Western Digital Corporation (WDC) reported its Q2 2026 earnings, surpassing analysts’ expectations with an EPS of $2.13 against a forecast of $1.91, marking an 11.52% surprise. Revenue reached $3.1 billion, exceeding the projected $2.92 billion. Despite the strong earnings, the stock price fell 10.54% in after-hours trading, closing at $250.23 from a prior $279.70.

Key Takeaways

• Western Digital’s EPS and revenue exceeded forecasts.
• Stock price dropped significantly by 10.54% in after-hours trading.
• Strong growth in cloud segment, representing 89% of total revenue.
• Continued focus on advanced storage technologies like HAMR and ePMR.

Company Performance

Western Digital’s overall performance in Q2 FY2026 showed robust growth, with revenue increasing by 25% year-over-year. The company delivered 215 exabytes to customers, a 22% increase from the previous year. The cloud segment was a major contributor, accounting for 89% of total revenue, driven by heightened demand for data storage solutions in AI and hyperscale customer sectors.

Financial Highlights

• Revenue: $3.1 billion, up 25% year-over-year
• Earnings per share: $2.13, up 78% year-over-year
• Gross Margin: 46.1%, increased by 770 basis points year-over-year
• Operating Income: Slightly above $1 billion (33.8% operating margin)
• Free Cash Flow: $653 million (21.6% free cash flow margin)

Earnings vs. Forecast

Western Digital’s Q2 earnings beat expectations, with an EPS of $2.13 compared to the forecasted $1.91, resulting in an 11.52% surprise. Revenue also surpassed predictions, reaching $3.1 billion against an anticipated $2.92 billion, marking a 6.16% revenue surprise.

Market Reaction

Despite the earnings beat, Western Digital’s stock fell 10.54% in after-hours trading, closing at $250.23. This decline comes after a pre-earnings close of $279.70. The stock remains volatile, with a premarket recovery of 1.99%, trading at $275.62. The stock’s movement contrasts with its 52-week high of $285.42, reflecting investor caution despite strong financial performance.

Outlook & Guidance

For Q3 FY2026, Western Digital projects revenue of $3.2 billion, plus or minus $100 million, and an EPS of $2.30, plus or minus $0.15. The company expects gross margins to be in the range of 47-48%, continuing its focus on advanced storage technologies such as HAMR and ePMR.

Executive Commentary

CEO Irving Tan emphasized the strategic role of AI in business transformation, stating, "As generative AI models become the norm and agentic AI scales to drive business productivity, it is clear that AI is becoming a true strategic enabler of business transformation." CFO Kris Sennesael highlighted the company’s delivery of 215 EB to customers, a 22% increase year-over-year.

Risks and Challenges

• Market volatility and investor sentiment impacting stock price.
• Potential supply chain disruptions affecting production timelines.
• Competitive pressures from other storage solution providers.
• Economic conditions influencing customer investment in technology.
• Rapid technological advancements requiring continuous innovation.

Q&A

During the earnings call, analysts inquired about the stable pricing environment and the mix of UltraSMR products, now over 50% of the portfolio. Questions also focused on the yields of ePMR products, which are in the low 90% range, and the progress of HAMR qualifications with the first customer.

Full transcript - Western Digital Corporation (WDC) Q2 2026:

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: Good afternoon, and thank you for standing by. Welcome to Western Digital’s second quarter fiscal 2026 conference call. Presently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you would like to ask a question, you may press star then one on your phone. As a reminder, this call is being recorded. Now, I will turn the call over to Mr. Ambrish Srivastava, Vice President, Investor Relations. You may begin.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, and good afternoon, everyone. Joining me today are Irving Tan, Western Digital’s Chief Executive Officer, and Kris Sennesael, Western Digital’s Chief Financial Officer. Before we begin, please note that today’s discussion will contain forward-looking statements based on management’s current assumptions and expectations, which are subject to various risks and uncertainties. These forward-looking statements include expectations for our product portfolio, our business plans and performance, ongoing market trends, and our future financial results. We assume no obligation to update these statements. Please refer to our most recent annual report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. In our prepared remarks, our comments will be related to non-GAAP results on a continuing operations basis unless stated otherwise.

Reconciliations between the non-GAAP and comparable GAAP financial measures are included in the press release and other materials that are being posted in the Investor Relations section of our website at investor.wdc.com. Lastly, I want to note that when we refer to we, us, or similar terms, we are referring only to Western Digital as a company and not speaking on behalf of the industry. With that, I will now turn the call over to Irving for introductory remarks. Irving?

Irving Tan, Chief Executive Officer, Western Digital: Thanks, Ambrish, and good afternoon, everyone. And thank you for joining us today. The growth and impact of AI continues to accelerate across numerous industries. As generative AI models become the norm and agentic AI scales to drive business productivity, it is clear that AI is becoming a true strategic enabler of business transformation. AI inference has also begun to take hold, in many ways becoming the true AI workload, with deployment to chatbots and virtual assistants and customer relationship management tools. Further innovations in physical AI are also accelerating quickly, generating increasingly larger multimodal models propelled by advancements in autonomous vehicles and robotics. In all cases, it is data that is needed to fuel the entire AI process, from training to inference, to enable stronger models and sharper inference results.

As more data is generated and the value of data increases, the demand to store it is expanding at a rapid rate. As AI capabilities expand, cloud continues to grow as well, and both are driving the search and demand for higher density storage solutions. In this new era where AI and cloud dominate, Western Digital has taken a customer-focused approach to managing this strong demand by working closely with our hyperscale customers, ensuring that we deliver reliable, high-capacity drives at scale to give them the best performance and total cost of ownership. We are doing this by continuing to focus on increasing our drives’ areal density and accelerating our HAMR and ePMR roadmaps, as well as upshifting our customers to accelerate adoption of higher capacity drives and UltraSMR technology.

This last quarter, we shipped over 3.5 million units of our latest generation ePMR products, offering up to 26 TB CMR and 32 TB UltraSMR capacities, representing strong confidence and adoption by our customers. We have also started qualification of our HAMR and next-generation ePMR products, each with a different hyperscale customer. These drives will offer our customers the higher capacity and improved total cost of ownership that they are looking for. In addition, we continue to accelerate our HAMR innovation. To support this, we recently acquired intellectual property, assets, and talent that will help us in the development of our internal laser capabilities. Also, this past quarter, in partnership with software ecosystem partners, we announced our UltraSMR-enabled JBOD platforms, expanding UltraSMR adoption to a broader customer set.

These platforms deliver significantly higher storage density compared to conventional drives, giving customers hyperscale-like performance and make mass-scale data analysis more sustainable and efficient. We are truly seeing our approach resonate with our customers, and this is reflected in longer-term agreements and better visibility into their requirements. We have firm purchase orders with our top seven customers through calendar year 2026. We also have in place robust commercial agreements with three of our top five customers: two through calendar year 2027 and one through calendar year 2028. These agreements indicate a strong trust that we have built with our customers and confidence in our ability to meet their expedite needs.

We are hosting an Innovation Day on February 3rd in New York next week, where we will share updated roadmaps for our HAMR and ePMR products, as well as further details on core innovations that we are developing to improve our drives’ performance, energy efficiency, and throughput. We will also provide an update on our financial model. In keeping with our strategy to incubate new growth factors based on our intellectual property and core capabilities, last month, we announced a strategic investment in Qolab, which combines our expertise in material science and precision manufacturing with Qolab’s breakthrough approach to quantum hardware design. Working with Qolab, we aim to advance next-generation nanofabrication processes that improve qubit performance, reliability, and scalability. Looking ahead, we see our positive momentum continuing and will remain focused on supporting our customers’ expedite storage requirements while completing qualifications and launching our next-generation HAMR and ePMR drives.

I will now hand it over to Kris to share our Q2 results and outlook for Q3.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Thank you, Irving, and good afternoon, everyone. Western Digital delivered another quarter of strong financial performance, reflecting disciplined execution across our organization and our ability to meet the customers’ growing demand in the AI-driven data economy. During the second quarter of fiscal 2026, revenue was $3 billion, up 25% year-over-year, driven by strong demand for our Nearline drives. Earnings per share was $2.13. Both revenue and EPS were above the high end of the guidance range. We delivered 215 EB to our customers, up 22% year-over-year. This includes over 3.5 million drives or 103 EB of our latest generation ePMR, with capacity points up to 32 TB.

Cloud represented 89% of total revenue at $2.7 billion, up 28% year-over-year, driven by strong demand for our higher capacity Nearline product portfolio. Client represented 6% of total revenue at $176 million, up 26% year-over-year. Consumer represented 5% of revenue at $168 million, down 3% year-over-year. Gross margin for the fiscal second quarter was 46.1%. Gross margin improved 770 basis points year-over-year and 220 basis points sequentially. The improved gross margin performance reflects continued shift towards higher capacity drives and tight cost control in our manufacturing sites and throughout the supply chain. Operating expenses were $372 million. As a percentage of revenue, operating expenses declined 120 basis points sequentially, primarily due to operating leverage in the model. Operating income was slightly above $1 billion, translating into an operating margin of 33.8%.

Interest and other expenses were $45 million, and our effective tax rate in the fiscal second quarter was 15.1%. Taken into account the diluted share count of 378 million shares, EPS was $2.13, an increase of 78% year-over-year. Turning to the balance sheet, at the end of our fiscal second quarter, cash and cash equivalents were $2 billion, and total liquidity was $3.2 billion, including the undrawn revolver capacity. Debt outstanding was $4.7 billion, translating into a net debt position of $2.7 billion and a net leveraged EBITDA ratio of well below one-third. Operating cash flow for the fiscal second quarter was $745 million, and capital expenditures were $92 million, resulting in strong free cash flow generation of $653 million for the quarter, which reflected a free cash flow margin of 21.6%.

During the quarter, we made $48 million of dividend payments and increased our share repurchases to $615 million, repurchasing 3.8 million shares of common stock. Since the launch of our capital return program in the fourth quarter of fiscal 2025, we have returned $1.4 billion to our shareholders by way of share repurchases and dividend payments. Also, today, we announced that our board has approved a quarterly cash dividend of $12.50 per share of the company’s common stock, payable on March 18, 2026, to shareholders of record as of March 5, 2026. I will now turn to the outlook for the third quarter of fiscal 2026. We anticipate revenue to be $3.2 billion, ±$100 million. At midpoint, this reflects a growth of approximately 40% year-over-year. Gross margin is expected to be between 47%-48%.

We expect operating expenses in the range of $380 million-$390 million. Interest and other expenses are anticipated to be approximately $50 million. The tax rate is expected to be approximately 16%. As a result, we expect diluted earnings per share to be $2.30 ± $0.15, based on a non-GAAP diluted share count of approximately 385 million shares. To wrap up, Western Digital achieved another strong quarter, with performance ahead of expectations. Our guidance for the next quarter underscored continued favorable trends in our business, alongside our disciplined approach to free cash flow, capital returns, and long-term value creation for shareholders. With that, let’s now begin the Q&A. Ambrish?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Kris. Operator, you can now open the line to questions, please. To ensure that we hear from as many analysts as possible, please ask one question at a time. After we respond, we will give you an opportunity to ask one follow-up question. Operator?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: Ladies and gentlemen, we will now begin the question-and-answer portion of today’s call. If you have a question, please press star one on your phone. If you would like to withdraw your question, please press star two. One moment, please, for the first question. Our first question today comes from Aaron Rakers with Wells Fargo. Please go ahead.

Aaron Rakers, Analyst, Wells Fargo: Yeah, thanks for taking the question. And I will stick to one, Ambrish. In the gross margin line, the guidance that you’re giving for 47%-48%, I guess the back-of-the-envelope math would suggest that you’re maintaining what looks to be like a 70%, maybe 75% incremental margin flow-through. So I guess my question is, how do you think about the durability of that incremental margin? Or maybe taken another way, how do you think about the cost curve down on a per-terabyte basis as we look out over the next, call it, several quarters? Thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yes, Aaron, thanks for your question. So first of all, I’m really happy with what’s going on with the gross margin. We delivered 46.1% gross margin, up 220 basis points quarter-over-quarter, up 770 basis points year-over-year. We are guiding to 47%-48%, so 47.5% at the midpoint, which is up 740 basis points on a year-over-year basis. Aaron, I think your math is working. The incremental gross margin is on or about 75%, depending on how you look at it on a year-over-year basis or quarter-over-quarter basis. So I’ve stated before, I’m very comfortable with an incremental gross margin higher than 50%, and definitely 75% is higher than 50%. I mean, in gross margins, there’s two sides to the equation. On one hand, you have pricing environment, and on the other hand, you have the cost environment.

In pricing, I’ve talked about that before. We see a stable pricing environment with prices on a price per terabyte kind of flattish to slightly up. Actually, last quarter, it was up 2%, 3% on an ASP per terabyte basis. So that clearly demonstrates the value that we continue to deliver to our customers. On the cost front, the teams continue to execute really well. We continue to upshift our customers to higher capacity drives, which gives us a cost benefit. Then there is great execution as well on driving down the cost in our manufacturing assets, as well as throughout the supply chain. And when you look at it last quarter, the cost per terabyte was coming down on or about 10% on a year-over-year basis. So when you put this all together, we continue to drive further gross margin expansion.

We believe in the next couple of quarters and beyond, we will continue to be able to do that.

Aaron Rakers, Analyst, Wells Fargo: Thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Aaron. We’ll go to the next question, please.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Erik Woodring with Morgan Stanley. Please go ahead.

Erik Woodring, Analyst, Morgan Stanley: Great, guys. Thank you for taking my questions. Irving, just given the tightness of the HDD market and kind of the significant inflation that NAND is going through right now, can you maybe just talk about maybe your patience in being able to sign purchase orders further into calendar 2027 to extract better economics, just relative to maybe how you were approaching signing POs last year? Is that making any difference in the economics you’re able to extract? And then thank you.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, thanks, Erik. As we highlighted, we’re pretty much sold out for calendar 2026. We have firm POs with our top seven customers. And we’ve also established LTAs with two of them for calendar 2027 and one of them for calendar 2028. Obviously, these LTAs have a combination of volume of exabytes and price. And in relation to pricing, I think first, it’s important to recognize that our customers actually have seen value that there’s actually a structural shift in the value that we deliver to them, especially in the impact that we have to their total cost of ownership as the business moves more and more towards inference where monetization is happening. So in this case, the pricing that we’ve provided there reflects the value that we are delivering to them.

As Kris mentioned, we continue to see going forward a stable pricing environment that gives us an opportunity to continue to extract more value as we deliver both better TCO value to our customers and to better support their supply demand needs as well through higher capacity drives.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Did you have a follow-up, Erik?

Erik Woodring, Analyst, Morgan Stanley: Sure. Just very quickly, Kris, we’d just love to know how you’re approaching the SanDisk share ownership. Do you still plan to monetize before I think it’s the February 21st deadline? And more importantly, how do you expect to leverage those proceeds? Thanks so much, guys. Best of luck.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yes, Erik. As you probably know, we still have 7.5 million SanDisk shares, and it’s our intention to monetize those shares before the one-year anniversary of the separation, likely in a similar transaction that we have done before, meaning it’s a debt for equity swap. And so the proceeds will be used to further reduce the debt.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Erik. Next question, please.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from CJ Muse with Cantor Fitzgerald. Please go ahead.

CJ Muse, Analyst, Cantor Fitzgerald: Yeah, hi. Yeah, thanks for taking the question. I guess, could you speak to how customer engagement and contracts are evolving in this very tight environment? Thanks so much.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, CJ, this is Irving. Thanks for the question. One of the things that we’ve been very focused on over the last year is really developing a much more customer-centric approach. As we’ve shared in the past, we’ve really pivoted our organization to be centered around our big hyperscale customers with dedicated teams for each of them. That’s really deepened the relationship that we have with them in terms of both technology roadmap development, in terms of getting better visibility of their demand requirements. And you see the result of that in the longer-term LTAs we’ve been able to structure with them. We’re also looking forward to sharing with all of you the innovations that we are going to be delivering to support the AI workloads needs going forward at our Innovation Day next week. But definitely, the relationship has improved.

As I highlighted, they definitely see the value and the structural that’s resulting in the structural change that we’re seeing in terms of pricing with them. That’s also resulting in the longer-term contracts that we have. Ultimately, what we want to do is to be able to ensure that it’s a fair value exchange, deliver predictable pricing to them, because one of the things that they are concerned about is the high volatility of some tiers of the storage space, right? And to ensure that there’s sustainable value creation both for them and for us along the way.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: You have a follow-up, CJ? Oh, sorry, CJ, go ahead.

CJ Muse, Analyst, Cantor Fitzgerald: Yeah, sorry about that, Ambrish. I guess just to follow on the SanDisk share comment, can you talk about your plans thereafter? Are you going to focus more so on share repurchase or other?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Well, we are already focusing on share repurchases since we’ve announced the $2 billion share repurchase authorization in May of 2025. We already have repurchased $1.3 billion, or we have used $1.3 billion of that program, repurchasing on or about 13 million shares. There is no hesitation. We will continue to use that program.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, CJ.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Wamsi Mohan with Bank of America. Please go ahead.

Ashley Greninger, Analyst, Bank of America: Hi, this is Ashley Greninger, on for Wamsi. Congrats on the results, guys. Just one question for me. Mine’s on the mix of UltraSMR. Just given your order book LTAs, how is this mix trend on UltraSMR trending, and how does this mix shift play a role kind of as a driver of gross margins moving forward? Thanks.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, that’s a really great question, Ashley. Thank you for that. Well, last quarter, we crossed an entire portfolio of 50% mix on UltraSMR, and we actually see that increasing, as we’ve highlighted. One of the things that we’re doing to better support the growth in demand from our customers is really to upshift them to higher capacity drives. A big part of that is the upshift to UltraSMR-based drives, and we see more and more customers adopting UltraSMR. We have our top three customers fully on board with UltraSMR drives already today, and we have another two to three more that are moving into a process of adopting UltraSMR. So we are likely to see the UltraSMR mix of our total Nearline exabyte base continue to increase going forward. That’s actually very important for us because, one, we are better able to serve our customer demand needs.

As you recall, UltraSMR gives a 20% capacity uplift over CMR and a 10% capacity uplift over the industry-standard SMR. But equally important from a gross margin standpoint, UltraSMR is a software-based solution, so it’s very creative for us from a margin standpoint as well. So a higher mix of UltraSMR is definitely going to be beneficial both to our customers and to our ongoing profitability as well.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: And Ashley, one thing in Irving’s prepared remarks, we mentioned the JBOD that we have launched, which also expands our UltraSMR customer reach beyond what we have been targeting so far. So thanks for your question. We can go to the next question, please.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Asiya Merchant with Citigroup. Please go ahead.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital1: Hi, good afternoon. It’s Mike Cadiz at Citi for Asiya today. So I have a question and perhaps a follow-up. The first is, could you provide any color or additional color on yields and reliability? I know that there are a couple of points that Irving has brought up over the past couple of quarters in relation to the multiple rollouts. Is there any implication to cost per bit declines that we can think of?

Irving Tan, Chief Executive Officer, Western Digital: Yeah, thanks for the question, Mike. So our yields on our ePMR products continue to be very, very—they continue to be yielding very well in the low 90s% yield range. And obviously, from a reliability and quality standpoint, we’ve received very good feedback from our customers. The fact that we’ve been able to, last quarter, deliver over 3.5 million units of our flagship ePMR drives is a testimony to the confidence that they have in terms of the reliability and the quality. In terms of the cost, related to the cost down, obviously, as we get yields up, cost continues to decline as the UltraSMR mix goes up within those new products as well. That’s also going to be a driver of cost down as well.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital1: Okay.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Did you have a follow-up, Mike?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital1: Yeah, thank you for that. So can you talk more about any progress or the progress from your Rochester test and integration site, how you’re leveraging perhaps those efforts to accelerate maybe the existing customer transitions? Thanks.

