Financial Data and Key Metrics Changes - Fiscal 2025 was marked by record ethanol sales volume of 290 million gallons, a slight increase from 289.7 million gallons in fiscal 2024, with fourth quarter volumes at 70.1 million gallons compared to 74.6 million gallons in Q4 2024 [11] - Average selling price for consolidated ethanol volumes was approximately $1.74 per gallon for the full fiscal year 2025 and $1.72 for the fourth quarter [11] - Gross profit for fiscal year 2025 was $93.7 million, up from approximately $91.5 million in fiscal year 2024, with Q4 gross profit at $28.9 million compared to $17.6 million in Q4 2024 [13][14] - Net income attributable to REX shareholders for the year was $83 million, compared to $58.2 million in fiscal year 2024, with Q4 net income at $43.7 million compared to $11.1 million in Q4 2024 [16] Business Line Data and Key Metrics Changes - Dried distillers grains sales volumes totaled 612,000 tons in fiscal 2025, a 3% decrease from 632,000 tons in fiscal 2024, with Q4 volumes at approximately 151,000 tons, a 9% decrease from Q4 2024 [12] - Modified distillers grains sales volumes increased to 81,900 tons in fiscal 2025 from approximately 70,000 tons in fiscal 2024, with Q4 volumes at approximately 19,700 tons, a 1% increase over Q4 2024 [12] - Corn oil sales volumes increased to approximately 97 million pounds in fiscal 2025 from 88.1 million pounds in fiscal 2024, with Q4 volumes at approximately 25.2 million pounds, a 7% increase over Q4 2024 [13] Market Data and Key Metrics Changes - Ethanol export demand remained strong throughout 2025, with U.S. exports reaching record levels, and this strength is expected to continue into 2026 [20] - Corn supplies are favorable, supporting manageable input costs and expected healthy crush margins [21] Company Strategy and Development Direction - The company is focused on expanding capacity at the One Earth Energy facility to 200 million gallons per year, with completion expected in fiscal 2026 [8] - The implementation of the 45Z tax credit is anticipated to positively impact results going forward, with the company positioned to capitalize on this program [5][9] - The company is committed to sustainability through its carbon capture and sequestration initiative, which is expected to enhance its competitive position and financial benefits [5][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to build on momentum from fiscal 2025, citing expanded capacity, tax credit eligibility, and a strong financial foundation as key growth drivers [6][19] - The company has delivered 22 consecutive quarters of profitability, indicating operational excellence and market expertise [19] - Management remains optimistic about the favorable policy environment and the potential for increased ethanol demand through developments related to year-round E15 blending [20][21] Other Important Information - The company ended fiscal 2025 with total cash equivalents and short-term investments of $375.8 million, compared to $359.1 million at the end of fiscal 2024, and concluded the year without any bank debt [17][18] Q&A Session Summary Question: Regarding the 45Z tax credits, is the $28 million for Q4 or a catch-up for previous periods? - The $28 million represents the full fiscal year of 2025, and the company remains optimistic about claiming these credits in future years [24][25] Question: How will the carbon capture project impact the CI score? - The carbon capture project is expected to significantly improve the CI score, but specific details have not been disclosed [27][29] Question: What is the status of the Class VI injection permit? - The permitting process is in the final stage of technical review, with regular meetings ongoing with the EPA [32] Question: How are tariffs impacting operations for ethanol and corn oil? - There has been no negative impact from tariffs on ethanol exports, and high oil prices are expected to benefit the ethanol business [34][37] Question: What is the outlook for nationwide E15? - While nationwide E15 would be beneficial, management does not expect it to happen due to the influence of oil companies, but anticipates more independent retailers adopting E15 [51]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $14.2 million, an 11.2% increase compared to the same period last year [16] - Gross margins for Q4 2025 were 46.9%, slightly down from 47.2% in Q4 2024, impacted by tariffs and product mix [17] - Net income per diluted share was $0.99 for Q4 2025, up from $0.73 in the prior year [18] - Adjusted EBITDA for Q4 2025 was $4.5 million, a 46.8% increase over $3.1 million in Q4 2024 [18] - Total revenues for the fiscal year 2025 were $54.4 million, also an 11.2% increase over the previous year [20] - Gross margins for 2025 were 44.4%, down from 46.2% in 2024, affected by higher tariff-related costs [21] - Net income for 2025 was $8.4 million or $2.62 per diluted share, compared to $7.6 million or $26.5 per share in 2024 [22] - Adjusted EBITDA for 2025 was $12.6 million, up from $11.1 million in 2024 [23] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by defense program products and avionics shipments [20] - Backlog at the end of Q4 2025 was $76.4 million, a 62% increase from $47.2 million at the end of Q4 2024, reflecting a focus on securing long-duration contracts [19] Market Data and Key Metrics Changes - The company reported strong demand in the defense sector, particularly due to military actions and increased procurement budgets [12][14] - The FY 2026 defense budget was approved, with expectations for military procurement to increase significantly [12] Company Strategy and Development Direction - The company is focused on expanding its defense program business, which constitutes the majority of its revenue [29] - There is an emphasis on both organic growth and strategic partnerships or acquisitions to enhance capabilities [33] - A rights offering was announced to support acquisition strategies and improve financial flexibility [34][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to capitalize on increased demand in the defense sector and anticipated growth in radar and electronic warfare markets [30] - The company expects a more favorable tariff environment in 2026, which should positively impact gross margins [49] Other Important Information - The company added $10.7 million of cash through operations in fiscal year 2025 and has no outstanding debt [26][27] - A new loan agreement was signed to borrow up to $20 million, enhancing financial flexibility [27] - The company plans to hold an investor day on May 12, 2026, at the New York Stock Exchange [39] Q&A Session Summary Question: Motivation for the rights offering - The rights offering is driven by industry changes and increased demand, allowing the company to enhance capacity and take advantage of market opportunities [40][41][43] Question: Impact of tariffs on gross margin - Tariffs had a negative impact on gross margins, but a more favorable product mix and reduced tariffs are expected to improve margins in the future [45][49] Question: Growth sources for backlog - The backlog growth is primarily from defense and aerospace sectors, with expectations for increased opportunities in space [52] Question: Drone exposure in business - The company has exposure to drone warfare through sales to manufacturers of larger drones and is seeing growth in radar systems focused on counter-drone warfare [58][61]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $14.2 million, an 11.2% increase compared to the same period last year [8] - Gross margins for Q4 2025 were 46.9%, slightly down from 47.2% in Q4 2024, impacted by tariffs and product mix [9] - Net income per diluted share was $0.99 for Q4 2025, up from $0.73 in the prior year [9] - For the fiscal year 2025, total revenues were $54.4 million, also an 11.2% increase over the previous year [10] - Gross margins for 2025 were 44.4%, down from 46.2% in 2024, affected by higher tariff-related costs [11] - Net income for 2025 was $8.4 million or $2.62 per diluted share, compared to $7.6 million or $2.65 per share in 2024 [11] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by defense program products and avionics shipments [10] - Backlog at the end of Q4 2025 was $76.4 million, a 62% increase from $47.2 million at the end of Q4 2024, reflecting a focus on securing long-duration, program-centric business [10] Market Data and Key Metrics Changes - The company reported strong performance in defense-related orders and improvements in the commercial aircraft sector [4] - The defense budget for FY 2026 was approved, with expectations for increased military procurement, which could benefit M-tron significantly [6][7] Company Strategy and Development Direction - M-tron is focusing on expanding its defense program business, particularly in radar and electronic warfare, which are expected to see strong growth [15] - The company is also pursuing inorganic growth through partnerships and acquisitions, having formed three strategic partnerships in 2025 [17] - A rights offering is planned to provide flexibility for acquisitions and to support strategic investments [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on increased demand from the