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Operator: Good afternoon, and welcome to the Relmada Therapeutics, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the prepared remarks, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded and will be available for replay on the Relmada Therapeutics, Inc. website. I would now like to turn the call over to Brian Ritchie from LifeSci Advisors. Please go ahead, Mr. Ritchie. Brian Ritchie: Good day, everyone, and thank you for joining us today. This afternoon, Relmada Therapeutics, Inc. issued a press release providing a business update and outlining its financial results for the three months and year ended December 31, 2025. Please note that certain information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. We caution listeners that during this call, Relmada Therapeutics, Inc.'s management team will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in Relmada Therapeutics, Inc.'s press release issued today and the company's SEC filings, including in the Annual Report on Form 10-K for the year ended December 31, 2025, filed after the close today. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast on March 19, 2026. Relmada Therapeutics, Inc. undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With me on today's call are Relmada Therapeutics, Inc.'s CEO, Dr. Sergio Traversa, who will briefly provide a summary of recent business highlights; Dr. Raj S. Pruthi, Relmada Therapeutics, Inc.'s CMO, Oncology, who will provide an NDV-01 program update; and Relmada Therapeutics, Inc.'s CFO, Maged S. Shenouda, who will provide an update on cipranolone and a review of the company's Q4 financial results. After that, we will open the line for a brief Q&A session. Now, I would like to hand the call over to Sergio Traversa. Sergio? Sergio Traversa: Thank you, Brian. Good afternoon and welcome everyone to the Relmada Therapeutics, Inc. Fourth Quarter and Year-End 2025 Conference Call. 2025 has been a transformational year for Relmada Therapeutics, Inc., marked by significant progress for our lead program NDV-01. As a reminder, NDV-01 is a sustained-release formulation of gemcitabine and docetaxel. We are developing this investigational product candidate for the treatment of non-muscle invasive bladder cancer, or NMIBC. Most recently, we reported compelling responses and durable 12-month efficacy data for our ongoing Phase II study of NDV-01. We achieved FDA alignment for our planned registrational Phase III RESCUE programs. We fortified our team and we substantially strengthened our balance sheet. As we reflect on our recent accomplishments and planned next steps, I would like to highlight four key areas. First, NDV-01. We believe that the strength of the recently reported 12-month follow-up data could position NDV-01 as a potential best-in-class therapy for the treatment of NMIBC. Furthermore, the strength of the clinical data and the unique, easy-to-administer sustained-release formulation give us confidence that NDV-01 has the potential to provide what urologists and patients with NMIBC need: a simple, durable, effective treatment that readily fits into real-world practice settings. We plan to initiate the Phase III RESCUE program in the middle of this year. Our Phase III regulatory strategy, agreed upon with the FDA, includes two independent registrational pathways. Pathway one is focused on adjuvant therapy following TURBT in patients with intermediate-risk bladder cancer, which affects about 75,000 patients in the United States. Pathway two is focused on second-line treatment in BCG-unresponsive patients, which represents about 5,000 patients in the United States. Second, cipranolone. Cipranolone has previously demonstrated proof of concept in Tourette syndrome. It is a disorder characterized by compulsive behavior. We are getting ready to begin a proof-of-concept study in Prader-Willi syndrome in the middle of this year. And third, our team. We substantially strengthened our development team with the appointment of Dr. Raj S. Pruthi, a highly regarded physician-scientist and urologic oncologist, as Chief Medical Officer, Oncology. In addition, we established a scientific advisory board comprised of similarly distinguished peers to further support the NDV-01 program, including Dr. Yair Lotan from the University of Texas Southwestern Medical Center and Dr. Kates from Johns Hopkins University School of Medicine. Fourth and last, financial strength. We just completed a successful $160 million private financing. Based on existing forecasts, these funds plus our existing cash balance provide Relmada Therapeutics, Inc. with capital through 2029 and, importantly, through the completion of the planned NDV-01 program. Looking ahead, 2026 is poised to be another important year of value creation for Relmada Therapeutics, Inc., with the initiation of our Phase III RESCUE program for NDV-01 in bladder cancer and the Phase II proof-of-concept trial for cipranolone in Prader-Willi syndrome. With that, I also would like to express my appreciation for the trust and support of our investors, employees, collaborators, and the patients who participate in our studies. Next, I will turn the call over to Dr. Raj S. Pruthi, who will provide a review of the NDV-01 program, including 12-month follow-up data from the ongoing Phase II study and the summary of our Phase III plans. Raj? Raj S. Pruthi: Thank you, Sergio. Good afternoon, everyone. It is a privilege to share an update on the clinical progress we have made this year, headlined by the truly compelling and best-in-class results for NDV-01 in NMIBC. Bladder cancer is a high-frequency cancer that has a major impact on the lives of patients, generally diagnosed in their early to mid-70s. High recurrence rates and burdensome treatments disrupt quality of life at a time when patients are eager to enjoy life. I want to touch on three topics during today's call. One, an overview of the NDV-01 12-month data. Two, a summary of our planned Phase III program. And three, a discussion of how NDV-01 might fit into the practice of urologic oncology. As Sergio noted, NDV-01 is a novel, sustained-release intravesical formulation of two chemotherapy agents, gemcitabine and docetaxel, or GemDosi, as we say. Our program builds on physicians' established familiarity with the efficacy and safety profile of conventional GemDosi. More specifically, in patients who are unresponsive to BCG, this combination offers a salvage, bladder-sparing option that may help avoid a radical cystectomy. Moving on to the 12-month data, we are pleased to report that NDV-01 has demonstrated a high response rate and durable 12-month efficacy from the ongoing Phase II study. We believe these data stand out in comparison to the other benchmark programs and could position NDV-01 as a best-in-class treatment option for patients with bladder cancer if approved. The study is an open-label, single-arm trial in patients with high-risk NMIBC. Patients receive six biweekly doses, every other week times six, followed by monthly maintenance for up to one year. Patients undergo regular assessments with cystoscopy, pathology, and, if needed, biopsy. The study was designed to enroll up to 70 patients with high-risk NMIBC. The primary endpoints are safety and complete response rate at 12 months. Secondary endpoints are duration of response and event-free survival. The data demonstrated a 12-month complete response rate of 76% with a favorable safety profile. Notably, the study also showed a 12-month complete response rate of 80% in the BCG-unresponsive population, one of the most difficult-to-treat segments of NMIBC. These findings support the advancement into the Phase III registrational program, which we are calling RESCUE. The program will evaluate NDV-01 in both second-line BCG-unresponsive disease and in intermediate-risk disease as an adjuvant therapy following TURBT. When you look at the complete responses, or CR, at any time in the overall population, we see a CR anytime of 95% based on 38 patients. Among those with BCG-unresponsive disease, we see a CR rate at any time of 94%. Given the burdensome nature of recurrent bladder cancer treatment, safety is a critical element of our product profile. We continue to be encouraged by the favorable safety profile observed for NDV-01 across our clinical program. In the 12-month data set for NDV-01, no patients had progression to muscle-invasive disease, no patients underwent a radical cystectomy, no patients had a grade 3 or higher treatment-related adverse event, no interruptions or discontinuations of treatment due to adverse events occurred, and most treatment-related adverse events were at the grade 1 level. Moving on to the planned Phase III RESCUE program. We believe our 12-month response and durability data compare quite favorably to the current commercial and development-stage trials. We have constructed our Phase III registrational pathways to maximize our probability of success and create the most efficient path to FDA approval. The entire RESCUE registrational program was designed in alignment with the FDA to provide two separate approval pathways. We expect to secure U.S. IND clearance and initiate the Phase III RESCUE program in the middle of this year. Let us review the two studies that form the RESCUE program. Registrational pathway one focuses on the evaluation of NDV-01 in patients with intermediate-risk bladder cancer as an adjuvant therapy following TURBT surgery. We estimate there are about 70,000 to 75,000 patients each year in the U.S. in this setting. This study is planned to be an open-label, randomized, controlled trial. Since there are no approved treatments for adjuvant intermediate-risk NMIBC, the study will evaluate NDV-01 versus observation. The primary endpoint is disease-free survival, or DFS. Secondary endpoints include high-grade recurrence-free survival, progression-free survival, and quality-of-life metrics. We feel that the opportunity to incorporate NDV-01 into patient care post-TURBT is very attractive, and it could pave the way for an important clinical indication and broader adoption. Registrational pathway number two is focused on the evaluation of NDV-01 in the second-line setting in patients who are BCG-unresponsive with carcinoma in situ, or CIS, or refractory to first-line therapies approved or in development. We estimate that there are about 5,000 patients per year in the U.S. in this setting. Since these patients have few, if any, effective treatment alternatives to radical cystectomy, the study is designed as a single-arm, open-label trial. The primary endpoint is CR anytime. Secondary endpoints will include the duration of response, or DOR, progression-free survival, and recurrence-free survival among responders. We expect to report the initial three-month response data from this study by the end of 2026. We are excited about this pathway because it could offer a rapid route to approval. Before I hand the call over to Maged, I would like to make a note about how we feel NDV-01 might fit into clinical practice. NDV-01 is formulated to create a soft matrix in the bladder to enhance local bladder urothelial exposure and minimize systemic toxicity. It is delivered in the office in less than five minutes. This simple formulation and administration model has the potential to optimize the delivery experience for patients and providers, offering a level of simplicity and time savings that stands out amongst the others. Our Phase II data give us high confidence in our registrational program. By addressing a clear unmet need with a unique sustained-delivery profile, we believe NDV-01 is uniquely positioned to redefine the standard of care in bladder cancer. We look forward to initiating the RESCUE registrational program at an estimated 80 sites in North America in the middle of this year, and we will work to bring NDV-01 to bladder cancer patients as soon as possible. Maged? Maged S. Shenouda: Thanks, Raj, and good afternoon, everyone. Today, I will spend a few minutes on 2025 financial results. Because cipranolone modulates GABA, one of the most important neurotransmitters, it is defined as a GABA or GABA-modulating steroid antagonist. Cipranolone's novel action on the GABA neurotransmitter pathway gives it the potential to normalize the activity of the GABAA receptor and alleviate the repetitive symptoms of compulsivity disorders. These disorders affect millions of people around the world and include indications such as obsessive-compulsive disorder, Tourette syndrome, and Prader-Willi syndrome. We are preparing to initiate a proof-of-concept study in Prader-Willi syndrome in mid-2026. Our immediate efforts are dedicated to completing study preparations, including engaging with the FDA on our proposed trial design and establishing a robust supply chain. Moving now to our financial results. As noted earlier by Brian, this afternoon, Relmada Therapeutics, Inc. issued a press release announcing our business and financial results for the fourth quarter and twelve months ended December 31, 2025. During this call, I will review our fourth quarter 2025 financial results and refer you to our press release and Form 10-K filing issued this afternoon for financial information for the last twelve months. Starting with our cash balance, Relmada Therapeutics, Inc. closed 2025 with a cash balance of $93 million. This includes net proceeds of approximately $94 million from an underwritten stock offering announced on November 5, 2025. This compares to cash, cash equivalents, and short-term investments of approximately $45 million at December 31, 2024. On March 9, 2026, the company announced a $160 million private financing with net proceeds of approximately $150 million. This financing, along with our cash balance as of December 31, 2025, is expected to provide sufficient resources to fund company operations through 2029, including completion of the Phase III RESCUE program for NDV-01. Moving through our fourth quarter financial results, research and development expense for the three months ended December 31, 2025, totaled $8.1 million compared to $11.0 million for the three months ended December 31, 2024, a decrease of $2.9 million. The decrease was primarily driven by a decrease in study costs associated with the completion of two Phase III trials for REL-1017, partially offset by increased costs related to the start-up of the Phase III NDV-01 trials and Phase 2b cipranolone study, and additional R&D personnel. General and administrative expense for the three months ended December 31, 2025, totaled $12.3 million compared to $8.1 million for the three months ended December 31, 2024, an increase of approximately $4.2 million. The increase was primarily driven by an increase in compensation costs, partially offset by a decrease in stock compensation costs. Net cash used in operating activities for the three months ended December 31, 2025, totaled $14.6 million, compared to $8.8 million for the three months ended December 31, 2024. The net loss for the three months ended December 31, 2025, was $19.9 million, or 27¢ per basic and diluted share, compared to a net loss of $18.7 million, or $0.06 per basic and diluted share, for the three months ended December 31, 2024. Before we open the call for questions, I will turn back to Sergio for some closing comments. Sergio? Sergio Traversa: Thank you, Maged. In closing of our prepared remarks, I would like to share that I am very confident and optimistic about our clinical programs and the long-term prospects for Relmada Therapeutics, Inc. As we are getting ready to initiate the RESCUE registrational program for NDV-01, we are focused on execution and looking forward to updating you on our progress in the coming quarters. Operator, I would now like to open the call for questions. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. One moment, please, while we poll for questions. Our first question is from Uy Sieng Ear with Mizuho Securities. Uy Sieng Ear: Hey, guys. Congrats on the great data and the financing. Yeah, it seems like you did a lot of work this quarter. Maybe we are getting some questions on whether you will present additional data from your Phase II study. Should we expect, going forward, updates every three months, and will you also have data at AUA by any chance? That is the first question. The second question that we have been getting is there is some concern that the second-line patients may not be necessarily second line, but maybe, by the time they get to your regimen, it could be their third line. Please help us understand what you are doing to ensure that those patients are truly second-line patients. And the third question is, you indicated that you have three-month data from your Phase III BCG-unresponsive second-line patients. Will this be from the entire patient population, or would this be an interim from a portion of the number of patients that you expect to enroll. Thanks. Sergio Traversa: Thank you, Uy, for the questions. I think Raj can answer these questions. I will pass it to Raj. Raj S. Pruthi: Thank you, Sergio. Good to hear from you, Uy. Regarding the data, we will be presenting updated 12-month data at the AUA. It has been accepted to AUA. We will also be presenting a trial in progress as we get RESCUE going. Our plan is to focus on introducing data, and to your last question, in the BCG-unresponsive second-line group, starting at the end of the year. As we start the trial in midyear, we should have some three-month data to share externally by the end of the year, as it is a single-arm, open-label study. Our thought is then to have, at a cadence of about every three months, additional updates as we get six-, nine-, and twelve-month follow-up on that data set. You provided an excellent question on second line, third line, fourth line. We are indeed limiting the number of prior therapy lines to two. So you can have had one line of therapy and still have been BCG-unresponsive, for example, while allowing a second line to be an alternative intravesical. We are also going to look at 15 patients at three months for those who received one prior line of therapy versus two, just to make sure there is nothing concerning in this open-label study that would warrant exclusion. This is reflective of the conversations we have had with the FDA. But it is a good question, and we are limiting the number of third or fourth lines. Uy Sieng Ear: Thank you. Operator: Our next question is from Farzin Hak with Jefferies. Congrats on the progress, and thank you for taking my questions. Farzin Hak: I have one on the operational standpoint. The NMIBC space is becoming congested with active trials and drugs approved, too. What is your expectation for enrollment cadence across your two studies, and can the drug’s in-office profile potentially serve as a recruitment advantage? Sergio Traversa: Thank you, Farzin. Raj, do you want to take that? Raj S. Pruthi: Thank you. Yeah, Farzin, good to hear from you. I think you are right. The high-risk, BCG-unresponsive space has been crowded, but I think ours, coming in as a second-line therapy, provides a unique advantage. There are no drugs that have been approved in that setting and none that I am aware of that are even being investigated as a pivotal study in that setting. So I think we have a competitive advantage in that we can go to sites that, even with drugs in development, can follow them in this unique path. The same for intermediate risk. Right now, it is becoming an area of broader interest. CG Oncology, for example, has an intermediate-risk trial that looks like it is ahead of schedule and accrued very rapidly. I think there is a lot of interest from investigators in intermediate-risk patients. I expect us to enroll that study pretty rapidly and ahead of schedule like CG did. Thanks for the question, Farzin. Farzin Hak: Got it. And then for the second-line high-grade settings, beyond the primary endpoint of CR rate at any time, has the FDA stipulated a minimum duration of follow-up required for all patients by submitting the NDA? Raj S. Pruthi: Another great question. They have not required a minimum follow-up. They said they want to see CR anytime, as you said, and durability of response or duration of response. I think the wording they used, which I think is important, is they want to see the totality of the data. They want to see that you have a response and there is some level of durability. They have not specified what that number is. Farzin Hak: Got it. Thank you so much. Operator: Thank you, Farzin. Your next question is from Christopher with Lucent. Christopher: Hey, guys. Thanks for the question. I was wondering, given the population differences between your Phase II and Phase III RESCUE, what are you expecting to see in terms of the CR rate at the three-month mark, as well as what we should be benchmarking against with the status of the field? Sergio Traversa: Thank you, Chris. Raj, do you want to take this one as well? Raj S. Pruthi: Yes. Thanks, Chris. Thanks for the question. In the intermediate-risk study, we structured the trial statistics around a two-year RFS of 75%. That is reflected in the literature with GemDosi. With what we have seen in this population and with sustained release, we should exceed that, but that is our target number and it drives the statistics. It is an event-driven study with a target of 128 events. Regarding the BCG-unresponsive second-line, if you look historically, in first line the first drug approved was valrubicin in 1998 at 8% 12-month CR, followed by Keytruda at 19% and then other programs in the 24% range. So I am glad the FDA was not fixated on a certain number, but I think that threshold should be at those levels or lower than what we have seen in first-line therapy, just as precedent. Christopher: Got it. Thanks for the question. Operator: Our next question is from Kelsey Goodwin with Piper Sandler. Kelsey Goodwin: Hey, thanks so much for taking my question and congrats on the recent clinical update. Regarding that update, on the patient baseline characteristics and the CIS versus papillary split, how should we be comparing this data set to that of competitors with primarily CIS patients? And do you have any data to support that GemDosi looks similar in CIS and papillary patients? Sergio Traversa: Hi, Kelsey. It is Sergio here. Raj, it seems that this one also is for you. Raj S. Pruthi: Great question, Kelsey. Starting with the last part of your question, as a clinician you often think if the patient is BCG-unresponsive, this might be more virulent, but we do not often parse whether it is CIS versus papillary. Some people show pure CIS behaves better, but T1 actually is worse, so it is a mixed bag. For GemDosi, there is an article by Steinberg in 2020 in the Journal of Urology that looked at heavily pretreated patients, and at 12 months the RFS or CRs were 60% in the CIS population and 61% in papillary, so there is not a marked difference typically. If you go back and look at our data, our 12-month CR in BCG-unresponsive is 80%, and our 12-month CR in the overall population is 84%. That includes four patients with CIS; we had four out of four with complete response at any time and two out of two at 12 months. These are small numbers, but they still compare quite favorably. Even if you take NDV-01 and the BCG-unresponsive population, including CIS, and compare it to the best-in-class categories, I think their 12-month CR was 74%. Taking our entire cohort, we are significantly higher, so I think it is still best in class. I hope I answered your question. Kelsey Goodwin: That is super helpful. Thank you so much for that. And one follow-up: with respect to the intermediate-risk setting and that market overall, how much do you think that market might need to be built out by these early launches, given we have not had an approved agent until last year? Thanks so much. Raj S. Pruthi: You bet, Kelsey. Right now, we mentioned there are about 75,000 to 80,000 patients with intermediate-risk disease. If you look at the data now, only about 35% of those patients receive adjuvant therapy. What is important in our studies and in CG’s study is that in our intermediate-risk population, we include small, less than 3-centimeter Ta high-grade patients. That is very important because 20% of the intermediate-risk disease is these high-grade Ta patients, and those are the ones, probably more than anybody, who need adjuvant therapy to prevent recurrence. Going back, while about 35% receive adjuvant therapy, I think that number will grow as you see data from Moonlight or from PIVOT-006 or from our RESCUE intermediate study. As we get data, it gives patients confidence that there is an agent that might reduce the risk of another TURBT and gives urologists confidence that there is an agent they can deliver in the office that will reduce TURBT risk for patients. It is only going to grow. Kelsey Goodwin: That is great. Thank you so much. Operator: Thank you, Kelsey. Thank you. This concludes our question-and-answer session. I would now like to hand the floor back over to Sergio Traversa for any closing remarks. Sergio Traversa: The closing remark is a big thank you to everybody that has allowed Relmada Therapeutics, Inc. to get where we are now. We created data with a drug that can really help patients with bladder cancer. We are looking forward to updating everybody on our progress. Thank you, and enjoy the rest of the day. Thank you. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.
Operator: Greetings, and welcome to the Tenon Medical Fourth Quarter and Full Year 2025 Financial Results and Corporate Update Conference Call. As a reminder, this call is being recorded. Your hosts today are Steve Foster, President and Chief Executive Officer, and Kevin Williamson, Chief Financial Officer. Mr. Foster and Mr. Williamson will present results of operations for the fourth quarter and full year ended December 31, 2025, and provide a corporate update. A press release detailing these results was released today and is available on the Investor Relations section of our company's website, www.tenonmed.com. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates and other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned, not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. For a more complete discussion of these factors and other risks, you should review our quarterly and annual reports on file with the Securities and Exchange Commission at www.sec.gov. At this time, I'll turn the call over to Tenon Medical's Chief Executive Officer, Steve Foster. Please go ahead, sir. Steven Foster: Thank you, Shamali, and good afternoon to everyone. I'm pleased to welcome you to today's fourth quarter and full year 2025 financial results and corporate update conference call for Tenon Medical. Our fourth quarter and full year 2025 results demonstrate continued momentum in executing our strategic growth initiatives within our unique structure. We achieved record full year revenue of $3.9 million, a 20% increase compared to 2024, driven by strong second half momentum with fourth quarter revenue of $1.5 million, representing a 92% increase over the prior year period. The increase in revenue for the year was primarily driven by growth in surgical procedures across both the Catamaran and SImmetry+ platforms in the back half of 2025, led by new physician users. To support that clinical engagement, we hosted 24 physicians and targeted training sessions for both platforms during the fourth quarter alone. Importantly, alongside top line expansion, we leveraged operational effectiveness initiatives to achieve a reduction in cost of sales, reflecting improved operational efficiencies, better field productivity and greater leverage within our commercial infrastructure. We believe these gains underscore the effectiveness of our execution strategy alongside growing market awareness of our differentiated technologies. During the quarter, Tenon achieved several significant milestones that meaningfully strengthened our competitive position and lay the groundwork for continued growth in the coming year. Most notably, we received FDA 510(k) clearance for the next-generation SImmetry+ SI-Joint Fusion System, expanding our portfolio to include a complementary lateral approach alongside Catamaran. This milestone enhances our ability to serve a broader range of surgeon preferences and patient anatomies. We also successfully initiated and completed early clinical cases with SImmetry+, marking an important step in the system's commercial rollout. These procedures performed at leading Centers of Excellence, validate the system's readiness for broader market adoption and provide valuable real-world feedback as we scale development. To support these strategic enhancements, we strengthened our balance sheet through a $2.85 million At-The-Market PIPE financing that provides flexibility to expand our commercial organization, support our product rollout initiatives, advance clinical programs and continue building operational infrastructure. Subsequent to quarter end, we further strengthened our financial position by closing a private placement of senior convertible notes for gross proceeds of $4.3 million. Net proceeds will fund continued commercial expansion, upcoming product launches, clinical studies, working capital and general corporate purposes. Collectively, these accomplishments demonstrate disciplined execution across regulatory, clinical and financial fronts. With an expanded product offering, growing clinical validation and enhanced financial flexibility, we believe that Tenon exited the quarter and year well positioned to accelerate adoption, deepen our market penetration and drive sustained growth in the quarters and years ahead. We also expanded our intellectual property portfolio subsequent to quarter end, receiving notices of allowance from the U.S. Patent and Trademark Office for multiple applications expected to issue in 2026. This brings our global estate to 29 issued U.S. patents, 9 international patents and 31 pending applications, further reinforcing the defensibility of our platform around both the Catamaran and SImmetry technologies. Looking ahead, we remain firmly committed to advancing our strong market position with increased adoption across our expanding portfolio, now bolstered by the recent FDA 510(k) clearance of the SImmetry+ SI-Joint Fusion System. With this expanded product portfolio and growing clinical validation, we are leveraging both regulatory and market momentum to drive broader commercial uptake and deepen physician engagement. Building on strong execution in Q4, we are optimizing our cost structure and scaling operations to extend our market reach more efficiently. As we continue to refine our go-to-market strategy and capitalize on multiple surgical approaches across the SI-Joint Fusion landscape, we intend to accelerate revenue growth and deliver sustained value in the quarters ahead. With that, I'll turn the call over to Kevin to discuss our financials. Kevin Williamson: Thank you, Steve. I will now provide a summarized review of our financial results. A full breakdown is available in our press release that crossed the wire this afternoon. Revenue for the fourth quarter of 2025 was $1.5 million, an increase of 92% compared to $0.8 million in the fourth quarter of 2024. Revenue for the 12 months ended December 31, 2025, was $3.9 million, an increase of 20% from $3.3 million during the prior year period. The increase in the fourth quarter was primarily due to growth in surgical procedure volume across both the Catamaran and SImmetry+ platforms, driven primarily by new physician adoption. The increase in revenue for the year was driven by sales growth and momentum we saw in the back half of the year, which we expect to continue throughout 2026. Gross profit was $1 million or 69% of revenue in the fourth quarter of 2025 compared to $0.4 million or 46% of revenue in the prior year quarter, an increase of 188% and a 23 percentage point improvement in gross margin. For the 12 months ended December 31, 2025, gross profit was $2.4 million or 60% of revenue, compared to $1.7 million or 52% of revenue for the previous year's period, a 38% increase and an 8 percentage point improvement in gross margin. The gross margin improvement for the quarter and full year was primarily driven by higher revenue and the further absorption of fixed costs within our cost of goods sold. We expect gross margin to continue to improve with further revenue growth. Operating expenses totaled $3.9 million for the fourth quarter of 2025, up from $3.5 million in the prior year quarter. For the 12-months ended December 31, 2025, operating expenses totaled $15.2 million compared to $15.5 million in the prior year period. The increase in the fourth quarter was primarily due to higher variable expenses within sales and marketing, driven by increased revenue in the period, while the decrease in the year ended