Financial Data and Key Metrics Changes - In 2025, adjusted EBITDA reached $42.5 billion, consistent with the previous year, while net income was $19.6 billion, or $18.1 billion excluding exclusive events [19][20] - Operating cash flow remained robust at $36 billion despite a 14% drop in Brent prices, demonstrating strong cash generation capabilities [20] - The average Brent price in 2025 was $69 per barrel, a 14% decrease compared to 2024 [19] Business Line Data and Key Metrics Changes - Oil production increased by 11% in 2025 compared to 2024, with significant contributions from the Búzios and Tupi/Iracema fields, both surpassing 1 million barrels per day [6][7][10] - Refinery utilization reached 91%, with 68% of production comprising higher value-added derivatives such as diesel, gasoline, and QAV [21] - Diesel sales increased by 52%, reinforcing the company's competitiveness in the Brazilian market [20] Market Data and Key Metrics Changes - The company exported an average of 675,000 barrels per day in 2025, with the fourth quarter averaging nearly 1 million barrels per day [10][11] - The gas processing capacity increased to 21 million cubic meters per day with the operation of the second module of the Boaventura complex [14] Company Strategy and Development Direction - The company aims to maintain capital discipline while increasing production and operational efficiency, focusing on sustainable growth and energy transition [16][31] - A significant portion of investments (84%) was allocated to exploration and production, with a commitment to low-carbon energy initiatives [25][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the geopolitical instability affecting oil prices but emphasized the company's preparedness for various scenarios [35][36] - The company remains committed to maintaining a solid internal pricing policy that does not transfer market volatility to the domestic market [36][44] Other Important Information - In 2025, the company incorporated 1.7 billion barrels of oil, achieving the highest number of proven reserves in the last decade [9][27] - The company paid BRL 45 billion in dividends and invested over $20 million in social and environmental projects, contributing to job creation and economic development [30] Q&A Session Questions and Answers Question: Current scenario in the oil and gas industry considering geopolitical conflicts - Management highlighted the company's resilience and preparedness for price fluctuations, maintaining a solid internal pricing policy [35][36] Question: Priority allocation of cash flow generated in excess of budget - The focus remains on capital discipline, with any surplus cash flow directed towards scheduled investments and potential extraordinary dividends [54][55] Question: Maintaining refining margins amid high oil prices - Management confirmed the strategy to avoid transferring volatility to the domestic market, ensuring refining margins remain positive [58][64] Question: Anticipation of platform operations for 2026 - Management indicated that while some platforms are on schedule, efforts are being made to accelerate the ramp-up of existing platforms [68][72] Question: Commercial strategy in response to market volatility - The company conducts daily assessments of market conditions and adjusts its commercial strategy accordingly, ensuring robust communication among teams [77][78] Question: Impact of Middle East oil production limits on Petrobras operations - Management assured that the company has a significant inventory and long-term contracts in place, allowing for flexibility in operations [85]

Financial Data and Key Metrics Changes - In 2025, adjusted EBITDA reached $42.5 billion, consistent with the previous year, while net income was $19.6 billion, reflecting a robust performance despite external challenges [16][15] - Operating cash flow remained stable at $36 billion, demonstrating resilience amid a 14% drop in Brent crude prices [17][15] - The average Brent price in 2025 was $69 per barrel, a 14% decrease compared to 2024 [15] Business Line Data and Key Metrics Changes - Oil production increased by 11% in 2025 compared to 2024, with significant contributions from the Búzios and Tupi/Iracema fields, both surpassing 1 million barrels per day [4][5] - Refinery utilization reached 91%, with 68% of production comprising higher value-added derivatives such as diesel, gasoline, and QAV [18][9] - Diesel sales saw a 52% increase, reinforcing the company's competitiveness in the domestic market [17] Market Data and Key Metrics Changes - The company exported an average of 675,000 barrels per day in 2025, with the fourth quarter averaging nearly 1 million barrels per day [8][9] - The gas market also showed growth, with the Boaventura complex processing capacity increasing to 21 million cubic meters per day [12] Company Strategy and Development Direction - The company aims to maintain