Financial Data and Key Metrics Changes - Fourth quarter net income reached a record $85.7 million, representing a 12% growth year-over-year, while diluted earnings per share (EPS) grew by only 1% due to an increase in shares outstanding from the acquisition of RJ O'Brien [2][3] - Operating revenues exceeded $1.2 billion, up 31% compared to the previous year and 17% sequentially [3] - Full fiscal year net income was a record $305.9 million, up 17%, with an EPS of $5.89 and a return on equity (ROE) of 15.6% [4][23] Business Line Data and Key Metrics Changes - Transactional volumes increased across all product offerings except for FXCFDs, with operating revenues from listed contracts rising by 76% year-over-year, driven by the acquisition of RJO [5][6] - Operating revenues from OTC derivatives increased by 27% year-over-year but declined by 1% sequentially [5] - The self-directed retail segment saw a decline in net operating revenues by 35% and segment income by 51%, primarily due to a decrease in average daily volumes [7] Market Data and Key Metrics Changes - Interest and fee income on client balances increased by $52 million or 46% year-over-year, with the acquisition of RJO contributing $50 million [5] - Average client equity increased by 71% and average money market FDIC sweep client balances rose by 25% [5] - The payments segment's net operating revenues increased by 8% year-over-year but decreased by 3% sequentially [5] Company Strategy and Development Direction - The company has been active in M&A, completing six transactions in 2025, including the transformational acquisition of RJ O'Brien, which positions the company as the largest non-bank FCM in the U.S. [8][11] - The strategy focuses on organic growth and leveraging acquisitions to enhance product offerings and market share [8][9] - The company aims to achieve significant cost and capital synergies from the RJO acquisition, estimating $50 million in annual run rate cost synergies [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformative potential of the RJO acquisition, highlighting strong client growth and integration progress [15][22] - The company anticipates that the combination of acquisitions and organic growth will drive results for 2026 [23] - Management noted that the overall attrition of clients post-acquisition has been limited, indicating successful integration efforts [22] Other Important Information - The company reported a notable increase in client assets under custody, contributing to a stable and predictable income stream [23] - The company has made significant enhancements to its product offerings, including the build-out of a metals vault and improvements in digital asset services [13][14] Q&A Session Summary Question: How are early cross-selling efforts with RJO clients going? - Management indicated that cross-selling efforts are progressing well, with significant interest from RJO clients in new products, although tracking revenue synergies remains challenging [25][26] Question: Did precious metals trading improve after gold was exempted from tariffs? - Management noted that the precious metals business faced challenges due to low volatility and tariff disruptions but has shown improvement in the current quarter [28] Question: What drove the increase in RPC for listed derivatives? - The increase was attributed to the introduction of the RJO business, which had higher average rates per contract compared to the company's previous offerings [30]

Financial Data and Key Metrics Changes - Fourth quarter net income reached a record $85.7 million, representing a 12% growth year-over-year, while diluted earnings per share (EPS) grew by only 1% due to an increase in shares outstanding from the acquisition of RJ O'Brien [2][3] - Operating revenues exceeded $1.2 billion, up 31% compared to the previous year and 17% sequentially [3] - Net income for the full fiscal year was a record $305.9 million, up 17%, with an EPS of $5.89 and a return on equity (ROE) of 15.6% [4][22] Business Line Data and Key Metrics Changes - Operating revenues from listed contracts increased by 76% year-over-year, driven by the acquisition of RJO, contributing $89.5 million [5] - OTC derivatives revenues grew by 27% year-over-year but declined by 1% sequentially [5] - Payments revenues increased by 8% year-over-year but decreased by 3% sequentially, primarily due to a decline in rate per million [5] Market Data and Key Metrics Changes - Average client equity increased by 71% year-over-year, with the acquisition of RJO contributing significantly to this growth [5] - FXCFD revenues declined by 34% year-over-year, attributed to low volatility in FX markets [5] - The institutional segment saw record net operating revenues and segment income growth of 67% and 73%, respectively, largely due to the RJO acquisition [6] Company Strategy and Development Direction - The company has been active in M&A, completing six transactions in 2025, including the transformational acquisition of RJ O'Brien, which positions the company as the largest non-bank FCM in the U.S. [8][11] - The strategy focuses on being opportunistic in acquisitions while ensuring they are accretive