Financial Data and Key Metrics Changes - The company reported a 7% revenue growth in Q1, with adjusted earnings per share of $0.20, up 25% year-over-year [6][16] - Adjusted operating margin for Q1 was 5%, an increase of 110 basis points compared to the previous year, driven by The Americas which posted a 6.7% margin [6][17] - Gross margin continued to expand for the twelfth consecutive quarter, with a 170 basis points improvement in Q1 [13] Business Line Data and Key Metrics Changes - In The Americas, orders from large corporate customers grew, while there was a less than 1% decline in total orders compared to the prior year [6][19] - The international segment experienced a 1% organic revenue decline, with growth in India, the UK, and China offset by declines in Germany and France [17][20] - Orders in The Americas were split with one-third coming from education and government sectors, and two-thirds from large corporate and other vertical markets [25][26] Market Data and Key Metrics Changes - The Americas saw strong order growth from large technology customers, while education and government sectors faced declines due to changes in federal funding policies [7][12] - Internationally, growth was hindered by macroeconomic challenges in Germany and France, impacting small to mid-sized businesses [20] Company Strategy and Development Direction - The company is focused on leading the transformation of the workplace, particularly for large corporate customers [8][11] - Strategic pillars include expanding market reach, supporting education amidst funding uncertainties, and strengthening profitability through cost reduction efforts [12][13] - The company is prioritizing investments in strategic growth initiatives while navigating tariff and trade policy uncertainties [14][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum in large corporate customer investments, despite macroeconomic challenges [23][60] - The company anticipates continued strength in large corporate demand, driven by the need for workplace transformation [41][62] - Future guidance includes expectations for mid-single-digit organic revenue growth and expanded adjusted operating margins [32][33] Other Important Information - The company incurred $9 million in restructuring costs related to the exit of approximately 85 salaried employees [18] - Cash flow from operating activities showed a use of $141 million, primarily due to seasonal disbursements [19] Q&A Session Summary Question: Impact of education sector on orders - Management indicated that about one-third of orders in Q1 came from education and government, with the remaining two-thirds from corporate and other sectors [25][26] Question: Future order patterns in education - Education orders are expected to remain significant early in Q2 but will have less impact in the latter half of the year [27] Question: Pricing strategies and demand pull forward - A tariff recovery charge was implemented, leading to a pull forward of orders, but no significant orders were pulled from Q2 into Q1 [28][30] Question: Full year guidance and momentum - Management remains optimistic about mid-single-digit organic revenue growth, despite challenges in the education sector and international markets [31][32] Question: Profitability of international segment - The company is targeting consistent profitability in the international segment, with ongoing restructuring efforts [37] Question: Resilience of large corporate demand - Management noted that large corporate clients are investing in workplace transformation, reflecting a shift in work dynamics [40][62] Question: Conference room demand and future opportunities - There is significant opportunity to update the installed base of conference rooms, which have not kept pace with current technologies [48][49] Question: Gross margin expectations for Q2 - Guidance for Q2 gross margin is lower due to tariff impacts and expected declines in the education sector [50][51] Question: Future pricing increases - The company will continue to manage inflation through pricing increases if necessary, following historical patterns [56]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2025 was $87 million, slightly up from $86.5 million in the prior year quarter [4] - Earnings per share increased to $1.1 from $1.06 year-over-year [5][17] - Net sales decreased by $78 million or 9% year-over-year to $833 million, primarily due to lower direct selling prices [23] - Estimated pretax inventory holding gains were $20.8 million compared to losses of $3.4 million in the prior year quarter, a favorable swing of $24.2 million [20] Business Line Data and Key Metrics Changes - Automotive shipments increased by 5% year-over-year, contributing positively to overall performance [24] - Construction market volumes were down 5% year-over-year, consistent with historical fourth-quarter levels [26] - Agricultural market volumes decreased by 40% compared to the prior year quarter due to softness in agricultural equipment and increased competition [26] - Toll processing tons were down 11% year-over-year, impacted by various factors including customer decisions and the idling of a facility [27] Market Data and Key Metrics Changes - Market pricing for hot rolled coil started the year at just under $700 per ton, spiked to $950 per ton due to tariffs, and then fell to approximately $850 per ton [22] - The U.S. transformer