Financial Data and Key Metrics Changes - In Q2, the company achieved adjusted earnings per share of $4.82, representing a 19% year-over-year increase [27] - Consolidated revenue grew by 7%, supporting a 60 basis points adjusted margin expansion and a 17% adjusted operating income growth [27] - Adjusted operating income increased by $231 million despite headwinds from global trade policy changes and other factors [27] Business Line Data and Key Metrics Changes - FedEx Express (FEC) revenue increased by 8% year-over-year, with adjusted operating income growing by 24% and adjusted operating margin expanding by 100 basis points [9][27] - FedEx Freight revenue declined by 2%, primarily due to lower average daily shipments, with adjusted operating income declining by $70 million [9][27] - B2B services contributed nearly half of the revenue growth, indicating a successful focus on high-value segments [22] Market Data and Key Metrics Changes - The company experienced high single-digit revenue growth and margin expansion despite external headwinds such as the grounding of the MD-11 fleet and weakness in the industrial economy [7] - International export volumes declined, particularly in the China to U.S. lane, but there was growth in U.S. international outbound revenue [18][19] Company Strategy and Development Direction - The company is on track to spin off FedEx Freight as a separately listed public company by June 1, 2026, with a strong belief in the value that will be unlocked from this separation [8][36] - A focus on digital transformation and AI adoption is being emphasized to enhance operational efficiency and customer service [14][15] - The company is prioritizing high-value segments such as B2B and healthcare to offset challenges from global trade policy changes [14][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges and maintain profitability, citing the resilience built into the network [7][16] - The adjusted EPS outlook for FY 2026 has been raised to $17.80-$19, reflecting strong operational execution and efficiency initiatives [30] - Management acknowledged the impact of the MD-11 groundings and other headwinds but remains optimistic about future performance [32][36] Other Important Information - The company is actively pursuing opportunities to monetize proprietary insights through strategic collaborations, such as with ServiceNow [15] - The company has closed over 150 facilities as part of its ongoing transformation efforts [14] Q&A Session Summary Question: Dynamics of capturing incremental volume share in the domestic U.S. package business - Management confirmed they are pleased with profitable market share growth and highlighted the focus on B2B strategies and rate discipline [39][40] Question: Breakdown of B2B revenue growth - Management indicated that the growth was a combination of new business acquisition and improved share of wallet, with strong performance from small business B2B [44][46] Question: Cost of service and Network 2.0 transformation - Management acknowledged that while there are additional costs associated with service improvements, they are committed to maintaining service quality and expect efficiency gains within three to six months [48][50] Question: LTL business and spin-off costs - Management clarified that a portion of the EBIT decline is due to separation costs, with ongoing costs related to the spin-off being one-time expenses [52][81] Question: MD-11 aircraft return to service - Management expects the MD-11 aircraft to return to service in Q4, with incremental costs anticipated in Q3 due to peak season demands [57][59] Question: Breakdown of the $600 million headwind in the second half - Management detailed that the headwind consists of softness in the LTL business, costs from the MD-11 grounding, and increased variable compensation [64][66] Question: Future growth prospects in the domestic parcel market - Management expressed confidence in maintaining growth in high-value segments despite potential competitive pressures from UPS [78]

Financial Data and Key Metrics Changes - Total company revenue for Q3 was $141.8 million, exceeding the high end of guidance [5][16] - Adjusted EBITDA was $28.7 million, representing a 20% margin, with GAAP net income improving to $13.7 million, up $24.2 million year over year [5][17] - Operating cash flow was $17.9 million, up over 200% year over year, reflecting strong execution and disciplined cost management [5][19] Business Line Data and Key Metrics Changes - QNX achieved record quarterly revenue of $68.7 million, a 10% year-over-year growth, driven by royalties and professional services [6][17] - Secure communications revenue was $67 million, exceeding guidance, with annual recurring revenue increasing to $216 million [10][11] - Licensing revenue was $6.1 million, in line with expectations, and adjusted EBITDA for the division was $5.3 million [14][18] Market Data and Key Metrics Changes - QNX is now powering over 275 million vehicles on the road, a 20 million increase year over year, indicating significant market presence [9] - The secure communications division demonstrated a dollar-based net retention rate of 92%, indicating strong customer retention [11] Company Strategy and