Woodward (NasdaqGS:WWD) Q1 2026 Earnings call February 02, 2026 05:00 PM ET Speaker8Ladies and gentlemen, thank you for standing by. Welcome to the Woodward Incorporated first quarter fiscal year 2026 earnings call. At this time, I would like to inform you that this call is being recorded for rebroadcast and that all participants are in a listen-only mode. Following the presentation, you are invited to participate in a question-and-answer session. Joining us today from the company are Chip Blankenship, Chai ...

Simon Property Group (NYSE:SPG) Q4 2025 Earnings call February 02, 2026 05:00 PM ET Speaker15Greetings! Welcome to Simon Property Group's fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and the number zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the con ...

Financial Data and Key Metrics Changes - Revenue for the second quarter reached a record $1.13 billion, representing a 36% increase year-over-year and a 16% increase from the prior quarter [4][9] - Non-GAAP EPS was $3.36, exceeding guidance despite a $3 million foreign exchange revaluation loss [9][11] - Gross margin improved to 12.4%, and operating margin reached 10.9%, reflecting strong top-line growth [11][12] Business Line Data and Key Metrics Changes - Optical Communications revenue grew 29% year-over-year and 11% sequentially, totaling $833 million [9][10] - Telecom revenue surged 59% year-over-year and 17% from Q1, reaching $554 million, with DCI revenue increasing 42% year-over-year [4][10] - Non-Optical Communications revenue was $300 million, up 61% year-over-year and 30% sequentially, driven by high-performance computing products [10][11] Market Data and Key Metrics Changes - Datacom revenue was $278 million, showing a 2% sequential increase, while the year-over-year decline narrowed to 7% [10] - Automotive revenue grew 12% year-over-year but slightly declined sequentially as anticipated [5][11] - Industrial Laser revenue increased 10% year-over-year and 4% sequentially, contributing $41 million [11] Company Strategy and Development Direction - The company is focused on strategic capacity expansion, with the construction of Building 10, a 2 million sq ft facility, on track for completion by the end of 2026 [6][8] - The company is pursuing new opportunities across all business areas, particularly in telecom and high-performance computing [5][6] - The company aims to maintain execution excellence while scaling operations to meet increasing demand [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth trends across all major business areas, with expectations for continued strong performance in Q3 [8][13] - The company anticipates revenue growth in telecom, datacom, and HPC, while expecting a modest decline in automotive revenue [13] - Management highlighted the importance of executing well to capture growth opportunities and maintain competitive advantages [17][52] Other Important Information - The company ended the quarter with cash and short-term investments of $961 million, with capital expenditures of $52 million reflecting ongoing construction and capacity enhancements [12] - The company repurchased over 12,000 shares at an average price of $387 per share during the quarter [12] Q&A Session Summary Question: HPC customer ramp and production lines - Management indicated they are a little more than halfway to fully ramping the HPC program, expecting revenue to exceed $150 million when fully ramped [16][17] Question: Co-packaged optics and optical circuit switches - Management confirmed they are working on co-packaged optics with three different customers and are excited about the potential of optical circuit switches [19][22] Question: Datacom transceivers supply constraints - Management acknowledged supply constraints in Datacom but noted progress with a second source for lasers, which should alleviate some issues [27] Question: Telecom revenue growth drivers - Management stated that the growth in telecom was primarily driven by DCI, with optimism about both satellite communications and core telecom systems [30][31] Question: New customer opportunities in telecom - Management is pursuing both existing and new customers, emphasizing their role as a pure contract manufacturer without competing products [43][44] Question: Capacity additions and timelines - Management confirmed that the Pinehurst campus is being repurposed to add 120,000 sq ft of manufacturing space, with strong demand from legacy customers [91][92]

