Financial Data and Key Metrics Changes - Third Quarter 2025 revenues were $1,922 million, a 12% increase from $1,718 million in the Third Quarter of 2024, with 18% growth for the nine months ended September 30 [5][6] - GAAP gross margin for the Third Quarter was 24.9%, up from 24% in the same quarter last year, while non-GAAP gross margin increased to 25.2% from 24.4% [6][8] - GAAP diluted EPS was $2.80 for the Third Quarter of 2025, compared to $1.77 in the Third Quarter of 2024, with non-GAAP diluted EPS rising to $3.35 from $2.21 [8][11] Business Line Data and Key Metrics Changes - Aerospace segment revenues decreased by 3% year-over-year, primarily due to a decline in precision-guided munitions sales in Asia-Pacific, partially offset by increased sales in Israel and Europe [8][10] - SIFRAE and CYBER revenues increased by 14% year-over-year, driven by sales of radio systems and command-and-control systems in Europe [9] - Land segment revenues surged by 41% in the third quarter, attributed to ammunition and munitions sales in Israel and Europe [10] Market Data and Key Metrics Changes - Europe contributed 28% to total revenues, North America 21%, Asia-Pacific 14%, and Israel 33% [5] - The order backlog as of September 30, 2025, was $25.2 billion, an increase of $3.1 billion from the previous year, with 69% of the backlog from orders outside of Israel [10][11] Company Strategy and Development Direction - The company continues to focus on R&D investments to secure future growth and maintain its market leadership [6] - Recent contracts include a $2.3 billion international contract and a $1.625 billion contract with a European country, indicating strong demand for advanced defense solutions [13][14] - Expansion in Europe includes new facilities in Sweden and Germany to enhance local delivery capabilities [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth driven by strong demand for solutions, particularly in Europe and Israel, despite potential domestic demand fluctuations [12][23] - The company anticipates growth opportunities in high-powered laser systems and UAVs, with significant interest from international markets [30][31] Other Important Information - Cash flow from operating activities for the nine months ended September 30, 2025, was $461 million, significantly higher than $82.5 million in the same period last year [11] - The Board of Directors declared a dividend of $0.75 per share to be paid on January 5, 2026 [11] Q&A Session Summary Question: How enduring is domestic demand with the ceasefire? - Management noted an increase of $1.4 billion in backlog, with growth expected predominantly outside of Israel, especially in Europe [23] Question: What is the trajectory for the air and aerospace business? - Management expects continued growth in the aerospace segment, driven by international sales and demand for UAVs [27][28] Question: What are the opportunities in directed energy? - Management confirmed significant interest in high-powered laser systems, with potential for growth in both domestic and international markets [30][31] Question: What are the drivers of margin expansion? - Margin expansion was attributed to improved backlog profitability and operational excellence, including AI utilization and CapEx investments [34][36] Question: How will the company leverage the US DOD's budget expansion? - Management sees the US market as strategic and is exploring acquisition opportunities while expanding operations in border protection applications [42][44]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported a net sales growth of 16% and an adjusted EBITDA margin of 20.8% [5][21] - Adjusted EBITDA for the year was $482 million, with cash flow from operations amounting to $261 million [21] - The company repurchased approximately 7% of its outstanding shares, totaling $473 million [21] Business Line Data and Key Metrics Changes - The ready-to-drink (RTD) shake category grew by 15%, with Premier shake consumption increasing by 20% due to promotional events [6][22] - Premier Protein's net sales grew by 15%, while Dymatize's net sales surged by 33% [22][23] - Adjusted gross profit margin decreased by 620 basis points to 29.7%, attributed to input cost inflation and increased promotional activity [23] Market Data and Key Metrics Changes - The RTD shake category has doubled in retail sales since 2019, reaching $8.7 billion, with Premier Protein holding approximately 50% market share [7][8] - Household penetration for RTD shakes is at 54%, indicating significant growth potential compared to mature CPG categories [7] Company Strategy and Development Direction - The company plans to focus on expanding distribution, increasing advertising investment, and launching innovative products [14][15] - Long-term revenue growth is now projected at 7%-9%, down from previous expectations of low double digits, with Premier Protein expected to drive this growth [10][11] - The company aims to maintain an adjusted EBITDA margin of 