capital discipline while increasing production and operational efficiency, focusing on sustainable practices and energy transition [13][26] - A significant portion of investments (84%) was allocated to exploration and production, with a commitment to high-quality, profitable projects [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience amid geopolitical instability and fluctuating oil prices, emphasizing preparedness for various scenarios [29][30] - The company is committed to optimizing operations and maintaining a strong market position, with a focus on long-term growth and profitability [40][41] Other Important Information - In 2025, the company added 1.7 billion barrels to its proven reserves, achieving the highest level in the last decade [7][22] - The company paid BRL 45 billion in dividends and invested over $20 million in social and environmental projects, contributing to job creation and economic development [26] Q&A Session Summary Question: Current scenario in the oil and gas industry considering geopolitical conflicts - Management highlighted the company's preparedness for price volatility and emphasized a solid internal policy to manage price fluctuations without impacting the domestic market [29][30] Question: Priority allocation of cash flow generated in excess of budget - The company reiterated its focus on capital discipline and scheduled investments, with any surplus cash flow directed towards investments and debt management [42][43] Question: Impact of high oil prices on refining margins - Management acknowledged the need for quick responses to sustained high prices, emphasizing the importance of maintaining positive refining margins [44][46] Question: Possibility of advancing platform operations to 2026 - Management confirmed that while no additional anticipations for platform sail away are planned, efforts are being made to accelerate the ramp-up of existing platforms [49][50] Question: Commercial strategy and response to market volatility - The company conducts daily assessments of market conditions and maintains frequent communication among its teams to adapt its commercial strategy effectively [54][55]

Financial Data and Key Metrics Changes - In Q4 2025, ISG reported revenues of $61.2 million, a 6% increase compared to the previous year, with adjusted EBITDA rising 24% to $8.1 million, resulting in an EBITDA margin of 13.2% [9][20][24] - For the full year, revenues reached $245 million, up 7%, with adjusted EBITDA exceeding $32 million, a 28% increase year-over-year, and an EBITDA margin improvement of 300 basis points to 13.2% [10][24] - Operating cash flow for the full year was $29 million, up 46% from the prior year, indicating strong cash generation capabilities [10][22] Business Line Data and Key Metrics Changes - Recurring revenues accounted for 46% of total revenues in 2025, amounting to $112 million, with a 13% increase globally, driven by Research and governance services [9][10] - AI-related revenues constituted nearly 35% of Q4 revenues, up from 30% for the full year, reflecting a significant increase in AI adoption within ISG's service offerings [7][8] Market Data and Key Metrics Changes - The Americas region generated $38 million in Q4, a 1% increase, while Europe saw a 28% revenue increase to $19 million, and Asia Pacific revenues decreased by $1.1 million to $3.9 million [19][14] - The Americas region's full-year growth was 11%, marking its best performance in four years, while Europe continued strong momentum with double-digit growth in various sectors [10][19] Company Strategy and Development Direction - ISG is focusing on AI as a core aspect of its service offerings, with plans to increase AI-related revenues from 30% to 50% [44] - The company has established an AI Acceleration Unit to enhance its capabilities and drive AI initiatives, indicating a commitment to leading in AI transformation services [11][44] - The introduction of the AI Maturity Index aims to help clients assess their readiness for AI, serving as a strategic tool to open new client discussions [11][36] Management's Comments on Operating Environment and Future Outlook - Management noted that clients remain cautious in a macroeconomic environment but continue to invest in AI-related transformations [17] - The outlook for Q1 2026 anticipates continued revenue growth, with guidance set between $60.5 million and $61.5 million, despite macroeconomic uncertainties [18][24] Other Important Information - The company has a solid balance sheet with a gross debt to EBITDA ratio of just under 1.9x, down from 2.4x the previous year, indicating improved financial health [23][24] - ISG's AI-powered sourcing solution, ISG Tango, has seen significant growth, with over $25 billion in total contract value running through the platform [12][91] Q&A Session Summary Question: Differentiation of client verticals and spending - Management observed