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $48.2 million, a 12.2% increase compared to $42.9 million in Q2 2025, marking a record for the quarter [8][12][22] - Operating income increased by 32% year-over-year to $14.8 million, while net income rose by 29% to $13.5 million, representing 28% of revenue for the quarter [10][22][19] - Adjusted EBITDA for Q2 increased by 26% to $15.3 million, resulting in an EBITDA margin of 32% [10][23] - Cash and marketable securities totaled $115 million as of December 31, 2025, reflecting a 16.3% increase from $99.2 million in June 2025 [11][25] Business Line Data and Key Metrics Changes - Equipment revenue reached $24.3 million, up 12% year-over-year, driven by strong performance in door locking and intrusion segments [8][10][14] - Recurring revenue grew by 12.5% to $23.8 million, maintaining a gross margin of 90.2% [9][12][15] - The prospective annual run rate for recurring revenue increased to $99 million, up from $95 million in the previous quarter [10][13] Market Data and Key Metrics Changes - The company reported strong demand across its product portfolio, particularly in school security solutions and door locking products [31][32] - The transition from legacy copper phone lines to newer technologies is expected to drive significant growth in recurring service revenue [68] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through its recurring revenue model, which is expected to provide steady growth and profitability [6][7][29] - The appointment of a new Chief Revenue Officer aims to accelerate revenue growth and strengthen customer relationships [7][30] - The company is investing in innovation and infrastructure while maintaining a debt-free balance sheet, allowing for strategic opportunities and capital returns [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum through fiscal 2026, with strong demand and operational discipline in place [7][31] - The company is optimistic about the growth of its recurring revenue base and the successful integration of new products like the MVP cloud-based access control platform [32][33] Other Important Information - The board approved a 7% increase in the quarterly dividend to $0.15 per share, reflecting confidence in the business [11][29] - The company continues to manage inventory tightly and invest in product development and automation [30] Q&A Session Summary Question: What is the current inventory situation in the dealer channel? - The channel has normalized, with more stable buying patterns observed, which has positively impacted gross margins [36][37] Question: What is the outlook for the MVP access platform? - The MVP platform is expected to contribute meaningfully to recurring service revenues in the second half of calendar 2026 [39][40] Question: How is the hardware growth characterized, particularly in larger projects? - There are ongoing projects, particularly in schools, with no difficult comparisons expected for the remainder of the fiscal year [49][50] Question: What is the status of the ADI partnership? - The ADI relationship continues to be beneficial, with ongoing introductions to large dealers, although there is room for improvement in locking contributions [54][55] Question: Is there a need for additional pricing actions in the second half? - Current pricing adjustments are expected to be fully realized, with no additional increases anticipated at this time [48][60] Question: What is the outlook for cash management and potential capital allocation? - The company is considering various options for capital allocation, including acquisitions and increasing dividends, while ensuring any acquisitions align with strategic goals [70][72]

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $48.2 million, a record for the quarter, representing a 12.2% increase year-over-year [8][12] - Equipment revenue increased by 12% to $24.3 million, driven by strong demand and pricing strategies [10][14] - Recurring revenue grew by 12.5% to $23.8 million, maintaining a gross margin of 90.2% [9][13] - Operating income rose by 32% to $14.8 million, while net income increased by 29% to $13.5 million, representing 28% of revenue [10][22] - Adjusted EBITDA increased by 26% to $15.3 million, with an EBITDA margin of 32% [23] Business Line Data and Key Metrics Changes - Equipment revenue growth was supported by the locking segment and intrusion and alarm products, both showing double-digit increases [6][28] - Gross margin for equipment revenue improved to 28%, up from 24% a year ago, reflecting pricing discipline and operational efficiency [9][10] - Recurring service revenue now has a prospective annual run rate of approximately $99 million, up from $95 million last quarter [10][13] Market Data and Key Metrics Changes - The company reported strong demand across its product portfolio, particularly in school security solutions and door locking products [31][32] - The transition away from legacy copper phone lines is expected to drive additional market share for StarLink radios [33] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through its recurring revenue model, which is expected to provide steady growth and profitability [6][27] - The appointment of a new Chief Revenue Officer aims to accelerate revenue growth and strengthen customer relationships [29][30] - The company is investing in innovation and infrastructure while maintaining a debt-free balance sheet, allowing for strategic opportunities and capital returns [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum through fiscal 2026, with strong demand and operational discipline in