It's outperformed so far this week, that small cap trade. So, the Russell 2000 is up nearly 5% in three days. And our next guest now says the stage is finally set for those gains to actually continue with some momentum.For more, let's turn to portfolio manager of the Needm Small Cap Growth Fund, Chris Wler, who joins us here on set this Thanksgiving Eve. Chris, thank you very much for being here with us. >> Thank you for having me.>> All right, so let's talk about the small cap trade. You say that it does n ...

Financial Data and Key Metrics Changes - For the first quarter of fiscal 2026, consolidated revenue decreased by 8% to $7.4 million compared to $8 million in the same period of fiscal 2025 [4][9] - Consolidated gross profit increased by $800,000, reaching $1 million, resulting in a significant year-over-year gross margin improvement [4][9] - Consolidated SG&A expenses decreased by 6% to $1.5 million, primarily due to the absence of breakup fees from a terminated acquisition [9][10] - The net loss for the quarter was $600,000, or $0.06 per share, with total debt reduced to $5.7 million from $7.4 million [10][11] Business Line Data and Key Metrics Changes - Raynor's revenue for Q1 fiscal 2026 was $4.3 million with an operating profit of $1.5 million, showing strong margin growth despite a slight revenue decline [5][11] - STATCO's revenue was $3.3 million with an operating loss of $1.2 million, although it showed a $469,000 improvement in operating income year-over-year [5][12] - STATCO's gross profit margin improved by 14 percentage points, primarily due to better pricing and production efficiencies, despite ongoing challenges with legacy contracts [12] Market Data and Key Metrics Changes - The company reported a backlog of $50.1 million as of June 30, 2025, indicating strong customer confidence and new quoting opportunities in air defense and submarine defense sectors [7][14] - The company is focusing on building a strong recurring revenue customer base, which is reflected in the decrease in cost of revenue by 18% [9] Company Strategy and Development Direction - The company aims to secure and maintain enduring partnerships within the defense sector, focusing on custom manufacturing for naval and military applications [13][14] - Management is actively pursuing adjustments from clients and focusing on aggressive cash management to mitigate risks [6][10] - The company is looking to expand its revenue and profitability through strategic investments and operational improvements [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the prospects for revenue growth and profitability, citing a strong backlog and ongoing negotiations to improve contract terms [14][59] - The management acknowledged challenges with legacy contracts, particularly at STATCO, but emphasized progress in renegotiating these contracts [20][22] - There is a focus on improving operational efficiencies and increasing throughput to enhance profitability [51][52] Other Important Information - The company is experiencing challenges in finding and retaining talent, which is critical for scaling operations [49][50] - Management highlighted the importance of maintaining high-quality standards and on-time delivery to secure customer trust and future contracts [90][92] Q&A Session Summary Question: Backlog increase and management participation - Acknowledgment of backlog increase over $50 million and positive changes in management participation [17][19] Question: Duration of bad contracts - Management indicated that approximately 30% of customer revenue is affected by legacy contracts, with ongoing efforts to resolve these issues [20][21] Question: New business areas in backlog - All backlog is related to air defense and submarine defense opportunities [29][30] Question: STATCO's performance and future contributions - Management confirmed that STATCO has been a significant challenge but is working towards making it a positive contributor [33][34] Question: Revenue growth potential - Management believes the company can achieve higher revenues, potentially reaching $70 million to $100 million, with ongoing efforts to drive business development [41][42] Question: Renegotiation of contracts - Management indicated that while some contracts may need to be walked away from, the majority are expected to be renegotiated successfully [102][104] Question: Customer perceptions of gross margins - Management stated that the requested margins are within acceptable ranges for customers, emphasizing the importance of maintaining competitive pricing [112][120]

Core Insights - Stryker Corporation is focused on maintaining its growth strategy through commercial differentiation and mergers and acquisitions [4][5] - The newly appointed CFO, Preston Wells, emphasizes a seamless transition and continuity in the company's strategic direction [3][4] - The company aims for a 200 basis point improvement in profitability by the end of the year, continuing its commitment from previous years [5] Company Strategy - The company will prioritize capital allocation as a key focus area under the new CFO [5] - Stryker's strategy includes driving top-line growth through differentiated commercial approaches [4] - The company is committed to enhancing its profitability metrics, aiming for a significant improvement by year-end [5] Leadership Transition - Preston Wells has been with Stryker for 10 years, indicating a deep understanding of the company's operations and culture [4] - The transition to the new CFO role is described as seamless, suggesting stability in leadership [3][4]