Q4 2025 Pilgrims Pride Corp Earnings Call

Speaker #1: Participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. At the company's request, this call is being recorded.

Speaker #1: Please note that the PLIDES reference during today's call is available for download from the investor section of the company's website at www.PILGRIMS.com. After today's presentation, there will be an opportunity to ask questions.

Speaker #3: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad.

Speaker #2: So the consumer pays a premium. And they have this important trade of provenance. So when we look at the impacts of these agreements, it's more on the food service.

Speaker #3: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Lindsay Crabb, Director of IR.

Speaker #1: I would now like to turn the conference call over to Andrew Rojeski. Head of Strategy, Investor Relations, and Sustainability for Pilgrims PRIDE.

Speaker #3: Please go ahead.

Speaker #2: Good morning, and welcome to FBRT's fourth quarter earnings call. Thank you, Megan, for hosting our call today. As the operator mentioned, I'm Lindsay Crabb.

Speaker #2: Good morning and thank you for joining us today. As we review our operating and finance results for the fourth quarter and fiscal year ended, December 28th, 2025.

Speaker #2: With me on the call today are Richard Byrne, Chairman of FBRT; Michael Comparato, Chief Executive Officer of FBRT; Jerry Baglion, Chief Financial Officer and Chief Operating Officer of FBRT; and Brian Buffone, President of FBRT.

Speaker #2: Yesterday afternoon, we issued a press release providing an overview of our financial performance for the quarter and the year, including a reconciliation of any non-GAAP measures we may discuss.

Speaker #2: Before we begin, I want to mention that some of today's comments are forward-looking statements and are based on certain assumptions. Those comments and assumptions are subject to inherent risks and uncertainties, as subscribed in our most recently filed FEC periodic report.

Speaker #2: A copy of the release is available on our website at ir.pilgrims.com, along with slides for reference. These items have also been filed as Form 8Ks and are available online at sec.gov.

Speaker #2: And actual future results may differ materially. The information conveyed on this call is current only as of date of this call, February 12th, 2026.

Speaker #2: Fabio Sandri, President and Chief Executive Officer and Matt Galvanoni, Chief Finance Officer, will present on today's call. Before we begin our prepared remarks, I would like to remind everyone of our Safe Harbor disclaimer.

Speaker #2: The company assumes no obligation to update any statements made during this call, including any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Speaker #2: Today's call may contain certain forward-looking statements that represent our outlook and current expectations as of the day of this release. Other additional factors not anticipated by management may cause actual results to differ materially from those projected in these forward-looking statements.

Speaker #2: Additionally, we will refer to certain non-GAAP financial measures, which are reconciled to GAAP figures in our earnings release and supplementary slide deck. Each of which is available on our website at www.fbrtreat.com.

Speaker #2: Further information concerning these factors has been provided in yesterday's press release of Form 10K and our regular filings with the SEC. I would now like to turn the call over to Fabio Sandri.

Speaker #2: We will refer to the supplementary slide deck on today's call. With that, I will turn the call over to Rich Byrne.

Speaker #3: Great. Thanks, Lindsay, and good morning, everyone, and thank you for joining us today. Before we begin, I'd first like to share some important management updates with you.

Speaker #3: Thank you, Andy. Good morning, everyone, and thank you for joining us today. So for the fiscal year 2025, we established new financial milestones, as net revenues reached $18.5 billion and adjusted EBITDA rose to $2.3 billion.

Speaker #3: We announced all of these the other day. First, I'm pleased to announce that Mike Comparato, who many of you already know very well, has been appointed Chief Executive Officer.

Speaker #3: Our adjusted EBITDA margin was 12.3%. In the US, consistent execution of our strategies, along with strong chicken demand, bolstered our demand. Demand for our key customers grew significantly over the category average for the year.

Speaker #3: This is effective immediately. Mike currently leads our commercial real estate practice at Benefit Street Partners and has been instrumental in building and scaling that platform to what it is today.

Speaker #3: He brings deep commercial real estate expertise, a strong command of capital markets, and, of course, a proven track record. Concurrently with that, Mike's promotion, Brian Buffone, will assume the role of President.

Speaker #3: Our brand building accelerated as the combined retail sales of just bear across fresh and prepared exceeded $1 billion. Further diversifying our portfolio and resonating with consumers.

Speaker #3: Brian is a seasoned real estate veteran and a longstanding member of our investment team. His experience, institutional knowledge, and investment acumen will continue to be invaluable as we execute our strategy and serve our investors.

Speaker #3: Operational excellence efforts improved efficiencies in processing and live operations in Big Bird, mitigating commodity cut-out volatility throughout the year. Given these efforts, the US grew both in top line and bottom line.

Speaker #3: Together, these appointments represent a natural progression of FBRT's leadership, and I am excited to say, leave the company well positioned to execute its strategy in a dynamic market.

Speaker #3: Europe completed several projects to enhance the efficiency of its manufacturing footprint, consolidated back office support, and optimized mix and innovation. Key customer partnerships strengthened as sales and volume both increased compared to last year.

Speaker #3: I will remain actively engaged as Chairman, focused on strategic oversight and supporting Mike and Brian through this transition. So with that, let me turn the rest of the call over to Mike.

Speaker #3: Our portfolio of key brands continued to grow, further diversifying our portfolio. Based on these efforts, margins and overall adjusted EBITDA continued to improve. Mexico grew sales through increased sales volumes of branded offerings across fresh and prepared and growth with key customers, despite commodity pricing volatility.

Speaker #4: Thanks, Rich. Good morning, everybody. And before Mike prepared remarks, I want to thank Rich for his years of service as FBRT CEO. Rich has been an integral part of the company becoming a middle-market leader in the commercial real estate finance market, and we all appreciate his dedication over the years to the company's success.

Speaker #3: Equally important, we initiated a series of investments in both fresh and prepared to drive profitable growth while reducing the volatility of our business. For the fourth quarter of 2025, we reported net revenues of $4.5 billion.

Speaker #4: I also want to take a brief moment and congratulate Brian on being promoted to President of FBRT. Brian has been a longtime leader within Benefit Street and will now be playing a much more prominent role in FBRT.

Speaker #3: We have adjusted EBITDA of $450 million and our adjusted EBITDA margin was 9.2%. Our Q4 results reflect the robust nature of our strategies to drive strong margins during changing market conditions.

Speaker #4: Now onto the company. For several quarters, we have discussed our earnings undercovering our dividend. After thoughtful analysis, we decided it was no longer prudent to sacrifice book value to pay that dividend.

Speaker #3: In the US, fresh increased market share through continued focus on quality, service, and innovation. Our fresh business improved efficiencies both in plant and live operations.

Speaker #4: Accordingly, management has recommended and the board has approved a reset of the quarterly dividend to $0.20 per common share beginning the first quarter of 2026.

Speaker #3: Prepared foods continued to drive category-leading growth across retail and food service, further diversifying our portfolio. Investments to grow our presence in key customers, increased capacity in value added, and enhanced operational efficiency continued to progress as planned.

Speaker #4: The company continues to have earnings power to support a meaningfully higher dividend than $0.20. That has not changed. But in the near term, rather than returning capital to shareholders by overdistributing, we want to stabilize our book value and better match our current earnings to our dividend.

Speaker #3: In Europe, we increased overall adjusted EBITDA compared to the same quarter prior year. Our fresh operations drove the majority of the gains through improved productivity and enhanced mix, key customer demand was stable while our portfolio of key brands continued to grow.

Speaker #4: Our priorities are sustainable dividend coverage, book value growth, and building more consistent, durable earnings. The dividend reset is driven by several factors. The recent declines in SOFR, the timing of our originations and repayments, and the overall size of our loan portfolio have impacted short-term returns.

Speaker #3: Mexico faced difficult circumstances given increased imports of animal-based proteins and unbalanced fundamentals in the live market. Our diversified efforts continued to gain traction as branded fresh and prepared offerings both rose, compared to last year.

Speaker #4: In addition, spreads are at multi-decade tights, which means that new loans coming into the portfolio are generally making lower returns than loans that are paying off.

Speaker #3: Turning to supply, the USDA indicated that ready-to-cook production for the US rose 2.1% year-over-year in 2025, driven by increased headcount, improved live performance, and higher average live weights.

Speaker #4: REO liquidations are taking longer than originally anticipated, keeping equity locked and underperforming investments. We continue to make very good progress on the REO liquidation front.

Speaker #3: Excess were higher than 2024, giving a more productive layer flock and record hatchery utilization. Hatchability improved sequentially in Q4, with seasonality and a younger flock, but are still below the five-year average.

Speaker #4: Unfortunately, just at a slower pace than desired. Lastly, but most importantly, with our acquisition of Newpoint, we made the intentional decision to no longer be a pure-play mortgage REIT.

Speaker #4: Today, we are a commercial real estate investment platform. This means a lower overall dividend yield, but significantly more earnings stability and stronger long-term book value growth.

Speaker #3: Chick placements were higher throughout the entire quarter compared to last year. After peaking in Q3, live weights declined and ended the fourth quarter consistent with prior-year levels.

Speaker #3: Looking forward, USDA reports a $1.9% year-over-year decline in the layer flock in January 2026, alongside a 3.1% drop in poulet placements compared to Q4 of 2024.

Speaker #4: This cannot be overstated. We are a different company today than we were six or nine months ago. In acquiring Newpoint, we have intentionally traded some higher near-term returns from credit investments for steadier recurring servicing and fee revenue.

Speaker #3: Given these factors, along with other considerations, the most recent USDA estimates suggest moderate production growth of 1% in 2026 compared to last year. As for overall protein availability, USDA projects growth of 1.5% in 2026, with challenges in the beef production partially compensated by higher beef imports.

Speaker #4: This type of revenue typically trades at a lower yield than pure-play mortgage REITs since it produces a much more consistent and predictable ongoing cash flow stream.

Speaker #4: When looking at our company, and dividend yield today versus where we have been, the overall picture should be viewed based on a blend of our mortgage REIT operations plus that recurring revenue stream business.

Speaker #3: From a demand standpoint, consumers' sentiment remains low, given continued economic uncertainty. Inflation for food at home and away from home continued to impact consumers' available income.

Speaker #4: As we scale Newpoint, its contribution over time will continue to increase and be a creative to overall earnings. We have also recently made a few strategic investments in commercial real estate equity investments.

Speaker #3: Nonetheless, chicken's affordability was a sectionally appealing across channels and categories. In retail, consumers continued to stretch their budgets through more frequent trips with smaller basket sizes.