place [7][31] - The company is optimistic about the growth of its recurring service revenue and the impact of new product offerings like the MVP cloud-based access control platform [32][33] - Management acknowledged the importance of school security and the integration of various technologies to drive future growth [31][32] Other Important Information - The company increased its quarterly dividend to $0.15 per share, reflecting confidence in its cash generation capabilities [11][29] - Cash and marketable securities totaled $115 million, providing substantial flexibility for investments and shareholder returns [11][25] Q&A Session Summary Question: What is the current inventory situation in the dealer channel? - The channel has normalized, with more stable buying patterns observed, contributing to improved gross margins [36][37] Question: What is the outlook for the MVP Access platform? - The MVP Access platform is expected to contribute meaningfully to recurring service revenues in the second half of calendar 2026 [39][40] Question: How is the hardware growth characterized, particularly in larger projects? - The company is seeing ongoing projects, particularly in schools, with no difficult comparisons expected for the remainder of the fiscal year [49][50] Question: What is the status of the ADI partnership? - The ADI relationship continues to be beneficial, with ongoing introductions to large dealers, although there is room for improvement in locking contributions [54][55] Question: Is there a need for additional pricing actions in the second half? - Current pricing adjustments are expected to be fully realized, with no immediate need for further increases [48][60] Question: What is the outlook for cash management and potential acquisitions? - The company is considering various options for capital allocation, including acquisitions and increasing dividends, while ensuring any acquisitions are accretive [70][72]

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $48.2 million, a record for the quarter, representing a 12.2% increase year-over-year [9][13] - Equipment revenue increased by 12% to $24.3 million, driven by pricing strategies and strong demand [10][15] - Recurring revenue grew by 12.5% to $23.8 million, maintaining a gross margin of 90.2% [10][14] - Operating income rose by 32% to $14.8 million, while net income increased by 29% to $13.5 million, representing 28% of revenue [11][24] - Adjusted EBITDA increased by 26% to $15.3 million, resulting in an EBITDA margin of 32% [25] - Cash and marketable securities totaled $115 million, reflecting a 16.3% increase from the previous period [26][27] Business Line Data and Key Metrics Changes - Equipment revenue growth was supported by strong performance in door locking solutions and intrusion and alarm segments [30] - Gross margin for equipment revenue improved to 28%, up from 24% in the prior year [10][18] - Recurring service revenue now represents nearly half of total sales, with an annualized run rate of approximately $99 million [29] Market Data and Key Metrics Changes - The company continues to see strong demand across its product portfolio, particularly in school security solutions [34] - The transition away from legacy copper phone lines is expected to drive significant growth in radio sales, with a projected increase in market share [36][71] Company Strategy and Development Direction - The company is focused on enhancing shareholder value through its recurring revenue model, which provides predictable cash flow and long-term growth [8][29] - The appointment of a new Chief Revenue Officer aims to accelerate revenue growth and strengthen customer relationships [32] - The company is investing in innovation and infrastructure while maintaining a debt-free balance sheet [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining momentum through fiscal 2026, with strong operational discipline and a focus on expanding recurring revenue [8][34] - The company is optimistic about the demand for its products and the potential for new market opportunities, particularly in school security [34][35] Other Important Information - The board approved a quarterly dividend increase to $0.15 per share, reflecting confidence in the business [12][32] - The company is actively managing inventory and investing in product development to support growth [33] Q&A Session Summary Question: What is the current inventory situation in the dealer channel? - The channel has normalized, with more stable buying patterns observed, contributing to improved gross margins [39][40] Question: Can you provide an update on the MVP access platform? - The MVP platform is expected to contribute meaningfully to recurring service revenues in the second half of calendar 2026 [42][44] Question: Has storm activity impacted supply chain operations? - There has been no significant impact on supply chain operations, with only minor delays noted [45][47] Question: What is the outlook for pricing actions in Q3? - Pricing adjustments have been fully implemented, with