Chemed (NYSE:CHE) Q3 2025 Earnings Call October 29, 2025 10:00 AM ET Company ParticipantsJoel Wherley - President and CEOKevin McNamara - President and CEOHolley Schmidt - Assistant ControllerMike Witzeman - CFOConference Call ParticipantsBrian Tanquilut - AnalystJoanna Gajuk - AnalystBen Hendrix - AnalystHolley SchmidtGood morning.OperatorGood morning. Thank you for standing by. Welcome to the Chemed Corporation Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-onl ...

Financial Data and Key Metrics Changes - The company achieved all-time high EBITDA margins of 27% in electronic materials, reflecting improved cost structure and operational performance [5] - Sales increased by approximately 1% year-over-year, with adjusted earnings per share at $1.41, flat compared to the prior year and up 3% sequentially [12][13] - Adjusted EBITDA was $55.5 million, down 2% year-over-year, primarily due to lower volume from equipment downtime in Performance Materials [13][14] Business Line Data and Key Metrics Changes - Performance Materials reported value-added sales of $157.1 million, down 4% year-over-year, impacted by equipment downtime [14] - Electronic materials saw value-added sales of $79.7 million, up 2% from the prior year and up 7% organically, with EBITDA margins reaching a record 27.1% [15][16] - Precision Optics experienced value-added sales of $27.1 million, up 21% year-over-year, returning to double-digit EBITDA margins [16][17] Market Data and Key Metrics Changes - Semiconductor sales, excluding China, increased by 7% year-to-date, with high-performance memory applications growing over 30% [7] - The defense market saw record bookings up roughly 40% year-to-date, with about $150 million in RFQs being worked on [10] - The commercial space sector has seen a fivefold increase in sales over three years, driven by macro trends in AI and connectivity [11] Company Strategy and Development Direction - The company is focusing on high-growth markets such as semiconductor, defense, space, and energy, with a strong order book and improved operational performance expected to drive growth [6][11] - Strategic partnerships, such as with Kairos Power and Commonwealth Fusion Systems, are aimed at expanding into new energy solutions [9][25] - The company aims to achieve midterm target margins of 23% and is actively addressing operational reliability issues in Performance Materials [14][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in finishing 2025 positively, driven by strong order rates and market demand [11][18] - There is uncertainty regarding the impact of geopolitical tensions, particularly concerning China, which has seen a 20% year-over-year decline in business [71][87] - The company anticipates continued growth in high-demand sectors, despite challenges in the automotive market [56][44] Other Important Information - The company ended the quarter with a net debt position of approximately $441 million and authorized a new $50 million stock repurchase program [17] - Free cash flow is expected to be roughly 70% of adjusted net income, with strong cash generation year-to-date [17] Q&A Session Summary Question: Why didn't the company narrow the full-year outlook range? - Management cited uncertainty around China and potential impacts from the government shutdown as reasons for maintaining the range [24] Question: What financial impact is expected from the new agreement with Commonwealth Fusion Systems? - Initial shipments are expected to contribute a few million this year, with a more significant annualized run rate anticipated next year [25][27] Question: What is the nature of the equipment downtime in Performance Materials? - The downtime was due to issues with equipment in the largest plant, but it has been resolved, and the company expects to catch up on sales in Q4 [35][36] Question: What are the expectations for 2026 growth? - Management is optimistic about growth in key markets, despite challenges in China, and expects to leverage high-growth opportunities [44][46] Question: How is the company addressing operational reliability? - The company is focused on capital improvements and maintenance to minimize future disruptions in Performance Materials [39][40] Question: What is the expected impact of tariffs on financial results? - The China business is down about 20% year-over-year, with some tariff impacts being manageable through pricing strategies [70][71] Question: Will beryllium be stockpiled by the government? - With increased U.S. defense spending, there is a likelihood of increased usage of beryllium, and the company is prepared to meet that demand [95][96]