Speaker #4: In the current market environment, equity investments yield lower current returns in credit investments, but should provide longer-term growth and upside in earnings. An agency servicing platform and select equity investments are key to a strategy that delivers stronger long-term growth in book value for our shareholders over time, and creates a company where the total return should be more meaningful than just our dividend returns to shareholders.

Speaker #3: Within the channel, the meat department continues to lead performance as it is remaining a key priority for consumers. Chicken experienced volume growth across all cuts, versus prior quarter.

Speaker #3: Boneless, skinless breasts prices decreased 1% compared to last quarter, while prices of other proteins rose, especially ground beef that is set in new all-time highs.

Speaker #4: We fully recognize we must demonstrate FBRT's repositioning to the market and the team is working around the clock to do so. Again, FBRT should no longer be compared to pure-play mortgage REITs.

Speaker #3: As a matter of fact, when compared to two years ago, prices of boneless at retail were reduced by 1.7%, while prices of ground beef have increased 22%.

Speaker #4: We are positioning the company with a differentiated mix of dividend yield, stability, and growth, which traditional mortgage REITs do not provide. Looking ahead, our focus is on balancing attractive current income with disciplined book value growth.

Speaker #3: As a result, record pricing spreads emerged, further strengthening demand for chicken. Similar to boneless breast, dark meat from boneless thighs also continued to experience significant growth.

Speaker #4: We believe this approach strengthens the durability of our model and better aligns our yield strategy with the business we are building. Before turning the call over to Jerry and Brian, I want to take a minute just on overall market conditions.

Speaker #3: Dairy increased slightly versus last year as velocity more than offsets changes in mix, distribution, and pricing. Consumers also look for convenience. And in the frozen chicken category, we saw significant growth, with continued strength in velocity.

Speaker #4: Market conditions overall continue to improve. Liquidity is abundant, and virtually any capital markets transactions from CMBS to SASB to CRECLO is met with a deluge of orders driving spreads tighter.

Speaker #3: In food service, rising costs associated with dining out continued to pressure overall restaurant traffic, particularly in the food service formats. However, growth in QSRs and non-commercial channels compensated for these declines, supported by operators' continued strategic focus on chicken through value offerings, limited-time promotions, and menu innovation.

Speaker #4: As a result, we are witnessing spreads that are the tightest we've seen since pre-GFC days. We are also seeing regional banks slowly return to the market, primarily in the multifamily space.

Speaker #4: Their financing quotes typically come with large depository relationships and recourse, but we are hearing about banks quoting whole loans with the same pricing as AAA-rated bonds on CRECLOs.

Speaker #3: Chicken-centric QSRs are leveraging the proteins affordability to drive traffic and engagement, outperforming the broader dining sector. Within food service, boneless dark meat volumes are growing at double-digit rates across all segments, wings are gaining momentum, and tenders continue to deliver steady consistent growth.

Speaker #4: We are reluctant to chase spreads to the levels that are currently being bid in the market today for commodity multifamily loans. The returns are anemic, and if SOFR continues to fall, they only get worse.

Speaker #4: However, saying all of that, given the breadth of our product offerings, we are still able to originate ample loans that fit not only our credit criteria but also generate returns that are significantly more interesting for our investors.

Speaker #3: In exports, industry volumes accelerated during Q4. Within pilgrims, demand was primarily driven from the Southeast Asia and Mexico. Pricing remained high relative to historical levels and continues to be elevated in the first quarter of 2026.

Speaker #4: Brian is going to address a

Speaker #1: A few of our watch list positions , as well as provide some updates on the Rio portfolio . But first , I'll turn the call over to Jerry to walk to walk through our financial results in more detail

Speaker #3: While trade disruptions have impacted certain markets given the high-path AI outbreaks, the overall effect has been relatively muted on both pricing and volumes as most US trading partners quickly limit restrictions to either the county or specific zones.

Speaker #2: Great . Thanks , Mike . I appreciate everyone being on the call today . I'm going to go through the financial results for the quarter FPR reported GAAP net income of 18.4 million , or $0.13 per fully converted common share distributable earnings for the quarter were 17.9 million , or $0.12 per fully converted share Turning to distributable , we had earnings .

Speaker #3: As a result, trade simply shifts from other locations outside the impacted area during the restriction period. Moving forward, we expect exports to remain strong and well-diversified across markets.

Speaker #3: Turning to feed inputs, corn moved marginally higher in Q4 compared to previous quarter. However, prices moderated in January as the US corn realized new records in harvest area, yield, and total supply.

Speaker #2: We had a we had distributable earnings , which included 9.8 million of realized losses . Now 7.7 million of that was related to debt extinguishment and the balance to Rio sales .

Speaker #2: If you take these out , our distributable earnings was $0.22 per fully converted share or nearly flat to where we were last quarter .

Speaker #3: While records demand currently exist, corn ending stocks are still expected to increase to 2.2 billion bushels, creating the highest stock-to-use ratio since 2019. Soybeans and soybean meal rallied in Q4, given the resumption of US soybean sales to China.

Speaker #2: Timing was the primary driver of the quarter . Over quarter change in distributable earnings early in Q4 , we completed a $1 billion CLO for 12 that increased our non-recourse financing capacity .

Speaker #2: With this transaction , we called several older Clos that were past the Reinvestments periods , which produced a debt extinguishment charge that I mentioned of $0.07 per share .

Speaker #3: Strong domestic interest and export demand for soybean meal. Potential upside appears limited, given favorable weather in South America for soybean production and relatively slow pace of US soybean exports.

Speaker #2: The new CLO should lower financing costs in 2026, and additionally add meaningful origination capacity. We grew the core portfolio slightly in Q4, as originations outpaced payoffs.

Speaker #3: Since shipments are below average, the USDA anticipates ending stocks will rise by 350 million bushels, up 7% versus prior year. Global soybean stocks and processing capacity are also expected to increase.

Speaker #2: The principal balance rose modestly as we originated about 528 million of new commitments while receiving roughly 510 million of loan repayments . A small but important reversal from Q3 , when the core portfolio declined .

Speaker #3: Generating ample supplies of meal. Global wheat stocks continue to be well-supplied, and production increased by 41 metric tons. Versus prior year. Every major producer experienced above-average crops, reducing the risk of physical disruption in shipments.

Speaker #2: As we conserved liquidity for the new point acquisition during the quarter , we recorded a net Cecil benefit of 4.8 million . However , that included 3 million of loan specific reserves for four watch list loans .

Speaker #3: Additional tailwinds may emerge from increased wheat acreage planted in East UK. Within the US, our diversified fresh portfolio increased volume compared to the same period last year as consumers continue to seek affordability offerings for their meal occasions across retail and food service.

Speaker #2: One of those loans was subsequently transferred to Rio , and the associated Specific Reserve was charged off Importantly , we continued our share buybacks in Q4 , repurchasing 14.4 million of common stock , which contributed $0.05 to book value subsequent to quarter end , our board reauthorized the company's share repurchase program , providing 50 million available for future share repurchases through December 31st of 2026 .

Speaker #3: Our higher attribute differentiated offerings in case-ready accelerated its marketplace presence as volumes to keep customers increased nearly two times the category. Sales and profitability rose compared to last year from sustained growth.

Speaker #2: To further support the stock price book value per share ended the quarter at $14.15 , our dividend outpacing our earnings . Net leverage remains well within our targets , and the quarter at 2.5 times , with recourse .

Speaker #3: Small bird also realized similar success as volumes to QSR remain robust despite its low market for boning chicken and whole birds. Given continued market shifts to boneless cuts extensive key customer partnerships and growth aspirations, we reevaluate and adjust our portfolio to match demand accordingly.

Speaker #2: Leverage standing at 0.81 times . We have ample financing capacity and liquidity with reinvest available on two of our close as we redeploy the capacity created by our financing actions , we expect earnings to benefit in 2026 as our core loan portfolio grows and we see a more stabilized contribution from Newpoint .

Speaker #3: In big bird, commodity cut-out values fell nearly 20% compared to last year. Nonetheless, the business was able to improve its efficiencies in live operations and in production.

Speaker #3: Equally important, we further leverage our position as the leading supplier of NAE meat to support our robust growth or value as the offerings. To that end, big bird will continue to increase supplies to our internal prepared foods, reducing volatility and enhancing margins for our portfolio.

Speaker #2: Turning to slide 11 for updates on Newpoint new point contributed modestly in Q4 . This was expected given a lower origination cadence in the quarter and paired with higher tax reserves at the tres , the reduced new points reported earnings in Q4 .

Speaker #3: During the quarter and the beginning of 2026, our team also undertook a variety of projects to strengthen our key customer partnerships and enhance operational excellence, including investments within big bird to increase our portioning capacity and differentiated cuts.

Speaker #2: We expect new points , distributable earnings contribution to operate at a run rate of approximately 25 to $33 million per year . Agency volume came in at 1.1 billion of new loan originations in the quarter .

Speaker #2: We expect agency volumes to be between 4.5 and 5 point 5,000,000,000 in 2026 , at quarter end , the MSR portfolio was valued at approximately $220 million and generated 8.8 million of income in Q4 , reflecting an average MSR rate of approximately 82 basis points , and the implied life of that portfolio was 6.4 years .

Speaker #3: Through these efforts, our team managed to plan a downtime and adjusted production across locations accordingly to ensure sufficient availability, maintain quality, and uphold service levels.

Speaker #3: In prepared foods, sales grew 18% compared to the same period last year, giving branded growth across retail and food service. Just bare momentum continues to accelerate market share in retail.

Speaker #2: New point managed a servicing portfolio that was 47.8 billion at quarter end . The new point BSP integration work continues to move forward .

Speaker #3: It rose nearly 300 basis points compared to the same period last year. Equally important, it has the highest velocity of any brand within the frozen chicken.

Speaker #2: We've made significant progress on the migration of Bsps loans , and that servicing book onto New Point , and we're on pace to complete that transition by the middle of the first quarter .

Speaker #3: Further growth opportunities exist through increased distribution. Our innovation and approach to bold flavors under the pilgrims brand also continues to receive accolades as people's food award recognized our cheesy jalapeño nugget line as a category winner.

Speaker #2: The addition of the BSP loans will increase new points . Servicing book by approximately $10 billion and help to contribute to the increase in earnings power of New Point in 2026 .

Speaker #2: We remain confident New Point is a very accretive over the long term as origination and servicing volumes grow and integration synergies continue to build .

Speaker #3: In food service, we continue to build our presence, giving continued growth with distributors national accounts and schools. Our investment in a new prepared facility in Georgia to meet demand for our fully cooked offerings remains on schedule.

Speaker #2: With that , I'll turn it over to Brian to give you an update on our portfolio

Speaker #3: Thanks , Jerry . Good morning everyone . I just quickly want to start by saying thank you to Rich and Mike for their kind words and support .