market is expected to double over the next ten years, driven by electrification demand [9] Company Strategy and Development Direction - The company is focused on three strategic pillars: investments in electrical steel, margin-accretive growth through strategic CapEx and acquisitions, and base business improvements [7] - The acquisition of a 52% stake in CEDIM enhances the company's position in the European electric motor lamination market [10][30] - The company is embracing artificial intelligence to improve productivity and quality [13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment and ongoing uncertainty around tariffs [15] - The company is focused on improving processes and gaining market share despite headwinds [15] - Management believes the right strategy and strong customer relationships will drive future growth [15] Other Important Information - The company announced a quarterly dividend of $0.16 per share payable on September 26, 2025 [29] - Cash flow from operations was $54 million, with free cash flow of $8 million [28] Q&A Session Summary Question: How did the company achieve a richer mix of direct tons and stronger metal spreads? - Management noted that Q4 is typically the strongest quarter, and while volume was flat year-over-year, there was a significant quarter-over-quarter increase [36][37] Question: What is the outlook for galvanized spreads moving into fiscal year 2026? - Management expressed cautious optimism, citing tariff impacts and increased anti-dumping measures that may improve market conditions [40][42] Question: How can the company continue to succeed in the automotive market despite OEM destocking? - Management highlighted significant market share gains and strong relationships with automotive customers as key factors for success [44][47] Question: What are the competitive dynamics in the Taylor welded blanks business? - Management explained that the market is highly technical with few players in North America, and they are focused on lightweighting and part consolidation [52][56]

Financial Data and Key Metrics Changes - The company reported a 7% revenue growth in Q1 fiscal 2026, with adjusted earnings per share of $0.20, up 25% year-over-year [6][16] - Adjusted operating margin improved to 5%, an increase of 110 basis points compared to the previous year, driven by The Americas, which posted a margin of 6.7% [6][18] - Total orders in Q1 saw a less than 1% decline year-over-year but were up 7% on a two-year stack basis [6][20] Business Line Data and Key Metrics Changes - In The Americas, order growth from large corporate customers continued, while declines were noted in education and government sectors due to changes in federal funding policies [7][20] - The international segment experienced a 1% organic revenue decline, with growth in India, the UK, and China offset by declines in Germany and France [17][21] Market Data and Key Metrics Changes - The Americas saw strong order growth from large technology customers, while education and government sectors faced challenges [7][20] - Internationally, the performance varied, with Asia Pacific exceeding expectations, while EMEA results fell short [17][21] Company Strategy and Development Direction - The company is focused on leading the transformation of the workplace, particularly among large corporate customers [8][12] - Strategic pillars include expanding market reach and strengthening profitability through cost reduction and efficiency improvements [14][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing transformation of workplaces and the need for companies to invest in their spaces to support hybrid work [7][42] - The company anticipates continued momentum from large corporate customers, despite challenges in the education sector and macroeconomic headwinds in Europe [24][34] Other Important Information - The company incurred $9 million in restructuring costs related to the exit of approximately 85 salaried employees, aimed at prioritizing strategic growth initiatives [19] - The company expects Q2 revenue to range between $860 million and $890 million, reflecting organic growth of up to 3% year-over-year [22][23] Q&A Session Summary Question: How significant was the impact of education on the quarter's performance? - Management indicated that about one-third of orders came from education and government sectors, while two-thirds came from large corporate and other vertical markets, which performed well [27][28] Question: What is the outlook for education orders in the next quarter? - Education orders are expected to remain significant early in Q2 but will have less impact in the latter half of the year [29] Question: How does the company view pricing and cost recovery? - The company implemented a tariff recovery charge in March and anticipates that pricing increases will help offset inflation and tariff costs [30][31] Question: What are the expectations for full-year guidance? - The company targets mid-single-digit organic revenue growth and aims to expand adjusted operating margins compared to the previous year [34] Question: What actions are being taken to improve international segment profitability? - The company is taking steps to restructure operations in Europe to achieve consistent profitability, despite current demand levels [39][40] Question: What is driving the resilience in large corporate demand? - Management noted that companies are investing in their workplaces to adapt to new ways of working, which is driving demand [42][63]

