Financial Data and Key Metrics Changes - In Q4 2025, the company achieved revenue of approximately $34 million, representing a 37% year-over-year increase. Full-year revenue exceeded $99 million, up 43% from 2024, primarily driven by record engine sales approaching 800 units or over 75 megawatts of power [3][18] - The gross margin improved to 17% in Q4, a 30-point increase year-over-year, while the full-year gross margin was positive 5%, up 37 points from 2024 [18] - Total operating expenses for the full year were approximately $109 million, 32% lower than the previous year, with expectations for 2026 operating expenses to range between $65 million and $75 million [19] Business Line Data and Key Metrics Changes - The company secured its largest marine order to date, a 6.4-MW award, and announced a significant commercial agreement with New Flyer for 50 MW, indicating strong growth in the marine and commercial sectors [4][6] - The focus on product cost reduction and operational efficiency has led to a significant reduction in cash operating costs by 41% in Q4 compared to the same period last year [4] Market Data and Key Metrics Changes - The majority of engine shipments were directed towards Europe and North America, with particularly strong activity in Canada, highlighting the geographical focus of the company's market strategy [3] - The company is increasingly targeting stationary and rail markets, with expectations for additional activity in these segments in the coming months [8][12] Company Strategy and Development Direction - The company aims to achieve sustainable positive cash flow within the next two years, supported by a well-managed cost structure and improving gross margins [4][16] - Five near-term focus areas have been identified: improving commercial terms, product cost reductions, enhancing fleet service offerings, expanding product reach, and innovating business models [5][15] - The company is leveraging its installed base to expand recurring revenue through enhanced fleet services, which include long-term service agreements and operational monitoring [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the path ahead, emphasizing the importance of customer relationships and the commitment to delivering value [16] - The company is addressing financial and technical barriers to hydrogen adoption through flexible commercial structures and service-based offerings [13][15] - Management noted that the improvements in 2025 reflect the dedication and professionalism of the company's workforce [16] Other Important Information - The company ended the year with nearly $530 million in cash, indicating strong financial stability with no bank debt or near-term financing requirements [20] - The company is advancing Project Forge, which aims to reduce bipolar plate costs by up to 70% at full volume, enhancing competitiveness [9] Q&A Session Summary Question: On the restructuring side, have the large items been harvested? - Management indicated that they do not anticipate any major restructuring in 2026 and that the midpoint of the guidance range is a reasonable expectation for the overall cost structure [24][26] Question: Have these actions altered the R&D roadmap? - Management stated that the focus is on leveraging existing product portfolios and prior investments to maximize value, with a more concentrated approach on extracting value from innovations already realized [28][30] Question: What is the duration of the New Flyer contract? - The contract is for 500 units, with a focus on megawatts and unit volumes rather than duration, emphasizing a long-term partnership [33] Question: How does the FCmove-XD and FCveloCity-HD compare with competing offerings? - Management noted that the configuration and packaging of existing products can address the stationary market, with innovations aimed at increasing performance and reducing costs [34][40] Question: What are the opportunities in the stationary market? - Management highlighted a strong value proposition for fuel cells in the stationary market, particularly in addressing immediate power needs for data centers [39][40]