Speaker #3: Turning to Europe, consumer sentiment continues to be relative to subdued. Nonetheless, we improved our profitability, and maintained stable demand compared to the same period last year given consistent execution of our strategies.

Speaker #3: Earlier, and as I step into this role, I look forward to continuing to execute our strategy alongside Mike and the broader FR team. I'll start on slide 15.

Speaker #3: Within retail, chilled meals and fresh offerings were among the fastest growing categories. As such, our chicken business drove profitable growth, led by our differentiated poultry offerings that select customers.

Speaker #3: Our core portfolio finished Q4 at roughly $4.4 billion, with about 77% of our loans backed by multifamily assets and very limited office exposure.

Speaker #3: Our added value business remains steady, whereas pork experienced challenges from excess supply as animal health issues emerging in Spain triggering export restrictions in the EU.

Speaker #3: During the quarter , we originated 37 loans at a weighted average spread of 284 basis points , with multifamily representing 76% of our new loan originations .

Speaker #3: Despite these challenges, our team maintained volume and increased profitability compared to last year. Our diversification efforts through key brands continue to progress as overall sales and volumes rose compared to last year.

Speaker #3: Our pipeline is robust , but given current spreads , we are selective on pacing . As Mike mentioned earlier , our conduit business had an incredible quarter .

Speaker #3: One of the largest in the history of the company , and that reflects an improved CMBS market liquidity and healthy investor demand . Our pre hype book represents roughly 32% of the total loans loan commitments of $1.3 billion in multifamily , or 82% of that pre rate height .

Speaker #3: Fridge Raiders increased share yet again, given the effectiveness of recent changes to pricing and packaging. The momentum for the rollover continues to accelerate from additional distribution with new customers.

Speaker #3: The Richmond brand was challenged by low cost private label offerings, but recent investments in promotional and innovation activity have been beneficial in resuming our growth trajectory.

Speaker #3: Book credit mix remains steady . 76% of those legacy loans are risk rated 2 or 3 at quarter end . And we're continuing to work through the positions that need extra attention on the watch list .

Speaker #3: We continue to develop our innovation pipeline in close collaboration with our key customers. To that end, we have created a variety of new platforms in chilled meals focused on diet, health, and ethnic offerings.

Speaker #3: Importantly , the office loan exposure is now only $57 million across three loans , with an average loan size of 19 million . That's down from $130 million in the prior quarter due to two office loans paying off in full during the fourth quarter .

Speaker #3: To date, market acceptance has been promising, given incremental distribution awards and consumer interest. In food service, visit FEL@QSRs giving concern regarding affordability. As a result, our volumes were impacted, especially during the late half of the Q4.

Speaker #3: Credit quality across the portfolio remains stable , with an average risk rating of 2.4 at quarter end and during the quarter , two loans were removed from the watch list .

Speaker #3: To reverse this trend, several of our QSR customers reignited promotional activity during 2026. In Mexico, challenging market circumstances arose in Q4, given increased imports of animal-based protein.

Speaker #3: One was repaid in full and the other was taken as REO and subsequently sold , while two new multifamily assets were added . Borrower engagement remains high and we are actively working towards resolution on each position .

Speaker #3: As a result, the short-term supply of meat and poultry in Mexico increased to levels not previously experienced. This conditions were further amplified by weakened market fundamentals in the live commodity market as improved growing conditions increased supply.

Speaker #3: A notable change on our watch list was the Georgia Office loan that was extended 18 months in exchange for a 5% principal pay down that original loan amount of 27.5 million has now been paid down to 21.1 million , and the borrower continues to make monthly debt service payments .

Speaker #3: Nonetheless, we continue to drive our strategies. Growing volume in retail, QSRs, and food service channels compared to last year. We also increased volumes by double-digit in our fresh branded portfolio versus Q4 of 2024.

Speaker #3: That loan will stay on Non-accrual on slide 19 , I'll cover our foreclosure . Rio portfolio , our foreclosure REO balance declined to seven positions at quarter end , down from nine in the last quarter , reflecting continued progress resolving those legacy assets during the quarter .

Speaker #3: Just bare continues to be extremely well received as sales have grown more than two times compared to last year. Similarly, prepared sales volumes increased by 8% versus last year, led by key customers in food service and QSR.

Speaker #3: The team moved three assets off the REO list , selling them at our adjusted debt basis . Remaining reserves related to those assets were charged to distributable earnings this quarter , which contributed to our realized loss .

Speaker #3: Based on these efforts, we continue to diversify our portfolio and reduce the volatility for our business. Despite these short-term challenges, we continue to have growth ambitions in Mexico, given its long-term growth potential.

Speaker #3: We added a new property to our foreclosure , REO in Q4 , a Texas multifamily asset . However , it has already under Loi , and we expect resolution to that asset in the first half of this year .

Speaker #3: Status as a net importer of animal protein and effectiveness of our strategies. Our growth plans will further mitigate the volatility of our portfolio, resulting in higher, more resilient earnings profile.

Speaker #3: We remain highly focused on resolving the remaining positions so we can redeploy that capital into our core loan portfolio . And with that , I'd like to turn the turn it back over to the operator to begin the Q&A session .

Speaker #3: We have already begun implementation of our plan. In fresh, our efforts to build domestic supply, create national distribution capabilities, and diversify our geographical presence remain on schedule with growth in the South region, in Veracruz, and in the peninsula region, in Mérida.

Speaker #4: We will now begin the question and answer session to ask a question . You may press star , then one on your telephone keypad .

Speaker #3: In prepared, we are doubling our capacity of fully cooked products through the expansion of our facility in Porvenir. We anticipate our increased capacity coming online during the second quarter, further enabling growth for the second half of the year.

Speaker #4: If you are using a speakerphone , please pick up your handset before pressing the keys . If at any time your question has been addressed and you would like to withdraw your question , please press star then two .

Speaker #3: Our growth intentions in Mexico are not isolated. An overall prospect for chicken remains strong globally, given relative affordability, emerging trends in consumer preferences, and healthy attributes.

Speaker #4: At this time we will pause momentarily to assemble our roster The first question comes from Matthew Earner with Jones Trading . Please go ahead .

Speaker #3: As such, our growth investments previously announced in the US can further capitalize on these trends, reinforce our strategies, and strengthen our competitive advantage. Given these environments, our portfolio will also continue to evolve.

Speaker #5: Hey good morning guys . Thanks for taking the question . Rich . Congrats on a on a great run as well . And Mike and Brian , you guys also I want to touch on spreads and kind of the compression there .

Speaker #5: You know you guys have have mentioned or kind of hinted at you know laying off the gas a little bit there . You know it looks like conduit was pretty successful you know .

Speaker #3: To support key customer growth in fresh, we are converting one of our commodity big bird plants to a case-ready plant. We expect this conversion to become operational during the first half of 2026.

Speaker #5: So how should we think about capital allocation this quarter . You know , if the core portfolio has . Yeah , I guess muted originations somewhat .

Speaker #3: To support the expansion of prepared foods, we will install equipment upgrades, modify our plant layouts in big bird, leveraging our internal supply of differentiated NAE portion raw materials.

Speaker #1: Hey Matt good morning . Thanks for the question . I don't I don't want to take the prepared remarks out of context . We have the pedal to the floor on origination .

Speaker #3: Regardless of these investments, we fully expect to remain consistent in our quality and service levels, given our extensive network of facilities and overall supply chain capabilities.

Speaker #1: Our goal is to get , you know assets up to a level where we're , you know , meaningfully growing earnings . And we can only do that by closing loans .

Speaker #3: More importantly, we will have fortify our key customer partnerships and improve operational efficiencies, which will reduce volatility and enhance margins and drive profitable growth.

Speaker #1: Obviously , I think the the point of the message was , you know , we are not actively chasing the , you know Million in adjusted EBITDA, or an 8.8% margin.

Speaker #3: In sustainability, our journey continues. We've made significant headway in the reduction of our carbon-based direct and indirect emission intensity used for processing, compared to last year.

Speaker #3: External agencies continue to recognize progress in environmental and social matters as our scores improved compared to last year. Improvements in the team member development continue to be exceptionally well received as over 2,300 team members ordered dependents have signed up for our Better Futures program, of which 780 have begun their selected academic pathway.

Speaker #3: With that, I would like to ask our CFO, Matthew Galvanoni, to discuss our financial results.

Speaker #2: Thank you, Fabio. Good morning, everyone. For the fourth quarter of 2025, net revenues were $4.52 billion, versus $4.37 billion a year ago. With adjusted EBITDA of $415.1 million, and a margin of 9.2% compared to $525.7 million and a 12% margin in Q4 last year.

Speaker #2: For fiscal year 2025, net revenues were $18.5 billion. Versus $17.9 billion in fiscal 2024. Growth of 3.5%. While increasing adjusted EBITDA by 2.5% from 2.21 billion in fiscal 2024 to 2.27 billion this year.

Speaker #2: Back-to-back years with adjusted EBITDA margins greater than 12%. Adjusted EBITDA in the US for Q4 came in at $274.2 million. With adjusted EBITDA margins at 10.6%.

Speaker #2: Our US business continued its momentum in the quarter in fresh retail and with QSR key customers, driving above-category growth in these categories. Big bird achieved further operational improvements.

Speaker #2: However, we faced year-over-year commodity market pricing headwinds negatively impacting profitability. Our prepared foods business continued its momentum of branded product sales growth with both retail and food service customers driving year-over-year profitability improvement in the quarter.

Speaker #2: For the fiscal year, US net revenues were $11 billion, versus $10.6 billion in fiscal 2024. With adjusted EBITDA of $1.63 billion and a 14.8% margin, compared to $1.56 billion and a 14.7% margin last year.

Speaker #2: The US business maintained its margin profile through increasing sales volumes and delivering operational efficiencies. In Europe, adjusted EBITDA in Q4 was $131.4 million, versus $117.1 million in 2024, a 12.2% increase.

Speaker #2: For the full year, Europe's adjusted EBITDA improved 11.4% to $453.1 million in 2025 from $406.9 million in 2024. Europe drove improved profitability with growth in poultry sales and through the impacts of a series of operating efficiencies implemented over the last few years.

Speaker #2: Our European business is streamlined organizational structure and focus on innovative offerings has positioned it to partner more efficiently with our key customers in the region.

Speaker #2: We recognize approximately 31 million of restructuring charges during the year, down from 93 million in '24. While we continue to pursue efficiency measures, we anticipate the majority of these charges for these programs are behind us.

