime $37 million benefit associated with the customer agreement. The decrease was primarily driven by a $45 million impact from divestiture of our noncore gathering and processing assets in 2025, lower natural gas liquids prices and higher operating expenses. These factors offset growth from equity affiliates and increased volumes inclusive of acquisitions. Excluding the impacts of our noncore Rockies divestiture, gathering volumes were up 10% year-over-year due to production growth in the Utica and Permian, including acquisitions. Processing volumes increased 2% year-over-year, primarily due to increased production in the Marcellus and the Permian. Marcellus processing utilization was 94% for the quarter, demonstrating the need for incremental capacity as Harmon Creek III is positioned to come online on a just-in-time basis in the third quarter. Total fractionation volumes decreased 3% year-over-year, primarily due to lower ethane recovery in the Marcellus as a result of elevated regional gas prices in the first quarter. Winter Storm Fern in January impacted crude oil and natural gas production volumes resulting in a roughly $13 million headwind to our first quarter results. We would like to extend our gratitude to our teams in the field whose round-the-clock efforts for continuous safe and reliable operations at our MPLX assets during the storm. Thank you to our team. Across our business for every $0.05 change in weighted average NGL price, MPLX expects approximately a $20 million annual impact to segment adjusted EBITDA. During the first quarter, to manage this exposure, MPLX executed an economic hedge on 80% of this risk and recognized the negative mark-to-market of $56 million during the quarter. This impact will offset -- be offset by physical gains over the course of 2026. As a reminder, the first quarter is typically our lowest quarter for project-related expenses. While we expect these expenses in 2026 will be flat versus the prior year, we anticipate a sequential increase of $50 million in the second quarter, reflecting the seasonality of this project-related work. Now let me hand it back to Maryann for some concluding thoughts. Maryann Mannen: Thanks, Chris. MPLX has a proven history of executing on our commitments and delivering consistent financial performance. Through disciplined capital deployment and optimization of our integrated value chains, we have sustained strong EBITDA growth and maintained a robust return profile. This track record supports our confidence in our ability to continue creating value for unitholders through both organic project execution and reliable capital returns. Our long-term strategy is straightforward, and we are executing with discipline, operate safely and reliably, grow through high-return investments, optimize our integrated value chains and to maintain a strong financial foundation. The actions we have taken to position MPLX over the last several years are delivering strong results. The strength of our base business continues to deliver steady durable growth. As we progress through 2026, we expect the investments we are making to provide a clear path to continued mid-single-digit growth, and we continue to evaluate both organic and inorganic opportunities to drive income generation. With this momentum, we remain confident in our outlook and committed to creating exceptional value for our unitholders. Now let me turn the call over to Kristina. Kristina Kazarian: Thanks, Maryann. As we open the call for your questions, as a courtesy to all participants, we ask that you limit yourself to one question and a follow-up. If time permits, we will reprompt for additional questions. With that, operator, we are ready for questions today. Operator: [Operator Instructions] Our first question comes from John Mackay with Goldman Sachs. John Mackay: Look, in the back half of last year, you were talking about considerably higher EBITDA growth for '26 over '25. First quarter was flattish. I understand some of the moving pieces you guys gave on the cost side. And then you've walked us through the project ramp timelines. But could you spend a little bit more time walking us through how we should think about the EBITDA ramp through the year and kind of getting to that maybe above mid-single-digit target you laid out last call? Maryann Mannen: And you're correct. And as we were talking about in 2025, we continue to see growth '25, '26, if you let me to look at it first on an annual basis, '25 to '26 growth rate to be stronger than we saw '24 to '25. And as you well said, that growth for us is more back half weighted for 2026 than front half weighted. If you look at it over a 3-year period, our mid-single-digit growth has trended right around that 7.5% range. So I mentioned in a couple of my opening remarks there, Secretariat I now in service. And so obviously, we'll see that EBITDA strength coming online throughout the back half of this year. We typically see a 9- to 12-month ramp. We could see that in a little more narrower window as we look at Secretariat I. I also talked about Harmon Creek III. That project remains on track to enter service in the third quarter. I think