Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $693 million, a decrease of 16% year-over-year, primarily due to lower demand for Class 8 vocational and medium-duty trucks in the North American on-highway end market [15][16] - Net income for the quarter was $137 million, down $63 million from $200 million in the same period of 2024, driven by lower gross profit and $14 million in acquisition-related expenses [15][16] - Adjusted EBITDA margin remained flat year-over-year at 37%, with adjusted free cash flow of $184 million in Q3 [7][16] Business Line Data and Key Metrics Changes - In the defense end market, net sales increased by 47% year-over-year, indicating strong growth initiatives [15] - The North American on-highway end market faced significant challenges, with a noted decline in demand impacting overall sales [6][15] Market Data and Key Metrics Changes - The North American on-highway market has been negatively affected by global macroeconomic factors, leading to cautious purchasing decisions from end users [6][7] - The company reported a sequential quarterly increase in cash of $124 million, ending Q3 with over $900 million in cash [8][16] Company Strategy and Development Direction - The company is focused on operational excellence, quality, and customer service while adapting to evolving market dynamics [7] - The acquisition of Dana's off-highway business is a strategic priority, aimed at enhancing growth opportunities [8][16] Management's Comments on Operating Environment and Future Outlook - Management expects the challenging operating environment to persist in the near term, with market activity likely to remain subdued until there is greater clarity around regulatory and economic factors [6][7] - The company views the current reductions in demand as a deferral of purchases rather than a permanent change in market size [7][24] Other Important Information - The company maintains a solid balance sheet with a net leverage ratio of 1.33 times and $1.65 billion in liquidity [16] - The company is actively working to close the acquisition of Dana's off-highway business, which is expected to enhance its market position [8][62] Q&A Session Summary Question: On-highway sales decline - The decline in on-highway sales was steeper than expected, influenced by various factors including channel inventory and end market demand [20][22] Question: Fourth quarter revenue expectations - The company anticipates a sequential improvement in revenues due to expected growth in the defense segment, despite challenges in the North American on-highway market [31][32] Question: Observations on market weakness - The weakness in market demand began to manifest early in Q3, leading to adjustments in SG&A and R&D spending [35][36] Question: Impact of tariffs - The company highlighted that 85% of its components are sourced from the U.S., Mexico, and Canada, mitigating the impact of tariffs [42][44] Question: Earnings growth outlook for next year - The company is focused on managing costs and pricing, but future earnings growth will depend on end-user demand recovery [46][48] Question: International on-highway growth targets - The company sees significant opportunities in international markets and believes the Dana acquisition will enhance its global footprint [58][62]