Financial Data and Key Metrics Changes - For Q4 2025, net sales were $104.7 million, a decline of $1.8 million compared to Q4 2024. On a pro forma basis, net sales increased by $1.4 million, or 1.4% year-over-year [25] - Adjusted operating income for Q4 was $3.3 million, up from $2.4 million in the prior year. On a pro forma basis, operating income decreased slightly by 5.7% [25] - Adjusted EBITDA for Q4 was $12.9 million, an increase from $12.1 million a year ago, with a pro forma increase of $1.1 million or 9.3% year-over-year [26] - For the full year 2025, net sales were $422.2 million, a decline of $42.1 million compared to the previous year. On a pro forma basis, net sales decreased by $7.4 million or 1.7% [28] Business Line Data and Key Metrics Changes - In the Power Solutions segment, Q4 net sales were $45.5 million, up 14.9% year-over-year, driven by new program launches in electrical and defense business [30] - The Mobile Solutions segment saw Q4 net sales of $59.3 million, down from $63.8 million, primarily due to the rationalization of dilutive business [32] - Power Solutions adjusted EBITDA for the full year was $30.7 million, an increase of 10.8% compared to the previous year [31] - Mobile Solutions adjusted EBITDA for the full year was $33.5 million, a decline of 4%, but with adjusted EBITDA margins expanding by 70 basis points [34] Market Data and Key Metrics Changes - The global automotive market is expected to grow slightly by 2% in 2026, with specific regional growth outlooks [18] - The commercial vehicle market is anticipated to begin growing in 2026, supported by strong orders [19] - The defense electronics market is growing strongly, particularly with customers like Raytheon [49] Company Strategy and Development Direction - The company is shifting its sales profile towards higher value end markets and capabilities, moving away from low-value commodity automotive parts [7] - A record level of program launches is expected in 2026, with a pipeline of over $800 million in high-quality prospects [8] - The company aims to achieve between $70 million and $80 million in new business wins for the year [22] Management's Comments on Operating Environment and Future Outlook - Management noted that volatility remains high in markets due to global supply chain issues and geopolitical unrest [9] - The company is optimistic about returning to net sales growth in 2026, with a strong start in Q1 [9] - Management highlighted the importance of tactical maneuvering in response to ongoing market volatility [22] Other Important Information - The company completed a significant transformation plan, including the closure of four plants and the exit of unprofitable business lines [7] - Adjusted gross margin performance was 18.8% in Q4, trending towards a five-year goal of 20% [16] - The company achieved cost-out targets of $15 million for the year, offsetting inflation and pricing pressures [17] Q&A Session Summary Question: Can you expand on the data center end market opportunity? - The company is focused on high precision products for data centers, including watertight couplings and cable assemblies, with an immediate ramp-up expected due to high demand [60][62] Question: What does the roadmap for sustaining sales growth in 2026 look like? - The company plans to double capital spending, with growth primarily driven by new wins that have already been secured [64] Question: What is the cadence of ramp in 2026 in terms of revenue? - The company expects to see between $20 million and $25 million of revenue from new launches in 2026, alongside revenue from programs launched in 2025 [72]

Financial Data and Key Metrics Changes - Total sales declined 3% year-over-year to $1,600,000,000, driven by a 2% reduction in volumes and a 1% reduction in selling prices [24][26] - Adjusted EBITDA decreased 21% to $142,000,000, with an adjusted EBITDA margin falling to 8.9% [24][25] - Earnings per share for the quarter were reported at $1.30 [8] Business Line Data and Key Metrics Changes - Retail segment sales were $607,000,000, a 3% decline due to a 4% decrease in units, partially offset by a 1% increase in price [26] - Packaging segment sales dropped 3% to $410,000,000, consisting of a 3% decrease in organic units and a 1% decrease in selling prices [28] - Construction segment sales were largely flat at $516,000,000, with a 3% increase in units offset by a 3% decline in selling prices [30] Market Data and Key Metrics Changes - Retail sales experienced a 3% decline, primarily due to a 4% decline in volume, with a positive pricing impact of 1% [17] - The construction market outlook remains cautious, with many homebuilders lowering their full-year forecasts [20][22] - The company imports less than 15% of its lumber from Canada, with Southern Yellow Pine representing over 70% of lumber purchases [21] Company Strategy and Development Direction - The company plans to invest $1,000,000,000 in growth capital investments over the next five years, with a focus on organic and inorganic growth [13] - The strategy includes expanding value-added products and innovation while deemphasizing underperforming products [9] - The company aims for 7% to 10% unit growth and 12.5% EBITDA margins in the long term [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment has become increasingly uncertain, but recent business trends have shown improvement [5][6] - The company expects demand to remain slightly down across segments for the remainder of 2025, with competitive pricing pressures continuing [38] - Management remains confident in navigating potential tariff impacts and leveraging favorable demographic trends in an underbuilt housing market [22] Other Important Information - The company has a strong balance sheet with nearly $955,000,000 in cash and total liquidity of $2,200,000,000 [35] - A quarterly dividend of $0.35 per share was approved, representing a 6% increase from the previous year [35] - The company repurchased 649,000 shares for $70,000,000 during the quarter, with additional repurchases planned [36] Q&A Session Summary Question: Outlook on demand and competitive dynamics - Management expects current challenges to continue in future quarters, particularly in the packaging and construction segments, while retail may see improvements [43][44] Question: Impact of lumber prices and market share - The company aims to retain and grow market share while managing margins, with a focus on mitigating cost increases [50][51] Question: Decorators business and growth expectations - Management anticipates that the transition period affecting decorators is largely behind them, with expectations for year-over-year volume gains by the end of the year [55][61] Question: M&A opportunities and growth strategy - The company sees opportunities across all business units for M&A, with a preference for tuck-in acquisitions but open to larger transactions if the right opportunity arises [78][79] Question: Pricing mechanisms in ProWood and market conditions - Management indicated that pricing increases have been successfully passed along, and more normalized margins are expected moving forward [83][84]