Financial Data and Key Metrics Changes - Fiscal 2025 results did not meet expectations, with organic net sales and adjusted operating profit falling short, despite exceeding cost savings and free cash flow conversion goals [4][5][10] - Delivered savings totaling 5% of cost of goods, which is at the top of the industry, helping to offset input cost inflation [5][6] - Strong free cash conversion in fiscal 2025 allowed the company to return $2.5 billion to shareholders through dividends and share repurchases [6] Business Line Data and Key Metrics Changes - The North America yogurt business was divested, and White Bridge Pet Brands was added to the North America Pet segment, focusing on categories with stronger long-term growth opportunities [6][8] - The company has turned over 30% of its net sales base since fiscal 2018, contributing more than a point of growth to projected long-term category growth exposure [6][10] Market Data and Key Metrics Changes - In Q1 fiscal 2026, there was a low single-digit decline in organic net sales and a double-digit decline in adjusted operating profit and adjusted diluted earnings per share [10][11] - The company expects declines to continue in Q2 before improving in the second half and returning to growth in Q4 [11] Company Strategy and Development Direction - The Accelerate strategy remains the framework for driving long-term growth and returns for shareholders, focusing on restoring volume-driven organic sales growth in fiscal 2026 [4][8] - Three priorities for fiscal 2026 include returning the North America Retail segment to volume growth, accelerating growth in North America Pet, and driving efficiencies to reinvest in growth [8][9] - The Remarkable Experiences Framework will assess brands across five dimensions to identify strengths and opportunities for improvement [9] Management's Comments on Operating Environment and Future Outlook - The management acknowledges a challenging macro-economic backdrop and value-seeking consumer behavior impacting top-line results [5][7] - The company is focused on balancing reinvestment for long-term growth with cost savings to fund that growth [8][11] - Confidence in the ability to deliver fiscal 2026 goals is emphasized, supported by strong brands and industry-leading capabilities [11] Other Important Information - The company reported preliminary voting results indicating that all management proposals were approved, while both shareholder proposals failed to gain majority support [24][25] Q&A Session Summary Question: Approach to supporting healthy diets and providing nutrient information - The company has a long history of providing access to important nutrition and has consistently evolved its portfolio to improve nutritional characteristics [28] Question: Thoughts on transformational M&A activity in the food industry - The company maintains an always-on M&A capability and will continue to look for opportunities to upgrade the growth profile through acquisitions and divestitures [30] Question: Global transformation initiative and expected savings - The global transformation initiative is designed to enhance processes and free up resources for reinvestment, with savings expected to be utilized for growth investments [31]

Financial Data and Key Metrics Changes - In Q4 2025, net sales were $7.7 billion, down from $8.2 billion in the previous year, reflecting a 1.6% growth when excluding the $582 million benefit from an extra week in last year's quarter [37][38] - Full-year net sales rose 4.6% on a comparable 52-week basis, with volumes growing 1.4% and inflation at about 1.8% [39] - Adjusted EBITDA for Q4 was $116 million, compared to $133 million in the prior year, with full-year adjusted EBITDA at $552 million, slightly above the midpoint of the outlook [42][43] - Free cash flow in Q4 was $86 million, bringing the full-year total to around $240 million, a significant improvement from a cash use of approximately $90 million in fiscal 2024 [43][44] - Net debt was reduced to approximately $1.8 billion, the lowest level since 2018, with net leverage decreasing by around 0.7 turns from the end of the last fiscal year [23][44] Business Line Data and Key Metrics Changes - The natural segment experienced a growth of 9% on a comparable 13-week basis, outperforming the market, while conventional segment sales declined by 6% [38] - The company is focusing on improving category merchandising and account management capabilities, which includes realigning sales and merchandising teams [26][28] Market Data and Key Metrics Changes - The company is targeting a $90 billion addressable market that includes natural, organic, specialty, multicultural, and conventional grocery retailers [25] - The growth in the natural segment is supported by