to the company's ecosystem and shareholder value [9][10] - The integration of RJO is expected to yield significant cost and capital synergies, with a target of $50 million in annual run rate cost synergies [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential stemming from the RJO acquisition and the overall market dynamics, including the withdrawal of banks and consolidation of smaller firms [8][22] - The company anticipates that the integration of RJO will enhance its product offerings and client base, driving future revenue growth [17][21] - Management remains focused on executing with discipline and precision, emphasizing the importance of collaboration between leadership teams [21][22] Other Important Information - The company recorded pre-tax acquisition-related charges of approximately $9.3 million in the current quarter, impacting diluted EPS by about $0.13 [2][4] - The company has made significant enhancements to its product offerings, including the build-out of a metals vault and improvements in digital asset services [13][14] Q&A Session Summary Question: How are early cross-selling efforts with RJO clients going? - Management indicated that early cross-selling efforts are progressing well, with significant interest from RJO clients in new products, although tracking revenue synergies remains challenging [25][26] Question: Did precious metals trading improve after gold was exempted from tariffs? - Management noted that while the precious metals business faced challenges due to market dislocation, conditions have improved, and they expect a positive trend moving forward [28][29] Question: What drove the increase in RPC for listed derivatives? - The increase in RPC was attributed to the introduction of the RJO business, which had higher average rates per contract compared to the company's previous offerings [30][31]

Financial Data and Key Metrics Changes - The company reported a sequential acceleration in comparable net sales growth, with a projected top line growth of 4% on a reported basis and about 5.5% comparable growth year over year [40][68] - The second quarter segment profit margin in coffee was 18.2%, with expectations for slight improvement in the third quarter but not surpassing 20% [37] Business Line Data and Key Metrics Changes - Organic sales in the sweet baked snacks segment exceeded expectations, with improved performance noted in convenience stores and a focus on a more streamlined portfolio [7][20] - The sweet baked snacks bottom line did not meet expectations due to costs absorbed during the transition of the bakery network, but improvements are anticipated in the third and fourth quarters [20][21] - The pet portfolio is expected to see low single-digit growth in the third and fourth quarters, driven by brands like Milk-Bone and Meow Mix [25][24] Market Data and Key Metrics Changes - The company anticipates a strong lap in the third quarter for the pet treats category, particularly for Milk-Bone, which is expected to return to growth [22] - The frozen handheld and spreads segment is projected to see a reduction in net sales expectations by over $80 million for the full year, primarily driven by the spreads portfolio [27][28] Company Strategy and Development Direction - The company is committed to investing in the long-term health of its brands, with marketing dollars projected to increase year-over-year, maintaining about 5.5% of net sales [18] - A three-pronged plan to strengthen the portfolio by eliminating 25% of SKUs has been implemented, leading to improved performance in core brands [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver financial outlook for the fiscal year while advancing long-term objectives to increase shareholder value [70] - The company expects to benefit from a tariff-off environment in fiscal 2027, which should provide a tailwind to the coffee portfolio [42][43] Other Important Information - The company is on track to generate $975 million in free cash flow this fiscal year, supporting $500 million in debt repayment [62] - The pace of innovation across various product lines has accelerated, with notable advancements in Uncrustables and pet snacks [61] Q&A Session Summary Question: Insights on sweet baked goods performance - Management noted that the improvement in sweet baked snacks is sustainable, with a focus on core brands and a successful relaunch of Susie Q's [7] Question: Impact of tariffs on coffee pricing - The majority of the $0.50 tariff impact is related to green coffee tariffs, which will be a tailwind in fiscal 2027 [10][16] Question: SG&A guidance and marketing plans - Marketing investments will increase year-over-year, with a focus on growth brands while managing discretionary spending [18] Question: Profit results in sweet baked snacks - The second quarter's bottom line for sweet baked snacks did not meet expectations due to transition costs, but improvements are expected in subsequent quarters [20] Question: Expectations for pet treats in the back half - Management anticipates strong growth for Milk-Bone in the third quarter, supported by marketing efforts and innovation [22][24] Question: Reduced net sales expectation for frozen handheld and spreads - The reduction is primarily driven by the spreads portfolio, with Uncrustables still on track for significant growth [27][28] Question: Coffee margin expectations - Coffee margins are expected to improve slightly in the third quarter but will not exceed 20%, with a target of over 20% in the fourth quarter [37] Question: Elasticity and pricing in coffee - The current outlook for the coffee portfolio includes 16% year-over-year growth, with pricing offset by a decline in volume mix [45] Question: Innovation pace and its impact - The pace of innovation has accelerated, with significant contributions from new products across various categories [61]