December 31, 2025, was due to reduced general and administrative expenses, partially offset by increased sales and marketing investments to support increased sales and continued commercial expansion. Net loss for the fourth quarter was $2.8 million or $0.29 per share compared to a net loss of $3.1 million or $0.98 per share in the fourth quarter of 2024. For the 12 months ended December 31, 2025, net loss was $12.6 million or $1.70 per share compared to $13.7 million or $11.26 per share in the same year ago period. The year-over-year improvement in both periods, was largely driven by increased revenue as well as reduced general and administrative expenses, which together improved operating leverage across the business. We ended the quarter with $3.8 million in cash and cash equivalents compared to $6.5 million as of December 31, 2024. The company had no outstanding debt as of quarter end. Subsequent to quarter end, we closed a $4.3 million private placement of senior convertible notes, which provides additional runway to fund our commercial and clinical priorities deep into 2026. Overall, we believe the financial and strategic actions implemented both this quarter and throughout the year have positioned Tenon to drive continued growth in 2026 while sustaining a streamlined and disciplined cost base. I'll now hand the call back to Steve for closing comments. Steven Foster: Thank you, Kevin. In summary, we believe that the fourth quarter and full year of 2025 served as a pivotal inflection point for our company, delivering meaningful progress across our key priorities, including record top line performance, the commercial debut of SImmetry+ and the advancement of important regulatory and clinical programs. These achievements created a strong platform for continued execution. Building on that foundation, we have entered the current quarter with increased traction across our commercial channels and tighter operational discipline through optimizing our expense base and driving efficiencies throughout the organization. With expanding engagement from physicians and continued progress across our pipeline, we believe this strengthening momentum supports sustainable growth and long-term value creation for patients, providers and shareholders alike. I thank you all for attending. And now I'd like to hand the call over to our operator to begin our question-and-answer session with covering analysts. Shamali? Operator: [Operator Instructions] Our first question comes from the line of Scott Henry with Alliance Global Partners. Scott Henry: Really strong results for the fourth quarter. So just had a couple of questions on that. First, on the expense line, the operating expenses were down sequentially even with the addition of the other business. How representative do you think the Q4 rate is for 2026? Sometimes there's timing or seasonality issues, but just trying to get a sense of that $3.9 million in Q4 '25. Should we think about that as a baseline going forward? Or are there some unique situations that come into play? Kevin Williamson: Yes. Thank you, Scott, for the question. This is Kevin. Happy to answer that. So I think we talked about this a little bit last quarter as well. And I think, yes, this becomes a better baseline in Q4 moving forward into '26 for an expense line, total operating expense. And I think you're seeing two things there. Some higher integration and deal-related costs that were in Q3 that increased that operating line, those falling out in Q4, but then seeing a little bit higher variable expense around higher revenue to offset some of that, ultimately landing you though at a better run rate here in Q4 and moving forward. So it's a good metric to use to look at the business moving into '26. Scott Henry: Okay. Great. And then on the revenue side, $1.5 million in the quarter, annualizing at $6 million. I guess two questions. How do you think about 2026 relative to that $6 million run rate? And specifically first quarter, which only has about 11 days left, how do we think about that sequentially from fourth quarter? Steven Foster: Scott, this is Steve Foster. I'll comment just quickly. While we don't give future projections at this point, given our early stage, we're really excited about two things. One, the adoption momentum out there. We set records in all aspects, every metric of our business with incremental users with total surgeries done, our SImmetry+ alpha, these early surgeries to make sure the technology was meeting physician expectations, exceeded all expectations. The adoption rate was really high, a lot of enthusiasm about that product as well. And then lastly, I'll point to a very, very engaged and active pipeline. The transaction we did with SiVantage last year not only loaded what we're capable of selling at that moment, but perhaps more importantly, loaded technologies into our development pipeline, and those things are moving through quite efficiently. And we really do think once these things start hitting in 2026, they can have a meaningful impact on what we're able to achieve in 2026. So lots of excitement within the organization and confidence that we can meet and exceed expectations in '26. Kevin Williamson: Sorry, Scott. I'll go ahead and add a couple of points there, maybe to think about -- yes, as you look at revenue throughout the year in '26. So as you recall, we launched SImmetry+ in Q4, and that was right in the middle of Q4, November time frame. So a successful alpha there. We'll be commercializing SImmetry+ throughout the year here in '26. As Steve mentioned, some products in the pipeline that we plan to launch here in '26 will also be catalysts as well. So when you look at the momentum we built in the back half of the year, and you saw the incremental increase there between Q3 and Q4, we feel good about that momentum continuing. And then you bake-in the initiatives we have throughout the year. I think when you look at the year in general, you're typically going to see a higher Q4 as revenue increases, especially as those initiatives bake throughout the year. So likely on that track, but we feel good about taking that $6 million run rate that we're now on, as you mentioned, Scott, into Q1 here and then driving revenue through the catalyst throughout the year. Scott Henry: Okay. Great. And just the final question, just kind of qualitatively, when you look out to 2026, what do you see as your key driver for this revenue growth? Because you have a lot of things going on. You have SImmetry+, we've got the Catamaran SE launch, you've got SiVantage. Is there anything that kind of jumps out as leading the way in your opinion? Steven Foster: Yes, I'll take it real quick and then Kevin jump in if you'd like. Yes, what jumps to me is, look, we now have built a multiproduct portfolio that can address a ton of variables, whether it's approach to the anatomy variables, whether it's patient variables, et cetera. And physicians are seeing now that, that tool bag that they have that Tenon Medical provides is not only diverse, but it's backed by data. It's something they can count on. And so now that we've built that foundation, it really is for us about commercial expansion and execution in 2026. So what are you going to feed into that? You mentioned them, Scott, with Catamaran SE with SImmetry+, et cetera. But we also have other launches of new product, which we'll talk about here very shortly as they sort of come into view and as we prepare for FDA submissions and what have you, that we also think are going to continue to be very compelling for our physician customers. They're looking for solutions for the patients. We want to be there for them for every aspect of the sacropelvic challenges that they deal with. So that's how I would comment. Kevin, do you have anything to add there? Kevin Williamson: No, well said, Steve. Operator: Our next question comes from the line of Anthony Vendetti with Maxim Group. Anthony Vendetti: Yes. Steve, I was wondering if you could just talk a little bit about the launch of SImmetry+. And then maybe just what the physicians are saying now that you have a broader portfolio? Is that helping you gain access to more prospective physicians or medical centers? So maybe we'll start with that. Steven Foster: Yes, Anthony, thank you. It does. So when we were a single product organization, Catamaran got attention, people were excited about it, and there was a lot of good stuff going on. But no matter how you cut it, you're still a single solution provider. The SiVantage transaction now makes us a multi-solution provider. Okay, what's multiple solutions mean? Well, for the physicians, it's, okay, what does this patient really need? And how do I want to approach this anatomy. There are inferior-posterior approaches, lateral approaches, oblique approaches, et cetera. And it's usually driven by what the patient needs and sometimes it's driven by the physician's preference and what they prefer, how they were trained, things of that nature, right? And so now you can sit down with the physician and deliver multiple options for them. It's more of a full bag of options rather than a one-dimensional option for them. And that is -- that it is opening doors for us. You mentioned SImmetry+. SImmetry+ is a lateral and oblique technology. The reaction to the implant itself has been extremely positive. It's a 3D-printed technology. And I think perhaps more importantly, is the instrument set, the tools that they use to put the implant in have been recognized as highly refined, very efficient and something that the physicians really like. Last thing I'll say real fast is SImmetry+ is an interesting one, right? It's a phased launch. And when I say that, the first thing that came out was the SImmetry+ screw. We have additions to the way we can do that construct coming down the pipe throughout 2026 that we're very excited about. Again, we'll talk more in detail about it when we get closer to FDA submissions. But suffice to say that SImmetry+ will include the ability to decorticate the joint appropriately, prep it, graft it and fixate it with the technology. So we're really encouraged by the initial reaction to SImmetry+ and the screw itself, and there's a lot more to come. Anthony Vendetti: Okay. Great. And then maybe just the last couple of questions here is on -- for a lot of these physicians, some of these products are new. How do you balance that, the training with the selling? And then do you feel like this really gives you the portfolio you need? Or is there something else that you're looking at that would really round it out in terms of making it a more compelling offering? Steven Foster: No, it's a great question. So really two buckets of activity, that are probably pretty typical to medical device companies, right? One, you're trying to make your existing technology sticky. You want people to stick with it, stay excited about it, et cetera. And that's a lot of refinement and making sure that technology and that system is delivering at a high level. And then, of course, that second bucket is what you're talking about, which is, hey, look, what's next? What else, right? And I alluded a little bit to it earlier. We'll have some technology to talk about here, again, that's getting very close to submission to FDA that we really are extraordinarily excited about. Provides, again, even more flexibility and optionality to the physician who's treating these various maladies in the sacro-pelvic region. And it's interesting because -- and we talked a little bit about this before, Anthony, there are primary cases here, there are revision cases where something has already been tried and for whatever reason, it didn't work out very well. And then there's this entire bucket of an adjunct to a complex multilevel spine procedure that is just now sort of emerging within what we're capable of doing. And so we'll be hitting all three of those spaces really hard with our existing and our newly developed technology. And yes, just a lot of enthusiasm for 2026 going forward. Operator: Thank you. And we have reached the end of the question-and-answer session. Therefore, I'll now turn the call back over to Steve Foster for closing remarks. Steven Foster: Great. Thank you, Shamali. I'd like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach out to our IR firm, MZ Group, who will be more than happy to assist. And with that, I wish everyone a good evening. Operator: Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Hello, everyone, and welcome to GrowGeneration Corp.'s fourth quarter and full year 2025 earnings conference call. My name is Alan, and I will be your operator for today's call. At this time, participants are in listen-only mode. Following prepared remarks, we will open the call to questions from analysts, with instructions to be given at that time. This conference call is being recorded, and a replay of today's call will be available on the Investor Relations section of GrowGeneration Corp.'s website. I will now hand over the call to Phil Carlson with KCSA Strategic Communications for introductions and the reading of the safe harbor statement. Please go ahead, Phil. Thank you, operator. Phil Carlson: And welcome, everyone, to GrowGeneration Corp.'s fourth quarter and full year 2025 earnings results conference call. Operator: With us today from GrowGeneration Corp. are Darren Lampert, Co-Founder and Chief Executive Officer, and Greg Sanders, Chief Financial Officer. Phil Carlson: The company's fourth quarter and full year 2025 earnings press release was issued after the close of market today. A copy of this press release is available on the Investor Relations section of the GrowGeneration Corp. website at ir.growgeneration.com. I would like to remind everyone that certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to several risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any of the forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. SEC filings, as well as the earnings press release, which provide reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures, are all available on our website. Following prepared remarks, management will be happy to take your questions. We ask that you limit yourself to one question and one follow-up. If you have additional questions, please reenter the queue, and we will take them as time allows. Now I will hand the call over to GrowGeneration Corp.'s Co-Founder and CEO, Darren Lampert. Darren, please go ahead. Darren Lampert: Thanks, Phil. And good afternoon, everyone. Thank you for joining us to review GrowGeneration Corp.'s fourth quarter and full year 2025 financial results, and to discuss our outlook for 2026. 