enduring consumer trends towards health and wellness [33][120] Company Strategy and Development Direction - The company aims to become the food industry's most valued partner by providing innovative products and services to help retailers and suppliers grow profitably [24] - The refresh strategy focuses on creating more value for customers and suppliers while becoming a more effective and efficient business [25][31] - The company expects to achieve net sales growth in the low single digits on average from fiscal 2024 to 2027, reflecting better-than-projected organic growth [32][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory and ability to create sustainable long-term value despite challenges faced during the cyber incident [35] - The company anticipates continued execution of its strategy and another year of profitable growth while further strengthening its balance sheet [31][49] Other Important Information - The company has implemented lean daily management in 28 of its 52 distribution centers, which is expected to enhance operational efficiency [45] - The fiscal 2026 outlook includes expected net sales in the range of $31.6 billion to $32 billion, with adjusted EBITDA projected between $630 million and $700 million [47][48] Q&A Session Summary Question: Opportunities in natural merchandising initiatives - Management highlighted three key areas for growth in natural merchandising, focusing on innovation, simplifying the experience for emerging suppliers, and deepening involvement in categories for conventional retailers [52][56] Question: Improving conventional profitability - Management acknowledged that conventional products have lower margins and emphasized the need for thoughtful business shrinkage while focusing on improving product mix and operational efficiency [58][62] Question: Updated three-year guidance and customer attrition - Management noted solid growth in the customer file and emphasized that the strategy remains unchanged, with better-than-expected organic growth in natural and organic segments [67][68] Question: Industry promotional backdrop - Management observed a disciplined increase in promotional activities but noted that the share of volume sold on deal remains below 2019 levels [69] Question: Volume metrics and cyber incident impact - Management clarified that volume growth for the full year was about 1.5%, with a more significant impact from the cyber incident on conventional sales [70][71] Question: Adjusted EBITDA algorithm changes - Management attributed the improved adjusted EBITDA outlook to better-than-expected organic growth, continuous shrink reduction, and productivity efforts [72][73] Question: Relationship with Amazon - Management refrained from commenting on specific customers but emphasized a tailored strategy for enterprise accounts and a segmented approach to support customers of all sizes [78][79] Question: Capital investment and facility expansion - Management indicated that ongoing rationalization and expansion of distribution centers are part of their strategy, with a focus on automation and modernization [80][84] Question: Margin gain distribution in 2026 - Management outlined several factors contributing to EBITDA growth, including the exit of unprofitable contracts and continuous productivity improvements [90][93] Question: Tariff impact - Management is closely monitoring tariff developments and working with suppliers and customers to navigate challenges while keeping prices competitive [96] Question: Sales outlook for 2026 - Management expects organic sales growth led by the natural business, offset by the impact of distribution center optimization [110][111]

Financial Data and Key Metrics Changes - IDT reported a 43% increase in consolidated adjusted EBITDA to a record $129 million for the fiscal year 2025, with full-year adjusted EBITDA totaling $128.7 million, surpassing the updated guidance of $126 million [4][11][26] - Consolidated revenue increased by 2% for fiscal 2025, marking the first full-year increase since 2021, with Q4 revenue up by 3% [12][11] - Consolidated income from operations increased by 9% to $21.9 million in Q4 and by 55% to $100.4 million for the full year [13] Business Line Data and Key Metrics Changes - NRS's income from operations decreased by 3% to $5.8 million in Q4, while adjusted EBITDA increased by 32% to $9.3 million [14] - The fintech segment saw income from operations increase by 88% to $4.8 million in Q4, with adjusted EBITDA climbing over threefold to $5.5 million [16] - Net2phone's income from operations increased by 74% to $1.5 million in Q4, and adjusted EBITDA increased by 42% to $3.5 million [19] Market Data and Key Metrics Changes - BOSS Money's digital channel expansion contributed over 80% of