Development Direction - The company is focusing on expanding its QNX business into automotive and general embedded markets, with strategic investments in go-to-market activities and partnerships [6][30] - The introduction of the QNX General Embedded Development Platform (GEDP) aims to accelerate time to market for developers, with positive feedback from customers [10] - The company is also targeting higher pricing per vehicle through a vehicle software platform co-developed with Vector, indicating a shift towards higher-value offerings [8][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of QNX, expecting revenue for Q4 to be in the range of $71-$77 million, setting another record [21][22] - The secure communications division is expected to see increased revenue in Q4, with guidance raised for the full fiscal year [22][23] - Management highlighted the importance of mission-critical software solutions during the U.S. government shutdown, indicating resilience in the business model [49] Other Important Information - The company repurchased $5 million worth of shares, totaling 8.8 million shares bought back this fiscal year, to offset potential dilution [20] - The company expects to generate over $80 million in cash in Q4, further strengthening its balance sheet [25] Q&A Session Summary Question: Investment needs in GEM opportunity for fiscal 2027 - Management indicated that investments will focus on go-to-market activities and partnerships to gain critical mass in key end markets [30] Question: Factors leading to luxury China EV win - Cost savings, weight savings, and superior software functionality were highlighted as key factors in winning the deal [32] Question: Progress towards vehicle platform award - Management noted significant focus on integrating QNX and middleware, with more updates expected at CES [34] Question: Trends in QNX growth rates - Management expressed optimism about double-digit growth and strong backlog conversion into revenue [40][42] Question: Future of Secusmart business - Management acknowledged a strong pipeline within Secure Communications and expressed confidence in converting it into solid performance [44][45] Question: Government shutdown impact - Management noted that mission-critical software solutions were less impacted by the shutdown than initially feared [49] Question: Robotics technology demand - Management indicated that QNX technology is well-suited for high-performance robotics applications, with more details to be shared in the future [51]

Financial Data and Key Metrics Changes - Total company revenue for Q3 was $141.8 million, exceeding the high end of guidance [5][16] - Adjusted EBITDA was $28.7 million, representing a 20% margin, with GAAP net income improving to $13.7 million, up $24.2 million year over year [5][17] - Operating cash flow was $17.9 million, up over 200% year over year [19] Business Line Data and Key Metrics Changes - QNX achieved record quarterly revenue of $68.7 million, a 10% year-over-year growth [6][17] - Secure Communications revenue was $67 million, also exceeding guidance, with annual recurring revenue increasing to $216 million [11][18] - Licensing revenue was $6.1 million, in line with expectations [14] Market Data and Key Metrics Changes - QNX is now powering over 275 million vehicles, a 20 million increase year over year [9] - The automotive sector saw significant design wins with major European and Asian OEMs for ADAS and cockpit domains [7][9] Company Strategy and Development Direction - The company is focusing on expanding its QNX business into automotive and general embedded markets, with a strong emphasis on partnerships and go-to-market strategies [30] - Investment in certifications like BSI for UEM and FedRAMP High for AtHoc is strengthening the portfolio's position in government secure communication strategies [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges posed by the U.S. government shutdown, indicating that mission-critical software solutions were less impacted [49] - The outlook for Q4 includes expected revenue for QNX in the range of $71-$77 million, with overall company revenue guidance raised to $531-$541 million for the full fiscal year [21][24] Other Important Information - The company repurchased $5 million worth of shares during the quarter, totaling 8.8 million shares bought back this fiscal year [20] - The company plans to showcase new developments at CES in January [62] Q&A Session Summary Question: Investment needs in GEM opportunity for fiscal 2027 - Management indicated that investments will focus on go-to-market activities and partnerships to accelerate market entry [30] Question: Factors leading to the luxury China EV win - Cost savings, weight savings, and product performance were highlighted as key factors [32] Question: Progress towards vehicle platform award - Management noted significant focus on technology integration with partners and expects updates at CES [34] Question: Trends in QNX growth rates - Management expressed optimism about double-digit growth and backlog conversion into revenue [40][42] Question: Future of Secusmart business - A strong pipeline was noted, with potential for growth driven by defense spending [43][45] Question: Government shutdown impact - Management indicated that mission-critical solutions were less affected than initially feared [49] Question: Robotics technology applications - Management discussed the suitability of QNX for high-performance robotics applications [51] Question: Pricing opportunities for vehicle software platform - Management explained that OEMs are seeking efficient software integration, which presents cost-saving opportunities [57] Question: Secure Comms business with Canadian government - Management highlighted ongoing discussions and a multi-year agreement with the Canadian government [59][60]

