MSA Safety (MSA) Q4 2025 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Feb. 19, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• President and CEO — Daniel Anal
• Chief Financial Officer — Sergio Chaparria
• Vice President, Investor Relations — Anne Wilkinson

TAKEAWAYS

• Revenue -- $800 million for the full year, reflecting a 48% increase.
• Adjusted EBITDA -- $358 million for the year, up 71%.
• Net Profit -- $145 million, a 68% year-over-year improvement.
• Dividends Paid -- $30 million distributed to shareholders in 2025.
• Share Buybacks -- $12 million executed in 2025, marking the initial buyback program.
• Fourth Quarter Revenue -- $261 million, a 74% increase compared with fiscal Q4 2024.
• Fourth Quarter Adjusted EBITDA -- $115 million, a 101% increase.
• Fourth Quarter Gross Profit -- $106 million, up 94%.
• Fourth Quarter Net Profit -- $9.4 million.
• Free Cash Flow -- $138 million for the year, including $32 million in Q4.
• Cash and Cash Equivalents -- Ended the year at $108 million; net cash position was $93 million after credits and loans.
• Acquisition of La Pepa -- $40 million allocated to acquire 80% interest; company now holds 100% of the project.
• Nicaragua Tax Settlement -- $49 million paid in full, described as a one-time event for historical taxes.
• Annual Gold Production -- 227,000 gold equivalent ounces produced in 2025.
• Average Realized Gold Price -- $3,474 per ounce for the year, with $4,179 per ounce in Q4.
• All-In Sustaining Cost (AISC) -- $2,486 per ounce overall for the quarter; $2,828 per ounce in Nicaragua, $1,891 per ounce in Colombia.
• Colombia Production (Q4) -- 23,000 ounces produced; Aurora plant commenced production.
• Nicaragua Production (Q4) -- Nearly 36,000 ounces produced, identified as the focus for future volume and cost improvements.
• Lost-Time Injury Frequency Rate -- 0.9 in Colombia and 0.16 in Nicaragua, indicating low injury rates.
• Production Guidance for 2026 -- Projected consolidated gold production of 230,000-233,000 ounces.
• 2026 Colombia Guidance -- 83,000-93,000 ounces expected, with an 11% margin from contract mining partners.
• 2026 Nicaragua Guidance -- Target production of 130,000-140,000 ounces, with a 35% margin from Bonanza mining partners.
• 2026 CapEx and Exploration Spend -- Nearly $114 million planned, with focus on plant capacity increases in Nicaragua.
• Hemco Plant Expansion -- Processing to expand from 1,800 to 2,500 tons per day, aiming for a 40% increase in capacity by year end.
• Plant Recoveries in Nicaragua -- Improved from 87% to above 90% in recent months.
• Porvenir Technical Study -- Update set for release by March 2026, tied to operations in Nicaragua.
• Exploration Program (Nicaragua) -- Largest in company history now underway, including greenfield targets and resource-to-reserve upgrades.
• Silver Revenue -- Silver volumes became a significant portion of revenue in 2025, with ongoing review to identify mineral sources.
• Dividend Policy -- Target payout of approximately 15% of net profit, equating to a regular annual dividend of $30 million based on latest results.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• All-in sustaining costs increased due to higher gold price-linked partner payments and rising labor costs, with additional cost pressure from a weaker U.S. dollar affecting Colombia operations.
• Sergio Chaparria stated, "For going forward, we are going to have an effect of additionally around $8 million in ad valorem tax in Nicaragua." following the settlement of legacy tax issues.
• Cost pressures on labor, particularly in Colombia, have already been addressed with efficiency measures, but may persist if inflationary trends continue.

SUMMARY

MSA Safety (NYSE:MSA) delivered record financial results in 2025, supported by high gold prices, production outperformance, and expanded margins. Management highlighted new investment in Nicaragua to address bottlenecks, including a significant plant capacity increase and a robust exploration campaign focused on internal asset development. The acquisition of full ownership in the La Pepa project in Chile introduces future growth potential, though mine development timelines remain undefined. A one-time $49 million tax settlement resolved legacy liabilities in Nicaragua, but the company faces ongoing higher operating and tax costs, especially in markets with currency risks.

• Daniel Anal confirmed, "current policy is to distribute about 15% of our net profit," clarifying future dividend expectations as shareholder determined, with continued buybacks supported by strong cash generation.
• Management stressed that growth for 2026 is expected from both organic asset improvements and potential opportunistic acquisitions, focusing on value accretion per share.
• No formal revenue, profit, or EBITDA guidance was provided for 2026, as Daniel Anal stated, "The gold price is what the market delivers to us."
• The company has no material debt and indicated openness to adding leverage only if justified by high-return growth opportunities.
• Active evaluation of hedging is underway, with "any active hedging policies." currently in place; at significantly higher gold prices, risk management instruments may be implemented.
• Silver, previously a minor revenue component, now constitutes a notable share of income due to high price realizations and increased recoveries in Nicaragua.