remittance volume, with digital transactions increasing by 28% in Q4 and the amount sent increasing by 41% [5][17] - The average recurring revenue per terminal at NRS reached $299 in Q4, benefiting from increased penetration of NRS pay offerings [15] - The strengthening dollar impacted financial results from key South American markets, muting positive impacts from continued seat growth in net2phone [20] Company Strategy and Development Direction - The company plans to continue focusing on high-margin growth segments, with expectations of 20%-25% revenue growth and faster adjusted EBITDA growth in fiscal 2026 [16] - IDT is exploring opportunities in AI-driven solutions, particularly in net2phone, with a shift from a seat-based model to a usage-based model for AI agents [7][19] - The company is committed to returning cash to stockholders through buybacks and dividends while evaluating potential acquisitions [9][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2026, citing strong customer enthusiasm and the potential for continued growth despite challenges in the remittance business due to immigration policy changes [9][47] - The upcoming 1% federal tax on remittances is expected to accelerate the migration to digital channels, which are exempt from the tax [18] - Management acknowledged the competitive landscape and the need to adapt to changing market conditions while maintaining a focus on operational efficiency [41][42] Other Important Information - The company will report a revised measure of non-GAAP adjusted EBITDA starting Q1 FY 2026, excluding non-cash compensation expenses [24][25] - IDT's cash position increased by $30 million to $254 million, reflecting strong cash generation across all segments [23] Q&A Session Summary Question: What is the progress with stablecoins and Visa-linked wallets? - Management indicated that wallets have been launched in a beta phase and expect stablecoins to play a significant role in future transactions [28] Question: What is the WhatsApp launch date? - The WhatsApp feature is set to launch in the next few days for existing customers, with a broader rollout expected within 30-45 days [30] Question: What is causing the increase in churn rate in NRS terminals? - Management noted factors such as increased immigration enforcement, competition, and technical issues with equipment as contributors to churn [41][42] Question: Can the strong growth in BOSS Money be sustained? - Management believes that while growth may slow slightly, initiatives like wallets and WhatsApp will help maintain a competitive edge [46][49] Question: What is the focus for future acquisitions? - Management indicated a preference for smaller acquisitions over larger ones, emphasizing organic growth and internal investments [54]

Financial Data and Key Metrics Changes - For fiscal year 2025, consolidated adjusted EBITDA increased by 43% to a record $129 million, with full-year adjusted EBITDA totaling $128.7 million, surpassing the updated guidance of $126 million [4][11][26] - Consolidated revenue increased by 2% for the full year, marking the first full-year increase since 2021, with Q4 revenue up by 3% [12][11] - Consolidated gross margins improved by 310 basis points in Q4 and 380 basis points for the full year, reflecting the expansion of high-margin segments [13] Business Line Data and Key Metrics Changes - NRS segment's income from operations decreased by 3% to $5.8 million in Q4, while adjusted EBITDA increased by 32% to $9.3 million [14] - FinTech segment's income from operations surged by 88% to $4.8 million in Q4, with adjusted EBITDA climbing over threefold to $5.5 million [16] - Net2phone's income from operations increased by 74% to $1.5 million in Q4, and adjusted EBITDA increased by 42% to $3.5 million [19] Market Data and Key Metrics Changes - BOSS Money's digital channel now contributes over 80% of remittance volume, with digital transactions increasing by 28% in Q4 and the amount sent increasing by 41% [5][17] - The average recurring revenue per terminal at NRS reached $299 in Q4, benefiting from increased penetration of premium payment processing plans [15] - The remittance industry is expected to see a shift towards digital channels due to a new 1% federal tax on cash-originated remittances, effective January 1, 2026 [18] Company Strategy and Development Direction - The company plans to continue focusing on high-margin growth segments, with expectations of 20% to 25% revenue growth and faster adjusted EBITDA growth in fiscal 2026 [16] - Strategic initiatives include integrating retailers with delivery services like DoorDash and launching digital coupon offerings through NRS Insights [4][5] - The company is also investing in AI-driven solutions for net2phone, shifting its