Financial Data and Key Metrics Changes - Revenue growth of 3.1% to $186.1 million in Q3 2026, with a 5.9% increase excluding the Middle East [4][5] - Gross margin improved by 80 basis points to 54.3% compared to 53.5% last year, despite a $4.5 million impact from U.S. tariffs [5][15] - Adjusted operating income grew over 40% to $12.6 million, with positive operating cash flow of $1.3 million for the first nine months [5][17] - Net income for Q3 was $10.2 million, or $0.45 per diluted share, compared to $8.5 million, or $0.37 per diluted share in the previous year [17][18] Business Line Data and Key Metrics Changes - Movado brand sales grew 17.7%, with overall sales in Movado company stores increasing by 9.4% on a comparable store basis [9] - Licensed brands saw a 6.4% growth overall, with Coach driving double-digit growth among Gen Z consumers [10][11] - Strong performance in the Museum Collection and new product launches, including the Bangle Collection and Style Set with Lab-Grown Diamonds [7][8] Market Data and Key Metrics Changes - U.S. net sales increased by 6.9%, with strong growth in the fashion brand business and direct-to-consumer channels [6][14] - International net sales increased by 0.6%, with strong performances in Europe and Latin America, offset by weaker results in the Middle East [14][15] Company Strategy and Development Direction - Focus on building brands sustainably, driving innovation, and improving financial results [5][6] - Plans to return to growth in the Middle East next year after rebuilding the team and refining strategy [4][5] - Emphasis on capturing momentum among younger consumers embracing analog watches for their design and quality [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving dynamics in the fashion and accessible luxury watch categories despite global economic uncertainties [6][12] - No fiscal 2026 outlook provided due to current economic uncertainty and unpredictable tariff developments [20] Other Important Information - The company ended the quarter with $183.9 million in cash and no debt, and a quarterly dividend of $0.35 per share was approved [6][19] - Capital expenditures for the first nine months were $3.5 million, with approximately 100,000 shares repurchased under the share repurchase program [19] Q&A Session Questions and Answers Question: Is the success seen with many watches and brands due to influencers or design trends with Gen Z? - The success is attributed to a combination of increased social media coverage and innovative designs resonating with younger consumers [22] Question: Does having sold-out conditions impair sales? - Sold-out conditions are seen as a balance of supply and demand, with plans to replenish styles in early Q1 [23] Question: Will the success in sales change spending levels for the fiscal year? - The focus remains on improving profitability while continuing to invest in brand-building efforts [24]

Financial Data and Key Metrics Changes - For the quarter ended September 30, core net investment income was $0.28 per share, with GAAP net investment income also at $0.28 per share [4][14] - As of September 30, net asset value (NAV) was $10.83 per share, down 1.2% from $10.96 per share in the previous quarter [15] - The debt to equity ratio was 1.6 times, which was reduced to 1.4 times after subsequent asset sales [15][16] Business Line Data and Key Metrics Changes - The company invested $633 million in 11 new and 105 existing portfolio companies at a weighted average yield of 10.5% during the quarter [12] - The portfolio grew to $2.8 billion, up from $2.4 billion in the prior quarter [11] - The portfolio remains well-diversified, comprising 164 companies across 50 industries, with 90% in first lien senior secured debt [16] Market Data and Key Metrics Changes - The pricing on high-quality first lien term loans in the core middle market is SOFR plus 475-525 basis points, with leverage being reasonable [8] - The median leverage ratio of the portfolio's debt securities was 4.5 times, and the median interest coverage was 2 times [8][17] - Non-accruals represented only 0.4% of the portfolio at cost and 0.2% at market value, indicating strong credit metrics [9][16] Company Strategy and Development Direction - The company is focused on enhancing earnings power through scale, diversification, and disciplined capital deployment, as evidenced by the $250 million portfolio acquisition and the formation of a new joint venture [4][5] - The goal is to grow the PSSL2 