Irving Tan, Chief Executive Officer, Western Digital: Yeah. One update that we shared in the prepared script is actually last quarter, we indicated that we would start HAMR qualification. We pulled it forward to the first half of calendar 2026. We actually have started qualification of those drives already this month for HAMR. On top of that, we’ve also started qualification for our next generation ePMR drives as well. And obviously, our Rochester SIT lab plays a critical role in ensuring that we have a very smooth, quick qualification. And equally important, as they move into production environments, that they deliver the same reliability and quality that our customers have been used to our previous generations of products. Again, on this one, we look forward to sharing a lot more on the 3rd of February in our Innovation Day. We’ll be highlighting the updated roadmaps for both our ePMR and HAMR portfolio.

And so we look forward to sharing more of that exciting news next week.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Mike.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital1: Thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Amit Daryanani with Evercore. Please go ahead.

Hannah, Analyst, Evercore: Hi, this is Hannah on for Amit. I was just wondering, are there any notable investments related to HAMR that are currently flowing through COGS or operating expenses? Should we expect those costs to roll off or normalize as HAMR begins to ramp?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yeah, we have been working on HAMR for the last 10 years, and the engineering teams are making good progress. So there is no change there. We will continue to work on those programs, and we will, in general, continue to innovate and make performance improvements to our programs, continue to drive higher capacity drives. And those investments will continue. As it relates to the gross margin, we haven’t started the HAMR ramp yet, but we are confident once we start ramping HAMR that that will be neutral to accretive to our gross margins.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, maybe just to add on to what Kris said, even with the HAMR ramp that we anticipate will happen at the start of calendar 2027, our CapEx as a percentage of revenue on a run rate basis will still be within the 4%-6% range.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Did you have a follow-up?

Hannah, Analyst, Evercore: No, thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Okay, thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Karl Ackerman with BNP Paribas. Please go ahead.

Karl Ackerman, Analyst, BNP Paribas: Yes, thank you, gentlemen. rose mid-teens in 2025, and it’s projected to advance double digits again in 2026 as agentic AI is supposed to drive a cyclical recovery in front-end conventional servers. But in your case, because hard drive units are highly correlated to demand for conventional servers, and you’re also seeing a content uplift from these new drives, do you believe agentic AI demand can enable you to exceed your long-term exabyte growth target of low 20s? Thank you.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, thanks for the question, Karl. Well, I think we’ve definitely seen exabyte growth over the last few quarters in the low 20s, as you’ve highlighted. Actually, we see as the AI value changes from model training to inference, more data is going to get created as a result. And in order to enable the inference delivery, more data needs to get stored as a result of that data getting generated as well. And if you look at the economics of being able to deliver inference at the right cost structure to drive mass scale adoption, again, a lot of that data that’s getting generated and requires storage will be delivered, will be stored on hard drives as they are, as we’ve highlighted in the past, where hyperscalers really are masters of managing the economics and moving data across the different tiers of SSDs, HDDs, and tape as well.

From our perspective and the conversations that we’ve been having with our customers, inference is definitely going to drive a significant amount of data storage requirement. That’s really positive for HDDs going forward.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Do you have a follow-up, Karl?

Karl Ackerman, Analyst, BNP Paribas: If I may, Ambrish? Just going back to HAMR, it sounds like you’ve pulled in the progression of HAMR, at least your first primary customer. Can you talk about the interest beyond your initial customer, given the robust hyperscaler demand for exabyte capacity? Thank you.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, thanks for the question, Karl. As we’ve mentioned, we are starting qualification in the first half of this year. We’ve already started that with one hyperscale customer already this month, and we will be initiating another one with qualification with another hyperscale customer relatively soon.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Karl.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Thomas O’Malley with Barclays. Please go ahead.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital4: Hi, guys. Thanks for taking the question. Just to follow-up on some of the comments from the preamble about acquiring some IP, I think on the laser side, could you maybe give us a little more detail on that, maybe the size of the purchase, and then what in particular you needed to add on the laser side that you felt like you needed to go out and do a deal?

Irving Tan, Chief Executive Officer, Western Digital: Yeah, thanks for the question. Well, unfortunately, the terms and conditions of the deal are confidential, so we can’t really share too much about it. But we are excited about acquiring this technology. We’ll share again more of that next week at our Innovation Day. But what I will say is it’s definitely going to give us the benefit of taking much less real estate in the drive, right? And that will actually help with manufacturability in terms of reliability. And we also see that with this innovative technology, energy requirements to support the lasers will also be reduced compared to the conventional laser diodes. So we’re quite excited about both the IP and the capabilities that we’ve acquired.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Do you have a follow-up, Tom?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital4: I do. Within NVIDIA’s addition of the KV cache offload and the NAND attached that’s thought to go with that, I was curious if you guys have been engaging with any large hyperscalers or any large procurers of storage for any kind of solution that would maybe attach on to custom silicon deployments, a.k.a. something that brings the hard drive a little bit closer to some of the accelerators, if there’s a roadmap for those or if you’re engaging in that way with any customers? Thank you.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, no, thanks for the question. Again, I think the initiative that NVIDIA has been driving is really to help accelerate inference capability. And as I’ve highlighted, as a result of that, the velocity and the volume of data is going to get generated much more rapidly. And the benefit from us, obviously, will be able to require it will require a lot more storage, which obviously HDDs are well suited with the superior economics. We are working on, and we’ve highlighted in the prepared remarks, on interesting innovations to improve both our bandwidth and throughput of our drives. Again, something we’re looking forward to be sharing with all of you next week as well.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Tom.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Vijay Rakesh with Mizuho. Please go ahead.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital5: Yeah, hi, thanks, Irving and Kris. Pretty phenomenal numbers here. Just a quick question on the HAMR side. Are you expecting to pull in the HAMR roadmap timeline given how tight supply is, etc.?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yeah, we’ve pulled in the qualification already by half a year. We’ve started the qualification process with one customer. As I just mentioned earlier on Karl’s question, we will be starting a qualification with a second customer imminently on qualification. Obviously, getting HAMR and higher capacity drives to our customers are a key part of the approach that we’re taking to meet the strong demand for exabytes from our customers on HDD. But it’s also very important to remember we also have started the qualification of our next generation ePMR drives. Those products have shown the ability not to only deliver very high capacity per drive, but also to be able to support a high degree of scalability and manufacturability where we are able to deliver large volumes of drives to our customers. So last quarter, we delivered over 3.5 million drives.

This quarter, we’re looking to deliver close to 4 million drives.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital5: Got it. And then on the gross margin trajectory, I guess, with the incremental 50% drop through, when you look at HAMR ramps, any thoughts on how we should look at those margins? I guess you might call it on the Innovation Day, but any preliminary thoughts there? Thanks.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, I mean, as we’ve consistently highlighted, we see the transition once HAMR gets to the same scale as our ePMR portfolio, the gross margins for HAMR will be neutral to accretive from what we have with ePMR.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Vijay.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Steven Fox with Fox Advisors. Please go ahead.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital3: Hi, good afternoon. I was wondering if you can maybe talk about the revenue per exabyte in the quarter compared to last quarter and a year ago in the sense that how much of the change quarter over quarter and year-over-year is related to change in mix? And then I had a follow-up if I could?

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yeah, maybe I can start off here, and Kris might want to add in. Look, the big driver of our sort of revenue per exabyte, both year-over-year and quarter-over-quarter, is related to our cloud segment. So our big hyperscale customers, we see very strong demand from that segment. So obviously, that’s driving a lot of the bids and the revenues associated with that. And in that segment, as Kris has highlighted, the pricing is stable. So in fact, it was up single-digit last quarter and year-over-year as well. So that’s a positive trend that we continue to see. And that’s going to be a growth driver for the business for the year and probably for the next two years as well.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital3: Thanks. And if I could just quickly follow-up, can you just, is there any commentary on how successful you were in terms of maybe getting out more exabytes during a quarter than originally planned for, or whether through quicker customer qualifications or your own efficiencies? Any update there would help. Thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yeah. Well, last quarter, we delivered 215 EB, right? That was up 22% year-on-year. And again, a lot of it’s being driven by our cloud portfolio. As we’ve highlighted, we shipped over 3.5 million units of our current ePMR products that go up to 32 TB. So it’s a clear recognition of the stability, quality, and scalability of that product. So we will continue to do that. And we look forward to ramping the next generation of ePMR and HAMR in the coming quarters to better support the customer demands.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you, Steve.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The next question is from Ananda Baruah with Loop Capital. Please go ahead.

Ananda Baruah, Analyst, Loop Capital: Yeah, good afternoon, guys. Thanks for taking the question. On cost down, you mentioned that, I think, Kris, December quarter was 10% year-over-year down. And with UltraSMR becoming a larger portion of the ship, and then with HAMR coming on, sort of margin neutral deposits, do you think that cost down? And I think it’s classically been about 10% year-over-year. Do you think that can increase in coming years, cost out increasing per exabyte ship? Thanks.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yeah. So currently, it’s only about 10% cost per terabyte or exabyte reductions. Obviously, we will continue to innovate, continue to push to higher capacity drives, continue to upshift our customers to adoption of those higher capacity drives, including UltraSMR. And all of those actions will lead to further cost reductions on a cost per terabyte. I think it’s fair to say that there’s only about 10% is a good number. And as we potentially accelerate our roadmaps, we could potentially drive that higher.

Ananda Baruah, Analyst, Loop Capital: That’s super helpful.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Do you have a follow-up, Ananda?

Ananda Baruah, Analyst, Loop Capital: Yeah, quick, Ambrish. Thanks. This may be one for next week, actually. But just interested in understanding how far up the areal density stack do you think you can get CMR and UltraSMR before you really get HAMR going? Thanks.

Irving Tan, Chief Executive Officer, Western Digital: Yeah, I think that’s something we are looking very much forward to sharing with you next week. So we look forward to seeing you there.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Go to the next question, please. Thank you, Ananda.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: The last question is from Krish Sankar with TD Cowen. Please go ahead.

Eddy, Analyst, TD Cowen: Hey, guys. This is Eddy for Kris. You mentioned you had 3 LTAs for 2027 and 2028 that are volume, not price-based. I do wonder what is the reason these contracts are not locked in price, especially given the very tight supply? Is it the customer who prefers not to lock in price, or is it you guys who prefer to have the flexibility? Any high-level color would be helpful. Thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital0: Yeah. Thanks for the question. Just to clarify, we have two customers that have LTAs through calendar year 2027, one customer that has an LTA through calendar year 2028. These LTAs have both price and volume conditions in them.

Eddy, Analyst, TD Cowen: Okay, noted. Thank you. That’s a great color. Thank you.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital: Thank you. Thank you, Eddie.

Ambrish Srivastava, Vice President, Investor Relations, Western Digital2: This concludes today’s conference call. Thank you for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Nordson Corporation reported its first-quarter 2026 earnings, meeting EPS expectations and surpassing revenue forecasts. The company recorded an EPS of $2.37, aligning with analyst predictions, while revenue reached $669 million, exceeding forecasts by $16.18 million. Following the announcement, Nordson’s stock experienced a modest pre-market increase of 0.57%, reflecting investor optimism.

Key Takeaways

• Nordson’s revenue surpassed expectations by $16.18 million.
• EPS met forecasts at $2.37, marking a 15% year-over-year increase.
• The stock price rose 0.57% in pre-market trading.
• Strong performance in the semiconductor segment drove growth.
• The company maintains a positive outlook with upward revenue guidance.

Company Performance

Nordson Corporation achieved a record first-quarter revenue of $669 million, representing a 9% increase from the previous year. The company’s growth was largely driven by its Advanced Technology Solutions segment, particularly in semiconductor applications. This aligns with industry trends showing robust demand in the semiconductor market.

Financial Highlights

• Revenue: $669 million, up 9% year-over-year
• Earnings per share: $2.37, a 15% increase from the previous year
• Adjusted operating profit: $166 million, up 10%
• EBITDA: $203 million, with margins steady at 30%
• Free cash flow: $123 million, with a 105% cash flow conversion

Earnings vs. Forecast

Nordson’s EPS of $2.37 met the consensus forecast, while its revenue of $669 million exceeded expectations by $16.18 million, resulting in a 2.48% revenue surprise. This performance is consistent with the company’s historical trend of meeting or slightly exceeding earnings expectations.

Market Reaction

In response to the earnings report, Nordson’s stock price increased by 0.57% in pre-market trading, reaching $301. This rise reflects investor confidence in the company’s solid performance and future prospects. The stock remains near its 52-week high of $305.28, indicating strong market sentiment.

Outlook & Guidance

Nordson provided optimistic guidance for the upcoming quarters, projecting Q2 revenue between $710 million and $740 million and adjusted EPS between $2.70 and $2.90. For the full year, the company expects revenue between $2.86 billion and $2.98 billion and adjusted EPS between $11.00 and $11.60, reflecting a 10% increase at the midpoint.

Executive Commentary

CEO Sundaram Nagarajan expressed optimism about the company’s position, stating, "We entered 2026 optimistic about end market demand trends." He highlighted the company’s focus on innovation and operational excellence as key drivers of success. Nagarajan also noted, "We are getting rewarded for our focus on innovation, delivery, and meeting customer needs."

Risks and Challenges

• Supply chain disruptions could impact production timelines and costs.
• Fluctuations in semiconductor market demand may affect revenue.
• Increased competition in advanced technology solutions could pressure margins.
• Macroeconomic factors, such as interest rate changes, could influence investment levels.
• Currency exchange rate volatility may affect international revenue.

Q&A

During the earnings call, analysts inquired about margin dynamics across segments and the impact of weather on the medical segment. The company provided insights into semiconductor market cycles and addressed potential mergers and acquisitions, clarifying influences from geographic and product mixes.

Full transcript - Nordson Corporation (NDSN) Q1 2026:

Conference Operator: Hello, everyone. Thank you for joining us, and welcome to the Nordson Corporation First Quarter Fiscal Year 2026 conference call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Lara Mahoney. Please go ahead.

Lara Mahoney, Vice President of Investor Relations and Corporate Communications, Nordson Corporation: Thank you. Good morning. This is Lara Mahoney, Vice President of Investor Relations and Corporate Communications. I’m here with Sundaram Nagarajan, our President and Chief Executive Officer, and Daniel Hopgood, Executive Vice President and Chief Financial Officer. We welcome you to our conference call today, Thursday, February 19, to report Nordson’s fiscal 2026 first quarter results. You can find both our press release as well as our webcast slide presentation that we will refer to on today’s call on our website at www.nordson.com/investors. This conference call is being broadcast live on our investor website and will be available there for 30 days. During this conference call, we will make references to non-GAAP financial metrics. We’ve provided a reconciliation of these metrics to the most comparable GAAP metric in the press release issued yesterday.

Before we begin, please refer to slide 2 of our presentation, where we note that certain statements regarding our future performance that are made during this call may be forward-looking based upon Nordson’s current expectations. These statements may involve a number of risks, uncertainties, and other factors, as discussed in the company’s filings with the Securities and Exchange Commission, that could cause actual results to differ. Moving to today’s agenda on slide 3, Naga will discuss first quarter highlights. He will then turn the call over to Dan to review sales and earnings performance for the total company and the three business segments. Dan will also discuss the balance sheet and cash flow. Naga will then share a high-level commentary about our enterprise performance and provide an update on the fiscal 2026 second quarter and full year guidance. We will then be happy to take your questions.

With that, I’ll turn to slide four and turn the call over to Naga.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning, everyone. Thank you for joining Nordson’s Fiscal 2026 first quarter conference call. We entered 2026 optimistic about end market demand trends, and we achieved a record first quarter sales of $669 million. This is a 9% increase over the prior year and reflects 7% overall organic growth. Organic growth was broad-based across our segments, with notable strength in our ATS segment, which grew over 20% compared to prior year due to momentum in the semiconductor end market. Solid execution and volume leverage drove strong profit performance for the quarter, increasing EBITDA by 8% and increasing adjusted earnings per share by 15% compared to prior year, both first quarter records.

I would also like to highlight our free cash flow of $123 million and consistent cash flow conversion over 100% of net income during the quarter. We strategically deployed this cash to repurchase shares, return dividends to shareholders, and maintain our debt leverage while continuing to invest in the company. I’ll speak more about the enterprise performance in few moments, but first, I’ll turn the call over to Dan to provide a detailed perspective on our financial results for the quarter.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Thank you, Naga, and good morning, everyone. On slide number 5, you’ll see first quarter fiscal 2026 sales were a first quarter record of $669 million, up 9% from the prior year first quarter sales of $615 million. Total organic sales increased 7%, driven by robust demand in Asia across most of our end markets. And while all of our segments contributed to growth, we saw particular strength in our advanced technology product lines, responding to growing demand in the semiconductor space. Favorable currency translation added an additional 4% to the top line in the quarter and was partially offset by the small divestiture that we completed in the fourth quarter of last year.

Adjusted operating profit increased 10% year-over-year to $166 million, driven by increased SG&A leverage on the organic sales growth, as well as benefits from the divestiture of our medical contract manufacturing business. EBITDA was up 8% year-over-year at a first quarter record of $203 million. EBITDA margins as a percentage of sales were 30%, in line with the prior year as our sales growth was concentrated in Asia, where our gross margins are generally lower, particularly on system sales. As a result, we saw lower incrementals during the quarter, which we would expect to normalize over time. Looking at non-operating income and expenses, net interest expense during the quarter was $23 million, a decrease of $3 million versus the prior year, driven by lower year-over-year debt levels and a stable to declining rate environment.

Other income increased $19 million year-over-year, principally related to a non-cash gain on a minority investment. To give a little color on this, since this is a new item, this relates to a small but strategic technology investment that we’ve accumulated over a number of years. The company we invested with completed an initial public offering in December 2025 on the Korean Stock Exchange. As a result of this offering, we’re now required to mark this investment to market value each quarter. The initial gain that we recognized was $22 million in the quarter before tax. We’ve excluded this non-cash gain from adjusted earnings and will continue to treat future adjustments to mark-to-market as such going forward. Excluding this non-cash gain, year-over-year changes in other income and expense were driven by foreign currency contract fluctuations.

Our tax expense on a U.S. GAAP basis was $31 million, for an effective tax rate of 19%, inclusive of the impact of the non-cash gain that I just mentioned. Excluding this impact, our effective tax rate on an adjusted basis was 18%. This result is slightly below our annual guidance range for fiscal 2026 due to some discrete benefits that hit in the first quarter, primarily tied to stock compensation. We still project our full year tax rate to be at the lower end of our initial guidance range of 18.5%-19.5%. Net income in the quarter totaled $133 million, or $2.38 per share.

Excluding intangible amortization and the non-cash gain, adjusted earnings per share totaled a first quarter record of $2.37 per share, $0.02 above the midpoint of our quarterly guidance, and a 15% increase from prior year adjusted earnings per share of $2.06. This improvement in year-over-year earnings reflects solid operating leverage from the organic sales growth, as well as benefits from the divested medical contract manufacturing business. Now, let’s turn to slides 6 through 8 to review the first quarter 2026 segment performance. Industrial Precision Solutions sales of $327 million increased 9% compared to the prior year first quarter. Organic sales increased 3% compared to the prior year, with a favorable currency impact of 6%. Growth was broad-based across most product lines, with particular strength in Asia-Pacific markets.

Notably, demand for polymer processing and automotive product lines have stabilized as we expected. EBITDA was $110 million in the quarter, or 34% of sales, down 2% over prior year, largely due to the geographic product mix of organic growth and the lower incremental leverage on foreign currency changes. Turning to slide 7, you’ll see Medical and Fluid Solutions sales of $193 million were relatively flat compared to the prior year’s first quarter. Organic sales increased 3% in the quarter, led by strength in our engineered fluid solutions product lines. Divested sales from the medical contract manufacturing business had a negative impact of approximately 4% compared to the prior year. The 3% growth was a slower start than we expected for the segment, but we remain confident in the mid-single-digit outlook through the year.

It’s worth noting that the winter storms at the end of January did impact some of our production, as well as some of our medical supply chain on a temporary basis. We estimate to the tune of about a 1% impact on our sales in the quarter. EBITDA for Medical and Fluid Solutions was $70 million or 36% of sales, which was an increase of 9% from the prior year EBITDA of $64 million. EBITDA margin improved, driven by the divestiture, organic sales volume, and strong incremental performance. Now, turning to slide 8, you’ll see Advanced Technology Solutions sales were $149 million, a 23% increase compared to the prior year’s first quarter.