Financial Data and Key Metrics Changes - Adjusted EBITDA for the fourth quarter was $87 million, slightly up from $86.5 million in the prior year quarter [5] - Earnings per share increased to $1.1 from $1.06 year-over-year [6] - Net sales decreased by $78 million or 9% to $833 million compared to the prior year quarter [24] - Cash flow from operations was $54 million, with free cash flow at $8 million [30] - The company ended the quarter with $38 million in cash and outstanding debt of $152 million, resulting in net debt of $114 million [31] Business Line Data and Key Metrics Changes - Automotive shipments increased by 5% year-over-year, contributing positively to overall performance [25] - Heavy truck market saw volume increases due to market share gains, despite a slowdown in the truck and trailer market [27] - Construction volume decreased by 5% year-over-year, consistent with historical fourth-quarter levels [27] - Agricultural market volumes were down 40% compared to the prior year quarter, primarily due to softness in the agricultural equipment market [28] Market Data and Key Metrics Changes - Market pricing for hot rolled coil started the year at just under $700 per ton, spiked to $950 per ton due to tariffs, and then dropped to approximately $850 per ton [23] - Estimated pretax inventory holding gains for the fourth quarter were $20.8 million, compared to losses of $3.4 million in the prior year quarter [21] - Direct sales volume made up 60% of the mix in the current year quarter, up from 58% in the prior year quarter [24] Company Strategy and Development Direction - The company is focused on three strategic pillars: investments in the electrical steel market, margin-accretive growth through strategic CapEx and acquisitions, and base business improvements [8] - The acquisition of a 52% stake in CEDIM enhances the company's position in the European electric motor lamination market [10][11] - The company is integrating artificial intelligence into operations to improve productivity and quality [14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment, noting uncertainty around policy and economic conditions [15] - The company is focused on improving processes and gaining market share despite headwinds [16] - Management believes the right strategy and strong customer relationships will drive future growth [16] Other Important Information - The company was named a 2024 Supplier of the Year by General Motors, marking the fourth time in five years [12] - The addition of Mark Davis to the Board of Directors is expected to enhance governance and strategic direction [15] Q&A Session Summary Question: How did the company achieve a richer mix of direct tons and stronger metal spreads? - Management noted that the fourth quarter typically sees strong volume, and while year-over-year volume was flat, quarter-over-quarter volume was up significantly, indicating solid market conditions [38][39] Question: What is the outlook for the galvanized spreads market? - Management expressed cautious optimism, citing tariff impacts and anti-dumping cases that may limit imports and improve spreads over time [42][44] Question: How can the company continue to succeed in the automotive market despite OEM destocking? - Management highlighted significant market share gains in the automotive sector, which helped offset declines in OEM build rates [49][50] Question: What are the competitive dynamics in the Taylor welded blanks business? - Management explained that the market is highly technical with few players in North America, and the company is focused on growth through acquisitions and technical advancements [54][56]

Financial Data and Key Metrics Changes - The company reported net sales of $1.2 billion for the third quarter, an increase of $211 million or 22% year-over-year [20] - Adjusted operating profit rose to $222 million, up $55 million or 33% from the previous year, with an adjusted operating profit margin of 18.8%, an increase of 150 basis points [21] - Adjusted diluted earnings per share increased to $5.12, up $0.97 or 23% compared to the prior year [21] Business Line Data and Key Metrics Changes - ABL (Acuity Brands Lighting) generated sales of $923 million, a $25 million or 3% increase year-over-year, driven by growth in independent sales and direct sales networks [21] - Acuity Intelligent Spaces (AIS) reported sales of $264 million, an increase of $188 million, with Atrius and Distech combined growing 21% and QSC growing over 20% year-over-year [25] Market Data and Key Metrics Changes - The company experienced accelerated orders in the third quarter, attributed to strategic pricing actions in response to evolving tariff policies [5][22] - The independent sales network and direct sales showed strong growth, while corporate accounts faced declines due to timing issues with a large retailer's renovations [21] Company Strategy and Development Direction - The company is focused on product vitality, service enhancement, and technology improvements to drive productivity and market share growth [18] - Acuity is entering new verticals, including refuel and healthcare, and is making strategic acquisitions to enhance its product offerings [110][111] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage outcomes amid