Financial Data and Key Metrics Changes - Sales declined by 4% despite double-digit pricing gains for new equipment, offset by lower volumes [6][7] - Gross profit margins reached record levels, leading to an increase in EBIT and expanded EBIT margins [7][8] - SG&A expenses increased by 6% due to transition costs and the addition of 10 new locations from recent acquisitions [8][9] - The company maintains a strong cash position with no debt [9] Business Line Data and Key Metrics Changes - Residential new construction and international markets remain subdued, with residential new construction down by 15% to 20% [19] - E-commerce sales grew to $2.5 billion, representing 34% of total sales, with mobile app users increasing by 17% year-over-year [9][10] - The annual volume of products sold through OnCallAir increased by 19% to $1.6 billion [10] Market Data and Key Metrics Changes - International sales, particularly in Mexico, were volatile and negatively impacted earnings by approximately $0.10 per share in the quarter [22] - The company expects improvements in July and August, indicating a better market outlook [23] Company Strategy and Development Direction - The company is focused on transitioning to next-generation equipment with A2L refrigerants, affecting about 55% of historical product sales [5][6] - A new technology-driven sales platform is being developed to capture larger national customers, expected to launch in 2026 [10][11] - The company aims to grow the parts and supply segment, which currently represents about 30% of sales [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a soft market but remains optimistic about future growth and market share development [25][26] - The company is focused on improving gross margins and inventory turns, with a goal of reaching 30% gross profit margin [11][84] - Management emphasizes the importance of innovation and technology in maintaining competitive advantage [12][93] Other Important Information - The company is actively pursuing M&A opportunities, leveraging its strong balance sheet [55][56] - Management is committed to improving inventory management and reducing excess inventory levels [50][53] Q&A Session Summary Question: What happened to volumes in the quarter? - Management noted that volumes were weaker than expected due to weather patterns and a decline in residential new construction, but saw improvements in July [19][20] Question: How sustainable are the gross margins? - Management indicated that while the current gross margin of 29% is strong, it may not be sustainable in the second half of the year due to the absence of pricing benefits seen in the first half [27][28] Question: What is the impact of the canister shortage? - Management stated that the canister shortage was less of a concern now and that they expect to be off allocation by August [40][41] Question: How is the inventory investment trending? - The company reported a significant inventory investment due to the transition, but is focused on improving inventory turns moving forward [50][52] Question: What are the thoughts on consumer preferences during the product transition? - Management observed that the market remains focused on minimum efficiency products, with no significant shift towards high-efficiency systems [61][62] Question: Are there any incentives being requested by contractors? - Management indicated that contractors are not pushing for lower prices, as there is no elasticity in the market [146]

Financial Data and Key Metrics Changes - Consolidated Q4 revenue grew 4% on a reported basis and 2% on an organic constant currency basis, with full-year growth of 3% on both reported and constant currency bases [11] - Adjusted EBITDA increased by $3.1 million year over year but declined by $35.5 million for the full year [14] - Gross profit dollars grew year over year in Q4 despite a 110 basis points gross margin compression [15] Business Line Data and Key Metrics Changes - At Vista, organic constant currency revenue grew 4% for the quarter, driven by strength in promotional products, apparel, gifts, signage, packaging, and labels [12] - Revenue in the promotional products, apparel, and gifts category grew 18% for the full fiscal year, with variable gross profit in that category growing 27% [13] - Business cards declined 6% during Q4, reflecting a shift from legacy products to higher value elevated products [12][13] Market Data and Key Metrics Changes - Organic constant currency revenue growth in European markets was strong at 7% for Q4, while North America improved sequentially to 3% [12] - The total addressable market in Europe, North America, and Australia exceeds $100 billion annually, with over 60% still served by traditional suppliers [9] Company Strategy and Development Direction - The company is transitioning to product categories like packaging, promotional products, and apparel, which are expected to offset the maturation of legacy products [5][6] - Investments in manufacturing, new product introductions, and improved customer experience are aimed at capturing market opportunities [6][10] - The company aims to close the equity valuation gap through revenue and profit growth, rigorous capital allocation, and share repurchases [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the transition in product categories but remains optimistic about future growth in gross profit dollars and customer lifetime value [5][10] - Guidance for fiscal 2026 includes expected revenue growth of 5% to 6% and adjusted EBITDA of at least $450 million, factoring in startup costs and capital expenditures [19] Other Important Information - The company