The 21% organic sales increase was driven by double-digit growth in electronics dispense product lines related to semiconductor applications, as well as recovering demand for our X-ray systems. First quarter EBITDA was $33 million or 22% of sales, an increase of 43% compared to the prior year first quarter EBITDA of $23 million or 19% of sales. The improvement in EBITDA margin compared to the prior year reflects stronger sales volume and volume leverage. The team did an outstanding job of maintaining SG&A during the quarter as a result of sustainable operational and footprint changes that they made within their segment in prior years, guided by the NBS Next Growth Framework. Finally, turning to the balance sheet and cash flow on slide 9....

At the end of the first quarter, we had cash on hand of $120 million, and net debt was approximately $1.9 billion. Our leverage ratio of 2.1 times remained consistent with year-end results and is in line with our long-term targets, allowing us to continue to strategically deploy capital and giving us plenty of firepower for acquisition of strategic assets. Our free cash flow generation was $123 million during the quarter, resulting in a 105% conversion rate on net income, excluding the non-cash gain. This represents the third consecutive quarter above 100% conversion, despite the accelerated revenue growth we achieved. As noted on slide 10, during the quarter, we invested $18 million in capital projects to drive future organic growth.

We paid $46 million in dividends to our shareholders and repurchased $82 million in shares on the open market. We also modified and extended our existing $1.2 billion credit facility. As part of that transaction, we consolidated a term loan coming due in fiscal 2026 into the new facility to provide greater overall financial flexibility to pursue strategic opportunities with no change in our total outstanding debt. At quarter end, we have about $800 million available under the new facility. To summarize the quarter, we achieved high single-digit organic sales growth while maintaining our strong 30% EBITDA margins, despite some geographic and product mix headwinds. Our cash conversion remained strong, allowing us to strategically deploy capital to sustainably grow the franchise and return value to shareholders.

Our team delivered on their commitments for the quarter and worked to grow backlog to position us for success in the second quarter. While market conditions have improved for most of our businesses, we remain balanced and vigilant for more meaningful recovery in select end markets, which is reflected in our updated guidance for the full year that Naga will cover in a moment. With that, let’s turn to slide 11, and I’ll turn the call back to Naga.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Thanks, Dan. This strong first quarter performance has set the stage well for fiscal 2026. Now, three months into the year, our end markets are playing out as we expected. Within IPS, investments in packaging and product assembly are sustaining. Precision agriculture investments continue to grow over prior year, and automotive and polymer processing applications have stabilized. Medical end markets are returning to more normalized growth, and we expect to see these benefits continue as the year progresses. Growth in engineered fluid solution product lines is being driven by electronics and industrial applications. Within advanced technology, our dispense and surface treatment product lines for semiconductor application continue to drive growth, while our X-ray systems that ensure the quality of semiconductor packaging are starting to inflect. Growth in general and automotive electronics is more muted, but there are early signs of growing capacity needs in these end markets.

Because it is such an important growth driver, I want to take a moment on slide 12 to remind our investors about why Nordson wins in the semiconductor space. Semiconductor applications account for approximately 50% of revenue in the ATS segment and drove the overall double-digit organic growth in the first quarter. ATS’ core competency is in the advanced packaging process of semiconductor manufacturing. Our precision dispense applications, including our market-leading Vantage and Spectrum S2 electronics dispense systems, enable underfill and encapsulation applications that allow the stacking of increasingly small chips on printed circuit boards. Our close to the customer model positions Nordson as a partner when customers start developing advanced manufacturing processes for semiconductor packages. Our technology enables these increasingly sophisticated manufacturing processes. Quality control of these costly and complex chips is also creating more opportunities for our test and inspection portfolio.

Current investments are primarily in Asia Pacific, and we are well positioned across the semiconductor supply chain, both technologically and geographically, as investments grow into other regions. Clearly, I am pleased with the momentum across our end markets and our ability to meet our customer needs. Turning now to our outlook, starting on slide 13, we enter the second quarter with continued order momentum and increased backlog, up approximately 4% over the prior year. Order entry momentum was broad-based in the quarter, with strength in our ATS segment. These trends position the company to deliver second quarter fiscal 2026 sales in the range of $710 million-$740 million. Second quarter adjusted earnings are forecasted to be in the range of $2.70-$2.90 per diluted share.

Based on strong start to the year, the second quarter outlook, and the current foreign exchange rate environment, we are increasing our full-year guidance, as noted on slide 14. Sales are now expected in the range of $2.86 billion-$2.98 billion, which is an increase of 4.5% at the midpoint. The top end of our range assumes continued momentum from electronics end markets, as well as modest improvement in our industrial and automotive product lines. The bottom end of our guidance would assume some broader pullback in end market demand in the second half. While we certainly don’t see signs of that today, we still believe it is prudent to plan for this potential scenario.

Adjusted earnings will be in the range of $11-$11.60 per diluted share, which is an increase of 10% at the midpoint. As always, I want to thank our customers and shareholders for your continued support. In particular, I want to thank our Nordson employees, who are passionate about meeting the needs of our customers. Our focus on innovation and operational excellence continue to position us well to serve our customers. With that, we will pause and take your questions.

Conference Operator: We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from Jeff Hammond with KeyBanc. Your line is open. Please go ahead.

Jeff Hammond, Analyst, KeyBanc: Hey, good morning, everyone.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Good morning, Jeff.

Brad Hewitt, Analyst, Wolfe Research3: Good morning, Jeff.

Jeff Hammond, Analyst, KeyBanc: So really just want to, Can we just unpack kind of the margin dynamics around this kind of systems, you know, geographic mix? And do you think that continues over the next few quarters? Do you see mix improving, maybe what’s showing up in the order book that would, that would, you know, support kind of a mix change or staying the same?

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, it’s a good question, Jeff. Yeah, I would say, number one, if I step back, you know, we saw very strong incrementals in our medical business, I would say normal incrementals in our ATS business. Really, the primary segment where we saw the mix challenges was in IPS. But I think more importantly, what we would say is there’s been no fundamental change in the margin outlook for our business. You know, we’ve always said 40% is kind of the a normal ongoing incremental expectation for our businesses. There’s been no change in our gross margin profile. It’s really just a mix issue in the quarter, so we see things moving back to normal, certainly as the year plays out.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Maybe just add to it, you know, if you think about our second quarter guide and our full year guide, both contemplates, you know, Nordson delivering strong, best-in-class EBITDA margins like we have done in the past.

Jeff Hammond, Analyst, KeyBanc: Okay. Then can you just expand on kind of the slow start in medical, I think the weather issues, and just what you’re seeing that gives you confidence that business starts to pick up as you move through the year? And if you can just give us kind of underlying incrementals in that business, you know, if you exclude kind of the divestiture impact. Thanks.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: So we’ll take the incremental first, Dan, go, and then I’ll talk about the-

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Sure.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: -trends.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, and as I said, incrementals were actually quite strong. I mean, our incrementals all in are essentially off the chart. I think when you kind of strip out the impact of the CDMO divestiture, our incrementals are still north, well north of 50% in the quarter. So quite strong, and reflective of, you know, a good strong outlook in that business. From a growth standpoint, I mean, I’d say our 3%, while it’s a slower start than we would have liked, you know, part of that was weather-related. We mentioned about 1% impact, but we’re, you know, frankly, very comfortable with the mid-single-digit outlook, kind of return to normal growth.

We see strong underlying demand in the business, in our backlog, and our project activity with our customers, so it’s really just a slightly slower start and really not that much slower than we expected, not far off that mid-single digit if you adjust for the weather impact.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: ... It, you know, maybe add additional color to it, Jeff, is that, you know, supply chains in the interventional businesses have stabilized. We see some pretty good movement and order entry momentum in our fluid component business. Our ongoing demand for the Atrion businesses look good. I would just remind you that the Atrion businesses are going to be lower than our interventional businesses. But all in all, if you take the current order entry, and if you take the backlog and take the healthy pipeline of customer projects, we feel pretty good about delivering on the mid-single digits for MFS for the full year.

Jeff Hammond, Analyst, KeyBanc: Okay. Appreciate all the details. Thanks.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: All right. Thank you.

Conference Operator: Our next question comes from Mike Holleran with Baird. Your line is open. Please go ahead.

Mike Holleran, Analyst, Baird: Hey, good morning, everyone.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning, Mike.

Mike Holleran, Analyst, Baird: Hey, can we start on the ATS piece and maybe just give some more context to the moving pieces in the larger buckets there? You know, the dispense piece, it seems like it’s tracking the right way. Starting to see some signs on X-ray. But maybe broadly, in T&I piece, what are you seeing? And just maybe put it all together, talk about the three pieces, the order trajectory, and where you’re the most confident.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah, sure. Overall, strong momentum on order entry, as well as revenue shipments in the quarter for these businesses. Clearly, our dispense businesses were the strongest, and that is to be expected, right? If you think about our dispense businesses and their applications in these complex chip manufacturing processes, driven by AI computing power needs of our customers, we see tremendous amount of investment going on in this business, and that is reflective of the revenue performance as well as the order entry. If you think about our T&I, you wanna think about it in two pieces. One is our X-ray businesses, and the other one is our what we call as AMI businesses. And so these are acoustic emission based inspection techniques and optical techniques.

So if you think about the X-ray, we are beginning to see some pretty nice momentum in our X-ray business. Remember, last year, this business was a little bit down. We are beginning to see that business starting to inflect and feel really good about where we are. You know, think about, you know, these complex chips. These complex chips are now both combined logic and memory on the same stack, and so these are very expensive chips, and yield rates are everything here. And so the test and inspection applications continue to expand for us, in these manufacturing processes, and so we feel good about the long term, but also feel good about the near term, where we’re seeing these orders starting to inflect.

One thing, you know, we also have our AMI business, which is our acoustic emission business. There, we have coming off of two really strong years of growth. We still have pretty decent growth planned for them this year, but in general, you know, we feel really good about the ATS segment, and, you know, that is reflected in our second quarter outlook. If you get into the second half, you know, you need to remember that this business started to inflect in the second half of last year. The comps get a little bit difficult, but yet, based on what we can see in terms of backlog and order entry momentum, we feel still good about this year, this business being north of its long-term targets of mid-single digits.

Mike Holleran, Analyst, Baird: Great. That was super helpful, and, you know, maybe you can just have the exact same conversation around the IPS segment, given all the moving pieces there.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah, sure. If you think about the IPS business, you know, what we feel, the headline really is we return to growth with IPS. You know, we posted a 3% organic growth in the quarter. Expect that, you know, we will do so in the rest of the year. That’s sort of what we contemplate in our midpoint of the guide. Investments in packaging and product assembly end markets are sustaining. We continue to see growth in our precision ag or ag business in Europe and South America, where we are market leaders. Stable aftermarket demand. You know, remember, this is a business where aftermarkets are, you know, a significant part of their revenue, which is north of, you know, 55% or so. Polymer processing and automotive end markets, you know, we expect a nominal recovery through the year.

They’re stabilized, but, you know, not meaningfully inflecting yet.

Brad Hewitt, Analyst, Wolfe Research3: The only other thing I-

Mike Holleran, Analyst, Baird: Thank you. Really appreciate.

Brad Hewitt, Analyst, Wolfe Research3: ... As the growth that we are seeing. I’m sorry, go ahead. I-

Mike Holleran, Analyst, Baird: I said the exact same thing. I apologize and said, "Go ahead.

Brad Hewitt, Analyst, Wolfe Research3: Well, the only other thing I was gonna add, Mike, is that, you know, the growth that we are seeing, back to our kind of prepared remarks, is largely in Asia today.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: ... or in Asia Pacific. Again, that’s not just China, that’s broad Asia Pacific. And so, you know, opportunity, we’re still not seeing much inflection in the European and North American market demands. I think certainly there’s some early signs, as Naga mentioned in his comments, but we’re really not seeing that yet. And I think also being very cautious to call when that’s gonna happen.

Christopher Glynn, Analyst, Oppenheimer: Great. Thanks. Really appreciate it.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Sure.

Conference Operator: Our next question comes from Matt Somerville with D.A. Davidson. Your line is open. Please go ahead.

Speaker 7: Thanks. Just a quick follow-up. On the medical side of the business, can you just give a little bit more granularity as to the weather impact you saw in the quarter? Which business line was impacted, and if you kind of normalize for that impact, what would the medical organic performance - medical-only organic performance have looked like in the quarter?

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, it was, it was primarily in our interventional products, and then also to some extent in our fluid components, particularly some of our Atrion-related businesses. We had, you know, we had several businesses that have operations on the East Coast, as well as supply chains that are East Coast-based. And, you know, the long and the short of it is we lost a few days of production because we had literally operations that were mandated to be shut down because of the weather impact. And so, you know, we estimated about a 1% impact. It’s... You know, think of it as two to three days of production. Very temporary in nature.

We’re back up and obviously fully running, but did have an impact on our ability to deliver during the quarter, especially with it happening late in the quarter. So, you know, again, I think the simple math is 3% overall growth. Normalized, that would’ve been about 4% in the quarter without that late storm impact.

Speaker 7: Got it. Well, maybe if you can just comment on what you’re seeing from an M&A standpoint: multiples, potential deal sizes, actionability, and where you see most activity across, across the company.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah. Just, just a reminder, yeah, in terms of our acquisitions, you know, we continue to work our pipeline. Pretty active pipeline. Lots of different opportunities that we’ll pursue. You know, what you don’t want to look at lack of announcements and relate that to lack of activity, right? Because, you know, we remain financially and strategically disciplined. The areas we are continuing to work on are continuing to expand our Medical component portfolio. We’re working on Test and Inspection opportunities and any core technology, any technology that would add to our core offering in Industrial. So that is sort of the three areas that we are looking at and working on. Yes, the multiples look a little elevated in some cases. In some places it look reasonable. I think, you know, for us it is...

You know, we’re going to continue to be pretty disciplined around what we, what we buy, and our criteria has remained the same. We’re looking for businesses that would add to our growth portfolio, businesses that are differentiated, businesses that have strong technology plays. And from a financial perspective, we’re looking for Nordson-like gross margins and, you know, maybe EBITDA was in the 20 range, with meaningful opportunity to expand margins and, you know, an appropriate return. So all our criteria, both strategic and financial, remain the same. Healthy pipeline, continue to work on. Lack of announcement shouldn’t be assumed for lack of activity or work on our part.

Speaker 7: Thank you.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Of course.

Conference Operator: Our next question comes from Christopher Glynn with Oppenheimer. Your line is open. Please go ahead.

Christopher Glynn, Analyst, Oppenheimer: Thanks. Good morning, guys.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Good morning.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning.

Christopher Glynn, Analyst, Oppenheimer: Just wanted to. You mentioned, I think, seeing some initial signs of the general electronics half of ATS starting to show signs of life. That’s pretty consistent with what we’re hearing from, you know, kind of adjacent companies or exposures to yours. But yeah, just wanted to spend a minute exploring that topic.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, I guess maybe just to add a little bit of color. You know, I would say we’re not really seeing inflection in those businesses. I would say, you know, stable demand at low growth levels. I think, you know, the early signs that I would say we’re pointing to is, and you guys see the announcements as much as anybody else, you’re starting to see some of the semiconductor... I’ll say the high-end semiconductor demand and investment seem to be trickling into the lower level electronics applications. If you think of memory and general electronics requirements, we’re starting to see announcements and discussions around capacity investments. We’re not seeing those yet, but certainly those are early signs that we may see inflection coming at some point in the future.

Right now, what I would say we’re seeing in those markets is stable demand at low growth rates.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah.

Christopher Glynn, Analyst, Oppenheimer: Great, thanks for that. And then, just want to explore also when, emerging technologies in the semi application space start-

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah

Christopher Glynn, Analyst, Oppenheimer: ... to hit you, say, in the case of, so packaged optics, is that a meaningful opportunity? Is that down the line, or are you seeing some early action derivative of that technology?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Are you talking about optical modules? Is that what you’re talking about, Chris?

Christopher Glynn, Analyst, Oppenheimer: Yeah, exactly.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Okay. Yes, that, that is an area of, you know, we have some interesting products there that helps our customers manufacture those optical modules. It’s certainly an area that we are playing in, and it’s an area where we are beginning to see orders directly related to that.

Christopher Glynn, Analyst, Oppenheimer: Okay. And last one from me. You know, what was, as I recall from back in the past, it’s been a while, but you know, FX can have a substantial impact on ATS-IPS margins, and you know, they were certainly well below the steady state that you delivered for a long time there. I know you talked about mix, but ahead of the call, I was certain it would be FX, so just wanted to ask about that.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, and we mentioned that as well. FX is certainly... If you think of the incremental performance for IPS, that’s certainly one of the items that impacts us. And, you know, the simple math I would give you is, you know, ’cause FX was about a 6% positive impact on IPS sales. Obviously, we don’t get the same incrementals on FX movements. In fact, we would, you know, give you the math of use a 25%-30% range for a normal incremental on FX, both on the upside and downside. And so with 6% growth coming from FX at a lower incremental, certainly that’s a contributor to the performance in the quarter.

Christopher Glynn, Analyst, Oppenheimer: Great. Thank you for clarifying that.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yep.

Conference Operator: Our next question comes from Robert Jamison with Vertical Research Partners. Your line is open. Please go ahead.

Robert Jamison, Analyst, Vertical Research Partners: Hey, good morning. Thanks for taking my questions. Just really wanted to follow up quickly on that FX incrementals. Should we be assuming the same sort of incremental drop through, those 25% up or down across the other segments as well for FX?

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: It varies a little bit by segment, but yeah, generally speaking, that’s a good benchmark. And the only thing I would maybe caution you on is, you know, the outlook for the year. That FX impact will lessen at current rates.

Robert Jamison, Analyst, Vertical Research Partners: Mm-hmm.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: As you saw, FX rates improving throughout the year, last year. So Q1, we get a pretty big lift, but that’ll lessen as the year plays out at current rates. But yes, the drop through should be pretty similar. It moves a few points one way or the other, but not significantly different by segment.

Robert Jamison, Analyst, Vertical Research Partners: Great. Thank you.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Mm-hmm.

Robert Jamison, Analyst, Vertical Research Partners: And then I just want to talk about full year guidance. You know, really solid performance in 1Q. Nice Q2 guide. Just, you know, taking Naga’s comments, and I think it’s wise here to have a level of conservative baked in, and hopefully I’m reading those comments right. You know, but what I’d like to kind of understand is, you know, what end markets and areas would you expect to outperform your base case estimates to get us, you know, at or above the high end of your, you know, sales range? You know, does it need to be an acceleration in, like, auto?

I mean, I’ve been watching auto CapEx for, you know, plenty, 20+ global auto OEMs, and even since December, we’ve seen auto CapEx revised higher by, like, 5% growth in 2026, from flattish in December. So would it be kind of like a mix of that, plus more of an acceleration in some of the minimally invasive and specialty medical business? Would that be, like, kind of like a fair assessment if we were to, you know, everything were to align and get us towards the high end of your guidance range?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Hey, Rob, you know, thank you for your comments. You know, that exactly mirrors our thinking. You know, what we are trying to be is balanced, you know, and prudent in our thinking for the rest of the year. And in terms of the details of how we’re thinking about each of these end markets, I’ll have Dan talk to you about the high end and the low end.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, and I’ll start with, frankly, I think, the easier one. You know, medical, we see, as we mentioned, you know, good, ongoing, stable growth in the mid-single-digit range. You know, is there potential for upside there? Potentially, but we’re not really. I would say that’s not a market that we expect to inflect further necessarily.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: If I think of, you know, what would drive the higher end, it would be exactly what you’re talking about, some further inflection in general, industrial, and automotive demand. And then the other key factor that I would say is, you know, if you look at our ATS performance, as we’ve, you know, highlighted a number of times, you know, ATS deliveries being 70% systems tend to be lumpy. We’re not factoring in a 20% run rate in growth in this business. We know that there will be some lumpiness quarter to quarter, but one potential upside is if we see continuing, ongoing strength in demand, that would be upside versus our kind of base case thinking.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Um-

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Maybe let me just add one thing there, particularly on ATS. Some of the demand and the exact delivery depends on our customer, right? So we are part of somebody else’s large manufacturing supply chain, that they’re bringing a process up to speed. So occasionally, there may be a pull ahead and sometimes a pull back. You know, postponing is the way to think about it. So think of our lumpiness also from a customer demand, you know, delivery requirement.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Mm-hmm. Yeah, it’s a good way to think about it.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Right.