2025 was a defining year for GrowGeneration Corp. We transformed the business, right-sizing our retail footprint, dramatically expanding proprietary brand penetration to 32.8% for the full year, and delivering a 370 basis point improvement in gross margin to 26.8%. These structural improvements drove a 58.9% year-over-year improvement in adjusted EBITDA and cut our GAAP net loss by more than half. The cost structure and brand platform we built in 2025 are the foundation for profitability in 2026. With the permanent structural improvements we have implemented, we believe the company is well positioned to reach approximately breakeven adjusted EBITDA for the full year 2026. First, I would like to talk about some of the financial highlights of last year. During 2025, net sales came in at about $162 million. The year-over-year decline was expected and driven by store closures. During 2025, we consolidated eight retail stores, bringing our current retail footprint to 23 locations as of December 31. On a same-store basis, our core locations remained relatively stable, which tells us the business is stabilizing as anticipated. Importantly, looking specifically at the fourth quarter 2025, net sales were up year over year. So during what is typically our seasonally lowest revenue quarter, we had slightly higher sales compared to last year with fewer retail locations. I think that says a lot about our core business and the revenue we were able to generate with a smaller, more focused retail footprint. For the full year 2025, gross margin expanded 370 basis points to 26.8%. As such, we were able to grow gross margin substantially, even as total revenue declined as the market came under considerable pressure. This highlights that our proprietary brands are working exactly as they were designed to. For the full year, our private label sales penetration represented 32.8% of cultivation and gardening revenue, up from 24.2% last year. Looking at the fourth quarter of 2025, our private label sales penetration was 35.8%. We are very happy about this because every percentage point of private label mix adds margin and pricing control for GrowGeneration Corp. Moving down our P&L, in 2025, we took nearly $27 million out of operating expenses compared to last year. That is a 28% reduction. Again, just looking at the fourth quarter of 2025, we saw a 44.4% year-over-year improvement in operating expenses. To be clear, these are not temporary cuts. They are permanent structural changes we have implemented throughout the company that will drive improved costs and savings going forward. All this led to an $8.5 million, or 58.9%, year-over-year adjusted EBITDA improvement for 2025, going from negative $14.5 million to negative $6 million. That is a sizable increase and puts us well within striking distance of reaching breakeven. To sum everything up, in 2025, we improved our adjusted EBITDA profitability by $8.5 million despite lower revenue volume. We think this shows the tremendous operating leverage that we have been able to achieve at GrowGeneration Corp. and the expanded margins we have generated from our growing segment of proprietary brand sales. Private label brands remain our primary growth driver as we move forward. Our leading brands Charcoir, Drip Hydro, The Harvest Company, Dialed In, and Power Si continue to see strong adoption in the market. These brands are still in their early stages of introduction, and we are expanding into new revenue channels and product extensions, mainly B2B as well as via multi-state operators. We expect proprietary brands to reach 40% of cultivation and gardening revenue in 2026. On a broader basis, we continue to shift beyond our legacy retail base to a national controlled environment agriculture supplier focused on the largest specialty agricultural and controlled environment markets. In the fourth quarter of 2025, we started selling our proprietary brands into the independent garden center channel and relaunched theharvestco.com to serve greenhouse and specialty crop growers. We also established a distribution partnership with Arett Sales, expanding our wholesale and B2B reach into thousands of new retail stores across 32 states. Additionally, the company entered the home gardening market through our 2025 acquisition of Viagrow, a domestic brand distributed across retailers such as Amazon, The Home Depot, Walmart, Lowe's, and Tractor Supply. The addition of Viagrow further provides us with a scalable platform to serve home gardeners and hobbyist cultivators across multiple retail channels nationwide. Last year, we also began to see cultivation infrastructure projects become a larger portion of our business. In 2025, this offering that we have branded as GrowGeneration Corp. Build contributed considerable revenue to GrowGeneration Corp. These are projects where we help commercial and craft operators to either modernize existing facilities or build new ones, including areas such as lighting, benching, fertigation, HVAC, irrigation, and automation systems. Demand for this offering remains strong, and we expect this business will be a meaningful contributor to revenue in the coming years. In 2025, we also continued our digital transformation of sales as more customers adopt our customized B2B Pro portal. Our commercial and wholesale customers are continuing to move their purchasing online, utilizing automated ordering and custom catalogs, while being able to view inventory in real time. Concurrently, this is reducing transaction costs and driving greater recurring revenue for GrowGeneration Corp. Last year, we also commenced our international expansion to improve our growth trajectory. Specifically, we look for opportunities to enter new high-growth cultivation markets with growing numbers of hemp and cannabis licenses. As part of this, we formed a distribution partnership with V1 Solutions to support commercial sales throughout the European Union. We also began distributing our proprietary products in Costa Rica, which opens up the Central American markets for us. We are thrilled to bring our proprietary products to professional growers across Europe and Central America and believe these distribution partnerships will allow us to quickly scale our brand presence in these markets with minimal capital investment. Complementing this, our MMI Storage Solutions segment also grew in 2025, reaching $27.5 million in revenue. MMI continues to diversify into industrial, agricultural, and specialty end markets, and we expect this segment will continue to grow steadily in 2026. Given our progress this past year, we believe repurchasing shares at current levels represents a compelling and responsible allocation of capital. Today, in tandem with our financial results, we announced that our Board of Directors has authorized a share repurchase program for up to $10 million of the company's outstanding common stock. This authorization reflects our confidence in GrowGeneration Corp.'s long-term strategy and our commitment to driving sustainable shareholder value. Turning to our outlook for 2026, we expect modest revenue growth for the full year, as we are focused on revenue quality, not volume. As I mentioned previously, we expect proprietary brand sales as a percentage of cultivation and gardening revenue to reach 40% by year end. We also expect to see further steady improvement in margins and operating expenses during 2026. Through all of this, we anticipate reaching approximately breakeven adjusted EBITDA for the full year. Greg will give more color on this shortly. With over $46 million in cash and no debt, our improved cost structure and growing multichannel brand strategy, we believe GrowGeneration Corp. is well positioned to capitalize on the anticipated growth of the controlled environment agricultural industry as well as positive developments within the cannabis industry. We expect to generate sustainable and profitable long-term growth from our growing proprietary brand sales, further revenue expansion across independent garden centers, greenhouse agriculture, specialty crops, and cannabis, and through cultivation infrastructure projects. We believe we are still in our early stages of the growth cycle, and that the best is yet to come. With that, I will turn the call over to our CFO, Greg Sanders. Greg Sanders: Thank you, Darren, and good afternoon, everyone. I will briefly review our fourth quarter and full year 2025 results, and then I will provide additional context on our outlook for 2026. Starting with our fourth quarter 2025 results, GrowGeneration Corp. reported net sales of $37.8 million, up $0.4 million compared to $37.4 million during the same period last year. Encouragingly, the fourth quarter returned to year-over-year revenue growth despite operating with eight fewer retail locations. Net sales in our Cultivation and Gardening segment were $32.1 million for the quarter, compared to $32.9 million in the same period last year. Proprietary brand sales represented 35.8% of Cultivation and Gardening revenue, up from 30.4% in the prior year. This continued shift towards higher margin proprietary products remains one of the primary drivers of our margin expansion and long-term profitability strategy. In our Storage Solutions segment, net sales were $5.7 million for the quarter, up from $4.5 million in 2024, reflecting stable demand across product lines and diversification into new end markets. Gross profit increased to $9.1 million, an increase of $3 million compared to gross profit of $6.1 million for 2024. Gross margin increased to 24.1% in 2025 compared to 16.4% for the prior-year period, primarily due to higher proprietary brand penetration and the absence of restructuring-related costs incurred in the prior year. Now turning to expenses, in 2025, store and other operating expenses declined by approximately 26.6% to $6.8 million compared to $9.3 million in 2024, reflecting the benefits of our cost reduction initiatives. Selling, general and administrative expenses were $7.3 million compared to $6.8 million last year. This increase was mainly due to one-time severance and legal costs of approximately $1.5 million. Total operating expenses decreased by $13.3 million, or 45.3%, to $16.7 million, compared to $30.1 million in the comparable 2024 period. Depreciation and amortization totaled $2.4 million compared to $7.1 million in the same period last year. The decrease primarily reflects the absence of prior-year asset impairment and restructuring-related depreciation associated with store closures. GAAP net loss decreased to $7.4 million, or negative $0.12 per share, a $15.9 million improvement compared to a net loss of $23.3 million, or negative $0.39 per share, in the prior-year period. The improvement was primarily driven by higher gross margins and lower operating expenses. Non-GAAP adjusted EBITDA, as defined in our press release, was a loss of $2 million, a $6.1 million year-over-year improvement compared to a loss of $8.1 million in the prior year, reflecting improved sales mix from proprietary brands, gross margin expansion, and the continued benefits of our cost reduction initiatives. Now I will provide a quick overview of our full year 2025 results. Net sales were $161.7 million compared to $188.9 million for 2024, primarily due to declining retail volume from store consolidations. In 2025, proprietary brands accounted for 32.8% of Cultivation and Gardening sales, up from 24.2% in 2024. Additionally, proprietary brand sales increased on an absolute basis, growing from $39.5 million in 2024 to $44 million in 2025, representing an 11.3% year-over-year growth. Gross profit was $43.3 million for the full year 2025, a slight decrease compared to gross profit of $43.7 million for the full year 2024. Gross profit margin increased to 26.8% for the full year 2025 compared to 23.1% for 2024, an improvement of 370 basis points. Net loss was $24 million for the full year 2025, or negative $0.40 per share, a $25.5 million improvement compared to a net loss of $49.5 million for the full year 2024, or negative $0.82 per share. Adjusted EBITDA, as defined in our press release, was negative $6 million for the full year 2025, an $8.5 million improvement compared to negative $14.5 million for the full year 2024. The improvement in adjusted EBITDA was primarily driven by gross margin expansion from higher proprietary brand penetration and the continued realization of operational cost reduction initiatives. Now turning to the balance sheet, we ended the year with $46.1 million of cash, cash equivalents and marketable securities, and no debt. We have maintained one of the strongest balance sheets in our sector, which provides significant financial flexibility to support our strategic initiatives. As Darren mentioned, today we announced a share repurchase program authorized by our Board of Directors for up to $10 million of the company's outstanding common stock. Our Board evaluated the program in the context of our financial position, capital needs, and our view that the current share price does not reflect the long-term value of the business. With $46 million in cash and no debt, we have the financial strength to execute this program while preserving flexibility to pursue organic and strategic growth opportunities. We expect to be in the market in the near term. Now I will discuss our guidance for 2026. For the full year 2026, we expect modest revenue growth, as our focus remains on revenue quality and margin improvement more so than volume. We are guiding net revenue in the range of $162 million to $168 million. We expect proprietary brand sales as a percentage of Cultivation and Gardening revenue to reach approximately 40% by year end. We also anticipate further improvement in margins and operating expenses during 2026, although the majority of the savings we had expected to realize are already reflected in our current run rate. With this and the improvements we have made in our inventory base, we anticipate gross margins for the full year 2026 to be in the range of 27% to 29%. Based on these factors, we expect to achieve approximately breakeven adjusted EBITDA for the full year 2026. Our updated guidance assumes a softer first quarter, as is typical for our seasonally lightest period. We expect profitability to build progressively throughout the year, with Q2 and Q3 benefiting from outdoor cultivation season, continued gross margin expansion, and a lower operating cost base relative to 2025. Taken together, this expected cadence supports our goal of approximately breakeven adjusted EBITDA for the full year. To summarize, in the fourth quarter, we generated net sales that were slightly higher than the same period last year, despite having fewer retail locations. At the same time, we improved profitability dramatically, reflecting margin expansion and structural cost reductions. We have maintained a strong balance sheet while remaining debt free. Looking ahead, we enter 2026 with a significantly improved cost structure, meaningful financial flexibility, and clear operating targets, including 40% proprietary brand penetration by year's end, a return to sustainable top-line growth, and breakeven adjusted EBITDA for the full year. We believe the structural work we completed in 2025 positions us to execute on future growth and profitability targets. With that, I will turn the call back to Darren for closing remarks. Darren Lampert: Thanks, Greg. And thank you again to everyone for joining us today. In closing, 2025 was a year of significant change for GrowGeneration Corp. We exited underperforming stores, reduced headcount, and implemented cost reduction initiatives across our entire organization. These actions were difficult but necessary for our future. Today's results clearly show that our restructuring plan is working. We have stabilized revenue, successfully executed our private label strategy, improved margins, and fundamentally reset our cost structure, demonstrating the tremendous operating leverage within our business model while improving profitability dramatically year over year. Looking forward in 2026, GrowGeneration Corp. is well positioned to scale as a lean, brand-led company supported by a strong balance sheet and ample liquidity. In 2026, we will continue the expansion of our private label brands. At the same time, we will work to increase our presence in the larger specialty agricultural and controlled environment markets. We will also continue our digital sales transformation as more and more customers migrate through our B2B e-commerce portal. Importantly, we also continue to prioritize margin expansion and disciplined cost control. We are proud of what we have accomplished in 2025, but now 2026 is all about executing with our new business model. Our target is clear: breakeven adjusted EBITDA for the full year, driven by 40% proprietary brand penetration and continued cost discipline. We appreciate your continued support and look forward to keeping you updated on our progress. That concludes our prepared remarks. Operator, please open the lines for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Aaron Grey of Alliance Global Partners. Your line is now open. Aaron Grey: Hi. Good evening, and thank you for the questions here. So first for me, I just want to talk about the share repurchase that you announced, mostly just in terms of what went into the contemplation. We can appreciate how you might feel the stock is undervalued, but we know there are a lot of struggles in the hydro products market right now that could present potential M&A opportunity that you spoke to in the past. So I will get some incremental color in terms of how you thought about the potential use of $10 million, assuming it is all used for the share repurchase, to be used for that versus potentially buying an asset to drive greater sales growth or potential profitability? Thank you. Darren Lampert: Yes, I can start. I can answer that for you, Aaron. To start with, like anything else, nothing is ever an easy choice. When you take a look at GrowGeneration Corp.'s stock right now, we are trading at about a $60 million market cap with about $85 million of cash and inventory, and some tremendous assets within our company. We have been looking for the past year for acquisitions and have not found anything that really fit our