Financial Data and Key Metrics Changes - The company revised its fiscal 2026 sales guidance down to between $750 million and $760 million, impacted by approximately $50 million due to a large customer's store closures and distribution center consolidation [11][12] - Operating income is expected to be between $72 million and $79 million, with gross margin reported at 19.6%, down from 24.1% a year earlier, but up sequentially from 18.0% in the first quarter and 19.3% in the second quarter [14][15] Business Line Data and Key Metrics Changes - The braking business is expected to see gains that will increase overall margins due to operating efficiencies and facility utilization [5] - The EV Emulator business is being explored for strategic alternatives as it is considered a non-core asset [18][37] Market Data and Key Metrics Changes - The average age of U.S. light vehicles has risen to 12.8 years, with the number of vehicles on the road increasing to 295.9 million, indicating a growing market for replacement parts [7][8] - In Mexico, the vehicle market has approximately 36 million vehicles, with an average age of 16.2 years, showing increased demand for aftermarket parts [9] Company Strategy and Development Direction - The company aims to enhance its leadership position in the nondiscretionary automotive aftermarket parts sector, focusing on operational efficiencies and market share growth [7][40] - Strategic initiatives include growing sales of existing product lines, improving operational efficiencies, mitigating tariffs, and increasing cash conversion [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovering sales from a large customer and highlighted strong liquidity and operational fundamentals [4][6] - Despite recent headwinds, the company remains bullish about its outlook and is focused on leveraging its global operational footprint to meet demand [40][41] Other Important Information - The company generated cash of $23.7 million for the nine-month period, with net bank debt decreasing by $10.9 million to $70.5 million [16][17] - The company repurchased 669,472 shares for $8.4 million at an average price of $12.47 [18] Q&A Session Summary Question: Impact of sales disruption from a large customer - Management indicated that the sales disruption was largely a one-time event, with a 15% reduction in store numbers expected to impact future sales [25] Question: Market share opportunities due to competitor store closures - Management confirmed that they expect to gain market share as a result of competitor store closures [26] Question: Guidance for operating income and gross margins - Management expects gross margins to increase sequentially in the fourth quarter, alongside reductions in total operating expenses [34] Question: Currency impact on operating expenses - Management noted that the strengthening peso would have a non-cash impact on lease liabilities but would be accounted for separately [35] Question: Non-strategic asset divestiture - Management discussed the potential divestiture of the EV Emulator business, which does not align with their focus on aftermarket parts [37]

Financial Data and Key Metrics Changes - The company revised its fiscal 2026 sales guidance down to between $750 million and $760 million, impacted by approximately $50 million due to a large customer's store closures and distribution center consolidations [11][12] - Operating income is expected to be between $72 million and $79 million, with gross margin reported at 19.6%, down from 24.1% a year earlier, but showing a sequential increase from 18.0% in the first quarter and 19.3% in the second quarter [14][15] Business Line Data and Key Metrics Changes - The braking business is expected to see gains that will increase overall margins due to operating efficiencies and facility utilization [5] - The Heavy Duty business is experiencing increased demand for aftermarket parts, particularly in Mexico, where the vehicle population has grown to approximately 36 million, with an average age of 16.2 years [9] Market Data and Key Metrics Changes - The average age of U.S. light vehicles has risen to 12.8 years from 12.5 years in 2024, indicating a growing opportunity for replacement parts as consumers hold onto their vehicles longer [7][8] - The number of vehicles on the road in the U.S. climbed to 295.9 million from 291.1 million a year ago, suggesting increased demand for aftermarket parts [8] Company Strategy and Development Direction - The company is focused on being the leading supplier of nondiscretionary automotive aftermarket parts, leveraging its strong liquidity and operational footprint to enhance market share [7][10] - Strategic alternatives are being explored for the EV Emulator business, which is considered a non-core asset, as the company aims to concentrate on its aftermarket focus [10][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovering sales from a large customer and highlighted the positive momentum in the overall outlook despite recent challenges [4][5] - The company remains committed to enhancing shareholder value through share repurchases and debt reduction, with a strong liquidity position of approximately $146 million [16][17] Other Important Information - The company generated cash of $23.7 million for the nine-month period, with net bank debt decreasing by $10.9 million to $70.5 million [16][18] - The company plans to provide guidance for fiscal 2027 during the year-end call in June [16] Q&A Session Summary Question: Impact of sales disruption from a large customer - Management indicated that the sales disruption was largely a one-time event, with a 15% reduction in store numbers for the customer, but they remain optimistic about future growth [25] Question: Market share opportunities due to competitor store closures - Management confirmed that they expect to gain market share as competitors close stores, and they are well-positioned to capture fair share in the market [26] Question: Guidance for operating income and gross margins in Q4 - Management expects gross margins to increase sequentially in Q4, alongside reductions in total operating expenses, which will help meet guidance [34] Question: Currency impact on operating expenses - Management acknowledged that the strengthening peso will have a non-cash impact on lease liabilities but will be accounted for separately [35] Question: Non-strategic asset divestiture - Management discussed the potential divestiture of the Electric Vehicle Emulation business, which does not align with their focus on the aftermarket [37]

Financial Data and Key Metrics Changes - The company revised its fiscal 2026 sales guidance down to between $750 million and $760 million, impacted by approximately $50 million due to a large customer's store closures and distribution center consolidations [11][12] - Operating income is expected to be between $72 million and $79 million, with depreciation and amortization of approximately $10 million [11] - Gross margin decreased to 19.6% compared to 24.1% a year earlier, but increased sequentially from 18.0% in the first quarter and 19.3% in the second quarter [13][14] Business Line Data and Key Metrics Changes - The braking business is expected to see increased margins due to operating efficiencies and facility utilization [5] - The EV Emulator business is being explored for strategic alternatives as it is considered a non-core asset [18] Market Data and Key Metrics Changes - The average age of U.S. light vehicles rose to 12.8 years from 12.5 years in 2024, indicating increased replacement opportunities [7] - The number of vehicles on the road increased to 295.9 million from 291.1 million a year ago, suggesting a growing market for aftermarket parts [8] Company Strategy and Development Direction - The company aims to be the leading supplier of nondiscretionary automotive aftermarket parts, leveraging its financial strength and reputation [6] - Strategic initiatives include growing sales of existing product lines, improving operational efficiencies, mitigating tariffs, and increasing cash conversion [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovering sales from a large customer and highlighted the positive momentum in the overall outlook despite recent challenges [4][5] - The company remains focused on enhancing shareholder value through capital deployment, including share repurchases and debt reduction [5][17] Other Important Information - The company generated cash of $23.7 million for the nine-month period, with net bank debt decreasing by $10.9 million to $70.5 million [16] - Liquidity remains strong with total cash and availability of approximately $146 million as of December 31, 2025 [17] Q&A Session Summary Question: Impact of sales disruption from a large customer - Management indicated that the sales disruption is largely a one-time event, with a 15% reduction in store numbers expected to impact future sales [25] Question: Market share opportunities due to competitor store closures - Management confirmed that they expect to gain market share as competitors close stores, leveraging their existing market presence [26] Question: Guidance for operating income and gross margins in Q4 - Management expects gross margins to increase sequentially in Q4, alongside reductions in total operating expenses [34] Question: Currency impact on operating expenses - Management noted that the strengthening peso will have a non-cash impact on lease liabilities but will be accounted for separately [35] Question: Non-strategic asset divestiture - Management discussed the potential divestiture of the EV Emulator business, which does not align with their focus on the aftermarket [37]