Robert Jamison, Analyst, Vertical Research Partners: No, that, that makes perfect sense. And then just one last one, just, I don’t see this being an issue, guys, for you all, but the DRAM pricing, is—have there been any impacts, or how much is that of, like, your bill of materials? Is it pretty de minimis? And then, I guess another question would be, you know, with just some of the capacity constraints there, could that be a potential opportunity for you all, you know, if, like, on the back-end processes, if they need to increase capacity, or, or am I not kind of on course there?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Robert, could you repeat the early part of your question before the pricing? We missed something there. Just-

Robert Jamison, Analyst, Vertical Research Partners: Oh, yes. Sorry. So I was just talking about DRAM pricing, and I was wondering-

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Got it

Robert Jamison, Analyst, Vertical Research Partners: ... just with, like, memory costs going up, do you have any?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah

Robert Jamison, Analyst, Vertical Research Partners: significant exposure there that would be, you know, you know, related to margin?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah. I, you know, we don’t have a significant amount of exposure, but we do have exposure in the memory space, in the traditional memory, and, when there are capacity adds there, we will, we will benefit. We will benefit.

Robert Jamison, Analyst, Vertical Research Partners: Okay, excellent. Thank you so much for taking my questions.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Thank you.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Thank you.

Conference Operator: Our next question comes from Andrew Buscalia with BNP Paribas. Your line is open. Please go ahead.

Andrew Buscalia, Analyst, BNP Paribas: Hey, good morning, everyone.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Morning, Andrew.

Andrew Buscalia, Analyst, BNP Paribas: Just wanted to check on, you know, within ATS, I know, you know, you said about half of your sales tied to semis, but we’re seeing that test inspection piece maybe start to recover with X-ray. Can you just talk a little bit about how... I know that your testing the inspection stuff is quite niche, so I’m wondering what a cycle looks like for that side of your business, and is this X-ray piece sort of a precursor for a lift, you know, in that chunk of your ATS business?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah. If you think about our X-ray business, this is one was a little slower to recover when compared to our dispense business and when compared to our acoustic emission. And so if you think about year-on-year, our X-ray has some automotive exposure as well. The semi side of X-ray is doing really well, and the auto is flattish, is the way to think about it. Does that help the question that you asked?

Andrew Buscalia, Analyst, BNP Paribas: Yeah.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Okay.

Andrew Buscalia, Analyst, BNP Paribas: So as automotive,

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Sorry. As automotive comes back, you know, we will continue to see X-ray do well.

Andrew Buscalia, Analyst, BNP Paribas: Okay, got it. Okay, on the, in MFS, you know, you run into some pretty tough margin comps in the back half of the year. Can you just remind us... I guess, is that something when you when we come to lap that, you expect to expand off of such a high base? I mean, they’re pretty impressive margins you’re running into, and maybe what why would that be? What would lift that demand if you don’t or margins if the demand is not really accelerating?

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Yeah, no, it’s a good question, and I mean, maybe I’ll even go back to our fourth quarter. You know, we printed a very strong margin in the fourth quarter, and I think we made comments during that call that, you know, that was a high point, and not necessarily an ongoing run rate. And so, you know, we think margins in the MFS segment are very much sustainable in the, you know, 37%ish range. And, you know, we may have some selective quarter-over-quarter comp issues, like the fourth quarter, where we had a really strong performance. But, you know, we think maintaining that margin performance and continuing to generate reasonable incrementals as we grow is very much attainable in the, in the medical business. The...

Yeah, and it’s worth pointing out, and maybe just to reiterate, you know, that the divestiture that we completed in the fourth quarter is kind of a, call it a one-time adjustment that impacts our ongoing margins. And so you’re certainly seeing that in the year-over-year margin comparisons in Q1, and you’ll see that through the year until we hit Q4.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah. And, you know-

Andrew Buscalia, Analyst, BNP Paribas: Okay

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: ... I think, Andrew, the most important part we as a company are focused on, and this message sort of reiterates across all of our businesses. In, given Nordson’s high gross margins, high best-in-class EBITDA margins, it is super important for our businesses to stay focused on growth at reasonable incrementals. So as you think about us, you know, be it MFS, yes, the margins are pretty strong, but day in, day out, what our teams in the divisions are focused on is to drive organic growth, innovate, deliver products at the time the customer’s asking us, have the best quality there is, meet our customers’ needs in the market where they need us to be, just being agile. That’s sort of how we are thinking about it, and I would say the margin is just a by-product of all of the work, right?

So that, you know, if you want to think about us, I would think about above-market growth at reasonable increments. That’s what we’re focused on. That’s what you would see us deliver.

Andrew Buscalia, Analyst, BNP Paribas: Okay. Thanks, Naga.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Sure.

Conference Operator: Our next question comes from Chris Dankert with Loop Capital. Your line is open. Please go ahead.

Chris Dankert, Analyst, Loop Capital: Hey, morning. Thanks for taking the question, guys.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning, Chris.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Good morning.

Chris Dankert, Analyst, Loop Capital: Just looking at the ATS segment, I guess I’m fully appreciating that, you know, a lot of that business is just lumpier by nature, but-

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah

Chris Dankert, Analyst, Loop Capital: ... was any of that growth a pull forward around Lunar New Year, or was that just kind of how the orders just happened to fall serendipitously?

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: ... Yeah, no, nothing that we would say is tied to the Lunar New Year. In fact, to be honest, we’ve kind of looked at this, and the Lunar New Year, it has a pretty de minimis impact, and we’ve kind of proven that out, looking at history. So it’s really tied to, as Naga said earlier, customer demand requirements, when they want the machines on their floor for installation into their broader lines. And what you’re seeing is reflective of, you know, I would say, normal customer demand and requirements.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: You know, we do hear that our customers are investing for the demand, right? And so this increased demand for AI chip capacity is playing out, and it’s playing out in the packaging area right now, and that’s why you see our dispense business benefit. You start to see our X-ray business start to inflect. You know, so this is based on what people are asking, and the lumpiness comes from our customer, both investment pattern as well as installation requirements, so.

Chris Dankert, Analyst, Loop Capital: Yeah, it was certainly encouraging to see, you know, the strong start to the year and then the good shipments in 1Q here. So yeah, congrats on that. I guess as my follow-up, any comment on kind of the machine builder activity in core Europe and kind of what that demand has been within the IPS segment?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: They seem to be pretty stable, and, you know, our packaging business has had a pretty good quarter, expect to continue to have a pretty good quarter. You know, if you think about the nonwovens business, we’re coming off of two years of incredible capacity adds. Lot of capacity adds for nonwovens came in the last year from a lot of our mid-tier OEMs based in Asia, building out in Africa, Middle East, India. So, you know, global middle-income growth, still a big secular growth driver for this business, albeit reasonable, low single-digit growth, stable aftermarket demand, all the things that makes this business great, still intact, still continuing to do well.

Chris Dankert, Analyst, Loop Capital: Got it. Thanks so for the color, Naga, and congrats on a nice start to the 2026 year.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Thank you. Thank you.

Conference Operator: Our next question comes from Walter Liptak with Seaport Research. Your line is open. Please go ahead.

Walter Liptak, Analyst, Seaport Research: Hi, good morning, guys.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Good morning, Walter.

Walter Liptak, Analyst, Seaport Research: Let me try one on the ATS segment. And if I’m recalling this right, in past positive cycles or on consumer electronics for dispensing, the visibility was pretty short. Like, the customers would place orders, and then you’d have to cycle through and ship very quickly-

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Mm-hmm

Walter Liptak, Analyst, Seaport Research: ... already. And it sounds like, with this kind of data center build-out for advanced chips, that lumpiness is still there. Can you help us understand, is there any differences between prior kind of consumer electronics lead cycles versus this one? Do you get any more visibility into the capacity that might be going in?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah.

Walter Liptak, Analyst, Seaport Research: And those order lead times, you know-

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yes

Walter Liptak, Analyst, Seaport Research: ... if you can just comment.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: The order lead times are not very different, but the size or the growth differences are, you know, they are smaller rather than you know, significantly huge chunks and then nothing. So, I would say it is dampened. The amplitude of the cycle is dampened, is maybe one way to think about it, but the order lead times are no different. But, you know, we have built in some new advantages here in the last couple of years. If you remember, this business went through a relocation of capacity to be in geographies where we are closer to our customer or where the customer needs us to be. So that has helped us to be able to respond to this lead time. The other is our NBS Next application within our factories certainly has improved our own on-time delivery capability.

You know, we are consistently in the low 90s, you know, starting to march towards a 95% on-time delivery based on customer requirements. So, you know, this type of delivery capability that the teams have built over the last couple of years and having capacity where our customer needs us to be, is a game changer for this business.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: I’ll just add, by the way, I mean, your comment is spot on. You know, if you think of our backlog, and this is why we think looking at our backlog quarter-to-quarter, year-over-year is a good indicator. Yeah, we’re turning our backlog pretty quickly. You know, as you think about our backlog, yes, we have some selected areas with longer lead times, but the majority of our backlog turns in the quarter. And so, you know, our starting backlog is really an indicator of current demand for Q2. To your point, we also have—you know, we maintain robust pipelines. We know what we’re talking to our customers about on new projects.

I think the piece that’s harder to pin down sometimes, just because of customer requirements, is when those turn into orders and delivery, which is dependent on when the customers need them for their factory floor.

Walter Liptak, Analyst, Seaport Research: Okay, great. Yeah, thanks for that color. You called out, you know, the Wise Nordson Advanced Electronics winning. I wonder if, is there a win rate? Like, are you—you know, it sounds like you might be gaining market share here with some of the quick delivery. Is there a way of quantifying it with a win rate?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: You know, well, we don’t share that on the outside. I would definitely tell you our work around growth drivers in each of our businesses, including ATS, around focus on innovation, focus on delivery, having the best in quality, and finally meeting where our customers need us to be in the market, are four core growth drivers that each of our businesses are working on. And you know, I think we’re getting rewarded for that in the market.

Walter Liptak, Analyst, Seaport Research: Okay, great. All right. Thank you.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yes.

Conference Operator: If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. Our next question comes from Brad Hewitt with Wolfe Research. Your line is open. Please go ahead.

Brad Hewitt, Analyst, Wolfe Research: Hey, good morning, guys. Thanks for the questions.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Good morning, Brad.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: Good morning.

Brad Hewitt, Analyst, Wolfe Research: So IPS revenue was much better than typical sequential seasonality. Of course, you called out the strength in Asia Pacific, but just curious if you could elaborate a little bit more on what drove that strength in Asia. How much of that was a function of an easy comp? And then how do you think about growth by region for the year in IPS?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah, you know, as I’d shared earlier in one of the answers, I would tell you, it is a broad-based demand that we are certainly seeing in IPS. IPS returns to growth, return to growth in the quarter, expect to have a good growth for the rest of the year. You know, clearly you can see growth in packaging, product assembly, you know, our Precision Ag business is also growing nicely. You know, polymer solution has stabilized, so there is some of that negative going away, right? If you think about polymers in automotive, where last year we were dealing with still demand going down. That has stabilized, so from that perspective, the comps are better there. So it’s a combination of our businesses that were negative last year and are stabilized.

They’ve not inflected yet, but our businesses that are having good growth demand in packaging, product assembly, and precision ag are contributing to the growth in this segment.

Daniel Hopgood, Executive Vice President and Chief Financial Officer, Nordson Corporation: I think that’s maybe a good way to think about it, Brad, you know, what you’re seeing in our first quarter growth of 3% is really the underlying growth that we’ve been seeing in this segment, if not for the drag that we saw in the automotive and polymer space last year.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Yeah.

Brad Hewitt, Analyst, Wolfe Research: Okay, that’s helpful. Then maybe switching over to the ATS side. Given AI demand continues to accelerate in recent months, does that give you confidence that perhaps your electronics business as a whole can outperform the mid-single digit long-term outlook you discussed at the Investor Day?

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: I think it’s really important to remain balanced on this business. We have seen the cycle of this business and, you know, that’s the space we play in, and we fully appreciate it. And, you know, we capitalize and fully participate in the market when the market is up. So yes, in years when there is going to be significant investment like now, we are going to see higher than the mid-single digit. But then through the cycle, you know, we’re going to be in places where this business will go down, and that’s something we... You’ve experienced, you’ve seen us, you know. So you want to think through the cycle, mid-single digit. In the up cycle, certainly higher, right? And so that’s what we are experiencing now, and that’s what we’re planning for, and that’s embedded in our guide.

Brad Hewitt, Analyst, Wolfe Research: Great. Thank you.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Sure.

Conference Operator: There are no further questions at this time. I will now turn the call back to Naga for closing remarks.

Sundaram Nagarajan, President and Chief Executive Officer, Nordson Corporation: Thank you for your time and attention on today’s call. We have several upcoming investor events over the next month, where our team would be happy to meet with you, including the Loop Capital Industrial Conference on March tenth in New York, the Bank of America conference on March seventeenth in London, and at the APEX Trade Show in Anaheim, California, on March eighteenth, featuring our electronics product lines. Nordson is well positioned as a diversified precision technology company. Our close to the customer model, proprietary and niche technology, diversified geographic and end market exposures, high level of recurring revenue, and strong balance sheet are among the many attributes that make us a quality compounder. Have a great day!

Conference Operator: This concludes today’s call. Thank you for attending. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Triple Flag Precious Metals Corp (TFPM) reported its Q4 2025 earnings, revealing a stronger-than-expected earnings per share (EPS) of $0.33, surpassing analyst forecasts of $0.3067. However, revenue came in below expectations at $118.92 million, compared to the anticipated $121.62 million. Following the earnings release, the company’s stock showed a modest increase in premarket trading, rising by 0.17% to $36.00.

Key Takeaways

• EPS exceeded expectations by 7.6%, reaching $0.33.
• Revenue fell short of forecasts by 2.22%, totaling $118.92 million.
• Stock price increased slightly in premarket trading, reflecting cautious optimism.
• Record production achieved with 113,000 Gold Equivalent Ounces (GEOs) in 2025.
• Company remains debt-free with over $1 billion in liquidity.

Company Performance

Triple Flag Precious Metals Corp reported a record year in 2025, achieving significant growth across various financial metrics. The company increased its operating cash flow per share by 45% to $1.54 and returned nearly $46 million to shareholders through dividends. Additionally, Triple Flag bought back $9 million in shares, ending the year with a robust financial position, including over $70 million in cash and a $1 billion credit facility.

Financial Highlights

• Revenue: $118.92 million, a slight decrease from expectations.
• Earnings per share: $0.33, surpassing the forecast of $0.3067.
• Operating cash flow per share increased by 45% to $1.54.
• 113,000 GEOs produced in 2025, setting a new company record.

Earnings vs. Forecast

Triple Flag Precious Metals reported an EPS of $0.33, beating the forecasted $0.3067 by 7.6%. Despite this positive earnings surprise, the company’s revenue of $118.92 million fell short of the $121.62 million expectation, resulting in a revenue surprise of -2.22%. The EPS beat marks a positive deviation from previous quarters, where earnings have been more aligned with forecasts.

Market Reaction

In response to the earnings announcement, Triple Flag’s stock experienced a modest increase of 0.17% in premarket trading, reaching $36.00. This movement suggests a cautiously optimistic investor sentiment, as the stock remains within its 52-week range of $16.26 to $40.29.

Outlook & Guidance

Looking ahead, Triple Flag has set a 2026 production guidance of 95,000 to 105,000 GEOs, with a long-term target of 140,000 to 150,000 GEOs by 2030. The company plans to focus on mid-sized deals ranging from $200 to $500 million, with key growth assets including Northparkes, Arthur, Kemess, and Hope Bay.

Executive Commentary

CEO Sheldon Vanderkooy emphasized the company’s strong growth trajectory, stating, "We have a clear and de-risked pathway to robust growth of 140,000-150,000 GEOs in 2030." He also highlighted Triple Flag’s strong financial position, noting that the company exited 2025 debt-free with over $1 billion in total liquidity. COO James Dendle added, "Northparkes is not a static asset. It’s a dynamic, world-class mining operation with lots of embedded optionality that will drive value for decades to come."

Risks and Challenges

• Potential fluctuations in gold and precious metal prices could impact revenue.
• Geopolitical risks in mining jurisdictions may affect operations.
• Supply chain disruptions could hinder production targets.
• Competition in the streaming and royalty market may pressure margins.
• Regulatory changes in key jurisdictions could pose compliance challenges.

Q&A

During the earnings call, analysts inquired about the potential for additional gold deposits at Northparkes, which management confirmed as a focus area. Questions also centered on the company’s strategy for mid-sized deals and the exclusion of ATO contributions from current guidance. Management reiterated their commitment to exploring opportunities in the gold and silver streaming/royalty market.

Full transcript - Triple Flag Precious Metals Corp (TFPM) Q4 2025:

Desiree, Conference Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Triple Flag Precious Metals Fourth Quarter 2025 conference call. All lines have you please on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw a question again, press the star one. I would now like to turn the conference over to Sheldon Vanderkooy, CEO. You may begin.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Thank you, Desiree. Good morning, everyone, and thank you for joining us to discuss Triple Flag’s fourth quarter and full year 2025 results. Today, I’m joined by our Chief Financial Officer, Eban Bari, and Chief Operating Officer, James Dendle. Triple Flag had an outstanding year in 2025 as a, and is extremely well-positioned in 2026. We finished the year strong in Q4, resulting in record performance for full year 2025. We achieved record production of 113,000 GEOs. This was in the upper half of our guidance range and is the ninth consecutive year-over-year increase. Higher production and higher gold prices translated into record cash flow. Cash flow per share was $1.54 per share, a 45% increase from 2024.

The model is working as it is intended, directly translating higher gold prices into rising cash flow per share. We continue to benefit from rising prices in 2026. In Q4, the average gold price was $4,135 an ounce, well below current spot prices of just under $5,000 per ounce. Moving ahead to 2026, our guidance range is 95,000-105,000 GEOs, which reflects the well-understood mine sequencing at Northparkes. It also reflects the planned step down in the Cerro Lindo stream rate, following the successful delivery of 19.5 million ounces of silver since we acquired the stream in 2016. That was Triple Flag’s first investment. We continue to see a long life ahead for Cerro Lindo, with strong exploration potential, as well as exposure to the silver price going forward.

Our portfolio has significant embedded growth. Our 2030 outlook is that production in 2030 will grow to between 140,000-150,000 GEOs. This is approximately a 45% growth from the midpoint of our 2026 guidance. This is driven by multiple assets advancing through construction, permitting, and study stages, including Arcata, Kone, SK Creek, Aridirada, and Goldfield. Importantly, it is not dependent on any one large project. Looking beyond 2030, we have meaningful GEO growth potential from a number of large-scale assets located in the best jurisdictions, Australia, the United States, and Canada. First, Hope Bay is located in northern Canada, and Agnico has stated that it is progressing towards a construction decision, which is expected in May 2026. Second, Centerra released a positive PEA on Kemess, targeting potential production in 2031.

Kemess is located in British Columbia. Third is the Arthur Project in Nevada, where AngloGold is expected to imminently release a pre-feasibility study, which I am quite eager to see. Last, and most significantly, is our flagship asset, Northparkes, located in Australia, and which is clearly positioned as a significant growth asset for Triple Flag. I want to congratulate Lawrie Conway and the Evolution team for all the success they have had at Northparkes since they have acquired Northparkes. It is truly impressive. A week ago, Evolution released a significant update on Northparkes, which has three related catalysts for Triple Flag. First, Evolution approved the development of the E22 Block Cave. E22 has very attractive gold grades for Triple Flag, and Block Cave development is the value-maximizing approach for both Evolution and Triple Flag.