a mix of offensive and defensive spending across industries, with consumer sectors being more defensive while energy and health sciences are more offensive [30][32] Question: Acquisition of AI Maturity Index - The AI Maturity Index is seen as a valuable tool for assessing workforce readiness for AI, opening doors for new client engagements [36] Question: AI Acceleration Unit's early wins - The goal is to increase AI-related revenue from 30% to 50%, leveraging a skilled workforce and ongoing training initiatives [44][56] Question: Visibility in the pipeline - The pipeline remains strong, but some projects have shifted timelines due to macroeconomic factors, with expectations for acceleration in the latter half of 2026 [46][47] Question: Recurring revenue and AI spend - AI-related work is becoming part of recurring revenue streams, particularly in governance and research, while some projects remain non-recurring [49] Question: Labor supply for AI capabilities - The company has focused on upskilling its workforce in AI, with low turnover rates aiding in talent retention [56] Question: Growth in Asia Pacific - Improvement in the public sector is necessary for Asia Pacific to return to growth, with some early signs of opportunity in the pipeline [95]

Financial Data and Key Metrics Changes - In Q4 2025, ISG reported revenues of $61.2 million, a 6% increase compared to the previous year, with a positive currency impact of $1.3 million [17] - Adjusted EBITDA for Q4 was $8.1 million, up 24% from $6.5 million in the prior year, resulting in an EBITDA margin of 13.2%, which is 189 basis points higher year-on-year [18] - For the full year, revenues reached $245 million, a 7% increase, with adjusted EBITDA exceeding $32 million, up 28% from the previous year [9][22] - Operating cash flow for the full year was $29 million, a 46% increase year-on-year [20] Business Line Data and Key Metrics Changes - Recurring revenues in Q4 were up 13% globally, driven by research and platform businesses, especially governance services [8] - For the full year, recurring revenues totaled $112 million, representing 46% of total revenues [8] - AI-related revenues accounted for nearly 35% of Q4 revenues, up from 30% for the full year, indicating a threefold increase from 2024 [6][9] Market Data and Key Metrics Changes - The Americas region generated $38 million in Q4, a 1% increase, while Europe saw revenues rise by 28% to $19 million [17] - Asia Pacific revenues were $3.9 million, down $1.1 million compared to the prior year, with a noted need for public sector spending to reignite growth [14][15] Company Strategy and Development Direction - ISG is focusing on AI-centered transformation services, with a dedicated AI Acceleration Unit established to enhance capabilities and client offerings [10][11] - The company aims to increase AI-related revenue from 30% to 50% and is actively pursuing M&A opportunities to bolster recurring revenues and AI initiatives [35][42] - The introduction of the AI Maturity Index is seen as a strategic tool to assess client readiness for AI adoption and open new client discussions [10][33] Management's Comments on Operating Environment and Future Outlook - Management noted that clients remain cautious in a macroeconomic environment but continue to invest in AI-related transformations [15] - The outlook for Q1 includes expected revenues in the range of $60.5 million to $61.5 million, with continued year-over-year growth anticipated [16] - The company is well-positioned to capitalize on the accelerating demand for AI-led transformation despite macroeconomic uncertainties [22] Other Important Information - The company ended the year with cash of $28.7 million, flat from the end of Q3 and up $5.6 million year-on-year [20] - The average borrowing rate for the quarter was 5.8%, down 125 basis points year-on-year, indicating improved financial health [20] Q&A Session Summary Question: Differentiation of client verticals and spending trends - Management indicated a mix of offensive and defensive spending across industries, with consumer sectors being more defensive while energy and health sciences are more offensive [28] Question: Insights on the AI Maturity Index and acquisition appetite - The AI Maturity Index is being used as a door opener for new client engagements, and the company is actively looking for M&A opportunities to enhance its AI journey [30][35] Question: Early wins for the AI Acceleration Unit - The goal is to increase AI-related revenue from 30% to 50%, leveraging a skilled workforce and ongoing training initiatives [42] Question: Visibility in the pipeline and sales cycles - The pipeline remains strong, but the pace of sales may be mixed due to macroeconomic factors, with expectations for acceleration in the latter half of the year [44] Question: Recurring revenue and AI spend - AI is becoming part of most projects, with some components