joint venture to over $1 billion in assets, similar to existing joint ventures, which should lead to net investment income exceeding current dividends [5][12] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about a steady increase in transaction activity in private middle market lending, which is expected to lead to higher loan origination volumes [6] - The company believes the current environment favors lenders with strong private equity sponsor relationships and disciplined underwriting, areas where it has a clear advantage [6][10] - Management noted that the average consumer is relatively soft, but sectors like government services, defense, and healthcare remain strong [22] Other Important Information - The company has invested $8.4 billion in 539 companies since inception, with a loss ratio on invested capital of only 11 basis points annually [11] - The weighted average yield on debt investments was 10.2%, and approximately 99% of the debt portfolio is floating rate [16] Q&A Session Summary Question: How did the portfolio acquisition come about? - The acquisition was part of a joint venture with a third party, involving assets that were already well-known to the company, which originated a couple of years ago [20] Question: Are you seeing any bifurcation in the market? - There is a general reversion to the mean in the economy, with some sectors like logistics still dealing with post-COVID issues, while government services and healthcare remain strong [21][22] Question: What is the NII contribution from the assets sold? - The $250 million portfolio acquisition is expected to add about 1-2 cents per share of NII for a full quarter, while the new joint venture will take time to ramp up [28] Question: How are new loan spreads stabilizing? - New loans are being accessed at SOFR plus 175 basis points, with average spreads in the 475-525 range, reflecting a focus on solid credit [36] Question: What is the strength of the underlying portfolio companies? - The portfolio is seeing double-digit revenue growth and mid-single-digit EBITDA growth, with a healthy overall portfolio despite some choppier credits [44][46] Question: Any consideration for buybacks given the stock price? - The board considers all options, including buybacks, especially given the current valuation [58]

Financial Data and Key Metrics Changes - Fourth quarter net income reached a record $85.7 million, representing a 12% growth year-over-year, while diluted earnings per share (EPS) grew by only 1% due to an increase in shares outstanding from the acquisition of RJ O'Brien [5] - Operating revenues exceeded $1.2 billion, up 31% compared to the previous year, and up 17% from the preceding quarter [6] - Full fiscal year net income was a record $305.9 million, up 17%, with an EPS of $5.89 and a return on equity (ROE) of 15.6%, surpassing the 15% target [8][50] Business Line Data and Key Metrics Changes - Transactional volumes increased across all product offerings except for FXCFDs, with operating revenues from listed contracts rising by 76% year-over-year, primarily due to the acquisition of RJO [9] - Operating revenues from OTC derivatives increased by 27% year-over-year but declined by 1% from the previous quarter [10] - The self-directed retail segment saw a decline in net operating revenues by 35% and segment income down 51%, attributed to a 4% decline in average daily volumes and a 31% decline in rate per million [15] Market Data and Key Metrics Changes - Interest and fee income on client balances increased by $52 million or 46% year-over-year, with the acquisition of RJO contributing $50 million [11] - Average client equity increased by 71%, while average money market FDIC sweep client balances rose by 25% [11] - FXCFD revenues decreased by 34% year-over-year due to a 7% decline in average daily volume and a 32% decline in rate per million, primarily from low volatility in FX markets [10] Company Strategy and Development Direction - The company has been active in M&A, completing six transactions in 2025, including the transformational acquisition of RJ O'Brien, which positions the company as the largest non-bank FCM in the U.S. [19][24] - The strategy focuses on being disciplined in acquisitions, ensuring they are accretive to the ecosystem and enhance market share [20][21] - The company aims to leverage its expanded capabilities and client base to drive organic growth alongside its acquisitions [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong growth despite challenges, highlighting the importance of the RJO acquisition in driving future performance [50] - The integration of RJO is expected to create significant value, with a focus on expanding product offerings and achieving cost synergies [41][48] - Management remains optimistic about long-term growth, supported by a strong balance sheet and diverse offerings [50] Other Important Information - The company recorded pre-tax acquisition-related charges of approximately $9.3 million in the current quarter, impacting diluted EPS by about $0.13 [5] - The company anticipates achieving $50 million in annual run-rate cost synergies from the RJO acquisition within 24 months [41][44] Q&A