18%-20%, with increased brand investments supported by cost savings initiatives [11][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the category's momentum despite increased competition, highlighting Premier's strong market position [35][36] - The company anticipates a challenging Q1 but expects stronger performance in the latter half of the year [19][30] - Management noted that while promotional spending may increase, the overall promotional intensity in the category remains relatively low [90] Other Important Information - The company is focusing on innovation, including the launch of new flavors and product lines, such as almond milk shakes and coffee house shakes [17][18] - The company is leveraging partnerships with major retailers to enhance distribution and visibility [15][19] Q&A Session Summary Question: Changes in the competitive landscape and its impact on 2026 plans - Management noted that while competition has increased, Premier's strong market position and household penetration remain unchanged, providing confidence in future growth [35][36] Question: Insights on repeat rates for new entrants in the category - Management indicated that they expect their major club customer to maintain an expanded set, while monitoring the performance of insurgent brands [41][42] Question: Growth expectations in the club channel - Management expects growth to primarily come from outside the club channel, with improvements anticipated as comparisons ease [48] Question: Consumption trends and competition impact - Management expects consumption to improve in the latter half of December, driven by new partnerships and advertising efforts [54][56] Question: Insights on EBITDA margin expectations - Management highlighted that the anticipated decline in EBITDA margins is primarily due to tariffs and increased promotional spending, with expectations for improvement in the second half of the year [68][70] Question: Market share potential of insurgent brands - Management believes that while some insurgent brands may succeed, the complexity of expanding nationally will limit their growth compared to established brands like Premier [76][78] Question: Pricing expectations and promotional activity - Management expects a low single-digit headwind related to pricing for Premier Protein, with increased promotional activity anticipated in 2026 [85][90] Question: Long-term strategy regarding product portfolio - Management confirmed a focus on ready-to-drink shakes and powders, with no plans to re-enter the bars category, opting instead for licensing opportunities in adjacent products [96][97]

Financial Data and Key Metrics Changes - Fundings for the last quarter totaled $126.6 million, with net originations at $103.1 million, while exits and prepayments declined to $23.5 million [3][4] - Interest income rose 14% to $23.8 million, driven by a 16.2% increase in average earning assets, although the weighted average portfolio yield declined by 30 basis points to 12.5% [3][8] - Net investment income for the period was $11.4 million, with net realized losses of $6.3 million related to the exit of FES Resources [4][8] - Total assets increased to $908 million, with net assets rising to $482 million, and NAV per share increased from $21.25 to $21.34 [9][10] Business Line Data and Key Metrics Changes - The portfolio turnover did not materially impact the investment mix, with new originations predominantly in first lien debt, which rose to 72% of the portfolio's fair value [4][6] - PIC income increased to $2 million, representing 8.4% of interest income, attributed to two recent investments with supplemental PIC above the underlying cash interest yield [5] Market Data and Key Metrics Changes - The company experienced a significant increase in fair value of the investment portfolio by $63 million for the fiscal year, despite challenges in the market [5][12] - The company noted that the lower middle market remains relatively insulated from spread erosion and leverage escalation compared to the larger middle market [6] Company Strategy and Development Direction - The company continues to focus on investing in growth-oriented lower middle market businesses, particularly in support of mid-sized private equity funds [12][13] - The company has expanded its private equity sponsor relationships and is positioned to increase investments as these new platforms seek growth through acquisitions [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the healthy flow of attractive investment opportunities and the potential for continued growth in the lower middle market [6][12] - The company has maintained a conservative leverage position, with net debt at 82.5% of NAV, and has successfully refinanced upcoming debt maturities [7][10] Other Important Information - Monthly distributions for November and December will be $0.15 per common share, with an annual run rate of $1.80 per share, reflecting a yield of about 9.6% [10][11] - The company is considering share repurchases