Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Burford Capital Fiscal Year 2025 and Fourth Quarter 2025 Financial Results Conference Call and Audio Webcast. [Operator Instructions] I would now like to turn the call over to Josh Wood, Head of Investor Relations. You may begin.

Thank you, Bailey. Good morning, everyone, and thank you for joining us to discuss Burford's fourth quarter and full year 2025 results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, Jon Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, as well as our annual shareholder letter, and we also filed our Form 10-K for 2025. If you haven't already, you can find all of these materials on our Investor Relations website. Before we get started, just a reminder that today's call may contain forward-looking statements that involve certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed during the call. For information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also be referring to certain non-GAAP financial measures during the call. Please refer to today's earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, I'll turn the call over to Chris.

Thanks, Josh, and thanks, everybody, for joining us today. I'm going to take you through some key messages, and I'm going to start on Slide 9 of the presentation deck. And what I'd really emphasize about what happened in 2025 is that we had a standout year when it came to new business, which is the thing that we really have the largest amount of control over in this business. So we saw -- as you can see here, we saw very significant numbers, taking us well on our way to meeting our longer-term goals of doubling the base portfolio by 2030. If we were to keep on, on this clip, we would significantly exceed that goal. So that was just a terrific performance across the board: new definitive commitments, deployments, we added a net of $700 million of additional modeled realizations to the overall portfolio, taking that number to north of $5 billion now. So we're very pleased with how the year went from that perspective. As all of you will be aware, our realization activity, while still robust, was not as strong as it was last year. And that, of course, was a disappointment to us. That's, of course, also something that we have less control over, and it's something that as longtime observers of this business know, it's something that can ebb and flow with the level of activity going on in the courts. And we've been describing to you over the past several years, a world where we have a significant volume of older cases in the portfolio, which are simply not moving through the court system, the court process, at quite the pace that we would wish. We think that's probably still a hangover from the portfolio. In our shareholder letter this year, which I'd…

Thanks, Chris. Good morning, everyone. I'm going to take us through our 2 segments. That's the total segment. That's what we also call Burford-only. It's what the shareholders own. I'm going to jump straight into the Principal Finance and focus on the portfolio to start. If you look at the snapshot of where we are on Page 22, and you can see the portfolio is now $3.9 billion. YPF represents slightly below $1.7 billion. And then we've got deployed cost of slightly over $1.7 billion, and then unrealized fair value above that of around just under $500 million, which is around 27%, 28% of the total deployed cost. It sets us up, obviously, very well when you think about what the potential future of gains can be relative to how much cost in portfolio is out there. If you think about that number relative to our historic 82%, 83% ROIC, or we'll talk more about our modeled realizations in a couple of slides. The portfolio is also very diverse. You've seen these 2 charts before, and it remains -- the diversity still remains very similar in terms of geography with just over 50% in North America and continuing to expand, as Chris highlighted briefly, and we talk more about in the shareholder letter, as we explore other opportunities internationally. Asset type is also extremely diverse with a number of different, what I'll call, 20% type slices. In terms of moving forward, though, on how this segment, this is our Principal Finance segment, how did the revenue capital provision income play forward. First and foremost, I think Chris spent a lot of time with that on Slide 12, historically looking at breaking down the capital provision income between its gains and losses and then also the net realized gains and losses…

Thanks very much, Jordan, and thanks to you all for joining. So as Jordan and Chris have both said, it was a very strong year when it came to new business and increasing the potential of the portfolio. And I'm going to turn to that, but I do want to first turn to Slide 25 and have a word about the past. When you look at Slide 25, as Chris and Jordan both said, the realizations were not in '25 what they were in '24, a record year. But as Chris also pointed out, it wasn't a lack of activity in the portfolio that we had 69 assets contributing to realizations in '25 compared to 71 in '24, pretty comparable, just not as many big, chunky realizations. There was one matter that was a large deployment that was fairly short term. And in fact, when you look at the ROIC numbers, part of the reason that the ROIC number for '25 was lower is that matter happened quickly enough that we had a 40% IRR, but only a 25% ROIC. I'd do that deal any day when it comes along, but it's going to affect the numbers. Nonetheless, you see that our track record across the 2 years produced an ROIC of 81%, which is almost spot on with the historical track record over a longer period. And that's not really surprising. If you turn to Slide 26, you've seen this slide before. Basically, the nature of our business is there's 3 possible outcomes for any time we put money out. We can have an adjudication gain. We go to trial and win. We can have an adjudication loss, so we can have a settlement. The vast majority of our matters settle. They settle at an attractive IRRs and ROICs,…