Financial Data and Key Metrics Changes - In Q2, the company achieved a 7% year-over-year revenue growth, with adjusted earnings per share (EPS) increasing by 19% to $4.82 [25][29] - Adjusted operating income grew by 17%, supported by margin expansion of 60 basis points [25][29] - The company raised its adjusted EPS outlook for the fiscal year to a range of $17.80-$19, reflecting strong operational execution and revenue quality actions [8][29] Business Line Data and Key Metrics Changes - FedEx Express (FEC) revenue increased by 8% year-over-year, with adjusted operating income growing by 24% [7][25] - FedEx Freight revenue declined by 2%, primarily due to lower average daily shipments, with adjusted operating income decreasing by $70 million [17][26] - B2B services contributed nearly half of the revenue growth, with significant wins in healthcare and automotive sectors [20][17] Market Data and Key Metrics Changes - International export volumes declined, particularly on the China to U.S. lane, but were partially offset by growth in U.S. international outbound revenue [18][19] - The company reduced its trans-Pacific capacity by about 25% year-over-year and decreased third-party capacity by nearly 35% [9][10] - The company is experiencing a challenging environment in the LTL sector, consistent with broader industry trends [26][18] Company Strategy and Development Direction - The company is on track to spin off FedEx Freight as a separately listed public company by June 1, 2026, with a strong belief in the value that will be unlocked from this separation [6][34] - A focus on high-value segments, particularly B2B and healthcare, is driving growth and offsetting headwinds from global trade policy changes [13][20] - The company is scaling AI adoption across its workforce to enhance operational efficiency and customer service [14][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate external headwinds, including the grounding of the MD-11 fleet and global trade policy changes [5][16] - The company anticipates continued revenue momentum in the second half of the fiscal year, despite challenges in the LTL market and the impact of MD-11 groundings [29][31] - Management emphasized the importance of maintaining high service levels and operational integrity during peak season [11][12] Other Important Information - The company has closed more than 150 facilities as part of its ongoing transformation efforts [12] - Capital expenditures for the fiscal year are targeted at $4.5 billion, focusing on fleet maintenance and facility enhancements [27] - The company plans to implement a fuel surcharge adjustment to mitigate costs associated with maintaining service quality [23] Q&A Session Summary Question: Dynamics of volume share and pricing in domestic U.S. business - Management confirmed capturing profitable market share and emphasized a focus on B2B strategies and rate discipline [37][38] Question: Breakdown of B2B revenue growth - Management indicated that B2B contributed nearly half of the revenue growth, driven by new business acquisition and revenue quality strategies [39][40] Question: Cost of service and Network 2.0 transformation - Management acknowledged additional costs associated with service improvements but emphasized the long-term benefits of quality service [41][42] Question: Impact of spin-off costs on financial outlook - Management clarified that a portion of the EBIT decline is due to separation costs, with ongoing costs being a factor as well [43][45] Question: MD-11 aircraft return to service - Management expects the MD-11 aircraft to return to service in Q4, with incremental costs anticipated in Q3 due to peak season [46][47] Question: Breakdown of $600 million headwind in the second half - Management detailed the components of the headwind, including LTL softness, MD-11 grounding costs, and increased variable compensation [48][49] Question: Future growth prospects in the domestic parcel market - Management expressed confidence in maintaining growth in high-value segments, viewing competitive threats as manageable [55][56] Question: Consolidation in the LTL sector - Management noted potential consolidation in the truckload business, which could benefit the LTL sector in the long run [58][60]