revenue model from a seat-based to a usage-based model [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal year 2026, citing strong customer enthusiasm and the potential for continued growth despite challenges in the remittance market due to immigration policy changes [9][47] - The company is committed to returning cash to stockholders through buybacks and dividends while evaluating potential acquisitions [9][24] - Management acknowledged the competitive landscape and the need to adapt to changing market conditions, particularly in the remittance and digital payment sectors [41][46] Other Important Information - The company did not repurchase shares in Q4 due to pursuing a significant acquisition opportunity that ultimately did not materialize [23][24] - A revised measure of non-GAAP adjusted EBITDA will be reported starting Q1 FY26, excluding non-cash compensation expenses [25][26] Q&A Session Summary Question: Progress on stablecoins and Visa-linked wallets - Management confirmed that wallets are in beta phase and expect stablecoins to play a larger role in future transactions [28] Question: WhatsApp launch date - The WhatsApp service is set to launch in the next few days for existing customers, with a broader rollout expected in 30 to 45 days [30] Question: Churn rate in NRS terminals - Management attributed churn to increased competition, immigration enforcement, and technical issues, but noted improvements in recent weeks [41][44] Question: Sustainability of BOSS Money's growth - Management indicated that while growth may slow, initiatives like WhatsApp and digital wallets could enhance business growth [46][49] Question: Focus on acquisitions - Management suggested a preference for smaller acquisitions over larger ones, emphasizing organic growth and internal investments [54]

Financial Data and Key Metrics Changes - For fiscal year 2025, consolidated adjusted EBITDA increased by 43% to a record $129 million, driven by double-digit growth across all operating segments [4][11] - Consolidated revenue in Q4 increased by 3%, with full-year revenue rising by 2%, marking the first full-year increase since 2021 [11][12] - Adjusted EBITDA for Q4 rose by 33% to $33.4 million, while for the full year, it increased by 43% to $128.7 million [14][26] Business Line Data and Key Metrics Changes - NRS segment's income from operations decreased by 3% to $5.8 million in Q4, but adjusted EBITDA increased by 32% to $9.3 million [14] - FinTech segment's income from operations surged by 88% to $4.8 million in Q4, with adjusted EBITDA climbing over threefold to $5.5 million [16] - Net2phone's income from operations increased by 74% to $1.5 million in Q4, while adjusted EBITDA rose by 42% to $3.5 million [19] Market Data and Key Metrics Changes - BOSS Money's digital channel now contributes over 80% of remittance volume, with digital transactions increasing by 28% in Q4 [5][17] - The average recurring revenue per terminal at NRS reached $299 in Q4, benefiting from increased penetration of premium payment processing plans [15] - The company expects BOSS Money revenue and adjusted EBITDA to grow in the high teens for fiscal 2026 [19] Company Strategy and Development Direction - The company plans to continue integrating retailers with delivery services like DoorDash and is preparing to launch integrations with other large delivery services [4] - A focus on AI-driven solutions is evident, with plans to shift net2phone's revenue model from a seat-based to a usage-based model [7][19] - The company is committed to returning cash to stockholders through buybacks and dividends while evaluating potential acquisitions [9][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal year 2026, citing strong customer enthusiasm and ongoing growth initiatives [9][10] - The impact of a new 1% federal tax on remittances is expected to accelerate the migration to digital channels, which are exempt from the tax [18] - Management acknowledged challenges in the remittance business due to changing immigration policies but remains confident in the digital channel's growth potential [47][51] Other Important Information - The company did not repurchase shares in Q4 due to pursuing a significant acquisition opportunity that ultimately did not materialize [23][24] - A revised measure of non-GAAP adjusted EBITDA will be reported starting Q1 FY26, excluding non-cash compensation expenses [25][26] Q&A Session Summary Question: What is the progress with stablecoins and Visa-linked wallets? - Management indicated that wallets are in a beta phase and expect stablecoins to play a significant role in future transactions [28] Question: What is the WhatsApp launch date? - The WhatsApp service is set to launch in the next few days for existing