being recurring, particularly in governance and research [47] Question: Labor supply and readiness for AI demand - The company has scaled its workforce in AI skills and is confident in meeting current demand while maintaining low turnover rates [55] Question: Service lines expected to lead in Q1 - AI and recurring revenue streams, particularly in Europe, are expected to drive growth in Q1 [57] Question: Growth drivers for ISG Tango - ISG Tango is performing well, with significant contract value running through the platform, particularly in the mid-market segment [88] Question: Catalysts for growth in Asia - Improvement in public sector spending is necessary for Asia to return to growth, with some early signs of better opportunities in the pipeline [93]

Financial Data and Key Metrics Changes - The company reported full-year net earnings per share of $0.27 and Adjusted Net EPS of $0.34, exceeding the top end of guidance by $0.02 [11][35] - Full-year GAAP net earnings were $208 million, compared to $54.8 million in 2024, while adjusted net earnings increased by approximately 17% from $221.6 million in 2024 to $258.8 million [35] - Operating expenses as a percentage of gross revenue decreased from approximately 38% in 2024 to roughly 36% in 2025 [13] Business Line Data and Key Metrics Changes - The increase in adjusted net earnings was primarily driven by $10.3 million from new utility rates implemented across various systems [36] - New utility rates contributed $41.6 million of benefit from approved rate implementations across several gas, water, and electric systems throughout the year [40] - The regulated services group growth was driven by new rate implementations, favorable weather, lower interest expense, and depreciation deferral benefits [44] Market Data and Key Metrics Changes - The company operates in high-quality jurisdictions with attractive regulatory mechanisms, including tracker mechanisms and multi-year rate plans [29] - Recent legislative and regulatory developments in states like Missouri, Arizona, New Hampshire, and Oklahoma are enhancing investment recovery [30] Company Strategy and Development Direction - The company aims to become a premium pure-play regulated utility, focusing on operational discipline and regulatory strategy execution [10][19] - A centralized capital projects team is being implemented to improve execution and performance while maintaining affordability across all jurisdictions [15][16] - The capital expenditure outlook for 2026 through 2028 is approximately $3.2 billion, with a focus on safety, reliability, and service improvements [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2026 earnings guidance and highlighted the importance of disciplined execution and constructive regulatory engagement [19][54] - The effective tax rate for 2027 is now expected to be in the mid-to-high 20% range, impacting the adjusted net EPS estimate for that year [20][54] - Management emphasized the need for consistent operational standards and stakeholder engagement to improve customer outcomes and regulatory support [108] Other Important Information - The company strengthened its balance sheet by using net proceeds from the sale of its renewable business to retire approximately $1.6 billion of debt [14][49] - Total debt stands at approximately $6.5 billion, with a solid investment-grade credit rating and no expected equity issuance through 2027 [50] Q&A Session Summary Question: Can you share details on the revised 2027 guidance and the drivers behind the effective tax rate change? - Management indicated that the effective tax rate moved from low to mid-twenties to mid to high twenties, resulting in a $0.03 per share EPS deduction [62][63] Question: What are the largest levers the business can pull in the near term? - Management highlighted the importance of regulatory engagement and a strong balance sheet, providing flexibility for organic growth and potential opportunities [65] Question: Can you provide an update on the CalPeco solar project that was canceled? - The project was deemed economically unviable, and the decision to discontinue it was based on the inability to earn a fair return [90] Question: What is the company's view on the California regulatory backdrop regarding wildfire risk? - Management acknowledged the ongoing discussions about wildfire risk and the potential for contributing to a wildfire fund, but no specific decisions have been made [135]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported net income of $14.8 million and diluted earnings per share of $1.03, with a GAAP net combined ratio of 64.2 and an annualized return on equity of 51% [4][17] - For the full year, net income more than doubled to $40.8 million, and diluted earnings per share increased by 95% to $2.88, with a return on equity of 43% [4][17] - The net expense ratio improved from 41% in 2021 to 30% in 2025, marking