Financial Data and Key Metrics Changes - The company generated total revenue of $1.6 billion for the quarter, an 8% decrease compared to the second quarter of last year, primarily driven by 60 fewer stores in operation and reduced consumer traffic [23][24] - Adjusted EBITDA was $47 million in the quarter, compared to $57 million in the prior year, reflecting a decline due to restructuring expenses [25] - Adjusted free cash flow for the quarter was $13 million, a significant increase from $5 million in the same period last year, highlighting improved cash generation [27][36] Business Line Data and Key Metrics Changes - In the B2B distribution segment, revenue trends improved by approximately 200 basis points year over year, driven by new business wins and stronger demand [10][30] - The retail segment, Office Depot, reported sales of $716 million, down 10% year over year, but comparable store sales improved by 200 basis points [28][29] - The supply chain business, Veyr, achieved a 90% year-over-year revenue growth from third-party customers, with third-party revenue reaching $19 million [34][35] Market Data and Key Metrics Changes - The company is making significant progress in the hospitality market, with a strategic partnership covering approximately 15,000 members, positioning ODP to enter a $16 billion segment [15][16] - Sales to hospitality customers rose by a low double-digit percentage, indicating early traction in this new market [32] Company Strategy and Development Direction - The company's strategy focuses on leveraging supply chain strengths to accelerate growth in the B2B business while maximizing value from the retail segment [6][7] - The "Optimize for Growth" plan aims to streamline fixed costs and improve margins while expanding into higher growth sectors like hospitality and healthcare [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining momentum into the second half of the year, expecting additional top-line improvement in B2B distribution and sustained strength in retail [22][42] - The company anticipates generating over $115 million in adjusted free cash flow for the full year, supported by strong cash generation and disciplined working capital management [39][41] Other Important Information - The company closed 23 retail stores and three distribution facilities as part of its restructuring efforts [24][20] - Total liquidity at quarter-end was $658 million, consisting of $177 million in cash and $481 million in available credit [38] Q&A Session Summary Question: Are there alternatives being explored to maximize shareholder value? - Management emphasized that maximizing shareholder value is the primary focus, but they cannot comment on specific activities or rumors [46][47] Question: What assumptions have been made regarding the macroeconomic environment, particularly the labor market? - Management stated they are conservative in their assumptions and have a strong focus on inventory management to ensure cash flow generation [48][50] Question: What percentage of the assortment is subject to tariffs, and how will pricing be adjusted? - Approximately 57% of inventory is either MAP priced or exempt from tariffs, allowing flexibility in pricing strategies [53][58] Question: What needs to happen for the business solutions segment to return to positive revenue trends? - Continued execution and focus on hospitality growth are essential, with a strong emphasis on onboarding new properties [86][89]

Financial Data and Key Metrics Changes - Same store RevPAR declined 3.6%, driven by a 3.3% decline in average daily rate [5][9] - Second quarter occupancy was 78%, representing the second highest nominal occupancy in the past five years [6] - Year-to-date operating expenses increased 1.5% on relatively flat occupancy, limiting EBITDA margin contraction to 160 basis points year over year [11][27] - Second quarter adjusted EBITDA was $50.9 million, and adjusted FFO was $32.7 million or $0.27 per share [27][33] Business Line Data and Key Metrics Changes - RevPAR index grew by nearly 150 basis points to 115%, with the NCI portfolio achieving a 114% index, reflecting successful revenue strategies [10] - Food and beverage revenues increased 93% due to re-concepting efforts and new fee implementations [24] - Contract labor costs declined by 13% on both a nominal and per occupied room basis compared to the previous year [26] Market Data and Key Metrics Changes - San Francisco and Chicago saw RevPAR increases of 18% and 10% respectively, driven by resilient group and business transient demand [19] - Orlando's RevPAR increased by 9%, supported by leisure demand following the opening of a new theme park [20] - Government-related demand declined over 20% year over year, impacting overall performance [8] Company Strategy and Development Direction - The company plans to continue share repurchase activities funded by asset sales, with two hotels under contract for sale [12][74] - Emphasis on managing expenses aggressively to mitigate the effects of lost revenue on per share metrics [15][65] - The company is optimistic about future demand stabilization and pricing environment due to limited new hotel supply growth [17][51] Management's Comments on Operating Environment and Future Outlook - Management expects