Financial Data and Key Metrics Changes - Third-quarter revenue was $261.4 million, down from $298.4 million in the prior year, reflecting a $46 million revenue charge associated with the CH-53K program loss reserve and program adjustments [16][17] - GAAP net loss was $97.8 million, or $3.37 per diluted share, compared to net income of $18 million, or $0.57 per share in the prior year [17] - Adjusted EBITDA was $56.2 million, representing an 18.3% margin, down from 21.5% in the third quarter of 2024 [17][18] Business Line Data and Key Metrics Changes - Machine Clothing revenue was $175 million, a 4% decline from the prior year, with adjusted EBITDA margin at 31% compared to 33.2% last year [18] - Engineered Composites revenue was $86.5 million, down from $115.4 million last year, driven entirely by the CH-53K charge; excluding this impact, revenue was $132.5 million, up from $128.7 million in the prior year [18][19] Market Data and Key Metrics Changes - In North America, shipments improved sequentially, but order intake remained soft due to ongoing packaging and corrugator mill closures [12] - Europe showed signs of moderating recovery, while Asia faced challenges with overall demand at low levels due to overcapacity [12] Company Strategy and Development Direction - The company announced a strategic review of its structures assembly business, which may include the sale of the site, to focus on 3D woven technology and engineered components [4][5] - The company aims to exit lower-margin programs and concentrate on higher return opportunities, particularly in engineered composites and machine clothing [14][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the CH-53K program would not be profitable as originally bid, leading to a strategic decision to take a charge and explore options for the business [6][26] - The company expects underlying trends from the third quarter to persist into the fourth quarter, with a stable operating environment in the Americas and moderate recovery in Europe [22][23] Other Important Information - The company has deployed about $68 million in CapEx and $47 million in R&D over the past 12 months while returning more than $200 million to shareholders [11] - The company ended the quarter with $108 million in cash and $481 million in total debt, resulting in a net debt of approximately $372 million [21] Q&A Session Summary Question: Evaluation of the CH-53K program - Management upgraded leadership and planning capabilities but ultimately decided there was no path to profitability for the CH-53K program, leading to a strategic review [26][27] Question: Opportunities in 3D technology - There is significant activity in 3D woven technology, particularly in hypersonics and defense, with strong interest from OEMs [29][30] Question: 2026 targets after strategic review - The company remains focused on solid, profitable programs and has set guardrails for new contracts to ensure profitability [32] Question: Machine clothing margins - Margins have been affected by overproduction in Asia and strategic exits from unprofitable segments, but ongoing footprint rationalization is expected to improve margins [36][39] Question: LEAP program ramp-up - The LEAP program is expected to ramp significantly in 2026 and 2027, with steady margins due to the cost-plus contract structure [40][41]