Financial Data and Key Metrics Changes - The company reported a total sales decline of 4% and a 3% decline in the U.S. market, with unit volumes remaining subdued but achieving double-digit pricing gains on new products [4][5] - Gross margins improved by 130 basis points to 27.5%, with ongoing initiatives aimed at exceeding 30% in the long term [4][5] - Record cash flow of $355 million was generated in the third quarter, with a strong balance sheet and no debt [5][6] Business Line Data and Key Metrics Changes - Non-equipment sales, which include parts and supplies, accounted for over 20% of revenues, with parts alone making up 8% [15] - The company is focusing on enhancing sales in the non-equipment market, which currently represents roughly 30% of total sales [8] Market Data and Key Metrics Changes - E-commerce penetration has grown to 34% of total sales, reaching up to 60% to 70% in certain U.S. markets [7] - The number of contractors and technicians using the mobile app has increased by 18%, totaling 72,000 users [7] Company Strategy and Development Direction - The company is investing in innovation and technology to enhance competitive positioning, including the development of new technology for institutional customers and the use of AI for operational efficiency [8] - There is a focus on improving inventory turns and cash flow, with a target of reducing inventory by $500 million by year-end [55][57] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term fundamentals of the industry despite current volatility, expecting improvements as the product transition concludes [4][5] - The company is preparing for potential acquisition opportunities due to its strong financial position, with a focus on maintaining flexibility in capital allocation [45] Other Important Information - The transition to next-generation equipment with A2L refrigerants is largely complete, affecting approximately 55% of products sold [3][4] - The company is experiencing a fluid market environment, with varying demand across different regions [26][39] Q&A Session Summary Question: What is the dynamic between repair and replace in the current market? - Management indicated that both repair and replace are occurring, with geographic differences influencing consumer behavior [12][14] Question: How does the company view the recent distributor movement reported by Carrier? - Management acknowledged the softness in demand but noted that their experience shows a mid-single-digit decline in revenue, which is not as severe as reported by others [17][33] Question: What is the outlook for inventory levels by year-end? - Management aims to improve inventory turns and expects to end the year with inventories near historical levels [50][55] Question: Is there a plan for aggressive share repurchase given the current stock valuation? - Management is considering using cash for acquisitions rather than share repurchases, given the potential opportunities in the market [45] Question: What are the trends in customer behavior regarding product mix? - There has been a shift towards lower-tier products, but the company is also seeing success in selling higher efficiency systems through its OnCall Air platform [80][81]

Financial Data and Key Metrics Changes - ILPT reported third-quarter normalized FFO of $17.4 million or $0.26 per share, representing a 26% increase sequentially and a 116% increase year-over-year [11] - Same property cash basis NOI increased by 3% compared to the same period last year, supported by strong renewal activity and rent growth [5] - Interest expense decreased by $4.4 million compared to the second quarter of 2025, totaling $63.5 million, due to a $1.16 billion fixed-rate debt refinancing completed in June [11] Business Line Data and Key Metrics Changes - The company completed 836,000 sq ft of leasing during the third quarter, with renewals accounting for 70% of the activity [7] - The weighted average rental rates for the new leases were 22% higher than prior rates for the same space [7] - The leasing pipeline now exceeds 8 million sq ft, with anticipated average roll-ups in rent of 20% on the mainland and 30% in Hawaii [10] Market Data and Key Metrics Changes - ILPT's consolidated occupancy rate was 94.1%, outperforming the U.S. industrial average by 150 basis points [7] - Over 76% of annualized revenues come from investment-grade rated tenants or secure Hawaii land leases [6] Company Strategy and Development Direction - The company is focused on addressing lease expirations in 2026 and 2027 while evaluating opportunities to improve its balance sheet and reduce leverage [7][10] - ILPT has identified three properties for sale totaling 867,000 