Department of War and recent conflicts [8] - The company anticipates a more favorable tariff environment in 2026, which should positively impact gross margins [26] - Management highlighted the importance of cash on the balance sheet to take advantage of market opportunities and strengthen relationships with prime contractors [22] Other Important Information - M-tron added $10.7 million of cash through operations in fiscal year 2025 and has no outstanding debt [14] - The company plans to hold an investor day in New York on May 12, 2026 [19] Q&A Session Summary Question: Motivation for the rights offering - The rights offering is driven by industry changes and increased demand, allowing M-tron to enhance capacity and take advantage of market opportunities [22][23] Question: Impact of tariffs on gross margin - Tariffs and product mix have negatively impacted gross margins, but a more favorable product mix and reduced tariffs are expected in the future [24][26] Question: Growth sources for backlog - The backlog growth is primarily from defense and aerospace, with strong contributions from avionics [30] Question: Drone exposure in business - M-tron has exposure to drone warfare through sales to manufacturers of larger drones and is seeing growth in radar systems focused on counter-drone warfare [36] Question: Quantification of radar systems revenue for 2026 - Radar systems revenue is expected to total around $4 million in 2026 [44]

Financial Data and Key Metrics Changes - Organic revenue decreased by 6.6% year-on-year, with pricing up 0.6% and volume down 7.2% [14] - Adjusted EBITDA for the quarter was $119 million, up 4% year-on-year, with an EBITDA margin of 15.4%, an increase of 90 basis points [5][15] - Adjusted gross profit margin was 31.3%, up 170 basis points year-on-year [14] Business Segment Performance - Engineering Adhesives (EA) organic revenue increased approximately 3% year-on-year, with EBITDA margin rising to 19.9% [6] - Health and Hygiene (HHC) organic revenue declined 10% year-on-year, with EBITDA margins at 13.9%, up 120 basis points [7] - Building and Construction (BAS) organic sales decreased 5.1% year-on-year, with EBITDA margins remaining flat [8] Market Performance - Americas organic revenue was down 4% year-on-year, with EA achieving 8% organic revenue growth [8] - EIMEA organic revenue decreased 11% year-on-year, primarily due to tighter customer inventory management [8] - Asia Pacific organic revenue was up 2% excluding solar, lower than trend due to the timing of Chinese New Year [8] Company Strategy and Industry Competition - The company is leveraging global sourcing strength and maintaining a focused approach to cost and portfolio management [4] - A minimum 10% price increase across all product lines globally was announced to offset supply shock inflation [11] - The current supply chain disruption presents a unique opportunity for the company to gain market share [11] Management's Comments on Operating Environment and Future Outlook - Management highlighted significant constraints on raw material availability due to the conflict in the Middle East, leading to inflationary pressures [9] - The company expects organic revenue growth to be up low single digits for fiscal 2026, reflecting updated pricing actions and anticipated market share gains [16] - Management remains focused on controlling operational aspects and ensuring supply chain resilience [18] Other Important Information - The company has received over 40 force majeure letters from suppliers, indicating major disruptions in the supply chain [9] - Cash flow from operations improved by $49 million year-on-year, with expectations for operating cash flow to be weighted to the second half of the year [15] Q&A Session Summary Question: Impact of the 10% price hike on guidance - Management indicated that additional price and raw material benefits are factored in, but negative volume impacts are also expected [24][30] Question: Inventory management in HHC - Management noted that inventory control is real, with consumers shifting away from premium products, impacting adhesive usage [33] Question: Lunar New Year impact on volume - The company experienced a $15 million-$20 million revenue impact from Chinese New Year, with expectations for a bounce back in Q2 [40] Question: Raw material supply concerns - Management anticipates potential impacts on customers' ability to procure substrates, which may affect adhesive demand [95] Question: Medical grade adhesive performance - The medical business in Europe saw nearly 20% organic growth, indicating strong performance despite overall market challenges [102]