Session Summary Question: How are early cross-selling efforts with RJO clients going? - Management noted that early cross-selling efforts are progressing well, with significant interest from RJO in learning about new products, and some transactions have already occurred [51][52] Question: Did precious metals trading improve after gold was exempted from tariffs? - Management indicated that while there were challenges in the previous quarter due to low volatility and tariff disruptions, the situation has improved, and they expect a positive trend moving forward [56][59] Question: What drove the increase in RPC for listed derivatives? - The increase was attributed to the introduction of the RJO business, which had higher average rates per contract compared to the company's previous offerings [60]

Financial Data and Key Metrics Changes - The company reported a second quarter segment profit margin in coffee of 18.2% with expectations for slight improvement in the third quarter but not surpassing 20% [41] - The company anticipates a net $0.50 impact from tariffs in fiscal year 2026, which will transition to a tailwind in fiscal year 2027 [11][17] Business Line Data and Key Metrics Changes - Organic sales in the Sweet Baked Snacks segment exceeded expectations, with a focus on core brands leading to improved performance [6][7] - The Sweet Baked Snacks bottom line did not meet expectations due to costs associated with the transition of the bakery network [21] - The pet portfolio is expected to see low single-digit growth in the third and fourth quarters, driven by brands like Milk Bone and Meow Mix [26] Market Data and Key Metrics Changes - The company is seeing strong growth in the away-from-home segment, contributing to overall sales momentum [45] - The Uncrustables brand is projected to reach $1 billion in sales by the end of the fiscal year, with low double-digit growth anticipated in the second half [54] Company Strategy and Development Direction - The company is committed to investing in long-term brand health, with marketing dollars projected to be up year over year [19] - A three-pronged plan to strengthen the portfolio by eliminating 25% of SKUs has been implemented, leading to improved performance in core brands [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver financial outlook for the fiscal year while advancing long-term objectives to increase shareholder value [75] - The company expects to see benefits from tariff relief in fiscal year 2027, contributing positively to the bottom line [48] Other Important Information - The company is focused on innovation across various segments, with notable advancements in Uncrustables and pet snacks [65] - The company aims to reduce net debt to EBITDA from around four times to three times by fiscal year 2027 [67] Q&A Session Summary Question: How sustainable is the improvement in Sweet Baked Snacks? - Management noted that the improvement is sustainable due to a focused portfolio and strong brand performance [6][8] Question: What is the impact of tariffs on coffee pricing? - The majority of the $0.50 tariff impact is related to green coffee, which will be a tailwind in fiscal year 2027 [11][17] Question: What are the expectations for marketing plans and SG&A? - Marketing investments will increase year over year, while SG&A spend has been sharpened across the network [19] Question: What is the outlook for the pet treats category? - Management expects a strong lap in the third quarter, with Milk Bone anticipated to return to growth [23][24] Question: How is the company addressing pricing in the current environment? - The company is committed to holding prices and providing value across its broad portfolio [71] Question: What is the expected growth for Uncrustables? - Uncrustables is expected to achieve low double-digit growth in the second half, supporting its path to $1 billion in sales [54] Question: How is the company managing innovation? - The pace of innovation has accelerated, with significant developments in various product lines [65] Question: What is the company's strategy for debt reduction? - The company plans to generate $975 million in free cash flow this fiscal year to support debt paydown [67]

Financial Data and Key Metrics Changes - Net sales declined by 2.8% in Q3 and 4% year-to-date, with comparable sales down 1.7% in Q3 and 3.2% year-to-date [29][30] - Adjusted net income for Q3 was $11 million, equating to an adjusted diluted earnings per share of $0.10, while year-to-date adjusted net income is $61 million with an adjusted diluted earnings per share of $0.54 [32][33] - Gross margin improved to 39.6%, an increase of 51 basis points year-over-year, driven by strong inventory management and product mix benefits [31][32] Business Line Data and Key Metrics Changes - Digital sales grew by 2.4% versus last year, outperforming store sales, with traffic increasing from high single digits in August to high teens in October [30] - Women's business showed significant improvement, particularly in proprietary brands, while men's business also saw positive performance driven by clarity in offerings [12][13] - Accessories, including Sephora and