Thank you, Jon. I'm going to switch to Page 30 and talk a little bit about how do you tie that $5.2 billion then and think about that with respect to the Principal Finance balance sheet. So this is obviously on the ex-YPF basis. And the first piece to understand is, well, what if all the cases won, went all the way to the very end and adjudicated win. That estimate, that's what we sometimes call the win node, and it's where all of our initial work starts from. When you start to think about a settlement, when you think about the different probabilities of what could happen in the case, it derives from, well, what could happen if you actually won, even though the overall majority of our cases, 70%, 80% of them ultimately settle, well, that win node would be $12.8 billion. What we then do is we establish a model in which there's a litigation risk premium and, of course, duration, the discounting back. And when you bring that down, that window then settles at $2.2 billion, and that can be broken into the fair value that I -- that's the fair value that we have on the balance sheet, and that's broken into the net unrealized gains as well as the deployed cost. That's the $2.2 billion and the $1.7 billion. Where will that book of business ultimately land? The modeled realizations, as Jon just described, is $5.2 billion. And then ultimately, we believe in a modeled ROIC of 110%. That, of course, is based on a future estimate of deployed cost. The cases still have some money to spend to get to their ultimate conclusion. And so that's estimated on this slide to be at $2.5 billion. So that gives you a little bit of…

Thanks very much, Jordan. And I'm on Slide 39. And just to really come and sum up here. We have what we believe is a pretty fantastic core operating business, and Jon took you in some detail through why we believe that. We have showed a consistent ability to grow that business over time, growing to what is now a very substantial player in the legal industry. We deliver cash regularly. We don't always deliver as much cash as we would like as 2025 is a testament to. But that doesn't mean the cash isn't coming. It just means the cash is somewhat delayed. I've used for years with many of you the analogy of the litigation process being a conveyor belt, and that's exactly what it is. It moves forward. It moves forward inexorably, but it twists and turns and moves at unpredictable speeds. We can't control that. But in some ways, we're the beneficiary of it because that is what gives us our completely uncorrelated returns. So we have growth, we have cash, and we continue to believe that this business can produce a long-term ROE in the 20% range, as we've said before. On top of that, we've got the YPF assets, which we think continue to have very substantial value and option value for the business. And we are continuing to grow this business, not only in the core business, but as we continue to drive throughout the legal ecosystem. So we thank you all for your support. And with that, we're happy to take your questions.

[Operator Instructions] Your first question will come from the line of Mark DeVries with Deutsche Bank.

I appreciate this is not going to be an easy question. But just looking across all the different matters in your portfolio, where they are in the development, can you give us any sense for how the outlook for realizations looks for '26 relative to 2025?

So the short answer to that is no for 2 reasons. One is because as a matter of policy, we don't guide that way, just because we simply feel like we're unable to do so. And number two is I used my 2 lanes -- my 4 lanes merging into 2. And the problem with that is that we don't really know the pace of that merging. Like if you go back to Slide 28 that Jon talked about, that shows you a lot of stuff that is, to use a technical expression, jammed up in the 2015 and onward. And there's stuff there that just shouldn't have taken that long. Some stuff in litigation always takes a long time. And I always get people asking me when they look all the way back on this chart, they say, oh, look, you've still got active deployments from 2010. Are you kidding yourself? Are those ever going to come in? And the answer is yes to that. We write them off if they're not going to come in. But we actually got some money out of that 2010 band this year, and we're expecting to get more in this coming year. So no is the answer to that question. But the simple reality is those cases are going to move over time, and we just don't know exactly what that timing looks like. It would be lovely if we could take this on a quarter-by-quarter basis and give you a pretty reliable projection, but we just can't do that. And candidly, if we were able to do that, I think that more people would do this business and the returns would be lower. So the fact that it is unpredictable, while I realize is painful to many of our current shareholders, it, in fact, is also, to some extent, a moat in this business.

Okay. Any other color you can give us on what's driving this dynamic of the 4 lanes merging into 2? Are we still dealing with like backlogs related to court closures from the pandemic or other factors worth calling out?

