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Operator: Good day, and welcome to the GoHealth Third Quarter 2025 Earnings Conference Call. All participants will be in listen-only mode. There will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to John E. Shave, Vice President of Investor Relations. Please go ahead. John E. Shave: Thank you, and good morning. Welcome to GoHealth's third quarter 2025 results call. Joining me today are Vijay Kumar Kotte, Chief Executive Officer, and Brendan Shanahan, Chief Financial Officer. Today's conference call contains forward-looking statements based on our current expectations. Numerous known and unknown risks and uncertainties may cause actual results to differ materially from those anticipated or projected in these statements. Many of the factors that will determine future results are beyond the company's ability to control or predict. You should not place undue reliance on any forward-looking statements, and the company undertakes no obligation to update or revise any of these statements, whether due to new information, future events, or otherwise. Earlier today, we issued a press release announcing our results for the third quarter of 2025. We have posted the release on the GoHealth website under the Investor Relations tab. In the press release, we have listed certain risk factors that you should consider in conjunction with our forward-looking statements. We encourage you to consider the risk factors described in our Form 10-Q and our Form 10-Ks filed with the Securities and Exchange Commission for additional information. During this call, we will be discussing certain non-GAAP financial measures. These measures are reconciled to the most directly comparable GAAP financial measures in our press release. You may also refer to the Investor Relations presentation on the Investor Relations section of our website for reconciliations of non-GAAP measures to the most comparable GAAP measures discussed during this earnings call. I will now turn the call over to GoHealth's CEO, Vijay Kumar Kotte. Vijay Kumar Kotte: Thank you, John, and good morning, everyone. Today, more than 65 million individuals are enrolled in Medicare, and nearly half participate in Medicare Advantage. Each year, beneficiaries are challenged to decide how to access their coverage. They face an overwhelming number of plan options and annually need to sift through changes to benefits, networks, and formularies. Our role is to simplify that decision. GoHealth's platform is built for more than 30 million shopping experiences, giving our agents a data-driven view of which plans best align with each beneficiary's eligibility, doctor's prescriptions, and personalized needs. The foundation of our model remains the same: match beneficiaries to the coverage that serves them best, whether that means enrolling in a new plan or confirming their current one continues to be the right fit. Turning to the current Medicare Advantage landscape, demand for Medicare Advantage remains strong, and we believe the role of a trusted broker is more important than ever. However, the shape of growth this year has been different. Based on our analysis, health plans are prioritizing retention, stable member profiles, and unit economics rather than broad expansion. Health plans tightened plan economics, reduced prefunded marketing, and adjusted broker compensation. In some cases, the most consumer-preferred plans were made noncommissionable or were suppressed, and some health plans eliminated or consolidated low-margin plans entirely. The decision to scale back our MA volume earlier this year began when we saw health plans tightening commissions, eligibility, and benefit structures. So we pulled back intentionally. As we disclosed with our Q2 results, we made a deliberate decision in the second quarter to scale back our Medicare Advantage activity in response to tightening health plan economics. We shifted our capacity into GoHealthProtect during SEP and prioritized retention and stable member profiles rather than pursuing volume. Unit economics did not justify incremental volume. What I can tell you based on my personal experience building and running Medicare Advantage health plans is that none of the actions that health plans are taking now are irrational. Frankly, I believe they are very justified and prudent. We believe that health plans are making good decisions and have been clear about what they want and what they do not want. We have been here before. The industry experienced similar pressures previously. We learned from those cycles, and we used those lessons this year to move early. Rather than chasing volume and declining economics, we focused on three key priorities: one, quality over quantity; two, retention over short-term submissions; and three, cash preservation and strategic flexibility. We retained our highest quality agents, shifted marketing toward retention, and adjusted compensation to reinforce objective guidance, including confirming the consumer's existing plan when appropriate. We have significantly reduced overhead while continuing to invest in AI and automation that improve agent effectiveness, consumer experience, and member retention. We are confident that this will keep our platform efficient today and maintain our strategic optionality moving forward. These decisions preserve the capabilities that matter to us: our member book, our retention and engagement model, our leadership in special needs plans, and our efficient platform. We have continued support from our lenders and have enhanced our governance structure to support this strategy. Last quarter, we obtained a new senior secured super-priority term loan facility, including new capital and covenant relief, and we refreshed our board with new directors aligned with long-term value creation. We believe these actions provide the capacity to operate, invest, and evaluate strategic opportunities, including consolidation in a fragmented broker landscape. Health plans have been very clear about what they want today: retention over new growth, quality over quantity, and focused growth on special needs plans. We are aligning our strategy accordingly. We are protecting the parts of the business that matter to us the most. First, our leadership position in special needs plans, where health plans are increasingly reallocating resources. Total available non-special needs plan products declined for 2026, while special needs plan options increased. This reflects a clear industry priority: targeted growth, value, and continuity of care are highest. Second, our high-quality member book that supports payment quality. And third, our retention and engagement model. The broker landscape remains fragmented, and we believe the current environment supports consolidation. With a stronger balance sheet, lender support, and a refreshed board, we believe that we are positioned to lead integration where it creates value, reducing duplicative costs, improving back book cash flow, stabilizing membership retention, and enhancing the consumer experience. We look forward to continuing to provide you with updates as we progress down this path. Here are the messages I want to make sure are clear. First, our pullback is intentional. We prioritize long-term value creation rather than near-term enrollment volume. Medicare is complex, and choice can be overwhelming. Our role is not simply to move members into new plans; it's to help them understand whether their current plan is still the right fit. That balance between guidance and stability has always been core to how GoHealth serves consumers. Second, we preserve the capabilities that matter to us the most, including our technology platform, our retention and engagement model, our high-quality member base, and our leadership in special needs plans. Third, we believe the industry should consolidate. As others face capital constraints, we are confident that GoHealth is positioned to lead, to integrate, to expand when the environment stabilizes. Let me leave you with one thought. If our interpretation of the market proves early or overly cautious, we believe we have preserved flexibility through the protection of the member base, the platform, and the balance sheet. Alternatively, if we had chased projected volume in deteriorating economics, and that assessment was wrong, the downside would have been significant and lasting. We chose the disciplined path. We also remain optimistic. Medicare Advantage is a durable and important part of the US healthcare system, and we expect the market to rationalize as benefit designs, STAR's performance, and cost structures stabilize. Because we read the market and reacted early, maintained our core capabilities, strengthened our balance sheet, and aligned with health plan priorities, we believe GoHealth is positioned to return to revenue growth consistent with prior years when the market rationalizes, but with a meaningfully stronger margin and cash profile. With that, we will open the line for questions. On your telephone, and wait for your name to be announced. To withdraw your question, please press 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. You may then rejoin the queue. Please standby while we compile the Q&A roster. Our first question comes from Robert Miles McGuire with Granite Research. Your line is open. Robert Miles McGuire: Good morning and thank you for taking my question. So we've seen slowing and even contraction in parts of the Medicare Advantage market this year. Vijay, can you just give us an idea of your view of the Medicare Advantage growth trajectory over the next twelve to twenty-four months and what catalysts could reaccelerate that growth and what capabilities and investments best position GoHealth as the market stabilizes with retention and value-based plans? Vijay Kumar Kotte: No, Rob. Good morning. Good to hear your voice. Thanks for asking the question. This is an interesting topic. The market is one that has been dynamic for a lot of reasons, as you know. The health plans have been a driving force in that, alongside what the government has been looking at and how they can monitor and manage the program at the same time. As we think about the future, the propensity for membership to be stable and or grow again is going to be dependent upon the health plan's ability to rationalize their cost structure, to really double down on their star scores, and to be able to get appropriate rate adjustments from the federal government to be able to invest in those products. So, yes, I think the CMS numbers are a projection of a decrease in market penetration of Medicare Advantage versus prior years. That is probably, in my mind, more of a short-term item. As the product gets reset, and confidence is rebuilt in those products. That's why we feel it's prudent to have taken the action we did because there is uncertainty as to the stability of the new products that I think are out there this year. As we wait, with anticipation, instead of how the health plans will perform under those products. This is also an interesting period where it's not just is the product good today. As you know, in our business, it's about cash flow, cash generation. We book our revenue on an LTV basis, but there's a presumption in those as you invest cash at time zero, that relies upon a year one renewal. And so understanding which products will be stable for multiple years is really critical. And so we do look forward to an opportunity where over the next twelve to twenty-four months, health plans will have stabilized that cost structure so that they can rightsize or rationalize those products, which, again, is consistent with all the verbiage they put out there. But we do believe Medicare Advantage is here to stay. We think this is a very strategic and valuable tool to consumers who matter the most. This is important for their fixed income to be able to manage their total cost. So a long way to say, over twelve to twenty-four months, we do believe that the health plans, according to their own projections, will have stabilized their cost structures, will be refocused in which geographies and which products make the most sense to them. And then we will be able to align with those needs as we have historically. The last point I will say is that there's been no doubt the majority of the health plans have doubled down on their interest in special needs plans. And we have maintained that capability while we continue to invest in our technology to support those focused needs. As we've been a leader in that space for years. Robert Miles McGuire: Okay. I appreciate that. Thanks. And just to follow-up on growth PROTECT, it looked like continued to grow in the third quarter. Can you give us a deeper discussion on the key drivers of that growth? And you're balancing your focus on Protect during AEP? You know, with a more retention-oriented MA posture? And then lastly, how we should think about Protect's 2026 revenue contributions and which quarters could grow or strongest throughout the year? Vijay Kumar Kotte: No. I'm glad you brought it up. GoHealthProtect has been instrumental in the way we think about continued retention of our business. The more we can bring products that can enhance the peace of mind of our consumers, those that we have served in the past who are existing GoHealth customers, as well as new consumers who didn't even know these products were available. And we were able to test these at scale as we talked about on our Q2 call, really moving most of our floor towards focusing on and to deploy it. Learning how to serve the population with this new product set, in an efficient manner. We've got great partners on the other side of the carriers who support these products. And the strategy had always been to have a portfolio of products that align with how we want to serve consumers both existing and new, while being able to oscillate big based upon the seasonality, the natural seasonality that exists in the Medicare Advantage space. And the GoHealthProtect product set actually is very complementary, meaning the peaks and valleys are offset. So when Medicare Advantage is more peaked, it's actually the lower period of time for the GoHealthProtect or Guaranteed Acceptance products. So as we go through the next year, now we understand the seasonality of both very well. We believe they're very complementary. We will go into 2026 with that same approach. And you know, obviously, in the current AEP, focusing a little bit more on MA during the peak closing part of the AEP period where we're doing mostly MA. And then coming right back into the guaranteed acceptance space. And then oscillating a little bit as we read and react to the marketplace in OEP and beyond. But you should not be surprised that as we think about the MA marketplace, it only really changes when benefit plan cycles change. So now we know the new portfolio of products available on the market for the 2026 plan year. What is is what health plans want to do with those. Will they suppress more? Will they change their compensation for all the products that are out there? So we're going to be very tentative on that as we watch and learn from what we saw last year where there were suppression midstream, there were commission changes midstream, and there were continued changes all the way through OEP and going into SEP. So we want to be very thoughtful, and we're prepared for those changes as they might come through. But we are going to make sure that GoHealthProtect is augmented in there and can be more primed during the SEP and OEP period that you might have otherwise assumed. Robert Miles McGuire: Thank you. Operator: Our next question comes from Patrick Joseph McCann with Noble Capital Markets. Your line is open. Patrick Joseph McCann: Hey, thanks for taking my questions. Yeah. First, if you wouldn't mind, I know you've spoken about it already a little bit, but if you could talk a little bit about some of the more detailed reasons why you decided to pull back on the MA side of things. And then, I guess, if you could look at it from two different perspectives. On the one hand, what are the implications for you if you read the market correctly, but on the other hand, what would the consequences be if your assessment ultimately proves to be incorrect? Vijay Kumar Kotte: Oh, good morning, Pat. Good to hear you. So, look, this is actually a fairly simple answer. We listen to what people were saying. We serve two primary constituents. We serve our consumer, the Medicare beneficiaries, who seek our services to help identify the best plan options for them. And we serve the health plan to be able to engage that population and either enroll or retain or service that consumer base. And both parties have communicated to us that this is the market where we need to pull back on new enrollment and focus on stability. The health plans have explicitly said they value retention, and they're going to do everything they can to drive higher retention to grow their membership as opposed to get aggregate new members. They're trying to balance that, but they have indicated they would trade new members for a retained member nearly every time. So we listen to that. The second piece is we looked at the product landscape. We understand that a number of the products that are some of the best in certain are ones that are not even commissionable. And many of the products that we've written are still stable. They are the best products for the consumers that we saw last year. So when we look at that fact base, and we hear what people are looking for, consumers want stability and peace of mind. Health plans want retention over new enrollment. And they're putting their money where their mouth is. And the consumer relationship to us is a long-term play. So when we assess all that, we said the best use of our capital is not to confuse the market. It is to focus on the consumers who relied on us in the past. To drive retention when there's noise to try to probably take some of those members we've served and put in the right plan before to distract them and confuse them into some other product that may be commissionable by another broker. And to make sure our base is stable and knows they're in the right spot. And we feel confident the majority of our membership that we wrote is. And as we proved a couple of years ago, when we launched the plan fit save program, we built a reputation with our consumers that we were going to tell them what was the right thing was for them regardless of whether we got paid for it. And we've done that in a very concerted way on our current membership base as opposed to burning cash in the general marketing trend and having a lot of consumers come in that we're ultimately going to tell them to do nothing. And we believe that should be the most consistent message delivered this year by anybody speaking to a consumer. And so as we think about that dynamic, you could say, well, hey. There's a lot of messages out there today. How do you know you're right? We don't know for a fact that we're right. But our data says that we're directionally correct. The question is, to the extent we're correct, and what are the places that we're wrong? And I would say we as a leadership team, assess it from what are the risks here. The downside of our approach is that we might have not grown as much as we could have. We might have left an opportunity on the table. But we have retained all of our assets or our capabilities. We've maintained a cash position that gives us strength to move forward. We've retained and continue to invest in our technology to be able to scale back when we're ready. So we might be just a little bit behind if we're wrong. But if we're right, and if we're more right than wrong, then that means if we hadn't made this decision, and we had continued to go into the market like, might have otherwise gone because of the attractiveness of the disruption in the marketplace. Then that would have likely burned a lot of upfront cash that would not have been returned, let alone in the first part of next year. But even within a renewal cycle because there's going to be a lower probability of those room to host. And as you know better than anyone, Pat, this industry, you need that first renewal to do a cash on cash return on traditional agency-based business. So in history, Pat, we have always relied on looking at agency, nonagency. When we could do that, when we didn't think products predictable. This year, we didn't have that option because of the health plans lack of interest in new business. And thus, we think if we are would have gone down the path of trying to lead towards growth, in the traditional manner we would have had a lasting result, which would not have been good. And burning cash without an expectation to get a return on it is not the right way to survive the long game in the Medicare Advantage business. So those are the ways we looked at it. Those are the factors we assessed. And that's how we think about it. If we're wrong, we've just got to reramp and get going. But if we're right, the worst thing we could have done was to deploy a bunch of capital in this market. Patrick Joseph McCann: I appreciate that, Vijay. And then and finally, could you talk a little bit about why you think the industry should consolidate and what specifically positions GoHealth to be a leader in that consolidation? Vijay Kumar Kotte: I think there's been development of specialization within the broker space. But there is some unnecessary duplication of cost. We do know that we all serve consumers the same way. And have different approaches to the way we do it. The consumers are seeking the same thing from everybody. And when you think about the way to efficiently invest cash and capital to serve the most consumers you can, without causing extra noise in the market, we believe that large volume of brokers in the industry, a lot of different constituents marketing at a significant level, introduces additional churn by their natural existence. We do believe there's duplicative expense on the fixed cost side, duplicative investments in enhancements in technology and other type capabilities. That if you were to be able to combine, you could take the power of a strong consumer base in your back books deployed against leaner, more built-for-purpose administrative costs, that can allow self-investment of cash. You generate enough cash to drive your growth. Less dependence on cash and compensation models with health plans, it gives you a lot of independence and capabilities. So the market has grown to a point and you found natural leaders who do it the right way. And we believe that natural leaders with different expertise coming together get scale leverage, and that's why we think this is a prime time to do just that. And we're actively assessing the market for those types of endeavors. Patrick Joseph McCann: Thank you. Operator: Our next question comes from Ben Hendrix with RBC Capital Markets. Your line is open. Ben Hendrix: Hey. Thanks, guys, for taking the question. You know, we've heard from carriers this quarter with Humana setting forth the most direct messaging about slowing new sales, you know, to protect the economics of their existing members and also, in some cases, suspending broker relationships ahead of AEP. We just wanted to get an idea of how pervasive that kind of mentality is across your carrier base. You know, the degree to which you're seeing that in other carriers. And then if Humana is kind of the more you know, just what that weighting looks like in your book in terms of the importance to your Encompass platform and, you know, and other business. Thanks. Vijay Kumar Kotte: Thanks, Ben. Appreciate the question. This is one where I think, you know, you refer to Humana specifically. But what I would tell you is most of the major health plans have learned the lesson. Right, which is going back to '21, AEP, '22. I said in my prepared remarks that we've seen this story before. Any type of outsized growth either intentional or unintentional, has not been a good move or outcome for the health plan who won that disproportionate growth and share. Why? Well, the health plan has been very specific about the challenges in profitability. But in addition, they've also highlighted the headwind it puts on your star scores. And each of the major health plans has been in that spot over the last three to five years. Where they won more than they thought, it had significant profitability challenges. That onboarding challenge leads to Starz challenges off the bat. That for them to onboard all that membership in Q1. And then hits you on the medical cost side. Especially in the v twenty-eight world. So all of that said, the health plans are trying to be very thoughtful of they'd rather grow slower or less than plan and then be able to try to tweak it up. Than to be in a position where they need to pull it back. And I will tell you that is exactly what the health plans are trying to do. Nobody wants broad-based growth. Everybody wants even more than we've ever seen. Very specific targeted growth, very specific limits on it, but nearly every one of them. Had maintained that they want us to focus on stability, consistency, and retention. And that's exactly what we've done. So I think that's what's been happening in the market. That's what the health plans are doing. And that's how we're serving them because nobody wants to be that big winner that yields a big headwind for them in the first quarter of next year. Ben Hendrix: That makes sense. And also, I appreciate your commentary about maintaining flexibility while also significantly reducing kind of costs related to workforce. Wanted just to talk to you about kind of mechanics of a re-ramp. Like, when you when we need to get back into this, you know, into a kind of a full sales mode, kinda what you know, what are the hurdles and the mechanics of getting re-ramped back to full capacity in the future? Vijay Kumar Kotte: No. It's a great question. Obviously, we had to make sure we scrutinize that to maintain all the capabilities that enable that. We've invested, as we've talked about over the last almost three years, in enhancing our technology to do one thing. When I started here, one of the biggest cash burns was the cost of ramping agents during SEP in advance of AEP. Right? Because ramp is always generally a challenge in any dynamic and positive marketing environment. Ramp has been a challenge. And so what did we do? We focused our efforts to standardize our technology and tool. To really leverage how do you tie in your learning and development function to train and bring on agents faster. To deploy them with high quality, to do it in the shortest time possible. When we first started here, it took up to sixteen weeks to get an agent up to ready to sell as we would call it. And have the right