Financial Data and Key Metrics Changes - The fourth quarter Adjusted EBITDA was a loss of CAD 95.2 million, reflecting an Adjusted EBITDA margin of -20.9% and cash used in operating activities of CAD 3 million [13][14] - For the full year 2025, Adjusted EBITDA was a loss of CAD 261.4 million, representing an adjusted EBITDA margin of -12.5%, compared to a gain of CAD 22.4 million and a margin of 0.9% in 2024 [18] - The company finished the quarter with CAD 77 million in cash and CAD 195 million available under its revolving credit facility [14] Business Line Data and Key Metrics Changes - Shipments in the fourth quarter were 378,000 net tons, down 31% year-over-year, primarily due to the impact of U.S. tariffs [14][15] - For the full year, total shipments were 1.7 million net tons, compared to 2 million net tons in 2024 [17] - Net sales realizations averaged CAD 1,080 per ton for the full year, down from CAD 1,107 per ton in the prior year [17] Market Data and Key Metrics Changes - The Canadian dollar strengthened approximately 5% over 2025, moving from CAD 1.44 per USD at year-end 2024 to CAD 1.37 at December 31, 2025 [12] - Plate pricing remained resilient, with a premium over hot-rolled coil, while sheet pricing was approximately 40% lower than the index [36] Company Strategy and Development Direction - The company is pivoting its commercial strategy towards the Canadian market, exiting blast furnace and coke oven operations, and focusing on high-value products [6][11] - A binding MoU with Hanwha Ocean Co., Ltd. was announced, with a potential value of CAD 250 million, indicating a strategic shift towards defense and industrial supply chains [10][11] - The company aims to optimize for margin quality rather than volume, reducing exposure to tariff-distorted global markets [11] Management's Comments on Operating Environment and Future Outlook - The management acknowledged 2025 as a challenging year due to the 50% U.S. Section 232 tariff, which fundamentally altered the business model for Canadian steel producers [20] - The company is committed to exploring product diversification initiatives and applauded government measures to support the Canadian steel industry [22][23] - Management expressed confidence in the company's direction and the foundation for long-term value creation [24] Other Important Information - The company absorbed CAD 225 million in direct tariff costs for the full year, reflecting a structural shift in the industry [8] - Accelerated depreciation and stranded inventory costs were captured in the cost of sales during the quarter [16] Q&A Session Summary Question: What are the expectations for full year shipments? - The company expects total shipments between 1 and 1.2 million tons for the year, with a ramp-up in capacity at EAF [26] Question: What is the expected mix between plate and sheet? - The mix is anticipated to be roughly 50/50 between plate and sheet products [28] Question: How exposed are energy costs to the current spot market? - The company generates power from its own natural gas-fired power plant and consumes power from the grid, which is subject to Ontario's spot rate pricing [29] Question: What is the current status of plate pricing in Canada? - Plate pricing is holding up better than sheet pricing, with government initiatives helping to stabilize the market [36] Question: What are the critical milestones for the beam mill project? - The company is working on engineering, cost estimates, and timelines for the beam mill project, with demand in Canada exceeding supply [40] Question: What is the expected CapEx for the full year? - The company does not expect any change in the total project budget for the EAF, with sustaining CapEx expected to be around CAD 80 million a year [42]

Financial Data and Key Metrics Changes - For Q4 2025, net revenue decreased by $2.7 million or 9.3% to $26.5 million compared to $29.2 million last year, primarily due to reduced political revenue [3] - For the full year 2025, net revenue decreased by $5.8 million or 5.1% to $107.1 million compared to $112.9 million last year, with almost half of the decrease attributed to reduced political revenue [4] - The company recorded a non-cash impairment charge of $20.4 million in Q4 2025, leading to an operating loss of $9.5 million compared to operating income of $1 million for the same period last year [5] - The net loss for Q4 2025 was $6.9 million compared to net income of $1.3 million last year [5] - For the year ended December 31, 2025, the company reported a net loss of $7.9 million compared to net income of $3.5 million last year [6] Business Line Data and Key Metrics Changes - Gross political revenue for Q4 2025 was $254,000 compared to $2 million for the same quarter last year [3] - For the year 2025, gross political revenue was $650,000 compared to $3.3 million for 2024 [4] - Total interactive revenue increased by 25.8% for the quarter and 19.1% for the year [12] - E-commerce platform revenue grew by 16% year over year, contributing $2.5 million in local direct revenue [18] - Revenue from hyperlocal online news sites grew by 18% year over year, contributing over $2.5 million in revenue [18] Market Data and Key Metrics Changes - The company anticipates a return to revenue growth, including political revenue, in the second half of 2026, with expected increases in the range of mid-single digits [12] - The first quarter