Financial Data and Key Metrics Changes - Total company sales for Q3 2025 were $362 million, down approximately 4% year-over-year, with increased sales in performance materials and road technologies offset by declines in industrial specialties and APT [8][9] - Adjusted earnings improved significantly, up almost 500 basis points to $56.3 million, driving adjusted EBITDA margin to 33.5% [9] - Free cash flow for the quarter was $118 million, enabling the company to repurchase $25 million of shares and accelerate deleveraging, ending the quarter with net leverage of 2.7 times, beating the previous year-end target of 2.8 times [9][10] Business Line Data and Key Metrics Changes - Performance materials sales increased by 3%, primarily due to volume growth, although segment EBITDA and EBITDA margin were slightly down due to increased variable compensation and foreign exchange impacts [10] - APT sales declined year-over-year, impacted by tariffs and weak end-market demand, with an expected full-year revenue decline in the mid-teens percentage range and EBITDA margin reduced to 15-20% [11][12] - Road technologies posted a 5% sales increase, achieving record Q3 sales in North America, which is the largest and most profitable region for the company [12] Market Data and Key Metrics Changes - The automotive industry is experiencing volatility due to supply chain challenges, including chip shortages and aluminum plant fires, which have impacted production forecasts [20][39] - North American auto production is expected to be down a couple of percent year-over-year, although this is an improvement over prior forecasts [39] Company Strategy and Development Direction - The company announced the sale of its industrial specialties business for $110 million, expected to close in early 2026, with proceeds likely used for debt reduction [4][16] - The company is focusing on disciplined capital allocation and has raised full-year free cash flow guidance, expecting net leverage to be around 2.6 times by year-end [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model despite ongoing tariff uncertainties and slower industrial demand impacting APT [16] - The company anticipates a solid Q4 but expects it to be softer compared to strong Q2 and Q3 results [10] Other Important Information - The company will host an investor update on December 8, where it will share results from the strategic portfolio review and future expectations [6][17] Q&A Session Summary Question: Impact of aluminum plant fires and chip shortages on performance materials outlook - Management acknowledged the dynamic year for the industry and confirmed that results and outlook reflect impacts from these supply chain challenges [20] Question: Clarification on discontinued operations and Q4 implications - Management indicated that the full-year metrics for discontinued operations should be straightforward to extrapolate from Q3 results [21][23] Question: Working capital management post-divestiture - Management provided insights on the balance sheet and indicated that the impact of discontinued operations has been clearly outlined [28] Question: Net debt targets post-sale of industrial specialties - Management confirmed that net leverage finished the quarter at 2.7 times and is targeting 2.6 times by year-end, with proceeds from the sale primarily used for debt reduction [30][31] Question: Performance materials full-year sales outlook - Management explained that the flat to slightly down outlook is influenced by overall auto production forecasts and market dynamics, including EV volatility [38][39] Question: Update on Nexeon platform - Management stated that the Nexeon plant is expected to be operational in the coming months, emphasizing the ongoing partnership [40]

Financial Performance & Outlook - First quarter 2025 sales reached $1 billion, with an adjusted EBIT of $67 million (6.5% margin) and adjusted EBITDA of $98 million (9.6% margin)[29] - The company anticipates 2025 sales between $4 billion and $4.3 billion, a decrease of 2% to 9% compared to 2024, and adjusted EPS between $1 and $1.20[31, 32] - Operating cash for 2025 is projected to be between $275 million and $325 million[33] Segment Performance - Bedding Products segment expects a volume decrease in the low double digits at the midpoint for 2025[36] - Specialized Products segment anticipates a volume decrease in the mid-single digits at the midpoint for 2025[37] - Furniture, Flooring & Textile Products segment projects a volume decrease in the low single digits at the midpoint for 2025[38] Strategic Initiatives - The company's restructuring plan is on track to realize a $55 million to $60 million EBIT benefit in 2025[57] - Restructuring sales attrition is estimated at approximately $60 million in 2025[57] - The company has signed an agreement to exit the Aerospace business, expected to close in the second half of 2025[57] Tariff Impacts & Mitigation - The company is actively pursuing opportunities to capture demand for domestically-produced products and sourcing from lowest total cost countries to mitigate tariff impacts[51] - Foreign direct sourcing exposure is approximately $400 million annually before tariff implementation[49] Bedding Market Trends - The domestic mattress market experienced a 20% demand decline from 2021 to 2024, while domestic production declined 35% due to import market share growth[88]