Financial Data and Key Metrics Changes - Total revenues for Q4 2025 were $14.2 million, an 11.2% increase compared to the same period last year [8] - Gross margins for Q4 2025 were 46.9%, slightly down from 47.2% in Q4 2024, impacted by tariffs and product mix [9] - Net income per diluted share was $0.99 for Q4 2025, up from $0.73 in the prior year [9] - For the fiscal year 2025, total revenues were $54.4 million, also an 11.2% increase year-over-year [10] - Gross margins for 2025 were 44.4%, down from 46.2% in 2024, affected by higher tariff-related costs [11] - Net income for 2025 was $8.4 million or $2.62 per diluted share, compared to $7.6 million or $2.65 per share in 2024 [11] Business Line Data and Key Metrics Changes - Revenue growth was primarily driven by defense program products and avionics shipments [10] - Backlog at the end of Q4 2025 was $76.4 million, a 62% increase from $47.2 million at the end of Q4 2024, reflecting a focus on securing long-duration contracts [10] Market Data and Key Metrics Changes - The defense sector has seen significant activity, with a proposed increase in military procurement from $968 billion to $1.5 trillion [6] - M-tron is a key vendor for major defense contractors like Lockheed Martin and Raytheon, which are increasing production for missile systems [6][7] Company Strategy and Development Direction - M-tron is focusing on expanding its defense program business, particularly in radar and electronic warfare, which are expected to grow significantly [15] - The company is also emphasizing inorganic growth through partnerships and acquisitions, having formed three strategic partnerships in 2025 [17] - A rights offering is planned to provide flexibility for acquisitions and to support strategic investments [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on increased demand in the defense sector due to geopolitical tensions [8] - The company anticipates a more favorable tariff environment in 2026, which could positively impact gross margins [26] - Management highlighted the importance of cash on the balance sheet to take advantage of market opportunities and strengthen relationships with prime contractors [23] Other Important Information - M-tron added $10.7 million of cash through operations in fiscal year 2025 and has no outstanding debt [14] - The company plans to hold an investor day in New York on May 12, 2026 [19] Q&A Session Summary Question: What is the motivation for the rights offering? - The rights offering is driven by industry demand and the need to increase capacity to meet upcoming contracts, as well as to strengthen the balance sheet for potential acquisitions [21][22] Question: How should gross margin be viewed for next year? - Management indicated that while tariffs impacted gross margins in 2025, a more favorable product mix and reduced tariff impacts are expected in 2026 [24][26] Question: What is the source of backlog growth? - The backlog growth is primarily from defense and aerospace sectors, with strong contributions from avionics [29] Question: How significant is drone exposure in the business? - M-tron has been involved in drone components since 2014, and while it is a smaller part of the business, it is expected to grow significantly, especially in radar systems focused on counter-drone warfare [35][36]

Financial Data and Key Metrics Changes - Organic revenue decreased by 6.6% year-on-year, with pricing up 0.6% and volume down 7.2% [11] - Adjusted EBITDA for the quarter was $119 million, up 4% year-on-year, with an EBITDA margin of 15.4%, an increase of 90 basis points [4][12] - Adjusted earnings per share (EPS) increased by 6% year-on-year to $0.57, driven by higher operating income and lower shares outstanding [12] Business Segment Performance - Electronics and Aerospace (EA) organic revenue increased approximately 3% year-on-year, with EBITDA up 9% and EBITDA margin at 19.9% [4] - Health and Hygiene (HHC) organic revenue declined 10% year-on-year, with EBITDA margins at 13.9%, up 120 basis points [5] - Building and Construction (BAS) organic sales decreased by 5.1% year-on-year, with EBITDA flat year-on-year [6] Market Performance - Americas organic revenue was down 4% year-on-year, with EA achieving organic revenue growth of 8% [6] - EIMEA organic revenue decreased by 11% year-on-year, primarily due to tighter customer inventory management [6] - Asia Pacific organic revenue was up 2% excluding solar, lower than trend due to the timing of Chinese New Year [6] Company Strategy and Industry Competition - The company is taking decisive actions to navigate supply chain disruptions