INDUSTRY GLOSSARY

• All-In Sustaining Cost (AISC): A comprehensive cost metric for gold production, including direct operating costs, sustaining capital expenditures, and other recurring expenses necessary to maintain production.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to assess operational profitability.
• Ad Valorem Tax: A tax calculated as a percentage of the appraised value of a commodity, in this context, applied to gold production.
• Greenfield Exploration: Mineral exploration in areas with no previous mining activity or known resource development.
• Porvenir: A development-stage mineral deposit owned by MSA Safety, referenced as a future production contributor in Nicaragua.
• Aurora Plant: Processing facility in Colombia noted for contributing new gold production in Q4 2025.
• Bonanza Mining Partners: Local Nicaraguan miners whose ore processing is integrated into company operations, compensated as a percentage of gold price.

Full Conference Call Transcript

Daniel Anal: 2025 was a pivotal year for MSA Safety Incorporated. Defined by a disciplined approach to our mine plans and a focus on high-quality production. We are pleased to report that we exceeded our full-year guidance delivering 227,000 gold equivalent ounces. This achievement reflects the steady performance of our technical teams and continued commitment to maximizing the value of our existing ore bodies to operational excellence. Our operations in Nicaragua continue to deliver. In December alone, the asset reached a production mile of 16,000 gold equivalent ounces demonstrating the steady progress we are making in optimizing throughput, recoveries, and grade management at the site.

The combination of higher production volumes and a positive gold price environment resulted in exceptionally strong financial performance, with revenue reaching $800,000,000, a 48% increase year over year. This operational outperformance generated a record adjusted EBITDA of $358,000,000, a 71% increase over 2024. That represents approximately $1,000,000 in EBITDA for every single day of the year. We also delivered on our lengthy track record of returning capital to our shareholders through the payment of $30,000,000 in dividends, $12,000,000 through buybacks, and on top of that, we delivered an impressive 275% share price appreciation and received the TSX 30 designation.

That means that MSA Safety Incorporated outperformed 98% of all companies listed in the Toronto Stock Exchange in the last couple of years. We were also the top-performing equity in the Colombian Stock Exchange for the second consecutive year. Beyond our record financial metrics, I am most proud of our team's commitment to delivering these results safely and reliably. In our view, there is nothing more important than keeping our people and our communities safe. And this year's performance reflects that core value across all of our operations. I will now turn the call over to Sergio to discuss in more detail our financial results. Thank you, Daniel, and good morning, everyone.

Turning to our financial results, 2025 was defined by record growth across every major metric. This growth was driven by a favorable gold price environment with the average realized price per ounce sold reaching $3,474 for the full year and $4,179 in the fourth quarter. This represents exceptional price realization. Our full-year average surpassed the market benchmark reflecting our disciplined approach to maximizing value in a constructive gold price environment.

Sergio Chaparria: As per our financial results for the full year 2025, as Daniel mentioned earlier, our annual revenues hit a record of $800,000,000, with an increase of 48% compared with 2024. Our gross profit reached $326,000,000, up by 77%, and our net profit amounted to $145,000,000, a 68% year-over-year improvement. I would also like to highlight that MSA Safety Incorporated surpassed $145,000,000 in net profit representing a 68% increase over 2024 as mentioned before. We had adjusted EBITDA of $358,000,000 for 2025, representing a 71% increase over fiscal year 2024. Also, our net free cash flow hit a record of $138,000,000 for the year, with $32,000,000 of net free cash flow in the fourth quarter alone, as we previously highlighted.

As per our quarterly results, the fourth quarter saw revenues of $261,000,000, a 74% increase compared with the same period in 2024. This growth influenced the entire income statement, as our gross profit reached $106,000,000, up by 94%, and our adjusted EBITDA doubled to $115,000,000, a 101% increase year over year. Net profit for the fourth quarter was $9,400,000, and we generated free cash flow of $32,000,000 in the quarter. These results for the quarter are particularly strong when you consider the strategic investment and legacy items we address. Even after accounting for the acquisition of an 80% interest in the La Pepa project and the settlement of the Nicaraguan tax authority dispute, the business generated a record-breaking value.