uncertainties from tariff policies and geopolitical instability [17] - The expectation is that the combination of third and fourth quarter performance will meet the anticipated results for the second half of fiscal 2025 [62] Other Important Information - The company generated approximately $400 million in cash flow from operations year-to-date and has effectively allocated capital, including a 13% increase in dividends and share repurchases [27][28] - A special charge of $30 million was taken this quarter related to productivity efforts, which will yield benefits in future quarters [29][96] Q&A Session Summary Question: QSC margin performance - Management noted that QSC's margin improved significantly due to strong top-line growth and the adoption of productivity tools, with no deal accounting affecting the results [34][92] Question: Impact of accelerated orders and pricing actions - Management confirmed that there was evidence of order acceleration in both ABL and AIS, with expectations for normalized performance in the upcoming quarters [40][41] Question: Gross margin expectations for Q4 - Management indicated that while Q3 had minimal impact from tariffs, Q4 is expected to see some margin dilution due to tariff costs and pricing actions [58][60] Question: Demand environment and customer behavior - Management observed rational behavior from customers in response to pricing actions and tariff uncertainties, indicating a conservative approach to future expectations [97][99] Question: Progress on new verticals - Management highlighted strong traction in new markets such as refuel and healthcare, with ongoing efforts to enhance product offerings in these areas [110][111]

Financial Data and Key Metrics Changes - Total organic sales increased by 2% in the second quarter, primarily driven by volume growth [6][29] - Adjusted operating income increased by 10%, with a 11% increase when excluding currency impacts [34][36] - Adjusted earnings per share for the second quarter was $0.69, comparable to the previous year [36] Business Line Data and Key Metrics Changes - Consumer segment organic sales grew by 3%, driven by volume and mix, with a 4% volume growth in The Americas [30][29] - Flavor Solutions segment organic sales were flat, with a 1% price contribution offset by a 1% decline in volume and mix [31][32] - In the Americas, Flavor Solutions organic sales increased by 1%, reflecting a 2% price contribution [31] Market Data and Key Metrics Changes - In Asia Pacific, organic sales in the Consumer segment increased by 4%, driven by volume growth, particularly in China [30][31] - EMEA experienced a 7% decrease in Flavor Solutions organic sales, impacted by geopolitical issues and softness in customer volumes [32][21] - The Americas saw strong volume growth and share gains across core categories, while EMEA reflected select pricing actions to cover rising commodity costs [7][30] Company Strategy and Development Direction - The company focuses on profitable volume-led growth through brand investment, distribution expansion, innovation, and operational efficiencies [4][5] - Plans to drive growth include category management, brand marketing, new products, and leveraging data analytics for digital transformation [22][28] - The company aims to mitigate tariff impacts through sourcing strategies and operational efficiencies while maintaining volume momentum [12][40] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are adapting to economic pressures by changing shopping habits but continue to spend on flavor [8][9] - The company expects continued volume growth and strong consumption trends in the second half of the year [23][44] - Management remains confident in achieving long-term objectives despite current macroeconomic uncertainties [47][49] Other Important Information - The company has a global manufacturing footprint, with over 85% of products sold in major markets produced locally [39] - Tariff exposure is approximately $90 million annually, with plans to offset this through sourcing and pricing strategies [40][41] - The adjusted effective tax rate for the second quarter was 24%, compared to 14% in the previous year [35] Q&A Session Summary Question: What surprised you about the second quarter results? - Management noted that the consumer business performed well, driven by volume across core categories, and flavor solutions managed to perform better than expected despite tough conditions [52][54] Question: Can you elaborate on tariff mitigation actions? - The majority of mitigation actions are driven by sourcing and operational efficiencies, with targeted pricing as a residual approach [60][62] Question: Can you provide more detail on gross tariff exposure? - The $90 million exposure is primarily related to raw materials that cannot be sourced domestically, with a blended tariff rate impacting about 2% of COGS globally [71][73] Question: What are the pressures on certain commodities? - The global trade environment has created a standstill, impacting supply-demand dynamics and gross margins, leading to a revised gross margin outlook [92][93]