operating trends to improve in the fourth quarter, driven by demand stabilization and a stronger convention calendar [15][63] - Current forecasts for the third quarter reflect a RevPAR decline of approximately 3%, with expectations for improvements in August and September [14][33] - Management remains confident in the long-term outlook for the industry despite near-term macroeconomic uncertainties [33] Other Important Information - The company has reduced its full-year capital expenditure guidance to $60 million to $65 million on a pro-rata basis [33] - The Board of Directors declared a quarterly common dividend of $0.08 per share, representing a dividend yield of over 6% [32] Q&A Session Summary Question: Inquiry about buybacks in the quarter - Management indicated that the timing of buybacks was influenced by cash flow management and market conditions, with a focus on opportunistic usage going forward [38][39] Question: Transition of management and its impact - Management confirmed that the economics remain similar post-transition, primarily aimed at focusing operations [40] Question: Changes in demand segmentation - Management noted pressure in higher-rated segments, with a shift towards advanced purchase business to build demand [45][46] Question: Stability of government demand - Management observed stabilization in government demand after a rapid contraction, expecting it to remain stable at lower levels [79] Question: Lower CapEx guidance - Management explained that the reduction is related to timing and the decision to sell assets needing significant renovations rather than renovating them [80] Question: Future pricing power and demand trends - Management emphasized that overall better demand trends across all segments are necessary for improved pricing power [82][83]

Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $349 million, down from $428 million in Q3 2024, primarily due to the divestiture of SGK [5][28] - Net income increased to $15.4 million or $0.49 per share compared to $1.8 million or $0.06 per share a year ago, reflecting a gain from the SGK divestiture [27] - Consolidated adjusted EBITDA for Q3 2025 was $44.6 million, slightly down from $44.7 million in the previous year, indicating stability despite the divestiture [29] Business Line Data and Key Metrics Changes - Memorialization segment sales increased to $203.7 million from $202.7 million year-over-year, driven by the Dodge acquisition and inflationary pricing [31] - Industrial Technology segment sales decreased to $87.9 million from $91.7 million, primarily due to lower engineering sales, although warehouse automation showed improvement [33] - Brand Solutions segment sales fell to $57.7 million from $133.4 million, significantly impacted by the SGK divestiture [36] Market Data and Key Metrics Changes - The warehouse automation market is experiencing positive order trends, with significant increases in backlog due to renewed interest in automation technologies [14] - U.S. e-commerce is projected to grow by 10% in 2025, indicating a favorable market environment for the company's automation solutions [15] Company Strategy and Development Direction - The company is focused on a value creation plan aimed at simplifying corporate structure, reducing costs, and expanding into higher growth and margin businesses [6][9] - The merger of SGS and SGK is expected to create significant value, with projected annual adjusted EBITDA of about $100 million for Propellus Group [6][7] - The company is maintaining its previous earnings guidance of at least $190 million in adjusted EBITDA for 2025, despite the impact of the SGK divestiture [40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the early results of cost reduction initiatives and the potential for further debt reduction [9][24] - The company anticipates a return to normal revenue and pricing cadence in the memorialization segment for the remainder of the year [11] - Management noted ongoing legal disputes with Tesla but remains confident in the strength of its proprietary technology and market position [20][22] Other Important Information - The company expects to close the sale of remaining SGK German assets, further simplifying its structure and reducing debt levels [9] - Cash flow used in operating activities for Q3 2025 was $15.2 million, a decline from cash provided by operating activities of $13.5 million in the previous year [37] Q&A Session Summary Question: What was the EBITDA contribution from the Dodge Company this quarter? - The EBITDA contribution was approximately $1 million on $6 million in sales, consistent with previous estimates [43] Question: What was the energy storage related revenue for the quarter? - Sales in the energy business were down from a year ago, primarily due to ongoing issues discussed earlier [44] Question: How much synergy is expected between the new print head business and warehouse automation? - The connection between warehouse automation and the new print head business is significant, with expectations for future synergies as the products are rolled out [50][54] Question: Has the RotoGravir sale closed? - The sale is expected to close before September 30, generating over $30 million in net cash [70] Question: What is the status of the European packaging sale? - The European packaging business has an annual revenue run rate of about $50-60 million, with EBITDA being relatively breakeven [73] Question: Any updates on the legal front with Tesla? - Tesla has filed additional suits seeking to overturn a favorable ruling, but the likelihood of success is low [84]