no additional increases expected for the remainder of the year [51][52] Question: How is the ADI partnership progressing? - The ADI partnership continues to yield introductions to large dealers, with ongoing efforts to enhance contributions from the locking segment [57][58] Question: What are the plans for capital allocation given the increasing cash reserves? - The company is considering various options for capital allocation, including potential acquisitions and increasing dividends [73][75]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2025 was $191.1 million, a 54.1% increase from Q4 2024 and a 2.8% increase sequentially [4] - Net income attributable to ARLP in Q4 2025 was $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit, in Q4 2024 [4] - Total revenues for Q4 2025 were $535.5 million, down from $590.1 million in Q4 2024, primarily due to lower coal sales and transportation revenues [5] Business Line Data and Key Metrics Changes - Average coal sales price per ton in Q4 2025 was $57.57, a 4% decrease year-over-year and a 2.1% decrease sequentially [6] - Total coal production in Q4 2025 was 8.2 million tons, up from 6.9 million tons in Q4 2024, while coal sales volumes were 8.1 million tons, down from 8.4 million tons in Q4 2024 [6] - In the Illinois Basin, coal sales volumes were 6.5 million tons in Q4 2025, down approximately 2% compared to both Q4 2024 and the sequential quarter [7] - In the Appalachia region, coal sales volumes were 1.7 million tons in Q4 2025, down from 1.8 million tons in Q4 2024 [8] Market Data and Key Metrics Changes - The oil and gas royalty segment achieved total revenue of $56.8 million in Q4 2025, up 17.2% year-over-year [11] - BOE volumes in the oil and gas royalty segment increased 20.2% year-over-year and 10% sequentially [11] - Total liquidity as of December 31, 2025, was $518.5 million, including $71.2 million in cash and cash equivalents [13] Company Strategy and Development Direction - The company anticipates overall coal sales volumes for 2026 to increase to 33.75-35.25 million tons, despite reduced sales volumes at the Mettiki mine [14] - Contracting activity for 2026 is robust, with over 93% of expected volumes already committed and priced at the midpoint of guidance [14] - The company remains committed to investing in its oil and gas royalties business and pursuing disciplined growth in this segment [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong performance in the Illinois Basin and robust customer demand, with utilities opting for longer-term agreements [19] - The company noted that coal's value to the grid is increasingly recognized, especially during extreme weather events [26] - Management expects demand fundamentals to strengthen, driven by higher natural gas prices and load growth from data centers and U.S. manufacturing [25] Other Important Information - The company ended Q4 2025 with 1.1 million tons of coal inventory, an increase compared to previous quarters [10] - The anticipated impact of reduced sales volumes at Mettiki is reflected in the 2026 guidance, with potential impairment evaluations planned for Q1 2026 [10] Q&A Session Summary Question: What does it take to get to the high or low end of your price per ton guidance? - Management indicated that most remaining tons to be sold are in the Illinois Basin, with potential upside depending on customer contract flexibilities [33] Question: What would it take for Alliance to increase production? - Management stated that no new units are planned, but productivity improvements are expected to drive growth [39] Question: How to model equity method investments going forward? - Management suggested a lower run rate of around $3 million per quarter for equity investment income moving forward [41] Question: How should we think about quarterly sales cadence in 2026? - Management expects Q1 2026 to be the lowest sales quarter, with gradual improvement anticipated in subsequent quarters [47] Question: How do you expect export sales to compare to 2025 levels? - Management noted that export sales are limited, focusing primarily on domestic customers due to higher netbacks [50]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported net income of approximately $685 million and Adjusted EBITDA of $1,238 million, representing a growth of approximately 9% from 2024 [10] - In the fourth quarter, net income was $168 million compared to approximately $176 million in the third quarter, and Adjusted EBITDA was $309 million compared with approximately $321 million in the third quarter [10][11] - The gross Adjusted EBITDA margin for the fourth quarter was maintained at approximately 83%, above the target of 75% [11] Business Line Data and Key Metrics Changes - Fourth quarter gas processing volumes averaged 444 million cubic feet per day, crude terminaling volumes averaged 122,000 barrels of oil per day, and water gathering volumes averaged 124,000 barrels of water per day [5] - For the full year 2025, gas processing volumes averaged 445 million cubic feet