Financial Data and Key Metrics Changes - The company reported net income of $10.9 million and diluted earnings per share of $0.74, marking the second most profitable quarter in its history and the eighth consecutive quarter of profitability [2][9] - The GAAP combined ratio was 72.7%, with an annualized return on equity of 43% [2][9] - Direct written premium grew by 14%, and net investment income increased by 52% to $2.5 million [2][9][10] Business Line Data and Key Metrics Changes - Policies in force increased by 4.2% year-over-year and 1.4% sequentially, indicating stability in the agent and customer base [4] - The Select homeowners program now represents 54% of policies in force, with a claim frequency 31% lower than the legacy product [6] - The underlying loss ratio was 44.1%, an increase of 4.9 percentage points year-over-year, driven by higher claim severity [4][6] Market Data and Key Metrics Changes - The company experienced a month-over-month increase in new business since June, continuing into the fourth quarter [3] - The growth of 14% for the quarter was primarily driven by an average premium increase of 13% and improved retention [3] - Catastrophe losses contributed only 0.2 percentage points to the loss ratio compared to 1.7 percentage points in the prior year quarter, indicating a favorable trend [6] Company Strategy and Development Direction - The company is progressing with its state expansion initiative and plans to present a multi-year roadmap in the first half of next year [7] - Guidance for 2025 has been raised for net combined ratio, EPS, and ROE, while reaffirming direct written premium growth to range between 12% and 17% [7][8] - The company aims to maintain a disciplined posture on pricing and exposure management while seeking opportunities to enhance portfolio yield [8][10] Management's Comments on Operating Environment and Future Outlook - Management noted that hard market conditions in downstate New York have not changed materially, with strong overall volume [3] - The homeowners' market is in a crisis due to companies not making money, presenting an opportunity for the company to expand geographically [28] - Management expressed confidence in the company's competitive position despite increased competition in the market [22] Other Important Information - The company has no debt at its holding company, and shareholders' equity exceeded $107 million, an increase of 80% year-over-year [12] - Year-to-date return on equity is 39.8%, an increase of 3 percentage points from the same period last year [13] Q&A Session Summary Question: Will all accounts eventually move to the Select product? - Management confirmed that the legacy book will be maintained as it is profitable, and any conversion will occur only when it becomes small enough [16] Question: Is all new business written on the Select platform? - Yes, all new business has been written in Select since the beginning of 2022 [17] Question: How is the new E&S product being developed? - The company is deep into the development of the new product, benefiting from the experience gained with the Select product [18] Question: How has the AmGUARD book performed since writing began? - The performance is on track with expectations, writing about $1 million a month so far [21] Question: How are competitors expanding in downstate New York? - Competitors are opening up to writing more classes of business, but the company's growth remains healthy with a high conversion rate [22]

Financial Data and Key Metrics Changes - The company reported a gross margin decrease of 190 basis points and an EBITDA margin decrease of 160 basis points, despite lower ingredient costs as a percentage of sales [38][40] - The company is experiencing margin pressure primarily due to increased promotional activity and the higher-cost structure associated with Simple Mills products [39][40] Business Line Data and Key Metrics Changes - The food service business has been under pressure due to the economic environment and consumer sentiment, but profitability improvements from previous years are still evident [25][30] - The company has seen unit growth in brands like Canyon (up 6%) and Dave's Killer Bread (up 10%), indicating positive performance in certain segments [48] Market Data and Key Metrics Changes - Consumer sentiment reached a low point in Q3, but there are expectations for category demand to normalize as the economy strengthens [8][9] - The company noted that the price gaps between private label and lower-priced branded products have narrowed significantly, impacting private label performance [26] Company Strategy and Development Direction - The company is focused on redefining traditional loaf products to align with evolving consumer preferences, emphasizing value and better-for-you attributes [4][47] - There is a commitment to continue investing in consumer offerings