Financial Data and Key Metrics Changes - For the second quarter of 2025, consolidated revenue increased by 10%, adjusted EBITDA grew by 17%, and adjusted EPS was up by 29% [6][27][25] - The company reported strong profit margin growth, reflecting the resilience of its platform and confidence in the revised full-year outlook [27][25] Business Line Data and Key Metrics Changes - Real Estate Management Services (REMS) revenue growth was led by Workplace Management, with nearly 30% growth on a two-year stacked basis [13] - Project Management revenue growth was broad-based, particularly in the U.S. and Asia Pacific, with mid-teens management fee growth [13] - Capital Markets Services saw a 27% increase in debt advisory revenue and a 9% growth in investment sales, with a two-year stack growth of 25% for both [19] - Software and technology solutions experienced low double-digit growth in software revenue, offset by reduced technology solutions spending from large clients [22] Market Data and Key Metrics Changes - The U.S. industrial market led growth with a 13% increase, while global office leasing revenue tracked in line with market volume, showing a deceleration in growth [16][17] - The leasing advisory segment saw nearly 3% growth in U.S. office leasing revenues, contrasting with a 3% decline in market volume [17] Company Strategy and Development Direction - The company is focused on organic growth, enhancing operational efficiency, and investing in data technology and artificial intelligence to meet client demand for integrated real estate management solutions [9][25] - There is a commitment to returning capital to shareholders through increased share repurchases while considering M&A opportunities that augment organic initiatives [25][59] Management's Comments on Operating Environment and Future Outlook - Management noted an uptick in delayed decision-making in industrial and manufacturing sectors due to geopolitical and trade policy pressures, but expressed optimism about the stability of the pipeline for midsized capital projects [7][27] - The overall market backdrop remains constructive, with expectations for continued organic growth and market share gains [25][27] Other Important Information - The company raised $1 billion in private equity capital in the second quarter, bringing the year-to-date total to $2.9 billion [21] - Liquidity totaled $3.3 billion at the end of the second quarter, with an improvement in reported net leverage to 1.2 times, down from 1.7 times a year earlier [23] Q&A Session Summary Question: Strength of project management deals and revenue growth expectations - Management expressed optimism about the strength of the project management business, expecting continued demand for midsized projects [30] Question: Revenue growth expectations in REMS - Management indicated expectations of high single-digit to low double-digit revenue growth in REMS over the medium term, with recent contract wins contributing positively [31][32] Question: Growth drivers for JLL moving into 2026 - Management highlighted that the Capital Markets business is sensitive to geopolitical noise, but stable interest rates could support transaction volume growth [33] Question: Capital markets pipeline and deal activity - Management reported a strong pipeline across asset classes, particularly in retail and residential, with optimism for continued performance in Capital Markets [38] Question: Fannie Mae loan loss risks - Management confirmed ongoing monitoring of the portfolio for potential fraud, with no specific areas identified at this time [41] Question: Elevated contract churn in property management - Management acknowledged potential elevated contract turnover as part of a strategy to focus on long-term growth and profitability [42] Question: Margin expansion expectations - Management expects margin expansion to be stronger in the latter half of the year, though not necessarily linear [46][48] Question: Geographic split in capital markets business - Management indicated that approximately 60% of capital markets business is in the Americas and 40% in the rest of the world [54] Question: Capital allocation priorities - Management confirmed an increase in share repurchases while maintaining a focus on organic growth investments [59]