profile. On the private label brand side of it, we continue to roll out new products. We have a tremendous R&D team at GrowGeneration Corp., so the products that we are rolling out are best of breed. As you can see from the increase of private label penetrations into the markets, on the store side of it, we are shedding stores, not buying stores. But we have pretty much shifted our operations around tremendously. So on the brand side of it, we just have not found something that, for the right price, fits our operations. With that, we believe come 2027, this company will be throwing off cash and still have $46 million cash on our balance sheet and almost $40 million of inventory. So we still have plenty of flexibility if we found that right acquisition. So we believe right now it is in our shareholders' best interest and certainly our company's best interest to start buying back stock and see where it goes. But we still are in the market still looking to find the right fit for GrowGeneration Corp. But, unfortunately, we just have not found it as of yet. Aaron Grey: Okay. I appreciate the color. That is helpful there. And on proprietary brands, we want to talk a bit there. I know you have increasingly been selling your proprietary brands outside your own stores. Can you maybe give some color in terms of how much sales now are within your own channels versus third-party channels for category brands? And then secondly, how much of proprietary brand sales do you expect to be driven by sales to third party, and whether or not those third parties now start to increasingly go towards more traditional controlled environment markets? Thanks. Darren Lampert: I think the majority right now, Aaron, you are seeing going through GrowGeneration Corp.; I would probably say about 80% still. We certainly would love that number to go down to 50/50. A majority of our private label brands are being sold either through portals or the commercial markets through our commercial team. So as we continue to shed stores, we are seeing an increase in private label penetration, as opposed to the other way. Way back when, it was pretty much the stores that were selling our own brands. But now, I think with the continued success of these brands, the continued success of our commercial team, our facility advisers that are going to the largest facilities around the country and certainly helping sell and introduce the value proposition of our brands, it is working. When you take private label divisions, when you go back a couple years ago, that was in the teens. Expecting over 40% this year and growing, it has been quite a successful endeavor for GrowGeneration Corp., and I do believe it changed the company, the outlook of the company, and where the company is going. You are starting to see products of ours going into the agricultural side of the industry. You are also seeing Drip Hydro products being sold through The Home Depot and certain other stores right now. Our Viagrow products are starting to sell within some of the big box stores. But we are starting off a base of zero in the gardening centers. So you will see 20% plus growth on this side of our business, but it is going to take time to ramp up to become a meaningful part of the GrowGeneration Corp. story. Aaron Grey: Okay. I appreciate that, Darren. Last one from me, if I could. Just on Storage Solutions, nice rebound holistically for 2025 after some softness in 2024. Some accelerated growth in Q4. So maybe just talk about some of the dynamics that you are seeing there and outlook for 2026. Maybe if there has been some effort put back into the business after you no longer have it for potential sale. So any color in terms of that business line would be helpful. Thanks. Darren Lampert: We have put effort into it. We will be consolidating different locations for MMI this year onto one location. Middletown. So it is starting to hit on all cylinders. The product that it sells is space saving. It is something that is needed in retail right now, in agriculture, and anything you do. As buy online, pick up in store, whether it is grocery, whether it is golf, whether it is agricultural, they have a tremendous niche and a tremendous clientele. And we see growth in that company for years to come. We are consolidating it into one location, which we believe will help, closing some legacy locations, buying new equipment for this company, putting some money into it, and believe it will pay off and continue to grow. Aaron Grey: Okay. I appreciate the color, Darren. I will jump back in the queue. Thank you. Operator: Your next question comes from Brian Nagel of Oppenheimer. Your line is now open. Brian Nagel: Hey, guys. Good afternoon. I think I want to follow up on maybe that prior question, but I guess in a bigger picture. Darren, as you look at the business now, you have had a lot of success expanding the proprietary brands and really diversifying away from, as I understand, the core cannabis market. So as long as we watch here, you have been dealing with these cannabis headwinds, which have persisted a lot longer than I think most people expected. But what I guess I want to ask is, given the change in mix here and given the change in complexion of the business, at what point do you see GrowGeneration Corp. as a company really being driven by a different set of sector or macro factors? Darren Lampert: As of now, Brian, our core competency still is in growing, whether it is cannabis, whether it is fruits, vegetables, specialty crop. Again, we were brought up in the industry in the cannabis industry, and when you look at the mix of our customers right now, it is commercial, it is B2B. So we have gone away from the business-to-consumer model. When you take a look at big ag, it is no different than big cannabis—MSOs, large single-state operators—with very complex growing techniques and facilities, and that is what we do. It is something that we have gotten much more involved in recently, again, starting to build facilities. We have brought in facility advisers. We have brought in some tremendous talent on the build side of it that are project managing, bringing in groups to build facilities for some of the larger groups out there in the cannabis space. It is no different in the ag space. We just have not gotten there yet. But we believe we have the products to do it. We have the best products on the market coming out of GrowGeneration Corp. right now, and they are extremely price competitive. The quality that we are seeing out there on the markets right now is exceptional. So we believe right now, the restructuring has taken way longer than we would have liked it. We have gone from 65 stores; we are down to 20 stores right now. We closed another three stores in the first quarter, and we will be closing an additional store in the first quarter. So you will see the store count down to 19 at the end of the first quarter. And you are not seeing it affect sales, and you are not seeing it affect private label brands. So I think the restructuring—what you have seen over the last three years—is coming to an end. Our cost structure is at a place right now where we believe we can start making money. We were dealing with some tariff issues last year that we have worked ourselves through. We saw almost a $3 million to $3.5 million tariff that, over the last couple quarters, has flowed through our P&L. So even with that, we do believe that you will see a profitable year out of GrowGeneration Corp., from losing $14 million on an adjusted basis in 2024. You are seeing us picking up about $6 to $7 million a year on the EBITDA side of it, and we do not see that stopping. We think these brands are just getting stronger. We think their reach is getting further. We just signed a deal six months ago with Arett, but that takes time. And same thing, getting into the agricultural industry. But we are hiring people and salespeople on that side of it. We have been to some of the trade shows on the ag side of it. And if we could start diversifying product mix from 90% cannabis to 50% cannabis, we are not losing cannabis business; we are picking up cannabis business. So if we can start on the other side of it, you can see an extremely explosive sales side of our business at high margins. That is what we are looking forward to, and that is one of the reasons why we feel comfortable right now with our share buyback of $10 million to start bringing the float down, especially at these levels. Brian Nagel: That is helpful, Darren, and that is my segue to my second question. So you announced the buyback today. How should we be thinking about the timing of that? Is it something you could do relatively quickly, or is it more of an ease into it? Darren Lampert: I think we will be easing into it, Brian, depending upon where the stock trades. I think it is more of an ease. Like anything else, it is not a quick fix. We are certainly not looking to move our stock, so I think it will be a controlled buyback, but I think it will be effective. And like anything else, GrowGeneration Corp. is happy to buy back stock at these levels. Brian Nagel: Appreciate all the color. Thank you. Darren Lampert: Thank you, Brian. Operator: Your next question comes from Mark Smith of Lake Street. Your line is now open. Mark Smith: Hi, guys. Darren, you just hit a little bit of this, but I wanted to dig deeper into the store base. Ended at 23. Sounds like you are 20 today and likely go to 19 at the end of the quarter. You called early in your commentary the store base kind of stable. I am curious if this ends some of these closures, or if there are still some maybe that come up at the end of lease periods that we see closed as we work through 2026. Darren Lampert: I think we have been pretty clear that the future of GrowGeneration Corp. certainly is not in the retail stores. We are a B2B business, and some of our locations are not stores; they are more B2B distribution centers. So the name store is probably going to come out, and we are probably going to rename so there is no misunderstanding. GrowGeneration Corp. is no longer a business-to-consumer operation. Our stores are closed on weekends. Hours are different right now. There are warehouse people working in our stores as opposed to salespeople. There is a salesperson in each store, but even the mix of employees has changed within our stores. So I think when you look at GrowGeneration Corp. in 2026 and beyond, it is really a business-to-business, brand-driven company, as opposed to a retail location. Any of our retail sales are going through portals out of warehouses and also through distribution channels that we secure in the future. One is Arett, and hopefully there are others in other countries. We do believe probably this year we will finish somewhere in that 15-location range. So there are probably another four locations that we will shed by the end of the year, as long as we can do some work with the leases. But most of them are the smaller locations that are in areas where cannabis is not as abundantly sold as it used to be, as abundantly grown as it used to be. The future is small hubs, as we always said—not small, but 20,000 to 30,000 square foot hubs around the country—and a few large warehouses to supply for marketing and some areas where the growing is so intense that we believe that product within those areas makes sense. Mark Smith: The next question for me is similar as we look at operating expenses that you guys cut in 2025. As we look at 2026, it certainly looks like built into your guidance is continued cuts. Is a lot of that just having a full year of some of the cuts that have already been made, or are there other places where you feel like you can still cut operating expenses? Greg Sanders: Thanks for the question, Mark. In terms of operating expenses for 2025, we brought down our operating expense base $27 million in comparison to the prior year of 2024. We do see incremental improvements in 2026. Some of it is due to the eight closures that we had in 2025 where you had partial impact throughout the course of the year from those stores, potentially even closure costs that got embedded into the results as we are working through consolidation and moving inventory and shutting down the locations. And so some of the fallout in 2026 from an expense improvement perspective is just due to those changes operationally in the business. There are other areas of the business just in the same sense that we think there is incremental opportunity to continue to improve upon the expense base. So we expect expenses to continue to come down generally for both reasons in 2026. Mark Smith: Great. Thank you, guys. Operator: There are no further questions at this time. I would hand over the call to Darren Lampert for closing comments. Please go ahead. Darren Lampert: Thank you. I would like to thank our shareholders and employees for their continued support. I look forward to sharing our progress on our first quarter call in early May. Thank you, everyone, and have a beautiful day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.
Operator: Good evening. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sky Harbour Group Corporation 2025 year-end earnings call and webinar conference. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply submit a question online using the webcast URL posted on our website. Thank you. Francisco Gonzalez, Chief Financial Officer, you may begin your conference. Thank you. Thank you, Tiffany. Francisco Gonzalez: I am Francisco Gonzalez, CFO of Sky Harbour Group Corporation. Hello, and welcome to our 2025 full-year results investor conference call and webcast for Sky Harbour Group Corporation. We have also invited our bondholder investors in our parent subsidiary Sky Harbour Capital and now also our lenders in Sky Harbour Capital Two, and the 2026 series bondholders of Sky Harbour Capital Three, to join and participate on this call. Before we begin, I have been asked by counsel to note that on today's call, the company will address certain factors that may impact this and next year's earnings. All the information that we will discuss today contains forward-looking statements. These statements are based on management assumptions, may or may not come true, and you should refer to the language on slides one and two of this presentation as well as our SEC filings for a description of the factors that may cause actual results to differ from our forward-looking statements. All forward-looking statements are made as of today, and we assume no obligation to update any such statements. Now let us get started. The team with us this afternoon, you know from our prior webcast: our CEO and Chair of the Board, Tal Keinan; our Treasurer, Tim Herr; our Chief Accounting Officer, Mike Schmitt; our Accounting Manager, Tory Petro; and, at Treasury, Frank, our Assistant Treasurer. We have a few slides we will want to review with you before we open it to questions. These were filed with the SEC about an hour ago in Form 8-Ks, along with our 10-K that will also be available on our website later this evening. We also filed our February construction report one day early today, this afternoon, with the MSRB and the fourth quarter’s Sky Harbour Capital obligated group financials that were filed a couple of weeks ago. As the operator stated, you may submit written questions during the webcast during the Q&A using the Q4 platform, and we will address them shortly after our prepared remarks. Let us now get started. We turn to the first slide. On a consolidated basis, assets under construction and completed construction continue to increase, reaching over $328 million on the back of construction activity at phase two in Miami, the new campus well in construction in Bradley International, and phase two in Addison in the Dallas area. Please note this graph is soon to accelerate its upward trajectory as we broke ground already in Salt Lake City Airport and also soon will be doing that at Houston, New York, and our Lantana Executive Airport, Florida, Trenton, New Jersey, and Dallas International later this year. On the revenue front, we increased year-over-year by 87%, reaching a record $27.5 million for 2025, reflecting the acquisition of Camarillo in December 2024, as well as higher revenues from existing and new campuses that opened last year. Sequentially, revenues have the natural progression of occupancy increasing at the three new campuses. Operating expenses for the year increased to almost $28 million