customers, with a broader rollout expected in 30 to 45 days [30] Question: What are the main investments for growth this year? - Management refrained from providing specific guidance but emphasized a focus on customer acquisition at low costs [36] Question: What is the cause of increased churn in NRS terminals? - Factors include increased immigration enforcement affecting retailers, competition from new entrants, and technical issues with equipment [41][42] Question: Can the strong growth in BOSS Money be sustained? - Management believes growth may slow slightly but expects continued strong performance due to new initiatives [47][51] Question: What is the focus regarding future acquisitions? - Management indicated a preference for smaller acquisitions over larger ones, emphasizing internal growth and customer acquisition [54]

Financial Data and Key Metrics Changes - IDT reported a 43% increase in consolidated adjusted EBITDA to a record $129 million for fiscal year 2025, with full-year adjusted EBITDA totaling $128.7 million, surpassing guidance of $126 million [4][11][26] - Consolidated revenue increased by 2% for fiscal 2025, marking the first full-year increase since 2021, with Q4 revenue up by 3% [12][11] - Consolidated income from operations increased by 9% to $21.9 million in Q4 and by 55% to $100.4 million for the full year [12][14] Business Line Data and Key Metrics Changes - NRS segment's adjusted EBITDA increased by 37% to $34.2 million for the full year, with recurring revenue up by 27% to $122.6 million [14][15] - FinTech segment saw income from operations surge by 88% to $4.8 million in Q4, with adjusted EBITDA climbing over threefold to $5.5 million [16][19] - Net2phone's income from operations increased by 194% to $4.9 million for the full year, with adjusted EBITDA increasing by 54% to $12.1 million [19][20] Market Data and Key Metrics Changes - BOSS Money's digital channel now contributes over 80% of remittance volume, with digital transactions increasing by 28% in Q4 [5][17] - The average recurring revenue per terminal at NRS reached $299 in Q4, benefiting from increased penetration of premium payment processing plans [15][16] - The company expects BOSS Money revenue and adjusted EBITDA to grow in the high teens percentage range for fiscal 2026 [19] Company Strategy and Development Direction - IDT plans to continue focusing on high-margin growth segments, including merchant services and SaaS fees, to drive revenue and EBITDA growth [4][11] - The company is investing in AI-driven solutions across its segments, particularly in net2phone, where a shift from a seat-based model to a usage-based model is anticipated [7][19] - IDT is also evaluating potential acquisitions while maintaining a conservative approach to M&A, focusing on smaller opportunities rather than large ones [9][24][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2026, citing strong customer enthusiasm and the potential for continued growth despite challenges in the remittance market due to immigration policy changes [9][46] - The upcoming 1% federal tax on remittances is expected to accelerate the migration to digital channels, which are exempt from the tax [18][45] - Management acknowledged the competitive landscape but remains confident in IDT's ability to capture market share through innovative solutions [9][42] Other Important Information - The company will revise its non-GAAP adjusted EBITDA metric starting Q1 FY26 to exclude non-cash compensation expenses, with expectations of generating $141 to $145 million in adjusted EBITDA for fiscal 2026 [25][26] - IDT's cash position increased by $30 million to $254 million, reflecting strong cash generation across all segments [23] Q&A Session Summary Question: Progress on stablecoins and Visa-linked wallets - Management confirmed that wallets are in beta phase and expect stablecoins to play a significant role in future transactions [29] Question: WhatsApp launch date - The WhatsApp feature is launching soon, starting with existing customers [30] Question: Regulatory concerns regarding acquisitions - Management refrained from commenting on regulatory issues related to competitor acquisitions [31] Question: Main investments for growth - Management emphasized a focus on customer acquisition strategies without disclosing specific details [33] Question: Transition from seat model to usage model - The shift pertains mainly to AI agents, while UCaaS and CCaaS will continue to be sold by the seat [35] Question: Churn rate in NRS terminals - Management attributed churn to various factors, including increased competition and technical issues, but noted improvements [37][39] Question: Sustainability of BOSS Money's growth - Management anticipates growth may slow but believes