Moving to our cash position, our balance sheet remained exceptionally strong. We ended the year with $108,000,000 in cash and cash equivalents, a very strong net position of $93,000,000, composed of cash and cash equivalents of $108,000,000 as previously mentioned, and on top of that, accounts receivable from our refineries of $26,300,000, offset by credits and loans of only $15,400,000. It is important to highlight that this exceptional result was achieved after significant one-time outflows, including $40,000,000 for the acquisition of the La Pepa project, $49,000,000 in payments to the Nicaraguan tax authority, $12,000,000 allocated to our share buyback program. At this time, I would like to turn the call back to Daniel to discuss our operations.

Daniel Anal: Thank you, Sergio. These financial results were, of course, propelled by a very positive gold price environment. As Sergio mentioned, the ounces we produce were sold at approximately $3,500 an ounce. But most importantly, we have delivered on the metrics that we can control. In 2025, we produced 61,000 gold equivalent ounces. The average price of the gold in 2025 was $4,179 per ounce, a 57% increase compared with 2024. While we benefited from these record gold prices, we were not immune to sector-wide rising cost environment. Our consolidated all-in sustaining cost for the quarter was $2,486 per ounce.

This was primarily due to the Nicaragua operations, where the higher gold price directly correlates to increased payments with our Bonanza mining partners. In Colombia, the weaker U.S. dollar negatively impacted our local cost base as well. Turning to a breakdown of our mines, our Colombian operations performed well with an all-in sustaining cost of $1,891 an ounce. Production remains steady at 23,000 ounces for the fourth quarter. Most importantly, we successfully sold the new Aurora plant start production. The continued strong performance at the Aurora unit remains a highlight of our Colombian operations. Given the excellent results we are seeing, we believe that additional Aurora units would be the primary engines for long-term growth and operational success in Colombia.

At our Nicaragua operation, we produced almost 36,000 ounces of gold in the fourth quarter. And while all-in sustaining costs here are higher at $2,828 per ounce, this is largely due to the high proportion of mining partner contributions, which are paid as a percentage of the spot gold price. Cost, volumes, and efficiencies in Nicaragua will be a significant part of our focus in 2026, which I will talk about more shortly. Finally, in MSA Safety Incorporated, safety is a core value. Our lost-time injury frequency rate remains low at 0.9 in Colombia and an impressive 0.16 in Nicaragua.

In practical terms, this means that for every 100 people working at MSA Safety Incorporated over the course of the year, including both employees and contractors, there was less than one injury significant enough to prevent our colleague from returning to work the following day. This metric is a primary benchmark for how effectively we are protecting the safety and integrity of our workforce. Looking ahead, our strategy is focused on securing the future by removing historical bottlenecks, delivering growth, and investing in exploration. For the coming year, we are projecting consolidated gold production between 230,000 and 233,000 ounces of gold. On average, we are guiding 10,000 more than in 2025.

In Colombia, we are expecting our production to be between 83,000 and 93,000 ounces for 2026, with a margin of 11% from our contract mining partners. As for Nicaragua, we are expecting production within a range of 130,000 to 140,000 ounces of gold, a margin of 35% with our Bonanza mining partners. As for our 2026 capital investment program, we will be investing a total record of almost $114,000,000 for CapEx and exploration. A significant portion of our growth CapEx will be focused on Nicaragua. We will be investing in the Henco plant expansion, which will take us from 1,800 tons per day to 2,500 tons per day. That is almost a 40% increase in processing capacity this year.

We will also be investing in mine development to support this increased throughput. Throughput. Additionally, we are also evaluating adding a 1,000 tons per day mill to the Hemco plant. In Nicaragua, we have significantly more mineral than we can process. This is a very big focus for us at the moment. We are also working hard on improving plant recoveries, which have gone up from 87% to above 90% in recent months. Finally, we will also be investing in technical studies at Porvenir, a deposit situated along strike and just southwest from our two operating underground mines. The Porvenir technical study will be released with the research statement of our operations before March 2026.

In Colombia, capital expenditures will be on increasing the recoveries and achieving operational effectiveness. Sustaining CapEx for MSA Safety Incorporated will be focused on ensuring operational continuity. Regarding exploration, I am very excited to also announce the launch of the most aggressive exploration program in the history of our Nicaraguan asset. We will, of course, be working on resource-to-reserve conversion, near-mine follow-up drilling from the drilling completed in 2025, but for the first time in the history of the property, we will be exploring very exciting greenfield targets within our very prospective Nicaraguan portfolio. We will also release a comprehensive resource and reserve update in Nicaragua in 2026.

Finally, we will be investing in the La Pepa project in Chile with the objective of increasing the size of the deposit as well as an overall de-risk of the asset on multiple levels. 2025 has been a year of exceptional execution. Across the board, demonstrating the strength of our operating model and a proven track record of achieving our production guidance. We had a record-breaking financial year with $800,000,000 in revenue, $360,000,000 in adjusted EBITDA. This robust cash flow allowed us to maintain a very healthy cash position while at the same time returning $42,000,000 to our shareholders through dividends and buybacks.