reflecting increasing campuses of operation, the higher number of ground leases; remember, we expense ground leases on an accrual basis, so our larger number of ground leases impacts our operating expenses. These are mostly noncash and something that Mike, our Chief Accounting Officer, will cover shortly. One of our goals in 2026 is to achieve higher efficiencies at the campus level, especially as we open second phases in Miami and Dallas. In Q4, you will notice a slight dip in SG&A. This relates to a reduction in the cash component of compensation for our senior management team. We are working to keep SG&A as stable as possible. As we have discussed in prior public conversations, we look to peak at no more than $20 million SG&A on a cash basis and, obviously, enjoy the operating leverage that will entail. This line item, in terms of operating results, includes a lot of noncash items, again, that Mike will discuss shortly. On our cash flow from operations basis, we are pleased to report that we reached positive territory on a consolidated basis for the first time in our history. But I need to point out that this is mostly driven by the realization of $5.9 million in upfront rent, part of an extension of an existing tenant that closed in December. That tenant went to twelve years and is now our longest tenant lease in our portfolio of developed campuses. We are also pleased to report that, on an adjusted EBITDA basis that Mike will discuss shortly, we also reached breakeven on a run-rate basis in December. Next slide, please. This is a summary of the financials of our wholly-owned subsidiaries, Sky Harbour Capital, that form the obligated group. This basically incorporates the results of Houston, Miami, and Nashville campuses along with the campuses that opened during the year in Phoenix, Dallas, and Denver. Revenues for the year increased 49% year-over-year, and in Q4, 18% sequentially. We expect a moderate increase in 2026 and then a step up in Q2 2027 on the back of the opening of phase two in Miami, and then another step up in Q1 2027 on the back of the completion of our last project that forms the obligated group first vintage in Addison Airport in Texas. Operating expenses increased year-over-year given the higher number of operating campuses in operation. Let us turn now our attention to our Chief Accounting Officer for a breakdown of adjusted EBITDA for the year and for Q4. Thank you, Francisco. As with prior quarters, I would like to take this opportunity to provide some additional context regarding elements of our reported results. Adjusted EBITDA is utilized by our management team to evaluate our operating and financial performance. Mike Schmitt: It is supplemental in nature and a financial measure not calculated in accordance with US GAAP. We define adjusted EBITDA as GAAP net income or loss before the add backs and subtractions that are enumerated on the left of this slide, which consist entirely of noncash or nonoperating elements of both income and expense, including, in the fourth quarter and for the year ending 12/31/2025, the significant unrealized gain on our outstanding positions. We have provided a reconciliation from our GAAP net income results for the year and quarter ended 12/31/2025. The primary item worth highlighting here is the general trend of adjusted EBITDA as we conclude fiscal 2025. While slightly down on a year-over-year basis, adjusted EBITDA improved for the third consecutive quarter to a negative EBITDA of approximately $1 million in Q4. This was driven by increased occupancy and rental rates at each of our campuses, particularly during the latter half of the fourth quarter as our run rates improved and turned positive. With that, I would like to take the opportunity to pass the call. Tal Keinan: Thanks, Mike. Good to be with everyone again. I am not going to run through this entire leasing update, but I will point your attention to a few items. First, on the stabilized campuses, we have been talking for a while about greater than 100% potential occupancy, and we are, on a number of campuses, starting to break into that greater-than-100% territory. There is still a long way to go on those, but we are there on a number of campuses already. On campuses in initial lease-up, the blue, you will see Phoenix and Dallas going quite nicely. They are moving a little bit faster than we expected, and Denver is moving a bit slower than we expected. And, you know, again, we are not going to nail the timing on all of these. But Denver is now coming along nicely. We also, I think, encountered some seasonal effects in Denver opening up in the winter season. That plays in your favor in Phoenix and Dallas, less so in Denver. In addition, have a look at the last three lines of that main chart: the high, average, and low rent. And a couple things that you will see in there. First of all, in the blue campuses, campuses that are in initial lease-up, you will see a significantly larger discrepancy between the highest and the lowest rent. The reason for that is, as some of you will probably remember, our leasing strategy on these campuses is to achieve 100% occupancy or greater as soon as possible, which means we do very short-term leases, including some six-month leases, at very low rents with the idea of beginning to negotiate in earnest on the basis of 100% occupancy. That is a strategy that we have seen work in the previous vintages, so we are doing it now in a much more deliberate way. So what you will see, for example, if you take the Denver column, APA 1, you will see that the highest rent is $41. That is somebody who is actually on a long-term lease. We are only doing long-term leases, meaning a year or more, at or above our target rents. And that $14.36 as the lowest is a short term. That is somebody who will either be cycled out or will agree to come up to the target rates once we are in, call it, full or long-term lease-up. And then, lastly, on the main chart, I will call your attention to the preleasing activities, which, again, after we finish Denver, Phoenix, and Dallas, we move to that preleasing strategy. Again, it is already in place. It has to be. In order to do that, you will see significantly higher average rents. Remember, just to make everything apples to apples, that $44.85, that is rent alone. That does not include fuel revenue on those campuses, whereas the numbers for the green and blue sections include rent and fuel. In the case of blue, it is contracted fuel. We could get more fuel flow-ish than that. But the preleasing numbers do not include fuel at all. And what that is beginning to point to, we think, is what we have been maintaining for a while now. Our first campuses were chosen on a somewhat arbitrary basis. We are now targeting the best airports in the country, and we expect to see that trend continue of rents coming up as we go. The last thing I want you to be able to look at on this page is the bottom left, the re-lease update. We promised to give the numbers on this, and I think we have alluded to the fact that it has been quite robust. But what we are talking about is, in 2025, leases that came to term—remember, these were all mature leases. This is not that initial lease-up exercise that I just referred to where we try to get to 100% occupancy. No. These are mature leases in Miami and Nashville, where the lease comes to term. Twenty-two percent is the average markup from the last year of the previous lease to the first year of the new lease. So what we think that is pointing to is, again, our thesis on airports being essentially Manhattan or beachfront property. There is a fundamental supply-demand mismatch, and supply cannot grow because of the limited number of airports at the rate that demand is growing. I do not want to say that we are going to see 22% escalations for the next fifty years of these ground leases, but we do expect a very robust re-lease rate. Reminding everybody on the call, the multiyear tenant leases feature annual escalators of CPI. It used to be with a floor of 3%. Today, it is a floor of 4%. So, on top of those CPI-with-a-floor-of-4% escalators, we are seeing an average 22% jump when one lease comes to term and the new one is signed. Next slide. Thank you. Okay. So—site acquisition, a couple things to call everyone’s attention to. I am looking at the chart on the right first. The green bar, that 1,096,000 square feet, that is airports that are in operation, starting in Houston and running all the way to Denver. The orange, the 1,149,000 square feet, that is airports that we have under ground lease that are fully funded. And we will go through the funding a little bit further. But those are airports where we are now developing, and you will see a list of which airports are coming online in what order. So the green is in operation. The red is secured and fully funded. The yellow is secured and not yet funded. Again, we are not really in a rush to fund these yet because we are in a permitting process on all those airports. It will take some time. And there is phasing. There are airports where we are going to do phase one and wait a bit before we do phase two. In some cases, there is also a phase three on those airports. If you sum up all of the square footage of hangar buildable on airports on which we have ground leases, that is 4,160,000 square feet. Calling your attention to the left side of the slide, the map speaks for itself. The bottom of the slide is something that we want to try to get people used to a little bit. We have been defining our site acquisition goals in terms of number of airports. That is a proxy, a not-so-close proxy of what we are really going for, and it has the virtue that it is simple and easy to communicate a number of airports. But, as you saw, we met our guidance for 23 airports last year. We also secured new lands at two existing airports last year. And I can say that in the case, for example, of Stewart International in New York, securing that extra, whatever it was, 240,000 to 250,000 square feet of hangar-constructible land, that is worth a lot more to us than almost any new airport in the entire portfolio. So those expansions mean something, but they are obviously not captured if all you are doing is counting the number of airports. A closer proxy of what we are really going for is square footage of revenue-producing hangar. An even closer proxy is the total revenue available, because a square foot of hangar in the New York area is going to be worth more than a square foot of hangar in most other parts of the country. And then, finally—and we are going to find a way to communicate this simply. We do not have it yet. Internally, we do, but we do not have something simple enough, I think, to put out on these earnings calls. We will. It is: what is the total NOI available? Because there are airports where our OpEx per square foot is higher and airports where it is lower. Fundamentally, that is really what we are going after. We are trying to capture as much NOI as we can, assuming we are above a certain yield-on-cost threshold. So, again, we will find good and simple ways to communicate these things better. We are not releasing guidance yet. We will do that in the next earnings call for guidance for 2026. But expect that guidance to come in these terms, not really a number of airports, because, again, we just do not think that is a close enough proxy to what we are actually trying to achieve. Next slide is development. We spent a lot of 2025 really reconfiguring our development effort to go from something that is a little bit more sporadic and on fewer airports to a really significant program that is operating at scale. So we are seeing that happen right now. Just to make sure everyone understands what these numbers mean, starting at the top of the slide: rentable square feet under construction. You can see the timeline, what is going up as we enter 2026. It is about 750,000 square feet that is actually under construction, and that will continue to ramp up. Important to say, we are only talking about construction on existing ground leases, which is why you will see the 2027 square footage under construction, that 819,000 square feet, is likely to be low—meaning airports that we secure now, that we enter construction in 2027, are not captured here. And 2028 is very low; in fact, it is going down on this chart. And, again, that is because most of the construction that is going to be conducted in 2028 is on airfields that we have not secured yet. And then, based on our construction timeline, the next line is rentable square feet that is actually built and ready for occupancy. And, again, you can see how that grows. I think through 2026 is probably pretty accurate. 2027, we might start to see a little bit of a bump up on that 2.35 million square foot number. 2028, we expect something significantly higher than 3.17 million that you see here. Shifting to the bottom, I am not going to take you through the eye chart on the right. But on the left, you will see our schedule of deliveries of campuses. We expect to deliver Miami phase two toward the end of next month, then in September Bradley, Connecticut, our first New York area campus. At the end of this year, Addison two, our second phase in Dallas. And you can see, as we go down the list leading all the way to Dallas International at the bottom of the list, the pace of deliveries is obviously starting to ramp up. So I think we have gotten our development program to a place that we feel very comfortable right now in our ability to deliver on our 2026 and early 2027 schedule. There is still more ramp-up of our development resources required for the surge that is coming in 2027. With that, let me hand it back to Francisco. Tim? Francisco Gonzalez: Thanks, Tal. As we announced last quarter, we finalized a five-year tax-exempt drawdown facility with J.P. Morgan that will provide debt funding for our next projects in the development pipeline. Tim Herr: We expect to draw on the facility over the next two years as our airfields become ready for construction. To cover Sky Harbour Group Corporation’s required corporate contribution to the facility, we closed last month on $150 million of tax-exempt subordinate loans. The pricing was three times oversubscribed, with 18 distinct institutional investors coming into the credit. These bonds have a five-year maturity with a 6% fixed interest rate and a call option starting in year four, as we plan for an eventual takeout of both the bank facility and the subordinate bonds with long-term tax-exempt bonds once the projects are completed and cash flowing. Next slide. Quickly, these charts highlight the recent trading in our credit. Our long bond from the original 2021 issuance has been trading higher as we approach the completion of our first obligated group project later this year. Our newly issued 2026 series bonds have also been trading higher following issuance last month. Now let me turn it over to Francisco for a discussion on future capital— Francisco Gonzalez: Thank you, Tim. The 2026 series that Tim mentioned, of subordinate bonds, represents a fundamental rethinking of how we think of our economics and capital formation. We always knew we were going to issue subordinate bonds, but not this early in the life of our portfolio and not while still unrated on our senior obligated group credit. In this slide, we illustrate what the unit economics of a new campus looks like on average. We aim to target campuses across the US where we believe we will earn $40 per square foot in rent and $5 in fuel margin. After $9 per square foot of operating expenses, we are left with, again, as an illustration, $36 per square foot of NOI. Before the issuance of these subordinate bonds, we had been assuming 70% leverage on the program or on the projects, resulting in a return on equity at the unit economics level close to 30%. With the increased use of our debt, specifically subordinated bonds replacing the use of equity, the same campus can now be expected to generate returns on equity higher than 60%. Of course, we are going to be deliberate and cautious in our level of leverage. I look forward to refinancing, as Tim mentioned, the subordinated bonds and the J.P. Morgan facility well in advance of their five-year maturities. On a pro forma basis, we expect the coverage of such refinancing to still support investment-grade ratings for those bonds given the predicted coverage of all the existing and future projects under construction. Next