Speaker #2: Mexico made $9.5 million in adjusted EBITDA in Q4, compared to $36.9 million last year. When considering the full year, Mexico made $186.7 million in adjusted EBITDA, or an 8.8% margin, falling short of last year's 11.8% margin.

Speaker #2: Mexico experienced lower market pricing in the fourth quarter, driven by higher availability of imported animal-based protein. Although we did record 77 million in litigation-related settlement charges, our gap SG&A expenses in the fourth quarter were lower than last year, primarily due to a decrease in legal settlement expenses and cost efficiencies realized in Europe.

Speaker #2: For the full year, SG&A expenses were flat to last year, with slightly lower legal settlement costs being offset by higher brand marketing investments. Net interest expense for the year was a $110 million.

Operator: Welcome to the conference center. Please enter your PIN followed by the pound key or press star zero for operator assistance. Welcome to the conference center. Please enter your PIN followed by the pound key or press star zero for operator assistance.

Speaker #2: Currently, we forecast our 2026 net interest expense to be between $115 and $125 million. Our full year 2025 effective tax rate was 27.9%. We recorded a discrete tax item in the fourth quarter related to a catch-up for US state unitary taxes, which will not reoccur next year.

Speaker #2: As such, for 2026, we anticipate our effective tax rate to approximate 25%. We have a strong balance sheet and will continue to emphasize cash flows from operating activities, management of working capital, and disciplined investment in high-return projects.

Operator: Welcome to Chorus Call. Please hold for a conference specialist. Welcome to Chorus Call. Please hold for a conference specialist.

Speaker #2: As of the end of the year, our net debt total approximately $2.45 billion with a leverage ratio of less than 1.1 times our last 12 months' adjusted EBITDA.

Speaker #2: Our liquidity position remains very strong, and at the end of the fiscal year, we had over $1.8 billion in total cash and available credit.

Operator: ... Call your name, please?

[Company Representative] (FBRT): Hi, David Brown.

Operator: Company you're with?

Speaker #2: We have no short-term immediate cash requirements, with our bonds maturing between 2031 and 2034, and our US credit facility is not expiring until 2028.

[Company Representative] (FBRT): Aera.

Operator: Be on hold, David Brown.

Speaker #2: We finished the year spending $711 million of CapEx. Included in our 2025 capital spending were the growth projects in Mexico, the Big Bird plant conversion to support a key retail customer, early progress on our new prepared foods facility in Walker County, Georgia, to support our Just Bear brand growth plans, and other projects that Fabio previously mentioned.

[Company Representative] (FBRT): Thank you.

Speaker #2: The Big Bird plant conversion in the Mexican projects are on track to be completed by April. Currently, we forecast 2026 CapEx spending to be between $900 and $950 million, as we progress through these and the other projects to support prepared foods growth previously noted by Fabio.

Speaker #2: As mentioned in the past, our sustaining capital spend approximates $400 million per year. We will continue to follow our disciplined approach to capital allocations as we look to profitably grow the company and will continue to align investment priorities with our overall strategy to portfolio diversification, focus on key customers, operational excellence, and commitment to team member health and safety.

Speaker #2: Operator, this concludes our prepared remarks. Please open the call for questions.

Speaker #1: We will now begin. Question and answer session. In the interest of allowing equal access, we request that you limit your questions to two, then rejoin the queue for any follow-up.

Speaker #1: To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys to minimize background noise.

Speaker #1: To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. And your first question today comes from Ben Thurer with Barclays.

Speaker #1: Please go ahead.

Speaker #3: Yeah, good morning and thanks for taking my question. Fabio, Matt, two quick ones. So number one, maybe just on the current growing conditions and you've laid it out and you're prepared remarks.

Speaker #3: We're kind of like the cutout levels and pricing is compared to historic levels in particularly versus the last two years. So as we look into the first quarter and we've had stability coming down, how much of that would you say is related to just the genetic issue coming back up, or is it more of the weather-related, just given the cold weather we had over the last couple of weeks?

Speaker #3: Even in areas where chickens are grown. So just about the market dynamics right now and how we should think about the supply side for one queue.

Speaker #4: Yeah, thank you, Ben. Good morning. Yeah, I want to look at the supply and we always start with the breeding flock. And when you see the size of the breeding flock, we are with a total number that is down 1.9% year over year.

Speaker #4: So we have less breeders. But I think in terms of age, they are younger. Which will generate more eggs and help on the hatchability.

Speaker #4: But nonetheless, it's a smaller number. Given that input and some other factors like the weather and the seasonality, I think USDA is projecting the growth of supplying chicken for the Q1 at only 1.2% in a total for the year that will be only 1%.

Speaker #4: I think the hatchability issue, it's in part of this breed that we have and there's a lot of questions about breed. And I think the important thing for us is that we look at the overall profitability of the birds, not only one trait or another.

Speaker #4: So when you look at the profitability of the bird, we look at, of course, hatchability, but we look at conversions and we look at yields.

Speaker #4: And as of today, this bird, despite having hatchability that is below the five-year or below previous years, is still have the better yield and the better performance in terms of feed conversion than other birds.

Speaker #4: So I don't expect any significant changes. In the breed, of course, there is always new breeds coming online, but it takes time for the new breeds to roll out.

Speaker #3: Okay, perfect. And then my second question, just around within capital allocation, obviously CapEx you've mentioned the 900 to 950 million. That's a good 200 million increase versus last year and kind of like brings us to the half a billion investment for the year versus sustaining.

Speaker #3: So as you kind of laid the land in terms of these projects, the Big Bird conversion, things in Mexico prepared foods, what else is in the pipeline?

Speaker #3: I know you've made some announcements in Mexico a couple of weeks ago. So just help us understand framing that CapEx for now and also how much of that CapEx kind of carries then potentially into 2027 as you roll out more projects, just to think about the path of CapEx beyond 2026.

Speaker #4: Oh, great, great point. And I think we're always looking for the trends in the market and how can we support our key customers. And we can improve our looking to grow our prepared foods and I think we mentioned how outstanding we have results, especially because of the Just Bear brand.

Speaker #4: So we're building that new facility in Georgia. And that will take investments that started last year. It's going to take 2026 and we'll roll out to 2027.

Speaker #4: In Mexico, as we mentioned, we also diversifying our geography and we are growing in regions where we are not in. Typically in Mexico, we are in the northern region.

Speaker #4: And in the central region, we were not present in the south region and in the peninsula. And there are increasing our investments in those two regions.

Speaker #4: And that is a smaller and it's every year as we want to grow steady in those regions. So we'll have some investments in 2027.

Speaker #4: On the conversion, to increase our support to a key customer, it's going to be all done during this year and the changes on the internal supply of meat from our big bird to our prepared foods will be all done this year.

Speaker #4: I think the only thing that we can have for 2027, as we mentioned, we are seeing this trend of change of bone-in small birds to a more boneless.

Speaker #4: I think we all discuss about the sandwich horse. Many quarters ago, I've been discussing that and we're seeing that trend. And we may convert one small bird plant to a more deboning plant rather than a bone-in plant.

Speaker #3: Okay, perfect. Thanks, Fabio.

Speaker #1: And your next question comes from Peter Galbo, with Bank of America. Please go ahead.

Speaker #5: Hey, Fabio, good morning. And Matt, thanks for taking the question. Fabio, maybe just to pick up on Ben's question on the, I guess, the rally we've seen to start January in commodity prices.

Speaker #5: Just trying to think about, and I know it's a hard crystal ball, but the sustainability of that given some of it is the tailwinds to the category and other protein competing proteins being lower, versus kind of the storm impact and maybe that's having an upward pressure on prices.

Speaker #5: Just how do you think about maybe the sustainability of some of the price move we've seen into what is going to be historically and even seasonally stronger periods?

Speaker #4: Yeah, thank you very much. And good morning. We are seeing several trends supporting the demand for chicken. Starting with overall, we're seeing these macroeconomic indicators that are showing that the consumers have been watching their spending closely.

Speaker #4: And have growing concerns about the inflation. So as the inflation in food away from home is outpacing the food at home, consumers are looking for ways to save and they are moving to retail.

Speaker #4: So when we go to the retail, we see that they have more frequent trips. And lower baskets. And chicken demand has increased overall because, as we mentioned on the preparing remarks, compared to last quarter prices in retail, for boneless breasts has gone down 1%.

Speaker #4: What we see all the other competing protein prices going up. I think that created, as we mentioned, the highest spread on record. If you look at the prices of chicken compared to the prices of beef, we will have a spread of close to $2 per pound.

Speaker #4: And that is increasing the demand for chicken in the retail. When you go to the food service, despite this lower food traffic, I think the food service operators are trying to attract consumers with promotional activity I just mentioned the sandwich wars.

Speaker #4: And we're seeing the menu penetration of chicken going up in the food service. So we saw also a growth in the food service in the range of 2 to 3 percent.

Speaker #4: So I don't think that we're going to see change in those big trends during 2026. And as I mentioned, in terms of supply, USDA because of the size of the breeding flock and the state where we are in in terms of hatchability, and the high utilization on the hatcheries, we are seeing the supply growing only 1%.

Speaker #4: So I think that the trends are very positive, especially for the grilling season.

Speaker #1: Right. Okay. Thanks for that. And Matt, maybe just a couple of cleanups. If you could help us, I think you gave the interest tax and CapEx, but maybe anything on DNA for the year and then how you're just thinking about the SG&A levels, which continue to be pretty impressive how we might think about that for '26.

Speaker #1: Thanks very much, guys.

Speaker #4: Yeah, no problem, Peter. Yeah, good morning. So from a DNA perspective, depreciation and amortization, we're looking to track to about 520 million dollars for the year for '26.

Speaker #4: 2025 is about 460. And then SG&A, what I would tell you is kind of think about it sort of 140 million dollars a quarter.

Speaker #4: I think that'll help kind of get you guys pretty close maybe just a little north of that for the full year using that 140 a quarter.

Speaker #1: Awesome. Thanks, guys. And your next question today comes from Andrew Strelzik, with BMO Capital Markets. Please go ahead.

Speaker #6: Hi, good morning. This is Ben covering for Andrew. So I'll start with Mexico. Just if you could dig a little deeper on what happened there during the quarter and then we're wondering maybe what happens moving forward in the first half of '26.

Speaker #6: Is the supply-demand situation cleaned up there or should we expect some lingering pressure? Just trying to understand the potential cadence there. Thanks.

Speaker #4: Yeah, sure. Good morning. And as we've been saying, Mexico can be very volatile quarter over quarter. But on the year, we've always seen growth and very positive results there.

Speaker #4: In Q4, I think we have a series of events. Q4 typically is a good quarter. For Mexico, but during this quarter, we saw some shifts in the exports market.