With the acquisition of La Pepa, we secured full control of a high-quality asset in the Maricunga Gold Belt in Chile, one of the most prolific gold districts in the world. With a clean balance sheet, a safe and productive workforce, and the continued success of units like Aurora, and the expansion of the Nicaragua processing facilities in Nicaragua, we are very well positioned to carry this momentum into 2026 and deliver long-term value for our shareholders. Thank you for your time. And thank you very much for your trust in MSA Safety Incorporated.

Anne Wilkinson: Now with that, we would like to open the floor to questions. And our first question this morning will come from Ben Pearney. Thanks, Ben, for joining us on this call. So what kind of cost pressures are you seeing for the 2026 guidance? Is much of this increase a result of the higher gold prices and the higher cost per ore, or are you seeing cost pressures elsewhere as well?

Daniel Anal: Thanks, Ben, for your question. The answer is yes. A big part of it is related to gold price. As you know, our Bonanza mining partners are paid a percentage of spot price. Therefore, as the gold price goes up, our cost base on the Bonanza side goes up as well. However, we are also working in several other initiatives to increase volumes and recover our economies of scale in our mines. So as I described before, we are going to be investing a lot in our processing facilities. Processing right now is the main bottleneck of our Nicaraguan operations.

We are constrained at 1,800 tons per day, so we are going to be going to 2,500 tons per day this year itself. And that will bring with that, we will bring tremendous economies of scale, particularly in our mines. Historically, the Bonanza mining program has been very profitable for the operation. So what the company has done is to give it has given priority to that side of business. And our own mines have suffered because of that. So we have, and just to give you an example, in 2024, we produced close to 35,000 ounces in our industrial mines. And last year, we went down to around 22,000 ounces. So that makes no sense.

That is the immediate priority. That is what we are working on. We are going to go full steam ahead with our own industrial mines, recover the economies of scale. We are going to be achieving that through the increased throughput at our processing plant and investing in mine development. All of that is included in the capital program that we have for this year. As I mentioned before as well, we are working hard on recoveries. That is important because we have paid for the mining cost, we have paid for the processing cost, and this goes straight to the bottom line. This is extra profit that we make.

So that 3% extra recoveries that we have already achieved translate into tens of millions of dollars of extra benefit for our Nicaraguan operations. So that is on recoveries. And last but not least is grade. We are working very hard on increasing our grades not only in our industrial mines, where we are putting a lot of attention now to things like dilution, having a very smart mine plan, but at the same time, incentivizing our Bonanza mining partners to deliver higher-quality ores. We are already seeing that.

We are removing historical bottlenecks in our operations, historical barriers for these high grades to be delivered to our plants, and we are starting to see grades denominated in ounce per ton, not grams per ton, which is very exciting. It speaks to the quality of our portfolio in Nicaragua. And that is actually guiding our exploration efforts as well. This is a 150,000-hectare very prolific district, and everything is to be done from an exploration perspective there. So just to go back to your question on cost, the main goal is our economies of scale, particularly Nicaragua. In Colombia, we have suffered from weakening dollar. Our costs are in pesos, so that is putting some pressure.

The main drivers of increased costs on the Bonanza mining side is higher gold prices. But we will recover economies of scale, and we will be working very, very hard on cost in 2026. That is the main agenda.

Anne Wilkinson: Moving forward. So Ben has a follow-up question, and also we have a question from Nicolas Ruiz Reyes that are related. So Ben and Nicolas ask, could you comment on the elevated taxes in Nicaragua in 2025? And what can investors expect in 2026? And a very related question Nicholas asked is that a one-time charge?

Daniel Anal: Perfect. Thank you very much for your question. So the size of it, the close to $50,000,000 payment, is a one-time event. This is a legacy issue. These were, you know, the claim was unpaid taxes from 2019 to 2024. As you noticed in the CapEx that we are guiding, we will be investing a lot in Nicaragua. We see a lot of growth opportunities in Nicaragua, and it is very important for us to have a constructive relationship with the government that hosts us. So that was just not a positive situation. We wanted to focus on our operations. We wanted to focus on our mines, do what we do.

So we thought it was best just to resolve that legacy issue, pay that money, and go back to our mine. So that is what we are doing. It is a one-time event. However, there is going to be an impact in cost going forward. Sergio, what is going to be the impact? Yeah. For going forward, we are going to have an effect of additionally around $8,000,000 in ad valorem tax in Nicaragua.