of 2026 is currently pacing down mid-single digits, with interactive revenue up 26.4% [12] Company Strategy and Development Direction - The company is focusing on building digital infrastructure to support interactive orders and enhance local management teams [13] - A digital initiative is being implemented, which will initially increase marketing expenses by $1.5 million for 2026 [14] - The company aims to maintain a strong balance sheet while returning value to shareholders through regular dividends and potential stock buybacks [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the digital transformation strategy, emphasizing the need for simplicity, clarity, and transparency in advertising [25] - The company recognizes the shift in consumer behavior and the need for advertising strategies to adapt accordingly [25] - Management believes that the investments in training and digital strategy will improve profitability as digital initiatives grow [26] Other Important Information - The company recognized a gain of $11.6 million from the sale of telecommunications towers and related property [8] - The company paid a quarterly dividend of $0.25 per share on December 12, 2025, and declared another on February 12, 2026 [10] - The company has repurchased 219,326 shares of its Class A common stock for $2.5 million during the year ended December 31, 2025 [11] Q&A Session Summary - There were no questions from participants during the Q&A session [27]

Financial Data and Key Metrics Changes - In Q4 2025, revenues increased to $437 million from $403 million in Q3, with adjusted EBITDA rising to $61 million, representing a margin of 14% compared to 10% in Q3 [24][25] - For the full year 2025, revenues totaled $1.94 billion, with adjusted EBITDA of $310 million and a margin of 16% [24] - Free cash flow improved to $14 million in Q4 from -$29 million in Q3, totaling $25 million for the full year 2025 [24][25] Business Line Data and Key Metrics Changes - Stimulation services revenues rose to $384 million in Q4 from $343 million in Q3, with adjusted EBITDA increasing to $33 million and margins improving to 8.7% from 5.7% [25][26] - Proppant production segment revenues surged to $115 million in Q4 from $76 million in Q3, with adjusted EBITDA doubling to $16 million and margins increasing to 14% from 10.5% [26][27] - Manufacturing segment revenues decreased slightly to $43 million in Q4 from $48 million in Q3, with adjusted EBITDA remaining stable at $4 million [27] Market Data and Key Metrics Changes - The company noted that the market faced challenges in 2025 due to tariff-driven economic uncertainty and OPEC's supply decisions, impacting operator activity levels [6][8] - Despite these challenges, the company expects a tightening of supply-demand dynamics as operators increase activity to combat natural production declines [8][9] Company Strategy and Development Direction - The company is focused on a $100 million cost optimization program targeting annualized savings, with significant progress reported in labor and capital expenditure efficiency [10][11] - The introduction of the Machina technology platform aims to enhance well optimization and operational efficiency, integrating various data sources for real-time decision-making [12][15] - The company emphasizes its vertical integration and asset management as key competitive advantages, positioning itself to benefit from market recovery [6][9] Management's Comments on Operating Environment and Future Outlook - Management highlighted that while Q1 2026 may see softer results due to weather disruptions, there is optimism for improved performance in Q2 as activity levels are expected to rise [19][41] - The ongoing conflict in the Middle East is anticipated to impact supply and demand dynamics, potentially leading to higher oil prices, which could benefit the company [8][9] - Management remains disciplined in capital allocation and is prepared to respond to increased demand as market conditions evolve [33][54] Other Important Information - The company reported a total cash and cash equivalents of approximately $23 million as of December 31, 2025, with total liquidity of approximately $152 million [31] - The company has made significant strides in reducing long-term debt, repaying approximately $136 million in 2025 [32] Q&A Session Summary Question: Can you provide more details on the new technology? - The technology is installed on every fleet and allows for real-time data integration for well optimization, enabling interventions to increase the number of open perforations [36][37] Question: What is the expected production uplift from the technology? - It is too early to quantify production increases, but the focus is on the number of open perforations as a measure of success [38][39] Question: How do you see Q2 performance compared to Q4? - It is a fair assumption that Q2 will perform better than Q4, given the current run rate and cost reductions [41][42] Question: Are you seeing increased operator interest due to Middle East disruptions? - There has been an increase in discussions and inquiries from operators, particularly regarding DUCs and existing activity [50][51] Question: How are you managing your balance sheet and deleveraging opportunities? - The company actively manages its balance sheet and is exploring various strategies to optimize leverage and liquidity while considering capital allocation opportunities [55][56]