Financial Data and Key Metrics Changes - Total organic sales increased by 2% in Q2 2025, primarily driven by volume growth, with volume growth of more than 3% in the Consumer segment [6][28] - Adjusted operating income increased by 10%, with a 11% increase when excluding currency impacts [32] - Adjusted earnings per share for Q2 2025 was $0.69, comparable to the previous year [35] Business Line Data and Key Metrics Changes - Consumer segment organic sales increased by 3%, driven by volume and mix, with volume growth of 4% in The Americas [28][29] - Flavor Solutions segment organic sales were flat, with a 1% contribution from price offset by a 1% decline in volume and mix [30] - In The Americas, Flavor Solutions organic sales increased by 1%, reflecting a 2% price contribution, partially offset by a 1% decline in volume [30] Market Data and Key Metrics Changes - In EMEA, consumer organic sales grew by 3%, driven by a 2% increase in volume and a 1% increase in price due to commodity costs [29] - Asia Pacific region saw a 4% increase in consumer organic sales, driven by volume growth, reflecting a gradual recovery in China [29] - Flavor Solutions organic sales in EMEA decreased by 7%, impacted by lower volumes and prices due to geopolitical issues [31] Company Strategy and Development Direction - The company is focused on profitable volume-led growth by investing in brands, expanding distribution, driving innovation, and increasing operational efficiencies [4][5] - Plans to offset tariff costs through sourcing strategies and advanced analytics, while maintaining volume momentum [12][39] - Continued emphasis on health and wellness trends, with a focus on flavoring rather than competing for calories [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are adapting to economic pressures by shopping differently, but continue to spend on flavor [8] - The company expects to maintain its volume-led momentum and expand operating margins in 2025 despite ongoing challenges [46] - The outlook for 2025 includes maintaining net sales and adjusted operating profit guidance, with organic net sales growth expected to range between 1% to 3% [40][41] Other Important Information - The company is experiencing elevated cost pressures due to global trade uncertainties, impacting gross margins [31][40] - Cash flow from operations was $161 million, a decrease from $302 million in the previous year, driven by higher cash used due to working capital timing [36] - The company is committed to maintaining a strong balance sheet while funding growth investments and returning cash to shareholders [36] Q&A Session Summary Question: What surprised you about the second quarter results? - Management noted that the consumer business performed well, driven by volume across core categories, and they outperformed expectations in flavor solutions despite tough conditions [50][53] Question: Can you elaborate on tariff mitigation actions? - The majority of mitigation actions are driven by sourcing and CCI, with targeted pricing as a residual approach [59][60] Question: Can you provide more detail on gross tariff exposure? - The gross tariff exposure is approximately $90 million, primarily related to raw materials that cannot be sourced domestically [69][72] Question: How does the company balance sourcing lower-cost options with maintaining quality? - The company emphasizes that there is no trade-off between quality and cost, maintaining high standards while finding cost-effective sourcing options [89][91] Question: What is the impact of the global trade environment on commodity costs? - The global trade environment has led to elevated pressure on certain commodities, impacting gross margins, and the company is mitigating this through SG&A initiatives [90][94]

Acuity (AYI) Q3 2025 Earnings Call June 26, 2025 08:00 AM ET Speaker0 Good morning, and welcome to the Acuity Fiscal twenty twenty five Third Quarter Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, the company will conduct a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Charlotte McLaughlin, Vice President of Investor Relations. Charlotte, please go ahead. Sp ...

Financial Data and Key Metrics Changes - Adjusted revenue increased by 3.8% to HKD 110 billion, with adjusted cash profit at HKD 266 million, primarily driven by property development [4][8] - Adjusted revenue from property development grew by 5.3% to approximately HKD 7.2 billion compared to HKD 6.8 billion last year [4][28] - Total bank loans and notes decreased by HKD 2.2 billion, and the net adjusted gearing ratio dropped by 1.2 points to 67.6% [9][19] Business Line Data and Key Metrics Changes - Hotel revenue was HKD 2 billion, reflecting a growth of 2.3% year-on-year [6][51] - Gaming revenue increased by 1.6% to approximately HKD 400 million, indicating stability in recurring income [8][51] - Revenue from car parks decreased by 2.6%, attributed to the phasing out of underperforming contracts [55][56] Market Data and Key Metrics Changes - The total accumulated attributable pre-sale value and unbooked contracted sales reached approximately HKD 8.9 billion [4][17] - The gross margin improved to 31.8% from 31% last year, particularly in the car park business [18][19] - The average selling price in Manchester increased by 35%, reflecting a strong market demand [40] Company Strategy and Development Direction - The company aims to accelerate project completion to enable early revenue recognition and optimize cash flow [26][47] - A robust development pipeline of around HKD 61 billion is expected to support sustainable growth over the next six to eight years [26][47] - The company is focusing on inventory monetization and