Second, Evolution has announced that it is studying expanding Northparkes from the current 7.6 million tons per annum to 10 million tons per annum, or potentially more. There is tremendous demand for copper, and Northparkes is a very large resource, so the potential value creation of an expansion is clear. This could be very beneficial to the Triple Flag stream. And last, Evolution has identified a very attractive gold-only deposit on the property named E44. We had constructive discussions with Lawrie and Kieran and their team, and together we came to an agreement that will allow for the development of E44, which was previously not included in Evolution’s life of mine plan at Northparkes. As part of that agreement, Triple Flag will receive guaranteed minimum deliveries from E44, starting in 2030.

Northparkes is a byproduct stream, so the potential to also benefit from primary gold deposits is a fantastic bonus for Triple Flag and its shareholders. All of these factors together clearly position Northparkes as a growth asset for Triple Flag for the next decade to come. I’d also like to touch on our capital deployment in 2025. Triple Flag invested over $350 million in value accretive deals. This included the Arcata restart and ramp up in Peru, the Arthur Oxide Project in Nevada, the Johnson Camp Mine that is ramping up in Arizona, and the Minera Florida producing mine in Chile. These transactions provide current and growing cash flow, or in the case of Arthur, represent exposure to a premier development project with a clear path to production and further exploration upside. Importantly, all of these assets are also located in mining-friendly jurisdictions....

Overall, Triple Flag is exceptionally well-positioned to deliver long-term and organic value for our shareholders from a diversified portfolio of producing and development assets across premier mining jurisdictions. I will now turn it over to Eban to discuss our financial results for 2025.

Eban Bari, Chief Financial Officer, Triple Flag Precious Metals: Thank you, Sheldon. As you can see on this slide, 2025 was a record year across all financial metrics, driven by strong GEOs and record precious metals prices. As Sheldon noted, these record prices have since been broken by new records, with spot gold and silver well above even the Q4 average. Operating cash flow per share, the single most important metric we focus on as management, increased 45% to $1.54 per share. This metric best reflects the underlying operating performance of our core streaming and royalty business. This strong cash flow generation continued to support all of our capital allocation priorities, given our high margin business, including shareholder returns and external growth opportunities.

On shareholder returns, we paid out nearly $46 million in dividends to shareholders in 2025, which reflected a progressive 5% dividend increase in the middle of the year, our fourth consecutive increase since our IPO. In addition to our dividend, we were active and accretive on our share buyback during the year. In 2025, we bought back $9 million of our shares in open market at approximately $17.39 per share. We expect to remain active on our NCIB opportunistically going forward. On external growth front, as Sheldon mentioned, we reinvested over $350 million into new streams and royalties in 2025. Arcata, Arthur, Johnson, Kemess Mine, and Minera Florida, all provide either immediate or near to medium-term cash flow, significant exploration potential, and exposure to premier mining jurisdictions with strong operators.

I’m pleased to highlight that even with this level of capital deployment and as a result of our strong cash flow generation, Triple Flag is debt-free at year-end, with more than $70 million in cash and $1 billion available on our credit facility. We remain well-positioned to deploying capital into transactions that are accretive, fit with our strategy, and deliver value throughout the cycle. Moving forward to 2026 guidance. As Sheldon noted, we expect GEOs of between 95,000 and 105,000 ounces for the year. We expect these GEOs to be all derived from gold and silver and reflect a conservative gold-to-silver price ratio of 72 for the whole year, with a lower ratio assumed in the first half.

Depletion is expected to be between $65 million and $75 million, slightly lower than 2025, reflecting the sales mix we expect in 2026. G&A costs are expected to be between $30 million and $32 million, consistent with our actual expenses in 2025, that reflect the impact of Triple Flag’s strong share price increase throughout the year on share-based compensation expense. Finally, our Australian cash tax rate for our Australian royalties will be approximately 25%, consistent with prior year actuals. I will now pass it on to James to discuss our asset portfolio.

James Dendle, Chief Operating Officer, Triple Flag Precious Metals: Thank you, Eban. Triple Flag has achieved a consistent track record, delivering long-term GEOs growth since our first full year of operation in 2017. Beyond the guidance we have set for 2026, we see further organic growth to 140,000-150,000 GEOs in 2030. Midpoint to midpoint, this represents annual growth of 45% from 2026 guidance, which I’ll discuss further on the following slide. Our long-term organic growth outlook of 100,000-150,000 GEOs in 2030 is robust and reflects the achievement of several de-risking milestones delivered by our operators over the past 12 months. We are seeing meaningful progress across the portfolio, supported not only by constructive commodity price environments, but also by favorable permitting regimes across the jurisdictions to which we have exposure.

Arcata, Kone, SK Creek, Aridirada, Goldfield, South Railroad, and Delamar are a few examples of the many assets in our portfolio that are advancing rapidly towards production or steady state ramp-up over the medium term. Touching on only a few of them, we were exceptionally pleased to see in 2025, the SK Creek project in British Columbia receive full permits in less than one year after submission, Aura Minerals receive a construction license for Aridirada within one year of its acquisition, and Centerra’s renewed focus on the Goldfield project as a straightforward heap leach operation in Nevada. Beyond 2030, our portfolio is expected to deliver further GEOs growth from Arthur, Kemess, Hope Bay, as well as the growth initiatives at Northparkes, which I’ll discuss in the following slides. Beyond 2030-...

Arthur, Kemess, Hope Bay, and Northparkes represent world-class, long-life assets located in the most stable and established mining jurisdictions. They provide substantial growth potential beyond our 2030 outlook and demonstrate the quality of Triple Flag’s portfolio. At Arthur, we see the imminent release of a pre-feasibility study by AngloGold as an important catalyst in providing greater insights on the potential of this district scale system, starting with the Merlin and Silicon deposits as straightforward oxide open-pit projects. Arthur will be a cornerstone asset for Triple Flag in the 2030s. At Kemess, Triple Flag holds a 100% silver stream. The January 2026 preliminary economic assessment supports a large-scale copper, gold, silver operation, reaching production by 2031, leveraging existing brownfield infrastructure and permits from the previous mining operation.

Notably, the PEA mine plan only represents 47% of the total indicated and inferred resources, providing potential upside for future answers to be included in subsequent economic studies. At PFS, the Kemess is expected in 2027. At Hope Bay, our 1% NSR royalty covers a district-scale gold system on an asset operated by Agnico Eagle, the premier Canadian Arctic underground miner. In their year-end results from last week, Agnico noted their annual gold production is expected to be 400-425,000 ounces, with a potential construction decision in May 2026 and a potential restart in 2030. I’ll go into more detail on Northparkes on the next page. Northparkes is Triple Flag’s largest asset. It’s an established, high-quality copper-gold operation in Australia, operated by Evolution Mining.

Numerous growth projects have recently been approved, that Sheldon referred to, which unlock the value from this world-class copper-gold endowment. Currently, the E48 sub-level cave is ramping up and supports near-term gold production growth. Over the medium term, the E22 ore body will be advanced as a block cave, a large, low-cost operation with initial production by 2030. During this timeframe, the E44 gold-dominant deposit will also be advanced to production. This is an ore body not previously included in Evolution’s life of mine plans. Minimum guaranteed deliveries will commence in 2030 for a period of 7 years, with potential for meaningful life extensions beyond this initial period. Finally, and perhaps most importantly, is the potential for mill expansion to at least, at least 10 million tons per annum, which is currently being studied over the next year.

We believe that this potential expansion is the optimal path forward to unlock the value from not only the 550 million tons of current measured and indicated resources, but other prospective and underexplored targets that could materially add to the expected production profile with the improved scale and processing optionality. These growth projects demonstrate that Northparkes is not a static asset. It’s a dynamic, world-class mining operation with lots of embedded optionality that will drive value for decades to come. I’ll now pass back to Sheldon for closing remarks.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Thank you, James. After delivering record performance in 2025, Triple Flag is in an exceptionally strong position as we look ahead to 2026 and beyond. We have a clear and de-risked pathway to robust growth of 140,000-150,000 GEOs in 2030. Our project pipeline progressed very well in 2025 and now in 2026. Beyond 2030, Triple Flag shareholders can expect significant additional GEO growth from long-life, district-scale assets, including at Northparkes, Arthur, Kemess, and Hope Bay, all from projects with clear line of sight to production, a top-tier operator, and located in Australia, Canada, or the United States. Northparkes is our cornerstone asset and is clearly positioned as a growth asset over the next decade.

On the deal front, we deployed over $350 million in 2025 across multiple accretive transactions, demonstrating our ability to source and execute on high-quality opportunities that deliver compounding per-share growth from good assets, good regions, and good operators. Our balance sheet remains pristine. We exited 2025 debt-free and with over $1 billion in total liquidity, providing us with substantial financial flexibility to continue pursuing accretive growth opportunities, as well as to allocate capital to progressively growing returns to shareholders. That concludes our prepared remarks. Operator, please open the floor to questions.

Desiree, Conference Operator: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Cosmos Chiu with CIBC. Your line is open.

Cosmos Chiu, Analyst, CIBC: Thanks, Sheldon, Eban, and James. Maybe my first question is at Northparkes. Great to see that you’re investing more money into Northparkes at the E44 deposit. I guess my question is, are there more opportunities like that in terms of, you know, something similar to E44, gold-rich, something that would not be in the mine plan unless there’s a partner coming in and helping to put up some of the CapEx. And then maybe if you can also talk about geological setting, ’cause it must be a very, you know, clear variety of different geological settings here, if there are copper-rich deposits and gold-rich deposits. I’m just trying to figure out where some of these gold-rich deposits came from.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Yeah. Thanks, Cosmos. This is Sheldon. I’ll start and then pass it over to James. Historically, the Northparkes property, you know, had gold deposits, kinda shallow surface gold deposits, and it was very interesting. Now, of course, when we came in and did the stream, we really did the stream as a byproduct stream, you know, which worked ’cause we get about 60% of the gold revenue that Evolution Mining gets from Northparkes. And that works if the primary revenue is the copper. But if it’s gold only, we had to come to the table with Lawrie and the team and work something out.

But this is really exciting for us because the idea of getting, you know, a gold-only deposit there and us also having access to that was really key. There’s nothing else right now on the horizon, but is there a potential there? Well, I’ll let James speak to that, but there have been, you know, gold-dominant deposits on that property in the past.

James Dendle, Chief Operating Officer, Triple Flag Precious Metals: Yeah, and Cosmos, James. As Sheldon noted, the first mining at Northparkes is actually, as you probably remember, the mid-1990s, as a gold project, and it was actually first explored with shallow holes for gold mineralization. So there is a history there, but it very clearly transitioned to a copper deposit for the last, you know, 25 years or so. So when you think about it geologically, yes, the gold is clearly associated with the copper, and it’s a very prospective region. And I think what we’ve seen with Evolution is exactly what we hoped when they acquired the asset. They think very expansively, and very creatively about how to maximize value from operations, and I think that’s been a big part of their success with assets like Ernest Henry.

And they’re applying the same approach to Northparkes, which is to say, you know, there’s a large resource, let’s look at expanding capacity, and then with that expanded capacity, what, what else can we do with it? Which has caused them to really look at the gold deposits in a way that wasn’t done in the past. And the short answer is, you know, E44 is the most known.

Cosmos Chiu, Analyst, CIBC: Mm-hmm

James Dendle, Chief Operating Officer, Triple Flag Precious Metals: ... but there are a large number of targets across the property that are sort of known from some of the historical work, but have not been tested and defined in a systematic manner, which I think really speaks to the opportunity to find more of this type of mineralization, which, with the expanded mill capacity, Evolution can take advantage of.

Cosmos Chiu, Analyst, CIBC: Great. That’s, that’s great to hear, James. And then, maybe my next question is, you know, taking a step back here. In the royalties and, streaming, industry, we’ve now seen, recently some billion-dollar deals or even multi-billion dollar deals. I know, Sheldon, you mentioned that you deployed about $300 million last year, but in terms of these billion-dollar deals, multi-billion dollar deals, is that, something that, Triple Flag could be interested in, could be competitive in, or, you know, is that slightly too large for you at this point in time?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Hi, Cos. We’ve always said that, like, our sweet spot is really in the, you know, $200 million-$500 million range, and I don’t think that that changes. And when you look back, you know, Triple Flag actually is coming up on our 10th anniversary. Over the last 10 years, the vast majority of the capital deployment in the sector has been in, you know, that strike zone. So I feel really good about that. You know, there was a large deal done earlier this week, and four point three billion is too big for Triple Flag. I think that’s okay, but,

Cosmos Chiu, Analyst, CIBC: Mm-hmm

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: ... but there’s plenty out there I think that we can grow and deploy on. And again, our relative to our size, I think we have, we definitely have an ability to grow, ’cause when you, when you look at the size of Triple Flag and $350 million of deployment, that’s meaningful. So if we do a $400 million deal, that is, that moves the needle for Triple Flag, and I think that’ll do very well by our shareholders.

Cosmos Chiu, Analyst, CIBC: Great. And then maybe one last question, as you talk about the different growth opportunities within your portfolio. I guess one asset you did not mention was Pumpkin Hollow. I know there’s a bit of history behind it, but now it seems like Pumpkin Hollow has a new owner, Kinterra, and they seem to have, you know, be able to raise a lot of capital. So, you know, Pumpkin Hollow, once again, is this something that we should start talking about? Is this something that we should start getting excited about, or is it too-- still too early at this point in time?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Yeah. So we retain a royalty on the Pumpkin Hollow open pit, and that actually, I think, looks like a really nice royalty because that is copper in the United States, and we’re a royalty, and we’re on title, and that you know, survived all the processes that went on there. So I am quite keen to see what Kinterra is doing there, and that represents some very nice copper exposure from the United States for Triple Flag shareholders. Triple Flag will not be investing any more money in Pumpkin Hollow. I can, I’ll say that clearly.

Cosmos Chiu, Analyst, CIBC: Great. Thanks again, Sheldon, James, and Eban. Those are all the questions I have. Thank you.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Thanks, Cos.

Desiree, Conference Operator: Our next question comes from the line of Tanya Jakusconek with Scotiabank. Your line is open.

Tanya Jakusconek, Analyst, Scotiabank: Oh, great. Good morning, everybody. Can you hear me?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: I can. Hi, Tanya.

Tanya Jakusconek, Analyst, Scotiabank: Good morning. Hello. I have a couple of questions, if I could. Start with a very easy one. Can you know, I just, you know, just kinda wanna assume, like, a flat gold price, flat silver price, et cetera. Can you give us just an idea of how the year is going to look like from a quarterly perspective? You know, we have some step downs, we have other things happening, so I’m just trying to understand how should we think first half, second half, et cetera?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: ... Yeah. Hi, Tanya. We give our annual guidance; we’re not going to break it down by the quarters. And yeah, and you’ve kind of correctly identified the one factor, which is the Cerro Lindo step down will occur sometime in the second quarter, we believe, but can’t give any more quarterly guidance over and above that.

Tanya Jakusconek, Analyst, Scotiabank: Okay. What about the capital returns? I think those are, you know, you focus on the dividend, and you like, the fact that you progressively increase that dividend. How should we be thinking about it for mid-year?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Yeah, I think nothing’s changed on our philosophy on capital allocation. So, you know, as you cited, we have a progressively increasing dividend. We’ve increased it every year since we’ve been public. I see no reason why we would change that. I think it’s very, it goes over very well with, with shareholders. So that’s the dividend. And then, you know, we’re looking to deploy capital into accretive opportunities for shareholders. It’s really that simple.

Tanya Jakusconek, Analyst, Scotiabank: Okay. And in terms of the opportunities, I think you mentioned the $200 million-$500 million range being your sweet spot and seeing some bigger deals. So, I have a couple of questions on this front. The first thing is, I’ve noted, two people shopping in their own closet, Sandstorm and, Wheaton. Are there any other things to do in shopping in your own closet? Any other opportunities on assets you own?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: That’s an analogy I haven’t heard before. I like it. You know, I guess we just-

Tanya Jakusconek, Analyst, Scotiabank: I shop in the closet all the time, by the way, Sheldon.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: You know, it’s natural when you have a relationship with a party, or you already have a position in a property, that those are the things you look to. And, you know, with Northparkes, that was obviously a natural for us. And, would we be looking for other opportunities like that? Yeah, perhaps. But these things are, they’re never done till they’re done, and, I don’t want to start front running anything. But, you know, we’re—we try to engage closely with all of our partners.

Tanya Jakusconek, Analyst, Scotiabank: In terms of opportunities that are out there, would you say most of them now are focused on asset builds, or are they royalty portfolios still available? We saw one last night as well. Anything, any color on opportunities that are out there?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: You know, it’s going to be the same answer as has been received by, I think, everyone for the last little while. There’s a variety. You know, there’s third-party assets that are coming up for sale. There’s people looking for financing for various things, you know, and that can be development, or that could be other reasons. It’s, I wouldn’t say there’s any, like, one big thematic out there, and it’s kind of our job, you know, to look at the opportunity set and try to generate some of our opportunity set as well. So I wouldn’t say there is any kind of one sort of theme that I’m seeing out there.

The opportunity set looks pretty robust to me, and I think we’ve seen, you know, not just ourselves, but other people deploy. You know, I think that bodes well for the sector as a whole.

Tanya Jakusconek, Analyst, Scotiabank: Okay. And then we’ve seen some very big silver opportunities. Are there any smaller ones that fit that $200 million-$500 million range you’re seeing out there?

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Yeah, and, and again, I wouldn’t consider 200-500 to be small for, for a company of Triple Flag size. That’d be quite meaningful. There’s silver opportunities. There’s also gold opportunities out there. You know, I think our, our focus is always probably gold first, silver second. But, you know, we like precious metals, and, you know, if it’s a good silver asset or a good gold asset, we really want to be on good assets with good operators.

Tanya Jakusconek, Analyst, Scotiabank: Yeah, taken. When I meant the smallest silver opportunities, that was relative to the $4.3 billion, so it was a relative.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Yeah, most things are small relative to $4.3 billion. Yeah.

Tanya Jakusconek, Analyst, Scotiabank: Okay. All right, no worries. I’ll leave the room for someone else to ask questions. Thank you for taking my, my question.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Thanks, Tanya.

Desiree, Conference Operator: Next question comes from the line of Brian MacArthur with Raymond James. Your line is open.

Brian MacArthur, Analyst, Raymond James: Good morning, and thank you for taking my question. Could you just give us an update on ATO and maybe what you assumed any contribution this year? And then as you go out to 2030, what you’re thinking, i.e., expansion or baseline? If you just give us an update on that, that would be great. Thank you.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Yeah. Hi, Brian, it’s Sheldon. I’ll answer that one. Look, ATO is in litigation. We’ve been quite upfront with the market on that. We feel very confident in our position. And, you know, that process is kind of going through the court, so I can’t say too much. But what I will say, and I think this is really pertinent, I’m glad you asked the question: We took it out of our 2026 guidance, and we took it out of the 2030 five-year as well. So that doesn’t reflect our confidence and our position, but rather we just wanted to remove it as a potential distraction for investors to have to get a handle on.

When you look at those figures we put out for 2026 and for 2030, there’s 0 contribution from ATO in there, and ATO is only upside, not downside, relative to those figures.

Brian MacArthur, Analyst, Raymond James: Great. Thanks very much, Sheldon. Very clear.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Thanks, Brian.

Desiree, Conference Operator: That concludes the question and answer session. I would like to turn the call back over to our CEO, Sheldon Vanderkooy.

Sheldon Vanderkooy, CEO, Triple Flag Precious Metals: Thank you very much. Really appreciated speaking with everyone, and looking forward to a great 2026. Bye.

Desiree, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining in. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Liberty Latin America Ltd (LILA) reported its Q4 2025 earnings, revealing EPS of -$0.0351, in line with forecasts, but a revenue miss of $10 million, with actual revenue at $1.16 billion. The market reacted with a premarket stock drop of 4.92%, reflecting investor concerns over the revenue shortfall.