Financial Data and Key Metrics Changes - Total company revenue for Q3 2026 was $141.8 million, exceeding the high end of guidance, with adjusted EBITDA at $28.7 million, representing a 20% margin [5][16] - GAAP net income improved by $24.2 million year over year to $13.7 million, marking the third consecutive quarter of GAAP profitability [5][17] - Operating cash flow was $17.9 million, up over 200% year over year, reflecting strong execution and disciplined cost management [5][19] Business Line Data and Key Metrics Changes - QNX achieved record quarterly revenue of $68.7 million, a 10% year-over-year growth, driven by royalties and professional services [6][17] - Secure communications revenue was $67 million, exceeding guidance, with annual recurring revenue (ARR) increasing to $216 million [11][12] - Licensing revenue was $6.1 million, in line with expectations [15] Market Data and Key Metrics Changes - QNX is now powering over 275 million vehicles on the road, a 20 million increase year over year, indicating significant market presence [10] - The secure communications division demonstrated resilience during the U.S. government shutdown, achieving growth despite challenges [12][50] Company Strategy and Development Direction - The company is focusing on expanding its QNX business, particularly in the automotive sector and general embedded space, with strategic investments in go-to-market activities and partnerships [6][31] - There is an emphasis on enhancing safety solutions in the Chinese market, responding to increased demand for safety certifications [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of QNX, anticipating continued double-digit growth and strong profit margins [21][42] - The company is optimistic about the secure communications division, with a strong pipeline and potential for growth driven by defense spending [44][60] Other Important Information - The company is repurchasing shares as part of its strategy to enhance shareholder value, with $5 million allocated for buybacks in Q3 [20] - Guidance for Q4 revenue is set between $138 to $148 million, with adjusted EBITDA expected to be between $22 and $32 million [23] Q&A Session Summary Question: Investment in GEM opportunity for fiscal 2027 - Management indicated that investment will focus on go-to-market activities and partnerships to accelerate market entry [30] Question: Luxury China EV win details - The win was attributed to cost savings, weight savings, and superior software functionality, with potential for more success in China [32][33] Question: QNX growth trend and fiscal 2027 outlook - Management noted strong backlog and momentum, with guidance for fiscal 2027 to be provided in Q4 [40][42] Question: Secusmart business outlook - There is a strong pipeline within Secure Communications, and management is optimistic about converting this into solid performance in fiscal 2027 [44][45] Question: Government shutdown impact - Management navigated the shutdown effectively, with mission-critical solutions remaining a priority for government clients [50] Question: Robotics technology application - QNX technology is being utilized in various robotics applications, with a focus on high compute and performance needs [52]

Financial Data and Key Metrics Changes - Total revenues for fiscal 2025 were over $6.2 billion, with net income of nearly $430 million, resulting in a 10% increase in book value per share [5][6] - In Q4 2025, total revenues were just under $1.7 billion, with Adjusted Diluted Earnings Per Share of $1.92 [7][21] - Housing revenues decreased by 15% in Q4 2025 compared to the previous year, with an average selling price decline of 7% to $466,000 [21][22] Business Line Data and Key Metrics Changes - The company delivered 3,619 homes in Q4 2025, exceeding guidance due to reduced average build times [21] - Housing gross profit margin was 17%, with an Adjusted Housing Gross Profit Margin of 17.8%, reflecting a 310 basis point decrease due to pricing pressure and higher land costs [22] - The company achieved a 27% backlog of the midpoint of its full-year delivery target for 2026, down from 34% at the start of 2025 [11] Market Data and Key Metrics Changes - The cancellation rate was stable at 18%, supporting net orders at an average absorption pace of three per month per community [10] - The company produced 2,414 net orders in Q4, indicating a consistent approach to pricing amid market challenges [8] Company Strategy and Development Direction - The company is focused on increasing the percentage of Built-to-Order (BTO) homes from 57% in Q4 2025 to historical levels of 70% or higher [12][13] - Plans to open between 35 and 40 new communities in Q1 2026, expecting a peak community count during the spring selling season [12] - The company aims to maintain a disciplined approach to capital allocation while returning over $600 million to shareholders in fiscal 2025 [6][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, citing favorable demographics and structural undersupply as key demand drivers [7][8] - The company anticipates improved margins throughout 2026 as it shifts its sales mix towards BTO homes [25][60] - Management acknowledged challenges such as low consumer confidence and elevated mortgage rates impacting buyer decisions [8][10] Other Important Information - The company owned or controlled approximately 65,000 lots at year-end, with a focus on markets positioned for long-term growth [16] - A new $1.2 billion revolving credit facility was established to enhance liquidity, with total liquidity of $1.43 billion at quarter-end [29] Q&A Session