due to the stock price being at a discount, although it is also focused on profitable expansion [30][31] Q&A Session Summary Question: Update on the pipeline and mix of new versus add-on opportunities - The company is tracking approximately $100 million of potential volume, with a mix of follow-on acquisitions and new originations [16][18] Question: Decline in portfolio yield - The decline was primarily due to lower base rates, with new deals still maintaining attractive spreads [21][22] Question: Consideration of share repurchases - The company is tempted to consider share repurchases given the stock price, but it is also focused on profitable expansion [30][31] Question: Dividend reduction rationale - The reduction was a proactive measure to maintain financial flexibility in light of potential rate compressions [34][36] Question: Outlook for elevated repayment activity - Management believes that while some repayments may continue, the maturity of investments and extended hold periods by private equity firms will mitigate risks [42][44] Question: Credit concerns in the portfolio - Management is not currently seeing significant credit issues, although they are monitoring certain assets closely [45][47]

Financial Data and Key Metrics Changes - Fundings for the last quarter totaled $126.6 million, with net originations at $103.1 million, while exits and prepayments declined to $23.5 million [3][4] - Interest income rose 14% to $23.8 million, driven by a 16.2% increase in average earning assets, although the weighted average portfolio yield declined by 30 basis points to 12.5% [3][8] - Net investment income for the period was $11.4 million, with net realized losses of $6.3 million related to the exit of FES Resources [4][8] - Total assets increased to $908 million, with net assets rising to $482 million, and NAV per share increased from $21.25 to $21.34 [9][10] Business Line Data and Key Metrics Changes - The portfolio turnover did not materially impact the investment mix, with first lien debt rising to 72% of the portfolio's fair value [4] - PIC income increased to $2 million, representing 8.4% of interest income, attributed to two recent investments [5] Market Data and Key Metrics Changes - The company experienced a significant increase in fair value of the investment portfolio by $63 million for the fiscal year, despite challenges faced [5][6] - The company maintained a conservative leverage position with net debt at 82.5% of NAV [7] Company Strategy and Development Direction - The company continues to focus on investing in growth-oriented lower middle market businesses, leveraging relationships with private equity sponsors [12][13] - The strategy includes providing attractive financing solutions to the private equity market, with expectations of continued growth in the lower middle market [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the lower middle market's resilience against spread erosion and leverage escalation [6] - The company is well-positioned for future growth, with a healthy pipeline of investment opportunities and a strong balance sheet [12] Other Important Information - Monthly distributions for November and December will be $0.15 per common share, with an annual run rate of $1.80 per share [10][11] - The company has refinanced its debt, enhancing financial flexibility and maturity profile [7][12] Q&A Session Summary Question: Update on the pipeline and mix of new versus add-on opportunities - The company is tracking approximately $100 million of potential volume, with a mix of new and follow-on acquisition opportunities [16][18] Question: Decline in portfolio yield - The decline was primarily due to lower base rates, with new deals still maintaining attractive spreads [21][22] Question: Consideration of share repurchases - The company is tempted to consider share repurchases given the current stock price and low leverage [30] Question: Dividend reduction rationale - The reduction was a proactive measure to maintain financial health amid potential rate compressions [34][36] Question: Outlook for elevated repayment activity - Management believes that while some repayments may continue, the maturity of investments and extended hold periods will mitigate risks [42][44] Question: Credit concerns in the portfolio - No new non-accruals were reported, and while some assets are being monitored, the overall credit position remains strong [45][46]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 increased by 7% to $54.9 million from $51.3 million in Q4 2024, with organic growth of 4.5% and $1.3 million from acquisitions [8] - Annual recurring revenue (ARR) grew over 9% in Q4 2025, outpacing overall revenue growth [5] - Adjusted EBITDA for Q4 2025 slightly declined to $14.4 million from $14.6 million in Q4 2024, with adjusted EBITDA as a percentage of revenues at 26.2% for Q4 2025 compared to 28.5% for Q4 2024 [9][10] - Adjusted diluted earnings per share from continuing operations was $0.27 for Q4 2025 