Financial Data and Key Metrics Changes - Third quarter revenue totaled $399 million, stable across business segments sequentially, but down year-over-year due to lower demand in certain North American industrial markets [8][10] - Gross margins were 16.7%, slightly below the prior year's margins, reflecting pricing discipline despite modest volume pressure [8] - Adjusted EPS was $0.65 per diluted share, down from $0.75 in the second quarter, impacted by higher interest expenses [9][10] - EBITDA for the quarter was $34.2 million, with an EBITDA margin of 8.6% [9] - Working capital initiatives drove positive operating cash flow of $17 million, up from $9 million last year [10] Business Segment Data and Key Metrics Changes - Supply Technologies net sales were $186 million, consistent with previous quarters, but down year-over-year due to lower customer demand in certain markets [10][11] - Assembly Components segment sales improved sequentially to $97 million, reflecting increased production and new program launches [13] - Engineered Products segment sales were $116 million, down from $124 million a year ago, driven by lower demand in forged and machine products [14][15] - New equipment bookings in Engineered Products were $174 million in the first nine months, with expectations to exceed $200 million for the year [15] Market Data and Key Metrics Changes - Year-over-year sales decline was primarily due to lower demand in North America, offset by growth in Europe, particularly in electrical end markets [8][11] - Backlogs as of September 30 were up 28% since year-end, indicating strong demand heading into 2026 [7][15] Company Strategy and Development Direction - The company is focused on transformation towards a leaner, more predictable business model, emphasizing long-term competitive advantages and strategic capital investments [2][3] - Continued investments in technology and information systems are aimed at capacity expansion and margin improvement [6] - The company expects to reduce debt significantly while building on productivity improvements and strong backlogs in 2026 [4][10] Management's Comments on Operating Environment and Future Outlook - Management anticipates no meaningful rebound in demand during the fourth quarter but expects to benefit from new business and strong backlogs moving into 2026 [2][4] - The company is optimistic about the growth in industrial electrification and defense markets, which are expected to drive future performance [29][40] - Management highlighted the importance of managing working capital efficiently and preparing for future growth despite current market volatility [45][46] Other Important Information - The company refinanced its senior notes and revolving credit facility, extending maturity dates and strengthening its balance sheet [5] - The effective tax rate for the full year is expected to range between 13%-16%, benefiting from ongoing tax initiatives [9] Q&A Session Summary Question: How are large orders in the Engineered Products backlog accounted for? - Contracts are accounted for using the percentage of completion method, with expectations to recognize three of five pieces of equipment from a large order in 2026 [28] Question: Will margin pressure from front-end investments abate in 2026? - Margins are expected to improve as contracts are completed and aftermarket strong margins continue [38][40] Question: What is the expectation for free cash flow in Q4? - Free cash flow is estimated to be strong, ranging between $45-$55 million, driven by working capital management [41][42] Question: Are there impacts from the potential government shutdown? - No explicit examples of impact were noted, but some internal processes may have slowed down [52] Question: How sustainable is the pricing in Supply Technologies? - The focus is on strategic initiatives for growth and improving competitiveness rather than solely on pricing [56] Question: Is AI being implemented to enhance operations? - Investments in information technology, including AI for data management, are expected to drive efficiencies in the business [59] Question: What are the metrics around debt reduction? - The company expects to reduce debt by $35-$45 million in the fourth quarter, supported by strong free cash flow [63][64]