Anne Wilkinson: Excellent. So moving on, Michael Matheson has a question, and I think that we probably partially answered this. All-in sustaining costs per ounce were up significantly in 2025. Much of that was just the increase in the price of gold reflected in the price you paid our mining partners. But there are some increases in labor costs. Do you think labor costs specifically will be stable in 2026, or should we expect further increases?

Daniel Anal: Thanks, Mike, for your question. So, okay. I mentioned the main agenda already, so volume, recoveries, grades, those are going to be the main drivers of lower cost in the coming years. But you are right. There is significant cost pressure as well from a labor perspective. What we are doing there is that we are optimizing our teams. We already actually did that recently. We are working on being more efficient. So incorporating AI tools, automating parts of our processes, we are adopting technologies in our operations so we become more competitive. So that is happening. The increase, particularly in Colombia, is significant. But as I mentioned, we already took measures to lower the impact of that going forward.

Anne Wilkinson: Michael had a follow-up question. So we recently increased our stake in La Pepa to 100%. Do you have a forecast of when mining operations will begin at La Pepa?

Daniel Anal: Perfect. So La Pepa is an exciting new jurisdiction for MSA Safety Incorporated. As you saw, we acquired that last year from Pan American Silver. We are starting at a very good base with about 2,000,000 ounces in resources. But it is an exploration-stage asset in a very prolific gold district surrounded by producing mines, surrounded by advanced development assets. It is looking very interesting. We think there is a lot of growth potential there, but we have to do the work. We have to explore, and we have to de-risk the project, particularly from an environmental perspective.

This is a sensitive part of the world, and we are doing all the work we can do right now to fast-track this asset. This year, we are going to be working on producing an actual timeline, the one that we can deliver on. But as of right now, it is at the assessment stage from a timeline perspective and from a production perspective. Next question is from Justin Chan, and he asked about, from a modeling perspective, when would you suggest modeling the ramp-up to 2,500 tonnes a day at Hemco, and how many months do you expect it to take to reach steady state of 2,500 tons a day?

Daniel Anal: Hi, Justin. Thanks for your question. So already, we are working on that. We are already at above 2,000 tons per day. So the very fast adjustment that we could do to our processing facilities, we have done. We expect to be at 2,200 tons per day by June, and then by December, be at 2,500 tons per day. So it is going to be incremental increases. In parallel, we are going to be working on the engineering to add a 1,000 tons per day mill to the Hemco plant. We have an incredible situation in Nicaragua where we have way more mineral than we can process at the moment.

So as I mentioned before on the call and previous answers, that is our focus, de-bottlenecking that so we can take advantage of this abundance of minerals that we see all over our properties at Hemco.

Anne Wilkinson: So Justin has a follow-up question for Sergio, on a cash flow basis. So on the $83,000,000 income tax liability, should we assume this is paid equally quarterly, or if not, could you provide some color on the timing of tax payments?

Sergio Chaparria: Yes. Actually, for timing on taxes, we are going to pay taxes during 2026, expected to be a major payment during February. And in May, we are going to have the remaining balance to be paid to Colombian tax authorities.

Anne Wilkinson: And we have a follow-up question from Ben Piri. 2025 was a strong year for shareholder returns, which speaks to a supremely healthy balance sheet. Do you expect this will continue into 2026? Will capital allocation be focused on growth?

Daniel Anal: Thanks, Ben. And I think that connects with other questions that we have received. Return to our shareholders is a priority for us, for sure. And MSA Safety Incorporated has an impressive track record of delivering a lot of value to its shareholders for decades. So, ideally speaking, we do want to continue with that, delivering strong dividend. Last year, we had our inaugural buyback program, which was also successful. So last year, we delivered $42,000,000 to our shareholders. And in Colombia, just to be clear, that is actually a shareholder decision. That is something that we will take to the shareholder assembly that is going to happen soon, and shareholders will decide on that.

From a management perspective, we think we can do both. We can continue delivering good dividends. But we think shareholders and the company itself should invest in its growth, should invest in its assets. We are already seeing what investment in our own operations can do. So that is the plan. I think, personally, I think we can deliver good value to our shareholders, both in the form of dividends and buybacks, and at the same time invest in our assets. And we are being rewarded doing that. You saw the performance of our stock in the last two years. We have gone up above 1,000%. That is very impressive.

So that is also capital return to our shareholders, and that should be appreciated as well. So long story short, we think we can do both.

Anne Wilkinson: So the next two questions kind of flow naturally into that. So Raul on Aurora asks, does the company plan to acquire tier-one assets in the exploration stage to further our global growth strategy?

Daniel Anal: Thanks, Raul, for your question. The answer is yes, but I am going to give you some context. We are prioritizing, ideally, producing assets. But it has become a very challenging environment from an M&A perspective. Assets are trading at very high valuations, so we are being very cautious, very disciplined as well. We want to preserve our per-share metrics. So we do not want to dilute ourselves a lot and just grow because we want to grow. We want to be very cautious with the return to our shareholders on a per-share basis. So our focus right now is producing assets. But as I mentioned, that is looking challenging to find value in that segment.