Financial Data and Key Metrics Changes - Net income for Q4 2025 was $18.2 million, or $0.83 per diluted share, compared to $8.9 million, or $0.41 per diluted share in Q4 2024 [15] - Adjusted net income for Q4 2025 was $23 million, or $1.05 per diluted share, compared to $12 million, or $0.55 per diluted share in 2024 [16] - Adjusted EBITDA for the full year 2025 was $50.8 million, despite a 5% decline in net sales [10][16] Business Line Data and Key Metrics Changes - U.S. segment sales decreased 5.5% to $185.3 million, with kitchenware and home solutions experiencing declines, partially offset by an increase in tableware [17] - International segment sales decreased 2.3% to $18.8 million, with a notable decline in U.K. e-commerce [17] - The Dolly brand grew to approximately $18 million for the year, an increase of over 150% [10] Market Data and Key Metrics Changes - The overall market was impacted by tariff escalations, leading to disruptions and cancellations of orders [5] - The company experienced a recovery in shipments in Q4, particularly with Costco, which had previously pulled back sharply on tabletop programs [7] Company Strategy and Development Direction - The company implemented price increases to offset tariff costs, which initially hurt volumes but eventually restored pricing parity [6] - A focus on cost discipline led to a 12% reduction in SG&A expenses, totaling $38 million in Q4 [9] - The relocation of the East Coast distribution center to Hagerstown, Maryland, is expected to enhance long-term efficiency and reduce future distribution expenses [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2025 due to tariffs but expressed pride in the team's performance and the company's ability to mitigate these effects [4] - The priority for 2026 is to recover sustainable top-line growth, leveraging existing customer relationships and successful product lines [13] - Management expects a normalization of seasonality in 2026, with the full impact of pricing increases felt throughout the year [25] Other Important Information - The final phase of the international restructuring initiative, Project Concord, was delayed but is expected to be fully implemented in the first half of 2026 [11] - The company maintains a strong balance sheet with liquidity of $76.6 million at year-end [20] Q&A Session Summary Question: Insights on growth building blocks for 2026 - Management expects more normal seasonality in 2026 and anticipates the full impact of pricing increases implemented in 2025 [25] Question: Retail customers' inventory willingness and sell-through data - There has been a divergence in performance across channels, with e-commerce showing strong growth [28] Question: Cash priorities and capital allocation for 2026 - The company is pursuing internal growth initiatives that are not capital intensive and plans to maintain its dividend policy [31] Question: Sustainability of lower SG&A costs - Management indicated that the reduction in SG&A is sustainable, with potential increases tied to growth opportunities [39] Question: Operating loss in the international segment - The loss was less pronounced than in 2024, with ongoing efforts to achieve better performance through Project Concord [59] Question: Tax rate expectations for 2026 - The tax rate is expected to be in the high 20% range, contingent on the performance of international operations [60] Question: CapEx estimates for the Maryland distribution center - Anticipated CapEx for 2026 is around $7 million, with expectations to be below budget [62]