and innovation, despite short-term margin pressures [12][47] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the category will stabilize over time, although some weakness is expected to continue into 2026 [9][16] - The company acknowledges the challenges posed by economic uncertainty but expresses optimism about long-term growth due to a strong brand portfolio and team [47] Other Important Information - This earnings call marks the final appearance of the CFO, Steve Kinsey, after 18 years with the company [5] - The company is actively evaluating its cost structure and supply chain optimization to enhance efficiency [53][54] Q&A Session Summary Question: Consumer sentiment and category demand normalization - Management believes that while it is difficult to pinpoint an exact timeline, the category will stabilize over time, with ongoing consumer concerns impacting demand [9][10] Question: Offsets to margin pressure from new investments - Management acknowledges that innovation tends to pressure margins in the short term but expects improvements as scale and efficiency increase [12] Question: Performance of Simple Mills post-acquisition - Integration efforts are going well, with strong performance in line with expectations and new innovations planned for the upcoming year [20] Question: Food service and private label business performance - The food service business is under pressure, but profitability improvements are still being realized, while private label performance has been weak due to narrowed price gaps [25][26] Question: Expectations for 2026 gross margins - Management expects inflationary pressures on input costs, including volatile wheat commodities, to impact gross margins in 2026 [30] Question: Dividend and capital allocation strategy - The company is focused on delivering shareholder value and reassessing capital projects to ensure the best returns, with no immediate changes to dividend policy indicated [35][36] Question: Complexity of managing multiple brands - Management acknowledges the complexity of managing regional brands but emphasizes the importance of meeting consumer needs and optimizing cost structures [51][52]

Financial Data and Key Metrics Changes - Revenue for Q3 was $35 million, a decline of 17.8% compared to the prior year quarter, with same-store revenue down approximately 22% [13] - Cases declined 15.2% to 2,780, with same-store cases down approximately 20% [13] - Average revenue per case was $12,587, a decline of approximately 3% from the prior year quarter [14] - Adjusted EBITDA was $3 million, down from $4.7 million in the prior year quarter, with an adjusted EBITDA margin of 8.7% compared to 11% [15] - Net loss for the quarter was $9.5 million, with an adjusted net loss of $2.4 million, or $0.04 per diluted share [15] Business Line Data and Key Metrics Changes - The introduction of skin tightening services has seen a lift in demand, but many clients require additional procedures for loose skin beyond what skin tightening can address [8][26] - The company is expanding its service offerings to include skin excisions and removals, which are currently in pilot [26] Market Data and Key Metrics Changes - Global GLP-1 prescriptions have grown at approximately 38% annually between 2022 and 2024, with total sales expected to reach $100 billion by 2030 [6] - 63% of GLP-1 patients are seeking aesthetic treatments post-use, indicating a new consumer base for the company [7] Company Strategy and Development Direction - The company is focusing on three key areas: introducing new services to capture the GLP-1 opportunity, enhancing sales and marketing strategies, and maintaining financial discipline [4][12] - The strategy includes adapting marketing spend to align with revenue trends and prioritizing initiatives that drive higher conversion rates [8] Management's Comments on Operating Environment and Future Outlook - Management noted that while Q3 revenue was lower than expected, it reflects timing rather than a change in business trajectory [4] - The company updated its annual outlook, expecting 2025 revenue of approximately $153 million, down from previous guidance of $160 million to $170 million [10][19] Other Important Information - The company announced the appointment of Michael Arthur as the new CFO starting January 2026, succeeding Dennis Dean [11] - The closure of the London center was confirmed as part of a strategic review, as it was the only unprofitable center [10][17] Q&A Session Summary Question: Can you elaborate on the cost-cutting measures taken by line and their sustainability? - Management indicated that cost controls have primarily focused on SG&A, with ongoing efforts to identify additional savings [22][23] Question: What is the uptake of the standalone skin tightening service and plans for expansion? - Management noted that while demand for skin tightening is evident, many clients require additional procedures, leading to the introduction of skin excisions [25][26] Question: What happened regarding the timing issue in Q3? - Management explained that while leads and consultations remained strong, consumer hesitance to purchase impacted revenue [31][32] Question: How will marketing strategies shift to target the GLP-1 user segment? - Management confirmed that messaging will be tailored to GLP-1 users, focusing on addressing loose skin and uneven weight loss [34][36]