sq ft, anticipating a combined sales price of approximately $55 million [8] Management's Comments on Operating Environment and Future Outlook - Management noted that despite macroeconomic and tariff uncertainties, the industrial real estate sector remains resilient, driven by e-commerce growth and reshoring initiatives [4] - For the fourth quarter of 2025, normalized FFO is expected to be between $0.27-$0.29 per share, excluding incentive fees [14] Other Important Information - The company recognized a $6.1 million impairment charge on one of the properties held for sale [12] - ILPT ended the quarter with cash on hand of $83 million and restricted cash of $95 million, with a net debt-to-total assets ratio of 69.3% [12] Q&A Session Summary Question: Guidance on incentive fees - Management indicated that a full-year incentive fee of $6.3 million would be recorded, with less than $2 million expected in Q4 [16][18] Question: GAAP rent increase on mainland assets - Management explained that a specific deal with the United States Postal Service drove down the GAAP rent increase to 1.8% [23][24] Question: Disposition opportunities in 2026 - Management stated that they are constantly evaluating the portfolio and may sell more properties in 2026, particularly within the Mountain joint venture [27] Question: Update on leasing in Indianapolis - Management reported optimism with three proposals out in Indianapolis, expecting potential leasing in the first half of next year [30] Question: Leasing progress in Hawaii - Management mentioned ongoing diligence with a full-site user prospect in Hawaii, hopeful for a lease [34] Question: Overall leasing and renewal outlook for 2026 - Management confirmed good progress on 2026 and 2027 expirations, with many signed LOIs or active lease negotiations [35]

Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q3 2025 was reported at $1.74, which is $0.04 above the forecast and $0.02 above market consensus [5][37] - The midpoint of the earnings guidance for the full year 2025 was raised by $0.03, now projected at $6.89 to $6.92 per share [5][39] - Occupancy in the same property pool increased by 20 basis points from the previous quarter, reaching 86.6% [21][37] Business Line Data and Key Metrics Changes - Over 1.5 million square feet of leasing was completed in Q3 2025, a 39% increase compared to Q3 2024 and 130% of the last five-year average for the same quarter [6][5] - Year-to-date leasing activity totaled 3.8 million square feet, which is 14% greater than the first three quarters of 2024 [6] - The total portfolio percentage leased for the quarter was 88.8%, a decline of 30 basis points, but an increase of 10 basis points from June 30 [22] Market Data and Key Metrics Changes - Office transaction volume in private markets reached $12.9 billion in Q3 2025, up 6% from Q2 2025 and 55% from Q3 2024 [8] - Direct vacancy for premier workplaces in key markets is 11.7%, which is 22% lower than the broader market [10] - The overall mark-to-market on leases signed in Q3 was up almost 7%, with notable increases in Boston and New York [24] Company Strategy and Development Direction - The company aims to sell 27 non-strategic assets for approximately $1.9 billion by the end of 2027, with 23 transactions either closed or underway totaling roughly $1.25 billion in estimated net proceeds [7][8] - Focus on increasing portfolio concentration of premier workplace assets in core gateway markets, with a strategy to reallocate capital to high-quality developments [10][11] - Plans to grow FFO through new development, particularly in multifamily projects, while being selective in office developments due to market conditions [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are growing and utilizing their spaces more intensively, leading to positive leasing market conditions [16] - The company expects to achieve a 200 basis point increase in occupancy by the end of 2026, supported by a strong leasing pipeline [51][68] - The overall economic environment is improving, with debt and equity investors becoming more constructive on the office sector [16] Other Important Information - The company recorded $212 million in impairments related to assets part of the strategic sales program [38] - The debt markets have improved, allowing the company to successfully access both secured and unsecured markets, including a $1 billion issuance of exchangeable notes [34][36] Q&A Session Summary Question: Thoughts on reallocating capital into premier locations and smaller markets like Seattle and LA - Management acknowledged that LA and Seattle are smaller markets with weaker leasing conditions and