initiatives will help maintain a strong growth trajectory [42][46] Question: Focus on smaller vs. larger acquisitions - Management indicated a preference for smaller acquisitions in the current market environment [48]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 reached $250 million, exceeding previous guidance and representing approximately 40% year-over-year growth [20][6] - Earnings per share were $1.50, significantly above the high end of guidance and up 19% from the prior year [21][6] - Annualized recurring revenue (ARR) grew 47% year-over-year, closing at $849 million [19][5] - Operating margin was 40%, slightly down from 41% in the previous year [20][21] Business Line Data and Key Metrics Changes - The ShareFile business showed improved net retention rates as customers adopted AI capabilities, contributing to better-than-expected ARR and top-line growth [8][19] - Other products such as OpenEdge, MarkLogic, Sitefinity, WhatsUp Gold, and DevTools also exceeded expectations, indicating strong performance across the portfolio [9][19] Market Data and Key Metrics Changes - The demand for AI-related products is driving growth, with customers increasingly looking for solutions that deliver clear ROI [7][5] - The integration of ShareFile has been successful, with over 3,000 customers using the new AI document assistant [8][7] Company Strategy and Development Direction - The company is focused on innovation, particularly in AI capabilities, to enhance product value and customer success [10][11] - M&A remains a key growth strategy, with ongoing evaluations of potential acquisitions in application platforms, digital experience, and infrastructure management [17][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued demand for products driven by AI initiatives, expecting this trend to persist beyond fiscal 2025 [7][5] - The company plans to maintain disciplined capital allocation, focusing on debt repayment and share repurchases based on market conditions [23][24] Other Important Information - The company repurchased $15 million of shares in Q3, with a total of $65 million repurchased year-to-date [23][6] - The board authorized an increase in share repurchase authorization by $200 million, bringing the total to $242 million [23][6] Q&A Session Summary Question: AI strategy and its impact on net retention rate and pricing power - Management indicated that AI capabilities are expected to first impact monthly recurring revenue (MRR) and net retention rates, with potential for indirect pricing opportunities through product upgrades [28][30][32] Question: EBIT guidance and conservatism in outlook - Management clarified that the guidance reflects a strong Q3 performance but maintains a conservative approach for Q4, which is typically a strong quarter [34][36] Question: Surprises from ShareFile acquisition - Management noted challenges in integration but highlighted positive aspects such as strong team engagement and customer reliance on ShareFile [40][41] Question: Monetization of Agentic RAG product - The initial monetization strategy focuses on cross-selling opportunities within the existing customer base while also targeting new customers [46][47] Question: Gross margin performance - Management explained that gross margin improvements are due to better operational efficiencies across SaaS products, despite the growing share of SaaS revenue [48][49] Question: M&A attractiveness in the current environment - Management expressed interest in all three business categories, emphasizing the growing importance of data platforms and digital experiences in the context of AI [52][55]

Financial Data and Key Metrics Changes - Fiscal Year 2025 marked a transformative year for the company, moving from development to commercial readiness, with strong project economics validated [2] - The recently published pre-feasibility study (PFS) for phase one indicates a 39.5-year mine life, an after-tax NPV of $725 million, and a project IRR of 19% [3][4] - Estimated free cash flow over the mine's life is approximately $3.7 billion pre-tax, with an after-tax payback period of just under six years [4] Business Line Data and Key Metrics Changes - The company successfully qualified its high-purity boric acid with 14 customers across various industries, including specialty glass and chemicals [5] - Phase one targets production of 130,000 short tons of boric acid per year, with all-in sustaining costs estimated at $555 per ton [4] Market Data and Key Metrics Changes - There is a growing demand for U.S.