So we are now scouting for advanced development opportunities throughout the Americas. And in some cases, even looking at some other parts of the world, good jurisdictions where we can grow. So advanced development opportunities, assets that we can take into production and take advantage of this very positive gold price environment, are the second priority. But, of course, we are opportunity-driven. This is the new vision of MSA Safety Incorporated. It is to take the good opportunities that present. So if a good high-quality exploration asset comes, we would love to take a look at it. And if it makes sense for MSA Safety Incorporated, we would love to do it.

We need a strong—we are building a strong pipeline of assets as we move into a growth phase.

Anne Wilkinson: So next up, we have two kind of related questions. One from Jaime Alvarez and the second one from Andre Guilhido. They relate to knowing more about Nicaragua, the initiatives that we have to augment our production there, the work that we are doing on exploration and a little bit more about Porvenir. Additionally, Andres kind of expands on that trying to understand the Bonanza model and the success there, and how we may be working to reduce our reliance on our Bonanza mining partners to process more of our own tonnage from our underground mine.

Daniel Anal: Okay. Perfect. So I think I have spoken enough about our main initiatives in Nicaragua, again, increasing volume, increasing recoveries, improving the grade that we feed to our plant. That, of course, is the main driver. We do not want to be in the historical position that the company had that we had to choose between A or B. We believe we can do A and B. We can mine our mines full steam ahead, and we can process our partner minerals. That is the main agenda. We do not want to have to take that decision. We want to take advantage of all the opportunities, both from our mines and from the Bonanza mining partners.

Speaking about Porvenir, which is also an exciting opportunity that we are working on right now. The latest information that was published to the market was back in 2023. That was a pre-feasibility study. It was already looking attractive at $1,500 gold price. So after putting a lot of work into that asset, we have been investing a lot in engineering, and we have been pushing hard on permitting as well. So, hopefully, that becomes one of our next mines. Just for everyone's context, this was an asset, according to the pre-feasibility that we have published, that was going to produce about 60,000 ounces of gold, 110,000 ounces of silver, and then about 40,000,000 pounds of zinc.

And it had an all-in sustaining cost below $1,000 an ounce. Again, it was a project that was economic. It was looking good at $1,500 gold price. So at the current gold levels, it should be a very attractive asset. Things have changed a lot in Porvenir. We, as I mentioned, have been exploring. We are doing a lot of engineering. The layout of the processing facility is going to change. We are designing it in a way that it can grow beyond the current—beyond what we are seeing.

And we are going to be adding, very likely, a copper-gold flotation circuit at the beginning, which will produce a high-quality copper-gold concentrate and will simplify our metallurgy for the rest of the process. So the update on Porvenir is going to come out in the first quarter this year together with the resource update for our Nicaragua operations. So stay tuned for that. It is an exciting asset, and we want to push it forward as soon as possible as well.

Anne Wilkinson: So back to the balance sheet, and Justin Chan follows up. So the tax payments—sofia, the tax payments will be paid in Q1 and Q2.

Sergio Chaparria: To just follow up on your answer. Yes. To follow up on that question, yes, we will be paying that amount during the first semester.

Daniel Anal: Just to something very valuable, Justin, that we do in Colombia. We have this mechanism called Obras por Impuestos that MSA Safety Incorporated has pioneered. And basically, it is a regulation that allows MSA Safety Incorporated to pay its taxes by delivering infrastructure projects. So this year is going to be exciting from that perspective. We are going to start building a large school in El Bagre. So it is going to be covering about 1,000 students in our community by paying our taxes. It takes a lot of management bandwidth because it is, well, building a large school, but it is totally worth it.

We will be investing in our communities, and this is an amazing mechanism that we have in Colombia. So that is taxes, but it is also the kind of social work that we like to do at MSA Safety Incorporated.

Anne Wilkinson: So we have some important questions coming in about net, but I think we will stay focused in Nicaragua just for the next minute or so. We have a question in from Walter Becerra. And Walter asked, he wants to dig in a little bit more, comment about our objectives around recovering silver.

Daniel Anal: Oh, thank you. Thanks for the question. So that is actually quite exciting as well. We are seeing a lot of silver in our Hemco plant. Before, we were not paying attention to that in our efforts on the recovery side of things. So as we started taking a good handle of the processing side of things in Nicaragua, we said, well, there is a lot of silver coming through our plant. Silver is having record prices trading at above, you know, $100 an ounce. So we started paying a lot of attention to silver. Silver became a significant portion of our revenues last year. We expect that it will continue that way.