training. As you saw last year, we brought on the TeleQuote team. We did that within two weeks and got them to double their production. And that is what our tool can do. So we're maintaining that capacity. Maintaining that capability, continuing to invest in the AI and automation tools, that standardize the process. That's the key to RAM. Standardize the experience so that a new person who's licensed can easily flow in and let the technology do their work and let the agent do what they're supposed to do on the call. Answer nuanced questions and give peace of mind. They can't they're not there to decipher the 3,000 plan. That's what the tech does. So when we think about identifying that market opportunity where the health plans are starting to lean back into it, they tend to give you a little bit of line of sight into that, and then we begin to ramp. And there are plenty of agents out there. When we've needed them, we can go out and get it. Right now, I think a lot of people are available if you wanted to start a ramp tomorrow. Not saying that's what we're doing, but I will tell you that when you want to, we'll be able to find those agents, we'll be able to put them through our platform and bring them on and ready to sell faster than anything we've seen in the market thus far. Ben Hendrix: Thank you. Operator: Our next question comes from James Philip Sidoti with Sidoti and Co. Your line is open. James Philip Sidoti: Hi, good morning. Thanks for taking the question. So I'm trying to figure out how you navigate the next twelve to twenty-four months until enrollment starts to ramp again. You know, where is your cash balance today? And where do you think the what do you think the cash burn will be over the next few quarters? Vijay Kumar Kotte: Yeah. Let's just start. I mean, I think you'll see in our filing approximately $32 million of cash at the end of the third quarter. And, you know, you've also seen we do have access to the continued draws for the new money that we brought in as part of the super-priority lender deal that we entered into at the end of last quarter. But this is really about making sure that you have a plan. Like I said, this is about cash management. This is about making sure deploying cash in an efficient way that is going to give you the best return on cash on cash return on that. And so when we think about our pro forma, we've got our plans in place to enable us to have sufficient liquidity to run and operate our business to maintain compliance with our covenants, etcetera. But give us the flexibility to come back when we're ready. When the market's ready, for us to do that. We're going to be very thoughtful about how we time it. And as we said in the previous response to Ben's question, it's critically important to have the continued investment in technology. We're not stopping our investments in our capabilities. We're going to enhance them. So we're going to be very thoughtful on how we deploy our cash against it. To ensure that we are going to be even more ready. You can have even a shorter time be re-ramped. That's the key. Is being able to turn it up and turn it off. Quickly and effectively. And that capability is what we've, I think, proven to do well. We're going to continue to develop. And that enables us to have confidence that our current plans allow us the liquidity and the capital structure to be able to still be a leader in serving consumers in this space. James Philip Sidoti: And how much capital is available to you from that super-priority facility? Vijay Kumar Kotte: As you may recall, it was $40 million of new money that had multiple opportunities for draw throughout the third quarter here at different trigger points. Based upon time, date triggers. So the short answer is $40 million of new capital since we entered. We have accessible we entered into that agreement. James Philip Sidoti: So, you know, between the cash you have on hand, the additional cash, you know, do you think that's enough and why? Do you think that's enough? Vijay Kumar Kotte: I mean, if we wanted obviously, we think it's enough. Because we think it maintains our capabilities or stability and still allows us to make investments. It also allows us to continue to pursue the consolidation of the industry, which we think is critical. We think that is a major unlock in the space too. But more importantly, how are we able to do it? We're able to do it because we're doing what we do now. We're reading the market, and we're not trying to hope there's going to be a cash on cash return. We want high confidence, risk-adjusted cash on cash return. And I can't stress that enough. The math isn't just six zero six revenue or LTV to CAC. I need year one cash on cash versus a CAC. And so when we start to see that open up, that's when we'll do it. So that rigor, that discipline, around how we deploy the cash is going to lean conservative. That lean is going to enable us optionality. We're always going to leave some business on the table and not try to shoot to the maximum possible. That's being disciplined and thoughtful. This team, my team, which I'm very proud of all the hard work they've done, not easy to make the moves we have. Gives me the confidence that we can continue to be nimble as the market shifts. James Philip Sidoti: Thank you. Operator: As a reminder, to ask a question, please press 11 on your telephone. Again, that is 11 to ask a question. Our next question comes from David Joseph Storms with Stonegate. Your line is open. David Joseph Storms: Good morning and thank you for taking my questions. I just want to start. There's been a lot of emphasis on retention as a core part of the model for this year. Can you maybe walk through some of the logistics, some of the stuff that you're seeing on the ground to support this retention, thinking between conversation structure, any post-enrollment engagement, support, stuff like that? And then maybe any early indications of success from some of the more recent cohorts that you're applying this to? Vijay Kumar Kotte: No. Thank you, Dave. It's an excellent question. It's so important to not just use words. Everybody's saying retention. The question is, what are you doing to put your money where your mouth is on retention? So, yes, we have not done broad-based. You can go assess. You can see an AEP. We're not doing broad-based marketing to the general population. What we're doing is we're having focused service follow-ups with our consumers that we've had in our back book and continue to serve. We want to make sure that we're focusing our agents and not distracting them. So those of you who have ever been in these types of businesses, you'll realize when an agent is on the phone and he has an option to make a follow-up phone call, or and he's seeing a queue of leads coming in, what does that generate? That means you lean towards the new sale typically when you have those leads in, you see the queue. What we've done is we shut that queue off. The queue is only for existing consumers to make sure we're focusing on service them as AEP begins. And that's a really important part of our strategy. Start there. Don't distract. Well, how are you going to make sure that your agents are really going to do a quality job there? You can put quality metrics. You can put KPIs in place. But you've got to change their compensation model. And that's exactly what we did. We did this years ago. We started the Plan Fit Save model. And we've doubled down on that program now. This is not just for interactions that you have on the phone. This is with our new members with Plan Fit Save was taking leads out of the marketplace, and we put them in, and we them through to. When we're doing it now, we're saying we're giving you a special compensation for servicing the back book. Most brokerages out there aren't paying their agents incremental commissions. And or variable compensation. To support individual members. And that is what we've done. So we've done a concerted marketing effort. Complemented by training, technology, which is enhanced to deliver service in comparison of your current plan, and then doubling down on that by putting your compensation model to reward the right behavior. And discourage bad behavior. And so we've done all those. And the early indications and the first few weeks by some of our carriers has already been our retention rate is better than the field. And that's well ahead of where we were in previous years. And so I will tell you that we are very excited about it. We're very proud of our agents. We've retained the best agent. The highest quality who serve the most consumers of this back book. To be able to do just this. And each one of those tactics so we can always be better, is performing better than we had expected. David Joseph Storms: That's very helpful. Thank you. One more follow-up for me. There's been a lot of focus, and I think we've all noticed this. You know, the focus on the shift into special needs plans. How do you feel about your strategic positioning there? You know, maybe what differentiates GoHealth's ability to serve these SNP members effectively? Any training, positioning, anything you're doing to maybe be ready for that shift there would be very helpful. Thank you. Vijay Kumar Kotte: No. Thanks, Dave. The special needs population is one that is actually very near and dear to my heart. I've been building dual special needs plans for nearly twenty years. I mean, it's been a long haul here, and that's a population that has a very unique set of needs and questions. And for the average broker, it is hard. And it's a complicated conversation. It doesn't give the average broker a confidence that they're going to have a consumer enroll and stay on that product. And so what we've done is we've taken that friction with agents out. How do we do that? We use our proprietary technology. The PLANFit tool helps guide not only a through the shopping process, but an agent through the shopping process. To help support integrations with datasets to verify eligibility, to pull in data to give you, you know, potential eligibility on chronic. Special needs plans as well. And then to give the agent confidence that when that is the highest ranked product, meaning a dual special needs plan or a chronic special needs plan, it's the highest ranked product according to our proprietary tools to facilitate enrolling the consumer in that and helping the agent ask real-time questions via our Plan GPT platform. That helps them get very nuanced answers to the specific questions of special needs population. That requires great technology, as we've described, extensive training, and a lot of experience answering the what-ifs for this population. So when we have a lead come in, that's presumptively likely eligible for a special needs plan, our technology is automatically routing that lead to an agent who has in that geography and with those types of special needs plan. It's not random. It's not first in line. It's not a FIFO type approach. What it is is a very thoughtful, AI logic-driven rating and matching system. That ensures that a very special consumer is getting a trained and knowledgeable agent can help facilitate that. Because of all this complexity, that is why health plans are compensated in a different way. This is why health plans are able to drive different margin profiles. With that population. It's an important but complicated population who requires incremental investment to be made in infrastructure to support. We have that infrastructure. We have a differentially delivered in this space, and that is why it's a strategic alignment with what health plans want. So, hopefully, that was responsive, and I know probably a little bit long-winded, but I'm really proud of this technology and what we're able to do to serve this population. David Joseph Storms: Thank you. Operator: I'm showing no further questions at this time. I would now like to turn it back to Vijay Kumar Kotte, CEO, for closing remarks. Vijay Kumar Kotte: Thank you, Daniel. This is a dynamic marketplace. It has been. The key as we look at it is to ensure that we are taking all the information we're exposed to and really sticking true to one clear statement. Most people tell you what you want. So what they want, what they what you need to do is hear it. And we have heard it. We've listened to it. Seen it. We've anticipated it, and we've taken the deliberate and disciplined actions to react to it to enable ourselves to serve everybody the way they want to be served. Consumers want peace of mind. Health plans want stability and retention. They don't want us just risking the market with a bunch of marketing. They didn't invest. They didn't prefund. They didn't provide MDF the same way they historically did. They want to invest in reinforced retention. That's what the health plans have actually done. They put more incentives in retentions and renewals. And we have been nimble to be able to deliver on those capabilities to support exactly those things. Peace of mind, stability, retention. And I'd be remiss if I didn't thank our team who has been so nimble with us and so showed so much integrity, versatility, resilience to be able to trust what we're doing to understand our goal is to serve, and to pass the temptation of short-term opportunity while we think about long-term cash on cash viability and strategic opportunity. So with that, we will close, and I really do appreciate everybody's participation this morning. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings, and welcome to the Protalix BioTherapeutics, Inc. Third Quarter Financial and Business Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Moyer, Investor Relations. Thank you, sir. You may begin. Mike Moyer: Thank you. One moment, please. Thank you, operator, and welcome to the Protalix BioTherapeutics, Inc. Third Quarter 2025 Financial Results and Business Update Conference Call. With me today are Dror Bashan, CEO of Protalix BioTherapeutics, Inc., and Gilad Mamluk, Senior Vice President and Chief Financial Officer. A press release announcing the financial results for the quarter and corporate updates was issued this morning and is available now on the Protalix BioTherapeutics, Inc. website. Please take a moment to read the disclaimer regarding forward-looking statements in the press release. The earnings release and teleconference include forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made. Factors that could cause actual results to differ are described in the disclaimer in the Protalix BioTherapeutics, Inc. filings with the US Securities and Exchange Commission. I will now turn the call over to Mr. Bashan. Dror? Dror Bashan: Thank you, Mike. And thank you, everyone, for joining this call. I will begin by reviewing our recent accomplishments. Following my remarks, Gilad will provide a detailed review of our quarterly and year-to-date financial results, and then we will open the line for your questions. We are pleased to report another strong quarter and a solid year-to-date performance. For the first nine months of 2025, total revenues were $46.436 million, representing a 24% increase compared to the same period last year. Our total revenues for the third quarter were $17.9 million, which reflects a decrease of 1% compared to the same period of 2024. We recognize revenues from sales of our products to Chiesi, Pfizer, and Fiocruz in Brazil. Their purchases vary from quarter to quarter as they control their own inventories. Overall, these revenues reflect the continued commercial success of our enzyme replacement therapies and provide a strong foundation to support our research and development efforts. On the regulatory front, as we have announced previously, Chiesi, with our cooperation, has formally requested the reexamination of the negative opinion issued in October by the Committee of Medicinal Products for Human Use (CHMP) regarding the proposed every four weeks dose regimen for Elfabrio in Europe. There should be no misunderstanding. This process has nothing to do with the currently approved every two weeks regimen, and the May 2023 approval of the every two weeks regimen in the EU is unaffected, and Elfabrio remains available to patients in the EU. We remain confident in Elfabrio's long-term potential, and we are working closely with Chiesi to provide additional data and context to support the reexamination of the once in four weeks regimen, which we believe could offer meaningful benefits to patients and caregivers. Turning to our pipeline, we are particularly excited about PRX-115, our recombinant pegylated uricase candidate under development for the potential treatment of uncontrolled gout. Preparation for the phase two clinical trial is well underway. We filed our IND for the phase two clinical trial of PRX-115 in October, and the IND has become effective following the FDA's standard thirty-day review period. We continue our plans to initiate the trial later this year. Based on the encouraging first-in-human data from a phase one clinical trial, PRX-115, we believe it has the potential to be a best-in-class therapy with a long-acting profile that could improve patient compliance and outcomes. If successful, this program represents a significant opportunity in the market with a high unmet need. We look forward to updating you about the trial as data becomes available. Finally, I would emphasize that our operating strategy remains focused on three pillars: driving commercial success with Elfabrio, advancing PRX-115, and other early-stage pipeline programs, and maintaining financial discipline. With a strong cash position and positive quarterly net income, we are well-positioned to execute on these three priorities. Before we turn to the financial results, I want to introduce Gilad Mamluk to this call. Gilad began serving as Protalix BioTherapeutics, Inc. Chief Financial Officer in August, and this is his first earnings call with the company. I'm sure that I speak for everyone on this call when I wish you much success in the new position. Welcome, Gilad. And I'll now turn the call over to you to present a detailed review of our financial results. Gilad, please. Gilad Mamluk: Thank you, Dror, and good morning, everyone. Total revenues from selling goods for the nine months ended September 30, 2025, were $43.1 million, an increase of $8.3 million or 24% compared to the $34.8 million for the same period in 2024. These revenues consist of $18.6 million in sales of Elfabrio to Chiesi, $15.4 million in sales for Elelyso to Pfizer, and $9.1 million in sales of Elelyso to Fiocruz in Brazil. Total revenues from selling goods for the three months ended September 30, 2025, were $17.7 million, a decrease of $100,000 or 1% compared to $17.8 million for the same period in 2024. These revenues consist of $8.8 million in sales of Elfabrio to Chiesi, $2.8 million in sales for Elelyso to Pfizer, and $6.9 million from sales to Fiocruz in Brazil. As Dror mentioned, we recognized revenues from sales of our products to our partners, Chiesi, Pfizer, and Fiocruz in Brazil, and the individual purchases change from quarter to quarter, as each of our partners controls their own inventories. As a result, the orders we receive from our partners may not be timed to the pace of patient acquisition and retention, and accordingly, our product sales to our partners may not reflect patient demand for the product. We recorded revenues from license and R&D services of $550,000 for the nine months ended September 30, 2025, an increase of $100,000 compared to $400,000 for the same period in 2024. For the three months ended September 30, 2025, we recorded revenues from license and R&D services of $200,000, an increase of $100,000 compared to $100,000 for the same period in 2024. Revenues from license and R&D services are comprised mainly of revenues we recognize in connection with our license and supply agreement with Chiesi. Other than potential regulatory milestone payments that may become payable, we expect to generate minimal revenues from licensed R&D services now that we have completed the clinical development of Elfabrio. Cost of goods sold for the nine months ended September 30, 2025, was $22.4 million, up $2 million or 10% from $20.4 million for the same period last year, reflecting increased sales to Chiesi and Pfizer for the nine-month period, partially offset by a decrease in sales to Fiocruz. For the three months ended September 30, 2025, cost of goods sold was $8.3 million, a decrease of $100,000 or 1% from $8.4 million for the same period in 2024. The decrease was mainly the result of the decrease in sales to Chiesi and Pfizer for the quarter, partially offset by the increase in sales to Fiocruz. Research and development expenses for the nine months ended September 30, 2025, totaled $13.9 million, an increase of $5.1 million or 58% compared to $8.8 million for the prior year period. For the three months ended September 30, 2025, total research and development expenses were approximately $4.5 million, an increase of $1.5 million or 50% compared to $3 million for the same period of 2024. The increase for both the three and nine-month periods was mainly due to preparations for our planned phase two clinical trial of PRX-115, which we view as a strategic investment in our pipeline and long-term growth. Selling, general, and administrative expenses for the nine months ended September 30, 2025, were $8.2 million, down $1 million or 11% from $9.2 million for the same period last year. The decrease resulted mainly from lower salary and selling expenses. For the three months ended September 30, 2025, selling, general, and administrative expenses were $2.9 million, an increase of $300,000 or 12% compared to $2.6 million for the same period in 2024. The increase resulted mainly from an increase of $100,000 in salary and related expenses and an increase of $200,000 in selling expenses. Financial income net was $10,000 for the nine months ended September 30, 2025, compared to financial income net of $100,000 for the same period in 2024. The decrease resulted mainly from exchange rate costs and lower interest income on bank deposits, which was partially offset by lower notes interest expenses due to the September 2024 repayment in full of all the outstanding principal and interest payable under our then-outstanding convertible notes, or the 2024 notes. For the three months ended September 30, 2025, financial income net was $100,000 compared to financial expenses net of $100,000 for the same period in 2024. The difference resulted mainly from lower notes interest expenses due to the September 2024 repayment in full of all the outstanding principal and interest payable under the 2024 notes. We recorded tax expenses of approximately $300,000 for the nine months ended September 30, 2025, compared to tax expenses of approximately $400,000 for the same period in 2024. For the three months ended September 30, 2025, we recorded a tax benefit of approximately $100,000 compared to tax expenses of approximately $600,000 for the same period in 2024. Our tax expenses and benefits result mainly from taxes on GILTI income under the US Tax Cuts and Jobs Act of 2017, the US "One Big Beautiful Bill" Act, which was signed into law on July 4, 2025, and includes a restoration of the current deductibility for domestic regional expenditure beginning in 2025, retransmission options for previously capitalized amounts. We recorded a net loss of $1.1 million for the nine months period ended September 30, 2025, or 1¢ per share basic and diluted, compared to a net loss of $3.6 million or 5¢ per share for the same period in 2024. For the three months ended September 30, 2025, net income was approximately $2.4 million or 3¢ per share, basic and diluted, compared to net income of $3.2 million or 4¢ per share basic and 3¢ per share diluted for the same period in 2024. At September 30, 2025, we had $29.4 million in cash and cash equivalents and short-term bank deposits, which we believe are sufficient to satisfy our capital needs for at least twelve months from the date we issue our quarterly report for the quarter ended September 30, 2025. Overall, these results reflect strong execution and financial discipline as we continue to invest in our pipeline while maintaining a solid balance sheet. Dror, back to you. Dror Bashan: Thanks, Gilad. To conclude, we are proud of our progress over the course of 2025 so far. We delivered strong year-to-date financial performance. We advanced PRX-115 towards phase two initiation and continue to strengthen our commercial foundation with Elfabrio. We believe these achievements position Protalix BioTherapeutics, Inc. for long-term growth and value creation. We appreciate your continued support and look forward to updating you on our progress in the coming months. Operator, please open the line for questions. Operator: Thank you. We will now be conducting a question and answer session. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Ram Selvaraju with H. C. Wainwright. Please proceed with your question. Ram Selvaraju: Thanks so much for taking my questions, and congratulations on all the recent progress. I first of all wanted to ask if you could provide us with any granularity regarding the timeline for the reexamination of the CHMP opinion on the every four-week dosing regimen of Elfabrio. Secondly, I wanted to see if you had any additional comments on the evolving competitive landscape in treatment-refractory gout and what implications this may have for the ultimate size of the commercial opportunity for PRX-115. And then lastly, with respect to ongoing financial reporting, I was just wondering if you anticipate further predictability of the royalty-based revenue recognition related to Elfabrio sales going forward, or if you anticipate any additional sources of volatility that may impact how you recognize revenue stemming from sales of Elfabrio? Thank you. Dror Bashan: So thank you, Ram. I will answer you one by one if it's okay. On the once every four weeks reexamination request, we expect to have an answer in 2026, and, of course, we will update accordingly. This is one. With regard to the gout, indeed, there are multiple developments mainly uricase-based mechanisms of action. When we look at the gout market, we foresee a significant increase in the overall gout market in the next five to six years. And, we think that within the uricases or the uncontrolled gout patient population that requires uricases will grow as well. And if indeed our phase two will be successful, potentially we have a product that can take a very nice market share from this increased pool. On the third one, you know, we continue to recognize what we sell to Chiesi's inventory. And I'm not aware of any major change. Chiesi does well in the market. We are optimistic when we look into the future. And this is it. Gilad Mamluk: I would just add to that, Ram, that we have good predictability in terms of our revenues, and we do hope to give some more visibility also in our annual report. But as you know, we are limited in what we can say, given our agreement with Chiesi, and Chiesi is a privately held company. Ram Selvaraju: Thank you very much for all of those responses. I just had one other quick one maybe for Gilad. Regarding the cash runway guidance, I just wanted to clarify whether this is based solely on the expenditures, the operating expenditures that you expect, or if this is factoring in the continued receipt of royalty-based revenue on Elfabrio. Gilad Mamluk: It's based on both. And as I said, we have good predictability regarding the revenue stream. Dror Bashan: And this includes, of course, the expenses associated with the phase two trial on PRX-115. Right? Ram Selvaraju: Yeah. That's fine. Yeah. Okay. Gilad Mamluk: Definitely. Ram Selvaraju: Okay. Thank you. Operator: Our next question comes from John Vandermosten with Zacks. Please proceed with your question. John Vandermosten: Thank you. And, hi, Dror, and welcome to the call, Gilad. Regarding the CHMP decision on the every four-week dosing, does it make sense to run a new trial to get the information that the EMA might be looking for to get that different dosing regimen, assuming that they don't find a favorable decision? Dror Bashan: Okay. Right now, you know, Chiesi submitted a request for reexamination. They will put their arguments together in the coming months. And then there will be discussions within the CHMP, and the verdict will be given, of course, as I mentioned, in 2026. If it's positive, great. If it's not positive, Chiesi will decide internally and take a decision. John Vandermosten: Okay. And it sounds like you're still on track for a start of the trial for PRX-115 before the end of the year. What does the timeline look like for that if you get started in the next few weeks in terms of top-line readout and enrollment and everything? Dror Bashan: Yes. Indeed. We plan to start screening patients in a few weeks. In 2027, we expect top-line results. John Vandermosten: Okay. And you've identified that you want to have several different assets in your development pipeline. And I know you have three right now listed. And I was just wondering what's emerging as a follow-on to PRX-115 as another candidate? Dror Bashan: So we hope to update the market soon. You know, PRX-119, I hope that we will be able to, if indeed we'll pass all the models and the tests that we are going through for the final test, we will update about the mechanism of action and the specific indication. John Vandermosten: Okay. And then a last one for me. I know you've been getting a few additional approvals in different geographies for, or Chiesi has, new approvals. Has anything emerged recently since the last update in terms of that? Gilad Mamluk: I'm not aware of anything significant or something I'm aware of. Dror Bashan: There is a long list of markets Chiesi is under submission or planning to submit for in the next few years to come. So we are not concerned on this front. This is part of the further expansion of Elfabrio globally. John Vandermosten: Sounds good. And I guess you'll disclose that as it happens. I know in the past you've disclosed them in the queue. Dror Bashan: Yes. Yes. We will disclose it accordingly and properly. John Vandermosten: Great. Thank you. Ram Selvaraju: You're welcome. Operator: Our next question comes from Ophil Menkes. Please proceed with your question. Ophil Menkes: Hi. I'm just an individual investor, but I have a couple of questions for you. Number one is there seems to be a pattern of basically receivables going up at the end of the year and then being cleaned up at Q1. Now so far, $9.9 million has been basically paid off from the end of Q3 receivables. And, basically, from what I've seen, it looks like the Brazil and the Pfizer amount that we sold this year are basically probably 4% to 5% above the whole of last year. And assuming that they have about 10% growth, that means that they haven't got much, well, a lot of orders to get easier. Now based on these assumptions, I mean, is there any kind of indication of, like, what kind of numbers you could be doing next year? I mean, what is your capacity based on royalties being paid every time that you basically sell a product to Chiesi? Is there any kind of ballpark number or something like that? That would be question number one. Question number two is, do you guys have any kind of anticipated R&D growth during the phase two for PRX-115 because you guys are looking at a pretty sizable phase two, which is actually pretty nice because you can prove your product candidate pretty nicely with that, but that's costing a lot of money. So, I mean, I have a lot of other questions, but I'm gonna stop at that so that you guys can have some questions, some time to think it over and then so. Thank you. Gilad Mamluk: So regarding the first question, Ophil, we are not providing guidance as noted. Also in terms of our revenue, you know, something we mentioned is that we are buying to the inventory. So if you look at the revenues, there is no direct link, there is a link, but there is no direct link between the revenues and the revenues of Chiesi, for example, because if Chiesi is buying to the inventory in 2024, just for the example, then they may buy less in the first quarter and vice versa. So it may be a bit misleading to try to relate that directly. I can tell you that they keep going. That's without providing any guidance in their numbers, which we cannot give, I can say that they are going nicely the way we see that. In terms of the R&D growth, yes, definitely, we take this expense into account for PRX-115. And as we said, we have enough cash for more than twelve months to fund this trial. Operator: Our next question comes from John Vandermosten with Zacks. Please proceed with your question. John Vandermosten: Great. Thanks for letting me ask another one. The last question made me wonder what your thoughts are in terms of cash burn for 2026 and how that might split between R&D and SG&A? Gilad Mamluk: So as I said over this one, we are not, we cannot provide guidance at that stage. John Vandermosten: Okay. Even for your cost? Gilad Mamluk: Correct. But what we did say is that, and I also replied to the previous question, we said that we have enough cash for more than twelve months. And we, of course, have in mind that we are funding the PRX-115 phase two trial. John Vandermosten: Okay. Alright. Thank you. Operator: We have now reached the end of our question and answer session. I would now like to turn the floor back over to Dror for closing comments. Dror Bashan: So thank you, everybody, for the time. And we will keep updating you. And we will connect next quarter, please. Mike Moyer: Thank you. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Good day and welcome to the Ondas Holdings Inc. Third Quarter 2025 Conference Call. All participants will be in listen-only mode. After today's presentation, before we begin, the company would like to remind you that this call may contain forward-looking statements. While these forward-looking statements reflect Ondas' best current judgment, they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward-looking statements. These risk factors are discussed in Ondas' periodic SEC filings and in the earnings press release issued today, which are both available on the company's website. Ondas undertakes no obligation to revise or any forward-looking statements to reflect future events or circumstances, except as required by law. During this call, Ondas will refer to certain non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is shown in our press release issued earlier today, which is available at the Investor Relations section of our website. This non-GAAP information is provided as a supplement to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. However, management believes these non-GAAP measures provide investors with valuable information on the underlying trends of our business. Please note this event is being recorded. I would now like to turn the presentation over to Eric Brock, Chairman and CEO. Please go ahead. Eric Brock: Well, thank you, operator, and good morning. I want to get started by welcoming everyone to our quarterly conference call. We appreciate you joining us today and for your continued interest in Ondas. I'm happy to be joined this morning by key members of our leadership team, including Neil Laird, our CFO, Oshri Lugasi, the Co-CEO of Ondas Autonomous Systems, Meir Kliner, President of OAS and the Founder of Aerobotics, and Markus Nottelmann, the CEO of Vantas Networks. So let's turn to the agenda. We'll begin the call with a review of our key highlights from 2025. Then I'll hand the call to Neil for a financial review of our Q3 2025 results. After that, we'll provide business updates for our OAS and Ondas Networks business units, we'll ask Oshri, Meir, and Markus to share commentary on current business activity and progress against our plans. During our OAS business review, we will also share some context on the progress of our strategic acquisition program. And we will also hear from Tal Cohen, the Founder and General Manager of Centrix, who's joining the call to share some insight into the Centrix technology platform and business as well as a strategic fit with Ondas. After the operational updates, I will share an outlook for the remainder of 2025 and beyond as we continue to see strong execution on our growth strategy, and further momentum into 2026. Then we will wrap the call and open the floor for investor questions. Let's start by setting the stage for today's discussion. Simply put, Ondas is positioned for success. That positioning wasn't luck. It's the result of years of hard work, discipline, and planning. We've earned it, as have our investors. We've built a strong foundation through talent and perseverance and again, through the support of our investors. And now we find ourselves at the heart of an industry-wide transition. The autonomous and unmanned systems defense and security markets have reached an inflection point, moving from technology development to platform adoption. As we said many times, the market from here will be defined by scaled operating companies, not by those simply introducing new technology platforms. Innovation and technological advancement remain critical, but they're not sufficient on their own to create high returns on capital and equity value. The winners from this point forward will be those who can leverage the extraordinary advancements in autonomy, unmanned systems, and physical AI to build durable, efficient, and scaled businesses. That's exactly what we're doing at Ondas. We're demonstrating platform adoption and validation across both our Optimus and Iron Drone systems and with the new technology platforms we are layering in at OAS. We're benefiting from strong market demand. While seeing firsthand the beginning of what we believe is a major counter-UAS boom where Ondas is extremely well positioned to win. In July, we laid out our core plus strategic growth plan and the response has been tremendous. Truly a mandate from our investors to execute. Immediately demonstrated execution on that plan. We are doing what we said we would do. Because we've been planning for this transition for years. This plan creates value across the board. For our customers, partners, and the incredible talent driving Ondas' growth. It, of course, creates opportunity and long-term value for our investors. A key enabler of that success will be our balance sheet strength. We've raised approximately $855 million since June to support our growth plan. We believe Ondas now has one of the strongest balance sheets in the industry, giving us access to a deep capital pool and a meaningful cost of capital advantage. Access to low-cost capital is a foundation of a true competitive advantage, one that allows us to move decisively, scale efficiently, and lead confidently in the fast-growing markets we are attacking. To support the coming boom in autonomous unmanned technologies, the industry needs scaled leaders, companies capable of operationalizing the technologies that have been validated in the field. Ondas is focused on that exactly. And again, deliberately executing the growth plan that we laid out in July. Now let's turn to the overview. Momentum continues to build at Ondas, and I'm very pleased to report that we delivered another record quarter. Not just financially, but also operationally. In the third quarter, we generated $10.1 million in revenue, a more than six-fold increase year over year, up nearly 60% sequentially from Q2. Our consolidated backlog grew to $23.3 million, more than double where we started the year, and that number reaches over $40 million when including another $18 million related to acquisitions that have closed or pending closure in the fourth quarter. We expect our backlog to grow through 2025 as our pipeline matures, given the strengthened visibility on customer order plans. Given the strength of our execution and our expectations for strong market demand, we are raising our full-year 2025 revenue target to at least $36 million, which means we expect to generate more than $15 million in revenue for Q4. We are also establishing a goal for at least $110 million in revenue for 2026. The outlook for Q4 and 2026 is being driven primarily by OAS, where we continue to expand with existing customers and add new ones. Our customer pipeline is expanding and maturing, and we expect a strong end to 2025 from an order standpoint, which supports our outlook for significant ongoing growth in 2026. The OAS team is building the operating infrastructure to support a multiyear growth outlook. We're scaling production, fuel services, and sustainment capabilities to meet accelerating global demand for our autonomous and unmanned systems. Oshri and Meir will share more details on the investments we are making in scaling operations. At the same time, our strategic growth program is accelerating. This is the evolution we've been planning. Moving from standalone technology platforms towards a system of systems model that unites air, ground sensing, and communications into an integrated autonomy ecosystem. The evolution enables a faster path to operational maturity, and we believe unlocks significant upside to both revenue and profitability. To further maximize the opportunity ahead of us, we established Ondas Capital, which we launched in the third quarter. Ondas Capital is building a technology bridge from Ukraine to The United States and allied European nations. Focused on scaling combat-proven unmanned and dual-use technologies into production and commercialization. This initiative broadens our reach, strengthens our industrial base, and supports the growing alignment between innovation, security, and economic resilience. Meanwhile, Ondas Networks continues the hard work to drive adoption of its point six zero wireless connectivity platform. As Markus will share, the AAR's wireless communications committee formally selected DOT 16 as a wireless roadmap standard for all AAR-owned frequencies. Including the 900, 450, and now 160 megahertz networks. While the hard work will continue, this formal designation validates our long-term strategy and continues to position Ondas Networks as a center of a generational upgrade cycle for railroad communications across North America. Finally, from a financial standpoint, the company remains exceptionally well-capitalized. We raised approximately $855 million in equity in 2025, providing the capital strength to support our business plan, including both our core operations and our strategic initiatives. We are investing this capital to accelerate growth and shareholder value creation as we said we would. To summarize, Ondas is positioned for continued record growth through the balance of 2025 and into 2026, and we continue to build what we believe is an important and valuable defense and security technology company. I want to now provide some context for the critical objectives defined within our long-term business planning. What you see here is a continuation of the strategic roadmap we've been building over the past year. A roadmap that's now delivering real tangible results. Ondas today is no longer just a developer of market-leading technologies. We are building a scaled operating platform that connects world-class talent, technology along with partners, and customers into a unified growth engine. At the center of this effort is Atlas Autonomous Systems, where we continue to build the core OAS operational platform. Under Oshri's leadership, that platform is scaling rapidly, supported by seasoned executives, an impactful cross-functional advisory board, and a growing ecosystem of partners across technology, sales, and production. Oshri and Meir will share more details on the operational infrastructure we are building later in the call. Over the last several months, we've expanded the scope of our capabilities through strategic acquisitions and investments that strengthen our operating foundation and extend our reach across multiple domains. We entered into a definitive agreement with SentriX, which will bring advanced cyber over RF drone detection and mitigation to complement our Iron Drone Raider. We added the Paral Motion, which expands us into unmanned ground systems, robotics, and fiber optic communications. And we acquired Forum Defense, a leader in subsurface intelligence and demining robotics that brings a new dimension to OAS' economy portfolio. Other smaller yet strategic acquisitions that contribute engineering, AI, and optics expertise were added, and that includes SPO, Zico Engineering, and Insight Intelligent Sensors. At the same time, we formed a strategic partnership and made a minority investment in RIF Dynamics, whose attributable drone platform and leadership in European defense markets position us perfectly to capture new opportunities in allied regions. Taken together, these additions create a growing portfolio of capabilities that make Ondas a more complete and competitive company, spanning air, ground sensing, and communications technologies. And as we expand this platform, we're also expanding our talent base, customer reach, and partner ecosystem, each one reinforcing the other. This creates true operating leverage, which we believe will drive faster growth, stronger margins, and higher profitability as we scale. And the speed at which we do this is very important. The key message here is that this is not just a compilation of technologies and corporate entities. We are building a scalable, unified service delivery platform designed to service demanding customers and use cases, importantly, accelerate revenue growth in our path to profitability, building a stronger, more diversified Ondas, one capable of sustained performance, multi-domain leadership, and meaningful long-term value creation. Now let's turn to Ondas Capital. We are very excited to have formally launched Ondas Capital, which represents a powerful new strategic growth platform for the company. Ondas Capital is a multiyear initiative designed to deploy $150 million to accelerate the transition of battle-tested unmanned and dual-use technologies from Ukraine and other allied nations into trusted U.S. and European production. The mission is straightforward, to scale proven technologies in unmanned systems, AI, and dual-use innovation that are already validated in the field and ready for production, whereby Ondas and our partner ecosystem can drive faster, more cost-effective deployment across the major defense and security markets in the U.S. and Europe. Neil Laird: We Eric Brock: This effort is not just about capital. It's about building an industrial bridge between innovation and deployment. By integrating investment, production, and market access, Ondas Capital will help drive commercialization of critical defense and security technologies, strengthen the Allied industrial ecosystem, and create meaningful long-term value for our shareholders. A major strategic benefit of Ondas Capital is its global footprint. We are anchored here in The United States, we now have forward offices and key allied innovation in financial quarters, including Boston, New York, Kiev, Tallinn, London, and Frankfurt. Being on the ground in Eastern Europe and Ukraine is a critical advantage. It allows us to directly access cutting-edge combat-proven technologies while working side by side with our partners and allies at the frontline of innovation. This complements our deep operating experience in Israel, where we've demonstrated how to take advanced defense technologies and scale them successfully through production, global partnerships, and commercialization. We believe Ondas Capital will become a cornerstone for strategic growth, international collaboration, and industrial resilience while creating new pathways for financial and operational expansion across the Ondas Group. And finally, in the interest of time today, keeping my comments brief, but I'm pleased to share that we plan to host a dedicated Ondas Capital investor call in December. James Acuna, who is leading this initiative, will join me along with our leadership team to provide a deep dive into the opportunity, business model, and financial plan for Ondas Capital. We're incredibly proud of the progress to date and I look forward to sharing much more very soon. I will now hand the call to Neil to provide a detailed financial update. Neil? Neil Laird: Thanks. Thank you, Eric. As I get started, I wanted to remind our investors that our financial statements reflect the early stage of platform adoption for our products. And the initial success of our acquisition program. We expect to demonstrate a significant revenue increase over the next few quarters, both from organic growth and from our acquisition pipeline. Revenues increased over 580% to $10.1 million in the third quarter, up from $1.5 million in the third quarter of last year. This increase was driven by OAS revenues, which were $10 million compared to $1 million a year ago. It reflects the ongoing deliveries of Iron Drone and Optimus Systems, and contributions from Apero ground robots related services. Under contracts from military and public safety customers. Gross profit was $2.6 million, representing a 26% gross margin in the third quarter. As compared to a gross profit of $50,000 in 2024. The increase in gross profit year over year results from increased higher margin product revenue at OAS. Compared to lower margin service and subscription revenue in 2024. Gross margins can be volatile on a quarter-to-quarter basis due to revenue levels that reflect the early stages of platform adoption, certain fixed service costs reflected in our cost of goods sold, and shifts in revenue mix between product development, product development, and services revenue. Operating expenses increased to $18.1 million for 2025 as compared to $8.7 million in 2024. An increase of $9.4 million. Our operating expenses increased primarily due to an increase in personnel costs as we are investing in leadership to support our business growth and strategic initiatives. Those operating expenses include an increase of $5 million of noncash items. Cash operating expenses, which exclude non-cash items such as stock-based compensation, depreciation, and amortization, were $11.6 million in 2025. Compared to $7.2 million in 2024. An increase of $4.4 million. The increase in cash operating expenses is due primarily to higher personnel costs. Particularly with the OAS operating infrastructure build-out and similar Ondas Holdings. Similarly, at Ondas Holdings to support expected business expansion in the coming quarters and the company's strategic growth plan. Adjusted EBITDA loss increased $1.7 million to a loss of $8.8 million for the current quarter. The operating loss was $15.5 million compared to $8.7 million in the third quarter of last year. Now let's turn to the cash flow statement. We had cash of $433 million as of 09/30/2025. Compared to $30 million as of 09/31/2024. Cash used in operations for the first nine months remained relatively flat at $26 million compared to $25.4 million for the first nine months of 2024. Cash used in investing activities for the first nine months of 2025 included a handful of strategic investments as indicated on the slide. We find these investments as a good use of cash and expect much higher returns than money market investments. We have discussed in detail the strategic relationship with RIF previously as it relates to investments in companies such as Lightpath, Copen, and Safepro, we believe we have unique expertise to evaluate the opportunity for financial return. And these companies also offer strategic business relationships within our partner ecosystem. We generated cash from finance activities of $448.2 million during the first nine months of 2025. The majority of this came from the equity offerings in June, August, and September. In addition to $24.7 million from the exercise of warrants and stock options. We expect operating cash utilization to continue to improve in the coming quarters. Improved cash efficiency comes from operating expense leverage at our OAS business unit, given our expectation of increased revenue and gross profit growth over the course of 2025, and into 2026. Further, our partnership with Clear, which we expanded in July, will support our revenue growth, including for revenue streams we add through our strategic acquisition program. This working capital is non-dilutive credit facilities to fund certain inventory and accounts receivable balances. Again, we held cash of $433.4 million as of 09/30/2025. Compared to $30 million as of 09/31/2024. We are pleased with the results of our program to improve the structure of the balance sheet. By raising cash and converting debt. Shareholders' equity as of 09/30/2025 was $487.2 million compared to $16.6 million as of 09/31/2024. Furthermore, Ondas' pro forma cash balances were $840.4 million and stockholders' equity was $894 million adjusted for the $47 million in net proceeds raised in an equity offering on 10/07/2025. And before cash used for operations and to finance acquisitions and investments in the fourth quarter. And I'll hand it back to you now, Eric. Eric Brock: Now when we transition to a review of our business units and ask Markus, Oshri, and Meir to provide updates on business development activity and operations at OAS. Start first with Markus who is moving OAS on our DOT 16 platform deeper into the railroad operating groups which will eventually have its rewards. Markus? Markus Nottelmann: Thank you, Eric. It's great to be here and to update you on some of our key initiatives and developments in Q3. To pick up from our last earnings