Summary Question: Can you help understand the conservatism in the gross margin guide? - Management noted that some inventory needs to be cleared, impacting margins due to higher costs associated with older specs [32][33] Question: What are the expectations for the BTO mix in Q1 and the full year? - The BTO mix is expected to remain in the 57%-60% range for Q1, with a goal to reach at least a 70% ratio by year-end [57][58] Question: How is the pricing strategy adapting to competitive pressures? - The company has maintained stable pricing and is focused on increasing the BTO mix, which is expected to improve margins over time [50][51] Question: What is the outlook for capital returns to shareholders in fiscal 2026? - The company plans to continue its share repurchase program, targeting between $50 million and $100 million in the first quarter [75]

Financial Data and Key Metrics Changes - The company ended fiscal 2025 with cash and cash equivalents of $203.3 million, an increase of approximately $175 million from the end of fiscal 2024, primarily driven by successful equity capital raises [25] - Fiscal 2025 loss from operations was $46.2 million, an increase from the previous year due to higher general and administrative expenses and R&D expenses [26] - The net cash used in operating activities increased to $19.6 million, while net cash used in investing activities rose to $17.5 million, reflecting increased R&D and facility acquisitions [27] Business Line Data and Key Metrics Changes - The company made significant progress in advancing the KRONOS MMR Energy System, including securing strategic collaborations and achieving important NRC milestones [10] - The acquisition of Global First Power, rebranded as True North Nuclear, marked progress in resuming licensing activities in Canada [11] Market Data and Key Metrics Changes - The demand for reliable baseload power is projected to increase significantly, with electricity usage expected to grow by 5%-6% annually over the next five years, driven largely by AI data centers [5][6] - There is a growing global commitment to triple nuclear capacity by 2050, indicating a long-term trend in nuclear energy growth [8] Company Strategy and Development Direction - The company aims to position itself at the center of a global nuclear renaissance, focusing on the development of micro-reactors to meet the increasing demand for clean energy [4] - The strategy includes vertical integration to de-risk the nuclear fuel supply chain, with a focus on enrichment and conversion capabilities [23][24] Management's Comments on Operating Environment and Future Outlook - Management highlighted the bipartisan policy support for nuclear energy in the U.S. and the favorable regulatory environment as key drivers for future growth [9] - The company expects to submit a construction permit application for the U of I project in Q1 2026, with a turnaround time from the NRC anticipated to be less than 12 months [32] Other Important Information - The company raised over $600 million since its May 2024 IPO, indicating strong institutional support and financial health [11] - The KRONOS MMR is designed to provide off-grid or behind-the-meter power, addressing the constraints faced by large energy users [15][20] Q&A Session Summary Question: Update on the U of I site and NRC permit application timeline - Management confirmed that the drilling was completed on schedule and the construction permit application is on track for Q1 next year, with an expected turnaround time from the NRC of less than 12 months [31][32] Question: Vertical integration strategy objectives for 2026 - The company aims to centralize reactor core manufacturing while recognizing the need for specialized components that may require external partnerships [35][36] Question: Progress on the Canadian project and licensing - The company is focused on site selection and expects to announce the site in the first half of next year, with plans to expedite the licensing process by leveraging previous work done at the site [45][46] Question: Scope of the AFWERX direct-to-phase two project - The AFWERX program aims to provide self-sufficient power solutions for military bases, with potential for mass production of reactor systems once the program advances [48][50] Question: State-level licensing opportunities - Management discussed the potential for states to take over licensing for certain facilities, which could expedite the process and reduce the NRC's workload [54][57] Question: Differences between the test reactor at UIUC and commercial reactors - The UIUC reactor will be a full-scale system, closely matching the commercial reactor design, with minor optimizations expected for commercial units [58][59]