caused by the conflict in the Middle East, including a minimum 10% price increase across all product lines [9] - The adhesive industry is experiencing supply uncertainty, creating opportunities for the company to gain market share [9] - Project Quantum Leap is progressing well, aimed at strengthening long-term competitiveness and profitability [15] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of a resilient supply chain and manufacturing network in light of current disruptions [15] - The company expects significant inflationary pressure and raw material shortages to persist throughout the year [7] - Updated guidance for fiscal 2026 includes net revenue growth in the mid-single digits and organic revenue growth in the low single digits [13] Other Important Information - The company received over 40 force majeure letters from suppliers, indicating significant raw material availability constraints [7] - Cash flow from operations improved by $49 million year-on-year, with net debt to adjusted EBITDA at 3.1 times [12] Q&A Session Summary Question: Impact of the 10% price hike on guidance - Management confirmed that additional pricing and raw material benefits are factored in, alongside negative volume impacts [21][27] Question: Inventory management trends in HHC - Management noted pressure on consumers leading to tighter inventory management and a shift towards lower-cost products [30][31] Question: Lunar New Year impact on volume - The company experienced a $15 million-$20 million revenue impact from Chinese New Year, with expectations for a bounce back in Q2 [36][38] Question: Raw material supply concerns - Management indicated that over 40 force majeure notices have been received, primarily from the Asia Pacific region, affecting various material categories [41] Question: Opportunities for share gains - Management emphasized the potential for durable share gains through long-term agreements with customers during supply shortages [61][62]

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $63.487 million, a decrease of 1.4% compared to Q4 2024 [2] - The net loss for Q4 2025 was $3 million, improved from a net loss of $7.198 million in Q4 2024 [2][6] - For the fiscal year 2025, net sales totaled $257.429 million, down 2.9% from fiscal year 2024 [2] - The net loss from continuing operations for 2025 was $7.275 million, or $0.50 per diluted share, compared to a net loss of $12.210 million, or $0.83 per diluted share in 2024 [3] Business Line Data and Key Metrics Changes - Soft surface sales for the quarter and year were down less than 1%, while the industry was down approximately 4% in Q4 and 5% for the year [3] - The company gained market share in the carpet market despite the overall industry decline [3][10] Market Data and Key Metrics Changes - Existing home sales in 2025 were at a 30-year low, with only three houses sold for every 100 households, the lowest ratio since 1982 [9] - The housing industry has been in recession for four years, with production down about 30% from four years ago [9] Company Strategy and Development Direction - The company has implemented a profit improvement plan for 2026, expected to improve profitability by over $13 million [10] - Cost reductions of over $12 million were achieved in 2025, with a total of $60 million in cost reductions over the last three years [10] - The company is focusing on enhancing its product offerings and market position, particularly in the high-end market [12] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about the potential impact of rising interest rates and ongoing geopolitical issues, particularly related to Iran [21][23] - There is optimism about pent-up demand in the housing market, contingent on further reductions in mortgage rates [9] - The company is navigating a challenging environment but continues to gain market share [10] Other Important Information - The company reduced its workforce by 30% due to the decline in business [10] - The total payment of IEEPA tariffs was approximately $3.3 million, with ongoing efforts to seek refunds [12][41] Q&A Session Summary Question: Impact of potential interest rate rises - Management acknowledged that rising interest rates could hinder sales volumes, which have remained steady despite previous higher rates [21] Question: Material sourcing concerns due to geopolitical issues - Management indicated that while material availability is not a major concern, rising raw material costs could be problematic [23] Question: Stock performance and potential dividends - Management agreed to consider suggestions regarding stock dividends and insider purchases to boost investor confidence [27] Question: Clarification on cost savings for 2026 - Management confirmed that the $14.2 million in cost savings for 2026 is incremental compared to 2025 [30] Question: Tariff impact breakdown - Management noted that the bulk of the $1.4 million net tariff impact occurred in the third and fourth quarters [39] Question: CapEx for 2026 - Management projected a CapEx of $2.5 million for 2026 [44]