No, I think you really are. Like when you think about what happened there, you had court closures at a time when there was no lessening of new disputes. And so you had the same volume of new disputes. If you look at the filing levels, it's not like they collapsed during the pandemic. So you had a world where all of a sudden, courts don't have any physical ability to expand their operations. We already have vastly fewer judges in courtrooms than we do for the number of cases filed. And the reason for that is that the system expects, just as our portfolio shows, most cases to resolve by settlement. But to get a case settled needs a catalyst, right? If you're a defendant, you're not going to settle a case if you can simply sit on your hands and not spend the money to settle the case. So you need to feel some pressure. And the pressure usually is the case is moving through the process along the conveyor belt that I described, and it's putting you at trial risk. So if the court congestion is kicking the trial risk out, then you're realistically also kicking that settlement pressure out. And look, I think it's getting better, but it's a lot for the system to absorb, given that every single year, something like 12 million new civil cases are filed in the United States.

And then I've got an accounting question for Jordan. Jordan, do you have room to get more conservative on the duration assumptions on your fair values such that you reduce the risk that you have these negative fair value marks when you don't have a negative development, it's just a change in assumption related to the duration of the case?

Absolutely. And I think that we're constantly looking at our models with respect to how to initially establish duration and then how it impacts over time. So yes, to the extent that we see it up at the onset, that we should set a duration that's longer, we can, and we have that ability.

Your next question comes from the line of Timothy D'Agostino with B. Riley Securities.

Regarding new definitive commitments, I was wondering if you could provide some color on the composition of those, understanding that '25 lacked some of those big case resolutions. So as we look at new commitments for this year, I guess, any color on the composition of maybe how many dollar amount or case-wise are these larger scale cases, that would be great.

Sure. So for those of you who are newer to Burford, let me just remind you that in addition to all of the gory detail that we provide in the slides and the 10-K and so on, we also publish on our website a detailed table that goes literally case by case and shows you for each new -- well, for each existing and for each new case that we put on, it shows you a bunch of demographic information. So it shows you the type of case, so whether it's, for example, a business court or an intellectual property case, or an antitrust case. It shows you the industry that's involved. It shows you the geography where the case is pending. And it shows you the size of the commitment that we've made, the amount of deployment against that case. And once we start to get returns, it shows you, again, on a granular line-by-line basis, what the returns are. And so you can pull that up, and you'll see that there are several dozen new cases in 2025 or new investments in 2025, and you can scan through them. And you'll see that there's quite a lot of diversification there. We typically span a significant number of industries, a number of case types, a number of geographies, and 2025 was no exception to that. And they also range in size from quite large commitments to significant matters to relatively small things that are single cases that nevertheless, we think have the potential to generate attractive future returns. So that's a useful source if you want to get granular about what's going on in the portfolio.

And your next question comes from the line of Mike Piccolo with Wedbush.

I had 2 questions related to the negative fair value marks on the cases highlighted in the presentation. The first one with the Sysco proteins case, what are the potential gains for that?

The potential gains for the case? So we don't release individual case modeling expectation data for pretty obvious reasons that, that would feed very nicely into the litigation strategy of the other side. And so that's something that is not only something that we don't release, but something that we would regard as being protected by legal privilege. That being said, I think if you look at those cases, and there's quite a lot of public information about them, I think it's clear that the size of the claims in those cases is substantial.

And the next one with the bankruptcy case. Is the collateral separate from other claims?

Well, so we are entitled -- when we provide litigation finance to people, we're entitled to proceeds only from the claims that the companies have. So we're not a general creditor like a bank is where we're looking for repayment from any assets. Our claims are just for proceeds from the underlying claim outcomes. So the way that's going to play out is that as those claims pay, there's lots of things going on in that case. That was a multibillion-dollar distributor. So it's not as though the only cash flow sources are these litigation claims. So within the Chapter 11, there's cash flowing to the senior secured creditors and so on from the business operations and the business continues to function. But we have our handout for proceeds from the litigation claims, which continue to be strong and which continue to be resolving positively. So there is positive cash flow coming from those claims as well.

And just one last question. I don't think you guys give guidance, but in terms of your long-term ROE target, the 20%, when you say long-term, how do you bridge that gap from where ROE is sitting currently?

Well, we do it on a...

Like it's a matter of...