Financial Data and Key Metrics Changes - Fiscal 2025 recorded revenue of $1.39 billion, a 13% increase from the previous year, driven by a 7% volume growth in avocados [7][17] - Fourth quarter revenue totaled $319 million, down 10% year-over-year due to a 27% decrease in average per-unit avocado sales prices [17] - Adjusted net income for the quarter was $22.2 million, or $0.31 per diluted share, compared to $19.6 million, or $0.28 per diluted share last year [18] - Adjusted EBITDA increased 12% to a record $41.4 million compared to $36.9 million last year [19] Business Line Data and Key Metrics Changes - The marketing and distribution segment achieved 7% avocado volume growth for the full year and 13% in the fourth quarter [9][20] - International farming segment sales increased 97% to $59.7 million, with segment-adjusted EBITDA more than tripling to $8.4 million [21] - Blueberry net sales increased 16% to $36.5 million, although segment-adjusted EBITDA decreased due to lower per-unit margins [22] Market Data and Key Metrics Changes - The North American market showed stable growth, while Europe and Asia experienced significant volume growth, with European volume sold increasing by 40% [8][10] - The company's international penetration was bolstered by consistent supply from Peruvian products, allowing for deeper relationships with large retailers [10] Company Strategy and Development Direction - The company is focused on leveraging its integrated global platform to drive growth and enhance free cash flow, with a significant emphasis on international expansion [15][16] - The management transition is seen as a strategic move to capitalize on the company's strong foundation and drive future growth [3][4] - The company aims to increase household penetration of avocados from approximately 70% to 73%-75% over the next couple of years [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate pricing volatility and supply disruptions, highlighting the team's execution capabilities [9][15] - The outlook for Fiscal 2026 anticipates a 10% increase in avocado industry volumes, although pricing is expected to be lower year-over-year [24] Other Important Information - The company reduced long-term debt by approximately $18 million during Fiscal 2025, resulting in a 25% decline in interest expense [23] - Capital expenditures for the year were $51.4 million, with expectations to decrease to approximately $40 million in Fiscal 2026 [24] Q&A Session Summary Question: Outlook for mangoes and potential growth - Management indicated that the growth trajectory for mangoes will be similar to previous years, focusing on market share penetration and global sourcing initiatives [28][29] Question: Risks in achieving free cash flow growth - Management highlighted strong operating performance as the primary driver of cash flow, with a focus on maintaining flexibility in capital expenditures [30][31] Question: Capital allocation with lower CapEx - The company is prioritizing growth and exploring various opportunities to maximize shareholder value, including potential share buybacks [32][33] Question: Changes in strategy with management transition - Management confirmed that the strategic direction remains consistent, with a focus on growth and capital deployment over the next five to ten years [34][36] Question: Insights on CapEx and growth opportunities - Approximately $20 million of the upcoming $40 million CapEx is expected to be growth-oriented, with investments in both farming operations and commercial expansion [41][42] Question: Household penetration goals for avocados - Management aims to increase household penetration to 73%-75% over the next couple of years, leveraging lower pricing environments to drive consumer engagement [47][52]

Financial Data and Key Metrics Changes - For Q2 fiscal 2026, revenues increased by 1% on a reported basis and were flat on a currency-neutral basis, with Nike Direct down 9% and Nike Digital down 14% [24][21] - Gross margins declined by 300 basis points to 40.6% primarily due to increased product costs from higher tariffs and inventory obsolescence in Greater China [24][23] - Earnings per share was reported at $0.53, with inventory decreasing by 3% year-over-year [25][24] Business Line Data and Key Metrics Changes - The wholesale segment grew by 8%, while classic footwear franchises declined over 20% year-over-year, contributing to a top-line headwind of approximately $550 million [24][21] - Running grew by over 20% for the second consecutive quarter, with significant growth across all channels, including Nike Direct [14][21] - Nike's North America revenue grew by 9%, with wholesale growing by 24%, while Nike Direct declined by 10% [26][25] Market Data and Key Metrics Changes - In North America, gross margins only declined by 330 basis points despite a 520 basis point impact from new U.S. tariffs, indicating effective management of the marketplace [28][27] - Greater China saw a revenue decline of 16%, with Nike Direct down 18% and wholesale down 15% [30][29] - EMEA revenue was down 1%, with a decline in Nike Direct and Nike Stores, while wholesale remained flat [29][28] Company Strategy and Development Direction - The company is focused on executing "Win Now Actions" to reposition its business and drive growth through a diversified product portfolio and enhanced consumer connections [5][6] - The "Sport Offense" strategy aims to leverage athlete-centered innovation across various channels to drive growth [5][6] - The company is committed to returning to double-digit EBIT margins, with a focus on improving operational efficiency and managing costs [19][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the recovery will not be linear, with different