We are investigating this a lot because, to be totally honest with you, we do not know exactly where this silver is coming from. It is coming from our Bonanza mining partners, for sure. But exactly from what part of our portfolio, we do not fully understand yet. So that connects to the whole exploration initiative and what we are doing from that side. It is also the most aggressive exploration program. So we are understanding the plant is becoming a very valuable tool for us to explore our district.

Anne Wilkinson: So I think we have covered Nicaragua, and I think we can turn now to Nechi. And we have a question from Manuel Rodriguez. With respect to Nechi, and with respect to gold grades and recovery rates in our operation, what are our expectations with relation to the new Aurora plants and our scavengers?

Sergio Chaparria: Gracias, Manuel. Perfect. So in Nechi, that is the focus.

Daniel Anal: Efficiencies, recoveries, we are adding more recovery circuits to our operations. We are not expecting right now, given the situation in Colombia, we are exercising a lot of caution. So very large investments in our Nechi operations are not expected yet. We would be happy to double down if we see a more constructive environment. So the focus right now is exactly what we mentioned: improving recoveries, being more efficient in our operations. We are evaluating multiple alternatives to improve our revenues and our profitability in Nechi. So initiatives, as you mentioned, like the scavenger, like the Aurora plants, they are all being worked on.

We are doing a lot of engineering, optimizing studies, to improve recoveries in Colombia as well.

Anne Wilkinson: So to follow up, and this is probably more broad-based with the two operations, Samuel Doris has a question about our efforts to increase the number of ounces of production in 2026, asking about inorganic growth, or will the focus be solely on technical improvement.

Daniel Anal: Thank you. So the answer is both. The additional ounces are going to come from our own assets. But we have added a lot of muscle to our technical teams, and we are scouting for opportunities globally that make sense for MSA Safety Incorporated. So if inorganic opportunities come at the right valuations, we would love to exercise those.

Anne Wilkinson: Excellent. So moving to our newest—the 100% interest that we own in La Pepa in Chile, Jorge Parija asked how are the results for La Pepa going? When can we hope for production from La Pepa?

Daniel Anal: That is actually a very good question, one that we are trying to answer. It is an advanced exploration asset. But to be totally honest with you, as I mentioned, we need to explore more. We need to de-risk the asset, and we need to understand better our timelines. We hope it becomes a mine in the near future, but at this point, we are working on the plan to bring that to our timelines, so it is a new asset. We have a new team and they are working on producing that timeline for us.

Anne Wilkinson: So just as a follow-up, Sebastian has asked, are there any additional studies for La Pepa project—PFS, PEA—are they planned for this year? And I—

Daniel Anal: It connects to the previous question, not to this year. We are doing all the environmental studies. That is actually the starting point. And we are going to be drilling as well, understanding the landscape, understanding all the regulatory process there. We are going to start imagining how a mine would look like there. We have very clear benchmarks. The Phoenix deposit just north immediate to us just went into production, and they are showing us how it can be done. So that is a good benchmark for us. But at this point, it is an advanced exploration asset for us.

Anne Wilkinson: So moving just kind of up to the company in general, there are a number of questions about our dividend policy going forward and our propensity to buy back our own shares, and this has come in from five or six individuals. So that to you in a bulk question, Dan.

Daniel Anal: Okay. Perfect. No surprise there, Anne. Thank you very much. Look, from a dividend perspective, as I mentioned before, that is actually a shareholder decision, not a management decision. The current policy is to distribute about 15% of our net profit. That translates to an annual regular dividend of approximately $30,000,000 with the latest financial results. That is just the policy. From a management perspective, we think, as I mentioned earlier, that we can continue delivering dividends. We like the buyback mechanism. We think it is very efficient, especially for our North American shareholders who are becoming increasingly important in our story. And we will work very hard in returning these impressive capital returns to our shareholders.

So it is a package. And as we invest in our assets, we invest in our company, we expect that will translate into more value to our shareholders as well.

Anne Wilkinson: K. So a much broader-based question from Sebastian. Garua Hale. Considering the volatility in the price of gold and the cost of our operations in the macroeconomic context, what is our strategy What is MSA Safety Incorporated's strategy to protect shareholder value in the medium and longer term? Specifically, what do we intend to implement to increase our revenues and sustainable value for our shareholders.

Daniel Anal: Gracias, Sebastian. So that is actually an important question. So when I started getting involved with MSA Safety Incorporated, the mandate was actually to remove all hedging policies that the company had before. We were swimming against the current. We were swimming against a very strong bull market. So for the last couple of years, the company has been enjoying this impressive gold rally. As you said, that has translated into—you saw—that has translated into record economics for our operations. And so right now, we do not have any active hedging policies. We are enjoying the price that we are seeing right now.