Key Takeaways

• EPS met expectations at -$0.0351, but revenue fell short by $10 million.
• Stock price dropped 4.92% in premarket trading post-announcement.
• Adjusted OIBDA margins improved significantly, up by 300 basis points.
• 5G expansion continues with a successful launch in Costa Rica.
• Competitive pressures and roaming revenue challenges persist.

Company Performance

Liberty Latin America demonstrated mixed performance in Q4 2025. While EPS met expectations, the company faced a revenue shortfall. Despite this, Liberty Latin America showed strength in operational efficiency, with a notable improvement in adjusted OIBDA margins and a substantial increase in adjusted free cash flow.

Financial Highlights

• Revenue: $1.16 billion, slightly below the forecast of $1.17 billion.
• Earnings per share: -$0.0351, matching the forecast.
• Adjusted OIBDA: $1.7 billion, representing 9% rebased growth.
• Adjusted free cash flow: $150 million, up 29% year-over-year.

Market Reaction

The stock experienced a 4.92% decline in premarket trading, dropping to $7.35. This movement indicates investor apprehension following the revenue miss. The stock remains volatile within its 52-week range, reflecting broader market uncertainties.

Outlook & Guidance

Liberty Latin America anticipates financial performance to improve in the latter half of 2026, with a focus on organic growth and cash flow enhancement. The company plans to announce potential shareholder return initiatives later in the year.

Executive Commentary

CEO Balan Nair stated, "We say in our company, all these setbacks create for a great comeback," highlighting resilience despite current challenges. CFO Chris Noyes acknowledged "near-term headwinds, especially with the timing of the Jamaican recovery."

Risks and Challenges

• Revenue challenges due to competitive pressures in fixed broadband markets.
• Roaming revenue declines amid technological shifts.
• Potential delays in the recovery of the Jamaican market.

Q&A

Analysts inquired about the fixed mobile convergence strategy and its impact on growth. The company emphasized ongoing initiatives in this area, alongside infrastructure projects like the MANTA and El Salvador submarine cables, as key to future expansion.

Full transcript - Liberty Latin America Ltd (LILA) Q4 2025:

Conference Operator: Good day, everyone. You are holding for Liberty Latin America’s full year 2025 investor call. Thank you for your patience. The investor call will begin in approximately 5 minutes. Please stand by. Good day, everyone. You are holding for Liberty Latin America’s full year 2025 investor call. Thank you for your patience. The investor call will begin in approximately 2 minutes. Good morning, ladies and gentlemen, and thank you for standing by. Today’s call is being recorded. I’ll now turn the call over to Zoë Lawrenson, Senior Director of Strategy and Corporate Development, Liberty Latin America.

Zoë Lawrenson, Senior Director of Strategy and Corporate Development, Liberty Latin America: Good morning, and welcome to Liberty Latin America’s full year 2025 investor call. At this time, all participants are in listen-only mode. Today’s formal presentation materials can be found on the investor relations section of Liberty Latin America’s website, www.lla.com. Following today’s formal presentation, instructions will be given for a question and answer session. As a reminder, this call is being recorded. Today’s remarks may include forward-looking statements, including the company’s expectations with respect to its outlook and future growth prospects, and other information and statements that are not historical fact. Actual results may differ materially from those expressed or implied by these statements. For more information, please refer to the risk factors discussed in Liberty Latin America’s most recently filed annual report on Form 10-K, along with the associated press release.

Liberty Latin America disclaims any obligation to update any forward-looking statements or information to reflect any change in its expectations or in the conditions on which any such statement or information is based. In addition, on this call, we may refer to certain non-GAAP financial measures, which are reconciled to the most comparable GAAP financial measures, which can be found in the appendices to this presentation, which is accessible under the Investors section of our website. I would now like to turn the call over to our CEO, Mr. Balan Nair.

Balan Nair, CEO, Liberty Latin America: Thank you, Zoë, and welcome everybody to Liberty Latin America’s fourth quarter and full year 2025 results presentation. I will be running through our group highlights and an overview of our operating results by segment before Chris Noyes, our CFO, reviews the company financial performance. We’ll then get straight to your questions. As always, I’m joined by my executive team from across our operations, and I will invite them to contribute as needed during the Q&A following our prepared remarks. As a point of housekeeping, we will both be working from slides, which you can find on our website at www.lla.com. All right, starting on slide 4, in our highlights. Our business performed very well in 2025.

We added over 225,000 mobile postpaid subscribers across the group, notably driven by Costa Rica and supported by fixed mobile convergence efforts and continuing prepaid to postpaid migrations. The postpaid adds this quarter included a positive net add contribution from Puerto Rico for the first time since the migration. We also recorded $1.7 billion of Adjusted OIBDA in full year 2025, which represented 9% growth on a rebased basis. This performance was driven by good execution on cost initiatives, as well as effective customer management, and came despite headwinds in the fourth quarter from Hurricane Melissa. We worked hard to drive a steep recovery in profitability in Puerto Rico, as well as double-digit Adjusted OIBDA growth in Cable & Wireless Panama. B2B came in very strong in the fourth quarter, which is seasonally our best B2B quarter.

LLA registered P&E additions for the group at 14% as a percentage of revenue for full year 2025, in line with previously communicated intentions and representing a 2 percentage point decline versus the prior year. With adjusted OIBDA expanding, the P&E additions falling, the adjusted OIBDA less P&E additions increased by 27% for the full year 2025. Our adjusted OIBDA of the P&E additions margin came in at 24% for full year 2025. When comparing on a like for like basis, including adjusting for different lease accounting under the IFRS reporting, this compares very favorably to peers across the region and in the U.S., and there’s still room to grow here. Finally, in Jamaica, I would like to thank all those involved in our recovery efforts following the effects of Hurricane Melissa.

Against the backdrop of a Category 5 hurricane, our mobile network held up well, recovering service very quickly. While our fixed infrastructure was more impacted by the storm, we continued to reconnect homes and B2B customers. As we rebuild and fixed and continue our network transformation in mobile, we aim to invest in an innovative and returns-focused manner. I’ll cover more on this later. Turning to slide 6. I’ll provide an update on Liberty Caribbean, which inevitably felt the impact of the hurricane in Jamaica in both Q4 and full year numbers. On the top left of the slide, we present our mobile KPIs. Postpaid mobile additions of 55,000 registered a strong cadence through 2025, and notably continued through Q4 despite the impact of hurricane.

Momentum here continues to bring from rising FMC penetration and prepaid to postpaid migration, which are tailwinds we anticipate continuing over the coming periods. On the bottom left of the slide, we show our fixed KPIs. We have managed to keep the broadband base broadly steady throughout the first nine months of the year, with Q4 largely reflecting the impact of lost customers in Jamaica. Elsewhere, we saw some modest pressure on volumes in Trinidad and Tobago and the Bahamas. Moving to the center of the slide, despite headwinds from Hurricane Melissa, we held Liberty Caribbean segment revenue flat in full year 2025 at $1.5 billion. Within this, we registered rebased residential mobile revenue growth of 4%, given structural support from postpaid additions, as well as selective price increases on both prepaid and postpaid throughout the year.

This offset pressures on the fixed residential business and on B2B, which mainly was due to the impact of the hurricane in the fourth quarter. Looking forward to 2026, we continue to be fully focused on rebuilding in Jamaica, which I will turn to in more detail on the next slide. In addition, and looking region-wide, we aim to continue driving FMC, where penetration is now within 40%. In the B2B segment, which reflects over one-third of segment revenue, we also see a significant opportunity to expand this revenue pool. Turning to slide 7. I’ll provide an update on Jamaica post-Melissa, and outline our investment focus for 2026, during which we will be deploying proceeds from the payout under our weather derivatives program, which total $81 million on a net basis. First, to mobile.

Our mobile network recovered quickly, and through quarter end, we were running at a higher level of mobile subscribers and carrying more data traffic over the network than prior to the hurricane. As of the latest data available through early February, this trend has been continuing. Our mobile business in Jamaica is largely prepaid, and these improving KPIs translated into higher prepaid and higher overall residential mobile revenue in Q4. Our postpaid mobile business has also proven to be resilient. We feel good about the outlook for our mobile business in Jamaica, seeing not only the opportunity to maintain this recovery, but to further build upon it. We have been transforming our network over the course of 2025, and as a result, we have been recognized by Ookla as the fastest mobile network in the island for the second half of 2025.

We will continue our transformation journey into 2026, leveraging an improved spectrum position and greater site density. With over 85% of our mobile customer base on a prepaid tariff, we see continued opportunities to migrate customers to postpaid, and we will continue to focus on attracting higher-value prepaid customers within this segment. On the fixed side, as we have mentioned, the fixed network was materially more damaged than our mobile network, impacting both our residential fixed customers and our B2B customers, who weigh more towards fixed services. As a result, we have taken out 133,000 home passes from the count, where we don’t foresee restoring a fixed service in the near term. To provide more clarity on our outlook for the fixed network, it’s instructive to break down the country into three geographic zones.

Across the country, we have over 75% of our fixed broadband customers back online today, but see significant regional differences. The capital city, Kingston, is in what we term as Zone One, an area which represents the largest driver of GDP, over half of pre-Melissa homes passed, and it’s where the bulk of our B2B customers are based. In Zone One, economic activity and daily life is fully restored, and the vast majority of homes are back online. In Zone Two, representing 30% of pre-Melissa homes, is still recovering. Our plans are to rebuild in the parish of St James, where Jamaica’s second city, Montego Bay, is located. Once complete, this should move the needle in terms of further bringing customers back online. Meanwhile, in the West, Zone Three felt the largest impact of the storm, and just over 50% of broadband customers still remain offline.

Our rebuild here is following and subject to the cadence of reconstruction of homes and businesses in the region. Through the course of the year, we will continue to restore homes and B2B customers with a focus on return on investment and innovation. We look forward to building back stronger in Jamaica and on a run rate basis, with target being back close to pre-hurricane levels of profitability by the end of 2026. Moving to slide 8 and our C&W Panama segment. Starting on the top left of the slide, we delivered accelerating momentum in postpaid adds throughout 2025 as customers continued to migrate from prepaid, which creates more predictable revenues. We increased prices in postpaid and improved pricing plans in our prepaid business. On the bottom left of the slide, we show our fixed KPIs.

We delivered another robust quarter of internet subscriber adds, while competitive conditions caused some offset on price over the course of the year. Looking at revenue, and as we show on the center of the slide, we registered rebased revenue growth of 3% for C&W Panama for full year 2025, which in turn was driven by rebased residential mobile revenue growth of 7% in 2025. Encouragingly, we also saw an improving performance in our B2B segment in 2025, with the contribution weighing more towards the end of the year. We registered a number of new wins, including the Ministry of Education of Panama, MEDUCA, which signed a contract with us to provide high-speed internet to all public schools nationwide.

B2B rebased revenue growth for full year 2025 was 1%, mainly driven by the fourth quarter that registered 24% growth on a year-over-year basis. Looking to 2026, we aim to build on our success on B2B and B2G and continue to drive postpaid momentum in residential segment, while staying vigilant on cost and discipline on capital investments. Next, to slide 9 and our final segment within the C&W current silo, Liberty Networks. On the left side of the slide, we present our full year 2025 revenue evolution. Wholesale revenue grew 6% on a rebased basis. Stripping out headwinds from non-cash IRUs, underlying wholesale revenue growth would have been 12% year-over-year, mainly driven by revenue from a new key project win and new lease capacity sales.

In December last year, we announced that we were chosen to design, construct, activate, and operate El Salvador’s first submarine cable. This is a 1,800-kilometer cable to connect the country to major international hubs, boosting high-speed internet capacity and resiliency. This investment goes beyond building critical infrastructure. It lays the foundation for economic growth, innovation, and opportunity for all Salvadorans. Enterprise revenue was a smaller part of the growth engine, though still showing momentum in ITSS service and connectivity solutions. These services are helping us bring a strong base of monthly recurring revenue, which supports long-term stability and positions us well for the future.

As we look forward, we remain focused on continuing to deliver growth and underlying subsea capacity, as well as executing on our El Salvador project and on Manta as well, our 5,600-kilometer joint build with Sparkle and Gold Data. On track to be operational in late 2027 or early 2028, Manta is expected to establish a solid foundation of monthly recurring revenue, enhancing long-term profitability and positioning Liberty Networks as the region’s primary data hub. Given expenditure is front-end loaded for this project, we look forward to turning current FCF headwinds into future tailwinds. Turning to slide 11 and Liberty Costa Rica. Starting on the top left of the slide. The postpaid business segment in Costa Rica continues to be the highlight for the LLA group.

In 2025, we added over 160,000 postpaid subscribers, representing a 16% expansion on the 2024 base. In particular, we have seen strong take-up in the lower-end postpaid segment, which is nevertheless accretive relative to our prepaid ARPU levels. Moving to the bottom left of the slide. On the fixed side, we continue to do a good job growing our subscriber base under competitive market conditions with an improved performance in the fourth quarter. Moving to the center of the slide, we show Costa Rica registering rebased revenue growth of 1% in 2025. The driver of this was our residential mobile business, which grew revenue by 6% on a rebased basis. Despite the growing broadband base, price competition led to fixed revenue declining by 4% on a rebased basis, while we also faced a tough comparison on B2B.

Looking forward, we see no immediate reason for a slowdown in the drivers of our prepaid to postpaid mobile strategy. We expect 5G to become even more important, and Liberty was the first operator to launch 5G in Costa Rica in 2024, and we have over 300,000 customers today. Following the acquisition of 5G Spectrum in 2025, we expect a continued lift as we deploy 5G standalone in partnership with Ericsson. Acknowledging the tougher fixed market conditions, we will leverage our FMC advantage and stay innovative. In Q3 of last year, for example, we launched an offer for new and existing customers to have access to the most popular over-the-top platforms included in their home plan, a unique move in the Costa Rican market. Finally, and following SUTEL’s rejection of the proposed merger with Tigo in Costa Rica, we have now turned our attention to costs.

We believe we have a strong track record on cost reduction across the LLA group, and we are focused on delivering similar margin benefits in Costa Rica over time. Moving to slide 13 and our third credit silo, Liberty Puerto Rico. Starting on the top left of the slide. In Q4, we registered the first quarter of positive postpaid mobile adds since the migration. This follows significant commercial efforts in the second half of the year, focused on the launch of Liberty Mix. This new multi-line plan has captured customers’ imagination, offering flexibility, designing to mix and match plans within multi-bundle packages. It also has transparency with no hidden fees and value add through hotspots and roam like home, which are particularly important to our customer base. Additionally, on mobile, we are pleased to have completed the migration of our Boost MVNO customers onto our network.

These are high ARPU prepaid customers, and retaining these customers while removing wholesale costs is an important milestone for the business. Our postpaid base also saw a pickup in the quarter from a small number of migrated Boost customers who opted to switch into our Liberty postpaid offer. Moving to the bottom left of the slide. On the fixed side, we continue to see competitive pressures impacting our subscriber base, though we registered lower broadband losses in the fourth quarter. In part, this follows greater commercial efforts on the fixed side, including campaigns focusing on network quality and reliability. Moving to the center of the slide, we registered a 6% revenue decline for the year. This largely reflects a 6% decline in residential mobile revenue.

in turn, a function of the negative impact from the migration of customers to our mobile network and network challenges in 2024, which caused a decline in the average number of postpaid mobile subscribers. B2B revenue declined by 16% year over year, in part due to similar migration factors. Residential fixed declined by 1% year over year, with support coming from price increases early in 2025. Looking to 2026, Puerto Rico remains a competitive market, and we aim to keep laser focus on our commercial proposition. We have seen a nice lift in NPS to start the year on both fixed and postpaid side. We will continue to work hard to improve our customer propositions as we try to stabilize the fixed business and scale up in postpaid mobile.

Finally, on slide 14, we summarize our strategic vision for Liberty Latin America as we look to 2026. Firstly, on the commercial front, you have heard me mention FMC or Fixed Mobile Convergence a number of times on the call. We have complementary high-speed fixed and mobile infrastructure across almost all of our entire footprint, and we aim to continue to leverage this in our commercial proposition. We sometimes talk a little less about B2B, though this represents almost one-third of group revenue. This contribution could be higher, and we are particularly excited about our recently announced partnership with AWS to bring AWS Compute and AI models to our local markets for our customers.

We have a number of innovative products to be launched that will reduce our video costs, to bring more resilience to our internet service, to bring 100% coverage to our mobile service, and to bring more AI agents to our care service. Operationally, we remain focused on investing in our business in a returns-focused manner. Of key importance is our rebuild in Jamaica, both in terms of reconnecting homes but also further transformation of our mobile network. We are excited to be pursuing two key projects within Liberty Networks, building connectivity on behalf of El Salvador and our ongoing MANTA project. We will be very focused on successful execution on build through 2026. On 5G, which is now available in Puerto Rico, Panama, Costa Rica, the Cayman Islands, and Barbados.

This helps us maintain and enhance our commercial position in the mobile market, as well as supporting FMC. We remain attuned to future opportunities to deploy 5G across our footprint. Finally, we are committed to rewarding our shareholders and our financial aspirations to deliver. I won’t steal Chris’s thunder, but suffice to say, cost efforts, capital investment discipline, and a focus on free cash flow delivery lay at the heart of our outlook. And with that, I’ll pass you over to Chris Noyes, our Chief Financial Officer, who will take you through our financial performance before we move on to your questions. Chris?

Chris Noyes, CFO, Liberty Latin America: Thanks, Colin. Over the next slides, I will provide key highlights of our Q4 and full year results for 2025, with a focus on the fourth quarter. For Q4, we delivered revenue of $1.2 billion, reflecting 1% year-over-year rebase growth. This was fueled by double-digit top-line growth at Liberty Networks and CWP, offset in large part by declines in LC, principally due to the hurricane and LPR as a result of the year-over-year decline in customers. On a full year basis, LLA revenue was slightly down on a rebase basis to $4.4 billion. Moving to the right, we reported adjusted OIBDA of $451 million in Q4, bringing our 2025 full year adjusted OIBDA to $1.7 billion.

These results reflect year-over-year rebased growth of 8% for Q4 and 9% for 2025, with both periods adversely impacted by $27 million stemming from Hurricane Melissa. For LLA, our operating focus on cost control and efficiency contributed to our roughly 300 basis point improvement in adjusted OIBDA margins in 2025. We expect our 2025 actions will continue to benefit our 2026 results. Slide 17 recaps our Q4 results for the C&W credit silo. Starting on the left, in Q4, LC reported $356 million in revenue and $153 million in adjusted OIBDA.

Both metrics declined year over year on a rebased basis, which was entirely due to Hurricane Melissa, as the Jamaican business experienced a decline of $20 million in revenue and $27 million in adjusted OIBDA in the last two months of Q4. Overall, it is important to not let the hurricane detract from what was a very strong year from the LC team, especially in light of their margin improvement and 7% adjusted OIBDA rebased growth full year 2025. With that being said, we do expect that the next quarters will be financially challenging in Jamaica, and obviously, the year-over-year comps will be difficult until we lap the hurricane in Q4. Next, moving to CWP.

Aided by revenue from government-related projects, in Q4, CWP posted double-digit rebased year-over-year growth for both revenue and adjusted OIBDA, reporting $230 million of revenue and $94 million of adjusted OIBDA. CWP’s focus on improved gross margin contribution and cost out activities was reflected in expanded adjusted OIBDA margins in Q4 and full year 2025. Turning to Liberty Networks, LN generated $129 million in revenue and $75 million in adjusted OIBDA, which accounts for year-over-year rebased increases of 14% and 21%, respectively.... Results in Q4, as Milan highlighted, were fueled in part by the El Salvador build and continued ramping of its wholesale infrastructure business. Aggregating all three operating segments within the C&W credit silo.