Financial Data and Key Metrics Changes - The company reported revenue of $116.2 million for fiscal year 2025, representing a 40.6% growth compared to $82.7 million in 2024 [4][13] - Gross profit increased by 32.6% to $34.2 million, with a gross profit margin of 29.5% in 2025, down from 31.2% in 2024 [14] - The net loss narrowed to $747,000 in 2025 from a net loss of $4.1 million in 2024, with positive EBITDA of $184,000 compared to a negative $3.6 million in 2024 [5][6][18] Business Line Data and Key Metrics Changes - In the Stran Promo segment, sales increased to $82.1 million in 2025 from $72.7 million in 2024, with gross profit rising to $27 million and a gross profit margin of 32.9% [13][15] - The Stran Loyalty segment saw sales increase to $34.1 million in 2025 from $9.9 million in 2024, with gross profit rising to $7.2 million and a gross profit margin of 21.1% [13][15] Market Data and Key Metrics Changes - The promotional products market was valued at $27.7 billion in 2025, indicating a large and fragmented industry with significant opportunities for market share growth [10] Company Strategy and Development Direction - The company focuses on deepening relationships with enterprise clients, expanding programmatic revenue, investing in technology, and pursuing strategic acquisitions [10][12] - A new client-branded gifting platform was launched to enhance e-commerce capabilities and create recurring revenue streams [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and momentum, anticipating meaningful improvement in profitability for the first quarter of 2026 [11][20] - The company believes that tariff-related volatility has stabilized, allowing for better collaboration with vendors and customers [6] Other Important Information - The company had approximately $11.6 million in cash and cash equivalents as of December 31, 2025 [19] - The warrants have an exercise price of approximately $4.81 per share and are set to expire in the fourth quarter of 2026, which is viewed as a near-term catalyst for the stock [11] Q&A Session Summary - No questions were raised during the Q&A session, indicating that all concerns were addressed during the presentation [21][22]

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $63.5 million, a decrease of 1.4% compared to Q4 2024. The net loss for Q4 2025 was $3 million, improved from a net loss of $7.2 million in Q4 2024 [2][6] - For the fiscal year 2025, net sales totaled $257.4 million, down 2.9% from fiscal year 2024. The net loss for the year was $7.6 million, compared to a net loss of $13 million in 2024 [2][3] Business Line Data and Key Metrics Changes - Soft surface sales for both the quarter and the year were down less than 1%, while the industry experienced a decline of approximately 4% in Q4 and 5% for the year. The company gained market share in the carpet market during this period [3][11] - Gross margins improved to 27% for both the quarter and the full year, up from 21.7% in the prior year quarter and 24.7% in the prior fiscal year, due to cost reductions and profit improvement initiatives [5][6] Market Data and Key Metrics Changes - The housing industry continued to struggle, with existing home sales at a 30-year low, despite a population increase of 70 million over the same period. The ratio of homes sold to households was the lowest since 1982 [9][10] - The company noted that mortgage rates declined from the high 6% range to the low 6% range in 2025, but further reductions are necessary to unleash pent-up demand [10][11] Company Strategy and Development Direction - The company has implemented a profit improvement plan for 2026, expected to enhance profitability by over $13 million. Cost reductions have totaled $60 million over the last three years [11][12] - The company is focusing on expanding its DuraSilk solution-dyed PET polyester offering and has exited China as a source of product due to high tariffs [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the ongoing Iran situation potentially impacting raw material costs, but noted that the company primarily produces domestically [24][25] - The company remains optimistic about future improvements in 2026, even if market conditions do