asset disposal to reduce debt levels [65][66] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the property market, indicating that they believe it has bottomed out [76] - The company plans to maintain a conservative approach to lower the gearing ratio while exploring new project opportunities [71][76] - Future cash flow visibility is supported by both property development projects and recurring income businesses [66] Other Important Information - The company has completed several significant property projects, including Aspen in Canary Wharf and Huon Hole in Singapore, contributing to revenue [4][30] - The company has entered into contracts for the sale of non-core assets, including a car park in Manchester and a hotel asset in North London [14][15] Q&A Session Summary Question: When will the dividend be restored? - Management indicated that due to market uncertainties and impairments, they are being conservative and have not yet decided on dividend payments [75][76] Question: How much of the HKD 8.9 billion pre-sale will be recognized in FY 2026 and FY 2027? - Approximately HKD 11 billion is expected to be recognized in FY 2026, with the remaining to be recognized in FY 2027 [79][80] Question: What is the company's stance on perpetual bonds given recent market events? - Management stated that they have not yet had internal discussions regarding the high coupon of perpetual bonds and will provide updates in due course [82][83] Question: What challenges does the company face in expanding its hotel portfolio? - Management acknowledged competition from global hotel groups and emphasized the importance of consistency in service and brand quality [84][88]

Financial Data and Key Metrics Changes - The company reported a net debt of $3 billion, significantly down from the previous quarter, and expects to generate free cash flow in the fourth quarter [10] - The liquidity level reached $15.7 billion, including untapped facilities, indicating a strong financial position [10][11] - The gross margin guidance for the fourth quarter was set at 42%, reflecting a positive outlook driven by favorable market conditions [19][78] Business Line Data and Key Metrics Changes - The DRAM bit demand outlook for calendar 2025 was raised to high teens from mid-teens, driven by robust AI demand in data centers and improvements in industrial and broad distribution markets [6][8][48] - The NAND business is experiencing a challenging market environment, but inventory levels have improved [18][69] - The LPDDR business in data centers is expected to grow significantly, with the company maintaining a sole source position in this market [20][21] Market Data and Key Metrics Changes - Demand in the industrial and broad distribution markets has shown significant improvement, contributing positively to the overall DRAM growth estimates for 2025 [8][48] - The company noted that tariff-related impacts on customer order patterns were modest, with overall demand signals remaining healthy [48][49] Company Strategy and Development Direction - The company aims to maintain technology leadership and invest in capacity for DRAM to serve high-value markets, including HBM [11] - The focus is on expanding the LPDDR market in data centers and leveraging its position as a pioneer in this segment [20][21] - The company is preparing for the transition to HBM4, which is expected to have higher pricing and better specifications compared to HBM3 [54][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment for the remainder of calendar 2025, despite uncertainties related to tariffs and macroeconomic factors [49] - The company is optimistic about the growth trajectory of its HBM business, with strong customer engagements and a solid roadmap for future products [39][41] - Management highlighted that the pricing dynamics in the DRAM market are healthy, with steady pricing on HBM and improvements in overall demand [68][69] Other Important Information - The company is experiencing a favorable mix shift towards more DRAM growth relative to NAND, which is expected to positively impact gross margins [30][78] - The company is cautious about capacity in the NAND market due to its challenging environment, while also managing startup costs effectively [16][18] Q&A Session Summary Question: DRAM bit demand outlook for 2025 - The company raised its DRAM bit demand outlook for calendar 2025 to high teens, driven by AI demand and improvements in industrial markets [6][8] Question: Prioritization of net leverage versus share buybacks - The company is focused on deleveraging while maintaining flexibility to invest in business priorities and return capital to shareholders [10][11] Question: Gross margin guidance and NAND business dynamics - The gross margin guidance reflects improvements in demand dynamics and careful management of capacity and costs in the NAND business [15][19] Question: LPDDR business growth in data centers - The company is excited about its position in the LPDDR market and expects continued growth as power consumption becomes a key driver for data center designs [20][21] Question: HBM pricing dynamics - HBM pricing remains steady, with the overall mix shift towards consumer-oriented products impacting blended ASPs [64][68] Question: Cost dynamics in DRAM and NAND - Costs in both DRAM and NAND have decreased, attributed to mix effects and operational improvements [69][73]