and $1.05 for the fiscal year [10] Business Line Data and Key Metrics Changes - Recurring revenues increased by 9% to $41.3 million in Q4 2025, accounting for 75% of total revenues [8] - SaaS revenues grew by 25%, offsetting an 8% decline in maintenance revenues [8] - Professional services revenue increased by $1.8 million, partially offsetting the decline in software and license sales [8] Market Data and Key Metrics Changes - Justice is the largest market, representing approximately 25% of revenues, with utilities, transportation, education, and public administration contributing roughly equally [12] - The company expects revenue distribution for FY 2026 to be approximately 23% in Q1, 25.5% in Q2, 24.5% in Q3, and 27% in Q4 [13] Company Strategy and Development Direction - The company has divested its merchant services and healthcare revenue cycle management businesses, focusing on providing software solutions for the public sector [4][7] - Investments in justice and utility markets are expected to accelerate in 2026, with a focus on long-term recurring revenue growth [5] - The company aims to enhance its public sector vertical through strategic acquisitions and internal development [14] Management's Comments on Operating Environment and Future Outlook - Management expects recurring revenues to grow at a rate similar to FY 2025, in the range of 8%-10%, but anticipates a decline in non-recurring professional services [11] - The long-term expectation for organic revenue growth remains in the high single digits [11] - The company is experiencing increased demand for technology-forward platform solutions across the public sector [16][17] Other Important Information - The company has $67 million in cash and no debt, with $400 million of borrowing capacity under a revolving credit facility [10] - The adjusted EBITDA improvement for the year was driven mainly by lower corporate expenses following the divestitures [10] Q&A Session Summary Question: Clarification on 2026 organic growth outlook - Management indicated that they are focusing on recurring revenue and expect professional services to decline in 2026 due to timing and cadence of projects [21][22] Question: Details on dollar retention and pricing - The company has been conservative on price increases historically but expects to achieve a consistent range of 3%-5% price increases going forward [24][25] Question: Justice tech investment and expectations for 2026 - The investment primarily consists of personnel to accelerate development and implementation, with costs expected to continue into the next fiscal year [26][27] Question: Thoughts on buyback versus M&A - The company has refreshed a $50 million buyback authorization and is focused on being opportunistic, while also indicating that meaningful M&A activity is expected in 2026 [29][31]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 totaled $43.4 million, up from $35.7 million in Q3 2024, representing a year-over-year growth [9] - The company reported an operating loss of $1 million, including a one-time adjustment of $1.1 million, resulting in a GAAP net loss of $0.07 per share compared to a net income of $0.3 million, or $0.02 per share, in the previous year [5][15] - Consolidated gross profit increased to $9.6 million, a 10.8% rise from $8.7 million in Q3 2024, but gross margin declined to 22.2% from 24.3% [11][12] Business Line Data and Key Metrics Changes - Revenues from the battery and energy product segment were $39.9 million, up from $32.5 million year-over-year, with a 19% increase in government defense sales [9][10] - Communication systems segment revenues increased by 8.2% to $3.4 million from $3.2 million in the previous year [10] - The sales split between commercial and government defense for the battery business remained stable at 70/30, while the domestic-to-international sales split shifted to 72/28 due to increased domestic shipments [10][11] Market Data and Key Metrics Changes - Total backlog at the end of Q3 was $90.1 million, a 6.5% increase from $84.5 million at the end of Q2 [11] - The commercial-to-government defense sales split on a consolidated basis was 65/35, similar to the previous year's 63/37 [11] Company Strategy and Development Direction - The company is focusing on diversification through M&A and new product development to stabilize and improve profitability [6][8] - A company-wide rebranding initiative is underway to unify the Ultralife brand and enhance market identity [7][18] - The closure of the Calgary facility is expected to yield annual savings of approximately $0.8 million throughout 2026 [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges with gross margins due to supply chain quality issues but remains optimistic about future growth opportunities [5][25] - The completion of the Electric Chem transition is expected to broaden market opportunities, particularly in oil and gas sectors [17][26] - The company is intensifying efforts to improve gross margins through pricing strategies and lean productivity projects [18][19] Other Important Information - Operating expenses increased by 29.4% year-over-year to $10.6 million, influenced by the inclusion of Electric Chem and one-time costs [12] - The company has reduced debt principal by $4.1 million in the first nine months of 2025, exceeding the required amortization [16] Q&A Session Summary - No questions were raised during the Q&A session, and the call concluded with management expressing anticipation for future discussions [27][28]