Financial Data and Key Metrics Changes - In Q2 2025, the company generated $46 million of free cash flow and $203 million over the last twelve months, despite key commodities trading at or near operators' cost of production [6][7] - The net income for Q2 2025 was $34 million, with the mineral rights segment contributing $40 million in net income, a decrease of $13 million compared to the prior year [13] Business Line Data and Key Metrics Changes - The mineral rights segment's operating and free cash flow each decreased by $11 million year-over-year due to weaker coal markets [13] - The soda ash segment generated $3 million in net income, down $1 million from the previous year, with operating and free cash flow each decreasing by $3 million due to lower sales prices [14] Market Data and Key Metrics Changes - The metallurgical coal market remains under pressure with soft demand for steel and high coal inventories, leading to operators selling coal at or near production costs [7][8] - The soda ash market is significantly oversupplied, with prices below production costs for most producers, and expected to remain low until demand rebounds or supply rationalizes [10][11] Company Strategy and Development Direction - The company aims to pay off substantially all debt by mid-next year and increase unitholder distributions starting next August [7][12] - Future cash priorities post-deleveraging will focus on unitholder distributions, unit repurchases, and opportunistic investments [21] Management's Comments on Operating Environment and Future Outlook - Management noted that many operators are in better financial shape than in previous downturns, which bodes well for the industry [8][9] - The current market for key commodities is as negative as ever, but the company continues to generate robust free cash flow [11] Other Important Information - The company has not made significant progress on COVID carbon neutral initiatives, with the market for most C and I activities remaining stagnant [11] Q&A Session Summary Question: Are there opportunities to acquire additional royalty or soda ash assets post-debt repayment? - Management indicated that while the mineral rights market is fragmented and not very active, there are always possibilities for one-off transactions [19][20] Question: What are the priorities for cash after achieving a debt-free status? - Management stated that priorities will be unitholder distributions, unit repurchases at discounts, and opportunistic investments in assets at bargain prices [21] Question: Is there potential for other mineral opportunities across the company's land? - Management acknowledged the possibility of future opportunities but did not specify any current targets [22]

Financial Data and Key Metrics Changes - The company reported total revenue of $869.2 million for Q2 2025, representing a 9.2% increase year-over-year [5][19] - Adjusted EBITDA for the quarter was $201.8 million, reflecting a 7.5% increase compared to the same period last year, with an adjusted EBITDA margin of 23.2% [5][19] - Same facility revenue grew by 9.5% year-over-year, including a 7.5% increase in revenue per patient day and a 1.8% growth in patient days [19][20] Business Line Data and Key Metrics Changes - The company added 101 beds to existing facilities in Q2, totaling 191 beds added for 2025, and 479 beds added to date in 2025 [8][10] - Same facility patient days increased by 1.8%, with strong performance in specialty and comprehensive treatment centers (CTCs) [11][12] - The company experienced a slight decline in Medicaid volumes year-over-year in its acute care hospitals, while commercial and Medicare volumes increased by 98% respectively [12] Market Data and Key Metrics Changes - The company anticipates approximately $230 million in gross revenue from existing state Medicaid supplemental programs for the full year 2025, with potential reductions starting in fiscal 2028 [6][20] - The approval of the Tennessee supplemental payment program resulted in a favorable pre-tax benefit of $51.8 million for the quarter [20] Company Strategy and Development Direction - The company remains committed to delivering essential care to underserved populations and prioritizes partnerships with payers and state agencies [7] - The company is focusing on quality initiatives and technology investments to enhance patient safety and care coordination [12][15] - The company plans to pause some capital spending to unlock more free cash flow and reduce startup costs [35][36] Management's Comments on Operating Environment and Future Outlook - Management noted that the primary driver of lower-than-expected volumes was weaker Medicaid volumes in the acute care business, reflecting evolving utilization patterns among managed Medicaid plans [26][27] - The company expects adjusted EBITDA for the full year to be in the range of $675 million to $700 million, with startup losses projected to be approximately $60 million to $65 million [21][22] - Management expressed confidence in the long-term growth potential despite current challenges, emphasizing the importance of quality care and operational efficiency [15][34] Other Important Information - Heather Dixon, the Chief Financial Officer, will be stepping down, and Tim Sides will assume the role of Interim CFO [17][18] - The company is experiencing more favorable labor trends in 2025, supported by initiatives focused on recruitment and retention [16] Q&A Session Summary Question: Can you elaborate on the Medicaid volume issues? - Management indicated that weaker Medicaid volumes were primarily due to evolving utilization patterns among managed Medicaid plans, impacting admissions trends [26][27] Question: What is driving the increase in startup costs? - The increase in startup costs is due to an accelerated opening pace of new facilities, resulting in earlier-than-expected costs [28][29] Question: How does the company view free cash flow opportunities in 2026? - Management believes there is an opportunity to accelerate the path to becoming free cash flow positive by pausing some capital spending [34][35] Question: What is the impact of underperforming facilities on patient volumes? - Underperforming facilities had a negative impact of about 80 basis points on same facility patient volume growth in Q2, with management monitoring the situation closely [42][43] Question: How is the company addressing referral sources for underperforming facilities? - The company is actively engaging with referral sources to highlight the quality of care and investments made in technology and patient outcomes [95][96]

