Financial Data and Key Metrics Changes - Net sales for Q3 totaled $375 million, representing a 10% decline year over year when excluding the divested AT and M business [8][12] - Gross margin rate in Q3 was 7.2%, a 70 basis point decline compared to 7.9% in the same period last year [12] - Adjusted net income in Q3 was $6.8 million or $0.27 per diluted share, down from $9.8 million or $0.39 per diluted share in the same quarter last year [16] Business Line Data and Key Metrics Changes - Medical segment net sales were $115 million, up 2% year over year, driven by non-recurring consignment inventory sales [8][9] - Automotive segment net sales were $173 million, a 14% decrease year over year, representing 46% of total company sales [10] - Industrial segment net sales were $86 million, down 15% year over year, representing 23% of total company sales [10][11] Market Data and Key Metrics Changes - Sales in the Medical market increased, while the Automotive and Industrial markets experienced declines [8][10] - The automotive business is heavily concentrated in North America and China, with growth noted in Europe due to a new braking platform [10] Company Strategy and Development Direction - The company is focusing on expanding its presence in the medical contract manufacturing organization (CMO) sector, with a new manufacturing facility in Indianapolis [6][9] - The strategy includes utilizing cash generated from EMS operations to invest in the CMO sector, with expectations for organic revenue growth over time [7][9] - The company aims to improve its global capacity utilization by closing the Tampa facility and streamlining operations [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth through emerging medical technologies and high-level assemblies [23] - The current tariff environment presents uncertainty, impacting the timing of recovery in the core EMS business [20][22] - Management reiterated guidance for fiscal year 2025, expecting to be at the high end of sales and operating income ranges [19] Other Important Information - Cash flow generated by operating activities in the quarter was $30.9 million, marking the fifth consecutive quarter of positive cash flow [16] - The company has $304.6 million in short-term liquidity available at the end of Q3 [18] - The company invested $3 million to repurchase 175,000 shares of common stock during the quarter [19] Q&A Session Summary Question: Details about the new facility in Indianapolis - The new facility provides more space for growth in the medical CMO sector and is leased to minimize upfront costs [25][26] Question: Impact of the existing facility's sale - It is too early to determine the potential value of the existing facility, with a transition period of two to three years expected [30] Question: Trends in open orders or backlog - The greatest increase in backlog was seen in the medical vertical, followed by industrial and automotive [32] Question: Orders pulled into March due to tariffs - Management is uncertain if orders were pulled forward due to tariffs but is monitoring customer feedback [36] Question: Operating expenses trends for the rest of the year - SG&A expenses are expected to rise as investments are needed to prepare for growth [41] Question: Short-term moves in gross margin and operating income - Next quarter is expected to be similar to Q3, with conservative estimates due to market uncertainties [48] Question: Demand environment in medical - The investment in the new facility was made to capture larger business opportunities in the medical CMO sector [50] Question: Inventory management and cash conversion - There is still room for improvement in cash conversion days, with ongoing efforts to manage inventory effectively [53]

Financial Data and Key Metrics Changes - Net sales for Q2 totaled $357 million, a 15% decrease year over year, with a 13% decline when excluding AT and M [8][14] - Adjusted operating income for Q2 was $13.3 million, or 3.7% of net sales, compared to $19.1 million, or 4.5% of net sales, in the previous year [16] - Adjusted net income in Q2 was $7.4 million, or $0.29 per diluted share, down from $9.8 million, or $0.39 per diluted share, in the same quarter last year [17] - Cash flow generated from operating activities was $29.5 million, marking the fourth consecutive quarter of positive cash flow [17][18] - Inventory levels decreased by $149 million, or 33%, year over year, ending the quarter at $306.2 million [18] Business Line Data and Key Metrics Changes - Automotive net sales were $193 million, a 4% decrease year over year, representing 54% of total company sales [9] - Medical net sales were $84 million, a 22% decrease year over year, accounting for 23% of total company sales [10] - Industrial net sales were $81 million, down 20% year over year, also representing 23% of total company sales [12] Market Data and Key Metrics Changes - North America and Europe experienced double-digit declines, while Asia saw an increase in sales [8] - The automotive business in China showed strong performance, with record production rates, contrasting with declining volumes in North America [9] Company Strategy and Development Direction - The company is strategically repositioning for growth, focusing on divesting non-core assets and enhancing facility utilization [6][7] - There is an increased focus on the medical CMO sector, with plans to expand manufacturing capabilities [12][27] - The company is exploring opportunities in emerging medical technologies and high-level assemblies [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a sustained period of declining customer demand and revised expectations for the full fiscal year [6][7] - The company is optimistic about future growth but recognizes that necessary changes will take time [7][27] - Management is actively working with customers to navigate the impacts of tariffs and supply chain challenges [22][24] Other Important Information - The company has amended its credit facility, enhancing its capital structure and providing additional liquidity for investments [19][20] - A total of $97.7 million has been returned to shareholders through share repurchases since October 2015, with $22.3 million remaining on the repurchase program [20][21] Q&A Session Summary Question: What is the impact of tariffs on production decisions? - Management indicated that even with a 25% tariff, it remains more cost-effective for most products to be manufactured in Mexico [30] Question: How is inventory reduction trending? - Management noted that inventory is expected to continue decreasing over the next six to twelve months as they manage customer agreements [35] Question: What is the current utilization rate in Jasper? - The utilization rate in Jasper is around 65%, with discussions ongoing about moving additional work from Tampa to Jasper [43] Question: Is the revised guidance driven by a specific vertical? - The revised guidance reflects broad-based softness across all verticals, although the automotive sector is holding steady due to strength in Asia [46] Question: What changes are being made to focus on the medical vertical? - The company has restructured to combine its drug delivery business with the core EMS medical vertical to enhance collaboration and capabilities [54]