Financial Data and Key Metrics Changes - Q3 2025 marked the strongest quarter in Gorilla's history with revenue exceeding expectations and operating profit turning positive, resulting in a breakeven bottom line [2][12] - The company reported a cash position of over $121 million, with $109 million being unrestricted cash and $15.1 million in debt, leading to a net cash position of $106 million [3][4] - For 2025, the revenue guidance is set between $100 million and $110 million, with EBITDA margins expected to be over 20% and net income margins between 15% and 20% [4][5] - The gross margins for the first nine months were slightly over 35%, with expectations to reach the 35%-40% range for the full year [4] Business Line Data and Key Metrics Changes - The company is advancing AI infrastructure programs across Southeast Asia, Latin America, and the Middle East, securing multi-billion dollar projects [2] - The signed contract with Freyr is valued at $1.4 billion, contributing over $400 million annually once fully operational [7][8] - The company anticipates that over 50% of revenue will come from Southeast Asia next year, with a good mix between government and enterprise clients [8][9] Market Data and Key Metrics Changes - The company has a strong pipeline of $7 billion, primarily driven by government and telco contracts focused on national AI and digital sovereignty strategies [16][53] - The demand for GPU servers is high globally, with supply chain constraints being a significant challenge [38] Company Strategy and Development Direction - Gorilla aims to diversify its business and reduce reliance on government contracts, focusing on a mix of government and enterprise clients [9] - The company is actively pursuing acquisitions in India and the U.S. to enhance capabilities and expand into high-growth markets [68][92] - The strategy includes building a unified AI infrastructure that integrates data centers, GPU services, and software solutions to create a sustainable revenue model [100][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the structural growth of the business, emphasizing that profitability is not a one-off event but a result of operational discipline [14][15] - The company is optimistic about the future, with a clear backlog and a demand curve that exceeds current guidance [17] - Management highlighted the importance of operational readiness and the ability to scale as customer demand increases [39] Other Important Information - The company has improved its credit quality and is now in a strong net cash position, allowing it to fund significant new deployments [10][11] - The management team has a proven track record, with revenue increasing significantly since going public in 2022 [10] Q&A Session Summary Question: What are the assumptions for the 2026 guidance regarding the large deal contribution? - The guidance for 2026 is based on contracted backlog and the first phase of the Southeast Asia data center project, which alone contributes $100 million from 2026 to 2028 [22] Question: Any color on EBITDA margins for 2026? - The guidance for EBITDA margins is in the range of 15%-25% [26] Question: Can you provide more detail on deliverables for the large contract in 2026? - The first $100 million is expected to come from a phased rollout of data center capabilities, with revenue ramping up as infrastructure is commissioned [28] Question: How does the company gauge potential upside in guidance? - There is more upside potential due to the timing of customer deployments and supply chain constraints, with a focus on getting programs live by 2026 [36][39] Question: What is the magnitude of the backlog? - The backlog is strictly defined at $85 million for 2026, with additional potential from ongoing negotiations and bids [47] Question: Why is Gorilla winning contracts against competitors? - Gorilla's long-standing relationships, operational discipline, and ability to deliver sovereign-grade AI infrastructure are key competitive advantages [56][58] Question: What are the plans for cash utilization? - The cash will be used for capital needs related to major contracts, including performance guarantees and working capital for data center projects [71] Question: How does the company plan to grow its sales team? - The current sales team is well established, and the CEO is personally involved in key customer engagements [66] Question: What is the strategic role of the company in the AI compute infrastructure? - Gorilla is building a comprehensive AI infrastructure, integrating data centers, GPU services, and software to create a sustainable revenue model [100][102]