you know this. It's a 300 million cubic feet per day gas processing plant. It also includes construction of a second 40,000 barrel a day de-eth, and it gives total Northeast gas processing and fractionation capacity to a total of 8.1 Bcf a day and 800,000 barrels a day, respectively, when that project comes online. A few other projects, as you know, will lean in. So the back half of the year, we expect to be stronger clearly than the first half of the year. And we see good line of sight to that, which also continues to give us confidence, frankly, in our 12.5% distribution increase. As you know, we've been talking about that for 2026 as well and 2027. And again, we remain confident in these projects delivering a little bit longer term. As you know, we've got our fractionation '28, '29 coming online and the export dock. That project remains well on track, on budget, as you've heard me say as well. So back half weighted, remain confident, we still expect '26 to be a stronger growth than 2025. Let me pause there, John. John Mackay: That's clear. Second question for me is just given the disruptions we've seen in the Middle East. We've seen a kind of higher call for U.S. hydrocarbon exports. Could you just kind of remind us your asset position there, kind of what you've been seeing on the commercial side? Maybe if you can walk through LOOP, Mount Airy and then, I guess, any incremental comments on the NGL dock under construction would be great. Maryann Mannen: Yes. I'll pass that to Shawn. He can give you some insights on the export dock as well. Shawn Lyon: John, this is Shawn. Thanks for the question. As we look at what's going on in the market dynamics right now and we look at our asset base, Mount Airy is a great example. We're located strategically right next to Garyville, and based on some of the market things going on, I think MPC and others will continue to lean into that. So we anticipate that asset utilization will be increasing some. And then also, as you look -- you talked about LOOP. MPLX has a share of LOOP there. We've seen Venezuelan crude come in. And obviously, some imports and exports are increasing across that asset base there. And as Maryann mentioned on the, I'll say, the export dock and fractionator complex on the Gulf Coast. We're excited as we continue to stay on track for in-service date of '28 and '29. Again, we're excited that those -- our facilities, our assets are going to be full as we go in service date there. Operator: Our next question comes from Burke Sansiviero with Wolfe Research. Burke Sansiviero: So distribution coverage has been 1.3x over the past 2 quarters. Can you just provide a little bit more color on your confidence in growing the distribution by 12.5% for another 2 years and staying above the -- at or above the 1.3x threshold, seems to imply that cash flows also need to grow 12.5% from here? Maryann Mannen: Yes, certainly. So when we think about our 12.5% distribution growth both for this year 2026 and 2027, we've set financial metrics for that and one of which is, as you stated, that our coverage doesn't fall below 1.3x. So that is our commitment. We look at that, obviously, on an annual basis, of course. But you're absolutely correct. Cash flows would be supportive of that, and we continue to see our ability to do that for '26 and '27. Burke Sansiviero: And buybacks have been somewhat programmatic over the past year at $100 million a quarter cadence. Can you just talk to why buybacks went down in Q1 to $50 million? And are you looking to retain more cash from here? Maryann Mannen: Certainly. So -- what I would say is there really no change in our overall capital allocation strategy. We continue to see opportunities to put capital to work and, therefore, have modified our share buyback program. I want to pass it to Chris because I know he's got a few things that he wants to share as well. Carl Hagedorn: Yes. Thanks, [ Keith ]. And I'll say, as Maryann stated, again, no change to our capital allocation methodology or strategy. Distributions will continue to be that primary tool to return capital to unitholders with the unit repurchases really being that more flexible method of returning capital. But what I would also say is we continue to believe that MPLX units trade at a discount. We think this type of a program at this level reflects that belief. Operator: [Operator Instructions] Our next question comes from Manav Gupta with UBS. Manav Gupta: I have two questions. I'm going to ask them right upfront. So first, can we get an update on the Titan sour complex, what you're seeing in that area? Is the producer activity increasing with higher crude prices in that particular area? And second, I wanted to talk to you about -- a little bit about the local gas markets in Texas. There are more pipelines coming to Agua Dulce, including yours, but then you also have some pipelines like Traverse and Bay Runner, which can move gas out of Agua Dulce and help with these opportunities where local prices are depressed. So could you talk about the local gas Texas markets and how MPLX can benefit from the dislocation in prices in various hubs? Maryann Mannen: So in general, first, let