Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $124.5 million, up 10.4% from $112.8 million in the prior year quarter, driven by a $9.4 million increase in volume and a $3.5 million favorable impact from product mix [9] - Gross margin for Q3 2025 was 34.5%, down from 38.6% in the prior year quarter, negatively impacted by higher import costs [10] - Net income for Q3 2025 was $7.6 million, compared to $9.3 million in the prior year quarter, with a net income margin of 6.1% [12] - Adjusted EBITDA for Q3 2025 was $13.1 million, down from $14.7 million in the prior year quarter, with an adjusted EBITDA margin of 10.5% [12] Business Line Data and Key Metrics Changes - Sales to chain accounts and distributors increased by 13.7%, while online sales rose by 3.1% over the prior year quarter [9] - Sales to the retail channel decreased by 12.5%, reflecting overall retail sector softness [9] Market Data and Key Metrics Changes - The company experienced double-digit growth across all major markets, particularly in Texas and California [4] - Domestic sourcing increased to approximately 20% from about 15% in Q2 2025, while imports from Taiwan decreased to approximately 42% from 58% [4] Company Strategy and Development Direction - The company aims to scale its new paperback business to over $100 million in additional annual revenue over the next two to three years, driven by a shift from plastic to paper products among restaurant chains [6] - A stock repurchase program of up to $15 million was announced, reflecting confidence in future growth prospects [8][14] - The company is focused on maintaining disciplined pricing and enhancing operational efficiencies while integrating new customer accounts [7][8] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing trade volatility but expressed confidence in sustaining growth through effective pricing initiatives and sourcing diversification [4] - The anticipated growth from the new paperback category is expected to be supported by evolving regulations and a focus on customer experience [6] - For Q4 2025, the company expects net sales to increase by approximately 10%-14% over the prior year quarter, with gross margin projected to be within 33%-35% [14] Other Important Information - The company ended Q3 2025 with $91.1 million in working capital and maintained financial liquidity of $34.7 million [13] - The Board of Directors approved a quarterly dividend of $0.45 per share, payable on November 28, 2025 [14] Q&A Session Summary Question: Plans for scaling the paperback business - Management confirmed the aim to scale the paperback business to $100 million over the next two years, driven by chains moving away from plastic [17][19] Question: Confidence in gross margin recovery - Management indicated that while they are being conservative, there are signs of stabilization in currency exchange rates that could improve gross margins [20][22] Question: Capital allocation priorities - Management stated that they are considering stock buybacks while maintaining strong cash flow and are also looking at potential mergers and acquisitions [24][25] Question: Dividend versus buyback considerations - Management clarified that they do not have any debt on their books and are evaluating capital allocation strategies, including potential share repurchases [30][32] Question: Expected margins on new bag business - Management indicated that margins on the new bag business could vary, with higher volume products in the high teens and specialty bags potentially reaching high 50% margins [40]