Speaker #4: And Mexico was the most attractive market for especially breast meat from Brazil and other locations. And we saw a significant increase in the exports to Mexico on the breast meat.

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Speaker #4: We also saw a significant increase in pork exports to Mexico, which increased a lot the supply of meat. That impacted more the northern region.

Speaker #4: At the same time, in the central region, that includes the Mexico City, we saw the growing conditions very favorable for chicken. And after a strong first semester, we saw the supply of chicken increasing in that region.

Operator: Welcome to Chorus Call. Please hold for a conference specialist. Welcome to Chorus Call. Please hold for a conference specialist.

Speaker #4: So we have the two regions affected by different aspects. So we saw this increase in supply in the center to impacted the live market prices.

Moderator: ... Call your name, please?

[Analyst] (Aera): Hi, David Brown.

Moderator: Company you're with?

Speaker #4: And because of that, we saw the weaker Q4 than anticipated. That's why we are creating the portfolio they are creating and we're talking about growing two different regions.

[Analyst] (Aera): Aera.

Operator: Be on hold, David Brown.

Speaker #4: So growing in the south region, in Veracruz, and growing in the peninsula because these areas are more insulated from the north and from the central microdynamics.

Speaker #4: On the lingering effects, I think we're seeing now the market more into the normal season, patterns. We're seeing slowdown in the growing conditions in the center.

Speaker #4: And we always mentioned that there are several small players when the profitability is very high in that region, they come to the market. And when the profitability starts going down, they exit that market.

Speaker #4: And we are seeing that. So we're seeing a more stable supply and demand. And on the north, as well, we're seeing that all the freezers are completely full in the northern region.

Speaker #4: So I don't think that there will be any more increase in the exports to that region. So we see the volatility in Mexico, and that's why we are evolving our portfolio.

Speaker #4: To be a more resilient earnings.

Speaker #6: Got it. Thank you for that color. That's very helpful. And then my last question will be about the EU, UK business. Very strong performance during the fourth quarter there.

Speaker #6: Well over 6% operating margin. Was that how much of that was seasonally driven? I guess is the first part of the question. And then you pointed out in the 10-K, in particular, strength in domestic demand for fresh products.

Speaker #6: So if you could kind of tie that into the volume strength and profitability strength in the EU and UK and just thinking about starting 2026, I mean, if it wasn't seasonally driven in the fourth quarter, would we expect 6% plus margin to sustain there?

Speaker #6: So that's my last question. Thanks.

Speaker #4: Yeah. Thank you. Yeah, there is always seasonality in the UK, especially on the pork seeing in Europe, and there's no different than other places of the Earth, is the strength of the chicken business.

Speaker #4: So we're seeing the affordability, the availability, and also our strategies. And we are resonating with the key customers and consumers with a differentiated offering.

Speaker #4: So we're re seeing a strengthening in the chicken business in the region. But I think there is seasonality in Q4 is typically stronger in Europe than other quarters.

Speaker #4: I think we'll see significantly improvements quarter over quarter. Within this seasonality. So I think we will have a better quarter in Q1 than we have the same year ago in Q1.

Operator: Good day, and welcome to the Franklin BSP Realty Trust Q4 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Lindsey Crabbe, Director of IR. Please go ahead.

Speaker #4: Although we are seeing some weakness in QSR, that started during Q4 because of, again, the prices of specialty beef, our business in the region on the QSRs were a little bit impacted on the traffic.

Speaker #4: But we are seeing some promotional activity on those QSRs. We expect an improvement during this Q1.

Speaker #6: Thank you.

Speaker #1: Any next question comes from Pooran Sharma with Stevens. Please go ahead.

Lindsey Crabbe: Good morning, and welcome to FBRT's Q4 earnings call. Thank you, Megan, for hosting our call today. As the operator mentioned, I'm Lindsey Crabbe. With me on the call today are Richard Byrne, Chairman of FBRT, Michael Comparato, Chief Executive Officer of FBRT, Jerry Baglien, Chief Financial Officer and Chief Operating Officer of FBRT, and Brian Buffone, President of FBRT. Before we begin, I want to mention that some of today's comments are forward-looking statements and are based on certain assumptions. Those comments and assumptions are subject to inherent risks and uncertainties as described in our most recently filed SEC periodic reports, and actual future results may differ materially. The information conveyed on this call is current only as of the date of this call, 12 February 2026.

Speaker #7: Hey, this is Adam on for Pooran. Thanks very much for the question. So obviously, the beef environment continues to be a tailwind for chicken.

Speaker #7: In our eyes, there's two big moving pieces there. One, Mexican cattle imports, and two, the pace of heifer retention. Just wanted to get y'all's opinion on how those two factors on the two extremes slow versus aggressive heifer retention and the resumption or lack of cattle imports could impact chicken demand and therefore broiler margins.

Speaker #7: Thanks.

Speaker #4: Yeah, I think when we look at the retail and I mentioned that we saw the spreads at the highest number ever, right? And I think this is something that's been growing over time.

Lindsey Crabbe: The company assumes no obligation to update any statements made during this call, including any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, we will refer to certain non-GAAP financial measures, which are reconciled to GAAP figures in our earnings release and supplementary slide deck, each of which are available on our website at www.fbrtreit.com. We will refer to the supplementary slide deck on today's call. With that, I will turn the call over to Rich Byrne.

Speaker #4: And I think 2025 and 2026 has been exacerbated by the effects that you just mentioned on the price of the live animals. Here in the US, and some capacity reductions in the beef industry.

Speaker #4: I think it's very difficult to look at the sensitivity on the how much that delta needs to be to trigger trade downs. But I think what we are seeing is that the consumer really impacted in the inflation, especially on the food away from home.

Richard Byrne: Great. Thanks, Lindsay, and good morning, everyone, and thank you for joining us today. Before we begin, I'd first like to share some important management updates with you. We announced all of these the other day. First, I'm pleased to announce that Mike Comparato, who many of you already know very well, has been appointed Chief Executive Officer. This is effective immediately. Mike currently leads our commercial real estate practice at Benefit Street Partners and has been instrumental in building and scaling that platform to what it is today. He brings deep commercial real estate expertise, a strong command of capital markets, and of course, a proven track record. Concurrently with that, with Mike's promotion, Brian Buffone will assume the role of President. Brian is a seasoned real estate veteran and a long-standing member of our investment team.

Speaker #4: And we're seeing all this demand for chicken in the retail. And I think it's the same in the food service as I mentioned. It's a matter of availability because when you look at the USDA expectations for 2026, it's for the production of beef going down.

Speaker #4: So it would depend a lot more on the imports. And what type of cuts will come from these imports from South America and other regions?

Speaker #4: So we don't expect the prices of beef to reduce significantly during 2026. As you mentioned, because of the retention that have started. So I think that could be something that we'll see in 2027.

Richard Byrne: His experience, institutional knowledge, and investment acumen will continue to be invaluable as we execute our strategy and serve our, our investors. Together, these appointments represent a natural progression of FBRT's leadership, and I am excited to say, leave the company well-positioned to execute its strategy in a dynamic market. I will remain actively engaged as chairman, focused on strategic oversight and supporting Mike and Brian through this transition. So with that, let me turn the rest of the call over to Mike.

Speaker #4: But I think overall, we are seeing a very strong demand for chicken, both in retail and food service.

Speaker #7: Thank you. That's helpful. And for my follow-up, I was wondering, I think you touched on it briefly in your prepared remarks, but if you could just give a brief state of the union of the disease pressure you're seeing in Spain with I know we've seen somewhere between 100 to 150 positive cases of ASF in Spain, but yeah, anything else you can add there would be great.

Speaker #4: Yeah, of course. Our European business has been impacted for because of that. I think what we are seeing is the ASF in Spain. Spain is one of the largest producers in the world of pork.

Michael Comparato: Thanks, Rich. Good morning, everybody. And before my prepared remarks, I want to thank Rich for his years of service as FBRT’s CEO. Rich has been an integral part of the company becoming a middle-market leader in the commercial real estate finance market, and we all appreciate his dedication over the years to the company’s success. I also want to take a brief moment and congratulate Brian on being promoted to president of FBRT. Brian has been a longtime leader within Benefit Street and will now be playing a much more prominent role in FBRT. Now, on to the company. For several quarters, we have discussed our earnings under-covering our dividend. After thoughtful analysis, we decided it was no longer prudent to sacrifice book value to pay that dividend.

Speaker #4: And because of the ASF, they've been banned from exporting to China. Because those exports don't go to China, they end up in the European region.

Speaker #4: Typically, in the UK. And that is generating a lot of supply. Especially for in the sausage business. And that is creating some impact in our branded business.

Speaker #4: Because our richman brand, we are an established brand. In the UK, when it's competing with these external meat and all these private label sausage, it ends up impacting in prices.

Speaker #4: And that's why we mentioned that the richman brand was facing some challenges during Q4. But we expect some promotional activity and resilience of that brand is amazing.

Michael Comparato: Accordingly, management has recommended and the board has approved a reset of the quarterly dividend to $0.20 per common share beginning Q1 2026. The company continues to have earnings power to support a meaningfully higher dividend than $0.20. That has not changed. But in the near term, rather than returning capital to shareholders by overdistributing, we want to stabilize our book value and better match our current earnings to our dividend. Our priorities are sustainable dividend coverage, book value growth, and building more consistent, durable earnings. The dividend reset is driven by several factors. The recent declines in SOFR, the timing of our originations and repayments, and the overall size of our loan portfolio have impacted short-term returns.

Speaker #4: We've been growing year over year. So we expect that impact to reduce. Now, how long that is going to continue on the ASF in Spain and how is that going to impact long-term the UK?

Speaker #4: I don't think that that is something that we can foresee. But I don't believe that it's going to be a long-term impact as we are seeing the herd being reduced throughout Europe.

Speaker #7: Okay, great. Thank you very much.

Speaker #1: Any next question comes from Leah Jordan with Goldman Sachs. Please go ahead.

Speaker #8: Thank you. Good morning. I wanted to go back to your comments about food service in the US. You talked about the consumer shifting to retail, which is a headwind for the channel, but you continue to grow nicely.

Michael Comparato: In addition, spreads are at multi-decade tights, which means that new loans coming into the portfolio are generally making lower returns than loans that are paying off. REO liquidations are taking longer than originally anticipated, keeping equity locked in underperforming investments. We continue to make very good progress on the REO liquidation front, unfortunately, just at a slower pace than desired. Lastly, but most importantly, with our acquisition of NewPoint, we made the intentional decision to no longer be a pure play mortgage REIT. Today, we are a commercial real estate investment platform. This means a lower overall dividend yield, but significantly more earning stability and stronger long-term book value growth. This cannot be overstated. We are a different company today than we were six or nine months ago. In acquiring NewPoint, we have intentionally traded some higher near-term returns from credit investments for steadier, recurring servicing, and fee revenue.