Financial Data and Key Metrics Changes - Revenue for Q4 2025 increased by 7% to $54.9 million from $51.3 million in Q4 2024, with organic growth of 4.5% and $1.3 million from acquisitions [9] - Annual recurring revenue (ARR) grew over 9% in Q4, outpacing overall revenue growth [5] - Adjusted EBITDA for Q4 2025 slightly declined to $14.4 million from $14.6 million in Q4 2024, with adjusted EBITDA as a percentage of revenues at 26.2% for Q4 2025 compared to 28.5% for Q4 2024 [10][11] - Adjusted diluted earnings per share from continuing operations was $0.27 for Q4 2025 and $1.05 for the fiscal year [11] Business Line Data and Key Metrics Changes - Recurring revenues increased by 9% to $41.3 million in Q4 2025 compared to $37.8 million in Q4 2024, with 75% of revenues coming from recurring sources [9] - SaaS revenues grew by 25%, offsetting an 8% decline in maintenance revenues [9] - Professional services revenue increased by $1.8 million, partially offsetting the decline in software and license sales [9] Market Data and Key Metrics Changes - Justice is the largest market, representing approximately 25% of revenues, with utilities, transportation, education, and public administration being roughly equally weighted [13] - The company expects revenue distribution for FY 2026 to be approximately Q1: 23%, Q2: 25.5%, Q3: 24.5%, Q4: 27% [14] Company Strategy and Development Direction - The company has divested its merchant services and healthcare revenue cycle management businesses, focusing on providing software solutions for the public sector [4] - Investments in new products and markets are ongoing, particularly in justice and utility sectors, with expectations for accelerated growth in 2026 [5] - The company aims to enhance its public sector vertical through strategic acquisitions and internal development [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in revenue opportunities tied to investments, expecting durable recurring revenue growth over the long term [5] - Guidance for FY 2026 includes revenues of $217 million to $232 million and adjusted EBITDA of $58.5 million to $65 million, with recurring revenues expected to grow at 8%-10% [12] - The company anticipates a decline in non-recurring professional services in FY 2026, but expects a rebound in FY 2027 and beyond [12] Other Important Information - The company has $67 million in cash and no debt, with $400 million of borrowing capacity under a revolving credit facility [11] - The net dollar retention for fiscal 2025 was 104%, with expectations for modest price increases contributing to future growth [10][25] Q&A Session Summary Question: Clarification on 2026 organic growth outlook - Management indicated that they are focusing on recurring revenue and expect professional services to decline in 2026 due to timing and cadence of projects [22][24] Question: Inquiry about dollar retention and pricing - Management noted that historical price increases have been conservative, but they expect to achieve a consistent 3%-5% price increase range moving forward [25][26] Question: Discussion on justice tech investment - Management confirmed that investments in justice tech are in line with expectations and are aimed at accelerating development and implementation [27][28] Question: Thoughts on cash balance and buyback versus M&A - Management stated that they have refreshed a $50 million buyback authorization and are focused on being opportunistic, while also indicating ongoing M&A discussions [30][32] Question: Clarification on M&A strategy - Management clarified that they are looking for meaningful acquisitions, primarily in the $2 million-$5 million EBITDA range, but nothing transformative [34][35]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 totaled $43.4 million, up from $35.7 million in Q3 2024, representing a year-over-year growth [9] - Operating loss was $1 million, including a one-time adjustment of $1.1 million, resulting in a GAAP net loss of $0.07 per share compared to a net income of $0.3 million or $0.02 per share in the previous year [5][15] - Consolidated gross profit increased to $9.6 million, a 10.8% increase from $8.7 million in Q3 2024, but gross margin declined to 22.2% from 24.3% [11][12] Business Line Data and Key Metrics Changes - Battery and energy product segment revenues were $39.9 million, up from $32.5 million year-over-year, with a gross profit of $8.8 million [9][12] - Communication systems segment revenues increased by 8.2% to $3.4 million, with gross profit rising to $0.8 million [10][12] - Government defense sales increased by 19%, while commercial sales decreased by 5.7%, primarily due to declines in oil and gas and medical battery sales [10] Market Data and Key Metrics Changes - The sales split between commercial and government defense for the battery business was 70/30, consistent