me share with you sort of overall progress on Titan. First and foremost, as I mentioned, we were successful in the first quarter treating over 150 million cubic feet per day in the first quarter. As a matter of fact, March was actually -- we saw our absolute strongest performance in the month of March. And no change in our expectations for the completion of Titan II by the end of this year, 2026. So that we will have full run rate EBITDA as we outlined when we talked about the opportunity for Northwind. So we expect that expansion from 150 million to over 400 million cubic feet per day of sour gas treating capacity to be available and consistent. We're seeing a lot of interest from our producers, producer customers in that space, particularly as they are moving their production into that region. I'm going to first pass it to Greg to give you some incremental color on the customers. And then to respond to your question around all of the Texas opportunities as we see all that pipeline, I'm going to ask then Dave to answer your question on that. Thanks, Manav. Gregory Floerke: Manav, this is Greg. Just a little bit more color on the Titan system. We have been focused daily and weekly on integrated -- integrating that system, increasing reliability, bringing on more volume. We really continue to be excited about the number of rigs that are operating up in the -- this portion of Lea County in the Delaware Basin and the associated gas that comes with it. CO2, H2S, sour gas that needs treating. So the demand is definitely there, as Maryann said. In terms of the projects, the scaling this is our other big focus, and that includes Titan II. We recently brought on a new sour gas treater on the north end of the system that we call Pelham. It's a compressor station as well. That is operating well. And Titan and the multiple pipeline projects that are associated with increasing -- doubling our capacity at Titan. And our fourth AGI well are all in construction and on schedule for fourth quarter completion. David Heppner: So Manav, this is Dave. And maybe I'll touch on -- I'll build on a little bit what Greg talked about and touch on the gas markets and dig a little deeper in our overall Permian wellhead-to-water nat gas strategy because I think I'll try to bring all the pieces of the puzzle together for you. So first of all, let me reaffirm a little bit that generally, MPLX is a fee-based business, and we're not taking on the commodity risks within the nat gas markets in the U.S. Gulf Coast. With that said, when we think about our strategy, maybe think it in about 5 major components. So Greg touched on the first one. In-basin gathering, processing and treating. From there long-haul egress pipelines, and I'll talk about those in a minute. And then connectivity between markets. And then the next is connectivity into demand centers, specifically LNG, but also potentially data centers and power. And then finally is giving our shipper customers optionality and flexibility to all those markets. So -- when you think about the long-haul pipelines, you mentioned Agua Dulce. So from the basin in Agua Dulce, of course, we have Whistler already moving 2.5 Bcf a day, and we have Blackcomb coming in service in the third quarter of this year. And then when you think about the long hauls into the Katy market, of course, we have Matterhorn currently flowing 2.5 Bcf a day, similar to Whistler. And we have Eiger coming online in 2028 in the second half of 2028. So those are those 4 main headers, both into Agua Dulce and Katy, which gives our customers that flexibility to those markets. But I think the other piece of the puzzle is Traverse, which is the bidirectional pipe between those two markets, which allows that flexibility. So that's that connectivity between markets. And then you think about you getting it to the end demand centers, specifically LNG and the high growth -- rapid growth in the LNG market. So of course, we got ADCC going into Corpus Christi, and we have the Bay Runner I and II go into NextDecade, specifically down in Brownsville, those last ones. So when we think about all that, that's really how we're trying to build out -- have been building out and continue to build out our nat gas strategy. With all that said, we also believe that there is the need for incremental egress pipelines out of the basin. So as we look forward, we think and believe that MPLX can continue to play a very active role in supporting those value chain solutions that -- and our strategies necessary to address all that incremental demand in those market opportunities. So hopefully, that gives you a little bit of color on how we're thinking about it. Kristina Kazarian: All right. Thank you. Operator? Operator: I am showing no additional questions. I will turn the call back to Kristina. Kristina Kazarian: Thank you. Thank you for your interest in MPLX. Should you have more questions or would you like clarifications on topics discussed this morning, please contact us. Our team will be available to take your calls. Thank you for joining us today. Operator: Thank you for your participation. Participants, you may disconnect at this time.