Speaker #8: So just seeing if you could provide more detail on the demand you're seeing there. Any nuance between QSR versus others? And how much can new business wins continue to offset any broader industry slowdown there?

Speaker #8: Or how do you think about lapping the strength that you've had over the past year in innovation and LTOs?

Speaker #4: Yeah, thank you, Leah. Yeah, again, like I mentioned, the food service traffic is a challenge. And has been challenged over the last year. And the food service operator are looking for promotional activity to drive traffic.

Speaker #4: When you drill down into the segments, what we are seeing is a slowdown in the food service restaurants. Compensated by increases in the non-commercial, especially hospitality, schools, and growth in the national accounts.

Speaker #4: When you look at the promotional activity, it has been even the non-chicken QSRs are doing a lot of promotions with chicken. And we saw the increase in the overall industry close to 3%.

Michael Comparato: This type of revenue typically trades at a lower yield than pure play mortgage REITs, since it produces a much more consistent and predictable ongoing cash flow stream. When looking at our company and dividend yield today versus where we have been, the overall picture should be viewed based on a blend of our mortgage REIT operations plus that recurring revenue stream business. As we scale NewPoint, its contribution over time will continue to increase and be accretive to overall earnings. We have also recently made a few strategic investments in commercial real estate equity investments. In the current market environment, equity investments yield lower current returns in credit investments, but should provide longer-term growth and upside in earnings.

Speaker #4: So we don't expect that to change during 2026. For the factors that we already mentioned on the availability of lean beef on the burgers and the availability of other proteins and the affordability and versatility of chicken.

Speaker #8: Okay, great. Thank you. And then just for my second question, just wanted to ask about Just Bear a little bit more. You've shown some nice acceleration across prepared foods overall.

Speaker #8: But Just Bear has been really strong for you with the share gains that it's had. I know we're still waiting on that new plant to open.

Michael Comparato: An agency servicing platform and select equity investments are key to a strategy that delivers stronger long-term growth and book value for our shareholders over time and creates a company where the total return should be more meaningful than just our dividend returns to shareholders... We fully recognize we must demonstrate FBRT's repositioning to the market, and the team is working around the clock to do so. Again, FBRT should no longer be compared to pure-play mortgage REITs. We are positioning the company with a differentiated mix of dividend yield, stability, and growth, which traditional mortgage REITs do not provide. Looking ahead, our focus is on balancing attractive current income with disciplined book value growth. We believe this approach strengthens the durability of our model and better aligns our yield strategy with the business we are building.

Speaker #8: But how do you think about growth for that brand over the coming year? Considering distribution and velocity? And then you think ultimately longer term, how do you think about continuing to increase brand awareness or household penetration there?

Speaker #4: Thank you. It's a great point. And I think the brand awareness is still not at the levels of national expansion that we expected. But we are seeing that Just Bear is the number one in terms of velocity where we are.

Speaker #4: And I think that's very important for the retailers. As we are discussing with our key customers on the distribution side, if you have Just Bear in your shelves, you can see that the shelf is turning faster than with any other segment.

Speaker #4: I think it's innovation. What is going to play for us to continue to grow, I think we have a very strong core product, but we can innovate and stretch that brand to some other different.

Michael Comparato: Before turning the call over to Jerry and Brian, I want to take a minute just on overall market conditions. Market conditions overall continue to improve. Liquidity is abundant, and virtually any capital markets transactions, from CMBS to SASB to CRE CLO, is met with a deluge of orders, driving spreads tighter. As a result, we are witnessing spreads that are the tightest we've seen since pre-GFC days. We are also seeing regional banks slowly return to the market, primarily in the multifamily space. Their financing quotes typically come with large depository relationships and recourse, but we are hearing about banks quoting whole loans with the same pricing as AAA-rated bonds on CRE CLOs. We are reluctant to chase spreads to the levels that are currently being bid in the market today for commodity multifamily loans. The returns are anemic, and if SOFR continues to fall, they only get worse.

Speaker #4: Being chopped and formed because it's a whole muscle. Today, but there is a lot of opportunities in the chop and form. And the Just Bear brand promise is exactly what the consumer is looking for today, which is a clean label, no additions of antibiotics or any other items that the consumer is looking today at the labels and comparing.

Speaker #4: And that's why that is resonating so well with the consumer. So it's gains in distribution. Because we're still not very national. We went from 1% to 13% market share in a matter of five years.

Speaker #4: But we still have a lot of distribution to gain. And the velocity that we'll continue because of how the brand and the brand promise is resonating with our consumers.

Michael Comparato: However, saying all of that, given the breadth of our product offerings, we are still able to originate ample loans that fit not only our credit criteria, but also generate returns that are significantly more interesting for our investors. Brian is going to address a few of our watchlist positions, as well as provide some updates on the REO portfolio. But first, I'll turn the call over to Jerry to walk through our financial results in more detail.

Speaker #8: Great. Thank you.

Speaker #1: Any next question comes from Thomas Henry with Heather Jones Research. Please go ahead.

Speaker #9: Good morning, folks. Thanks for taking the question. On Europe, could you elaborate on any trends besides the seasonality driving the strong volume performance? And any expectations that these continuing into '26?

[Company Representative] (FBRT): Great. Thanks, Mike. I appreciate everyone being on the call today. I'm going to go through the financial results for the quarter. FBRT reported GAAP net income of $18.4 million, or 13 cents per fully converted common share. Distributable earnings for the quarter were $17.9 million, or 12 cents per fully converted share. Turning to distributable earnings, we had distributable earnings, which included $9.8 million of realized losses. Now, $7.7 million of that was related to debt extinguishments and the balance to REO sales. If you take these out, our distributable earnings was 22 cents per fully converted share, or nearly flat to where we were last quarter. Timing was a primary driver of the quarter-over-quarter change in distributable earnings.

Speaker #9: Thank you.

Speaker #4: Yeah, I think it's a normal seasonality we see the end of the year, a lot of promotional activity in terms of hams and bacon and other cuts.

Speaker #4: But as a long-term trend, what we are seeing throughout the year is the growth of chicken. That's more important than the seasonality. I think the consumer is facing the same challenges in Europe that they are facing in the United States on the inflation.

Speaker #4: And when you look at the breakdown of the growth in total grocery, grocery is growing 4%, but chicken is growing 8 to 10 percent.

Speaker #4: So there is the seasonal effects, and we saw some growth in the fresh pork close to 5% this quarter. But the long-term trend is a more growth in the chicken side.

[Company Representative] (FBRT): Early in Q4, we completed a $1 billion CLO, FL12, that increased our non-recourse financing capacity. With this transaction, we called several older CLOs that were past the reinvestment periods, which produced a debt extinguishment charge that I mentioned of $0.07 per share. The new CLO should lower financing costs in 2026, and additionally, add meaningful origination capacity. We grew the core portfolio slightly in Q4 as originations outpaced payoffs. The principal balance rose modestly as we originated about $528 million of new commitments while receiving roughly $510 million of loan repayments, a small but important reversal from Q3, when the core portfolio declined as we conserved liquidity for the NewPoint acquisition. During the quarter, we recorded a net CECL benefit of $4.8 million. However, that included $3 million of loan-specific reserves for four watchlist loans.

Speaker #4: And of course, with the innovations that we are doing, the partnerships that we are doing in Europe on the meals, we're also creating some new lines that are generating great results.

Speaker #4: The meals are a very affordable way for a family to have their needs. So I think it's something that we're investing together with key customers on differentiating, creating better experiences for our and differentiating in terms of ethnicity.

Speaker #4: For the consumers.

Speaker #1: Any next question comes from Guilherme Palhares with Santander. Please go ahead.

Speaker #9: Good morning, everyone. Thank you for taking my questions. Just two quick ones. The first is, where do you see today the capacity of group parents of chicken in the US?

[Company Representative] (FBRT): One of those loans was subsequently transferred to REO, and the associated specific reserve was charged off. Importantly, we continued our share buybacks in Q4, repurchasing $14.4 million of common stock, which contributed $0.05 to book value. Subsequent to quarter-end, our board reauthorized the company's share repurchase program, providing $50 million available for future share repurchases through 31 December 2026 to further support the stock price. Book value per share ended the quarter at $14.15, reflecting our dividend outpacing our earnings. Net leverage remains well within our targets and ended the quarter at 2.5 times, with recourse leverage standing at 0.81 times. We have ample financing capacity and liquidity, with reinvest available on two of our CLOs.

Speaker #9: And the second one, if you could talk a bit about the new trade permit of EU towards the Brazilian chicken and whether this could have any impact on the business there.

Speaker #9: Thank you.

Speaker #4: Yeah, thank you. On the grandparents, the information we have is the USDA. Information when we talk about the size of the breeding flock, it includes the grandparents.

Speaker #4: And when we look at the number, it is down 1.9%. And that includes the processors and includes the grandparents. So I don't see any or we don't have any information about significant increase in the grandparent size of that.

Speaker #4: On the impact of the Mercosur agreement or the UK-Europe and Brazil, what we are seeing is the normal continuation of a long-term export from Brazil, which is one of the largest chicken exporters, to Europe.

[Company Representative] (FBRT): As we redeploy the capacity created by our financing actions, we expect earnings to benefit in 2026 as our core loan portfolio grows and we see a more stabilized contribution from NewPoint. Turning to slide 11 for updates on NewPoint. NewPoint contributed modestly in Q4. This was expected given a lower origination cadence in the quarter and paired with higher tax reserves at the TRS that reduced NewPoint's reported earnings in Q4. We expect NewPoint's distributable earnings contribution to operate at a run rate of approximately $25 to 33 million per year. Agency volume came in at $1.1 billion of new loan originations in the quarter. We expect agency volumes to be between $4.5 and 5.5 billion in 2026.

Speaker #4: I think Brazil typically exports breast meat and that breast meat goes to the food service. When you look at the UK consumer, they give great value to the provenance.

Speaker #4: And our chicken business and our pork business in Europe are mainly on the retail side because we are local producers. Because the standards of producing in the UK, both chicken and pork, are higher than everywhere else in the world.

Speaker #4: So the consumer pays a premium and they have this important trade of provenance. So when we look at the impacts of these agreements, it's more on the food service area.