Financial Data and Key Metrics Changes - Revenue for Q3 was $35 million, a 17.8% decline compared to the prior year quarter, with same-store revenue down approximately 22% [13] - Cases declined 15.2% to 2,780, with same-store cases down approximately 20% [13] - Average revenue per case was $12,587, a decline of approximately 3% from the prior year quarter [14] - Adjusted EBITDA was $3 million, down from $4.7 million in the prior year quarter, with an adjusted EBITDA margin of 8.7% compared to 11% [15] - Net loss for the quarter was $9.5 million, with an adjusted net loss of $2.4 million, or $0.04 per diluted share [15] Business Line Data and Key Metrics Changes - The introduction of skin tightening services has seen a lift in demand, but many clients require additional procedures for loose skin beyond what skin tightening can address [6][7] - The company is expanding its service offerings to include skin excisions and removals, which are currently in pilot [25][26] Market Data and Key Metrics Changes - Global GLP-1 prescriptions have grown at roughly 38% annually between 2022 and 2024, with total sales expected to reach $100 billion by 2030 [5] - 63% of GLP-1 patients are seeking aesthetic treatments post-use, indicating a new consumer base for the company [6] Company Strategy and Development Direction - The company is focusing on three key areas: introducing new services to capture the GLP-1 opportunity, enhancing sales and marketing strategies, and maintaining financial discipline [4][11] - A strategic review led to the closure of the unprofitable London center, allowing resources to be redirected to North America locations [9] Management's Comments on Operating Environment and Future Outlook - Management noted that while Q3 revenue was lower than expected, it reflects timing rather than a change in business trajectory, with improving same-store sales trends anticipated for Q4 [9][32] - The company updated its annual outlook, expecting 2025 revenue of approximately $153 million, down from previous guidance of $160 million-$170 million [9][19] Other Important Information - Michael Arthur will join as Chief Financial Officer in January 2026, succeeding Dennis Dean, who will retire [10] - Dr. Aaron Rollins resigned from the board for personal reasons, with no disagreements reported [10] Q&A Session Summary Question: Can you elaborate on the cost-cutting measures taken by line and their sustainability? - Management indicated that cost controls have primarily focused on SG&A, with ongoing efforts to identify additional savings [21][22] Question: What is the uptake for the standalone skin tightening service and plans for expansion? - Management noted that demand for solutions addressing loose skin is evident, with plans to pilot skin excisions and expand services across centers [24][25] Question: What were the timing issues affecting Q3 performance? - Management explained that while leads and consultations remained strong, consumer hesitance to convert from interest to purchase impacted revenue [30][31] Question: How will marketing strategies shift to target the GLP-1 user segment? - Management confirmed that messaging will be tailored to GLP-1 users, focusing on addressing loose skin and uneven weight loss [33][35]

Financial Data and Key Metrics Changes - The company reported a gross margin decrease of 190 basis points and an EBITDA margin decrease of 160 basis points, despite lower ingredient costs as a percentage of sales [38][40] - The company is experiencing margin pressure primarily due to negative price mix and lower volumes [38] Business Line Data and Key Metrics Changes - The food service business has been under pressure due to the economic environment and consumer sentiment, but profitability improvements from previous years are still delivering positive results [25][30] - The Simple Mills acquisition is performing in line with expectations, with strong collaboration and integration efforts noted [20] Market Data and Key Metrics Changes - Consumer sentiment reached a low point in Q3, but there are expectations for category demand to normalize as the economy strengthens [8][9] - The company noted a significant shift in consumer preferences from traditional loaf to more value-oriented brands, impacting sales in the traditional bread category [46][47] Company Strategy and Development Direction - The company is