with the previous year's 69/31 [10] - Domestic-to-international sales split shifted to 72/28 from 56/44, reflecting increased domestic shipments of government defense products [10] - Total backlog at the end of Q3 was $90.1 million, a 6.5% increase from $84.5 million at the end of Q2 [11] Company Strategy and Development Direction - The company is focusing on diversification through M&A and new product development to stabilize and improve profitability [6][8] - A company-wide rebranding initiative is underway to unify the Ultralife brand and enhance market identity [7][18] - The closure of the Calgary facility is expected to yield annual savings of approximately $0.8 million throughout 2026 [12][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges with gross margins due to supply chain quality issues but remains optimistic about future growth opportunities [5][25] - The completion of the Electric Chem transition is expected to enhance vertical integration and broaden market opportunities [17][26] - The company is intensifying efforts to improve gross margins through pricing strategies and lean productivity projects [18][19] Other Important Information - Operating expenses increased by 29.4% year-over-year to $10.6 million, influenced by the inclusion of Electric Chem and one-time costs [12] - The company has reduced debt principal by $4.1 million in the first nine months of 2025, exceeding the required amortization [16] Q&A Session Summary - No questions were raised during the Q&A session, and the call concluded with closing remarks from management [27][28]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported revenue of $346.9 million, an increase of 1.8% compared to $341 million in Q3 2024, driven by higher fleet combined time charter equivalent (TCE) rates despite lower available days [16] - EBITDA for Q3 2025 was $193.9 million, while net income was $56.3 million, with earnings per common unit at $1.90 [4][18] - For the first nine months of 2025, total revenue decreased by $23 million to $978.6 million, with adjusted EBITDA down by $29 million to $519.8 million and adjusted net income down by $67 million to $196 million compared to the same period in 2024 [19][20] Business Line Data and Key Metrics Changes - The TCE rate for the combined container and tanker fleet increased by 3.7% and 1.7% to $31,832 and $26,238 per day, respectively, while the TCE rate for the dry bulk fleet decreased by 3.5% to $17,976 per day [17] - The company added $745 million of long-term contracted revenue during the quarter, with total contracted revenue amounting to $3.7 billion, including $1.3 billion from tankers, $0.2 billion from dry bulk, and $2.2 billion from containerships [15][16] Market Data and Key Metrics Changes - The geopolitical environment has shifted trading routes, impacting the tanker and dry bulk markets positively due to sanctions on Russian, Venezuelan, and Iranian oil [22][26] - The dry bulk market is expected to benefit from strong Atlantic basin iron ore growth, with significant new projects in Guinea and Brazil anticipated to create demand for additional vessels [24][25] Company Strategy and Development Direction - The company is focused on modernizing its fleet, with an average fleet age of 9.7 years compared to the industry average of 13.5 years, and aims to maintain a low net loan-to-value (LTV) ratio of 20.5% [4][5][7] - The company has a strong risk management culture, continuously monitoring and assessing risks while maintaining a diversified fleet [5][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the prospects for 2026, with 58% of available days fixed and a reduced cost break-even of $894 per day [8][12] - The company remains focused on capital allocation and opportunistic purchases, with a strong backlog of contracted revenue providing visibility in an uncertain environment [11][15] Other Important Information - The company completed a $300 million senior secured bond issuance at a coupon of 7.75%, which will be used to refinance existing floating rate debt, thereby reducing interest rate risk [9][21] - The company has returned $42.2 million under its dividend and unit repurchase programs, with a remaining purchase power of $37.3 million [10] Q&A Session Summary Question: How does the company plan to fix its vessels going forward into 2026? - Management indicated that they are using maximum flexibility, with the majority of open vessels being dry bulk, and they are comfortable with fixing the fleet based on market assumptions [31][32] Question: Is there an opportunity to build smaller ships against contracts? - Management noted increased activity in the market for smaller vessels, emphasizing the importance of counterparty and duration in such projects [36][37] Question: How will the proceeds from the recent bond issue be deployed? - The proceeds will enhance optionality, as the company has $1.2 billion of debt-free vessels, maintaining the same net debt before and after the bond issuance [39]