Financial Data and Key Metrics Changes - The company achieved a 15% increase in EBITDA for the fourth quarter of 2025, driven by record volumes in mining and logistics, lower steel costs, and a recovering cement price environment [4][10]. - The total investment for the year amounted to BRL 5.9 billion, reflecting a 42.4% increase in CAPEX compared to the previous quarter [12]. - The leverage indicator reached 3.47 times, marking the first increase after three consecutive quarters of decline due to concentrated investments and cash flow issues [15][16]. Business Line Data and Key Metrics Changes - In mining, the company recorded the second-largest production and sales volume in its history, exceeding 45 million tons for the first time, which is an 8.4% annual growth since the IPO in 2021 [6][21]. - The steel segment experienced a 6% reduction in sales due to seasonal factors and high inventory levels among local distributors, with a 7.5% annual decline in sales compared to the previous year [17][18]. - The cement market showed stability despite seasonal impacts, with a slight drop in net revenue of 6% for the quarter, but the highest annual revenue recorded for the company [25][26]. Market Data and Key Metrics Changes - The logistics segment achieved record EBITDA for the year, with a margin of 44%, slightly below the previous year due to lower contributions from the port modal [27]. - The energy segment also reported historical records, with a 79% increase in EBITDA and an adjusted margin of 54% [27]. Company Strategy and Development Direction - The company announced a strategic plan to improve its capital structure, aiming to raise up to BRL 18 billion through asset sales to reduce leverage and facilitate growth [5][16]. - The focus is on prioritizing results over volume in the cement market, with strict cost control measures in place [8][9]. - The logistics segment is seen as a key growth driver, with investments expected to enhance operational efficiency and asset valuation [41]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational resilience of the company, despite challenges such as increased leverage and cash flow issues [5][14]. - The outlook for 2026 is positive, with expectations of growth in cement and steel, while mining and logistics will benefit from operational efficiencies [11][42]. - The management highlighted the importance of anti-dumping measures to protect local producers and stabilize the market [8][54]. Other Important Information - The company has made significant strides in its ESG agenda, including investments in environmental management and safety improvements [29][30]. - The company reported a negative cash flow of BRL 261 million for the quarter, but this was an improvement compared to the previous quarter [13]. Q&A Session Summary Question: Details on the disinvestment plan and timing for operations - The company is focused on finalizing the sale of cement assets by the third quarter of 2026, with several proposals received from potential buyers [48][50]. Question: Dynamics of demand and pricing in the steel market - The company anticipates stable steel volumes in the first quarter of 2026, with a potential price increase of 4.5% to 6% due to improved market conditions and anti-dumping measures [52][55]. Question: Concerns about imports and anti-dumping measures - The management is actively monitoring imports from countries like Korea and India, and is working with the government to address potential dumping issues [71][72]. Question: Clarification on net debt increase and EBITDA impacts - The increase in net debt is attributed to concentrated investments and cash flow challenges, while the steel segment's EBITDA was impacted by operational efficiency and market conditions [86].

Financial Data and Key Metrics Changes - The company achieved a 15% increase in EBITDA for the fourth quarter of 2025, driven by record volumes in mining and logistics, lower steel costs, and a recovering cement price environment [4][10]. - The total EBITDA for the year reached BRL 11.8 billion, representing a 15% growth compared to the previous year, with an adjusted EBITDA margin of almost 28% [9][10]. - The leverage indicator for the last 12 months increased to 3.47x, marking the first rise after three consecutive quarters of decline, attributed to increased investments and expenses [13][14]. Business Line Data and Key Metrics Changes - In mining, the company recorded the second-largest production and sales volume in its history, exceeding 45 million tons for the first time, with an 8.4% annual growth since the IPO in 2021 [6][19]. - The steel segment experienced a drop in production costs, reaching the lowest levels since 2021, while maintaining a focus on profitability over volume, resulting in a 2.6% increase in average annual prices [16][18]. - The cement market showed stability despite seasonal impacts, with a slight drop in net revenue due to seasonality offsetting price increases, yet achieving the highest revenue level recorded for the company [22][23]. Market Data and Key Metrics Changes - The logistics segment achieved record EBITDA for the year, with a margin of 44%, slightly below the previous year due to lower contributions from the port modal [24]. - The energy segment also reported historical records, with