not improve, and is actively monitoring market conditions for necessary adjustments [15][17] Other Important Information - The company reduced selling and administrative expenses by 3.1% in fiscal year 2025, with significant reductions in selling expenses offset by higher legal costs [5][6] - The company has been proactive in pursuing asset sales to improve liquidity and has engaged external help to seek refunds for tariffs paid [40][42] Q&A Session Summary Question: Impact of potential interest rate rises - Management acknowledged that rising interest rates could hurt volumes, as existing home sales have remained steady despite higher rates [23][24] Question: Material sourcing concerns due to the Iran situation - Management indicated that the primary concern is the pricing of materials rather than availability, as most products are produced domestically [24][25] Question: Stock performance and potential dividends - Management agreed to consider suggestions regarding stock dividends and insider buying to improve market perception [27][29] Question: Clarification on cost savings for 2026 - Management confirmed that the $14.2 million in cost savings for 2026 is incremental compared to 2025 [32][36] Question: Tariff impact and refund status - Management is actively pursuing refunds for tariffs and has positioned itself to expedite the process once refunds are issued [42][43]

Financial Data and Key Metrics Changes - Revenues for Q4 2025 were $96.5 million, with an operating income of $8.4 million on a fully reported basis, or $28.6 million when excluding the impact of the impairment on Bodil Knutsen [4] - Net income on a fully reported basis was a loss of $6.2 million, whereas it was net income of $14 million when excluding the impairment [4] - Adjusted EBITDA was $59.3 million, and as of December 31, 2025, the company had $137 million in available liquidity, consisting of $89 million in cash and cash equivalents, plus $48 million in undrawn capacity on credit facilities [4] Business Line Data and Key Metrics Changes - The company operated with a 99.5% utilization rate, accounting for the scheduled dry docking of Synnøve Knutsen, resulting in an overall utilization of 96.4% [5] - A cash distribution of $0.026 per common unit was declared following Q4, paid in February [5] Market Data and Key Metrics Changes - The markets in both Brazil and the North Sea are tightening, driven by FPSO startups, ramp-ups, expansions, and technology-driven production increases [8] - The backlog as of December 31, 2025, was sustained at $929 million in fixed contracts averaging 2.6 years, with potential for more if all options are exercised [8] Company Strategy and Development Direction - The company is focused on capital allocation decisions, including distributions, buybacks, and investments in the fleet, with no direct formula for prioritizing these options [26][36] - The company is encouraged by its refinancing experiences and the strong signal regarding lenders' continued appetite for financing [10] Management's Comments on Operating Environment and Future Outlook - Management noted a stronger financial position compared to previous years, with a focus on maintaining a solid balance sheet and generating significant cash flow [27] - The company anticipates that shuttle tanker demand will absorb the current order book, with a medium-term shortage of shuttle tankers expected against forthcoming production [13] Other Important Information - The company entered into a $71.1 million senior secured term loan facility to refinance Synnøve Knutsen during Q4 [5] - The discussions regarding the unsolicited offer from KNOT were terminated, with no transaction recommended [3][7] Q&A Session Summary Question: Has there been a valuation of KNOP in connection with the TSSI bond issue? - Management indicated that anyone interested in the bond's circumstances should refer to the offering materials, as they were not directly involved in valuation exercises [17] Question: What is the rationale behind reducing the useful life of vessels from 23 to 20 years? - Management explained that the reduction reflects market preferences for vessels under 20 years, as clients typically seek newer vessels [19] Question: What will it take for the dividend to come back? - Management stated that capital allocation is continually assessed by directors, with no direct formula for when distributions will be increased [26] Question: Are there any priorities for drop-downs versus dividends or accelerated debt repayment? - Management clarified that there is no working priority among different capital allocation options [36]