Yes, we do it on a rolling basis. We've certainly had individual years where our ROE was well in excess of that long-term target, and we've had years where it's well below it. Right now, as you can see from one of the early slides in the deck, our multiyear ROE is in the teens, but it's not up to our 20% target. And that's something that we believe, and Jordan walked through the unit economics associated with ROE at our Investor Day. And that's something that we still believe is achievable over a longer period of time.

Okay. Bailey, I think we'll jump in here with a quick question that's coming in through the webcast. We have a question. You mentioned before reluctance to buy back shares due to unpredictability of capital needs. If so, there seems to be no real justification to pay a dividend, especially with current share price. Why not turn off dividends and opportunistically buy shares instead?

Yes. So this is certainly a theme that we have heard from a number of investors, and it's something that we considered very carefully over the last few months, including with the Board and with our outside advisers. And the dynamic for us -- because I certainly understand the logic behind the concept. The logic for us works as follows. The dividend, we've had a constant level dividend for some years that pays at $0.125 a year. So in round numbers, think about that as being $25 million. So it's a pretty small amount. If we were to stop paying that dividend altogether, then we would turn a number of particularly U.K. income-focused fund investors into forced sellers whose funds would no longer permit them by their mandate to continue to hold Burford stock if we didn't pay a dividend at all. And so we basically weighed the value of a $25 million buyback, which we think is pretty low against the negative impact of turning a portion of our shareholder base, including some very long-term and loyal shareholders, turning those shareholders into forced sellers. And when we considered that balance, we ultimately came down on the side that the $25 million buyback wasn't enough to move the needle compared to the negative impact of the -- of losing those investors in the U.K. And so that's where we are. It's not -- it's a relatively fine call, I would say. And if the dividend had been dramatically larger, I'm not sure that I would have -- or the Board would have come out in the same place. But that -- just to give you transparency into our thinking, that was the underlying thinking behind it. And we also debated, well, do you do something in the middle. Do you reduce the dividend and take some of that and put it towards a buyback. And then we got into the point of saying, well, gee, at some point, we're dealing with such small numbers that it really doesn't make any difference for anybody. So that was the underlying logic.

Okay. One more from the webcast here. How is your underwriting changing to reflect potentially longer court times on new pieces of litigation?

Jon, do you want to...

Yes. I'm happy to take that. So we're constantly updating our modeling and underwriting based on our historical experience. And one way I think we've talked in the past that we've dealt with duration is to structure deals so the terms reward us for delay so that our returns go up as matters go longer. There's no doubt that we have paid increasing attention to that dynamic to make sure that we're compensated for the longer run times. So that's a little bit why also when Chris says that not having the realizations this year, of course, we would rather, but we feel good about the portfolio. The same case that resolved at this moment, if it resolves in another year, it may well be it resolves with a higher return for us, given the way we've structured things. And that's on top of the dynamic that often the question of whether it resolves now or later is going to be a product of the recovery level, both that whether it's going to be a settlement or an adjudication win, but also that settlements later on can end up being higher settlements. So we definitely take into account duration as part of our underwriting, and I like to think that we try to get better at it as time goes on and learn from experience.

All right. We'll do one more question from the webcast around debt structure. Why not obtain a revolver, delayed draw facility or securitization facility instead of discrete notes to better match capital unpredictability and allow for share buybacks?

Sure. Yes. I was about to say Chris talked a lot about our thought process around share buybacks. How it relates to the capital structure, we're constantly looking for other ideas and exploring ways in which we can build the balance sheet. I do -- the asset itself is not as similar to some consumer or even commercial assets in terms of its predictability to fit neatly into a securitization facility or to obtain that in size relative to the balance sheet that we currently maintain. I understand the logic of that, and we're constantly in conversations. We haven't found the perfect match. And ultimately, the unsecured and covenant levels that we have, the cost of the capital, and the amount that we can put on has favored -- has become very favorable relative to some of the things that we've seen, especially the scale that we would need with respect to that.

Well, we have made it to the top of the hour. And with thanks, as usual, to all of you for your interest in Burford, quite frankly, for your patience as we wait for some cash and as we wait for some YPF news. We're looking forward to an exciting 2026, and we'll continue to keep you updated about where things are going. So thank you all very much.

Thank you. This concludes today's conference call. You may now disconnect.