a 79% growth in EBITDA and an adjusted EBITDA margin of 54% [24]. - The company noted a strong demand for steel in Brazil, with expectations of a recovery in domestic consumption and a reduction in imports due to anti-dumping measures [50][52]. Company Strategy and Development Direction - The company announced a strategic plan to improve its capital structure, aiming to raise up to BRL 18 billion through asset sales to reduce leverage and support growth [5][14]. - A focus on operational efficiency and cost control is emphasized, particularly in the steel segment, where measures are being taken to enhance production predictability and reduce costs [33][34]. - The logistics segment is seen as a key growth area, with investments expected to enhance asset valuation and operational efficiency [38]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational resilience of the company, despite challenges such as seasonality and competitive pressures from imports [4][5]. - The outlook for 2026 is positive, with expectations of increased performance in cement and steel, while mining and logistics will benefit from operational efficiencies [10][39]. - The company is committed to reducing cash burn and improving liquidity, with a focus on managing inventory levels effectively [40]. Other Important Information - The company invested BRL 5.9 billion in CAPEX for the year, reflecting a 42.4% increase compared to the previous quarter, with strategic projects underway [11]. - The ESG agenda is highlighted, with significant investments in environmental management and safety measures, including a reduction in accident rates and CO2 emissions [25][27]. Q&A Session Summary Question: Details on the disinvestment plan and timing for operations - The company is focused on finalizing the sale of cement assets by the third quarter of 2026, with several proposals received from potential buyers [45][46]. Question: Dynamics of steel prices and market protection measures - The company anticipates stable steel volumes in the first quarter of 2026, with a projected price increase of 4.5% to 6% due to improved market conditions and anti-dumping measures [48][51]. Question: Concerns about imports from other countries - The company is monitoring imports from countries like Korea and India, with ongoing discussions regarding anti-dumping measures to protect the domestic market [66][68]. Question: Strategic alternatives for financial management - The company has various financial strategies in place to address liquidity and debt, focusing on the sale of cement assets as a primary option [60][62]. Question: Impact of net debt increase and EBITDA in the steel mill - The increase in net debt is attributed to prepayment and monetary variations, with ongoing assessments to clarify the impacts on EBITDA [82].

Financial Data and Key Metrics Changes - CSN achieved a 15% increase in EBITDA for the fourth quarter of 2025, driven by record volumes in mining and logistics, lower steel costs, and a recovering cement price environment [3][4] - The company reported an EBITDA of BRL 11.8 billion for the year, representing a 15% growth compared to the previous year [9] - The leverage indicator reached 3.47 times, marking the first increase after three consecutive quarters of decline due to increased investments and expenses [12][13] Business Line Data and Key Metrics Changes - In mining, CSN recorded the second-largest production and sales volume in its history, exceeding 45 million tons for the first time, which is an 8.4% annual growth since the IPO in 2021 [5][18] - The steel segment saw a reduction in production costs, reaching the lowest levels since 2021, contributing to a consolidated growth of 2.6% in annual average prices despite challenges from imports [16][17] - The cement segment experienced a slight drop in net revenue due to seasonality, but the annual performance showed the highest revenue recorded for the company, with profitability close to 30% in the second half of the year [21][22] Market Data and Key Metrics Changes - The logistics segment achieved record EBITDA for the year, with a margin of 44%, slightly below the previous year due to lower contributions from the port modal [23] - The energy segment also reported historical records, with a 79% growth in EBITDA and an adjusted margin of 54% [23] Company Strategy and Development Direction - CSN announced a strategic movement to improve its capital structure, aiming to raise up to BRL 18 billion to reduce leverage and facilitate growth [4][13] - The company is prioritizing results over volume in its cement strategy, reflecting a shift in focus towards profitability [6] - Investments in logistics and energy are seen as key pillars for organic growth, with a new logistics