slide. We closed the year with $48 million in cash and U.S. Treasuries, which now are enhanced with $150 million in gross proceeds from the 2026 series bonds, which closed last month, and $200 million of the committed J.P. Morgan facility late last year, which was undrawn at year-end but which we now start to use here in the current quarter to fund capital expenditures at the Bradley campus. We now feel that we have created a fortress of liquidity at the company and are fully funded to double the size of our campuses and reach over 2 million rentable square feet, as I mentioned earlier. In terms of future capital formation, we will continue to be deliberate and prudent on our debt management, opportunistic in monetization of assets. As previously noted or disclosed, we received $5.9 million in an upfront rent payment last December as part of the extension of one of our hangars in our portfolio. We also continue to negotiate and have now actually broadened the number of potential partners for the previously announced joint venture of one of our hangars in Miami, likely to include more hangars throughout the portfolio. We also have received interest from tenants who would also like to acquire hangars and then lease them. This type of asset monetization, either in the form of hangar sales or hangar lease prepayments, is a prudent way to generate equity capital in front of our future growth if, but only if, the valuation is supported and the alternatives are less attractive from dilution and cost-of-capital perspectives. Let me now turn it back to Tal for end-of-year highlights and forthcoming initiatives in the four pillars of our business. Tal Keinan: Thanks, Francisco. Okay. So on-site acquisition—2025 guidance of 23 airports under ground lease has been met. Like I said before, from our perspective, it is exceeded substantially through the two new ground leases on existing airports. And, like I said as well, we are refining our guidance metrics. Again, internally, we already use a metric that is much closer to targeting total available NOI rather than number of airports or square footage. But, again, we will get back in the next earnings call with guidance and with some clearly understandable metrics. On development, 2025 was the year of great investment in our development program. What I can say right now is, in the short term, things are looking good. We are on time, on budget, on all projects. Our scale-up for the next big surge in development activity is underway, and, you know, hopefully, in our Q2 call, we will be able to say we are ready to go with the program that will carry us through 2027. And as we continue to grow, it is not just economies of scale; it is our vertical integration. First, it is steel manufacturing. Now into general contracting. Our prototype improvements, the constant value engineering of that prototype, has gotten our cost per square foot down lower and lower. And I think a lot of people on the call appreciate that not only impacts our unit economics, it impacts our total market, because the number of airfields on which you can get a double-digit yield on cost goes up dramatically as your cost of construction goes down. I could say the same thing for cost of capital as well. On leasing, we continue to increase our revenue run-rate every quarter. And that is, again, something to be expected. Every time a new campus comes online, that is a ratchet up in our revenue run-rate. Again, once these things are stabilized, they are long-term leases. Again, just to avoid any confusion, we do have a period where we have a mix of long-term and short-term leases in order to achieve 100% occupancy. But then we re-lease for the long term. Once that happens and stabilizes, that is a ratchet up in your revenue run-rate. It is stable. These are multiyear leases, again with escalators. And when they do come to maturity, the trend has been a very significant jump in revenue each time. So I think we can expect to see that continue. We talked about re-leasing, and we talked about the preleasing program, which is in place. I think the first airport we will see dramatic wins on preleasing, really months before we actually open our doors, is going to be Bradley, Connecticut. On operations, our first phase two campus is ready to go operationally. We open our doors late next month; that is Miami phase two. One of the things to look at here is, we talk about the power of phasing. And so far, I think we have already seen the leasing dynamics. If you are opening up 160,000 square feet of hangar at once in Miami, it is a challenge on its own. If we had opened up 350,000 square feet at once, that would have been that much bigger a challenge. So I think we are already seeing the benefits of phasing in that respect. But it is also an OpEx question, in that we will be able to operate the combined campus in Miami with the same headcount, or almost the same headcount, that we are already operating just phase one in Miami. So, you know, very significant efficiency gains as we do that. The next place we will see that is going to be Dallas phase two. The second, we will come up with a metric that is kind of objective for measuring the quality of our service offering. The best we have been able to do so far is get some testimonials from some of the top flight departments in the country that base at Sky Harbour Group Corporation. There is a metric that we are going to put out hopefully by the next earnings call because it is increasingly important to us. It is a big differentiator. The time to wheels-up, the efficiency, the access of the aircraft, the security, the privacy, the customizable space, all of these things are a very big deal in aviation. We know it. We see it. We live it every day. We want to find a kind of objective way to communicate that to our investors. So, hopefully, we will have that by the next earnings call. And then our big thrust in 2026—if the construction program was the big thrust in 2025—getting our OpEx efficient is the big thrust in 2026. What I can say today is that we are effective. And that is by design. We said, listen, we are going to overinvest. If we have an equipment shortage, there is no equipment shortage. We might have an equipment surplus. We are going to have a headcount surplus. We are going to do everything a little bit over to make sure that we have the absolutely bulletproof service offering, and really the best service in business aviation. We are paying more than we need to pay to have that, though. So we are now in the process of very carefully and very deliberately finding the efficiency that we can find. I alluded to one of those, which is when you open phase two, for example, or if you have multiple airports in a single metro center—which you can see in our map we are having now—you can find all sorts of very, very exciting efficiencies. So I think part of that is kind of free money. There are those things that we can do, and that we are doing, that will, without any risk or any significant effort, increase the efficiency. Then there are certain things that we have to be, again, very deliberate, and it will be a bit of an effort to get it down. But that is our big strategic focus for 2026. Looking forward, last slide. So site acquisition—again, our focus is on maximizing our NOI capture. I am going to preempt questions. We are feeling the rumblings of competition in our industry. I think we have talked about it on pretty much every earnings call. We are seeing it. It is still kind of anecdotal. We do not see a player like Sky Harbour Group Corporation coming and doing exactly what we do, but we think that is on the way. And, again, the deepest moat we can dig around this business is capturing the last available land at the best airports in the country. So the focus this year is on max NOI capture—the best geographies in the country. Secondarily is same metro center expansion. And one of the things that we have learned is, knowing a market that we know intimately is a massive advantage. The fact that those markets know us intimately is a massive advantage. You cannot get space at Sky Harbour San Jose. You cannot get space. And we love that. That is great. It would be great if we could expand in that market, because we know the specific people—because we are talking to them—who would like to be based at Sky Harbour and cannot because we have run out of space. So look to that trend happening as well in 2026. On the development side, the prototype program continues. Again, we have a biannual refinement of the prototype, so it gets better each time we go: higher quality, lower life-cycle cost, lower development cost of the flagship SH37 hangar. And, like we said, we are preparing for the big surge in development that will happen with the big surge this year and the bigger surge beginning in early 2027. On the leasing side, the big challenge: square footage is coming online very fast. As you can see, we are stretched a little bit thin on the leasing side. We are looking to grow that team early this year. So short term, our objective is to meet that surge. The order of operations is: get those new campuses up to 100%, then go back and get those new campuses to market rent, and then third is take the legacy campuses—we are talking about that 22% jump in rents between lease terms—get those enhanced in Miami and in Nashville and in all of the legacy markets. And then long term, like I said, we are growing the leasing team. It has always been a little bit too small, and I think it is one of the areas that we have been a little bit behind the eight ball. But we are growing it now. And then, lastly, operations—the defense—I never want to forget it. I do not know if our investors are particularly interested in this. We definitely are. A boring quarter in operations is a victory: zero safety incidents, zero service lapses. That is a very big deal. I do not think any other provider in business aviation can make that claim, and we continue to be able to make it. We do not take it for granted. There is a lot of work that goes on to deliver that. What I consider offense is continuing to add services. We are working in conjunction with our residents to define the areas where we can really ratchet up our level of service, not looking at our competition. We do not really—does not bother us what our competition does. Looking at our residents and understanding their needs. And then, lastly, our 2026 OpEx efficiency program, and we will hope to have good numbers to report by the end of this year on OpEx. With that, thanks everyone. Francisco Gonzalez: This concludes our prepared remarks, and we now look forward to your questions. Operator, please go ahead and lead the queue. Operator: At this time, I would like to remind everyone, in order to ask a question, please submit it online using the webcast URL. We will pause for just a moment to compile the Q&A roster. Ryan Myers: Should we be expecting the signing of any new ground in 2026? Tal Keinan: Alright, Ryan. This is Tal. First, thanks for the coverage. Yes. The answer is yes. Again, we will be putting out guidance on the next earnings call for 2026. It is not going to come in the form of number of airports, like I said. It is going to come in the form of NOI capture, and we will have some clear metrics. Ryan Myers: Nice work on reaching operating cash flow/adjusted EBITDA run-rate breakeven by year-end. How should we be thinking about that in 2026? Will you be breakeven going forward from here? Francisco Gonzalez: Thank you, Ryan, for the question, and, again, also for your research coverage. Yes. So, obviously, our cash flows follow revenues. Revenues follow campus openings and leasing and lease rate increases. So Q1, Q2, if we are on time and on schedule for the opening of the second phase at Miami of Boca, we should be moving north from breakeven, and then, similarly, Q3 and Q4. Then, as I mentioned earlier, with Bradley opening up later on in the fall, and then phase two, we should then be a deep in deep black towards the end of this year. Thanks, Ryan. Michael Tompkins: We noticed construction spend came in a little lighter in Q4 than prior quarters, likely due to timing of deliveries and development starts. Now, with the proper team and financing in place, how can we think about construction spend ramping as we move throughout 2026 and beyond? Francisco Gonzalez: Thank you, Michael, for the question. Yes. As I mentioned earlier, construction expenditures are ramping up. We are breaking ground now in a variety of projects, and we have raised the capital to be able to raise the accelerator on a lot of these projects that we have been preparing for. Also, we need to note that we completed the onboarding of Ascend, our new subsidiary, doing in-house construction management, also general contracting of some, not all, but some of the campuses. With that and our liquidity being strong, you are going to see the acceleration of the construction spend in the coming quarters. Next question. Michael Tompkins: It looks like you made some great leasing progress this quarter, especially at Deer Valley. What are your expectations for when those rents start to roll into earnings, and what are your expectations for stabilization across the three assets that were delivered in 2025? Tal Keinan: Francisco, do you want to start, and I will finish? Francisco Gonzalez: Yes. So you are correct. We have recently received the increase in occupancy at Deer Valley, and then, you know, we have noticed that, again, market by market, very specific to the situation, but we are seeing that it takes us from six to nine months to reach stabilization. And then we are doing more preleasing, as Tal mentioned earlier, on some of our upcoming campuses. It is great to see, from the finance perspective, some hard leases signed for products that we have not even broken ground on, even getting on a permit, like in Dallas. So that bodes well for future stabilization and the speed at which we reach that after opening. But we expect some progression for the three assets that opened, basically, in the coming two quarters. Tal Keinan: Yep. Fair, and, Michael, I appreciate that you asked specifically about those three assets delivered in 2025, because, like Francisco just said, we are transitioning to a different lease-up strategy where we start a lot earlier. Just to remind everybody, even though you see, for example, Phoenix and Dallas at roughly 80% leased now, remember that when we hit 100%, we do not call that stabilization. A, because some of those are short-term leases that need to be recycled into long-term leases at our true market rates; and B, because we do not really stop at 100%. We can get beyond 100%, as we are showing in the legacy accounts. Gaurav Mehta: How many additional ground leases do you expect in 2026? Tal Keinan: It is Tal. Gaurav, thank you for the question. Thanks for the coverage. We are going to put out formal guidance at the next earnings call. Again, expected to come not in the form of number of ground leases, but some metric that is much more specific to how much NOI we are generating. That fundamentally is the metric we should be pursuing. Gaurav Mehta: Why is the average rent at preleasing campuses higher than stabilized and in initial lease-up campuses? Tal Keinan: Yep. Thanks for that as well. It is Tal again. It is what I alluded to in my earlier remarks, which is, when we—not to disparage Houston—but we showed up at our first airports, it was very much, “Hey, stay away from New York City,” because we know that is the best metro center in the country for us, and we know we are going to make mistakes at the beginning. Other than that, we were not that particular about which metro centers we targeted at the beginning. Some are better than others, as you can see. Our targeting is much more precise today. The airports are getting better and better. We know what we are looking for at those airports. So when we lease a hangar literally eighteen months out—we are talking about hard cash deposits in the bank, binding contracts on those leases—they are coming in at higher numbers than our existing campuses. That is the reason. Timothy D’Agostino: Quarter over quarter, multiple facilities had their projected construction start and completed dates changed to TBD: APA phase two, DVT phase two, HIO phase two, IAD phase two, ORL phase two, and POU phase two. Can you walk us through what led to those changes shown in the 10-K? Francisco Gonzalez: Thank