a significant milestone for the company [21] Business Line Data and Key Metrics Changes - Direct premiums written grew 14% in Q4 to $82.8 million and 15% for the full year to $277.8 million, driven by higher average premiums and strong retention [6][17] - The Select product now represents 57% of policies in force, up from 45% a year ago, contributing to improved risk selection and lower claims frequency [5] Market Data and Key Metrics Changes - The company plans to enter the California market in Q2 2026, which is expected to become a significant contributor to growth over time [9][10] - The California homeowners market is valued at $15 billion, nearly double that of New York, with a growing supply-demand imbalance for homeowners coverage [9] Company Strategy and Development Direction - The company aims for $500 million in direct premiums written by year-end 2029, focusing on growth in New York and measured expansion into new markets [9][14] - The introduction of the underlying combined ratio as a primary operating metric will help isolate controllable performance from catastrophe volatility [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic direction and ability to compete effectively in New York despite increasing competition [45] - The guidance for 2026 includes direct premiums written growth of 16%-20% and an underlying combined ratio of 74%-76%, reflecting a healthy and growing controllable business [12][14] Other Important Information - The company has no debt and a robust capital position, with shareholder equity increasing by 84% to $122.7 million [24] - The company is actively monitoring regulatory proposals in New York regarding homeowner insurer profitability [16] Q&A Session Summary Question: Differences in California Risks - Management highlighted that California is a large, dislocated market and will enter with a disciplined approach using the Select product tailored for California [30][32] Question: Expense Ratio Outlook - The company aims to maintain the expense ratio in the 29%-30% range, with potential for slight improvements [41] Question: Competition in New York - Management noted that while competition is increasing, the company has a strong position due to its Select product and deep producer relationships [45]

Financial Data and Key Metrics Changes - The company reported a net loss of $7.7 million for 2025, an improvement compared to the previous year [25] - Cash position at the end of the year was $23 million, extending the cash runway into the second half of 2027 [26] - Total cash inflow for the year amounted to $32 million, driven by public offerings and the exercise of investor warrants [21][22] Business Line Data and Key Metrics Changes - The EVX-01 program, a personalized cancer vaccine, showed a high objective response rate of 75% and a complete response rate of 25% in a two-year phase 2 study [11] - The EVX-04 program for acute myeloid leukemia (AML) demonstrated strong preclinical evidence, with 16 optimal ERV antigen fragments identified [14] - The EVX-B2 program for gonorrhea retained full global rights, with strong preclinical data indicating significant protection in mouse models [16] Market Data and Key Metrics Changes - The company has seen significant interest in its AI-Immunology platform from various parties, including collaborations with MSD and The Gates Foundation [4][7] - The autoimmune disease market is being explored, with over 14 million patients affected annually in the U.S. [8] Company Strategy and Development Direction - The company aims to optimize its focus on assets that will add the most value, particularly in oncology and infectious diseases [34] - There is a commitment to deriving value from both the platform and pipeline assets through partnerships [9] - The AI-Immunology platform is being investigated for applications in autoimmune diseases, with plans to identify key indications for development [8][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the AI-Immunology platform and its ability to generate meaningful clinical responses [33] - The company is positioned to advance through 2026, with ongoing discussions for potential partnerships [28] - Management highlighted the importance of building relationships and credibility with large pharmaceutical companies [62] Other Important Information - The company received recognition from the Galien Foundation for advances in AI in human health [6] - The automated vaccine design module launched in October 2025 enhances the design process, reducing costs and development time [19] Q&A Session Summary Question: Changes to strategy under new CEO - The fundamentals of the company remain strong, with a focus on optimizing value in oncology and infectious disease assets [34] Question: Regulatory submission for EVX-04 - The company is preparing for clinical trials and believes initial proof of concept will attract partner interest [36] Question: Partnering efforts for EVX-01 - The company is seeing interest in the cancer vaccine space, particularly due to strong clinical data and translational insights [46] Question: Application of AI-Immunology in autoimmune diseases - The company is analyzing prevalent autoimmune diseases to determine the best fit for its platform [76]