For Q4, we reported $693 million in revenue, reflecting a year-over-year rebased increase of 4% and $322 million in adjusted OIBDA, resulting in 5% year-over-year rebased growth. As noted earlier in LC, the results for the silo were hampered by the hurricane impact. Rounding out our other two credit silos, Liberty Costa Rica and Liberty Puerto Rico. On the left, we highlight LCR. We delivered Q4 revenue of $168 million and adjusted OIBDA of $66 million, representing rebased declines of 2% for revenue and 3% for adjusted OIBDA. Residential mobile continued to deliver a year-over-year growth, but was not able to offset a particularly soft quarter in B2B. With respect to full year 2025, adjusted OIBDA of $236 million was flat on a rebased basis.

Importantly, the operating team has launched a comprehensive effort to improve its cost structure during 2026 and would expect momentum to build throughout the year, like we have seen in other markets. Concluding with Puerto Rico on the right, LPR posted Q4 revenue of $301 million, a slight increase from Q3 levels, and which reflects a 4% rebased year-over-year decline. The rebased decline over last year is primarily a result of the full year impact of customer losses experienced from the 2024 migration. Importantly, the business has shown stabilizing trends over the last few quarters. Turning to Adjusted OIBDA, we reported $89 million in Q4, reflecting double-digit rebased growth year over year.

LPR has significantly improved their cost structure during 2025 to align more with their current customer base and also return to more normalized customer service levels, which have positively impacted their collection efforts and bad debt expense. These steps have been necessary to help compensate for the lower revenue base, and the net impact is reflected in the LPR’s improving adjusted OIBDA margins. Turning to Slide 19, two important metrics that we are focused upon at LLA as we think about driving long-term value, adjusted OIBDA less P&E additions and adjusted FCF before partner distributions. Starting on the left, we have already briefly discussed adjusted OIBDA, but the other key input to the calculation is P&E additions. Even in light of the various commitments we had and events that occurred during the year, including new project wins and hurricane impacts, we remained disciplined during 2025.

In aggregate, we invested $640 million in 2025, including $220 million in Q4, as compared to $725 million in 2024, including $240 million in Q4 2024. LLA’s P&E additions as a percentage of revenue were 14% in 2025 versus 16% in 2024, a measurable year-over-year reduction. Combined with our improved LLA adjusted OIBDA performance and margins, we delivered adjusted OIBDA less P&E additions of $1.1 billion in 2025, including $231 million in Q4, representing year-over-year growth for fiscal 2025 of 27% and for Q4 of 30%. Our 2025 result represents 24% of revenue, a significant improvement over 2024 levels, and one we look forward to continuing to drive higher over time.

Turning to adjusted free cash flow before partner distributions, we had a particularly robust Q4, delivering $278 million in the quarter, which brought our full year figure to $150 million, a 29% year-over-year increase. A key driver of this improvement was a significant expansion in Adjusted OIBDA less P&E additions of $226 million over this period, which was offset somewhat by working capital and related movements. Additionally, in Q4, we collected $81 million in net proceeds from our parametric program, which helps to mitigate, to a large extent, the physical damage and business interruption from Hurricane Melissa. As discussed earlier, we suffered financial impact in Q4 from Melissa, but a substantial amount of the adverse impact, including a large portion of the recovery investment, is expected to occur in 2026.

Although it’ll continue to evolve throughout the year, we generally expect that the 2026 Adjusted FCF impact from the storm will be in the neighborhood of $100 million. Our operating goal is to be run rating near pre-hurricane levels by year-end, which should set us up for a full recovery in 2027. Next is slide 20 and a review of our capital structure. At the consolidated level, we have total debt of $8.4 billion and liquidity consisting of $800 million in cash and $900 million in availability under our credit lines. At year-end 2025, we had consolidated net leverage of 4.3 times, an improvement from 2024 levels. If we exclude LPR leverage, which is undergoing a liability management exercise, as previously discussed, LLA leverage would decline into the mid threes.

Turning to the middle of the slide, which summarizes our two credit silos of C&W and LCR, we have total debt at C&W of $4.9 billion and covenant leverage of 3.5 times, and total debt at LCR of $515 million and covenant leverage of 1.8 times. As seen by the combined maturity schedule, approximately 75% of borrowings are due in 2031 and later. Moving to the right, Liberty Puerto Rico has $2.9 billion of total debt, with reported borrowing group net leverage of nearly 8 times, while covenant leverage of the restricted subsidiaries was 14 times as of Q4 2025. As seen today, LPR performance has stabilized over the last few quarters, but has a long road back to gain market share and expand the top line.

LPR continues to look for ways to improve its leverage profile. Of note, LPR may also need to raise additional liquidity in the near future to cover ongoing operating costs, although no definitive decisions have yet been taken in this regard. As discussed in our Q2 2025 earnings, LPR embarked on a liability management exercise with its creditors in 2025, and as part of that, a transaction proposal was provided to the creditors’ advisors in early November, and those advisors were provided with access to significant levels of information and diligence since that time. To date, while no response to such proposal has been received, the team hopes for engagement from the creditors in the near future.

As previously highlighted, LPR has substantial flexibility in its credit documents that will enable the business to continue to utilize its assets to meet any near term liquidity needs as they arise. As demonstrated by the $250 million secured financing raised to an unrestricted subsidiary of LPR that was announced in September 2025. Additionally, and consistent with our previously stated intention of separating LPR and LLA, we are actively working on this and will update when appropriate. Moving to slide 21 and our closing remarks. As compared to 2024, we delivered robust financial performance in 2025, with nearly double-digit rebased Adjusted OIBDA expansion, 27% Adjusted OIBDA less P&E additions growth, and Adjusted FCF before partner distributions improvement of 29%.

In Jamaica, we have generally recovered our mobile business and will be disciplined in our capital approach to reconnecting homes and businesses as conditions on the ground improve. No doubt the full recovery will take time and impact our reported results in the coming quarters, but we anticipate that we will be running at a much fuller tempo by 2027. Looking forward, Balan highlighted his 2026 strategic vision on his concluding slide, covering commercial, operational, and financial priorities. Without repeating, I believe they can be further summarized into our continued focus on driving organic growth within our operating businesses and cash flow improvement. We clearly have near-term headwinds, especially with the timing of the Jamaican recovery and given our planned cadence for 2026. We would expect our financial performance at LLA and across our markets to be heavily weighted to the second half of the year.

Activities related to cost out our investments in projects like MANTA and product innovation, including our new arrangement with AWS, all speak to setting the stage for future growth. Finally, for our equity investors, certainly 2025 did have its share of ups and downs, but trending positively at the end of the year. Management remains committed to working to unlock value, including returning capital to shareholders, and will be focused on executing Balan’s 2026 priorities, which we believe will be beneficial to value creation in 2026 and beyond. With that, operator, we will open it up for questions.

Conference Operator: Thank you. The question and answer session will be conducted electronically. If you would like to ask a question regarding the company’s operations, please do so by pressing star one to ask a question or star zero for operator assistance. In order to accommodate everyone, we request that you ask only one question with one follow-up, if needed. If you’re using a speakerphone, please make sure your mute function is turned off your signal... Well, sorry, to allow your signal to reach our equipment. We will pause for just a moment to give everyone opportunity to signal for questions. Our first question today will be from the line of Matthew Harrigan with StoneX. Please go ahead. Your line is open.

Matthew Harrigan, Analyst, StoneX: I wonder if AI will ever enable the Q&A to not be conducted electronically. Actually, 2, 2 questions. You know, firstly, you had some really effusive expectations on private equity infrastructure investment at one point. That didn’t materialize, but certainly, you know, the, the results are really inflecting upward. Even apart from Manta and El Salvador, just by virtue of economic growth and, and, and increased volume, even at lower, you know, per bit pricing, do, do you think you’ve got a, a really nice, you know, tailwind just organically from economic activity, or is it really just, just gonna be largely a step function off Manta and El Salvador and whatever, other discrete projects materialize? And then I have a follow-up. Thank you.

Balan Nair, CEO, Liberty Latin America: Sure. Hey, good morning, Matt. On the MANTA and El Salvador project, they do actually quite different projects. The MANTA project is both building more resiliency as well as adding a huge amount of capacities on routes we think are gonna be highly profitable. So, it’s being built right now, and we’ll start selling into it very soon, starting later this year, early next year. And we’ve got quite a bit of interest in that. The El Salvador project on the flip side, it’s really a build-operate-transfer kind of a model with the government of El Salvador... but it has some really good upsides for us as well, including the fact that we will be running, maintaining that network.

And in the future, perhaps, you know, we could put a branching unit and, add some capacity to some of the other drops. So both projects are hugely accretive and, and have very good margins on it, but they are very complex projects. Ray Collins, who leads our business unit there, he and his team, have been really on top of it. The build is and, and the engineering is ongoing right now, and we have a lot to deliver on here, but the team is really up for it.

Matthew Harrigan, Analyst, StoneX: Then as a follow-up, you know, Mike, Mike Fries yesterday, this wasn’t his expectation, but I think he said one of the hyperscaler executives said that it was possible that they could reduce, you know, Liberty Telecom’s OpEx from $15 billion to $7 billion or $8 billion. You know, Mike certainly didn’t endorse that, but he implied that there was gonna be a long, you know, run of AI and cost improvements, you know, given, obviously, you know, telecom, you’ve got a lot of repetitive processes and big data lakes, you know, network management, customer management. Do you think you’re gonna have that type of improvement? Well, obviously not of that scale, but do you think we’re gonna be seeing very, very significant, prolonged, you know, margin benefits?

And I was also curious, you know, this month, you know, you just the other day with AWS and then Liberty Global with Google and Gemini, somewhat before that, you know, both entered into relationships. And I’m curious how the expectations are, you know, vary between, you know, Google and Amazon, and was there any clear explanation as to why they went with Google and you went with AWS? Thanks.

Balan Nair, CEO, Liberty Latin America: Sure. Let me answer your last question first, and I’ll get back. I really can’t comment on Liberty Global’s decision with Google, like Google Cloud and the work the Google team is doing, it’s extremely impressive. Chris, myself, or a whole bunch of my executives visited with the Google Cloud folks just two weeks ago in California, three weeks now. Our relationship with AWS is, it’s slightly different, and it’s really focused on our business. Most of our models and most of our services and compute and storage is done over AWS. Most of our customers prefer AWS. The relationship with AWS is strong for our internal usage, and certainly, it’s a great product for us to partner with our customers.

We have quite a number of customers today, cloud customers on our premises that are migrating, and we think the migration to AWS makes a lot of sense for them and for us. And the folks at AWS have been really great to work with as well in this partnership. So that’s really kind of why we went down that path. We think it’s great for ourselves internally, and it’s great for our customers as well. In addition, by the way, AWS is making investments in our region with us, building out what they call outposts and their wavelength product in our data centers in Panama, in Colombia. So this is not just a reseller agreement; this is a really deep partnership between us and them.

To your second question in AI, or your first question on AI benefits, I think we’re really in the first innings here on this. You know, this requires... The opportunity is large. Let’s be clear, I don’t want to put a number on this, but clearly, as you pointed out, we have a lot of repetitive processes in our company, and we have a lot of things that perhaps we’re not really good at. And AI can actually make us a lot better. It’ll take costs out, it’ll help us be more productive, and in addition to that, it’ll have a better front end for us to our customers as well. And in all those fronts, we have either trials we have implemented, we have launched, and we just, you know, seeing the beginnings of it.

I think the challenge in our company, that we are challenging ourselves is, how do we translate all of this into some real, tangible, free cash flow improvement? And that’s really, as Chris pointed out, our primary goal. Everything that we work on here has to, at some point, translate to a free cash flow expansion, and, and we are working on it. I, I think, if you ask the same questions 2 quarters from now, I will probably have a slightly different answer, which much more tangible, initiatives that we’re working on. I can tell you now, if you go to Costa Rica, you call our call centers right now, there’s a high likelihood an AI agent will be answering the call.

Matthew Harrigan, Analyst, StoneX: Great. Thanks, Paul. Thanks, Chris.

Conference Operator: The next question today will be from the line of Michael Rollins with Citi. Please go ahead. Your line is open.

Michael Rollins, Analyst, Citi: Thanks, and good morning. I’m curious if you could help us, help, all of us understand the fixed to mobile convergence opportunity. You know, in your major markets or regions, can you frame what the current level of converged take rates are, where you see that potentially going on a volume basis? And to get there, do you have to do substantial discounting, or can it be nearly as accretive, you know, as if you were getting these customers on, on the standalone services and, and just, you know, coincidentally packaged together? Thanks.

Balan Nair, CEO, Liberty Latin America: Sure. The fixed mobile convergence have been a real benefit for us. Yes, there’s a few ways to look at it. One, if you know most of our markets, with the exception of Puerto Rico. It’s primarily prepaid, our primary prepaid markets. So when you go to fixed mobile convergence, there’s two things, two steps here. One, you go from pre to post, and then you link the post to our fixed product. And it’s primarily postpaid mobile with our fixed broadband. That’s really the golden product here, the bull’s-eye product, we call it. And this has worked quite well across our markets.

In Puerto Rico specifically, we have more than 50-some% market share in our fixed broadband in Puerto Rico, and we have right about slightly under 20% in our mobile postpaid. Clearly, the opportunity to link both of them is pretty high. So for every fixed broadband customer that do not have a postpaid, it’s really an opportunity for us, and for any of our postpaid customers that don’t have fixed broadband, also an opportunity for us. The trick is really our systems, and we’ve been going through, as you know, in Puerto Rico, quite a significant upgrade in our systems and stabilizing them. We are now at a point where we can start doing a lot of this postpaid and fixed mobile and fixed broadband convergence.

And it’s really kinda it provides two things: one, a higher ARPU in the home for that specific customer, so the customer ARPU goes up, and secondly, churn goes down. And these are proven facts across all telcos over many years, and I think we’ve been quite successful. We have quite a number of my general managers who are really steeped into this, focused on it, and this is really one of our growth opportunities in 2026 NDI.

Michael Rollins, Analyst, Citi: Thanks. Maybe just a follow-up on the revenue side. Can you give us an update, when you take into account the what you just described in terms of the FMC opportunities, the opportunities to continue growing your markets, what’s a fair range of annual rebased revenue growth that Liberty Latin America should operate within on a multi-year basis?

Balan Nair, CEO, Liberty Latin America: You know, that’s a great question. I gotta be careful I don’t give guidance here, but here’s how you look at it. You know, our mobile product is growing because as we move from pre to post, ARPU gets better, we attach it to a fixed, and, and you start growing. So the mobile product, you’ll see, you know, growth. It won’t be in the double digits, but it’ll be very respectable single-digit growth annually, and that... And we have a long runway in that. On the fixed side, broadband continues to grow, however, offset by headwinds on video and voice. So as you look at the fixed product, you’ll see flattish, just slight growth, but it’s mostly because we have some legacy products that you gotta just support. You know, eventually will wash out and we’ll get to a steady cadence.

B2B has good growth as well, and the B2B growth, we’re really excited now getting into more and more cloud services that we’re selling. We still continue to sell connectivity, but in addition to connectivity, we’re selling a lot more cloud services. But even in B2B, there is a headwind, and the headwind is mostly a lot of customers are canceling their voice products. So there’s voice services that will continue to decline a bit, but it’s offset by this new cloud services. And the second thing that kinda offsets our revenue going forward is roaming.

You know, clearly, as people travel, you know, this is a great market for us because a lot of the cruise ships, a lot of people roam, but clearly with new technologies and most people getting on Wi-Fi with their WhatsApp, you know, the roaming revenue is gonna be continuously—it’s gonna slightly decline, and that kinda adds to a headwind to our product. So our product portfolio has a lot of really nice, good products and a few headwinds that it’s just, you know, the nature of where the technology is at. I, I think the way we look at it is we, we are gonna invest further and deeper into all the products that are growing, and then we’re just gonna manage the rest of the products that, that we’re challenged with, you know, voice, video, roaming, those kinds of products, we’re gonna just try to manage that.

I think the team’s done a pretty good job. You can see it in our numbers. That’s why you can see while revenue is kinda flattish at the top, there’s a significant EBITDA expansion. The EBITDA expansion comes from cost cutting, this base management, and really us moving to higher margin products. So that’s kinda one way to look at it.

Michael Rollins, Analyst, Citi: Thanks. Very helpful. Thank you.

Conference Operator: As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now. The next question today will be from the line of Chris Sauer with New Street Research. Please go ahead. Your line is open.

Chris Sauer, Analyst, New Street Research: Yeah, thank you. I had a question on the top-line trajectory in Puerto Rico. Obviously, you know, great news on the inflection in postpaid net adds. I wonder if you can give sort of any color on the shape of how that sort of played out in the quarter. Obviously, what I’m trying to think of is, you know, what we should expect going forward, whether you’d expect to see further improvements in terms of postpaid net adds. And then also on the top line in Puerto Rico, obviously, that was sort of slightly offset by a bit of weakness on B2B.

I think you said that a function of sort of hangover from the transition, but just be interested in sort of if you can give any more color on what happened there as well, and therefore, also trajectory on B2B revenues in Puerto Rico.

Balan Nair, CEO, Liberty Latin America: Sure. In 2025, you know, we had a whole bunch of headwinds there. We started the year with an outlook that’s very, very different than what we ended the year with, meaning extremely positive in the way we ended the year compared to how we saw it at the beginning of the year. Because there were some headwinds and challenges that we did not anticipate as we came into 2025, the first quarter of 2025. Here’s a few things, you know, that can show the improvements. One, of course, you see financially, you know, we are turning this business around.

But it’s really based on a whole bunch of things that we fixed in the business, whether it’s the leadership talent, whether it’s the processes in it, the stabilization of the systems, and really coming out with value propositions and products that make sense to our customers. There’s a huge amount of improvements in business when somebody walks into our store today than they did last year. So a number of things that I think will give us a nice tailwind into 2026. The net adds you saw in the fourth quarter of 2025 were driven by all these improvements, including a real big turnaround in our NPS scores. But it was also assisted by the fact that we were migrating a ton of new subscribers, subscribers we bought from Dish.

They were prepaid subscribers that came to us, but because of our really strong postpaid value proposition, a number of those prepaid subscribers actually ended up buying a postpaid product instead of moving as a prepaid. And so, so, so that drove as well, some of the growth of net adds in fourth quarter 2025. Now, as I look into 2026, January, we had a very good month in January, so the, you know, without any of the Boost subscribers moving up to postpaid. So we continue to see the progress in that, but I think this is a journey that’s gonna take a lot more than one or two quarters. And my sense is by the end of 2026, we’ll be in even better state to set up for a really nice opening balance into 2027.

And then back to the revenue mix, you correctly pointed out, B2B was a challenge for us in 2025. We opened the year with a very weak opening balance in coming into 2025 and struggled throughout the year. We made a number of changes in the team, in the B2B team. We’ve brought in a new leader for the group. She’s extremely focused and, if I look at my budget for 2026, she has a very good and a very, I think a budget that, when we hit it, I think people are gonna be, quite happy. So the turnaround is happening, but we have to be patient. This is gonna take many quarters.

Chris Sauer, Analyst, New Street Research: Okay, thank you. Then maybe one follow-up would just be on the slide on equity value unlock, where you talk about shareholder returns focus. Is there any more color you can give there in terms of, you know, either what you’re thinking of or timing around when anything might be announced there?

Balan Nair, CEO, Liberty Latin America: I think, you know, things are looking on the up and up here. We feel really confident about the business. You know, we, we really feel really confident about the future. As Chris pointed out, the cash flow generation in the fourth quarter was really good. And we, you know, you can see that our intention, as Chris pointed out, is we’re gonna expand that into 2026. Now, yes, you know, most of our free cash flow comes in the second half of the year. So, so there’s a number of things that we’ve been thinking about. I suspect that, sometime during the course of this year, we are gonna come out with something that, that together with our board, make some decisions that I think, will reward a lot of the shareholders that’s been with us.

Chris Sauer, Analyst, New Street Research: Okay, thank you.

Conference Operator: That will conclude today’s question and answer session. I’d like to hand back to Balan there for any additional or closing remarks.