focused on redefining traditional loaf products to align with evolving consumer preferences, emphasizing value and better-for-you attributes [4][47] - There is a commitment to continue investing in consumer offerings and innovation, despite short-term margin pressures [12][48] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the category will stabilize over time, although some weakness is expected to continue into 2026 [9][16] - The company acknowledges the challenges posed by economic uncertainty but remains optimistic about long-term growth due to a strong brand portfolio and dedicated team [47] Other Important Information - This earnings call marked the final appearance of the CFO, Steve Kinsey, after 18 years with the company [5] Q&A Session Summary Question: Consumer sentiment and category demand normalization - Management believes that while it is difficult to pinpoint an exact timeline, the category will stabilize over time, with ongoing consumer focus and investment in better-for-you offerings [9][10] Question: Margin pressure from new investments - Management acknowledged that new investments may pressure margins in the short term but expects improvements as scale and efficiency increase [12] Question: Food service and private label performance - The food service business is under pressure, but profitability improvements are still evident. Private label performance has been weak due to narrowed price gaps with lower-priced branded products [25][26] Question: Expectations for 2026 gross margins - Management expects inflationary pressures on input costs for 2026, with ongoing volatility in wheat commodities [30] Question: Dividend and capital allocation strategy - The company is focused on delivering shareholder value and reassessing capital allocation, including CapEx and dividends, without making premature decisions [35][36] Question: Complexity of brand portfolio - Management acknowledged the complexity of managing multiple brands but emphasized the importance of meeting consumer needs and optimizing cost structures [51][53]

Financial Data and Key Metrics Changes - In Q3 2025, revenues increased to $363.7 million, up nearly 3% from $353.6 million in the prior year [16] - Adjusted EBITDA for Q3 2025 was $124.1 million, a slight decline of less than 1% from $124.7 million year-over-year [17] - Adjusted diluted EPS rose by more than 7% to $1.76 from $1.64 in Q3 2024, aided by share buybacks that reduced the weighted average diluted shares by 7.5% [17][25] Business Line Data and Key Metrics Changes - Tech and shopping revenue fell by 2% in Q3, with adjusted EBITDA down 12%, primarily due to the wind down of game publishing activities [8][19] - Health and wellness segment saw a 13% year-over-year revenue growth and 18% adjusted EBITDA growth, marking high watermarks for the division [10] - Cybersecurity and martech revenue grew by 2% in Q3, driven by strong performance in consumer VPN and cloud backup [12] Market Data and Key Metrics Changes - The connectivity division achieved 2% year-over-year revenue growth, with year-to-date revenues up 7% [11] - Gaming and entertainment revenues were approximately 4% lower year-over-year, but adjusted EBITDA grew nearly 3% [9] - Advertising and performance marketing revenues grew by 5.9% year-over-year, while subscription and licensing revenues increased by 2% [18] Company Strategy and Development Direction - The company is evaluating potential opportunities to unlock shareholder value, having engaged outside advisors for this purpose [4][5] - There is a focus on maximizing value for shareholders while maintaining a profitable and growing business structure [5][26] - The company is committed to a disciplined acquisition strategy, having closed seven acquisitions in the first nine months of 2025 [22][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the disconnect between the current market value and intrinsic value of the company is at its widest [29] - The company anticipates fiscal year 2025 total revenues and adjusted diluted EPS to be within the lower half of its guidance range [24] - Management expressed optimism about the performance of various segments despite broader industry headwinds [39] Other Important Information - The company has significant cash reserves of $503.4 million and long-term investments of $119.6 million, with a gross leverage of 1.7 times trailing 12 months adjusted EBITDA [22] - Free cash flow for Q3 2025 was $108.2 million, representing a 35% increase year-over-year [25] - The company plans to continue its stock repurchase program, having repurchased 3 million shares year-to-date [23] Q&A Session Summary Question: Insights on valuation disconnect - Management acknowledged the valuation disconnect and noted that the recent segment-level disclosures have attracted interest from strategic and private equity investors [28][29] Question: Strategic review and potential divestitures - Management stated that no specific properties are off-limits for divestiture, but exploring opportunities for select units is likely to be more value-accretive [31] Question: Impact of AI on traffic and revenue - Management indicated that the company is well-positioned against fluctuations in search traffic, with only 35% of total revenue dependent on web traffic [32] Question: Future M&A opportunities - Management expressed optimism about acquiring smaller properties that may not have weathered recent market changes as well as continuing to buy back shares [44][45] Question: Philosophical shift in acquisitions - Management clarified that the focus remains on cash-on-cash returns and that there is no change in the overall approach to acquisitions [51]

Financial Data and Key Metrics Changes - Global system-wide sales declined by 2.6%, primarily due to a 4.7% decline in U.S. same restaurant sales, reflecting increased industry competition and consumer pressure [14][19]. - Adjusted EBITDA rose by 2.1% to $138 million, driven by reductions in advertising and G&A expenses [17][22]. - Adjusted EPS was $0.24 per share, slightly below the previous year's $0.25 [17][22]. - Free cash flow increased to $195-$210 million, up by $35 million from prior expectations, reflecting reduced capital expenditures [18][27]. Business Line Data and Key Metrics Changes - U.S. company-operated restaurant same restaurant sales outperformed the overall U.S. system by 400 basis points, declining only 0.7% [19][20]. - International system-wide sales grew by 8.6%, with significant growth in regions like Mexico (over 18%) and Puerto Rico (over 10%) [16][20]. - Digital sales in the U.S. increased by 14.9%, reaching a digital mix of 20.3% [20]. Market Data and Key Metrics Changes - The U.S. market remains under pressure, with sales challenges noted, while international markets continue to show strong growth [5][16]. - The company anticipates international net unit growth of over 9% in 2025, with a focus on expanding in Canada and the U.K. [12][13]. Company Strategy and Development Direction - The company is prioritizing average unit volume (AUV) growth over net unit growth in the U.S. as part of Project Fresh, a comprehensive turnaround plan [5][12]. - Project Fresh focuses on brand revitalization, operational excellence, system optimization, and capital allocation to enhance customer experience and profitability [6][10][12]. - The company is working closely with franchisees to evaluate underperforming restaurants and develop action plans, which may include closures to strengthen the overall system [11][39]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the competitive landscape and consumer pressure affecting U.S. sales, while expressing confidence in the international growth trajectory [5][14]. - The company maintains its outlook for full-year global system-wide sales, adjusted EBITDA, and adjusted EPS, while increasing the free cash flow outlook [17][27]. - Management emphasized the importance of enhancing franchisee profitability and customer experience as key to long-term growth [51][52]. Other Important Information - The company has reduced its 2025 U.S. build-to-suit capital by approximately $20 million, reflecting a strategic shift towards AUV growth [12][18]. - The company has returned over $300 million to shareholders year-to-date through dividends and share repurchases, with plans to exceed $325 million for the full year [17][24]. Q&A Session Summary Question: Franchisee cash flow and balance sheet levels - The U.S. franchisee system remains healthy overall, with some facing acute financial pressure. The company is working with these franchisees on a case-by-case basis to improve restaurant-level economics [30][31]. Question: Factors leading to underperformance relative to peers - The company noted increased pressure on lower-income consumers and emphasized its value proposition, including the Biggie Bag and $8 meal deals, which performed well [36][37]. Question: Expected closures in the U.S. due to system optimization - The company estimates mid-single-digit percentage closures, which could amount to around 300 units, with a focus on improving overall system health [39][40]. Question: Clarification on U.S. AUV growth targets - The company is focused on net unit development coming in around the low end of its guidance, with gross unit development still on track [41][42]. Question: Insights from customer segmentation study - The company is conducting a comprehensive customer segmentation study to better understand consumer preferences and improve brand communication [46][47]. Question: Beverage platform performance and breakfast strategy - Recent beverage launches performed well, and breakfast remains a key focus, with flexibility allowed for franchisees with low breakfast sales [49][51].