jewelry, contributed positively, with Sephora running up 2% and jewelry increasing by 10% in Q3 [14][15][16] Market Data and Key Metrics Changes - The company noted that low-to-middle-income consumers are increasingly choiceful due to pressure on discretionary income, impacting overall sales performance [10][36] - The macroeconomic environment remains uncertain, particularly affecting younger customers and those with limited income [10][36] Company Strategy and Development Direction - The company is focused on three key priorities for its 2025 initiatives: offering a curated assortment, reestablishing Kohl's as a leader in value and quality, and delivering a frictionless shopping experience [10][11][21] - There is a commitment to enhancing proprietary brands and optimizing store layouts to improve customer experience and drive sales [19][22] - The company is leveraging artificial intelligence to improve operational efficiency and customer engagement [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming holiday season, highlighting improved inventory positioning and exclusive offerings [25][26] - The company anticipates a net sales decline of 3.5%-4% for the full year, with a focus on maintaining cost discipline and improving cash flow [36][37] Other Important Information - The company ended Q3 with $144 million in cash and cash equivalents, with inventory decreasing approximately 5% compared to last year [33][34] - Capital expenditures are projected to be around $400 million for the year, primarily for the completion of Sephora rollouts and other strategic initiatives [34] Q&A Session Summary Question: How is the company connecting with former and lapsed customers? - The company has been using data to target core customers with personalized marketing and has seen a 500 basis point improvement in Kohl's Card customer engagement [38][39] Question: Can you break down the $1.3 billion of operating cash flow? - The majority of cash flow is attributed to strong inventory management, with a focus on maintaining low inventory levels [41][42] Question: Which strategic initiatives are showing the most promise? - The focus on building a more balanced assortment and enhancing proprietary brands has been particularly effective [46][47] Question: What is the outlook for gross margin in Q4? - The company expects continued benefits from inventory management and proprietary brand performance, but anticipates some headwinds due to increased digital sales and promotional activities [54][56] Question: What is the current debt position and outlook? - The company has approximately $1.5 billion in debt, with plans to exit the revolver by the end of the year, positioning itself well for future liquidity [58][59]

Financial Data and Key Metrics Changes - The company reported a sequential acceleration in comparable net sales growth, with a projected top line growth of 4% on a reported basis and approximately 5.5% on a comparable basis year-over-year [38][64] - The coffee segment demonstrated an 18.2% profit margin in Q2, with expectations for slight improvement in Q3 but not surpassing 20% [34][41] Business Line Data and Key Metrics Changes - Organic sales in the sweet baked snacks segment exceeded expectations, with improved performance noted in convenience stores and a focus on a streamlined portfolio [5][18] - The pet treats category is expected to see low single-digit growth in the third and fourth quarters, driven by the Milk-Bone and Meow Mix brands [22][21] Market Data and Key Metrics Changes - The company anticipates a $75 million impact from coffee tariffs in Q3, which will be absorbed in the current fiscal year but expected to provide a tailwind in FY 2027 [14][39] - The spreads portfolio, particularly peanut butter, faced challenges in Q2, contributing to a reduction in net sales expectations for frozen handhelds and spreads [24][25] Company Strategy and Development Direction - The company is committed to investing in long-term brand health, with marketing spending projected to be about 5.5% of net sales [16] - A three-pronged plan focusing on portfolio strengthening through SKU rationalization has been implemented, with a notable relaunch of the Susie Q's brand [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver financial outlooks for the fiscal year while advancing long-term objectives to increase shareholder value [64] - The company noted that the current fiscal year has been impacted by tariff-related costs, but a stabilizing commodity environment is expected to benefit future earnings [39][62] Other Important Information - The company is on track to achieve a billion-dollar brand status for Uncrustables by the end of the fiscal year, with continued innovation and marketing support [27][44] - The closure of the Indianapolis facility is expected to yield a $30 million annual run rate impact, with $10 million benefiting the fourth quarter [19] Q&A Session Summary Question: How sustainable is the improvement in sweet baked goods? - Management noted that the improvement is supported by a focused portfolio strategy and the relaunch of key brands, indicating a sustainable trend [5][6] Question: What is the