sub-segment being developed [7][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational resiliency of the company, despite challenges from seasonality and external market pressures [3][4] - The outlook for 2026 is positive, with expectations of increased performance in cement and steel, while mining and logistics will benefit from operational efficiencies [9][34] - Management highlighted the importance of anti-dumping measures to support local producers and stabilize the market [6][30] Other Important Information - The company reported a significant release of working capital during the quarter, reflecting a higher volume of iron ore purchases from third parties [11] - CSN's ESG initiatives included investments of BRL 750 million in environmental management and a commitment to reducing CO2 emissions [25][26] Q&A Session Summary Question: Details on the disinvestment plan and timing for operations - Management confirmed that the signing of processes is expected in the third quarter of this year, with several proposals received from potential buyers [37][38] Question: Insights on steel price initiatives and market dynamics - Management indicated a forecasted price increase of 4.5% to 6% for the first quarter, with expectations of stable volumes in steel [40][41] Question: Concerns regarding imports and anti-dumping measures - Management acknowledged ongoing concerns about imports from countries like Korea and emphasized the importance of anti-dumping measures to protect the domestic market [46][52] Question: Clarification on net debt increase and cash flow - Management explained that the increase in net debt was due to concentrated investments and prepayment variations, with a focus on improving cash flow in the future [62]

Financial Data and Key Metrics Changes - In Q4 2025, the company generated revenues of approximately $157 million, consistent with guidance, but decreased due to seasonality and budget exhaustion [10] - Adjusted EBITDA for Q4 was approximately $23 million, the highest quarterly adjusted EBITDA of the year, with an adjusted EBITDA margin of about 14% [10][11] - For the full year, corporate adjusted EBITDA loss was around $26 million, reflecting a structural rightsizing of G&A and a 12% decline in total headcount year-over-year [12] Business Line Data and Key Metrics Changes - Northeast MidCon revenue was essentially flat at $69.6 million, with an adjusted EBITDA margin expansion to 25.3% driven by gas-directed activity [11] - Dry gas revenue in the Northeast MidCon increased 5.3% quarter-over-quarter and 44% year-over-year [8][11] - Rockies revenue declined to $46.3 million, down approximately 9% sequentially, primarily due to weather and budget exhaustion [11] - Southwest revenue decreased about 10% to $50.9 million, linked to budget exhaustion and reduced oil-directed activity, but adjusted EBITDA increased to $6.8 million [11] Market Data and Key Metrics Changes - The company noted a 6% increase in rig count across the Northeast MidCon segment quarter-over-quarter [24] - The overall market is expected to see a gradual improvement, particularly in gas-directed basins, with a forecast for Q1 2026 revenue of $145 million-$150 million, down approximately 3% from Q1 2025 [20][18] Company Strategy and Development Direction - The company continues to focus on higher margin, technically differentiated work while maintaining cost discipline and strategically deploying capital [6] - The capital program is predominantly maintenance-oriented, with gross capital expenditures expected to be approximately $40 million for 2026, down from $49 million in 2025 [12][20] - The company is positioned to benefit from industry consolidation and capacity rationalization, with smaller competitors exiting the market [20] Management's Comments on Operating Environment and Future Outlook - Management expressed a constructive but measured outlook for 2026, anticipating Q1 to be the low point of the year due to seasonal factors [18] - The company is monitoring the impact of the Middle East conflict on market conditions, noting that historical trends show a 60-90 day lag in activity changes following commodity price movements [44][48] - The internal budget for 2026 contemplates flat to slightly up revenue compared to 2025, with improvements expected in the second half of the year [19] Other Important Information - The company ended 2025 with total debt of $258.3 million and available liquidity of approximately $56 million [13] - A proactive amendment to the indenture was made to provide covenant relief, allowing for a net leverage ratio of 4.5x through March 31, 2027 [16] Q&A Session Summary Question: Strength in Northeast MidCon - Management noted a 6% increase in rig count in the Northeast MidCon segment