[Company Representative] (FBRT): At quarter end, the MSR portfolio was valued at approximately $220 million and generated $8.8 million of income in Q4, reflecting an average MSR rate of approximately 82 basis points, and the implied life of that portfolio was 6.4 years. NewPoint managed a servicing portfolio that was $47.8 billion at quarter end. The NewPoint BSP integration work continues to move forward. We made significant progress on the migration of BSP's loans and that servicing book onto NewPoint, and we're on pace to complete that transition by the middle of Q1. The addition of the BSP loans will increase NewPoint's servicing book by approximately $10 billion and help to contribute to the increase in earnings power of NewPoint in 2026.

Speaker #4: And we have a strong food service there that can benefit from cheaper raw material being from Thailand, being from Poland, or being from Brazil.

Speaker #4: So I think it is a good tailwind for our food service production in the UK. But it doesn't have a big impact on the retail side.

Operator: Good day, and welcome to the Franklin BSP Realty Trust Q4 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Lindsey Crabbe, Director of IR. Please go ahead.

Speaker #9: Thank you, Father.

Speaker #1: Any next question comes from Priya Rai Gupta with Barclays. Please go ahead.

Speaker #8: Hi, good morning. Thank you for taking the question. Matt, you for the last two years, the operating cash flow, before looking at changes in working capital, has been pretty consistent around 1.6 billion or so.

[Company Representative] (FBRT): We remain confident NewPoint is very accretive over the long term as origination and servicing volumes grow and integration synergies continue to build. With that, I'll turn it over to Brian to give you an update on our portfolio.

Lindsey Crabbe: Good morning, and welcome to FBRT's Q4 earnings call. Thank you, Megan, for hosting our call today. As the operator mentioned, I'm Lindsey Crabbe. With me on the call today are Richard Byrne, Chairman of FBRT, Michael Comparato, Chief Executive Officer of FBRT, Jerry Baglien, Chief Financial Officer and Chief Operating Officer of FBRT, and Brian Buffone, President of FBRT. Before we begin, I want to mention that some of today's comments are forward-looking statements and are based on certain assumptions. Those comments and assumptions are subject to inherent risks and uncertainties as described in our most recently filed SEC periodic reports, and actual future results may differ materially. The information conveyed on this call is current only as of the date of this call, 12 February 2026.

Speaker #8: Is there any reason that we should think about '26 looking different from that and then secondly, just as we think about the working capital piece, what are some of the trends that we should keep in mind as to whether that'll be through a positive or negative contribution to the cash from operations?

Brian Buffone: Thanks, Jerry. Good morning, everyone. I just quickly want to start by saying thank you to Rich and Mike for their kind words and support earlier, and as I step into this role, I look forward to continuing to execute our strategy alongside Mike and the broader FBRT team. I'll start on slide 15. Our core portfolio finished Q4 at roughly $4.4 billion, with about 77% of our loans backed by multifamily assets and very limited office exposure. During the quarter, we originated 37 loans at a weighted average spread of 284 basis points, with multifamily representing 76% of our new loan originations. Our pipeline is robust, but given current spreads, we are selective on pacing, as Mike mentioned earlier.

Speaker #8: Thanks.

Speaker #4: Thanks, Priya. Good talking to you. Generally, I don't see a major change kind of from your first question, relative to everything. And of course, we are increasing our CapEx spend intention tier for 2026 versus 2025 by call it almost 200 million.

Speaker #4: So that, of course, will come into play. But relative to working capital, I think when you look back to 2024, right, we had a lot of kind of tailwinds for us with the large grain cost decrease in '24 versus '23.

Lindsey Crabbe: The company assumes no obligation to update any statements made during this call, including any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, we will refer to certain non-GAAP financial measures, which are reconciled to GAAP figures in our earnings release and supplementary slide deck, each of which are available on our website at www.fbrtreit.com. We will refer to the supplementary slide deck on today's call. With that, I will turn the call over to Rich Byrne.

Speaker #4: Of course, things flattened out more in '25. What we really saw there in the inventory side is we had some more purposeful increases in what I'll call whip or finished goods because we were able to procure some cheaper breast meat at kind of opportune times, which increased some of our inventory levels.

Brian Buffone: Our conduit business had an incredible quarter, one of the largest in the history of the company, and that reflects an improved CMBS market liquidity and healthy investor demand. Our pre-rate hype book represents roughly 32% of the total loans, loan commitments of $1.3 billion in multifamily or 82% of that pre-rate hype book. Credit mix remains steady. 76% of those legacy loans are risk graded 2 or 3 at quarter end, and we're continuing to work through the positions that need extra attention on the watchlist. Importantly, the office loan exposure is now only $57 million across 3 loans, with an average loan size of $19 million. That's down from $130 million in the prior quarter due to 2 office loans paying off in full during the Q4.

Speaker #4: AR was kind of some of that, I'll call it, headwind was really more just higher sales pricing. So overall, I would say I don't see the repeat on the negative side on the inventory.

Rich Byrne: Great. Thanks, Lindsay, and good morning, everyone, and thank you for joining us today. Before we begin, I'd first like to share some important management updates with you. We announced all of these the other day. First, I'm pleased to announce that Mike Comparato, who many of you already know very well, has been appointed Chief Executive Officer. This is effective immediately. Mike currently leads our commercial real estate practice at Benefit Street Partners and has been instrumental in building and scaling that platform to what it is today. He brings deep commercial real estate expertise, a strong command of capital markets, and of course, a proven track record. Concurrently with that, with Mike's promotion, Brian Buffone will assume the role of President. Brian is a seasoned real estate veteran and a long-standing member of our investment team.

Speaker #4: That we saw in '25, of course, we'll have to watch and see what grain does, but kind of where grain sits today, we feel it should be more flattish.

Speaker #4: And then we'll just watch and monitor in AR. Hopefully, that helps.

Speaker #8: Yeah, that's really helpful. And then just one follow-up on the CapEx piece. So there's a headline just talking about 1.3 billion in investments in Mexico through '2030.

Brian Buffone: Credit quality across the portfolio remains stable, with an average risk rating of 2.4 at quarter end. During the quarter, 2 loans were removed from the watchlist. One was repaid in full, and the other was taken as REO and subsequently sold, while 2 new multifamily assets were added. Borrower engagement remains high, and we are actively working towards resolution on each position. A notable change on our watchlist was the Georgia office loan that was extended 18 months in exchange for a 5% principal paydown. That original loan amount of $27.5 million has now been paid down to $21.1 million, and the borrower continues to make monthly debt service payments. That loan will stay on nonaccrual. On slide 19, I'll cover our foreclosure REO portfolio.

Speaker #8: So as we think going forward, and I know you gave us a little bit of context into '27, but how should we think about that 1.3 billion specifically related to Mexico over '26 to '30, if you can give us some directional sense?

Speaker #4: Yeah, thank you. I think that is a long-term vision that we have just like I mentioned to grow in regions where we are not and grow our prepared foods.

Rich Byrne: His experience, institutional knowledge, and investment acumen will continue to be invaluable as we execute our strategy and serve our, our investors. Together, these appointments represent a natural progression of FBRT's leadership, and I am excited to say, leave the company well-positioned to execute its strategy in a dynamic market. I will remain actively engaged as chairman, focused on strategic oversight and supporting Mike and Brian through this transition. So with that, let me turn the rest of the call over to Mike.

Speaker #4: So that includes significant growth in the south region and in the Merida region, as well as the duplication of our prepared foods facilities. And in that investment is included also some investments done by growers to support that growth.

Speaker #4: So it's not totally from us, but it's because of our projects. And that will help close the gap in Mexico. Mexico is a big importer of meat.

Brian Buffone: Our foreclosure REO balance declined to seven positions at quarter end, down from nine in the last quarter, reflecting continued progress resolving those legacy assets. During the quarter, the team moved three assets off the REO list, selling them at our adjusted debt basis. Remaining reserves related to those assets were charged to distributable earnings this quarter, which contributed to our realized loss. We added a new property to our foreclosure REO in Q4, a Texas multifamily asset. However, it is already under LOI, and we expect resolution to that asset in the first half of this year. We remain highly focused on resolving the remaining positions so we can redeploy that capital into our core loan portfolio. With that, I'd like to turn it back over to the operator to begin the Q&A session.

Mike Comparato: Thanks, Rich. Good morning, everybody. And before my prepared remarks, I wanna thank Rich for his years of service, as FBRT's CEO. Rich has been an integral part of the company becoming a middle-market leader in the commercial real estate finance market, and we all appreciate his dedication over the years to the company's success. I also want to take a brief moment, and congratulate Brian on being promoted to president of FBRT. Brian has been a longtime leader within Benefit Street and will now be playing a much more prominent role in FBRT. Now on to the company. For several quarters, we have discussed our earnings under covering our dividend. After thoughtful analysis, we decided it was no longer prudent to sacrifice book value to pay that dividend.

Speaker #4: And we believe that we with our growth in Mexico, we can reduce the need of the imports by 35%, which helps a lot in the food security for the region.

Speaker #8: That's helpful. Thank you.

Speaker #1: This concludes the question and answer session. I would like to turn the conference back over to Fabio Sandri for any closing remarks.

Speaker #4: Yeah, thank you, everyone, for attending today's call. Throughout 2025, we accelerated our performance through a leadership mindset, living our values, and driving our methods.

Speaker #4: Given our teamwork, we deliver yet another strong year. 2026 started with severed weather events that impacted many regions where we operate. And I'd like to thank our team members and extend my deepest appreciation for their efforts every day and their dedication to our company and our communities.

Mike Comparato: Accordingly, management has recommended and the board has approved a reset of the quarterly dividend to $0.20 per common share beginning Q1 2026. The company continues to have earnings power to support a meaningfully higher dividend than $0.20. That has not changed. But in the near term, rather than returning capital to shareholders by overdistributing, we want to stabilize our book value and better match our current earnings to our dividend. Our priorities are sustainable dividend coverage, book value growth, and building more consistent, durable earnings. The dividend reset is driven by several factors. The recent declines in SOFR, the timing of our originations and repayments, and the overall size of our loan portfolio have impacted short-term returns.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Matthew Erdner with JonesTrading. Please go ahead.

Speaker #4: Moving forward, we must continue to drive our efforts with an unwavering focus on team member safety and well-being, product quality, and sustainability. When combined with our strategy and approach, we can achieve our vision to be the best and most respected company in our industry, creating an opportunity for a better future for our team members and their families.

Speaker #4: Equally important, we initiated the next chapter in our growth journey through investments across all regions. Based on these efforts, we can further drive profitable growth, reduce volatility, and enhance margins throughout our entire portfolio.