Financial Data and Key Metrics Changes - The company reported total revenue of $628 million for the second quarter, up 5% from the previous quarter and twice the midpoint of the sequential guidance provided in May [11][25] - EBITDA for the quarter was $51 million, marking an 11% sequential increase and representing the best second quarter EBITDA results in the company's public history [10][25] - Gross margins remained resilient at 22.9%, consistent with expectations and better than the full year 2024 average [11][27] - Free cash flow for the quarter was $41 million, with a cash balance of $232 million and no debt [13][14][30] Business Line Data and Key Metrics Changes - U.S. revenue totaled $528 million, an increase of $54 million or 11% sequentially, driven by midstream strength [17][26] - The midstream business grew to approximately 27% of total revenue, more than doubling its contribution over the past six quarters [12] - Canadian revenue was $48 million, down $14 million primarily due to seasonal impacts [20][26] - International revenue was $52 million, down 17% sequentially, in line with guidance due to non-repeating project activity [21][27] Market Data and Key Metrics Changes - U.S. midstream project investments drove strong sequential revenue gains, while upstream production remained disciplined with limited project backlogs [12][18] - The company noted a projected 2% increase in produced water volumes and a 13% increase in produced water recycling volumes for 2025, indicating growth opportunities in water management solutions [20] - The acquisition of Natron International expanded the company's electrical products opportunities in Singapore and the Asia Pacific region [21] Company Strategy and Development Direction - The company is focused on integrating with MRC Global to enhance service offerings and capture growth opportunities in alternative energy, AI infrastructure, and other industrial markets [14][15] - The strategic combination aims to realize $70 million in annual cost synergies within three years post-closing [15] - The company plans to balance organic and inorganic growth while pursuing potential bolt-on acquisitions [23][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds but emphasized solid execution and customer focus as key to success [8][10] - The outlook for the third quarter anticipates relatively flat revenue compared to the second quarter, with expectations of low single-digit percentage growth for the full year [34][36] - Management reaffirmed a target of $150 million in free cash flow for 2025 [36] Other Important Information - The company has a strong balance sheet with zero debt and total liquidity of $582 million [30] - The effective tax rate for the quarter was 21.9%, favorably impacted by tax benefits associated with stock awards [29] Q&A Session Summary Question: What are the most difficult parts of the integration likely to be? - Management emphasized focusing on customer needs and aligning teams early in the integration process to ensure a smooth transition [44] Question: Is it safe to assume the year is heading towards the top half of the current guidance? - Management indicated a bias towards the top end of the guidance but acknowledged potential budget exhaustion in the fourth quarter [46][48] Question: Are there opportunities to drive synergies with vendors and customers? - Management stated that while estimating synergies is ongoing, the focus remains on growth rather than immediate cost reductions [52] Question: Do you expect increased visibility in future earnings power with less exposure to upstream? - Management confirmed that diversification is a key opportunity, allowing for growth in both upstream and other markets [54] Question: How do you think about the impact from tariffs in the back half of the year? - Management noted that while tariffs have increased product costs, most sales growth has come from volume rather than price increases [67] Question: Were there specific factors that drove the outperformance in EBITDA? - Management attributed the improved EBITDA performance primarily to growth in the midstream sector [79]