you, Tim, for the question. It is clear that you are reading the detail, and thank you for your coverage. I am glad of this question because we obviously have, at the margin, to decide where do we go and do a phase two, and where we do a phase one, of the ground leases that we have secured. And, you know, ground leases will continue to be generated every year. So we set to put TBD on phases two to give us the flexibility in terms of when we actually are going to go ahead and implement that. It is going to depend on, of course, how phase one went, how the leasing went, how we feel in terms of making sense of adding that capacity to that particular market. Let me also note that having our funding of construction now through a drawdown facility in the bank gives us even more flexibility to do that type of optimization in terms of when we do a phase two versus a phase one on our campus, which is not something you get if you are doing it with fixed financing from the get-go where you almost have to determine exactly what you are doing from the get-go. Tal Keinan: Next question. Pranav Mehta: Can you explain the unit economics slide more? The most recent feasibility study has NOI around $20 per square foot for both obligated groups. Why do you think it would be $36? Only two properties have rent above $45 per square foot. Francisco Gonzalez: Thank you for the question. And, again, let me remind that this was an illustration, but something that we believe we are going to meet or likely surpass. Right now, we are entering into leases, and we have leases higher than $40 of rent in Miami, in San Jose, in Bradley, and in Dallas. The ones that we have preleased. We feel very comfortable that, as Tal mentioned, the airports that we are constructing now and are still forthcoming, on average, are better airports than our first vintage obligated group, so we are likely to see rents and overall revenues per square foot trending higher on our new accounts. Pat McCann: At this point, how much of a new campus do you ideally want preleased before construction begins, and how do you balance early visibility against the opportunity to push rents higher closer to delivery? Tal Keinan: Just reading the question again. At this point, how much of a new campus do you ideally want preleased before construction begins, and how do you—okay. Great question, Pat. And, again, thank you as well for the coverage. First of all, it is not really before construction begins per se. Yes, we are preleasing now before construction begins in a lot of these campuses. That is not really the threshold moment. The right time is about nine months before we intend to open those campuses. How much do you tend to—your question is very elegant. The first part ties to the last part very well. You are leaving some money on the table, of course, when you do that, when you prelease so far in advance. I think a good number—and we will experiment with this as we go and optimize it—but a good number is 50%. And when you open up, you are going to leave the second 50%. And you are right, our expectation is you will see somewhat higher rents on the second 50%. But the fact that we go in cash flowing—remember, at 50%, we are meeting our debt obligations handily already—I think is probably the right way to do it. And remember, we are not doing, you know, the average lease term is significantly less than five years. Whatever money you are leaving on the table, you are not leaving it on for a very long time. But I think your relapse will come over time as we optimize that. Don Kedick: With the first obligated group nearing completion, what is the actual IRR or yield on cost you think you achieved? Francisco Gonzalez: Thank you, Don, for the question. At Sky Harbour Group Corporation, we are very data driven, and we have all the data, and we are going to be looking back with backtesting at all our projects by phase and crunch all the numbers in terms of looking back and keeping track of profitability by campus and by vintages and so on. Of course, if you look back, we faced in our first portfolio the COVID construction inflation that we certainly underestimated, and then we had the design issue that we addressed a year and a half ago. That obviously resulted in us having to put more equity into the obligated group than we really expected. So the yield on cost at the outset is not going to be what we would hope for our campus. Having said that, though, rents have been coming in higher than we originally forecasted. So, yes, we are going to be lowering yield on cost at the first point of stabilization, but then, as Tal mentioned, we are experiencing higher rents and we are experiencing higher bumps on those first renewals. So there is another calculation that happens, I would say, two years after the first stabilization or the second stabilization when you have hit market rates of those leases in that particular campus or that particular vintage. And then, lastly, in terms of IRRs, IRRs incorporate that increasing rent that we experienced with inflation. Remember, we have CPI with a floor of 3% or 4%—only new leases have 4%—and then those bumps. The IRRs should offset some of those increased costs that we experienced. So stay tuned for those vintage portfolio calculations when we complete the obligated group at the end of this year. Next question. Gaurav Mehta: Can you please provide details on your interest in selling hangars? Should we expect any sales this year? Francisco Gonzalez: Thank you for the question. As I said in the prepared remarks, we are going to be very deliberate about entertaining this. There are some big concerns out there that really just increasingly do not like to rent. They maybe made their money in real estate and just do not want to lease. So, of course, we will be deliberate in terms of—and for us, the sale is an ultra-long forty- or fifty-year tenant lease where the tenant pays upfront for the right to basically have that hangar. It is just, conceptually, a sale. So we put up, obviously, numbers, and we are in the leasing business. We truly believe that, on a present value basis, we have maximized the value to our shareholders by keeping these assets and leasing them over time. But at the right price, and if that tenant will only participate in a particular campus if by “acquiring,” we will state that if it makes sense. Tal Keinan: I would add to that, Gaurav, that those ultra-long-term prepaid leases, aka sales, should be looked at as a tool in the growing arsenal of cost-of-capital reduction mechanisms that Francisco and team have at their disposal. It is another one of these: what is it worth to us today, from an NPV perspective? You never want to do these deals—and, to be clear, the conversation that we have with our residents who want these deals are very explicit. They are coming to us saying, we agree with you on your inflation expectations. We want to protect ourselves. I think, in one case, “I am going to be flying for the next fifteen years or so. I am probably going to phase out. I want to lock in whatever I have. I am willing to prepay. I am willing to prepay at a premium to get that done because I do not want to be subject to escalations and to reset.” So, by definition, there is a zero-sumness to this whole exercise. So it is definitely not an exercise in trying to beat our NPVs on the leases. It is about cost of capital. Alex Bossert: A recent sell-side report from BTIG indicates that you are now seeing build costs closer to $250 per square foot on your active sites. Could you unpack the primary drivers of this reduction in build costs? Specifically, how much of this efficiency is being driven by the vertical integration of Stratus and Ascend versus the natural economies of scale as you shift into phase two expansion? Finally, is $250 per square foot the right baseline to use, or do you see room for even further cost compression as you scale? Tal Keinan: Thanks for that question, Alex. Starting at the end, no, we are going to continue fighting. This is definitely not, you know, when we hit our goals, we reset our goals. Again, this is very, very material. To get your hard cost below $250 a foot not only improves your unit economics, it grows your total addressable market. If you can get that to $240, even more so; if you get that to $230, even more so. So we will continue fighting to get it down. How are we doing it? Yes, vertical integration is definitely a big part of it. The fact that we are subject, for example, to volatility in steel prices, but we can manage that volatility because we have virtually limitless space for inventory of steel at our plant in Texas, means we are not subject to the much higher volatility in pre-engineered metal building component prices, because that is our output. So the vertical integration is a key piece of it. The vertical integration into construction management and general contracting is another big piece, as a guess. I think I have said on this—say, if you are going to assemble a set of eight dining room chairs from IKEA, you are probably going to get something wrong in that first chair. You follow the instructions, but you are going to mix up left and right, and you are going to have to take it apart and put it back together again. Second chair, you are going to get it right. Third chair, you are not going to be looking at the instructions. Four through eight, you are going to be doing faster than you did the first chair. Same thing in our business. The erection of these hangars comes at a very, very specific sequence. There is a lot of nuance in it. Getting it right and getting it fast matters a lot. Here is the fact that we are now doing it over and over again across the country, not working with the general contractor who is seeing it for the first time as we have done up until now, is a big deal. There is more to it, but put all of those together; that is where we are seeing the economies. Christian Solberg: What percent of your airports that are operating currently have waitlists? Tal Keinan: Yep. Christian, thanks. We—so, not exactly waitlists that we operate. Meaning, it is not first come, first serve. If you are first on the list, you get a hangar first. If you are second, you get the hangar second. We keep lists of interested parties, and they are dynamic lists. Somebody could come and say, “I really need a solution right now.” If we do not have room, they might find a solution elsewhere and might become not relevant for a while. So we have lists of interested parties. When we come up with space—and this is particularly on the semi-private model; that happens a lot more frequently—we reach out to all of those guys. What is important, I think, to understand in that is, it is a flipping of the dynamic. When we open Miami phase one, you have got 160,000 square feet of vacancies. Everybody is shrewd. Everybody is sophisticated in this business. They understand that they have the leverage in that negotiation. Once the campus is stabilized, it is really the mirror image of that: you have multiple parties interested in one space. And if you stagger appropriately, which we do—you want to have two or three hangars coming to term at the same time—if staggered appropriately, you can keep that dynamic. So it is not exactly a waiting list. It is really an interested-parties list. Alan Jackson: First, is the gestation period shorter for the expansion of existing airports as compared to acquiring brand new ground leases? Are there any differences in the acquisition process between the two? Second, does management anticipate a need for hangars with a door threshold higher than 28 feet? Is the prototype able to be adjusted for airplanes as they become larger? Tal Keinan: Yes. Two good questions, Alan. Thanks. So, yes, there are a lot of advantages to expanding an existing field. Like I said earlier, you know the market and the market knows you at those airports. So that is a very big deal. We can also typically achieve greater efficiencies on ground rent. If you have a larger plot, you have more options for layout plans that could be more efficient. Again, revenue density is obviously critical to us, so the bigger plots lend themselves to that. And then, lastly, your OpEx—your OpEx per rentable square foot goes lower. There is a certain number of people that you need, come what may, on a campus, so scale is your friend as you grow. With regard to door threshold height, I do not know if you are watching it, but the NFPA 409 Group 3 standard 2026 edition allows you to go up to 34 feet of threshold height. So we have adjusted the prototype to go up to 34 feet. Remember that NFPA 409 is not mandatory, so the adoption rate is different in different geographies. We have come up with a kind of temporary solution where you have a valance which takes you down to 28 feet, keeps you compliant with 2021 standards for NFPA 409, and then, once the jurisdiction adopts those standards, you can remove the valance, and now you are at 34 feet. Because you are absolutely right: Falcon 10X, likely to be certified this year, is a 29-foot-and-change tall airplane. It does not fit in 28-foot door threshold hangars. So, good question. Francisco Gonzalez: Operator, I think we have time for two more questions. We started a little late. Let us take two more questions, and we will close it there. Alan Rodlow: Might a NetJets or a Flexjet decide to rent out an entire hangar for their clients to use where they are not able to build their own hangar? They seem to be moving away from always leaving jets on the ramps of airfields. Tal Keinan: The short answer is yes. Dave Storms: With regards to the step up of 22% following re-leasing, how sustainable is this kind of step up, and are there any geographies that are running ahead of or behind this? With the OpEx program underway, can you talk more about any specific levers being pulled here or maybe where you are seeing easy wins? Tal Keinan: With the second one. The easy ones are things like just enforcing our triple nets on our leases. We did not have good enough standardization on our tenant leases early on, and most of those are the leases that are in effect. Slightly different rules on each lease, which leads to lack of enforcement of triple net. So, you know, your insurance rates go up on an airport; we are covering a lot of what we do not really need to be covering today. That is an example of an easy one. It is just being compliant with our agreement. With regard to the sustainability of that 22% step up, it is a good question. We do not want to make huge claims going forward. To be clear, I do not think it is going to be 22% ongoing for the duration of these leases. If it were half that, if it were a quarter of that, I think you have a very exciting story. Just throw that into the model. Your inflation rate is probably the most sensitive item in the entire financial model of the whole business. So it is a very big deal. We are excited about—what I can say is, if you own a car in New Jersey, a $50,000 car, and you have a house in New Jersey, you park it for free in the driveway of your house. When you move into Manhattan, they are going to charge you a thousand bucks a month to garage your car. That is going to bother you for a little while. But at some point, you just accept it as part of the cost of owning a car in Manhattan. Fundamentally, hangar rents have been a footnote in the annual OpEx of a large jet owner, a footnote. I do not think that should be the case. If anything is a commodity in this business, it is fuel. It is not real estate. Real estate is actually the most precious asset in this entire industry. It should occupy a much higher level on your ranking of aircraft ownership OpEx. We think it is going there, and there is a lot more to go on that. Francisco Gonzalez: Thank you, operator. Operator: There are no further questions at this time. Mr. Francisco Gonzalez, I would like to turn the call back over to you. Francisco Gonzalez: Thank you, operator, and any leftover questions, because we are out of time, we will answer directly. Also, let me remind everybody again that you can find further information on our website, www.skyharbour.group. You can always reach out directly with financial questions through our email, investors@skyharbour.group. Thank you again for your participation. With this, we have concluded our webcast. Thank you all. Operator: This concludes today’s conference call. You may now disconnect.
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