Matthew Erdner: Hey, good morning, guys. Thanks for taking the question. Rich, congrats on a great run as well, and Mike and Brian, you guys also. I want to touch on spreads and kind of the compression there. You know, you guys have mentioned or kind of hinted at, you know, laying off the gas a little bit there. You know, it looks like Conduit was pretty successful, you know, so how should we think about capital allocation this quarter, you know, if the core portfolio has muted origination somewhat?

Speaker #4: To that end, I look forward to strengthening our legacy in 2026 and beyond. Thank you all.

Mike Comparato: In addition, spreads are at multi-decade tights, which means that new loans coming into the portfolio are generally making lower returns than loans that are paying off. REO liquidations are taking longer than originally anticipated, keeping equity locked in underperforming investments. We continue to make very good progress on the REO liquidation front, unfortunately, just at a slower pace than desired. Lastly, but most importantly, with our acquisition of NewPoint, we made the intentional decision to no longer be a pure play mortgage REIT. Today, we are a commercial real estate investment platform. This means a lower overall dividend yield, but significantly more earning stability and stronger long-term book value growth. This cannot be overstated. We are a different company today than we were six or nine months ago. In acquiring NewPoint, we have intentionally traded some higher near-term returns from credit investments for steadier, recurring servicing, and fee revenue.

[Company Representative] (FBRT): Hey, Matt. Good morning. Thanks for the question. I don't, I don't want to take the prepared remarks out of context. We have the pedal to the floor on origination. Our goal is to get, you know, assets up to a level where we're, you know, meaningfully growing earnings, and we can only do that by closing loans, obviously. I think, you know, the point of the message was, you know, we are not actively chasing the, you know, commodity ADI-

Mike Comparato: This type of revenue typically trades at a lower yield than pure play mortgage REITs, since it produces a much more consistent and predictable ongoing cash flow stream. When looking at our company and dividend yield today versus where we have been, the overall picture should be viewed based on a blend of our mortgage REIT operations plus that recurring revenue stream business. As we scale NewPoint, its contribution over time will continue to increase and be accretive to overall earnings. We have also recently made a few strategic investments in commercial real estate equity investments. In the current market environment, equity investments yield lower current returns in credit investments, but should provide longer-term growth and upside in earnings.

Mike Comparato: An agency servicing platform and select equity investments are key to a strategy that delivers stronger long-term growth and book value for our shareholders over time and creates a company where the total return should be more meaningful than just our dividend returns to shareholders... We fully recognize we must demonstrate FBRT's repositioning to the market, and the team is working around the clock to do so. Again, FBRT should no longer be compared to pure-play mortgage REITs. We are positioning the company with a differentiated mix of dividend yield, stability, and growth, which traditional mortgage REITs do not provide. Looking ahead, our focus is on balancing attractive current income with disciplined book value growth. We believe this approach strengthens the durability of our model and better aligns our yield strategy with the business we are building.

Mike Comparato: Before turning the call over to Jerry and Brian, I want to take a minute just on overall market conditions. Market conditions overall continue to improve. Liquidity is abundant, and virtually any capital markets transactions, from CMBS to SASB to CRE CLO, is met with a deluge of orders, driving spreads tighter. As a result, we are witnessing spreads that are the tightest we've seen since pre-GFC days. We are also seeing regional banks slowly return to the market, primarily in the multifamily space. Their financing quotes typically come with large depository relationships and recourse, but we are hearing about banks quoting whole loans with the same pricing as AAA-rated bonds on CRE CLOs. We are reluctant to chase spreads to the levels that are currently being bid in the market today for commodity multifamily loans. The returns are anemic, and if SOFR continues to fall, they only get worse.

Mike Comparato: However, saying all of that, given the breadth of our product offerings, we are still able to originate ample loans that fit not only our credit criteria, but also generate returns that are significantly more interesting for our investors. Brian is going to address a few of our watchlist positions, as well as provide some updates on the REO portfolio. But first, I'll turn the call over to Jerry to walk through our financial results in more detail.

Jerry Baglien: Great. Thanks, Mike. I appreciate everyone being on the call today. I'm going to go through the financial results for the quarter. FBRT reported GAAP net income of $18.4 million, or 13 cents per fully converted common share. Distributable earnings for the quarter were $17.9 million, or 12 cents per fully converted share. Turning to distributable earnings, we had distributable earnings, which included $9.8 million of realized losses. Now, $7.7 million of that was related to debt extinguishments and the balance to REO sales. If you take these out, our distributable earnings was 22 cents per fully converted share, or nearly flat to where we were last quarter. Timing was a primary driver of the quarter-over-quarter change in distributable earnings.

Jerry Baglien: Early in Q4, we completed a $1 billion CLO, FL12, that increased our non-recourse financing capacity. With this transaction, we called several older CLOs that were past the reinvestment periods, which produced a debt extinguishment charge that I mentioned of $0.07 per share. The new CLO should lower financing costs in 2026, and additionally, add meaningful origination capacity. We grew the core portfolio slightly in Q4 as originations outpaced payoffs. The principal balance rose modestly as we originated about $528 million of new commitments while receiving roughly $510 million of loan repayments, a small but important reversal from Q3, when the core portfolio declined as we conserved liquidity for the NewPoint acquisition. During the quarter, we recorded a net CECL benefit of $4.8 million. However, that included $3 million of loan-specific reserves for four watchlist loans.

Jerry Baglien: One of those loans was subsequently transferred to REO, and the associated specific reserve was charged off. Importantly, we continued our share buybacks in Q4, repurchasing $14.4 million of common stock, which contributed $0.05 to book value. Subsequent to quarter-end, our board reauthorized the company's share repurchase program, providing $50 million available for future share repurchases through 31 December 2026 to further support the stock price. Book value per share ended the quarter at $14.15, reflecting our dividend outpacing our earnings. Net leverage remains well within our targets and ended the quarter at 2.5 times, with recourse leverage standing at 0.81 times. We have ample financing capacity and liquidity, with reinvest available on two of our CLOs.

Jerry Baglien: As we redeploy the capacity created by our financing actions, we expect earnings to benefit in 2026 as our core loan portfolio grows and we see a more stabilized contribution from NewPoint. Turning to slide 11 for updates on NewPoint. NewPoint contributed modestly in Q4. This was expected given a lower origination cadence in the quarter and paired with higher tax reserves at the TRS that reduced NewPoint's reported earnings in Q4. We expect NewPoint's distributable earnings contribution to operate at a run rate of approximately $25 to 33 million per year. Agency volume came in at $1.1 billion of new loan originations in the quarter. We expect agency volumes to be between $4.5 and 5.5 billion in 2026.

Jerry Baglien: At quarter end, the MSR portfolio was valued at approximately $220 million and generated $8.8 million of income in Q4, reflecting an average MSR rate of approximately 82 basis points, and the implied life of that portfolio was 6.4 years. NewPoint managed a servicing portfolio that was $47.8 billion at quarter end. The NewPoint BSP integration work continues to move forward. We made significant progress on the migration of BSP's loans and that servicing book onto NewPoint, and we're on pace to complete that transition by the middle of Q1. The addition of the BSP loans will increase NewPoint's servicing book by approximately $10 billion and help to contribute to the increase in earnings power of NewPoint in 2026.

Jerry Baglien: We remain confident NewPoint is very accretive over the long term as origination and servicing volumes grow and integration synergies continue to build. With that, I'll turn it over to Brian to give you an update on our portfolio.

Brian Buffone: Thanks, Jerry. Good morning, everyone. I just quickly want to start by saying thank you to Rich and Mike for their kind words and support earlier, and as I step into this role, I look forward to continuing to execute our strategy alongside Mike and the broader FBRT team. I'll start on slide 15. Our core portfolio finished Q4 at roughly $4.4 billion, with about 77% of our loans backed by multifamily assets and very limited office exposure. During the quarter, we originated 37 loans at a weighted average spread of 284 basis points, with multifamily representing 76% of our new loan originations. Our pipeline is robust, but given current spreads, we are selective on pacing, as Mike mentioned earlier.

Brian Buffone: Our conduit business had an incredible quarter, one of the largest in the history of the company, and that reflects an improved CMBS market liquidity and healthy investor demand. Our pre-rate hype book represents roughly 32% of the total loans, loan commitments of $1.3 billion in multifamily or 82% of that pre-rate hype book. Credit mix remains steady. 76% of those legacy loans are risk graded 2 or 3 at quarter end, and we're continuing to work through the positions that need extra attention on the watchlist. Importantly, the office loan exposure is now only $57 million across 3 loans, with an average loan size of $19 million. That's down from $130 million in the prior quarter due to 2 office loans paying off in full during the Q4.

Brian Buffone: Credit quality across the portfolio remains stable, with an average risk rating of 2.4 at quarter end. During the quarter, 2 loans were removed from the watchlist. One was repaid in full, and the other was taken as REO and subsequently sold, while 2 new multifamily assets were added. Borrower engagement remains high, and we are actively working towards resolution on each position. A notable change on our watchlist was the Georgia office loan that was extended 18 months in exchange for a 5% principal paydown. That original loan amount of $27.5 million has now been paid down to $21.1 million, and the borrower continues to make monthly debt service payments. That loan will stay on nonaccrual. On slide 19, I'll cover our foreclosure REO portfolio.

Brian Buffone: Our foreclosure REO balance declined to 7 positions at quarter end, down from 9 in the last quarter, reflecting continued progress resolving those legacy assets. During the quarter, the team moved 3 assets off the REO list, selling them at our adjusted debt basis. Remaining reserves related to those assets were charged to distributable earnings this quarter, which contributed to our realized loss. We added a new property to our foreclosure REO in Q4, a Texas multifamily asset. However, it is already under LOI, and we expect resolution to that asset in the first half of this year. We remain highly focused on resolving the remaining positions so we can redeploy that capital into our core loan portfolio. With that, I'd like to turn it back over to the operator to begin the Q&A session.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Matthew Erdner with JonesTrading. Please go ahead.

Matthew Erdner: Hey, good morning, guys. Thanks for taking the question. Rich, congrats on a great run as well, and Mike and Brian, you guys also. I want to touch on spreads and kind of the compression there. You know, you guys have mentioned or kind of hinted at, you know, laying off the gas a little bit there. You know, it looks like Conduit was pretty successful, you know, so how should we think about capital allocation this quarter, you know, if the core portfolio has muted origination somewhat?

Mike Comparato: Hey, Matt. Good morning. Thanks for the question. I don't, I don't want to take the prepared remarks out of context. We have the pedal to the floor on origination. Our goal is to get, you know, assets up to a level where we're, you know, meaningfully growing earnings, and we can only do that by closing loans, obviously. I think, you know, the point of the message was, you know, we are not actively chasing the, you know, commodity ADI-