impact of tariffs on coffee pricing? - The majority of the $0.50 tariff impact is related to green coffee, which is expected to be a tailwind in FY 2027 [9][14] Question: What are the expectations for marketing plans and SG&A? - Marketing spending will increase year-over-year, with a focus on growth brands while managing discretionary spending [16] Question: How is the company addressing competition in the pet treats category? - Management highlighted ongoing marketing efforts and innovation as key strategies to regain market share in the pet treats segment [20][21] Question: What is the outlook for Uncrustables and the frozen handheld segment? - Uncrustables is expected to achieve low double-digit growth in the second half of the year, supported by innovation and marketing [44][27] Question: How does the company view pricing strategies in the current environment? - The company maintains a broad portfolio that allows for varying degrees of value, with a commitment to holding prices where possible [60] Question: What is the long-term outlook for debt reduction? - The company aims to generate $975 million in free cash flow this fiscal year, supporting a $500 million debt repayment [56]

Financial Data and Key Metrics Changes - In Q4 2025, the company signed over $1.4 billion in orders, setting a record and bringing the backlog to $5.3 billion, indicating strong growth potential for 2026 and beyond [7] - Full year revenue was approximately $2.3 billion, about $300 million below expectations due to delays in ramping up a manufacturing facility in Arizona [8][20] - The adjusted gross margin for the year was a record 13.7%, with adjusted EBITDA of approximately $19.5 million, at the top end of guidance [8][22] - The company ended the year with approximately $1.3 billion in liquidity, an increase of $300 million compared to the end of fiscal 2024 [9][23] Business Line Data and Key Metrics Changes - The record order intake of $1.4 billion included contributions from all core markets, with approximately half of the projects located in Australia [9] - The company expects the US market to be the largest contributor to order intake for fiscal 2026, reflecting a strong pipeline [9] Market Data and Key Metrics Changes - Demand for energy storage solutions is accelerating globally, driven by declining capital costs and increasing electricity demand from renewables and data centers [9][10] - The company has seen a significant increase in larger deals, with 38 projects of at least 1 gigawatt hour in the pipeline, more than double from last year [10] Company Strategy and Development Direction - The company is focused on leading the energy storage market, with a new product roadmap and a domestic content strategy to enhance competitiveness [7][12] - The introduction of the SmartStack product is expected to drive a majority of future orders due to its competitive total cost of ownership and operational metrics [14][15] - The company is committed to strengthening its domestic supply chain and has contracted with key production facilities in the US [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting delivery commitments and capturing revenue shortfalls in fiscal 2026 due to improved production rates [8][16] - The company anticipates investing about $200 million in fiscal 2026, with a revenue guidance range of $3.2 billion to $3.6 billion [24] - Management highlighted the importance of compliance with new regulations and the progress made towards meeting domestic content requirements [17][18] Other Important Information - The company has secured a second supplier for domestic battery cells, which is compliant with regulations, enhancing its supply chain resilience [17][18] - The company is actively working on compliance with the One Big Beautiful Bill (OBBBA) regulations to ensure eligibility for tax credits [17][18] Q&A Session Summary Question: Changes in the competitive environment - Management noted that while the international market remains competitive, there is a shift in the US towards customers preferring US or non-PFE manufacturers [34] Question: Future gross margin expectations - Management indicated that they aim to improve gross margins beyond the current guidance of 11-13% in the coming years [35][36] Question: Data center market sizing and Fluence's market share - Management acknowledged that the total addressable market (TAM) for data centers is significantly larger than previously estimated, with ongoing discussions to capture a larger share [42][49] Question: Q4 underperformance and manufacturing delays - Management explained that staffing challenges at the Arizona facility led to underperformance, but improvements have been made, and they are confident in meeting future production targets [60][62] Question: Incremental capacity from the new cell supplier - Management confirmed that the new supplier will provide sufficient capacity to meet projected loads for the next couple of years without significant upfront commitments [64] Question: Long-duration storage solutions - Management stated that SmartStack will be the primary solution for long-duration storage, emphasizing its competitive advantages [98]