call, support throughout the rail sector continues to build around DOT 16 P, the IEEE standard that Ondas has pioneered and continues to support in advance. In September, the Wireless Communications Committee, a specialized working group within the Association of American Railroads, announced that it has selected DOT 16 for all new developments in the AAR-owned frequencies. This represents the AAR's commitment to 16 not only on the 900 and 450 but also on the 160 megahertz network. Again, this means that all of the AAR-owned frequencies are destined to adopt DOT 16, the DOT 16 wireless platform. As outlined in the Q2 earnings call, the 160 MHz network has characteristics that make it a compelling case for railroad investment. Specifically, the 160 megahertz network is ubiquitous. Where there is rail, there is 160 megahertz coverage. This is the frequency where the railroads through the AAR own and operate 1.3 megahertz of spectrum, making it ideal for larger data-intensive IoT applications. Of the railroad-owned spectrum, the 160 megahertz frequency also has the best propagation characteristics. Making it ideal for difficult terrain and dark territory. Addressing dark territory applications by providing connectivity for railroad applications and staff represents a substantial opportunity for Ondas Networks. I would like to highlight how quickly momentum is building around DOT 16 on the 160 megahertz network. In Q4 and early next year, we are running several separate field trials on Class I and other railroads. Three railroads that in aggregate address long-term industry needs in significant markets. Specifically, these POCs address clear communications, signaling, and connected wayside topics. As well as general connectivity topics for connected railroad workforce. This is significant as it moves Ondas Networks from engaging with railroads on individual use cases to implement true DOT 16 general-purpose networks, which adding safety, and operation-enhancing applications becomes plug and play. On the revenue front, we will be shipping the first Northeast Corridor access production unit at the end of Q4 with further deliveries in 2026. We take pride in the fact that our products will be used for a safety-critical positive train control application in the Northeast Corridor on Amtrak. Our joint development program with Siemens Mobility India for Head of Train Radios has also progressed to deliveries and revenue within the next several months. As many of you may be aware, in July, the Cybersecurity and Infrastructure Security Agency, also known as CISA, issued a notification related to the security issues with the current generation head of train and end of train communications protocol. This has given railroads a significant reason to accelerate the finalization of the HOT EOT generation four point zero specifications. Given that the DOT 16 protocol that Ondas Networks developed for MGAG addresses those relevant security issues. In September, the Wireless Communications Committee announced that the NGHE specifications will be completed in 2026. We continue to engage with the HOT and EOT manufacturers on design and product development tasks to take advantage of the updated WCC timeline. We also continue to engage with the railroads specific 900 megahertz applications. Though timelines of large network deployments remain uncertain. The 900 megahertz timelines are frustrating, though we are creating even more compelling opportunities in addition to the 900 megahertz network with the railroads. And believe the market and financial opportunity for our DOT 16 technology remains significant. Overall, we are pleased with the commitment the industry is making to the adoption of DOT 16. Our direct engagement with railroads and vendors of Wayside and telematics devices is accelerating the build-out of the DOT 16 ecosystem. We expect will lead to accelerated commercialization and believe we will be able to demonstrate the beginning of the adoption curve in 2026. I will now hand the call back to Eric. Eric Brock: Thank you, Markus. I will now ask Oshri Lugasi to take the floor and provide a business update for the OAS business unit. Meir Kliner will also share some context on the progress of the build-out of the OAS operating platform. We will also be joined by Tal Cohen, the Founder and General Manager of Centrix, who will introduce the company, its technology platform, and the strategic fit with Ondas in our IronDrone platform. Oshri, please proceed. Thank you, Eric. During Q3, we made a huge leap forward Oshri Lugasi: in building Ondas Autonomous Systems into a true defense tech and security firm. We are working relentlessly toward our vision of delivering next-generation autonomous and connected solutions for defense, homeland security, and critical missions. OAS is shifting rapidly. We are dramatically expanding our talent base, our partnerships, our customer reach, and our technological capabilities. In the upcoming slides, we will elaborate on how these elements are driving our growth. Our vision is to integrate advanced technology, resilience, and scale to create the autonomous infrastructure that nations and industry will rely on. Our goal is bold and global, to build a powerful global leader that delivers a complete portfolio of defense and security capabilities to the most important customers tasked with keeping the world safe. We are particularly focused on protecting from the surge in threats posed by drones. We are prioritizing combining sensors that can detect and track threats from small UAVs to large ones with effectors capable of neutralizing them safely, protecting the world's most critical assets. We aim to reinforce national borders and forces with cutting-edge technology, enhancing surveillance and intelligence capabilities, protecting civilians in cities, and securing essential infrastructure that sustains modern life. Across all our systems, we integrate advanced AI at multiple levels of autonomy. From prompt-assisted to fully autonomous, powered by some of the most sophisticated robotic technologies in the world. As we promised in our last meeting, we've built real momentum and equipped OAS with much stronger commercial, operational, and technological muscles. During the quarter, we delivered record-high revenues of approximately $10 million, marking the strongest performance in our history. Our backlog grew to $22.2 million at OAS as of September 30. And was more than $40 million when including the announced acquisitions. Further, our customer pipeline remains robust, and we expect to close the year strongly with further backlog expansion. Indeed, we are tracking significant pipeline activity that we hope to share in the near term. This will support accelerating growth momentum into 2026. We advanced our M&A and strategic growth program and completed multiple strategic acquisitions which are adding immediate operational and financial value to Ondas. We established new partnerships and onboarded top talent to strengthen and expand OAS' operational infrastructure. We achieved several important milestones across our portfolio. Optimus was officially listed on the GreenUAS framework with inclusion on the Blue UAS list pending with the US DOD. At the same time, we continued to expand our global pipeline for the Iron Drone Raider, strengthening our position in the fast-growing counter-UAS market. We successfully executed multiple counter-UAS pilots in the US, Europe, and Asia, demonstrating interoperability across our systems. Our Iron Drone Raider was showcased at the Intercom Counter-UAS ID ICE 2025 exercise in San Diego, drawing strong interest from both US and international agencies. We have performed several similar demonstrations for US customers which have been well received. Our Iron Drone Raider was selected by Security Turn Germany, a leading integration partner to the German Armed Forces and other critical security operators. Following successful system integration and demonstrations conducted in Germany by Robotics, we expect this hard work to turn into demand in the coming months given the urgent need to protect critical infrastructure and borders in Europe. Ondas is positioned to lead here. Of course, our market position is even stronger with the addition of SentriX, which opens a tremendous opportunity to market a layered counter-UAS solution suite. Similarly, our US pipeline continues to mature aligned with the growing demand for advanced defense and security solutions. Our marketing partner, Mistral, is helping support a growing and maturing set of pipeline opportunities with defense and homeland security customers. We formed a partnership and made a strategic investment with Rift Dynamics, including an initial order for the WASP FVP drone. Rift is making impressive progress in Europe with the WASP, and we are excited to support the global success, of course, including in the US. On the production side, we launched NDAA-compliant made-in-US fiber optics tools at American Robotics. Strengthening our domestic production base. We have also advanced the required work to prepare the US supply chain for Optimus and Iron Drone and expect to have US-built systems available in Q1 2026. Finally, we continued scaling our operating platform through key leadership additions, most notably the appointment earlier this week of Major General (Retired) Johava Reven, former CEO of Rafael Advanced Defense Systems, to our advisory board. His experience and insight will significantly enhance our strategic depth as we continue expanding OAS globally. I will now pass the call to Meir Kliner, who will share an update on the M&A program and the operational scaling activities at OAS. Meir? Meir Kliner: Thank you, Oshri. During the quarter, we accelerated the execution of our strategic growth program, which drives value creation through accelerated growth and a clear path to profitability. The first start after outlining the plan for investors in July, leveraging the work and the preparation we began earlier in the year. Our acquisition program is off to a fast start after outlining the plan for investors just last July, which is leveraging the work and the preparation we began earlier in the year. Our M&A strategy remains highly focused and disciplined, targeting companies and technologies that expand OAS' commercial reach and strengthen our product ecosystem. Each acquisition we made contributes a unique within our multi-domain architecture, allowing us to integrate aerial, ground, and other critical elements and systems into a unified system of systems. This integration merges ISR, counter-UAS, robotics, communications, and sensing technologies under one interoperable platform. Synergies accelerate customer solution delivery, enhance revenue growth, and increase operational leverage through OAS' scaled infrastructure and position OAS as a next-generation multi-domain defense and security leader. We are building a scaled and interoperable platform by bringing together a group of highly complementary companies, each representing a critical pillar of defense autonomy. In the last several months, we made significant progress in expanding the OAS platform through strategic acquisitions, adding five new companies and bringing critical capabilities, technologies, and customer relationships to our group. These acquisitions strengthen OAS across critical operational domains, including air, ground, and cyber, while expanding our global footprint with Tier one defense and security customers. With SPO, we are now engaged in critical components for missiles and advanced drone systems. Reinforcing our access to the defense supply chain. Vampiro Motion marks our entry into ground robotics and payload systems, a key capability for border defense and maneuvering forces operating in complex terrain. FOREM defense expands our sub-ground and engineering platforms, enabling OAS to participate in land clearance and demining operations. Which are essential to modern defense missions. In the counter-UAS domain, our primary focus area, we added Insight Intelligent Sensors, which delivers electro-optical and AI-driven identification of hostile drones. And SentriX, which we are entered into a definitive agreement with. Whose CyberOver RF technology provides one of the most effective and precise counter-UAS solutions available. Capable of neutralizing threats with minimal collateral impact. And with TCL, which we acquired in July, we have further strengthened our elite engineering team, adding important capabilities valued by our defense customers. Together, these companies significantly enhance OAS' technological depth, operational diversity, and customer reach. Solidifying our position as a next-generation multi-domain technology leader. We don't have time on a quarterly call to do a deep dive into the recently acquired companies. But we will expand on SentriX and ask Tal Cohen, SentriX founder and general manager, to share some thoughts in a few moments. As we continue to scale Ondas Autonomous Systems, we are building a strong operational infrastructure that connects all elements of our business, from our core operations and acquired companies to new talent and an expanding partner ecosystem that supports growth. Our goal is to create a fully integrated operating platform that accelerates execution and enhances efficiency across the group. This integration is being supported by the establishment of a senior leadership layer at OAS, which will manage the integration and growth of the acquired businesses. The expanding OAS leadership runs across the critical disciplines, including sales and marketing, supply chain and field support, HR, legal, and finance and accounting. We are expanding our go-to-market capabilities, aligning our global sales teams, partners, and customer networks under one commercial framework. At the same time, we are strengthening our operational backbone. Unifying manufacturing, distribution, and technology resources to support higher production capacity and faster deployment cycles. We also brought in new leadership and advisory talent to help guide execution and drive collaboration across all subsidiaries. Finally, by connecting our technology platforms, talent, and ecosystem partners, we are establishing the foundation for sustainable scale and long-term value creation as a multi-domain defense and security leader. The integrated structure is transforming OAS into a true multi-domain defense network, where each company strengthens and amplifies the others. Merging aerial, ground, sensing, and cyber into one interoperable, scalable, and autonomous system of systems. Our counter-UAS segment, a key area of focus and growth, will be anchored by the integration of IronOne and SentriX. Together delivering a complete hard and soft kill capabilities under a unified command and control architecture. This system of systems framework is now coming together, with each company contributing a critical capability to the broader OAS defense technology ecosystem. And as we move forward, we will continue adding companies and technologies to complete our portfolio and further strengthen OAS' position as a next-generation defense and security leader. I would like to take a moment to focus on SentriX. SentriX will expand OAS' global reach to tier one defense, public safety, and security agencies. Organizations actively protecting critical infrastructure across more than 25 countries. SentriX Cyber over RF technology represents one of the most advanced counter-UAS solutions in the market today, enabling safe, precise, and regulation-compliant drone neutralizing without jamming or collateral interference. SentriX technology is already field-proven, deployed globally across airports, defense facilities, and public safety operations. Demonstrating extended range, multi-target engagement, and adaptability to evolving radio technologies. This acquisition will position OAS with a unique soft kill capability. Perfectly complementing IronOne's hard kill system. And together, they create a comprehensive counter-UAS architecture unmatched in the market. I will now hand the call over to Tal Cohen, general manager of SentriX, to review the company and this market of counter-UAS. Tal? Tal Cohen: Thank you, Meir, and thank you for having me today. At SentriX, we are truly excited to join Ondas. We believe this partnership will create a significant opportunity to deliver together with Ondas the ideal solution to the evolving drone threat that has rapidly emerged over the past few years. I am pleased to highlight how SentriX is driving a major advancement in our Counter Unmanned Aerial Systems capability through our proprietary CyberOver RF technology or COF in short. COF works differently from a traditional jamming or kinetic solution. Rather than broadly disrupting signals or deploying interceptors, SentriX's system interacts directly with a drone communication protocol, the language between the drone and its controller, enabling us to detect, identify, track, and then assume control of a hostile drone in seconds. Some of the operational advantages stand out. Rapid deployment and simplicity. SentriX system can be deployed in minutes, in a single Pelican case or mobile. Precision and safety. COF ensures zero interference with authorized drones, GPS, or nearby communication systems. Enabling safe mitigation in civilian, critical infrastructure, and defense environments alike. Proven global performance. SentriX is already trusted by 25 countries. By integrating SentriX into the OAS architecture, alongside our aerial platforms, ground systems, and sensor networks, we will be delivering a complete detect-to-defeat CUES ecosystem. SentriX brings the software layer of precise, cyber protocol takeover, which pairs organically with our Kinetic Platforms for hard kill response. As drone threats become more agile, more numerous, and more diverse across borders, critical infrastructure, and contested environments, the COF capability gives us the scalability, agility, and compliance required for today's multi-domain defense posture. In short, with SentriX on board, we are not just reacting to drone threats. We will be proactively controlling them. Safely, reliably, and at scale. SentriX's global footprint is growing rapidly. We have now successfully deployed our solution in more than 25 countries, demonstrating the strong demand and the proven value of our technology for customers across the defense, security, and public safety sectors. SentriX has reached more than 200 global deployments. Reflecting strong and accelerating international adaptation among Tier one defense and security agencies worldwide. In Europe, we are active in 13 countries with 74 deployments, achieving 24% year-to-date growth. In Asia, we have expanded across six countries with 82 deployments, growing 32% year-to-date. And in North America, we have seen the fastest growth, 21% year-to-date, with 34 deployments across three countries. We are also extending our presence in Africa, South America, and Australia. Through new multi-agency programs that highlight the scalability and versatility of our COF COUNTER US technology. Altogether, this demonstrates not only the global scalability and operational readiness of SentriX, but also how this capability will reinforce OAS' position as a trusted provider of field-proven, multi-layered CUES solutions for defense and critical infrastructure protection. A combined solution will allow detection, mitigation, and situational awareness under one coordinated architecture. We start with SentriX. Which provides the first line of defense through its cyber over RF technology. It delivers long-range detection, tracking, and identification of drones and enables safe cyber-based mitigation, taking control of the hostile drone and landing it without jamming or collateral interference. This also gives us critical intelligence, real-time insights, into the drone's identity, behavior, and even its operator's location. Next, we add the Iron Drone Raider. Ondas' autonomous kinetic interception system. It is designed to automatically intercept and defeat any drone threat. Including those that operate without radio control or GPS, completing the full spectrum protection layer. Finally, both systems feed into a unified situational awareness interface. Where data from SentriX and IronDrone are fused into a single automated operational picture. This integration allows operators to detect, track, and neutralize threats in real-time. While reducing the workload and improving decision-making accuracy. Together, these capabilities will deliver comprehensive counter-UAS architecture, one that covers every threat type, across every environment, with precision, safety, and automation. When we look at the broader counter-UAS market, the opportunity ahead of us is extremely significant. Global demand for counter-drone technologies is projected to grow from roughly $2.4 billion in 2024 to over $10.5 billion by 2030. Representing a 27% compound annual growth rate. This growth is driven by the rapid escalation of drone threats across defense, homeland security, and critical infrastructure sectors. And by increasing government funding and regulation worldwide, as we are seeing strong momentum across all regions. SentriX is already well-positioned in each of these markets, with active deployments and a proven track record supporting tier one defense and security agencies. If we move to the revenue outlook, SentriX continues to demonstrate exceptional growth, maintaining a triple-digit compound annual growth rate. With bookings expected to more than triple over the next few years. The company also sustains a strong gross margin in the upper 70% range, underscoring the scalability and efficiency of its technology platform. Demand continues to increase across Europe, The United States, and Southeast Asia. Fueled by both the rising number of drone incidents and the urgent need for compliant, effective, and automated defense solutions. Our Cyber Over RF approach provides exactly that. A simple, safe, and proven method to detect, identify, and neutralize drones without causing collateral interference. Positioning SentriX and OAS to capture a meaningful share of this rapidly expanding $10 billion market. That will conclude my remarks. Thank you for having me here today. We are excited about what's ahead of us and look forward to sharing more great news with you soon. With that, I'll hand the call back over to Eric. Eric, Eric Brock: Thank you, Tal. As you know, we are thrilled to have SentriX join the Ondas team. We see exceptional talent at SentriX combined with market-leading technology, which we believe is extremely well-positioned for the massive addressable market opportunity we have outlined. We believe Ondas is building a very strong position in front of a coming boom in CUES infrastructure deployments globally. We'll now turn to the outlook for Q4 and take a quick look into 2026 as well. As we highlighted throughout the year, our programmatic M&A effort remains very productive. And we believe it will continue to be highly accretive for our investors. We'll continue to build our corporate development team, and as we expand our capabilities, we're seeing the pipeline mature rapidly. Just as importantly, we're seeing significant inbound interest from potential partners, investors, and acquisition candidates who view Ondas as a strategic home for their technologies and businesses. The pipeline isn't just maturing, it's broadening. We're now seeing more established and operationally mature companies emerge as relevant targets, and that's exciting. It speaks to the strength of our reputation and the scale of opportunity we're creating for 2026 and beyond. At present, we have over 20 companies in the active M&A pipeline, with advanced activity with seven potential targets. Collectively, these opportunities represent more than $500 million in potential additional revenue, highlighting the material impact our strategic growth program can have as we continue to execute. We believe this momentum positions us for a very strong 2026, one where our acquisitions and partnerships will not only add scale and capability but also drive higher operating leverage, faster growth, and sustained profitability. Ondas is building a platform designed for expansion. We are confident that the next phase of our M&A program will continue to strengthen both our business and long-term shareholder value. Let's turn to the financial and operational outlook. As we have highlighted, Ondas continues to build momentum, and we expect to see strong growth across all areas of the business led by OAS, as we move through the balance of 2025 and into 2026. We believe we can comfortably meet the financial and operational objectives we outlined earlier this year. And today, we're updating those targets to reflect our progress and visibility. For the full year 2025, we are now raising our revenue target to at least $36 million, which puts our Q4 revenue target north of $15 million. Looking ahead, we're also providing our first formal view into 2026. Based on the visibility we have today, we are targeting at least $110 million in revenue for 2026, and I would note that this number may in fact prove conservative given our expanding customer base, backlog, and maturing customer pipeline as well as our expanded M&A opportunity set. We also expect to announce additional acquisitions during Q4, continuing to execute our strategic growth program. As we stated previously, we continue to target the addition of a U.S. DoD or DHS customer in 2025, which will represent another major milestone for the company. Of course, acquisitions would be accretive to our 2026 outlook. As it relates to Ondas Networks, we are heartened by the AAR's expanding commitment to DOT 16, with three major private wireless networks now formally designated for upgrade with 16 technology. Neil Laird: However, Eric Brock: We do believe we will see meaningful adoption by the railroads in 2026, and this will help reward our investors for the strategic value we are creating with Ondas Networks. Until we see the orders, our outlook today reflects only modest revenue expectations from Ondas Networks relative to the OAS business. We will also continue to be as communicative as possible with our investors. To that front, we plan to host two dedicated events: an Ondas Capital Investor Day in December, where we will dive into that business unit's strategy and investment roadmap, and an OAS Investor Day in January, which will update our business plan from last July and focus on our plans to scale our operating platform, capture new customers, as well as share our technology roadmap and a detailed financial plan for 2026. In summary, Ondas is executing on all fronts. We're growing, scaling, and expanding strategically. We built an exceptionally strong