per day, crude terminaling volumes averaged 129,000 barrels of oil per day, and water gathering volumes averaged 131,000 barrels of water per day [6] Market Data and Key Metrics Changes - The company expects lower volumes across its systems in the first quarter of 2026 due to severe winter weather, with a recovery anticipated as weather improves [7][41] - Approximately 95% of revenues are protected by minimum volume commitments (MVCs) for the full year 2026, providing a safety net against volume fluctuations [8][14] Company Strategy and Development Direction - The company plans to reduce capital spending significantly, expecting to spend approximately $150 million in 2026, a 40% reduction from 2025, and further decrease to less than $75 million per year in 2027 and 2028 [4][15] - The strategy includes a targeted 5% distribution growth per Class A share through 2028, supported by significant free cash flow generation [5][29] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the severe winter weather has impacted operations but expects a recovery in production as conditions improve [41] - The company reiterated its guidance for net income and Adjusted EBITDA growth through 2028, driven by gas volume growth and lower capital expenditures [8][29] Other Important Information - The company had a drawn balance of $338 million on its revolving credit facility at year-end [12] - Adjusted free cash flow for the first quarter of 2026 is expected to increase relative to the fourth quarter of 2025 due to lower capital expenditures [12] Q&A Session Summary Question: Balance sheet and debt repayment strategy - Management indicated that a portion of free cash flow will be used for debt repayment, with a conservative financial strategy in line with volume profiles [17][19] Question: Third-party outlook and Chevron's production target - Management expects no change in third-party volumes, maintaining an average of 10% across oil and gas, and confirmed Chevron's target of 200,000 barrels of oil equivalent per day remains intact [21][23] Question: Growth drivers and cost-cutting impact - Future growth is driven by inflation escalators and reduced capital expenditures, with significant free cash flow generation expected [26][28] Question: Weather impact on production - Management noted that while severe weather has affected operations, a recovery is anticipated as conditions improve, with MVCs providing revenue protection [40][41] Question: Long-term leverage target - Management stated there is no specific leverage target, but expects natural deleveraging as EBITDA grows and debt levels remain stable [43][45]

Financial Data and Key Metrics Changes - For Q4 2025, adjusted EBITDA was $191.1 million, up 54.1% from Q4 2024 and up 2.8% sequentially from Q3 2025 [4] - Net income attributable to ARLP in Q4 2025 was $82.7 million, or $0.64 per unit, compared to $16.3 million, or $0.12 per unit, in Q4 2024 [4] - Total revenues were $535.5 million in Q4 2025, down from $590.1 million in Q4 2024, primarily due to lower coal sales and transportation revenues [5] Business Line Data and Key Metrics Changes - Average coal sales price per ton for Q4 2025 was $57.57, a 4% decrease year-over-year and a 2.1% decrease sequentially [6] - Total coal production in Q4 2025 was 8.2 million tons, compared to 6.9 million tons in Q4 2024 [6] - In the Illinois Basin, coal sales volumes were 6.5 million tons in Q4 2025, down approximately 2% compared to both Q4 2024 and Q3 2025 [7] - In Appalachia, coal sales volumes were 1.7 million tons in Q4 2025, down from 1.8 million tons in Q4 2024 [8] Market Data and Key Metrics Changes - The oil and gas royalty segment achieved total revenue of $56.8 million in Q4 2025, up 17.2% year-over-year [11] - BOE volumes increased 20.2% year-over-year and 10% sequentially in Q4 2025 [11] - Total liquidity as of December 31, 2025, was $518.5 million, including $71.2 million in cash [13] Company Strategy and Development Direction - The company anticipates overall coal sales volumes for 2026 to increase to 33.75 million tons - 35.25 million tons, despite reduced sales volumes at the Mettiki Mine [14] - Contracting activity for 2026 is robust, with over 93% of expected volumes already committed and priced [14] - The company remains committed to investing in its oil and gas royalties business and pursuing disciplined growth in this segment [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong contracting activity and a favorable supply-demand dynamic as utilities opt for longer-term agreements [19] - The company noted that coal's value to the grid is increasingly recognized, especially during extreme weather events [26] - Management expects demand growth driven by data centers and industrial development, which will support coal pricing [25] Other Important Information - The company ended Q4 2025 with 1.1 million tons of coal inventory, an increase compared to previous quarters [10] - The anticipated impact of reduced sales volumes at Mettiki is reflected in the 2026 guidance, with