currently do not see development opportunities in those areas [46] Question: Confidence level regarding occupancy increases in 2026 - Management expressed confidence in achieving a 200 basis point increase in occupancy by the end of 2026, supported by ongoing leasing activity [51] Question: Recovery in San Francisco and Salesforce's investment impact - Management noted that AI demand is focused on low-rise buildings rather than high-rise, and Salesforce's commitment is seen as positive for job growth and office demand [54][58] Question: Percentage of pre-pandemic leases still to be addressed - Management indicated that a significant portion of the portfolio consists of long-term leases, and most growth is coming from existing clients expanding their space [63][65] Question: Addressing vacancy and occupancy build - Management stated that projections are based on annual expectations, with confidence in achieving occupancy increases driven by current leasing activity [68]

OneSpaWorld (NasdaqCM:OSW) Q3 2025 Earnings Call October 29, 2025 10:00 AM ET Company ParticipantsLeonard Fluxman - CEO and Executive ChairmanSteve Wieczynski - Managing DirectorStephen Lazarus - President, COO and CFOAllison Malkin - PartnerSharon Zackfia - Partner and Head of Consumer Equity ResearchConference Call ParticipantsAssia Georgieva - AnalystGregory Miller - Stock AnalystDrew May - Research AnalystMax Rakhlenko - Equity Research AnalystOperatorGood day and welcome to the OneSpaWorld third quarte ...

Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q3 2025 was $1.74, which is $0.04 above the forecast and $0.02 above market consensus [5][38] - The midpoint of the earnings guidance for the full year 2025 was raised by $0.03, now projected at $6.89-$6.92 per share [5][40] - Occupancy in the same property pool increased by 20 basis points from the previous quarter, reaching 86.6% [21][38] Business Line Data and Key Metrics Changes - Over 1.5 million sq ft of leasing was completed in Q3 2025, a 39% increase compared to Q3 2024 and 130% of the last five-year average for the same quarter [6][5] - Year-to-date leasing activity reached 3.8 million sq ft, which is 14% greater than the first three quarters of 2024 [6] - The total portfolio percentage leased for the quarter was 88.8%, a decline of 30 basis points, but an increase of 10 basis points from June 30 [22] Market Data and Key Metrics Changes - S&P 500 earnings have been growing for nine consecutive quarters, with a projected growth of around 11%-12% for 2025 [6] - Office transaction volume in private markets improved, with significant office sales reaching $12.9 billion in Q3 2025, up 6% from Q2 and 55% from Q3 2024 [8] - Direct vacancy for premier workplaces in key markets is 11.7%, which is 22% lower than the broader market [10] Company Strategy and Development Direction - The company aims to lease space and grow occupancy, with a focus on premier workplace assets in core gateway markets [5][10] - A strategic goal includes selling 27 non-strategic assets for approximately $1.9 billion by the end of 2027, with $1.25 billion in transactions already closed or underway [7][8] - The company is reallocating capital to premier workplace assets and has launched new developments in New York and Washington, DC [12][14] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are growing and utilizing their space more intensively, leading to positive leasing market conditions [16] - The company expects to see a 200 basis point increase in occupancy by the end of 2026, driven by active leasing and market conditions [52][70] - The overall market for office space is improving, with more availability of capital at better pricing [16][37] Other Important Information - The company recorded $212 million in impairments related to assets part of its strategic sales program [39] - The debt markets have improved, allowing the company to access financing at favorable terms, including a $1 billion unsecured exchangeable notes offering [35][37] Q&A Session Summary Question: How is the company approaching smaller markets like Seattle and LA? - Management indicated that there are no current development opportunities in LA or Seattle due to weaker leasing conditions, but they would consider acquisition opportunities if they arise [46][47] Question: What is the confidence level regarding occupancy increases in 2026? - Management expressed confidence in achieving a 200+ basis point increase in occupancy by the end of 2026, supported by ongoing leasing activity [51][52] Question: How is the company addressing the recovery in San Francisco? - Management noted that AI demand is primarily in low-rise buildings south of Mission Street, and they are seeing growth in leasing activity from technology companies [54][56]