But, of course, at $5,000 gold, our board is already evaluating hedging instruments as part of our broader risk management approach. So it is something that we are looking at cautiously. We are monitoring. We are talking to our finance teams, our advisers. But the market in general is guiding a very constructive gold price environment. So I think we are, generally speaking, in agreement with most large banks that are seeing a very positive gold price environment. Recently, we have been more active in the market with certain financial instruments to protect ourselves. But generally speaking, we are mostly exposed to the gold price.

Anne Wilkinson: So we have two related questions. From Sergio Daniel Torres Otero and Walter Becerra about can you elaborate on our investigation of redomiciling the company and the investors would like to know a little bit more about that.

Daniel Anal: For sure. So, look, the company has been pushing very hard on converting into an international story. We no longer want to be the company in Avenida del Poblado. It is very well known to Medellin and to Colombians. We want to be a company that people recognize in the gold space internationally. So the company took the first step listing in TSX back in 2021. That was a very positive step that the company took. But still, we are mostly ignored by the market.

We actually have a very aggressive marketing agenda this year to get the story out, to get investors throughout the world to get to know the story of MSA Safety Incorporated, which we are convinced is a great story. It is a great opportunity for them. So we expect to go to other markets, get hopefully listed in other exchanges. And as part of that, we need to explore these redomiciliation initiatives so our company can be recognized in other exchanges.

Anne Wilkinson: So turning to Alina Islam. Can you clarify your comment on acquiring assets? Are you prepared to look outside America?

Daniel Anal: Yes. Thanks, Alina. And if you—something that we have changed. Look, we are not in a market where we can be very picky anymore. The reality is that we want to take the best advantages that the world has to offer for MSA Safety Incorporated. So if it happens to be in, you know, in Australia or in Europe, why not? If it is the right opportunity at the right price, with high-quality asset in a decent jurisdiction, we are to go there, do the homework. And if it makes sense for MSA Safety Incorporated, then do it. So we are no longer constrained by Latin American assets. We are looking globally for opportunities.

Anne Wilkinson: So there are two questions that came in that, in my mind, are opposite sides of the same coin. Gustavo de Pala asks what are our investment plans for the year? And Sebastian was just the bonus, are there any plans to reduce debt or to increase our leverage during the current fiscal year?

Daniel Anal: Mhmm. So we use debt. We have done that. We have negative debt at the moment. The debt that we have is debt that makes sense because of the tax benefits that we get. These are leasings and stuff like that. So, you know, we paid all the debt that made sense to pay, have a very healthy cash position. As Sergio mentioned, over $100,000,000. We have very significant accounts receivable from our buyers, from our refinery. So we have a very healthy liquidity situation, so there are no more debt payments coming. We pay what we can pay. From an investment perspective, as we have mentioned throughout the call, we are going to be investing $100,000,000 in our assets.

Big portion of it is going to go to Nicaragua where we return hopefully are going to convert that into immediate ounces, immediate. So we are prioritizing the investments that make most sense to our company from a capital allocation perspective. And that is a discipline we have at MSA Safety Incorporated. We are going to put our money where we will get the best return for it.

Anne Wilkinson: So, and my mistake. I misread. So are there any plans to issue debt or to increase our leverage? My mistake.

Daniel Anal: Okay. Perfect. No problem. So, yes, that is also something—we do not have a very opportunity-efficient capital structure. We have no debt. So for the right opportunity, the answer is yes. As we grow, if there is an attractive project and that requires some leverage, some debt component, we would be happy to take some debt. Again, we have, you know, $360,000,000 in EBITDA this year and virtually no debt. So the company can take some leverage for its growth initiatives.

Anne Wilkinson: We left the trick question for last. What are our projections for revenue, profits, and adjusted EBITDA for 2026.

Daniel Anal: So the answer to that is our guidance. We are guiding 10,000 ounces more this year. The math is going to address that depending on the gold price that we end up getting. But the cost is what we guided. The production is what we guided. The gold price is what the market delivers to us. What I can tell you is that from a gold price environment, we are seeing a very constructive situation. That should translate into, hopefully, another record year for MSA Safety Incorporated. But you know, we will see what we get, but it is looking very positive.

Anne Wilkinson: So that is our last question today. So we want to thank you very much for joining us on our year-end and fourth quarter call. I am going to turn the call back over to Daniel. Did you have any last words—

Daniel Anal: Perfect. No. Thank you very much, everyone, for your interest, for your time, and thank for your trust in MSA Safety Incorporated. We are going to be working with our team to continue delivering impressive results to you. So thanks, everyone, for connecting.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.