Balan Nair, CEO, Liberty Latin America: Well, firstly, I’d like to say thank you to everybody that’s been patient with this. Certainly the story’s got lots of moving parts, and we’ve had our fair share of challenges, and some of it self-inflicted, some of it clearly, you know, Mother Nature’s. We weren’t expecting that hit in Jamaica and the hurricane. But we’re gonna power through all of it, and one thing that’s really good about this team is it’s, they are quite resilient. And we, when we see things going off, we try to fix it, and we do, I think, a pretty dang good job bringing things back to where it should be. And we’ll do the same thing within Jamaica as well.

As Chris pointed out, I think by the end of this year, you know, you’re gonna see that Jamaica is back to where it, it should be, which sets us up for a great 2027 as well. But we’ve had our setbacks and, you know, we, we say in our, in our company, you know, all these setbacks creates for a great comeback, and I think we are on our path to a great comeback. So thank you very much for all your support, and we look forward to talking to you again next quarter.

Conference Operator: Ladies and gentlemen, this concludes Liberty Latin America’s full year 2025 investor call. As a reminder, a replay of the call will be available in the investor relations section of Liberty Latin America’s website at www.lla.com. There you can also find a copy of today’s presentation material.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Pediatrix Medical Group reported its fourth-quarter 2025 earnings, revealing an earnings per share (EPS) of $0.50, falling short of the forecasted $0.54, a miss of 7.41%. Despite surpassing revenue expectations with $494 million against a forecast of $486.23 million, the stock saw a significant pre-market decline of 14.43%, trading at $18.80.

Key Takeaways

• EPS missed expectations by 7.41%, impacting investor confidence.
• Revenue exceeded forecasts, showing a 1.6% positive surprise.
• Stock price dropped 16.34% from the previous close in pre-market trading.
• New physician alignment programs and telemedicine exploration were highlighted.
• Operating cash flow saw a year-over-year decline.

Company Performance

Pediatrix Medical Group faced a challenging quarter, with EPS failing to meet expectations. However, revenue growth was a bright spot, driven by same-unit growth and pricing improvements. The company continues to lead in the NICU and maternal-fetal medicine markets, maintaining strong hospital relations.

Financial Highlights

• Revenue: $494 million, up 1.6% from forecast
• Earnings per share: $0.50, down 7.41% from forecast
• Adjusted EBITDA: $66 million for Q4, $276 million for 2025
• Operating cash flow: $115 million, down from $135 million the previous year

Earnings vs. Forecast

Pediatrix reported an EPS of $0.50, missing the $0.54 forecast by 7.41%. However, revenue surpassed expectations with a 1.6% surprise, reaching $494 million.

Market Reaction

The stock dropped 16.34% in pre-market trading, reflecting investor concerns over the EPS miss and operational challenges. This movement contrasts sharply with broader market trends, highlighting specific issues within the company.

Outlook & Guidance

For 2026, Pediatrix projects an adjusted EBITDA of $280-$300 million, with revenue expected to be flat at approximately $1.9 billion. The company plans to explore telemedicine and expand in OB hospital medicine, despite reduced share buyback activity.

Executive Commentary

CEO Mark Ordan emphasized the company’s strong market position and growth potential, stating, "We are uniquely positioned, have the financial strength and discipline to accomplish this, and we are determined to do all we can to achieve smart growth."

Risks and Challenges

• EPS miss suggests potential operational inefficiencies.
• Declining patient service volumes could indicate demand issues.
• Operating cash flow reduction raises liquidity concerns.
• Potential impacts from ACA subsidy changes.
• Market saturation in core services may limit growth.

Q&A

Analysts inquired about the impact of ACA subsidy changes and pricing stability. The company clarified its expectations for steady metrics in volume and payer mix, while exploring growth opportunities in telemedicine and OB hospitalist services.

Full transcript - Pediatrix Medical Group Inc (MD) Q4 2025:

Conference Operator: Hello, and thank you for standing by. At this time, I would like to welcome everyone to the Q4 2025 Pediatrix Medical Group, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. I would now like to turn the conference over to Mary Ann Moore, Chief Administrative Officer and General Counsel. You may begin.

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: Thank you, operator, and good morning. Certain statements and information during this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by Pediatrix management in light of their experience and assessment of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today, and Pediatrix undertakes no duty to update or revise any such statements, whether as a result of new information, future event, events, or otherwise. Important factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements are described in the company’s filings with the SEC, including the sections entitled Risk Factors. In today’s remarks by management, we will be discussing non-GAAP financial metrics.

A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning’s earnings press release, our quarterly and annual report, and on our website at www.pediatrix.com. With that, I will turn the call over to Mark Ordan, our Chief Executive Officer.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Thanks, Mary Ann, and good morning, everyone. Also with me today is Kasandra Rossi, our Chief Financial Officer. Our fourth quarter results were quite strong and capped an equally strong 2025. Our adjusted EBITDA of $66 million was in line with our upwardly adjusted guidance. Throughout 2025, including the fourth quarter, strong volume, acuity, and payer mix, combined with strong financial control, gave rise to these results. During this time, we welcomed new leaders in key areas of the company, all of whom are dedicated in some way to focusing on care quality, which of course, is the very essence of Pediatrix. With these investments in record practice bonuses, our full-year adjusted EBITDA was a very strong $276 million.

We expect our results in 2026 to be in the range of $280 million-$300 million, which at its midpoint, of course, is 5% above 2025. This projection assumes steady metrics, including volume, acuity, and payer mix, and recent or early results support this outlook. Despite these steady metrics on our top line, we have several operational initiatives which we believe will flow favorably to our Adjusted EBITDA. We have said that we assume that there was some payer mix benefit in 2025 from ACA subsidies. If those continue to lapse with no effective remedy, we would expect some effect. And as we have said before, this is very difficult to quantify such an effect because there are many possible outcomes. Kasandra will now provide some additional details on the quarter and preliminary outlook for 2026.

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: Thanks, Mark, and good morning, everyone. Our consolidated revenue decrease was driven by net non-same-unit activity of $26 million, including a decrease in revenue from our portfolio restructuring, partially offset by an increase in revenue from acquisition and organic growth. This decrease was partially offset by same-unit growth of 4%, with same-unit pricing up just under 7% and overall patient service volumes down just under 3%. Pricing was driven by solid RCM cash collections, favorable payer mix, increased patient acuity in neonatology, and an increase in contract administrative fees. And while we saw volume declines across all our service lines during the quarter, including NICU days down about 2%, we were up against a tough comp. Practice-level SW&B expenses declined slightly year-over-year, reflecting our portfolio restructuring activity, partially offset by same-unit increases.

On a same-unit basis, we saw increases in variable practice incentive compensation and salary and benefits. Salary growth for the fourth quarter was modestly below the ranges that we have seen for the prior six quarters. Those averaged around 3%. Our G&A expense increased year-over-year, driven by a modest increase in salary expense as well as some travel expenses. D&A expense decreased year-over-year, resulting from lower overall CapEx and an increase in fully depreciated assets. Other non-operating expense decreased year-over-year, driven by higher interest income on cash balances and a decrease in interest expense on modestly lower average borrowings at slightly lower rates. Moving on to cash flow.

We generated $115 million in operating cash flow in the fourth quarter, compared to $135 million in the prior year, primarily related to decreases in cash flow from AP and accrued and other liabilities. We also deployed $64 million of capital during the quarter to buy 2.9 million shares of our stock, leaving us with just about 83 million shares outstanding. We ended the quarter with cash of $375 million and net debt of just over $220 million. This reflects net leverage of just under 1x. Our AR DSO at December 31 of 42.8 days were down slightly from September 30, but were down almost 5 days year-over-year, driven by improved cash collections at our existing units.... Moving on to our preliminary 2026 outlook that Mark noted earlier.

This outlook contemplates full-year revenue of approximately $1.9 billion, in line with 2025. It also contemplates full-year G&A expense in the range of $230 million-$240 million, compared to our 2025 G&A of $241 million. Achieving the middle of the range would put it down about 20 basis points as a percent of revenue. I’ll also note the normal seasonality of our quarterly results. Within our expectations of full-year adjusted EBITDA, we anticipate that our first quarter 2026 adjusted EBITDA will represent about 17%-19% of that annual expected range. Historically, the first quarter adjusted EBITDA has ranged from 17%-21% of the full year.

We have also not factored any contribution to our results from M&A activity in 2026, and we plan to update you on the timing and magnitude of any potential additions. I’ll now turn the call back over to Mark.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Thanks, Kasandra. Our very strong balance sheet and cash flow enable us to invest in quality and clinical support and to attract and retain the finest clinicians in each of our areas of concentration. In the fourth quarter, we introduced two new programs to further align our physicians at Pediatrix. The first program provides a portion of the physician’s cash bonus and a stock price tracking element that is paid out over multiple years. This program is a first step for us toward creating greater alignment across the entire organization, and we hope to expand it in the future. More than 500 physicians are participating in this program in its first year, and we expect this to create greater awareness of, and responsibility for, our collaborative role in delivering best-in-class care. We are also excited to announce Pediatrix Partners.

This is a group of 46 physicians from across our specialties who have received a stock price tracking grant to recognize their leadership role, along with future efforts to help guide our decisions in quality, hospital relations, recruiting and retention, and growth. We anticipate annually adding physicians to this inaugural class. Looking into 2026 and beyond, we see many areas of potential opportunity. With our great physical footprint, we have the ability to leverage advanced telemedicine. This can provide vital assistance and care to people who are currently out of reach and can be a bridge to our national in-person care presence. As we speak, we are looking at additional growth opportunities in our physical core, both in NICUs and maternal-fetal medicine, along with OBH.

On OBH, we have a very strong presence in OB hospital medicine, and we see very strong demand for us to really increase our presence here. Remember, our long-established hospital relations, thanks to our NICU, PICU, and MFM practices, provide an obvious entree here. Given our existing physical presence and dedicated overhead already, we believe we can provide a cost advantage to our hospital partners. We love this space we are in, and we enjoy our leadership position. We’re also very aware of opportunities outside of our pediatrics and obstetrics space. We assure you that we will guard our balance sheet strength carefully and only consider other opportunities that do not dilute our great strength in pediatrics and obstetrics. In our core areas in pediatrics and obstetrics, we see many viable growth avenues.

We are uniquely positioned, have the financial strength and discipline to accomplish this, and we are determined to do all we can to achieve smart growth. Operator, I’d like to now turn the call over to questions.

Conference Operator: Thank you. As a reminder, to ask a question, you will need to press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Your first question comes from the line of Ryan Daniels with William Blair. Your line is open.

Matthew Mardula, Analyst, William Blair: Hello, this is Matthew Mardula on for Ryan Daniels. Thank you so much for taking my question. I know in your prepared remarks, you said full year revenue of $1.9 billion for 2026. Could you kind of give us the drivers of that revenue growth? Any color into the expectations for facility volume growth or pricing expectations for the 2026 year would be great to hear about.

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: Hey, Matthew. So really, this overall assumes that we are going to be flat, both in volume and in pricing. While there will be some kind of ups and downs within the components that are part of pricing, overall, we do expect those to be pretty flat.

Matthew Mardula, Analyst, William Blair: Great. Okay. Thank you for that. Then with the negative patient volume year-over-year this quarter, is there anything you could call out regarding kind of what happened there? I know you previously mentioned it’s difficult to call out one exact factor or one reason why, but kind of with the strong volume we have seen the past couple of quarters, is there any color we could hear about with what happened this quarter? Thanks.

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: No, it really-- that’s about the comp, and so we tried to mention that the volume being down this quarter was really, it’s because the comp was fairly tough from the fourth quarter of last year.

Matthew Mardula, Analyst, William Blair: Great. Thank you so much for all those insights.

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: You’re welcome, Matthew. Thanks.

Conference Operator: Your next question comes from the line of Jack Flevin with Jefferies. Your line is open.

Jack Flevin, Analyst, Jefferies: ... Hey, good morning. Thanks for taking the question. Well, I want to drill in a little bit on probably the quarter and the guidance as well. Maybe slightly different start on the quarter. The variable comp expense, I think we saw this in 2021, where you had a really strong year and then variable comp sort of spiked higher. I know you sort of gave a little bit of a hint at it with the wide guidance range heading into the quarter. Is there any way to quantify or talk about sort of what that was in the quarter and how that drove earnings?

And then the second piece, Mark, hearing your commentary on some of the changes to some of the physician or stock-based comp structures, should we think about that as something that might have a smoothing effect for this same sort of dynamic in future years?

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Well, so two things. One is the, there were a variety of factors that, that led to, our fourth quarter operations and going into, in, into 2026. So there’s no, there’s really no better parsing that I, that I could, that I could provide. In, in terms of alignment, I, I would say that’s really the key driver of this. It’s not to achieve a smoothing effect. It’s really just to make sure that over, over time, our, our doctors, who have an enormous role in our hospital relations, quality, recruiting and retention, really feel a strong tie to the company and that we have a mutual bond to each other. So that’s, that’s the, that’s the driver of this.

Jack Flevin, Analyst, Jefferies: Okay, understood. Appreciate that. And then just thinking about the guidance, I hearing your commentary, and it’s been consistent over, you know, a decent period about how it’s hard to quantify or for you all to parse out exchange impact or subsidy impact on your overall volumes. But I guess trying to think about the guidance, like, is there any way to understand what could possibly be embedded in the guidance for that factor? And then hearing a little bit of your commentary, it sounds like you might have said early in the year, you have indications that that sort of things are consistent. Should I take that as, like, payer mix, other sort of early indicators on this specific issue would tell you that-

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: No.

Jack Flevin, Analyst, Jefferies: You’re not really seeing a change yet?

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: That’s exactly, that’s exactly right. But, you know, we’re not seeing a change yet, but the government hasn’t yet figured out what the changes are in enrollment. We don’t know yet whether people who said they’re going to enroll are going to pay. We don’t know yet what the government might do in terms of a stopgap. And then the question is, you know, what do people do? Are people going on to commercial insurance? There are so many variables that make this up. So we’re, you know, obviously, our antenna is up, and I probably look twice a day and see what the government is up to. So it’s just very hard to quantify. But in our guidance, we assume that we have the same metrics that we had during 2025.

Jack Flevin, Analyst, Jefferies: Okay, and maybe just one follow-up, Mark or Kasandra, on that. Just like to think about pricing really strong. There really wasn’t that much payer mix movement in 2025. So if I think about that flat pricing assumption, is it fair to say that, like, in the way you’ve built that, some of the trends on hospital, you know, hospital contract admin fees or core pricing or acuity might be balancing against, you know, some sort of implicit downside protection for an issue on exchanges? Is that a fair way to think about how you’ve structured that pricing assumption?

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: No. So I—it’s not really tied to anything with the exchanges, but we did actually see some incremental favorable payer mix in 2025, although, of course, the start of the shift was in 2024. So we did see that. So really, we’re just saying that we expect everything to remain pretty steady in 2026, really an average of what we saw in 2025. So that’s where the guidance is based on.

Jack Flevin, Analyst, Jefferies: Okay. Understood.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: There are many-

Jack Flevin, Analyst, Jefferies: Appreciate it.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: As you know, there are many components of it, you know, from volume, acuity, basic payer mix. So we’re assuming all the factors that were in 2025. We have no reason to think that any of those will change for 2026, so that’s why our forecast is as it is.

Jack Flevin, Analyst, Jefferies: Understood. Appreciate all the color, guys.

Conference Operator: Once again, if you would like to ask a question, press star one to join the queue. Pick up your handset, ensure that your phone is not in mute and press mute. Question comes from the line of A.J. Rice with UBS. Your line is open.

A.J. Rice, Analyst, UBS: Hi, everybody. So your EBITDA, at the midpoint, is supposed to grow about $14 million year-over-year in 2026, and it looks like you’ve got some assumptions about G&A cost reduction in there, maybe other cost reduction. Can you just flesh out a little bit more what is embedded in guidance with respect to the cost or expense side of the equation?

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: It’s really just that. We do, we did call out, I think Kasandra called out, likely expense reduction, small scale, and that’s really it. We’re overall forecasting pretty much the same kind of results that we had in 2025 carrying into 2026. And just because of normal operations changes, you know, quarter to quarter, that’s where we fall out. You know, we’re, and as I said in my comments, there are many things that we’re working on, that could affect this going forward, but nothing that we could call out, specifically at this time.

A.J. Rice, Analyst, UBS: Yeah, I was just thinking, usually people would assume you get some kind of inflationary update in G&A, and you’re actually forecasting about a $6 million decline year-over-year, which I don’t know. I thought there might be something specific behind that. On the comments about capital deployment, you said no M&As embedded in the guidance. Obviously, you’ve got, you’re doing share repurchase. Can you just give us a little flavor for how much share repurchase is anticipated in the current guidance? And then on, if you did M&A, I know you said you got the opportunity to grow in NICU, you got the opportunity with maternal-fetal medicine. Is it that type of thing, or those are just, you know, potentially bid on contracts to recruit individual doctors?

Is there any place where you’re looking for M&A that might be a little bigger and chunkier that you would potentially consider?

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Well, on the first part of your question, we assume in our guidance a small, much smaller amount of stock buyback, depending on, you know, we’ll be opportunistic about that. But probably we don’t anticipate at the same scale as we did in 2025. In terms of-

A.J. Rice, Analyst, UBS: Okay.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Growth opportunities, there are really many. They range from physical practices to telemedicine. Within our space, I mentioned OB hospitalist, which is, you know, a very important program nationwide in many hospitals, and we have a real strength in that. And as I said earlier, because of our NICU relationships, maternal-fetal medicine relationships, PICU relationships across the nation, we’re uniquely positioned to do that and do it in a cost-efficient way. And then, you know, and then, AJ, yes, there are lots of companies out there, many that are private equity-owned, that are looking for a new home. And I think there are a lot of people out there that are aware of our balance sheet.

You know, my team and I have certainly done deals like that over time, so we get a lot of inbound interest. We wanna balance that inbound interest with the strength of our core and make sure that we don’t do anything that can take away from our core. But this is a time when it’s good to have strong cash flow, a strong balance sheet, a great relationship with hospitals and be opportunistic if there’s something out there that we can do.

A.J. Rice, Analyst, UBS: Okay, all right. Thanks so much.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Thanks, AJ.

Conference Operator: Next question comes from the line of Ann Heinz with Mizuho. Your line is open.

Ann Heinz, Analyst, Mizuho: Great, good morning, and thank you. Can we just talk about pricing? I mean, it seemed very strong in the quarter, up around over 9%, and this is versus the 7% in Q3. I know you talked about acuity and other drivers, but it still seems very high. Can you tell us what’s happening with the acuity shift, and payer mix? Just more detail on just that strength over the past couple of quarters, and how sustainable you think it is? That’d be great. Thank you.

Mary Ann Moore, Chief Administrative Officer and General Counsel, Pediatrix Medical Group: Yeah. So for the quarter, it was actually up just under 7%, and it’s, it’s really the same things we’ve seen for the past couple of quarters. We really have strong RCM collections coming through, which, you know, was related to all the stabilization efforts that we undertook in 2025 with our, revenue cycle management transition. And then we did have, some favorable impact from payer mix that we’ve talked a little bit about. Acuity was also strong again, and, we did have contract administrative fees that were up a bit. So it’s really the same things we’ve seen. And then what we anticipate is that is going to stay, you know, kinda get steady as we move into 2026. And of course, in 2026, the comps are gonna be tougher.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: You know, on acuity,

Ann Heinz, Analyst, Mizuho: Yeah. Thank you.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: You know, with advanced, you know, our hospitals are known because of our NICUs to be able to handle patients that in the past you could never have handled. So I think there is certainly something that favors us because we are the leader in level three and level four NICUs around the country. And as Cassandra said, there has, you know, there’s just been a real strengthening in that part of the business.

Ann Heinz, Analyst, Mizuho: Thank you.

Conference Operator: There are no further questions at this time. I will turn the call back over to Mark Ordan, CEO, for closing remarks.

Mark Ordan, Chief Executive Officer, Pediatrix Medical Group: Great. Thank you all very much, and have a great day.

Conference Operator: That concludes today’s call. Thank you all for joining, and you may now disconnect.

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