potential impairment evaluations planned for Q1 2026 [10] Q&A Session Summary Question: What does it take to get to the high or low end of your price per ton guidance? - Management indicated that most remaining tons to be sold are in the Illinois Basin, with potential upside depending on customer contract flexibilities [34] Question: What would it take for Alliance to increase production? - Management stated that no new units are planned, but productivity improvements are expected to drive growth [40] Question: Any thoughts on modeling equity method investments going forward? - Management suggested a lower run rate of around $3 million per quarter for equity investment income moving forward [43] Question: How should we think about quarterly sales cadence in 2026? - Management expects Q1 2026 to be the lowest sales quarter, with gradual improvement anticipated in subsequent quarters [49] Question: How do you expect export sales to compare to 2025 levels? - Management noted that export sales are limited, focusing primarily on domestic customers due to higher netbacks [51]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported a net income of approximately $685 million and adjusted EBITDA of $1,238 million, representing a growth of approximately 9% from 2024 [10] - In the fourth quarter, net income was $168 million compared to approximately $176 million in the third quarter, and adjusted EBITDA was $309 million compared with approximately $321 million in the third quarter, primarily due to lower revenues from severe winter weather [10][11] - The gross adjusted EBITDA margin for the fourth quarter was maintained at approximately 83%, above the target of 75% [11] Business Line Data and Key Metrics Changes - Fourth quarter gas processing volumes averaged 444 million cubic feet per day, crude terminaling volumes averaged 122,000 barrels of oil per day, and water gathering volumes averaged 124,000 barrels of water per day [5] - For the full year 2025, gas processing volumes averaged 445 million cubic feet per day, crude terminaling volumes averaged 129,000 barrels of oil per day, and water gathering volumes averaged 131,000 barrels of water per day [6] Market Data and Key Metrics Changes - The company expects lower volumes across its systems for the first quarter of 2026 due to severe winter weather, but anticipates growth in volumes throughout the rest of the year consistent with historical seasonal expectations [7][8] Company Strategy and Development Direction - The company plans to reduce capital spending significantly, expecting to spend approximately $150 million in 2026, a 40% reduction from 2025, and further decrease to less than $75 million per year in 2027 and 2028 [4][9] - The strategy includes leveraging historical investments to drive significant free cash flow generation, supporting a targeted 5% distribution growth per Class A share through 2028, along with potential share repurchases and debt repayment [5][9] Management's Comments on Operating Environment and Future Outlook - Management reiterated that approximately 95% of revenues are protected by minimum volume commitments (MVCs) for 2026, which provides a safety net against production fluctuations [8][14] - The company expects annualized net income and adjusted EBITDA growth of 5% and approximately 10% annualized adjusted free cash flow growth through 2028, supported by gas volume growth and lower operating and capital expenditures [8][15] Other Important Information - The company had a drawn balance of $338 million on its revolving credit facility at year-end [12] - Adjusted free cash flow for the first quarter of 2026 is expected to increase relative to the fourth quarter of 2025, as capital expenditures are projected to be lower [12] Q&A Session Summary Question: Balance sheet and debt repayment priorities - Management plans to use a portion of free cash flow after distributions to pay down debt, expecting to naturally deliver below 3x leverage in the next few years as EBITDA grows without increasing absolute debt levels [18][19] Question: Third-party outlook and Chevron's production target - Management expects no change to the third-party outlook, maintaining an average of 10% across oil and gas, and confirmed Chevron's target of 200,000 barrels of oil equivalent per day remains intact [21][23] Question: Growth drivers and cost-cutting contributions - Future EBITDA growth is driven by inflation escalators and gas growth, with free cash flow growth resulting from reduced capital expenditures as the infrastructure buildout is completed [27][29] Question: CapEx flexibility - The company expects capital expenditures to be lower than the previous year, with guidance of $150 million for 2026 and potentially less than $75 million in 2027 and 2028 [31][35] Question: Weather impact on production - Management noted that while severe cold weather has impacted production, they expect a recovery as weather improves, with a typical seasonal increase in volumes anticipated in the second and third quarters [40][41]