brands and geographies recovering at varying speeds [22][21] - There is confidence in the long-term potential of the China market, despite current challenges, with plans to reset the approach to better align with local consumer preferences [11][30] - The company expects Q3 revenues to be down low single digits, with modest growth anticipated in North America [33][34] Other Important Information - The company is implementing changes in leadership to enhance decision-making and strategy execution across geographies [9][10] - Significant investments are being made in marketing and product innovation to support the recovery and growth strategy [19][20] Q&A Session Summary Question: Can you elaborate on the turnarounds and opportunities remaining? - Management highlighted that the path to sustainable growth is through "Win Now Actions" and the "Sport Offense," with North America showing strong growth and a healthier base for future growth [44][45] Question: What is the timeline for returning to double-digit EBIT margins? - Management stated that improving margins is a top priority, with a clear path back to double-digit EBIT margins through growth and operational efficiency [57][58] Question: How deep is the reset necessary in China? - Management indicated that a reset is necessary to return to a premium brand position, with ongoing actions to clean up the marketplace and improve retail presentation [61][62]

Financial Data and Key Metrics Changes - Total revenues for fiscal 2025 exceeded $6.2 billion, with net income of nearly $430 million, resulting in a 10% increase in book value per share [5][6][24] - In Q4 2025, total revenues were just under $1.7 billion, with adjusted diluted earnings per share of $1.92 [7][21] - Housing revenues decreased by 15% in Q4 2025 compared to the previous year, with an average selling price decline of 7% to $466,000 [21][22] Business Line Data and Key Metrics Changes - The company delivered 3,619 homes in Q4 2025, exceeding guidance due to reduced average build times [21] - Housing gross profit margin was reported at 17%, with an adjusted margin of 17.8% after excluding inventory-related charges [22] - The company repurchased 13% of its outstanding shares in 2025, enhancing earnings and book value per share [7][30] Market Data and Key Metrics Changes - The cancellation rate remained stable at 18%, supporting net orders at an average absorption pace of three per month per community [10] - The company experienced a shift towards built-to-order (BTO) homes, with expectations to increase the BTO mix from 57% in Q4 2025 to historical levels of 70% or higher [12][57] Company Strategy and Development Direction - The company aims to enhance its built-to-order sales strategy, which is expected to yield higher margins as the year progresses [20][25] - Plans to open between 35 and 40 new communities in Q1 2026, anticipating a peak community count during the spring selling season [12][29] - The company is focused on maintaining a disciplined approach to pricing, avoiding aggressive sales tactics during slower periods [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, citing favorable demographics and structural undersupply as key demand drivers [7][8] - The company acknowledged challenges such as low consumer confidence and elevated mortgage rates, which are constraining the pool of actionable buyers [8][10] - Management expects to provide more visibility on operating and gross margins as the spring selling season approaches [9][24] Other Important Information - The company invested $665 million in land acquisition and development in Q4 2025, with a focus on developing owned land [18][29] - The company maintained a strong balance sheet with total liquidity of $1.43 billion at year-end 2025 [29] - A new $1 billion share repurchase authorization was approved to support the capital return strategy [30] Q&A Session Summary Question: Can you help understand the conservatism in the gross margin guide? - Management indicated that some inventory needs to be cleared, impacting margins due to higher costs associated with older specs [32][33] Question: Why exclude accelerated stock compensation from adjusted EPS? - The exclusion was made to provide a like-for-like number for better comparison, as the timing of the equity expense was significant [36][37] Question: What are the finished and under-construction specs at the end of the quarter? - The company reported about 1,700 homes in inventory, with over 1,000 at or near the finished stage [41][42] Question: How is the shift to BTO facilitated by new community openings? - New communities allow for a stronger focus on the built-to-order model without competing with existing specs, enhancing the value proposition [46][54] Question: What is the expectation for the BTO mix in the fiscal first quarter? - The BTO mix is expected to remain in the 57%-60% range for Q1, with a goal to reach at least a 70/30 ratio by the end of the year [58][59] Question: What are the assumptions required for potential impairment charges? - Management stated that a significant shift in community profitability would be needed to trigger larger impairment charges, with current evaluations showing no immediate concerns [68][71]