Financial Data and Key Metrics Changes - The company reported a 14% adjusted sales growth in Q2 2025, driven by contributions from acquired metal roofing and structures businesses [8] - Adjusted operating income and EBITDA margin were 14.5% and 17.8% respectively, with adjusted EPS increasing by 11% year-over-year [9] - Free cash flow generation expanded to 8% of sales, with a target of 10% for 2025 [24][29] Business Line Data and Key Metrics Changes - Residential segment adjusted net sales increased by $18.8 million or 8.9%, primarily due to the metal roofing business acquisition [11] - AgTech net sales growth was supported by the acquisition of Lane Supply, with backlog increasing by 71% [17] - Infrastructure net sales increased by $400,000 or 1.6%, with backlog also increasing by 3% [23] Market Data and Key Metrics Changes - The residential market remains soft, with housing affordability and interest rates impacting new and existing home sales [13] - Retail point of sale results for roofing accessories were down between 5-6%, while building accessories were up 2.3% [14] - The AgTech backlog increased by 33% on an organic basis, indicating strong future revenue trends [17] Company Strategy and Development Direction - The company is strategically shifting focus to Building Products and Structures businesses, simplifying its portfolio by classifying the Renewables segment as discontinued operations [5][6] - The company aims to achieve stronger growth and margin expansion by concentrating resources on attractive markets with long runways for value creation [6][7] - The company plans to continue investing in organic growth and explore M&A opportunities, particularly in the building products segment [25] Management's Comments on Operating Environment and Future Outlook - Management expects overall demand to remain consistent with market conditions, focusing on driving participation gains and local market expansions [27] - The company is confident in managing the dynamic tariff environment and does not anticipate significant impacts from tariffs or inflation [52] - Management expressed optimism about the infrastructure business due to ongoing bipartisan efforts for additional funding [81] Other Important Information - The company has $200 million remaining under its current stock repurchase authorization [26] - The sale process for the renewables business is active, with expectations to close by year-end [38] Q&A Session Summary Question: Revenue contribution from metal roofing acquisitions - The residential segment was essentially flat, down less than 1% organically, with growth driven by metal roofing [35][37] Question: Update on the divestiture of the renewables business - The process is active, with discussions ongoing and hopes to close the sale by year-end [38] Question: Tax implications of the renewables sale - The transaction is expected to be tax-efficient due to existing carryforwards [46] Question: Price cost management and inventory positioning - The company has a robust model to manage tariffs and does not anticipate significant impacts for the remainder of the year [52] Question: Strategy regarding direct-to-contractor model - The strategy focuses on service and speed, with a direct engagement model for custom solutions [62][66] Question: Turnaround time for contractor orders - The expected turnaround time is within one to three days, depending on the project size [73] Question: Synergies between AgTech and infrastructure segments - There are limited synergies, as both segments operate independently despite some similarities [75]

Financial Data and Key Metrics Changes - The company reported a decrease in occupancy to 94.5% as of June 30, 2025, down from the previous quarter, primarily due to lease expirations and bankruptcies affecting properties [9][10] - The dividend was reduced from $0.21 per share to $0.15 per share, reflecting a rightsizing of the dividend as coverage dropped from 110% to 79% on a Funds Available for Distribution (FAD) basis [14][15] Business Line Data and Key Metrics Changes - The company successfully re-tenanted the Beaumont, Texas facility with Christus Health, which is now fully operational and paying rent [7] - The company completed the acquisition of a five-property portfolio of outpatient medical real estate, bringing total acquisition volume for 2024 and 2025 to approximately $150 million at a blended cash yield of 8.5% [11][12] Market Data and Key Metrics Changes - The company noted a significant increase in portfolio volumes, which averaged $300 million per quarter from 2022 to 2024, spiking to $2.1 billion in 2025 [12] - The market for higher quality assets is trading in the low to mid-six cap rates, with opportunities for higher returns available [26][28] Company Strategy and Development Direction - The company aims to renew portions of its credit facility due in 2026 and diversify its lender relationships to improve access to debt capital [13] - The management is focused on capital recycling, identifying assets for potential sale to enhance cash flows and reduce leverage [15][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving total occupancy over 95% by the end of the year, with expectations for stabilized occupancy at the East Orange property to exceed 90% within 24 to 36 months [10] - The management team emphasized the importance of maintaining a strong balance sheet and the potential for growth through strategic acquisitions and asset management [16][36] Other Important Information - The company is committed to improving transparency and clarity in its disclosures to better communicate with investors [18] - The management is undergoing a strategic review of the portfolio to identify opportunities for improvement and growth [16] Q&A Session