Financial Data and Key Metrics Changes - The company achieved all-time high EBITDA margins of 27% in electronic materials, reflecting improved cost structure and operational performance [5][6] - Sales increased by approximately 1% year-over-year, with adjusted earnings per share at $1.41, flat compared to the prior year and up 3% sequentially [5][13] - Adjusted EBITDA was $55.5 million, down 2% year-over-year, primarily due to lower volume from equipment downtime in Performance Materials [14] Business Line Data and Key Metrics Changes - **Performance Materials**: Value-added sales were $157.1 million, down 4% year-over-year due to equipment downtime, with adjusted EBITDA at $38 million, or 24.2% of value-added sales, down 18% compared to the prior year [12][14] - **Electronic Materials**: Value-added sales were $79.7 million, up 2% from the prior year and up 7% organically, with EBITDA margins reaching a record 27.1%, up 38% from the prior year [15][16] - **Precision Optics**: Value-added sales were $27.1 million, up 21% year-over-year, with adjusted EBITDA at $3.2 million, or 11.8% of value-added sales, marking a significant margin expansion [16][17] Market Data and Key Metrics Changes - The semiconductor market is recovering, with sales into high-performance memory applications increasing more than 30% year-to-date, excluding China [7] - Defense bookings increased by approximately 40% year-to-date, with the company working on about $150 million of RFQs [10][42] - The commercial space sector has seen sales increase fivefold in three years, driven by macro trends in AI and connectivity [10][11] Company Strategy and Development Direction - The company is focusing on high-growth markets such as semiconductor, defense, space, and energy, with a strong order book and improved operational performance expected to drive growth [6][11] - Strategic partnerships, such as with Kairos Power and Commonwealth Fusion Systems, are aimed at expanding the company's footprint in new energy applications [9][28] - The company aims to achieve midterm target margins of 23% and is actively addressing operational reliability issues in Performance Materials [6][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in finishing 2025 positively, driven by strong order rates and operational improvements [11][18] - There is uncertainty regarding the impact of geopolitical tensions, particularly concerning the China market, which is down about 20% year-over-year [70][86] - The company anticipates continued growth in defense spending and energy markets, with a focus on maintaining strong relationships with customers [10][94] Other Important Information - The company ended the quarter with a net debt position of approximately $441 million and $214 million of available capacity on its credit facility [17] - A new $50 million stock repurchase program was authorized by the Board of Directors, although organic growth remains the top priority for capital allocation [17][60] Q&A Session Summary Question: Why did the company not narrow the full-year outlook range? - Management cited uncertainty around China and potential impacts from the government shutdown as reasons for maintaining the range [25] Question: What financial impact is expected from the new agreement with Commonwealth Fusion? - Initial shipments are expected to contribute a few million this year, with a more significant annualized run rate anticipated next year [26][28] Question: What is the nature of the equipment downtime in Performance Materials? - The downtime was primarily due to issues in the largest plant, but it has been resolved, and the company expects to catch up on sales in Q4 [35][36] Question: What are the expectations for 2026 growth? - Management expressed optimism about growth in key markets, despite challenges in the auto market and geopolitical pressures [40][42] Question: How is the company addressing operational reliability? - The company is focused on capital improvements and maintenance to minimize future disruptions in Performance Materials [38][39] Question: What is the expected impact of tariffs on financial results? - The China business is down about 20% year-over-year, with some impacts from tariffs on raw materials, but the focus remains on stabilizing the supply chain [69][70] Question: Will beryllium be stockpiled by the government? - Increased U.S. defense spending is expected to drive demand for beryllium, with active discussions ongoing to ensure supply [94][95]

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