-based high-purity boron supply, with additional customers in advanced testing phases [5] - The company has entered long-term offtake discussions, indicating strong market interest and validation [7] Company Strategy and Development Direction - The company is focused on advancing towards a final investment decision (FID) by mid-2026, with early FEED engineering activities already commenced [8][9] - The company aims to build a resilient boric supply chain to support the U.S. industrial base for generations [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted the need for a new market producer to reduce supply chain risks, especially in light of recent disruptions from major boric acid producers [10][11] - The company views 2025 as an inflection year for boron, with independent analysis indicating supply shortfalls beginning in 2026 [11] Other Important Information - The company received a non-binding letter of intent for a potential $285 million project debt facility, a significant step towards funding phase one construction [3] - The company submitted a formal response to the U.S. Geological Survey draft critical minerals list, advocating for boron to be included [9] Q&A Session Summary Question: Can you review the comments about the disruption to the California boron mine? - Management noted that Rio Tinto announced a strategic review of their industrial minerals segment, which includes borates, following the appointment of a new CEO [15] Question: What is the process for getting boron on the U.S. Geological Survey critical minerals list? - Management explained that public comments are necessary for the review process, and they submitted their comments along with other groups [16][17]

Financial Data and Key Metrics Changes - The company reported a record quarterly revenue of $6.2 million for Q4 of fiscal 2025, compared to $4.2 million in the previous quarter and $4.7 million in Q4 of fiscal 2024, leading to an annualized run rate of approximately $25 million [5][23] - Gross margins for Q4 were 13%, up from 10% in the prior quarter but down from 22% in the same quarter last year, with annual gross margins at 18% compared to 30% in the prior year [25][28] - The company expects fiscal 2026 revenue to reach approximately $25 million, an increase of over 30% from $19 million in fiscal 2025, with gross margins projected to improve to around 30% [21][25] Business Line Data and Key Metrics Changes - Production revenue for Q4 was $5.1 million, up from $3.3 million in the previous quarter and $2.8 million in the year-ago quarter, while engineering revenue was $1.1 million, down from $1.9 million year-over-year [23] - The systems manufacturing business is expected to grow at least 75% in fiscal 2026, driven by the expansion of two major production programs [14][21] - Revenue from the micro-optics lab is projected to decline from $2.1 million in fiscal 2025 to $1.3 million in fiscal 2026 due to timing of a large defense customer reorder [24] Market Data and Key Metrics Changes - The company has seen a significant increase in production demand from its aerospace and surgical robotics customers, with a backlog for the aerospace program reaching nearly $9 million [10][24] - The transition of two major programs from development to production has provided increased visibility and confidence in future revenue growth [6][7] Company Strategy and Development Direction - The company is focusing on expanding its production capabilities and has invested in new facilities to support growth, including a move to a new headquarters in Littleton, Massachusetts [7][8] - The management is optimistic about the future, citing a strong backlog and the potential for substantial growth as production programs expand [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges with gross margins in Q3 and Q4 of fiscal 2025 but expressed confidence in recovery and improvement in fiscal 2026 [15][21] - The company is taking steps to address production yield issues and has renegotiated pricing with customers to improve profitability [12][13] Other Important Information - The company has hired new manufacturing and quality engineers to strengthen its operations team and improve manufacturing efficiency [19][20] - The company expects to recover positive adjusted EBITDA in the range of half a million dollars for fiscal 2026 [21] Q&A Session Summary Question: Guidance on revenue for 2026 - Management acknowledged being conservative in their guidance, noting a decline in revenue from the micro-optics lab but expecting higher margin production revenue to replace lower margin tooling and fixturing revenue [35][37] Question: Medical program pricing adjustments - Management explained that they have negotiated higher costs with their medical program customer to cover initial production difficulties, with a plan to ramp down prices as issues are resolved [40][41] Question: Tariff reimbursements - Management confirmed they are in verbal agreements for tariff reimbursements and are finalizing documentation [42][43] Question: Engineering resources and project pipeline - Management indicated that engineering resources will be progressively filled throughout 2026, with multiple programs lined up for production [49][50] Question: Challenges with the second single-use program - Management reported that the second single-use program is progressing well, learning from challenges faced in the cystoscope program, and expects a smoother ramp-up [62]