foundation, and we're positioned to deliver a year in 2025, setting the stage for even greater performance in 2026. Before we wrap the call and take investor questions, I want to briefly revisit how our financial and operating models are designed to accelerate shareholder value creation. Of course, that's the bottom line for me and our leadership team, and also the bottom line for you. The formula here is straightforward. And it's working. Our core growth plan is delivering momentum in massive end markets that are still in the early stages of a ten-plus-year adoption cycle. We're driving revenue acceleration, and as we continue to scale, we're generating operating leverage across the platform. That combination with sustained growth and capital efficiency gives us visibility into increasingly profitable growth over time, which we believe will support a premium valuation for Ondas. On top of that is our strategic growth plan, which amplifies those returns leveraging our access to low-cost capital. With a premium-valued operating platform, we're able to acquire premium capabilities and do so in a way that's highly accretive to both earnings and long-term value. Together, these models, our core operations, and strategic expansion create a powerful cycle. We deploy growth capital, we drive operating scale, and we expand platform solutions that open new customer and market opportunities. This is how we intend to continue building shareholder value. Execution, scalability, and disciplined capital deployment that compounds over time. I'm really excited to wrap up 2025 strongly and further excited to continue to leverage our momentum into 2026. With that said, operator, we will now move to take investor questions. Operator: Thank you. We will now begin the question and answer session. And the first question will come from Amit Dayal from H. C. Wainwright. Please go ahead. Amit Dayal: Good morning, everyone. Thank you for taking my questions. Eric, very impressive, the speed at which you are executing. Just along those lines, you highlighted that you are pursuing seven deals that you are at advanced stages from an M&A perspective. Just to clarify, if you do close all those seven deals, are you saying annual revenues at least the run rate could exceed $500 million per year? Eric Brock: No, I'm not saying that. Specifically to the seven targets. We're talking more broadly about the pipeline we outlined. Amit Dayal: Okay. Understood. And then Eric Brock: let me just add that that's incremental to it is incremental to the revenue targets we gave for 2026. Amit Dayal: Okay. So that's where potential upside could come from outside of any other organic developments for you? Eric Brock: Right. We think it's going to be both paths. Amit Dayal: Understood. And then as we think about future OAS revenues, how should we think about one-time product to system sales versus any recurring revenue components from those sales? Eric Brock: I think you're going to see the bulk of what we're doing in the next twelve to eighteen months be the platform sales, so system sales and infrastructure build-outs. As we outlined in the July Investor Day, that's going to look and feel like recurring revenue because we've got this ten-year cycle. And as we build that installed base, we'll be increasingly putting services behind that. I'd also add that early here, we're seeing significant demand from defense markets. Those tend to be purchases. As you see us build the pipeline and start to pull that through, on the commercial side that lends itself to as drone and data as a service model. So you see that mix start to shift as well when commercial starts to grow. Amit Dayal: Got it. Thank you. Just one more for me and then I'll get back in queue. With all of this M&A activity, how quickly can you eliminate sort of overlapping overheads from these recent acquisitions? Eric Brock: Well, we really took some great pains today to outline that leadership team and that OAS operating platform layer that we're establishing. And that's going to be a significant leverage point for us. At the same time, the companies we're acquiring are growing quite a bit themselves. So what we're hoping to do and believe we can do with this operating platform layer I described is accelerate revenue growth but also the capital efficiency. And I don't think that means that we're going to have to be reducing costs with acquired companies. We're bringing on talent I think we're going to be growing that talent as well. Got it. That's all I have there. Thank you so much. Amit Dayal: Sure. Operator: And the next question will be from Mike Latimore from Northland Capital Markets. Please go ahead. Mike Latimore: All right, great. Yes, congrats. Many exciting developments here. I guess as you look at the guidance for 26, does that get you to EBITDA positive? Eric Brock: We still believe that the operating businesses will be EBITDA positive by the second half of next year. And I think that case is even stronger as we're building the scale through the revenue additions. And let's stay tuned. We did say we're going to have a conference call in the first half of January to lay out the business plan and then the financial model for 2026. And there, we'll give you a sense as to when we can cover the holding company costs. Mike Latimore: Got it. And then the SentriX acquisition sounds very positive. I guess as you think about the counter-UAS or counter-drone market, do you expect most of your prospects to buy both SentriX and Iron Drone? Is that going to be a logical fail? Or would you have a big tranche in one category versus the other? Eric Brock: I think it depends on where these systems are going to be deployed. As you know, these are layered technologies. In many places, having the soft and hard kill will be appropriate. In certain locations, having one may be more appropriate. So we'll have to see how that plays out. But we do feel like we're in a very strong position as subject matter experts and the technology we can bring that are operational best in class that we can have a great deal of efficiency and guidance value in guiding our customers to what those layers look like at specific locations. Mike Latimore: And just last for me. In terms of The U.S. Market, which sort of product categories seem most promising for The U.S? And maybe which type of government or government agencies seem most promising? Eric Brock: I'd say they're all promising for sure. We do see quite a demand signal here from the Department of Defense as well as DHS. A critical infrastructure market even for in public safety, for the counter-drone. So as we look into 2026, we expect the counter-drone to likely lead the charge. However, we're going to see growth really across the board. Mike Latimore: Okay, great. Thanks a lot. All right, great. Thanks, Mike. Operator: And the next question is from Tim Horan from Oppenheimer. Please go ahead. Timothy Horan: Thanks. I got about 20 questions, but I'll keep it to three. Eric, it doesn't seem like Europe has much in the way of near air defenses at this point, but it sounds like it has been deployed in the locations. But is that pretty accurate? And I guess do you have the platform now to kind of go protect or sense and protect the nuclear facilities and other facilities coming? Can that be up and running relatively quickly? Eric Brock: So, yes, you're right. I think Europe and it's really true globally that the counter-drone infrastructure build-out really is just in its infancy. The batter is just coming for the first pitch. So we see a lot of greenfield here. At the same time, Europe is likely uniquely pressured here because of the war in Ukraine is on their doorstep, and you're seeing many reports consistently of drone threats emerging in Europe. So we think there's urgency across Europe to protect critical infrastructure, you mentioned power plants for sure, airports, other critical assets, bases, borders. We see a significant demand there. So I do think this is going to be a place that's going to be very fruitful for us. Timothy Horan: And it sounds like SentriX is deployed in a bunch of locations. Is there any evidence that their technology works to protect these locations? Yes. Eric Brock: Oh, yeah. There's tons of evidence and you can see it in the customer expansion. So this is a very robust proven technology and capability and we think that growth curve is going to be sustained. Timothy Horan: So on Mike's question of integrating Iron Drone with SentriX, when will that actually be accomplished? When can you start deploying the platform, yeah? Eric Brock: Let's I'm going to defer that to our call in January. I don't want to put the timelines on that. I will add that the detection piece of what SentriX does is critical for the hard kill. You have to identify the threat to go mitigate. In Iron Drone, we have been integrating many different detection technology platforms. And we think that's going to be pretty straightforward for us to do with SentriX as well. But we'll give more specifics on that in January. Timothy Horan: Great. So I guess lastly, how much does it cost to protect an airport or a site? Do you think both the upfront cost for the customer and the ongoing annual cost? Eric Brock: Like always, it depends, Tim. It depends on how many, you know, are they deploying a detection technology? Are they doing the soft kill? Are they adding hard kill, so it depends. But it can run into the millions of dollars per airport, sure. Timothy Horan: And is that an annual recurring fee, do you think? Or how does it come about like the upfront for annual recurring? Eric Brock: There are recurring fees on that, but yes, it again depends on what's being deployed. And I think we'll be able to lay that out in January, the financial models around this. Timothy Horan: Thank you. Eric Brock: Thank you. Operator: And the next question is from Austin Delhaig from Needham. Please go ahead. Austin Delhaig: Hey guys, thanks for taking my question and congrats on the great results. First question, guys, is kind of on the new 2025 guide. The $11 million in uptick, it sounds like some of this organic success that's higher than your expectations or is the majority of this uptick coming from the recent acquisitions? Eric Brock: It's both. I mean, we're going to be just to be clear, run the businesses that OAS is one unit and we have two business units on this that works in OAS. And that's what we're going to be presenting to you on a go-forward basis. But the from the acquisitions, and the core business as well. In terms of contribution in Q3, we did highlight that Apero was additive, but we're seeing strength. Austin Delhaig: Okay. And then looking at kind of your guys' 2026 guide, how much additional M&A is baked into that $110 million number? Eric Brock: There's no additional M&A. It's only the acquisitions we have announced. It does include the SentriX acquisition, which we expect to close soon. Austin Delhaig: Okay. Okay. And then last question. Like understanding gross margins can kind of bounce quarter to quarter, but maybe like on an annual basis, how are you guys thinking about those trending next year? Obviously, with the SentriX 70%, that's to be very accretive. But just trying to get a sense from a modeling perspective. Eric Brock: Yes. So you'll see gross margins improve certainly into 2026. We've talked about 50% as our target. I still want to keep it there. However, let's see when we meet in January. We'll have a more precise outlook on that. But I do think 50% is a very comfortable number. And from there, I think we can see upside. Austin Delhaig: All righty. Well, thank you guys again and keep up all the great work. Eric Brock: Great. Thanks, Austin. Operator: And the next question will come from Glenn Mattson from Ladenburg. Please go ahead. Glenn Mattson: Yes. Hi. Thanks for taking my call. Another one on SentriX. For me, you don't mind. Can you just talk about the obviously, there's EV capabilities because it can integrate it with all the other counter-UAS and technology that you have. But can you help us understand how unique it is versus what other people have out there in terms of other soft kill solutions or drone capture takeover just kind of help us understand that a little bit. Eric Brock: Sure. Maybe, I'll ask Meir or Tal to, Tal you're probably equipped to take this. Tal Cohen: I'm trying to assist. So just to make sure I understood the question correctly was what is the difference between general or additional or other effect also soft capabilities to temporary capability? Glenn Mattson: Yeah, the correct What was the question? Tal Cohen: Yes. So our question is based is excellent during the presentation on the cost Cyber Overhead capability. Meaning we can first detect and track and identify the drone in a passive manner. So we are not emitting or creating any interference whatsoever. And I think the most important part is for the mitigation we assume control over the drone with starting to communicate quite fine while communicating with the drone and not by doing any jamming or inflicting any other communication collateral damage. So it's a very short, very safe, very limited, and precise surgical and soft kill technology. Glenn Mattson: Appreciate that. And to your knowledge, there's no one else doing something similar in terms of being able to do drone capture such as like that without interfering with other communication technologies. Tal Cohen: Yeah. Our other capabilities that are doing and that are trying to do the same or to use the same technology. But currently, the technology is quite rare and very effective. Glenn Mattson: Great. Very I'll add I'll add, Glenn, if I Eric Brock: if I could say in our assessment of the market, the SentriX solution was hands down the most robust. And I'd also contrast this just to be make sure it's clear. We're not talking about jamming or spoofing radio links or GPS, we're talking about the cyber over RF. Which has significant benefits in performance. This is the taking control of the drone and then landing it. So it's the threat to mitigate it. Glenn Mattson: Very helpful. The last question I have is just on the guidance for 26. You talked about margins a little bit. That must give you some sense of like the mix that you anticipate from all these different products that you now have. Can you just give us some like the confidence level in that mix and in that guidance just kind of I think you talked about tracking the pipeline activity just is it a portfolio various Yes. On the margin side, Eric Brock: yes, I get the question. On the margin side, we're quite confident that margins will trend higher from these levels in 2026 as we get scale and the mix certainly is going to improve as well. Glenn Mattson: Great. Okay. Thanks, guys. Eric Brock: Thanks, Glenn. Operator: And the next question is from Matthew Galinko from Maxim Group. Please go ahead. Matthew Galinko: Hey, thanks for taking my question and congratulations on the quarter. I wanted to ask about just working capital, particularly inventory as we kind of see revenue scale pretty quickly. Is there should we expect a pretty significant buildup in inventory and critical components? And maybe as a follow-up to that, just how you feel on production capacity and any bottlenecks there that could limit the ramp? Thanks. Eric Brock: All right. So I'll take the latter first. We believe we have ample capacity to meet this plan in our planning. So I'm not too concerned about that. Of course, it's going to be hard work. Oshri did highlight that we're making a lot of progress in The U.S. in terms of production on the drone platform. Platforms, IronDrone and Optimus. So we do believe that in Q1, we'll start to add systems here and that's going to be able to meet demand we see here. So I feel pretty good about it. In terms of working capital, we'll probably be building a bit of inventory, but I don't find that too challenging. Obviously, we're well-capitalized. We will focus at the same time on our cash conversion cycle. So we'll probably be able to give you more details on at that meeting in January. Matthew Galinko: Great. Thank you. Eric Brock: Sure. Thanks, Matt. Operator: And the next question is from Jonathan Sigman from Stifel. Please go ahead. Jonathan Sigman: Good morning, Ondas team. Thank you for taking my question. And congratulations on all the progress. Just the operating platform that you're putting together is really pretty unique and I don't recall anyone having so much rapid success with acquiring businesses in a new industry like you are. I would love to hear how you're thinking about putting in incentive systems for your teams. Understand you'll give us more metrics in January. Just would like to hear a little bit about how you're thinking about the philosophy and how you measure performance and balancing the individual units and driving towards success the integrated whole. Thank you. Eric Brock: Yes. Thanks, John. So you first mentioned that the speed of the M&A, and that is I think that observation is spot on. We've articulated this really as an opportunity, probably a once-in-a-generation opportunity to provide a scaled platform for these important technologies, and I won't belabor that. But yes, we're moving fast and putting together the leadership team and incentivizing that team is really critical. And I think what we're doing is building a situation where we'll participate in the upside. So as we grow the business, certainly going to be able to increase cash compensation. But at the same time, we're also using incentives, and we find those to be very, very successful. The team that we're putting together believes in the mission, there's a lot of excitement about the success we're having. So that certainly helps reinforce the performance even in our productivity. So I like that flywheel. And I guess that's really the answer. It's we're not doing anything unique on that front, would say. But I think our team and I think the perspective management teams that we're talking to on the M&A side are excited about building a big company because, of course, they're looking at it as an opportunity to build substantial equity value. So I think that's kind of worked out well for us. Jonathan Sigman: Thank you. Eric Brock: Thanks, John. Operator: And ladies and gentlemen, this concludes today's question and answer session. I would like to turn the call back to Eric Brock for any closing remarks. Eric Brock: Okay. Well, thank you, operator. As we wrap the call, I want to thank you again for spending time with us today. As we outlined, we're expecting a strong finish to 2025, and we're focused on sustaining that momentum into 2026. We, as always, look forward to providing more updates along the way, and I think that's probably going to be sooner rather than later. We do have a lot going on. And from here, enjoy the rest of the day. We're going to get back to the important work of building the company. So thank you for attending. Operator: Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Welcome, ladies and gentlemen. Thank you for your patience. You have joined Xunlei Limited's third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to turn the call over to your host, Investor Relations Manager, Ms. Luhan Tang. Please go ahead. Luhan Tang: Good morning, and good evening, everyone. Thank you for joining Xunlei Limited's Q3 2025 Earnings Conference Call. With me today are Jinbo Li, Chairman and CEO, Eric Zhou, CFO, and Lily, Vice President of Finance. Our IR website has our earnings press release to supplement our prepared remarks during the call. Today's agenda includes prepared opening remarks from Chairman and CEO, Jinbo Li, on Q3 operational highlights, followed by CFO Eric Zhou's presentation of financial results details of Q3 2025 and the revenue guidance for Q4 2025 before we open up the floor to your questions. In the Q&A session, Jinbo Li will answer your questions. Please note that this call is recorded and can be replayed on our investor relations website at ir.xunlei.com. Before we get started, I would like to take this opportunity to remind you that the discussion today will contain certain forward-looking statements made under the safe harbor provisions of The US Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations under existing market conditions and are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those making forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei Limited assumes no obligation to update any forward-looking statements, except as required under applicable law. On this call, we will be using both GAAP and non-GAAP financial measures. Reconciliation of non-GAAP to comparable GAAP measures can be found in our earnings press release. Please note that all numbers are in US dollars unless otherwise stated. Now the following is the prepared statement by Jinbo Li, the Chairman and CEO of Xunlei Limited. Jinbo Li: Good morning, and good evening, everyone. Thank you for joining us today. We are pleased to report that 2025 continued to demonstrate positive growth momentum supported by solid performance across all of our major business operations. Our top line exceeded the upper end of our expectations, reaching total revenues of $126.4 million, representing a year-over-year increase of 57.7%. This outcome underscores the effectiveness of our initiatives to enhance user experience and deepen community engagement, as well as the further extension of our overseas audio live streaming operation. Our bottom line, on the other hand, continued to benefit significantly from the increased stock price of our investee company, Arashi Vision Inc., during the third quarter following its IPO in June, and reflected a gain of $545.8 million resulting from the fair value changes in our approximately 7.8% equity stake in the company. We believe that future realization of investment gains will drastically strengthen our balance sheet and provide strategic flexibility to pursue opportunities in research and development of new technologies, pursuing industry collaboration, selected investments, as well as more options for shareholder return. Now let me take a moment to walk you through each assessment and share some insights into the key drivers behind this performance. In Q3, our subscription business achieved significant milestones, generating $40.7 million in revenue, a 22.3% increase compared to the same period in 2024. This sustained growth underscored the strength and resilience of our model, as well as increased trust users placed on our product offering. A key highlight was the subscription revenue reaching a record high, reflecting strong market demand for our services. This upward trajectory is attributable to several strategic initiatives driven by continuous product integration and integration of user feedback, which enhance user satisfaction and build organic growth. We developed more refined strategies tailored to various platforms, enabling effective engagement with diverse audience segments across demographics. Furthermore, our live streaming and other services achieved robust year-over-year revenue growth of 127.1% in the third quarter, reaching $49.1 million. The growth was primarily driven by the rapid expansion of our overseas audio streaming operations, which have gained strong traction in multiple international markets. In addition, the acquisition of Hufu significantly contributed to our advertising revenue, bringing in high-quality monetization opportunities through its established platform and audio audience reach. Hufu's strong presence in the sports digital space has allowed us to tap into the highly engaged community of sports enthusiasts, enabling more effective and fast targeting and higher advertiser satisfaction. Finally, our cloud computing business generated $36.6 million in revenue, representing a significant year-over-year increase of 44.9% compared to the same period in 2024. This notable growth reflected a strong recovery from earlier setbacks, with the rebound in client demand, particularly among large enterprise customers. We successfully capitalized on emerging opportunities by enhancing our service offerings to provide more tailored, cost-effective, scalable, and secure solutions. Despite the increased revenues, our cloud computing business still faced challenges and headwinds. Looking ahead, we intend to foster innovation, enhance operational resilience, and capitalize on emerging opportunities to drive long-term growth and deliver enduring value to our shareholders. With that, I will now pass the call over to Eric Zhou. Eric will give a detailed review of our Q3 2025 financial results and provide revenue guidance for 2025. Thank you. Eric Zhou: Thank you, Luhan Tang. Thank you all again for participating in Xunlei Limited's call to discuss the financial results of 2025. In the third quarter, our total revenues were $126.4 million, representing an increase of 57.7% year-over-year. The increase in total revenues was mainly attributable to the increased revenue generated from our major business operations. Revenues from subscribers were $40.7 million, representing an increase of 22.3% year-over-year. The increase in subscription revenues was driven by the increase in the number of subscribers and an increased average revenue per subscriber. The number of subscribers was 6.56 million as of September 30, 2025, compared with 5.51 million as of September 30, 2024. The average revenue per subscriber for the third quarter was RMB 44.2 compared with RMB 40.9 in the same period of last year. The higher average revenue per subscriber was due to the increased portion of premium subscribers, which have higher average revenue per subscriber. Revenues from live streaming and other services were $49.1 million, representing an increase of 127.1% year-over-year. The increase was mainly due to the growth of our overseas audio live streaming business as well as our advertising business. Revenues from cloud computing were $36.6 million, representing an increase of 44.9% year-over-year. The increase in cloud computing revenues was mainly attributable to the increased demand from major customers for cloud computing services. Cost of revenues were $65.4 million, representing 51.7% of our total revenues, compared with $39.4 million or 49.1% of the total revenues in the same period of 2024. The increase in cost of revenues was mainly attributable to the increase in bandwidth costs and revenue sharing expenses in our overseas audio live streaming operation, especially generally in line with the growth in revenues. Bandwidth costs included in cost of revenues were $38.3 million, representing 30.3% of our total revenues, compared with $24.8 million or 31% of the total revenues in the same period of 2024. The increase in bandwidth costs was primarily due to the increased sales of our cloud computing services. Gross profit for 2025 was $60.5 million, representing an increase of 49.6% year-over-year. Gross profit margin was 47.9% in 2025 compared with 51.5% in the same period of 2024. The increase in gross profit was mainly contributed by our online advertising business, overseas audio live streaming business, and subscription business. The decrease in gross profit margin was mainly attributable to the decreased gross profit margin of our cloud computing business and higher proportion of revenues derived from our audio live streaming business, which has a lower gross profit margin. Eric Zhou: Our R&D expenses for 2025 were $21 million, representing 16.6% of our total revenues, compared with $17.7 million or 22.1% of our total revenues in the same period of 2024. The increased expenses were primarily due to the increase in labor costs as compared with the same period of 2024. Sales and marketing expenses for 2025 were $25.8 million, representing 20.4% of total revenues, compared with $11.5 million or 14.3% of our total revenues in the same period of 2024. The increases were primarily due to more marketing expenses incurred during the quarter for our subscription and overseas audio live streaming business as part of our ongoing efforts on user acquisition. G&A expenses for 2025 were $10.9 million, representing 8.6% of our total revenues, compared with $11.4 million or 14.4% of our total revenues in the same period of 2024. The decreased expenses were primarily due to the decrease in labor costs, partially offset by the increase in provision for litigations and the share-based compensation expenses during 2025. Operating income was $2.7 million compared with an operating loss of $200,000 in the same period of 2024. The increase in operating income was primarily attributable to the increase in gross profit, partially offset by the increase in marketing and other operating expenses during the quarter. Other income net was $547.7 million compared with other income net of $4.8 million in the same period of 2024. The increase was primarily due to the fair value changes in the third quarter for our long-term investment in Arashi Vision Inc., which completed its IPO in June 2025. Net income was $550.1 million compared with net income of $4.4 million in the same period of 2024. The increase in net income was primarily due to the increase in other income, as mentioned above. Non-GAAP net income was $5.3 million in 2025, compared with $4.9 million in the same period of 2024. The increase in non-GAAP net income was primarily due to the increase in operating income. Diluted income per ADS in 2025 was $8.60 compared with diluted earnings per ADS of 7¢ in 2024. Non-GAAP diluted earnings per ADS was 9¢ in 2025, compared with non-GAAP diluted earnings per ADS of 8¢ in the same period of 2024. As of September 30, 2025, the company had cash, cash equivalents, and short-term investments of $284.1 million compared with $275.6 million as of June 30, 2025. The increase was mainly due to the increase in net cash inflows from operating activities during the quarter. Turning to our guidance for 2025, Xunlei Limited estimates total revenues to be between $131 million and $139 million. The midpoint of the range represents a quarter-over-quarter increase of approximately 6.8%. These estimates represent management's preliminary view as of the date of this press release, which is subject to change, and any change could be material. Now we conclude prepared remarks for the conference call. Operator, we are ready to take questions. Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Just a moment for our first question, please. The first question comes from Xiaolan Tan from BT Capital. Please go ahead. Luhan Tang: So the investor was asking, Xunlei Limited has not paid any dividend historically. Given the fact that the recent investment in Arashi Vision Inc. and the upcoming expiration of the lockup period next year, does Xunlei Limited plan to consider dividend distribution in the future? So, since we hold more than 5% of the shares, if we want to sell our shares, we have to follow certain regulatory rules and also the regulations. So far, we do not have any plans for the share disposals or the dividend distribution. Operator: Thank you. The next question comes from Xiaolan Tan from BT Capital. Please go ahead. Luhan Tang: So the investor is asking, Xunlei Limited has previously mentioned that we would embrace artificial intelligence. Are there any progress made so far? We are very excited for the future of artificial intelligence. We are actively exploring the opportunities in this field. We look forward to sharing our progress with you in the future. Thank you. Operator: Thank you. As a reminder, to ask a question, please press 11 again. Thank you. I see no further questions at this time. I will now pass back to management. Eric Zhou: Thank you again for your time and participation. If you have any questions, please visit our website at ir.xunlei.com or send emails to our investor relations. Have a good day. We conclude today's conference call. Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings, and welcome to the Stratasys Ltd. third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Yonah Lloyd, Chief Communications Officer and Vice President of Investor Relations. Thank you. You may begin. Yonah Lloyd: Good morning, everyone, and thank you for joining us to discuss our 2025 third quarter financial results. On the call with us today are our CEO, Dr. Yoav Zeif, and our CFO, Eitan Zamir. I would like to remind you that access to today's call, including the slide presentation, is available online at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation, will also be available and can be accessed through the Investor Relations section of our site. Please note that some of the information provided during our discussion today will consist of forward-looking statements, including without limitation those regarding our expectations as to our future revenue, gross margin, operating expenses, taxes, and other future financial performance, and our expectations for our business outlook. All statements that speak to future performance, events, expectations, or results are forward-looking statements. Actual results or trends could differ materially from our forecast. For risks that could cause actual results to be materially different from those set forth in forward-looking statements, please refer to the risk factors discussed or referenced in Stratasys Ltd.'s annual report on Form 20-F for the 2024 year. Please also refer to that annual report along with our reports filed with or furnished to the SEC throughout 2025 for additional operational and financial details. Reports on Form 6-Ks that are furnished to the SEC on a quarterly basis and throughout the year provide updated current information regarding the company's operating results and material developments concerning our company. Stratasys Ltd. assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. In previous quarters, today's call will include GAAP and non-GAAP financial measures. Non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance. Non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release. I will now turn the call over to our Chief Executive Officer, Dr. Yoav Zeif. Yoav? Yoav Zeif: Thank you, Yonah. Good morning, everyone. And thank you for joining us. Our disciplined approach to cost management enabled us to deliver solid operating cash flow generation and EPS in the third quarter. This continues to demonstrate the underlying strength of our business model. As we work to overcome the macro-driven caution facing capital equipment sales, we remain focused on what we can influence: operational excellence, customer partnerships, and executing on our strategy as we advance additive manufacturing adoption with innovative offerings. Customer engagement remained substantive and strategic as we build the foundational infrastructure to drive growth and scale across key high-value verticals of aerospace and defense, particularly drones, automotive tooling, stent shares, precision machine components, and medical anatomic modeling. We are leaders in these areas where additive is a compelling alternative to conventional manufacturing. As we create durable competitive advantages for years to come, our long-term strategy remained centered on the fundamental trends reshaping manufacturing: supply chain localization, next-generation mobility, sustainability goals, personalization, and the unrelenting corporate focus on efficiency and cost reduction. These secular drivers have not diminished. If anything, they have intensified. The evolving trade and tariff landscape, while creating near-term complexity, ultimately reinforces the strategic value proposition of localized flexible manufacturing, precisely what additive delivers. We continue to engage customers on how our technologies can mitigate supply chain risks, address geopolitical issues, and reduce tariff exposure. And we believe these conversations will increasingly translate into action as companies seek resilient manufacturing strategies. Now turning to updates on customer activities that highlight the traction we are building as well as steps we are taking to strengthen key end-market exposure. Our year-over-year increase in hardware sales included a strong quarter for aerospace and defense, where we see continued progress with new customer purchases across all of our manufacturing-focused systems such as F3300, 770, 450, the new NEO 800 plus, as well as H350 and Origin systems. In commercial aviation, we secured wins with industry leaders such as Boeing, Embraer, and others, all demonstrating their continued confidence in our solutions and the critical role our technology plays in environments for the world's leading aircraft manufacturers. Our defense business also showed strong performance as we continued that sector with notable purchases from Honeywell, TE Connectivity, and L3 Harris. We also participated in Trident Warrior 25, the U.S. Navy's flagship fleet experimentation exercise, where we demonstrated the critical role of distributed advanced manufacturing in enhancing military combat readiness. Together with FleetWorks, a naval postgraduate school, we supported the DoD's largest distributed manufacturing demonstration to date, connecting assets across more than 8,000 miles. This exercise showcased our ability to provide both forward-deployed 3D printing capabilities and reach-back production through Stratasys Direct, creating a comprehensive ecosystem that significantly reduces reliance on traditional logistics chains for mission-critical repair and replacement. During the exercise, seven different sites across the globe leveraged our printer to produce lightweight, corrosion-resistant polymer parts that met U.S. Military specifications, demonstrating faster turnaround times and lower delivered cost compared to conventional supply chains. This demonstration reinforces our position as a trusted partner for defense applications and highlights the scalable, practical solution we provide to enhance mission readiness and operational resilience across thousands of miles of distributed operations. Moving to other areas, we are pleased to share that one of the world's largest U.S.-based technology companies, a leader across social media, AI innovation, and virtual and augmented reality hardware, invested in four of our newest FDM F3300 systems during the quarter. Initially, they will be used for large-scale prototyping for their automation platforms as well as their next-gen robot, after which they plan to use these systems to manufacture production parts for the VR and AR products. Our proven SaaS powder-based technology platform continues its expansion across core verticals such as aerospace, automotive, and government. Notably, the third quarter marked a significant strategic milestone with the adoption of the H350 platform by a global top-three pharmaceutical company, opening the door to exciting new opportunities across medical device and drug development applications. Additionally, our collaboration with FAA, the National Institute for Aviation Research, has launched a comprehensive soft characterization program involving five suppliers across key industries, positioning us to address emerging demands for drone components, aviation parts, tooling, and low-volume production applications while establishing the technical foundations for expanded adoption in this sector. In automotive, we extended our multi-year partnership with Andretti Global as the official 3D printing partner of Andretti Indica, building on a successful collaboration that dates back to 2018 with our F370 and Fotos 450 MC systems have supported their engineering efforts. We are now designing an optimized 3D printing lab within Andretti's new headquarters to significantly enhance their additive manufacturing capabilities. This partnership demonstrates the real-world performance advantages our technology delivers in demanding motorsport environments, where faster turnaround times, complex geometries, and higher quality parts are essential for competitive success. Now turning to dental, we are enthused about the strategic investments we are making in our prudent and related solution to accelerate growth in this important vertical. Most notably, during the quarter, we welcomed Chris Cabot as VP and Global Head of Dental. Chris brings exceptional credentials as one of the world's leaders in digital dentistry and additive manufacturing, combining clinical, technical, and commercial expertise. His recent role at Affordable Care, the largest denture manufacturer in the U.S., along with his track record of driving dental additive leadership, positions us exceptionally well for the opportunities ahead. To enhance our dental portfolio, we launched our SoftRelax post-processing solution, helping dental operators reduce manual labor by 90% while minimizing the use of harmful chemicals. We are also proud to be among the first dental additive companies to proactively remove TPO, a common but controversial toxic chemical, from all our dental resins, reinforcing our commitment to patient safety and sustainability. With that, I will turn the call to Eitan to review our financials. Eitan? Eitan Zamir: Thank you, Yoav, and good morning, everyone. Our third quarter results reflected strong execution by our team to leverage notably improved lower adjusted operating expenses by 440 basis points year over year to deliver solid operating cash flow and positive adjusted earnings per share as we effectively worked to offset the continued top-line and gross margin pressure. For the third quarter, consolidated revenue of $137 million was down 2.1% as compared to the same quarter in 2024, reflecting continued macro-driven capital equipment spending constraint. Product revenue in the third quarter was $94.1 million, flat compared to the same period last year. Service revenue was $42.9 million compared to $45.9 million in the same period last year. Within product revenue, system revenue was $32.1 million, up from $31.7 million we produced in the same period last year. Consumables revenue was $62 million compared to $62.4 million in the same period last year. Within service revenue, customer support revenue was $29.3 million compared to $31 million in the same period last year. Now turning to gross margin, GAAP gross margin was 41% for the quarter, compared to 44.8% for the same period last year. Non-GAAP gross margin was 45.3% for the quarter, compared to 49.6% in the same period last year. The change versus the prior year period was in large part due to the increase in tariff. When we initially discussed our expectations, the tariff rate had been set at 10%. However, subsequent to our comments, it was raised to 15%. During the quarter, we started to implement select price increases to help offset the impact of tariffs and look forward to seeing the full quarterly impact in the fourth quarter to help improve gross margins. In addition, lower revenues, change in mix, as well as higher absorption due to inventory reduction had an effect as well. GAAP operating expenses were $78.8 million, 57.5% of revenue, compared to $88.2 million or 63% of revenue during the same period last year. The improvement in expenses was due to our cost-saving initiative among other items. Non-GAAP operating expenses improved to $62 million, 45.3% of revenue, compared to $69.6 million or 49.7% of revenue during the same period last year, due primarily to lower employee-related costs including benefit from the cost-saving initiatives announced last year. Regarding consolidated earnings, GAAP operating loss for the quarter was $22.7 million compared to a loss of $25.5 million in the same period last year. Non-GAAP operating income for the quarter was $100,000 compared to an operating loss of $100,000 for the same period last year, reflecting the impact of improving operating expenses due to our cost-cutting efforts partially offset by lower gross profit. GAAP net loss for the quarter was $55.6 million or $0.65 per diluted share, compared to a net loss of $26.6 million or $0.37 per diluted share for the same period last year. During the quarter, we took a non-cash, non-recurring impairment charge of $33.9 million or $0.40 per diluted share related to our investment in Ultimaker, a key cause for larger GAAP net loss in the quarter. Non-GAAP net income for the quarter was $1.5 million or $0.02 per diluted share, compared to a net income of $400,000 or $0.01 per diluted share in the same period last year. Adjusted EBITDA was $5 million for the quarter, compared to $5.1 million in the same period last year. From a cash flow perspective, we generated $6.9 million in cash from operating activities, compared to the use of $4.5 million in the third quarter of last year. We continue to expect to generate higher positive operating cash flow for the full year 2025 relative to 2024. We ended the quarter with $255 million in cash, cash equivalents, and short-term deposits, $400,000 higher than at the end of the second quarter, with no debt remaining well-positioned to act on value-enhancing opportunities. Regarding our outlook for 2025, we are reiterating the non-GAAP guidance we provided on the last call and adjusting the GAAP net income and EPS due to the previously mentioned non-cash impairment. Specifically, we expect profitability to benefit from our ongoing efforts to drive cost reductions along with our additional plan to mitigate the impact from higher tariffs with select price increases. We are reaffirming that full-year 2025 revenue will range between $550 million to $560 million with non-GAAP gross margin ranging from 46.7% to 47% and full-year non-GAAP operating margin ranging from 1.5% to 2%. We still expect adjusted earnings per share of $0.13 to $0.16 with adjusted EBITDA ranging from $30 million to $32 million. We also anticipate producing year-over-year growth in operating cash flow. Please see the press release or slide presentation for further details. With that, let me turn the call back over to Yoav for closing remarks. Yoav? Yoav Zeif: Thank you, Eitan. We look to the future, we are seeing encouraging signs in the specific verticals and applications where we are focusing. And the stability of our recurring revenue streams continues to provide an important foundation to build growth. While the timeline for broader adoption is extended, we remain poised to seize opportunities as the industry inevitably improves. Our margin discipline and cost actions are helping us effectively protect profitability, which positions us well to leverage our strengthened balance sheet to maintain our technology leadership through strategic investments. As a technology leader, with a comprehensive portfolio spanning systems, materials, and software, we remain confident in our competitive position. Our continuing penetration into key growth industries where we are building the infrastructure to grow in the key verticals where we lead, such as defense, aerospace parts, and automotive tooling, reinforces our conviction in additive manufacturing's expanding role in production applications. As we look to maximize value for shareholders in the coming years. With that, let's open it up for questions. Operator? Operator: Thank you. We will now be conducting a question and answer session. The first question is from Brian Drab from William Blair. Please go ahead. Brian Drab: Hi, good morning. Thanks for taking my questions. I guess it's not morning for you, so I acknowledge that too. Can you talk about the gross margin, and I know you said that you're putting into place mitigating actions and pricing. Do you expect the trajectory to be for gross margin and how quickly do you think you can get it back maybe to the levels that you were seeing last year, fourth quarter, first quarter, second quarter? Can you talk about that trajectory of gross margin we should model? Yoav Zeif: Thank you, Brian, for the question. We anticipate, so first of all, as you mentioned, the impact of the tariffs and the mix and also the absorption due to inventory reduction, which is a good thing, all had an impact on our Q3 gross margin. As you also mentioned, we introduced a price increase during Q3 and we expect a full impact in Q4. We anticipate the improvement increase in gross margin as early as Q4, so in the coming quarter, and we anticipate this to continue to improve also in 2026. It's hard to at this point to say at which level that you should expect improvement in Q4. Brian Drab: Okay. Thanks. And then Yoav, you mentioned a couple of what sound like pretty significant opportunities with the social media AI company and others. Are any of those something for 2026 where you feel like they move the needle on revenue? What are you most excited about in terms of opportunities, specific opportunities that can maybe add some incremental material incremental revenue in 2026? Thanks. Yoav Zeif: Thank you, Brian, for the question. We have a clear strategy. We are going for manufacturing. Period. And this positions us, you know, I would say better than other players. So if I look relatively at the premium markets, those use cases that we are focusing on, and I will elaborate on them, we are in a better position than we ever have been. Because we are the strongest player now in those premium markets, which are our targets. And I'm talking about use cases that frankly we're just getting started there. Aerospace and defense, dental, medical, tooling, and some industrial machine components. But the main ones are those aerospace and defense and tooling. And also, when you talk about machine components and components for consumer goods, those are the AI and consumer goods company, the media company that we shared. No doubt that we will see growth in those use cases next year. We already have seen significant growth in those use cases, especially in hardware this year. So this is our growth going forward. And this is the direction, and I'm sure you will hear more about it during next year. Operator: The next question is from Greg Palm from Craig Hallum Capital Group. Please go ahead. Greg Palm: Yes, thanks. Kind of following up on that last question, but I know last quarter we were talking a lot about some of these more substantial production applications, longer sales cycles that initially maybe earlier this year potentially could land this year. I know that got pushed out. But can you just maybe give us an update on where some of that lies and just to be clear, on some of the stuff that you talked about, are these the same? Or are these sort of additional opportunities? Yoav Zeif: So those are the same opportunities. Because we are very focused. So those are the same opportunities and talking about our asking about sales cycle, we are not there yet, but it's the first quarter for a long time that we see some light at the end of the tunnel, slight improvement in the sales cycle. Because those sales cycles are long, as you said, it could be between a year to two years, and you need specific capabilities as a company to deliver the sales and to have the ability to enable the customers and our partners to be with those full solutions. So going forward, this is the focus. Those are the use cases that I mentioned. We have great examples. Maybe I'll share a real-world example of how additive manufacturing really addresses real-world problems. And I'm talking about in aerospace, I'm talking about supply chain and logistics problems in commercial aviation. I don't know if you remember, but around eighteen months ago, we announced a strategic investment in collaboration with A.M. Craft. It's a European, I think it's EASA certified aviation part manufacturer. We entered into a commercial agreement with them to extend the certification of 3D printed aviation parts based on our technologies. And only this quarter, they purchased two more F900s, and together the F900 and F3300s reach now 10 machines. 