Petco Health and Wellness Company, Inc.

Good afternoon, and welcome to the Petco fourth quarter 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 Roxanne Meyer, Investor Relations. Please go ahead.

Good afternoon, and welcome to PECO's fourth quarter and fiscal 2025 earnings conference call. Joining me on the call today are Joel Anderson, PECO's Chief Executive Officer, and Sabrina Simmons, PECO's Chief Financial Officer. In addition to the earnings release, we've posted a slide presentation on our website at ir.peco.com. I'd like to remind everyone that on this call, we will make certain forward-looking statements, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties include those set out in our earnings materials and SEC filings. In addition, on today's call, we will refer to certain non-GAAP financial measures. Reconciliations of these measures can be found in our earnings release, presentation, and SEC filings. With that, I'll turn the call over to Joel.

Thanks, Roxanne, and good afternoon, everyone. Thank you for joining us to discuss our fourth quarter and full-year results, where I'm pleased to share that Q4 sales were in line with our outlook, and we performed better than our adjusted EBITDA quarterly goal. Looking back on 2025, we successfully delivered on our robust agenda to strengthen our economic model and improve retail fundamentals, which resulted in significantly higher cash flow and profitability year over year. Specifically, for the year we achieved a 21% increase in adjusted EBITDA and a 77% increase in operating cash flow. Our healthier EBITDA and opportunistic debt pay down through a meaningful reduction in our leverage ratio at year end, allowing us to start the year with greater financial flexibility. This was no small feat, and I'm exceptionally proud of our team. We collaborated across the organization, we strengthened our culture, we communicated expectations, and we acted with urgency and decisiveness. It's important to note that the majority of our senior leadership team which is exceptionally well-tenured and talented, has only been together for about one year. We enter 26 with a running start, something we didn't have in 25. Some of the most recent additions to the team include Sabrina Simmons, CFO, who many of you already know, Michael Romanco, Chief Customer and Product Officer, and Joe Venezia, Chief Revenue Officer. The entire team's work has been transformative, And yet, we are just getting started. In addition to strengthening our financial foundation in 2025 and rebuilding the leadership team, we completed our Petco North Star strategy, including a comprehensive customer segmentation and needs analysis. This work is already shaping how we prioritize assortment, services, and experiences. And it also informed our updated brand positioning, where the pets go to live their real life. One key takeaway from the segmentation work is the identification of who our most important engaged customers are. That segment we call passionate explorers. These are pet parents who are highly invested in their pets and seek innovation, expert support, and a welcoming shopping experience across the full pet journey. In 2026, we are informed by this strategy work and execution will center on four growth pillars which I will review in detail later on this call. They are, number one, compelling product, driven by increased newness, brand launches, and own brand expansion. Number two, services at scale, leveraging our wholly owned vet, grooming, and training ecosystem. Number three, trusted store experience, focused on driving traffic, engagement, and basket. And finally, number four, an integrated omnichannel model, improving convenience, loyalty, and repeat behavior. With that, I'll now turn it over to Sabrina to provide details on our fourth quarter financial performance and our 2026 outlook. Following her remarks, I will discuss the specifics of our growth strategy for 2026, and we'll then open it up to your questions.