Financial Data and Key Metrics Changes - The company reported a record quarterly revenue of $6.2 million for Q4 2025, compared to $4.2 million in the previous quarter and $4.7 million in Q4 2024, leading to an annualized run rate of approximately $25 million [5][23] - Gross margins for Q4 2025 were 13%, up from 10% in Q3 2025 but down from 22% in Q4 2024, with annual gross margins at 18% compared to 30% in the prior year [25][28] - The company expects fiscal 2026 revenue to reach approximately $25 million, a 30% increase from $19 million in 2025, with gross margins projected to improve to around 30% [21][25] Business Line Data and Key Metrics Changes - Production revenue for Q4 2025 was $5.1 million, up from $3.3 million in the prior quarter and $2.8 million in the year-ago quarter, while engineering revenue was $1.1 million, down from $1.9 million year-over-year [23] - The systems manufacturing business is expected to grow at least 75% in fiscal 2026, driven by the expansion of two major production programs [14][21] - Revenue from the micro-optics lab is projected to decline from $2.1 million in fiscal 2025 to $1.3 million in fiscal 2026 due to timing of a large defense customer reorder [24] Market Data and Key Metrics Changes - The company has seen a significant increase in production demand from its aerospace and surgical robotics customers, with a backlog for the aerospace program reaching nearly $9 million [10][24] - The transition of the single-use cystoscope program to production has faced challenges but is expected to improve profitability through design updates and pricing renegotiations [12][13] Company Strategy and Development Direction - The company is focusing on expanding its production capabilities and has invested in new facilities to support growth, including a move to a new headquarters in Littleton, Massachusetts [7][8] - The management emphasizes the importance of advancing multiple products from the development pipeline into production, with expectations of two to three programs transitioning to production each year [14][15] - The company aims for long-term gross margins of 40% and is working on improving operational efficiencies and production yields [21][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing high growth expectations for the production business and confidence in the visibility of ongoing programs [30] - The company acknowledges challenges faced in gross margins during fiscal 2025 but expects substantial recovery in fiscal 2026 as production scales up [15][21] - Management highlighted the importance of addressing operational challenges and building internal capacity to support long-term business results [30][19] Other Important Information - The company has recently hired key personnel, including a new Chief Operating Officer, to enhance operational performance [20][19] - Adjusted EBITDA for fiscal 2025 was negative $3.7 million, compared to negative $1.6 million in fiscal 2024, with cash at approximately $1.8 million and debt below $1.9 million [28][29] Q&A Session Summary Question: Guidance on revenue for 2026 - Management acknowledged being conservative in their guidance, noting a decline in revenue from the micro-optics lab and the impact of tooling and fixturing revenue on gross margins [35][36] Question: Medical program pricing and reimbursement - Management confirmed that the client agreed to cover higher costs due to initial production difficulties, with a negotiated step-down in pricing expected as issues are resolved [40][41] Question: Tariff reimbursements - Management stated that verbal agreements for tariff reimbursements are in place, with documentation pending [42][43] Question: Engineering resources and project pipeline - Management indicated that engineering resources will be progressively filled throughout 2026, with several programs already lined up for development [49][50] Question: Challenges with the second single-use program - Management reported that the second single-use program is progressing well, learning from the challenges faced with the cystoscope program [62][64] Question: Future gross margin expectations - Management confirmed that gross margins are expected to improve significantly in the latter half of fiscal 2026, driven by operational improvements [66]