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $86.1 million, a 2% increase year-over-year, with a normalized growth of 2.8% after accounting for the impact of the Centric product sunset [16] - Adjusted EBITDA margins are expected to expand approximately 600 basis points from 2023 to year-end, with a projected margin of 19% for 2025, up from 16.5% in 2024 [12][19] - Free cash flow improved by $20 million year-to-date, with net leverage reduced from 4.4 times in Q4 2023 to approximately 2.2 times by Q3 2025 [12][15] Business Line Data and Key Metrics Changes - Financial health revenue was $54.5 million, representing 63% of total revenue, remaining flat year-over-year, while patient care revenue grew by 5.3% to $31.6 million [16][17] - Encoder business bookings have increased significantly, with margins of 70%-80%, indicating a positive trend in high-margin deals [22][24] Market Data and Key Metrics Changes - The percentage of Financial Health bookings in the 100-400 bed space increased from less than 20% in 2024 to more than 30% in 2025, reflecting a strategic focus on this market segment [5] - The company noted that the majority of hospitals operate on a calendar year budget cycle, which has influenced decision-making and timing for bookings [25] Company Strategy and Development Direction - The company is focused on improving the quality of earnings, enhancing client retention, and executing a strategic transition process to drive margin expansion [10][20] - The appointment of a new Chief Business Officer aims to elevate sales efforts and improve visibility into bookings and revenue growth [6][7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that while Q3 bookings were below expectations, early indicators in Q4 show a strong start, suggesting a potential recovery in pipeline conversion [6][30] - The company remains optimistic about future growth opportunities, particularly in the regulatory landscape and the focus on revenue cycle management (RCM) improvements [23] Other Important Information - The company has made significant progress in cost optimization, with capitalized software spending decreasing by 30% year-over-year [14] - Cash balance increased from $3.8 million at the end of 2023 to approximately $20 million, driven by improved profitability and disciplined working capital management [15] Q&A Session Summary Question: Can you discuss the bookings performance and expectations? - Management indicated that Q3 bookings of $15.5 million were about 20% below expectations, primarily due to delayed decisions rather than negative influences [22] Question: Are there common reasons for hospitals delaying implementation? - Delays are attributed to budget cycles and uncertainty regarding Medicaid funding, but management expects these decisions to accelerate as hospitals finalize their spending needs for 2026 [25] Question: What is the state of the pipeline and bookings growth expectations? - Management expressed caution, stating that while there is optimism in the pipeline, it is uncertain if Q4 will fully compensate for Q3 shortfalls [30] Question: How will new sales leadership impact bookings? - The new Chief Business Officer is expected to enhance sales efforts and improve accountability across sales, marketing, and client success functions [35] Question: What is the outlook for EBITDA margin expansion next year? - Management expects 200 basis points of margin expansion primarily from cost optimization efforts, with some implicit scenarios for revenue growth [44][46]

Financial Data and Key Metrics Changes - The company reported a GAAP loss from continuing operations of $0.13 per common share and distributable earnings were a loss of $0.94 per common share, with $0.04 per common share excluding realized losses on asset sales [13][16] - Net interest income declined to $10.5 million due to a $1.4 billion reduction in the CRE portfolio and $40 million of negative credit migration [13][14] - Book value per share was $10.28 at quarter end, down $0.16 from June 30, primarily due to the dividend covered shortfall [17] Business Line Data and Key Metrics Changes - The core portfolio totaled 1,120 loans with an unpaid principal balance of $5.4 billion, with delinquencies increasing to 5.9% of the total [5][6] - In small business lending operations, $175 million of SBA 7(a) loans were originated, which is 50% below the quarterly target [9][10] - The small business lending platform generated $11 million in net income, adding 280 basis points return on equity before realized losses [10] Market Data and Key Metrics Changes - The Portland mixed-use asset represented 14% of quarter-end equity, with a net operating loss of $330,000 for the hotel and occupancy at 48% [7][8] - The office and retail space in the Portland asset is currently 28% leased and has reached break-even [8] Company Strategy and Development Direction - The company is focused on returning to financial health and profitability through portfolio yield rehabilitation, growth in small business lending, and management of 2026 debt maturities [4] - The strategy includes reducing CRE loan exposure and liquidating non-core assets to improve liquidity [4][11] - The company plans to evaluate