Summary Question: What are the immediate strategic priorities for the company? - The CEO highlighted the need to develop a cohesive strategy with the team and board, focusing on refinancing and capital recycling as immediate priorities [21][22] Question: What types of assets are being considered for capital recycling? - The CFO indicated that ideal candidates for sale would be low-yielding assets with long-term leases and high-grade tenants, while also considering assets that may not fit long-term strategies [23][24] Question: What is the target leverage for the company? - The CEO mentioned a target leverage of sub-40% or sub-six times debt, aiming for a balance sheet that allows for growth [36] Question: How is the occupancy expected to trend going forward? - The COO stated that occupancy should remain above 95%, with some episodic downturns expected but overall consistency anticipated [43] Question: What is the expected impact of the Beaumont facility on future earnings? - The CFO noted that the Beaumont asset would contribute modestly to earnings in the third quarter, following its full occupancy starting in mid-May [44] Question: What is the size of dispositions being considered? - The CEO indicated a goal of $50 million to $100 million in dispositions, depending on market conditions and pricing [54]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 grew sequentially by 7% to $762 million, in line with guidance, driven by growth in both semiconductors and passive components [7][22] - Gross profit was $149 million, resulting in a gross margin of 19.5%, at the high end of guidance, primarily due to increased volume [24] - Book to bill ratio was positive at 1.02, marking the third consecutive quarter above one, with a backlog of $1.2 billion [23][24] Business Line Data and Key Metrics Changes - Automotive revenue increased by 4% due to improved demand from tier one customers and new ADAS programs [11] - Industrial segment revenue rose by 9%, driven by normalization of inventories and demand for smart grid infrastructure [12] - Aerospace defense revenue increased by 5%, while medical end markets saw a 4% growth, reflecting stronger demand in implantables [15][16] Market Data and Key Metrics Changes - Revenue in Asia grew by 12%, driven by AI power requirements and smart grid projects [20] - The Americas saw a 7% increase in revenue, supported by improved automotive and industrial demand [20] - Europe remained flat due to fewer workdays and inventory corrections [20] Company Strategy and Development Direction - The company is executing a five-year strategic plan, Vishay 3.0, focusing on capacity expansion and innovation in high-growth product lines [6][37] - Significant investments of approximately $775 million have been made to add capacity for high-growth, higher-profit products [8] - The company aims to enhance its presence in emerging markets such as e-mobility and sustainability [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the inventory correction cycle is largely behind, with normalized inventory levels for passives and some excess in semiconductors [7] - Positive demand momentum is expected to continue, particularly in smart grid infrastructure and AI applications [8][46] - The company anticipates a stronger second half of the year compared to the first half, with backlog building at a faster rate [44][46] Other Important Information - The company reported a negative free cash flow of $73 million for the quarter, attributed to capacity expansion investments and tax payments [31] - The effective tax rate is not meaningful at low levels of pre-tax income, but a normalized rate is expected as profitability returns [27][35] - The company plans to maintain its dividend and opportunistically repurchase shares based on available liquidity [35][32] Q&A Session Summary Question: Impact of Newport fab on gross margin - The Newport fab had a lower than expected negative impact of 160 basis points on gross margin in Q2, with guidance for Q3 set at 160 to 185 basis points [50][51] Question: MOSFET gross margins decline - MOSFET gross margins declined due to manufacturing inefficiencies, which are expected to improve in Q3 with increased IC sales [53][54] Question: US tariff impact - Less than 4% of products are manufactured in China and returned to the US, indicating a minimal impact from tariffs [56][57] Question: Inorganic growth and M&A opportunities - The company is actively looking for M&A opportunities, particularly in the semiconductor sector, to enhance customer presence [58][60] Question: Visibility on Q3 and backlog growth - The company is seeing a faster backlog build and anticipates a stronger second half of the year, with Q4 expected to outperform Q3 [64][66] Question: Customer demand and inventory management - Customers are still cautious in planning demand, with a significant portion of orders for quick delivery, indicating a transition from an inventory-heavy market [68][70] Question: AI customer expansion - The company has seen significant growth in AI customer count and is expanding applications beyond MOSFETs to include a broader portfolio [73][74] Question: Changes in customer programs - Adjustments in customer programs were noted due to design changes, impacting planned orders [76][78]