Financial Data and Key Metrics Changes - In Q4 2025, the company reported net income of $14.8 million and diluted earnings per share of $1.03, with a GAAP net combined ratio of 64.2 and an annualized return on equity of 51% [4][17] - For the full year, net income more than doubled to $40.8 million, and diluted earnings per share increased by 95% to $2.88, with a return on equity of 43% [4][17] - The net earned premium growth increased by 38% in Q4 and 46% for the full year, primarily due to a reduced quota share [7][19] Business Line Data and Key Metrics Changes - Direct premiums written grew 14% to $82.8 million in Q4 and 15% to $277.8 million for the full year, with New York personal lines policies in force growing over 7% [6] - The Select product now represents 57% of policies in force, up from 45% a year ago, improving risk selection and driving lower claims frequency [5] Market Data and Key Metrics Changes - The company plans to enter the California market in Q2 2026, which is significantly larger than New York, with a written premium market of $15 billion [9][10] - The California market is characterized by a supply-demand imbalance for homeowners coverage, which the company aims to address with its E&S approach [10][53] Company Strategy and Development Direction - The company has set a five-year goal of $500 million in direct premiums written by year-end 2029, focusing on growth in New York and measured expansion into new markets [9][14] - The company emphasizes maintaining underwriting discipline and not chasing volume at the expense of quality [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategic direction and the ability to navigate competitive pressures in New York [46] - The guidance for 2026 includes direct premiums written growth of 16%-20% and an underlying combined ratio of 74%-76%, reflecting a normalization of catastrophe losses [12][23] Other Important Information - The company has no debt and reported shareholder equity of $122.7 million, an increase of 84% during the year [24] - The expense ratio improved to 30%, down from 41% in 2021, marking a significant milestone for the company [21] Q&A Session Summary Question: Differences in California Risks - Management highlighted that California is a large, dislocated market and will use the same Select product with modifications for local conditions [30][31] Question: Quota Share for California Business - The company will start with a 30% quota share for California to manage risks effectively [33] Question: Competition in New York - Management noted that while competition is increasing, the company has a strong position due to its effective risk management and producer relationships [46]

Financial Data and Key Metrics Changes - The company reported a net loss of $7.7 million for 2025, an improvement compared to the previous year [25] - Cash position at the end of the year was $23 million, extending the cash runway into the second half of 2027 [26] - Total cash inflow for the year amounted to $32 million, driven by public offerings and the exercise of investor warrants [21][22] Business Line Data and Key Metrics Changes - The EVX-01 program, a personalized cancer vaccine, showed a high objective response rate of 75% and a complete response rate of 25% in a two-year phase II study [11] - The EVX-04 program for acute myeloid leukemia (AML) demonstrated strong preclinical evidence, with 16 optimal ERV antigen fragments identified [14] - The EVX-B2 program targeting Neisseria gonorrhoeae retained full global rights, with strong preclinical data indicating significant protection in mouse models [16] Market Data and Key Metrics Changes - The company has seen significant interest in its AI-Immunology platform from various parties, including collaborations with MSD and The Gates Foundation [4][5] - The autoimmune disease market is being explored, with over 14 million patients affected annually in the U.S. [8] Company Strategy and Development Direction - The company aims to optimize its focus on assets that will add the most value, particularly in oncology and infectious diseases [34] - There is a commitment to deriving value from both the platform and pipeline assets through partnerships [9] - The AI-Immunology platform is being investigated for applications in autoimmune diseases, with plans to identify key indications for development [8][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the AI-Immunology platform and its ability to generate meaningful clinical responses [32] - The company is positioned to advance through 2026, with