the dividend in December based on progress in the business plan and liquidity levels [12][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in refinancing pending debt maturities and emphasized a conservative approach to new investments and dividend policy [11][40] - The company expects to leverage unencumbered assets and additional debt issuance to address maturing obligations [11][28] Other Important Information - The company completed two portfolio sales, netting $85 million from the sale of 21 loans and $24 million from the sale of 196 small balance loans [4][5] - The net increase in provision for loan losses was $38 million, with a decrease in the valuation allowance of $178 million [15][16] Q&A Session Summary Question: What is the right level of leverage for the company going forward? - Management indicated that current gross leverage is around $3.5 million, with a target of less than that on a pro forma basis [19][20] Question: What is the current covenant on the unencumbered asset ratio? - The company confirmed that the unencumbered asset test is well covered within the 1.2 range, with no requirement to be at 1.25 [23][25] Question: What is the rationale for continuing to pay dividends while managing debt maturities? - Management stated that they are adopting an aggressive approach to reposition the balance sheet and will evaluate the dividend in December based on liquidity and business progress [27][28] Question: How is the Portland property being carried on the balance sheet? - The property is carried at fair value for the condos and at cost for the other components [33][34] Question: How does the company view the current market valuations for properties? - Management noted that the Portland asset is unique and not directly comparable to other properties, emphasizing positive trends in hospitality and RevPAR [36][37]

Financial Data and Key Metrics Changes - In Q3 2025, revenue was $519 million, a decrease of 1.9% from $529 million in the prior year [21] - Adjusted EBITDA was $43 million, or 8.4% of revenue, down from $50 million, or 9.5% [22] - Operating income decreased to $29 million, or 5.6% of revenue, compared to $34 million, or 6.4% [22] - Net debt was reduced by $119 million year-over-year, totaling $813 million [32] Business Segment Data and Key Metrics Changes - In the Engage segment, Q3 revenue decreased by 4% to $397 million, with operating income at $17 million, or 4.3% of revenue [22] - The Digital segment saw a revenue increase of 5.4% to $122 million, but operating income decreased to $12 million, or 9.5% of revenue [26] - Recurring revenue in the Digital segment declined by 9.8% due to the end-of-life status of a premise contact center solution [26] Market Data and Key Metrics Changes - The Engage segment's backlog is $1.66 billion, representing 102% of the 2025 revenue guidance midpoint, up from 99% in the prior year [25] - The Digital backlog is $444 million, or 95% of the 2025 revenue guidance midpoint, an increase from 92% year-over-year [30] Company Strategy and Development Direction - The company is focusing on AI-enabled customer experience (CX) solutions, blending technology with human interaction to drive growth [4][5] - Investments are being made in expanding executive leadership and enhancing AI capabilities to improve operational effectiveness [12][24] - The company aims to transition from traditional contact center solutions to AI-led consulting and journey orchestration [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to historical growth rates and margins despite current financial metrics not reflecting business momentum [19] - The company anticipates solid bottom-line growth in Q4 2025, driven by healthcare business and new client growth [34] - Management highlighted the importance of adapting to market dynamics and leveraging partnerships with hyperscalers for innovation [13][34] Other Important Information - Free cash flow was negative $10 million in Q3 2025, an improvement from negative $100 million in the prior year [30] - The company has approximately 1,700 full-time engineers focused on AI projects, indicating strong capabilities in this area [46] Q&A Session Questions and Answers Question: Can you walk through the significance of your role in the healthcare opportunity and the investments made? - The investments made in Q3 are expected to lead to double-digit growth in the healthcare seasonal business year-over-year, establishing strong client relationships for future growth [38][39] Question: What does the net economic scenario look like when integrating AI into client experiences? - Integrating AI is expected to drive positive economic impacts, allowing for outcome-based pricing that enhances margins by reducing labor costs [41][42] Question: Do you have the sales and delivery headcount needed for the shift into AI consulting? - The company has approximately 1,700 engineers with AI backgrounds and is confident in its capabilities to meet client demands [46][49] Question: How will you further improve free cash flow given the current revenue dynamics? - The focus is on debt reduction, improving working capital, and managing capital expenditures to enhance free cash flow generation [51][53]