and attributed the strength to diverse geographic exposure and robust gas-directed activity [24][26] Question: Revenue Decline in Southwest - The revenue decline in the Southwest was attributed to budget exhaustion and completion programs tailing off, with some assets being realigned to other regions [32][33] Question: CapEx and Cash Flow Outlook - The company is targeting gross capital spending of $40 million for 2026, reflecting a prudent approach given the current market conditions [34][35] Question: PIK Option and Covenant Relief - Management explained that the PIK option provides flexibility in cash management, and the covenant relief was a proactive measure to ensure adequate cushion for future periods [36][37] Question: Impact of Middle East Conflict - Management indicated that the impact of the Middle East conflict is uncertain, but historical trends suggest a lag in activity changes following commodity price movements [44][48] Question: Simul-frac Adoption - The company has seen slower adoption of simul-frac in the MidCon compared to other basins, with approximately 25%-30% of operations utilizing this method [58][60] Question: U.S. Coiled Tubing Market - Management acknowledged attrition in the coiled tubing market, with some players exiting, but noted that the market is currently balanced without significant shortages [63][66]

Financial Data and Key Metrics Changes - For the quarter ending December 31, 2025, the company generated distributable earnings of $0.27 per share, impacted by a loan foreclosure which reduced earnings by approximately $0.03 per share [8][16] - For the full year ended December 31, 2025, net interest income was $21.6 million, with distributable earnings of $15.2 million or $1.19 per share [16] - The company ended the fourth quarter with total assets of $310.2 million and total shareholder equity of $182 million, with a book value of $13.56 per share [18] Business Line Data and Key Metrics Changes - The company closed on $368 million of loans during the fiscal year, with $247 million committed and $224 million funded by the company [7] - In the fourth quarter of 2025, the company closed on $56 million of commitments, including loans for industrial and retail properties [12] - As of February 27, 2026, the portfolio, excluding the Thompson Hotels, consisted of $442.1 million of current commitments and $337 million of principal outstanding across 16 loans [17] Market Data and Key Metrics Changes - The company observed a bifurcation in the commercial real estate lending market, with lenders focused on multifamily and industrial assets experiencing tight spreads [10] - The company noted that the market volatility has created opportunities for transitional deals, despite recent uncertainty due to rising rates [21][23] Company Strategy and Development Direction - The company remains focused on providing loans for transitional real estate business plans, primarily in the Southern United States, with a strategy centered on residential loans [5] - The company aims to partner with top-tier sponsors for high-quality real estate projects, emphasizing structured solutions for complex deals [11][13] Management's Comments on Operating Environment and Future Outlook - Management indicated that the current market volatility presents both challenges and opportunities, particularly in identifying transitional deals [21][23] - The company expressed confidence in its ability to capitalize on attractive opportunities despite the uncertain macroeconomic environment [46][47] Other Important Information - The board of directors declared a $0.30 dividend per share for the quarter ended March 31, 2026, which is expected to be covered over the next 6-12 months [8][32] - The company increased its revolving credit facility to $165 million, with potential to expand to $200 million [9] Q&A Session Summary Question: Market dynamics and investment opportunities - The company noted that market volatility has created a gap in transitional deals, providing opportunities despite uncertainty [21][23] Question: Loan pipeline reduction - Management confirmed that the loan pipeline decreased to $652 million due to a focus on high-quality, actionable deals amidst market volatility [27][28] Question: Foreclosure of the San Antonio asset - The company explained that the Thompson Hotel foreclosure was due to management issues and cash flow constraints, despite the asset being high-quality [29][30] Question: Dividend coverage expectations - Management stated that the board is confident in covering the dividend over the next 6-12 months [32] Question: Capital deployment trends - Management reflected on the evolving opportunity set and the need for selective capital deployment in light of market conditions [44][46]