expects to achieve annualized savings of $14 million from cost reduction actions implemented in the latter half of fiscal 2025 [19] - Currency fluctuations had a $3.6 million benefit to adjusted EBITDA during the quarter, primarily due to the strengthening of the euro [15] Q&A Session Summary Question: FY '26 guidance implies free cash flow conversion of EBITDA at 31%. When should free cash flow conversion return to the 45% to 50% level? - Management expects the 45% to 50% conversion rate to be achievable in a normalized environment, but fiscal '26 will not reflect that due to higher CapEx and working capital fluctuations [21][26] Question: What is the go-forward revenue growth expectation for legacy and elevated products? - Management does not provide specific growth rates but anticipates continued decline in legacy products while expecting growth in elevated products [28][30] Question: Is the 2% to 3% FX adjusted growth rate expected for FY '26 the new steady state growth rate? - Management aspires to return to mid-single-digit growth rates over time, driven by execution in elevated products and high-value customers [36] Question: Has maintenance CapEx increased due to recent investments? - Maintenance CapEx has increased due to specific factors, but it is not solely a result of recent investments [39][42] Question: What is the risk that the informational product exemption ends? - There is some risk associated with the informational materials exclusion, but the company has a significant percentage of coverage under USMCA [50][52] Question: Do you think there was a pull forward in demand during Q4 due to tariffs? - Management has not seen indications of a pull forward in demand related to tariffs [54] Question: Can you explain the other income net line item and the impact of derivative contracts? - The company has an active currency hedging program that results in unrealized gains or losses, which can affect earnings but is expected to balance out over time [60][62]

Financial Data and Key Metrics Changes - The company reported revenue of $872 million for Q3 FY2025, an increase of 19% year-over-year and 5% sequentially [11][12] - Non-GAAP earnings per share (EPS) was $2.52, exceeding guidance [11][12] - Gross margin was reported at 12%, impacted by contra revenue from a warrant agreement [15][26] Business Line Data and Key Metrics Changes - Optical communications revenue was $657 million, up 11% year-over-year and 2% sequentially [12][14] - Datacom revenue was $251 million, down 18% year-over-year and 16% sequentially, primarily due to product transitions [12][14] - Telecom revenue reached $406 million, up 42% year-over-year and 17% sequentially, driven by strong demand in data center interconnect applications [12][14] Market Data and Key Metrics Changes - Automotive revenue increased by 76% year-over-year and 24% sequentially, reaching $129 million [14] - Industrial laser revenue was $40 million, up 33% year-over-year and 8% sequentially [14] - Non-optical communications revenue totaled $215 million, a 53% increase year-over-year and 15% sequentially [14] Company Strategy and Development Direction - The company announced a new commercial relationship with Amazon Web Services, expected to boost revenue starting in FY2026 [9][10] - Expansion plans are on track with Building 10 construction underway to meet long-term capacity needs [9][80] - The company remains optimistic about future growth driven by telecom system wins and the ramp of 1.6T datacom products [19][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute well and maintain a consistent track record of revenue growth [10][19] - The company anticipates continued year-over-year growth in the fourth quarter, with revenue guidance between $860 million and $900 million [19] - Management noted that while there may be short-term margin headwinds due to product ramps, long-term growth drivers remain intact [58][60] Other Important Information - The company repurchased over $100 million worth of shares this fiscal year, with approximately $197 million remaining under the current authorization [17][9] - Effective GAAP tax rate was reported at 5.8%, with expectations for mid-single digits for the fiscal year [17] Q&A Session Summary Question: Datacom revenue decline specifics - Management clarified that the decline in Datacom revenue was primarily due to strong growth in the DCI segment, offsetting some of the decline in 800G products [22][23] Question: Gross margin influences - Management indicated that the $4 million impact from the warrant affected gross margin by about 40 basis points, but this is not expected to recur [25][26] Question: Datacom revenue transition - Management noted that the decline in 800G is more likely due to share allocation rather than inventory issues, with a significant ramp for 1.6T products expected [34][36] Question: Amazon engagement and margin opportunities - Management expects the relationship with Amazon to expand over time, with revenue ramping in FY2026 [39][40] Question: Telecom growth sustainability - Management expressed optimism about the sustainability of telecom growth, citing several strong growth factors [44][46] Question: Tariff impacts - Management reported no material impacts from tariffs to date, as customers are responsible for tariffs under FOB shipping terms [18][76] Question: Building 10 progress - Management confirmed that construction of Building 10 is on track, with an 18-month timeline for completion [80][81] Question: Amazon revenue potential - Management indicated that Amazon could potentially become a significant customer, with revenue ramping in FY2026 [88][92]