Financial Data and Key Metrics Changes - The company achieved net sales of $47.6 million, representing a 4% year-over-year increase driven by a 31% increase in fire services products [4][21] - Adjusted EBITDA, excluding FX, was $200,000, a decrease of $4.5 million, or 95%, compared to $4.7 million for the comparable year-ago period [5][22] - Adjusted gross profit as a percentage of net sales in the third quarter was 31.3%, down from 41.7% in the comparable year-ago period [5][21] - Net loss was $16 million, or $1.64 per basic and diluted earnings per share, compared to a net income of $100,000 or $0.01 per basic and diluted earnings per share for the third quarter of fiscal 2025 [22] Business Line Data and Key Metrics Changes - Sales from the fire services product line increased by $6 million year-over-year, driven by $3.4 million in sales from the recent Veridian acquisition and organic fire services growth of $3 million [23][29] - Adjusted gross profit for the third quarter was $14.9 million, a decrease of $4.2 million, or 22%, compared to $19.1 million for the third quarter of fiscal 2025 [24][27] - The industrial demand softened across several channels, with distributors reducing inventory and certain customers deferring purchases [19] Market Data and Key Metrics Changes - Revenue softness was visible across the U.S., Canada, Latin America, and parts of EMEA, with North America facing challenges and Latin America coming in below plan due to macroeconomic conditions [10][29] - U.S. revenue decreased 3% to $15 million from $15.4 million, driven by declines in the industrial business due to tariff uncertainty [29] - European revenue, including Eagle, Jolly, and the recently acquired LHD business, increased 6% to $15.2 million [29] Company Strategy and Development Direction - The company is focused on recent acquisition synergies, increasing market share within the fragmented $2 billion fire protection sector, and growing the industrial products business [4] - The strategic acquisitions of California PPE and Arizona PPE expanded the company's global fire footprint into the U.S. personal protective equipment market [8] - The company plans to maintain a focus on operating and manufacturing efficiencies to deliver higher margins and improve free cash flow [36][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of tariff uncertainty, inflation effects, and associated mitigation strategies on performance [10] - The company remains optimistic about underlying demand signals, including a robust global fire tender pipeline and signs of pent-up demand across nearly every region [14] - Management has withdrawn formal guidance and is shifting to a more disciplined operating model focused on measurable execution, cash generation, and transparency [12] Other Important Information - The company completed a $6.1 million sale and partial leaseback of its Decatur, Alabama warehouse property, resulting in a gain of $4.3 million [9] - Inventory at the end of Q3 was $87.9 million, down from $90.2 million at the end of Q2 fiscal year 2026 [11][32] - The company has suspended its quarterly cash dividend to reinvest profits into growth opportunities [32] Q&A Session Summary Question: What makes the $38 million fire service tenders high probability? - Management indicated that high probability is based on being the incumbent, competitor struggles, multiple-brand strategy, and strong relationships with fire departments [42][44] Question: Can margins recover through higher absorption or production levels? - Management confirmed that recovery is linked to achieving full capacity and operating leverage, with a shift in product mix affecting margins [48][49] Question: What is the status of certification delays? - Management noted that certification delays are due to a backlog at certification agencies, affecting all manufacturers [57][70] Question: How are pricing opportunities being addressed? - Management is implementing annual pricing increases strategically across different business segments while managing inventory levels [62][64]

Financial Data and Key Metrics Changes - Net sales for Q3 2026 were $47.6 million, a 4% year-over-year increase, driven by a 31% increase in fire services products [4][21] - Adjusted EBITDA, excluding FX, was $200,000, a decrease of $4.5 million, or 95%, compared to $4.7 million for the same period last year [5][24] - Adjusted gross profit as a percentage of net sales decreased to 31.3% from 41.7% in the comparable year-ago period [5][23] - The net loss for the quarter was $16 million, or $1.64 per share, compared to a net income of $100,000, or $0.01 per share, for Q3 2025 [21][22] Business Line Data and Key Metrics Changes - Fire services revenue increased by $6 million year-over-year, driven by $3.4 million in sales from the Veridian acquisition and organic growth of $3 million [22][27] - Adjusted gross profit for the fire services segment decreased due to lower sales, higher product costs, and tariffs [23][25] - Industrial demand softened across several channels, with distributors reducing inventory and certain customers deferring purchases [17][18] Market Data and Key Metrics Changes - Domestic sales were $19.2 million, representing 40% of total revenues, while international sales were $28.4 million, accounting for 60% of total revenues [22] - Sales in Latin America decreased from $5 million to $4.2 million due to political uncertainty affecting purchase decisions [28] - Sales in Asia decreased 19% year-over-year from $3.6 million to $2.9 million [28] Company Strategy and Development Direction - The company is focused on expanding its market share in the fragmented $2 billion fire protection sector and growing its industrial products business [4][7] - Strategic acquisitions of California PPE and Arizona PPE are expected to enhance the North American service segment of the global fire services market [7][8] - The company plans to navigate macroeconomic challenges while expanding top-line revenue in fire services and industrial verticals [33][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of tariff uncertainty, inflation, and supply chain costs on revenue and gross margin [9][12] - The company remains optimistic about long-term demand signals and expects headwinds to ease as it moves into calendar year 2026 [12][35] - Management has withdrawn formal guidance and is shifting to a more disciplined operating model focused on measurable execution and cash generation [11][13] Other Important Information - The company completed a $6.1 million sale and partial leaseback of its Decatur, Alabama warehouse, resulting in a gain of $4.3 million [8] - Inventory at the end of Q3 was $87.9 million, down from $90.2 million at the end of Q2 [10][31] - The company has suspended its quarterly cash dividend to reinvest profits into growth opportunities [31] Q&A Session Summary Question: What makes the $38 million fire service tenders high probability? - The company believes these tenders are high probability due to existing relationships with fire departments, competitor struggles, and being written into specifications [37] Question: What is the status of certification delays? - Certification delays are due to a backlog at certification agencies, affecting all manufacturers, with no further delays expected [44] Question: How is the company addressing pricing opportunities? - The company is implementing annual pricing increases strategically across fire and industrial segments while managing competitive pressures [46][48]