ongoing discussions for potential partnerships [28] - Management highlighted the importance of building relationships and credibility with large pharmaceutical companies [62] Other Important Information - The company received recognition from the Galien Foundation for advances in AI in human health [6] - The automated vaccine design module launched in October 2025 significantly reduces costs and development time [19] Q&A Session Summary Question: Changes to strategy under new CEO - The CEO noted that while there are no fundamental changes to strategy, there is a sharpening of focus on high-value assets [34] Question: Regulatory submission for EVX-04 - The CEO indicated that the company is preparing to take EVX-04 into the clinic for initial proof of concept [36] Question: Partnering efforts for EVX-01 - The CEO mentioned that strong clinical data and translational insights are key to driving interest from potential partners [46] Question: Application of AI-Immunology in autoimmune diseases - The management confirmed ongoing analysis to identify the most prevalent autoimmune diseases for potential development [76]

Financial Data and Key Metrics Changes - For the fourth quarter, revenue reached $800 million, a 7% increase year-over-year, with adjusted EPS of $3.74, up $0.48 from last year [24][30] - Comparable sales rose 9%, with stores up 9% and direct sales up 8%, marking the strongest quarterly comp performance of the year [25][27] - Adjusted gross margin declined by 90 basis points, primarily due to heightened promotional activity at Schuh and ongoing tariff pressures [27][28] Business Line Data and Key Metrics Changes - Journeys led with a 12% growth in comparable sales, building on a 14% increase in Q4 last year, driven by strong demand for casual and athletic footwear [25][12] - Johnston & Murphy saw a 2% increase in comps, with sequential improvement noted in December and January [26] - Schuh's comps rose 3%, influenced by holiday promotional activity, but faced challenges due to a highly promotional environment [26][15] Market Data and Key Metrics Changes - The U.K. retail environment for Schuh remained competitive and promotional, leading to a lackluster holiday season for discretionary categories [15] - E-commerce penetration at Schuh exceeded 50% of sales, reflecting a shift towards value-driven online behavior [26] Company Strategy and Development Direction - The company is focused on a "Footwear First" strategy, emphasizing customer-centric initiatives and improving cost structures [51][72] - Key growth drivers include creating winning products, elevating retail brands, delivering exceptional consumer experiences, and building strong teams [52] - The company plans to double the number of 4.0 stores, enhancing the shopping experience and driving higher traffic and productivity [61][102] Management's Comments on Operating Environment and Future Outlook - The consumer environment remains selective, with demand accelerating during key shopping periods [8][9] - The company expects continued strength at Journeys, improvement at Johnston & Murphy, and a reset for Schuh to drive profitability in fiscal 2027 [34][49] - Management is optimistic about unlocking earnings opportunities across strategically positioned businesses while being mindful of evolving consumer needs [22][36] Other Important Information - The company ended the year with a positive net cash position and generated $164 million of free cash flow in Q4 [31][33] - Capital expenditures for the year are expected to be approximately $65 million-$70 million, primarily for store remodels and new openings [46] Q&A Session Questions and Answers Question: How is the Journeys business performing quarter to date? - Management reported that Journeys is tracking in the mid-single digits for February, with expectations for higher comps in the early part of the year due to anticipated tax refunds [76][78] Question: Can you discuss changes to the assortment for Journeys this year? - Management indicated that growth is expected from existing franchises rather than new brands, with a focus on deepening the assortment that resonates with consumers [82] Question: How much pressure did Schuh have on gross margin in 2026, and what recovery is anticipated in 2027? - Approximately 250 basis points of gross margin pressure was attributed to Schuh, with expectations for a significant recovery as promotions are reduced [85][87] Question: Can you provide insights on the canvas category performance and pipeline? - Management noted that while canvas remains relevant, they do not anticipate overall growth in the category for the year, focusing instead on casual and boots for growth [91] Question: What is the timing for store openings and closings? - The company plans to open 80 new 4.0 stores this year, with closures primarily occurring around lease expirations, predominantly in Q1 and Q2 [101][103]