Financial Data and Key Metrics Changes - Consolidated adjusted EBITDA for Q4 was $3.2 million, down from $6 million the prior year, driven by a pause in customer orders due to new global tariffs [4] - Full year consolidated adjusted EBITDA was $29.2 million, an improvement from the prior year [4][22] - Net sales for Q4 were $108.8 million, an increase of $7.8 million compared to Q4 2024, while full year net sales were $434.2 million, up $3.8 million from the prior year [21] Business Line Data and Key Metrics Changes - Air and Liquid Processing segment achieved record revenue and adjusted EBITDA in 2025, with Q4 revenue 10% higher than the prior year and full year revenue 7% above the prior year [6][7] - Forged and Cast Engineered Products (FCEP) reported Q4 net sales of $70.9 million, up from $66.5 million in Q4 2024, and full year net sales of $292.6 million, stable compared to $286.6 million in the prior year [12] - FCEP adjusted EBITDA for Q4 was $2.2 million, down from $5.5 million in the prior year, while full year adjusted EBITDA was $24.4 million [13] Market Data and Key Metrics Changes - Backlog for Air and Liquid declined by $8 million year-over-year, primarily due to the U.S. Navy's termination of the Constellation-class frigate program [8] - Significant order activity was noted at the start of 2026, with bookings up 73% compared to the prior year [8] - Demand for heat exchangers in the nuclear market reached record levels, indicating long-term growth potential [9] Company Strategy and Development Direction - The company initiated the removal of underperforming assets to improve adjusted EBITDA by $7-$8 million annually [4] - Focus on optimizing the Sweden facility and ramping up production to meet expected market growth [13][15] - Anticipation of significant margin expansion in the second half of 2026 and full year 2027 due to operational improvements and tariff protections [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about emerging from the steel market slowdown and improving profitability in 2026 [52] - The company noted that the roll market is recovering, and shutdown costs are behind them [25] - Management highlighted strong demand in the nuclear and AI data center markets, positioning the company for growth [10][9] Other Important Information - The company recorded significant one-time charges related to the exit from unprofitable operations, totaling $42.4 million in Q4 and $52.2 million for the full year [19] - The pension plan achieved fully funded status in early 2026, enhancing the company's liquidity position [24] Q&A Session Summary Question: Inquiry about Air and Liquid Processing margins - Management indicated that Q4 margins were affected by an unusual mix, and the full year is more representative of typical performance [29] Question: Clarification on customer behavior changes in Forged and Cast rolls - Management explained that customer behavior was impacted by tariff calculations, leading to a pause in orders, but demand is now recovering [32][34] Question: Involvement with Westinghouse's AP1000 reactors - Management confirmed past supply to Westinghouse and noted positive indicators for future activity in the nuclear market [46][48]

Backlog declined year over year by $8 million, primarily driven by the U.S. Navy’s decision to terminate production of the Constellation frigate program, which resulted in $7.1 million of orders being removed from the backlog in late 2025. Costs related to the terminated orders are expected to be paid by the Navy along with normal profit margins. While backlog ended $8 million lower, we did see significant order activity at the start of 2026. As referenced in our press release dated March 10, order activity ...