Core Insights - The company is initiating a leadership transition plan to appoint a new CEO while maintaining business continuity and focusing on profitable growth initiatives [1][3][71] Financial Performance - The company reported a solid third-quarter performance with sales up approximately 2% and orders up about 10%, indicating strong top-line momentum [2][10] - Adjusted earnings per share for the quarter was $2.51, an increase compared to the prior year [9][10] - Free cash flow generated in the third quarter was $174 million, primarily used to pay down debt, with expectations to generate $625 million for the year [10][30][66] Market and Segment Analysis - The data center market is a significant growth area, with $135 million in orders booked in the quarter and an additional $60 million in October, reflecting strong traction [7][11] - The company’s data center business is projected to grow from $30 million five years ago to an estimated $130 million this year, with a bid pipeline approaching $1 billion [11][12][62] - Orders in the automation and motion control (AMC) segment were up 31.7% year-over-year, driven by large data center orders [24][21] Margin and Cost Dynamics - The adjusted gross margin for the third quarter was 37.6%, down 80 basis points from the prior year, impacted by tariffs and rare earth magnet availability [8][10] - Adjusted EBITDA margin was 22.7%, reflecting synergy benefits offset by mix tariffs and rare earth pressures [9][10] - The company expects to achieve margin neutrality on tariffs by the end of next year, with ongoing efforts to manage tariff impacts [30][59] Future Outlook - The company anticipates low to mid-single-digit organic sales growth in 2026, with data centers contributing significantly to this growth [38][50] - Expectations for free cash flow in 2026 are nearly $900 million, supporting further debt reduction and improving leverage ratios [39][66] - The company is investing in expanding capacity in its data center business, with new facilities in British Columbia and Texas expected to enhance production capabilities [18][19][78] Leadership Transition - The board has initiated a comprehensive search for a new CEO, expected to take about four to six months, ensuring a smooth transition and continuity in strategy [71][72]