10 machines that consume a significant amount of material because it's reproduction. And aerospace is attractive because there is a real problem that they are solving there. You go to the association, I forgot the I think it's a IATA. Association of the Commercial Aviation. There is a supply chain problem there. And only the cost to the airline because of shortage and supply chain issues will be $11 billion only in 2025. And also there is a backlog of new airplanes. So the two big players, Airbus and Boeing, are not meeting the demand, and there is a huge backlog of 17,000 aircraft. It means that the old fleet is aging and needs more spare parts. And here, the solution of additive is exactly addressing the problem. Because you can print in hubs near the airport and you solve problems. So take, for example, a seat that is broken, and this seat needs to be replaced, and you don't have the part, and if it's a business seat, it could be between $5,000 to $10,000 the airline is losing on one flight. So recently, A.M. Craft certified or qualified our Texas strategy direct manufacturing site to produce those certified parts. And in the short term, we're going to certify also our Arizona site and Minnesota site and effectively it will make Stratasys Ltd.'s direct manufacturing the largest service bureau for certified aviation parts worldwide. Where, of course, the U.S. is the biggest market. And essentially create a distributed network for on-demand production of spare parts. When it takes time to build this infrastructure, but once you are there, it's a new world of production and maintenance. This is our focus, and this is only one example out of five use cases. Greg Palm: Yep. Understood. Okay. And then my second question on consumables, it's trending down a little bit on a year-over-year basis through the first nine months. I know at one point, we were thinking a little bit of growth this year. Is that still the case? Or what's your what's sort of the implied revenue range for Q4 for consumables specifically? Yoav Zeif: Okay. Thank you. Consumables would practically issue a flip. Or stable. And know, and this is despite the challenging environment that we all see around us in terms of constraint on expenses. Because we have a resilient model there, where people are keep buying our material. But there will be a change. Because I'm trying to connect it to our focus on use cases, manufacturing use case. Every manufacturing machine consumes much more than a prototyping machine. It's not a secret that we are not focusing on our installed base in entry-level rapid prototyping, low on rapid prototyping. So we are not focusing there. It means that someone else will sell in the future to this install base. We are focusing on the high end on those use cases that consume sometimes 10 times more in terms of utilization and consumption of material than a rapid prototype machine. And because we are selling more F3300 like to this media company, and more H350 and more FDM and P3 and SLA large machines, real industrial machines, we will see gradually consumption going up. Operator: The next question is from Troy Jensen from Cantor Fitzgerald. Please go ahead. Troy Jensen: Hey, gentlemen. Thanks for taking my questions. Maybe just start with Eitan here. OpEx $62 million on a non-GAAP basis. Do you expect that to like start to grow now on a sequential go-forward basis? Or are we still doing kind of cost cuts and cost controls here? Eitan Zamir: Sure. Thanks, Troy, for the question. As you mentioned, if you compare year over year, we're at $69.6 million Q3 last year, we're down to $62 million. And I believe we shared with you quarter after quarter the tight management of OpEx and continue to do that. Actually, expect Q4 to trend slightly down relative to Q3 in OpEx terms. But we continue to invest, of course. So we're going forward, we will balance between tight cost management and of course securing our growth engine and investing in R&D and sales and marketing. Troy Jensen: Got it. Okay. And maybe for Yoav here. On the production application, I've always been told that it's the material pricing is the biggest variable in the price per part. So can you just talk about like pricing structure? How do you just thoughts on like forward gross margins on materials too with maybe potential pricing structures on material pricing? Yoav Zeif: Thank you, Troy, for the question. Definitely, this is one of the areas we are making investments and making sure that we will differentiate ourselves because we are creating scale and material. So we are acquiring material players, you know it. And we are consolidating the deck operation and making sure that we are creating the scale and coming with more affordable materials. Having said that, the high-performance material in many, most of the applications that we are targeting is not a barrier. So if I take aerospace, high-performance material, the barrier is certifications and not the cost of the material because we are solving such a huge problem in aerospace that we have enough space to charge. But we understand that long term, this is something that we need to work on year over year over year and we are doing it and you will see gradually that we are improving the material prices in order to penetrate more applications. Operator: The next question is from Alek Valero from Loop Capital Markets. Please go ahead. Alek Valero: Thank you for taking my questions. Yes, I wanted to ask, can you speak to how big you view the dental opportunity now and how much you think you can capture there? And additionally, any details on timing? Yoav Zeif: Thank you, Alek, for the question. So, of course, we are not sharing specific numbers around specific applications. But you know I can only share on dental that we lately recruited probably one of the most talented digital dental experts in the world, Chris Cabot. He came from Affordable Care, which are the largest denture player in the U.S. And you just do one by one. He selected us because of the technology and the prospect of our technology going forward. We have a clear plan there. We know exactly what we are doing, where we need to focus. It's about restorative dental, it's about specific use cases that we can win with our two unique technologies, the PolyJet and P3. And as it's being reflected already, we have already two of the leading U.S. providers, Affordable Care and Glidewell, are already our customers. So it's a main focus for us. We are very positive about it. And we believe that we have the most superior offering in terms of color, option, lightweight, cost, and we take it forward. This is for us is this is the way forward. It's personalization. It's customization. It's all the value that with the unique additive brings innovation the strategy is bringing to the table. Alek Valero: Super helpful on that. And just a follow-up. This is a so on the purchase of four of your F3300s by an AI social media company, which sounds like Meta. Do you foresee any future purchases? And additionally, I believe you said that the uses for prototyping with the plan to manufacture production parts. If and when they reach the point of manufacturing, what does that look like for you in terms of incremental products and software purchases? Yoav Zeif: Thank you. Of course, we cannot share the name of the customer. But we can share the prospect of the application. We are very excited about it from two aspects or from two different viewpoints. One, the potential is huge. But the other, we have been chosen from many other competitors after a very long sales cycle, which is a proof point to our capabilities in high-end FDM. So the F3300 is not a story. It went through certification. It went through tests. We printed benchmark the same with aerospace, by the way. And we are talking about those companies want to create capabilities where they start with prototyping, but immediately they can use the same machine for manufacturing, which is a huge advantage in terms of speed and being in the market before their competitors. So this is the main thing business-wise that they see in our technology. Operator: This concludes the question and answer session. I would like to turn the floor back over to Yoav Zeif for closing comments. Yoav Zeif: Thank you for joining us. Looking forward to updating you again next quarter. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Greetings, and welcome to Broadwind, Inc.'s Third Quarter 2025 Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Thomas A. Ciccone. Thank you. You may begin. Thomas A. Ciccone: Good morning. And welcome to the Broadwind, Inc. Third Quarter 2025 Results Conference Call. Leading the call today is our CEO, Eric B. Blashford, and I am Thomas A. Ciccone, the company's Vice President and Chief Financial Officer. We issued a press release before the market opened today detailing our third quarter results. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors section of our latest annual and quarterly filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during our call in the press release issued today. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'll turn the call over to Eric. Eric B. Blashford: Thanks, Tom. And welcome to our call. This quarter, we continued to transform Broadwind, Inc. into a leading precision manufacturing partner of choice for global OEMs. As we advance our priorities to focus on high-value end markets while becoming a leaner, more diversified business, equipped to deliver profitable growth through the cycle. Recent actions to consolidate our manufacturing footprint, reduce fixed overhead, and strengthen the balance sheet have created a strong foundation, one that positions us well entering 2026. This quarter, our performance was driven by strong demand across our power generation and renewables markets, with third quarter orders increasing 90% year over year, supported by broad-based growth across all of our reporting segments. Importantly, orders from our power generation customers more than doubled versus last year and now represent nearly 20% of revenue driven by strong demand for our natural gas turbine product offerings. In early September, we completed the sale of our industrial fabrication operations in Wisconsin, resulting in a net gain of $8.2 million. By consolidating our heavy fabrications operations into our Abilene, Texas facility, we continue to enhance asset utilization and position Broadwind, Inc. to capitalize on opportunities with higher value, growing end markets, where our technical expertise and 100% domestic manufacturing footprint are in high demand. Along with closing the sale in Manitowoc, we announced a $3 million share repurchase program underscoring our continued confidence in our long-term value creation potential. Customer activity remains robust, with incoming orders rising to $44 million, up 90% year over year and doubling sequentially. Led by strong demand from power generation, increasing demand from oil and gas and industrial customers, combined with strong wind orders. These market dynamics reinforce the importance of our diverse customer base and our strategy to pursue the capabilities and quality certifications required to expand in growing markets, specifically power generation. Orders within our heavy fabrications business reflect an increase in orders for our wind products offset by softness in our natural gas pressure reducing systems or PRSs. Gearing orders continue to rebound nicely, increasing 260% to nearly $16 million as we continue to see strength in power generation and some resurgence in the wind and oil and gas aftermarket. In Q3 2025, orders within our Industrial Solutions business continued to be strong, increasing 86% to nearly $14 million driven by strong demand for both new gas turbine installations and aftermarket upgrades and services. We are pleased to have set yet another record for backlog in this segment. Operationally, we continue to invest in equipment technology to improve our process capabilities, reduce costs, and improve our profitability. In 2025, margins were temporarily impacted by production process inefficiencies relating to a unique low volume tower build at our Manitowoc and Abilene facilities as well as lower capacity utilization levels within our Gearing segment. As production normalizes, we anticipate improved operating leverage through the duration of the year and into 2026. In the Industrial Solutions segment, we are investing in additional manufacturing capacity to address our growing backlog and meet future customer demand in the gas power generation equipment market. Within our heavy fabrication segment, Q3 revenue grew by 43% year over year, primarily due to an increase in wind towers and repowering adapters sold offset by lower demand for our proprietary PRSs. Revenue in our 23% year over year, due to lower demand from the mining and industrial sectors partially offset by power generation and steel. Within industrial solutions, revenue grew 37% year over year, primarily due to stronger shipments into the new gas turbine equipment market both domestically and internationally. In summary, the team and business continued to perform well, as we sharpen our focus within adjacent higher margin precision manufacturing verticals. Recent strategic actions to divest our Manitowoc facility position us for increased balance sheet strength and optionality, while improving capacity utilization at our Abilene facility and reducing overhead costs. Despite the volatile trade policy environment, our 100% domestic manufacturing base remains a key competitive advantage positioning us to partner with tier one OEMs who value our deep technical expertise, commitment to quality, and on-time service. With that, I'll turn the call over to Tom for a discussion of our third quarter financial performance. Thomas A. Ciccone: Thank you, Eric. Turning to Slide five for an overview of our third quarter performance. Third quarter consolidated revenues were $44.2 million, representing a 25% increase versus the prior year period. Third quarter benefited from restarting Manitowoc Tower production, as well as increased repowering revenue in both our Manitowoc and Abilene facilities. Outside of our heavy fabrication segment, lower gearing deliveries were more than offset by increased revenue within our Industrial Solutions segment, reflective of the strong order levels we've experienced recently. Sequentially, revenue increased nearly 13% due primarily to the increase in heavy fabrication shipments. Adjusted EBITDA declined $2.4 million versus the prior year of $3.4 million. This decrease was primarily due to lower capacity utilization within our Gearing segment, costs associated with unplanned machine downtime, and manufacturing inefficiencies related to the production of unique low volume power builds within our heavy fabrication segment. Third quarter orders were strong at nearly $44 million. This represents an increase of 90% versus the prior year quarter and 108% sequentially. Orders increased across all of our segments versus the prior year and were up or flat across all segments sequentially. This represents the highest quarterly order level since 2022. Turning to Slide six for a discussion of our heavy fabrication. Third quarter orders were nearly $14 million, a 25% increase versus the prior year quarter. Just a reminder, during the second quarter, we received purchase order releases satisfying the volume associated with the long-term customer supply agreement that we announced in January 2023. As such, the growth in Q3 was primarily attributable to resuming the recognition of new power orders with this customer, partially offset by the decrease attributable to winding down the industrial fabrication operation at our Manitowoc facility. Third quarter revenues of $29.4 million are up 43% versus the prior year quarter, driven by an increase in wind power sections sold as we restarted Manitowoc Tower production in the previous quarter on a limited run which was completed during the third quarter, and increased repowering revenue. This was partially offset by a decrease in the industrial fabrication shipments as we wound down the Manitowoc operation and had fewer shipments of our PRS units. Despite the increase in revenue, third quarter segment adjusted EBITDA was down versus the prior year due to the manufacturing headwinds and unplanned machine downtime previously mentioned. Turning to Slide seven. Q3 Gearing orders increased $11.5 million year over year to $16 million, a level almost three times the average quarterly total over the past three to two years. Most notably, Q3 included a $6 million follow-on order from a leading OEM in the natural gas turbine segment of the power generation end market which we announced in July. This order represents the year one volume of a multiyear supplier agreement for Gearing products. In addition, during the quarter, oil and gas orders remained elevated relative to prior year levels, as we are benefiting from reshoring in reaction to recent US trade policies. Segment revenue was $7.1 million, down over $2 million period, driven by lower revenue and reduced capacity utilization. Turning to Slide eight. Industrial Solutions booked nearly $14 million of orders during the third quarter, maintaining the strong demand seen this year. The segment participates in the natural gas power equipment industry which is experiencing significant resurgence driven by the increasing demand for reliable and flexible power supply. Segment backlog hit a new record of almost $36 million at the end of the third quarter, eclipsing the previous record of $30 million set in Q2. This quarter represents the fourth straight quarter setting a record backlog level. Q3 segment revenue was $7.9 million, up both sequentially and versus the prior year quarter, reflective of the strong commercial environment. Revenue is up 37% versus the prior year quarter, but adjusted EBITDA of 0.6 was flat versus the prior year due to a lower margin mix of products sold as well as additional overhead to support increased production volumes. Turning to Slide nine. We ended the third quarter with total cash and availability on our credit facility of nearly $27 million. Liquidity was boosted in the quarter by the September closing of the sale of our Manitowoc Industrial Fabrication operations which resulted in over $13 million in cash. We used that cash to pay off a portion of our term loan with the balance applied to our line of credit which decreased from $17.6 million down to $3.8 million during Q3. Also boosting liquidity was a decrease in our operating working capital by almost $5 million, primarily driven by reduced inventory levels. We anticipate that working capital levels will decrease again during the fourth quarter. Finally, with respect to our financial guidance, today, we are updating our full year 2025 guidance. We are increasing our full year 2025 revenue expectations to be in the range of $155 to $160 million, up from $145 to $155 million. And the adjusted EBITDA range is maintained at $9 to $10 million, which excludes the $8.2 million gain on the sale of our Manitowoc industrial fabrication operation. As a reminder, in 2024, the Manitowoc facility generated over $25 million of revenue, but adjusted EBITDA margin rate of approximately 8% to 9%. The majority of that 2024 revenue was industrial fabrication work that we do not anticipate replacing organically in 2025. We expect to provide more detail around the full year 2026 outlook on our fourth quarter conference call. That concludes my remarks. I turn the call back over to Eric to continue our discussion. Eric B. Blashford: Thanks, Tom. Now allow me to provide some thoughts as we move into Q4 and 2026. We continue to make a decisive shift toward increasingly stable, growing power generation markets with an emphasis on oil and gas, renewables, and potentially nuclear. Our strategic emphasis is on pursuing the highest growth and the highest margin opportunities that leverage our precision manufacturing expertise. Our facilities in Abilene, Texas, Cicero, Illinois near Chicago, Pittsburgh, Pennsylvania, and Sanford, North Carolina near Raleigh have more than 600,000 square feet of manufacturing space ready to serve our customers. Given the consolidation of our manufacturing base, we anticipate Broadwind, Inc. should be on pace to materially improve capacity utilization going forward. Recent wins within the Gearing and Industrial Solutions segments from power generation, specifically within distributed power, as well as growing opportunities in utility scale natural gas turbines, support our strategy to expand in this market. We continue to see robust quote activity in both gearing and industrial solutions, generated by our ability to solve the complex precision manufacturing and sourcing challenges faced by customers in this growing market. Accordingly, we are expanding resources to meet this demand. In our Gearing segment, we continue to pursue our strategy to move beyond traditional gearing markets for new opportunities and other precision machine products. The recent sizable orders we received from the power generation sector are exciting, with more expected to come next year. We're pleased with the increasing level of customer activity we're seeing in various new infrastructure-related markets, such as road maintenance, cement plants, and aggregate material processing among others. Additionally, we're seeing an increase in orders from our traditional oil and gas customers, partially due to reshoring efforts. Accordingly, we continue to expand our capabilities to serve the high-speed geared segment with additions to our dynamic balancing capabilities, as we bring more key processes in-house. In industrial solutions, continued growth in the natural gas turbine industry driven by the global demand for power is having a positive commercial impact on our business. In Q3, we had near record bookings which led to a new record quarterly backlog. New data center installations are driving increased demand for distributed power solutions, including those that provide redundancy. And many of our key customers are adding significant production capacity in order to meet both the current and foreseeable future demand. Accordingly, we are expanding our internal capabilities in production, fulfillment, and the customer response team to address this growing opportunity and better serve our customers. Expanding on the investments made in robotics, coatings, and machining made earlier this year, we added another vertical machining center in Q3 to expand our fabrication capability. In our heavy fabrication segment, we believe that domestic, onshore wind tower activity will continue at its present pace through 2026. We are encouraged by the continued momentum in the wind repowering market as we are seeing sustained demand from our OEM customers for the adapters we manufacture which are required to upgrade most legacy turbines. We have good visibility for tower production through 2026 and good customer indications beyond that. In summary, I'm pleased with the order growth and strategic actions we've taken this year as we continue to demonstrate strong execution of our strategic priorities. Our divisions are well positioned to support the nation's growing need for power generation and infrastructure improvement which we see as long-term opportunities for us. Our quality, quick response, and ability to solve complex manufacturing challenges for our customers continue to help us win new opportunities. We're reducing our cost structure, investing wisely, and taking strategic actions to refocus our resources toward higher value and growing end markets. We value our people and are committed to keeping them safe, fulfilled, and productive. Our 100% US-based plants are expanding capabilities to take advantage of opportunities afforded by the pro-domestic manufacturing policy backdrop afforded by the current administration. We're encouraged that our order intake continues to grow, positioning us for improved utilization of our manufacturing footprint for the rest of the year and into 2026. As we strengthen our foundation for steady, profitable growth serving the power generation, critical infrastructure, and other key markets, with high-quality precision components and proprietary products to capitalize on improved demand in the years ahead. With that, I'll turn the call over to the moderator for the Q&A session. Operator: Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. One moment, while we poll for questions. Our first question comes from Amit Dayal with H.C. Wainwright. Please proceed with your question. Amit Dayal: Thank you. Good morning, everyone. So Eric, good morning, Amit. Good morning, Amit. Looking into 2026 a little bit, you know, is it looks like, you know, you're having good traction on the industrial solution side with, you know, the power infrastructure ramp that is underway. Is that going to be the key driver for you guys next year in terms of growth? Eric B. Blashford: I think power, well, in terms of division, yes. But I think in terms of market, power generation and critical infrastructure are going to lift both industrial solutions and gearing in 2026. Amit Dayal: Okay. So and that's why I was wondering why gearing was soft. You know, I know you indicated some sort of organic near-term issues, but is the general business environment for the gearing segment positive, I guess, you know, given some of the headlines we are seeing about maybe some economic slowdown, etcetera? Eric B. Blashford: Well, again, with certain markets, we are seeing a lift. We're seeing power generation, with distributed power, primarily with reciprocal turbines, below maybe 50 megawatts. So that's strength for us. We're also seeing some strength in aggregates. And even road maintenance of all things. So we're seeing some general infrastructure lift as well as power generation in gearing. Now gearing reminder, does have a bit of a lead time. So what we're seeing in softness in revenue is because of the lack of orders we had a couple, three quarters ago. These orders that we're receiving now, we will be delivering in 2026. Amit Dayal: Okay. Understood. And then just last one for me. You know, are you seeing learn about the margin profile for 2026 with the level of visibility you have right now. Eric B. Blashford: It's pretty stable. We are having some increases because of tariffs. We're able to pass those on. Some of our sourcing has to come from those countries that do primarily for industrial solutions. That are subject to tariffs, but we are able to pass those on with a timing difference to our customers. So I'd expect the margin profile to be about the same in '26 as it is in '25. However, the increase in capacity utilization does help us. Yeah. I think the only thing I'd add there, Amit, is that we did some operational headwinds in '25 here. And I think maybe all else being equal, we could expect a marginal improvement just due to the absence of those headwinds. Amit Dayal: Understood. Okay, guys. That's all I have. Thank you so much. Eric B. Blashford: Thank you. Operator: Our next question comes from Sameer Joshi with H.C. Wainwright. Sameer Joshi: Hey. Hey, Tom. Just following up with some more questions on the costs front. Now that the Manitowoc overhead is out of the way, do you expect to have higher gross margins going forward? Thomas A. Ciccone: Yeah. I would say it's probably more to do yeah. The answer is yes. And I think it probably has more to do with the, again, with the lack of operational headwinds that we had. The Abilene facility is an owned facility versus Manitowoc being a rented facility. So we do see slightly higher margins out of that facility. And I think capacity utilization is a big factor here. The more we can run across that plant, we should see some good returns on that. Sameer Joshi: Understood. And then, the PRS, sort of it's showing some weakness, at least in this quarter. Is that because of just timing, or is there a general lack of demand for that? Eric B. Blashford: Well, we like to think it's timing. Talk with our customers about it when we're on roadshows. And demos, and they really like the specifications of that. But what they say is at least right now, the price of oil is restricting their ability to increase capital. Once that turns a bit for them with new budget season, we should expect a resurgence in volume from that product line. Sameer Joshi: Great. Thanks. Thanks for that color. Operator: Thank you. Our next question comes from Eric Stine with Craig Hallum Capital Group. Please proceed with your question. Eric Stine: Hi, Eric. Hi, Tom. Good morning. Eric B. Blashford: Morning, Eric. Thomas A. Ciccone: Morning. Eric Stine: So maybe it sounds like, I mean, you're clearly making investments for growth across the business. I just want to specifically look at Industrial Solutions given where the backlog is? I guess, first, could you just talk about you've done it sounds like, quite a few. You've got more upgrades planned, what that might mean from a CapEx perspective, but also how quickly can that come on because your backlog would imply, you know, that you could have a pretty meaningful step up in revenues. Once those investments kind of come to bear. Thomas A. Ciccone: Yeah. I think to answer your question about CapEx, we've made some investment this year. They've been relatively modest. We don't expect anything that would move the needle from a consolidated perspective. As we look forward, historically, we've been about 2% to 3% of revenue as CapEx. We don't anticipate exceeding that in '26 or Q4 or '26. But what I will tell you is we do intend to expand that plant into another portion of a larger building which we can get into. Increases our floor space by about 35%. Going into 2026. So that, along with the increase we're making in staffing and equipment, we should be able to respond to this demand. But the demand is there and is coming, it is there and is continuing. So we definitely need to make these investments to keep up with it. Eric Stine: Right. And, okay. So second half is should it should be more of the expectation potentially for a step up there. Sure. I mean, maybe a good segue just on you know? I mean, obviously, it's no secret what's going on in energy markets, demand, need for resiliency, etcetera. But, I mean, I would think that this is a tailwind for your business for multiple years. And, so, you know, curious if you agree with that first. But then secondly, I mean, do you have you mentioned what you're doing in Industrial Solutions. But even in gearing, I mean, do you have kind of additional ways to expand capacity as you think about that, not just for 2026, but as you look at '27, '28, and beyond given these trends. Eric B. Blashford: Sure. Well, first of all, the demand for electricity is going to keep on going up, and we all know that. The demand for data centers is projected to go from 22 GW up to 35 GW through 2030 just for data centers alone. So we know that's a demand driver for us. Regarding capacity, I'm sorry. The visibility that we have for the gas turbine market goes beyond 26 into 27 and even into 28. So we do expect that tailwind to be behind us for the next certainly two or three years which is as far as we can see out right now. Gas turbines sold are about 30% up year over year, 2025 versus 2024. And '24 was a strong year. So you know, the basics are there for the growth. Regarding the capacity, we're really only still about 45% full in gearing facility. So we have plenty of capacity to fill there as this business grows. But what we're doing is specifically adding technology to bring more in-house. That was the balancing equipment I mentioned. Because the more we can bring in-house, the more control we hope we have of quality, over timing, and over price. So those are where are to see our investments made going forward. Eric Stine: Yep. Okay. That is helpful. And then just on heavy fab and specifically wind, you know, I would assume we should expect this to be the new norm now that you have satisfied that long-term contract. I mean, not that you would turn down an order of that magnitude should it happen. I mean, this is going to be a maybe not quarter to quarter, but this is going to be a you know, you get a large order. It's probably gonna mean that you're at elevated levels for you know, the next few quarters. And you know? But no one should expect necessarily that heavy fab backlog, you know, is meaningfully higher. Until wind really picks up. I mean, is that a fair or correct answer? Eric B. Blashford: Correct. Our customers like to issue us ratable POs because it also helps them because they don't necessarily know the turbine they're going to sell. That far out. They know that we know they want our capacity. We've got good visibility through '26 and really good customer indications beyond that. But when it comes to which turbine they sell and which tower goes under it, they really can't look out that far. So yes. What we saw this quarter, should expect to see going forward. Eric Stine: Okay. Thank you. Thanks, Eric. Eric B. Blashford: Very good. Thank you. Operator: We have reached the end of the question and answer session. I'd now like to turn the call back over to Eric B. Blashford for closing comments. Eric B. Blashford: Yes. Thanks, everyone, for listening. We look forward to coming back to you again early next year to talk about our full year 2025 and how 2026 looks. Operator: Thank you for your interest. This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.
Angelie: Good morning. My name is Angelie, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would like to turn the conference over to Jack Ezzell, Chief Executive Officer and Chief Operating Officer. Please go ahead. Jack Ezzell: Good morning, and welcome to OneWater Marine Inc.'s fiscal fourth quarter and full year 2025 earnings conference call. I am joined on the call today by Austin Singleton, Executive Chairman of the Board, and Anthony Aisquith, Chief Executive Officer. Before we begin, I would like to remind you that certain statements made in this morning's conference call regarding OneWater Marine Inc. and its operations may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company's control, described in the forward-looking statements, which could cause actual results and events to differ materially from those. Factors that might affect future results are discussed in the company's earnings release, which can be found in the Investor Relations section of the company's website and in its filings with the SEC. The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date they are made, except as required by law. Please note that all comparisons of our fourth quarter or fiscal year 2025 results are made against the fourth quarter or fiscal year 2024 unless otherwise noted. With that, I'd like to turn the call over to Austin Singleton, who will begin with a few opening remarks. Austin Singleton: Good morning, everyone, and thank you for joining us today. We finished 2025 with solid results and meaningful progress on our strategic priorities. Industry conditions remain challenging as retail demand continued to normalize from pandemic highs, promotional activity increased, and multiple hurricanes created disruption in key Florida markets. Against that backdrop, our team executed with discipline and focus. We delivered 6% same-store sales growth for the year, outperforming the broader industry in the categories where we compete. New boat sales were strong in the fourth quarter, and pre-owned sales remained a standout throughout the year, contributing to solid full-year results. This performance demonstrates our strength and resilience in our model and the depth of our retail network. We also took thoughtful cost actions and leveraged our flexible operating model to align expenses with demand and protect margins, finishing the year with positive momentum headed into 2026. Maintaining a disciplined approach to inventory has been a top priority, and our teams executed exceptionally well. We exited this year with the cleanest inventory levels we've seen in years, giving us a significant competitive advantage as we enter 2026. This enables us to respond quickly to shifting retail conditions and support a healthier balance between price and volume. We also completed our strategic exit from discontinued brands, allowing us to sharpen our focus on our core portfolio with high-performing brands. While this transition created some margin pain during the year, it laid the groundwork for meaningful long-term margin improvement as we move through 2026 and beyond. Looking ahead, we are encouraged by signs that channel inventories across the industry are returning to healthier levels and OEM production is beginning to normalize. We believe these factors, combined with our flexible operating model and strong customer relationships, position us well to capture demand and drive profitable growth as the industry stabilizes. Early boat show feedback has been positive from our manufacturing partners, highlighting strong customer interest and innovative new features and fresh models. At one of our largest events of the year, the Fort Lauderdale Boat Show, sales were up year over year. Unit sales were lower, reflecting the impact of the brands we exited in 2025 as well as the liquidation of excess inventory in the prior year. The good news is that we are beginning to see improvements in overall new boat gross margins. We are excited to build on this momentum through the winter boat show season. Finally, I want to thank our entire OneWater team for their hard work, resilience, and dedication to our customers throughout the year. I'm confident we have the right people, structure, and strategy in place to continue delivering long-term shareholder value. With that, I will turn it over to Anthony to discuss the business operations. Anthony Aisquith: Thanks, Austin. Good morning, everyone. I'd like to start by echoing Austin's comments and thanking our team for their dedication throughout the year. Despite a challenging marine market, our focus on serving customers drove another year of positive same-store sales growth and continued market share gains. New boat demand normalized after several years of outsized growth, and our team drove strong pre-owned sales by effectively leveraging a rebound in trade-in activity, which reached historic lows during the pandemic. We entered the year focused on rightsizing inventory and exited with one of the cleanest positions we've seen. That disciplined execution allowed us to begin rebuilding inventory in the fourth quarter, slightly ahead of typical seasonal patterns. Our inventory aging has significantly improved compared to a year ago, and early response to the new model year has been encouraging. Finance and insurance penetration remained healthy and continues to be a key strength. Further interest rate cuts should support customer affordability and enhance unit economics for boats financed through OneWater. Service parts and other sales were solid for the year despite modestly lower sales in our distribution segment due to reduced OEM production. As inventory levels reset across the industry and OEM output normalizes, we believe there is growth opportunity heading into 2026. I'd like to turn the call over to Jack to discuss the financials. Jack Ezzell: Thanks, Anthony. Fiscal fourth quarter 2025 revenue increased 22% to $460 million compared to $378 million in the prior year period, which was significantly affected by hurricane-related disruptions along the West Coast of Florida. New boat sales were up 27% to $275 million in the fourth quarter, while pre-owned sales increased 25% to $91 million. Overall, store sales were up 23%. Revenue from service parts and other sales for the quarter increased 7% to $81 million, driven by steady retail service activity in our dealership segment and modest growth in our distribution segment. Finance and insurance revenue increased year over year on a dollar basis but declined slightly as a percentage of total sales. Gross profit increased to $104 million in 2025 compared to $91 million in the prior year, primarily driven by higher new boat volumes as a result of the hurricane-related disruptions on the West Coast of Florida in the prior year. Fourth quarter selling, general, and administrative expenses increased 6% to $84 million, down 270 basis points, primarily driven by higher revenues in the quarter. Fourth quarter operating loss was $130 million, and adjusted EBITDA was $18 million. Net loss for the fiscal fourth quarter totaled $113 million or $6.9 per diluted share compared to a net loss of $10 million or $0.63 per diluted share in the prior year. The decrease was largely due to non-cash goodwill and intangible asset impairments of $146 million, driven principally by the decline in our market capitalization relative to the book value. As a reminder, this adjustment does not impact cash flow, liquidity, or operational flexibility. Adjusted diluted earnings per share was less than $0.1 compared to an adjusted diluted loss per share of $0.36 in the prior year. Turning to our full-year results, total revenue for 2025 increased 6% to $1.9 billion for fiscal year 2025, driven by a slight increase in units as well as an increase in the average selling price of both new and pre-owned boats. Same-store sales increased 6% in 2025, outperforming the industry backdrop where FSI data indicated a decline of over 13% in the categories in which we compete. Additionally, service parts and other revenue increased 2% to $295 million, driven by growth in our dealership segment as we continue to expand this important part of our business and support our customers. This was partially offset by lower sales in our distribution segment, reflecting reduced production levels from boat manufacturers. Full-year 2025 gross profit decreased 2% to $427 million as a result of market dynamics and the impact of select brands the company has exited during the year. Gross profit margin for fiscal year 2025 was 23%. Selling, general, and administrative expenses increased to $343 million or 18% of revenue from $333 million or 19% of revenue in the prior year. The decrease in selling and general administrative expenses as a percentage of revenue was driven by higher revenues in addition to targeted cost actions, which supported the SG&A savings. We will continue to practice proactive expense management and have flexibility to accelerate cost actions as necessary should the need arise. Net loss for fiscal year 2025 was $116 million or $7.22 per diluted share compared to a net loss of $6 million or $0.39 per diluted share in the prior year. The business generated adjusted EBITDA of $70 million and adjusted earnings per diluted share of $0.44. Now turning to the balance sheet, total liquidity was in excess of $67 million, including cash on hand and additional availability under our credit facilities. Total inventory as of September 30, 2025, decreased to $540 million compared to $591 million in the prior year. This decline reflects our ongoing strategic inventory positioning and brand rationalizations throughout the year. Total long-term debt was $412 million, and net of cash resulted in net leverage of 5.1 times trailing twelve months adjusted EBITDA. As we move forward, reducing leverage remains a priority in our capital allocation strategy. Looking ahead to 2026, we are cautiously optimistic, and we expect demand to fluctuate with traditional seasonal cycles. Our outlook is anchored on industry commentary and an expectation that industry unit sales will be flat to this year. Our forecasted sales will be negatively impacted by the impact of brands we exited. However, we also expect to outperform a flat market. Accordingly, we expect these factors to offset, resulting in flat same-store sales for the year. We anticipate total sales to be in a range of $1.83 billion to $1.93 billion. We expect adjusted EBITDA to be in the range of $65 million to $85 million and adjusted diluted earnings per share to be in the range of $0.25 to $0.75. Overall, we remain optimistic about 2026. There are a number of tailwinds, including improved industry inventory levels, reduced discounting, and lower interest rates, which we expect to be tempered by market uncertainty. We will remain focused on maintaining our clean inventory position and disciplined approach to cost management, which we believe provides a clear advantage as market conditions evolve. While fiscal 2025 presented challenges across the industry, the actions we have taken strengthen our foundation and position OneWater Marine Inc. to continue outperforming the industry as the environment stabilizes. This concludes our prepared remarks. Operator, will you please open the line for questions? Angelie: Thank you. At this time, I would like to remind everyone in order to ask a question, your first question comes from the line of Craig Kennison with Baird. Please go ahead. Craig Kennison: Hey, good morning. Thanks for taking my question. Jack, I wanted to follow up on your inventory comment. I'm not sure if you quantified the change year over year in dollars. I think last quarter, it was down 14%. So could you share that figure? Jack Ezzell: Yeah. We're down roughly 8.5%, $50 million year over year. You know, when we had originally said our goal was down 10 to 15, and we had been tracking that throughout the year. However, with the timing of some model year 26 boats, we started that build a little earlier this year because some of our stores were actually getting a little light on inventory. So again, we're really pleased with where the inventory is at. Craig Kennison: Thank you. And given your outlook for flat retail, what's the right assumption for inventory for fiscal 2026? Jack Ezzell: Yeah. I would expect it to be up modestly just with price increases and some things like that. I think just one thing to note is that on that flat retail, we expect that from the exiting brands. We have a headwind of, let's call it, around 5%. And so while we'll look to capture some of that with our continuing brands, those two will kind of offset. So, we think the business, if I pro forma out last year, the exiting brands, we think the business will be up mid-single digits. But when you kind of the two will kind of net out to get you to that flat. Craig Kennison: That's really helpful. That was my next question. Then maybe, Jack, lastly, just on your interest rate expense outlook for 2026, just want to make sure we have a feel for that given the term note and interest rate changes. Jack Ezzell: Yeah. I mean, I'm a little bit scarred from this past year because we had a lot of cuts in our model. And so, I think we have another 50 basis points of cuts in the model going this year, but I'm kind of hesitant on that number. When we think about year over year, I think floor plan interest will be, let's call it, flattish to up slightly. And then, our term interest will be down some just as we continue to make amortization payments, etc., on that. But it's down in the 5 to 10% range. Craig Kennison: Great. Thank you both. Angelie: Thank you. The next question comes from Joe Altobello with Raymond James. Please go ahead. Joe Altobello: Thanks. Hey, guys. Good morning. First question, on interest rates. You mentioned rates coming down could be a tailwind to demand in fiscal 2026. Have you started to see consumer rates come down in a meaningful way yet? Austin Singleton: Yeah. What's meaningful? They've come down. I mean, they haven't dropped a point. But they move with every rate cut, start to move down. So, yeah, we're starting to see that, and a little bit of that interest rate cuts probably led into a good October and a good Fort Lauderdale boat show. Joe Altobello: Got it. Which is where I was going to go next. The optimism that cuts. Right? That we're going in the right direction and that while a 25 basis points doesn't make a difference on someone buying a million-dollar boat, it certainly does a lot for their confidence and their projection of where they see things trending. Austin Singleton: Got it. Okay. And then Austin, you mentioned Fort Lauderdale. Could you kind of quantify how much your sales were up at the show? Austin Singleton: Yeah. I mean, we were almost up 20% for the show, just slightly under that compared to last year, which is really good. But the most important thing, I think, was that we started to see that margin pressure go away, which is exciting. I mean, when you come out of this quarter with the same-store sales comp that we had for the quarter, a little bit of that was due to the hurricane last year. So going into October, it was a nice surprise to see that held up. And October turned out really good, and then the Fort Lauderdale Boat Show continued. November is looking pretty decent right now. So we feel like last quarter, the summer, was kind of like at the bottom, and we started to turn, but it's just it's probably going to be a slow creep up from here, but every little bit helps. Momentum seems to be pretty decent right now. Joe Altobello: And just last question. Go, but I Jack Ezzell: As you know, right, that increase in Fort Lauderdale boat shows don't all hit in the December quarter. Right? Those sales are spread out. Joe Altobello: Oh, yeah. For sure. Yep. Absolutely. Okay. Margin, it's like you guys are a little more optimistic on margin this year. Obviously, last year and liquidating a lot of the smaller brands. But how do you see the promo environment playing out in fiscal 2026? Austin Singleton: Well, I mean, I think the manufacturers are still kind of compressed from a manufacturing standpoint. I mean, they all want to kind of produce more boats. I mean, when you talk to Wells Fargo on the floor plan side, inventory levels for the industry are really low right now. If you kind of see any kind of bump in the spring, you know, we're going to have to really work hard next year to manage, and that's one of the things we've got to do is manage inventory going up because the manufacturers can't just go in one day and increase production 20%. It's a slow grind for them to increase because the majority of that increase is probably going to be based in labor. And so you really got to work on managing your inventory. And it'll be a slow grind for the increase. We're excited about that in a way because that helps with margin. So, I mean, I think the promotional environment is going to stay put until the manufacturers start feeling the industry dealers like us start getting where we're ordering more boats, and I don't know if that comes in January, if that comes in March, or that comes in June. So the same old story we've said many times, I think as we get into the summer season in the back half of the year, you're going to start to see more green shoots take place if the momentum we're seeing today continues. Joe Altobello: Got it. Okay. Thank you. Angelie: Thank you. Again, if you would like to ask a question, press star then the number one on your telephone keypad. The next question comes from Noah Zatzkin with KeyBanc Capital Markets. Please go ahead. Noah Zatzkin: I guess first, on the pre-owned side, obviously really strong results during the quarter. Have you continued to see kind of an increase trade-in dynamic? And how are you thinking about that playing out next year? Thanks. Austin Singleton: Yeah. I mean, that momentum has kind of continued on. I mean, the dynamic of why that dropped during the middle of COVID and on the back end of COVID was just the lead time to get boats from manufacturers. So it gave the consumer a lot more free time or their own time to sell their boat. And so with inventory a little bit more on hand, the ordering cycle because the manufacturers have compressed production right now, and so it doesn't take as long to get a boat. We are seeing more trades than we saw pre-COVID. I wouldn't say there's more trades or there's more used boats out there than there's been. It's just that they're not selling it on their own, and they're running it through the dealerships. Noah Zatzkin: Got it. That's helpful. And then maybe just kind of an update on the M&A side, what you're seeing out there and how you're thinking about that next year? Austin Singleton: Yeah. I mean, we're staying extremely disciplined on that. I mean, we're really focused on the debt right now. And, you know, one of the good things that we have that works for us is time's on our side. So, you know, it's not like the deals are going to somebody else or they're leaving or they're disappearing. So we can be very methodical, very disciplined, and just take them, you know, be very picky as we move forward. But I think for the short term or at least till we get into boat season next year, as we run into the winter months, we'll probably be pretty disciplined and focused mainly on the debt. Noah Zatzkin: Thank you. Austin Singleton: Thanks, Don. Angelie: Thank you. There are no further questions at this time. This concludes today's conference call. You may now disconnect.
Operator: Good morning, and welcome to the Team, Inc. Third Quarter Update Call. I would now like to turn the conference over to Nelson M. Haight, Chief Financial Officer. Please go ahead. Nelson M. Haight: Thank you, operator. Good morning, everyone, and welcome to Team, Inc. About our third quarter 2025 operational and financial results. On the discussion today is Keith D. Tucker, our Chief Executive, and myself, Nelson M. Haight, Chief Financial Officer. I want to remind you that management's commentary today may include forward-looking statements, including without limitation those regarding revenue, gross margin, operating expense, other income and expense taxes, adjusted EBITDA, cash flow, and future business outlook, which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the risk factors that could cause actual results to differ, please refer to the Risk Factors section of Team, Inc.'s latest annual and quarterly filings filed with the Securities and Exchange Commission, along with our associated earnings release. Team assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. With that, I will turn it over to Keith D. Tucker, our CEO. Keith D. Tucker: Thank you, Nelson. Welcome everyone and thank you for joining us to review our third quarter operational and financial highlights. I want to start off by thanking our employees for their hard work which has made many of our recent successes possible. In 2025, we continue to deliver improved operational and financial results with year-over-year growth in revenue, margin, and adjusted EBITDA, all while expenses continue to trend lower as a percentage of revenue. Revenue grew almost 7% or about $14 million year-over-year, with gross margin increasing by 8.4% and adjusted EBITDA up to 28.6% to the highest level for a third quarter since at least 2016. As you can see, the growth in our adjusted EBITDA outpaced our top-line growth, which is a testament to the solid progress we continue to make on our ongoing cost and margin improvement initiatives. Drilling down into the segments, we saw 5.7% overall revenue growth in inspection and heat treating, driven by strong nested and call-out activity in the U.S. and 8.9% growth in our international operations, including Canada. We have now seen multiple quarters of growth in our Canadian operations, demonstrating the increasing traction of our ongoing initiatives to strengthen our commercial and financial performance in that area. In our Mechanical Services segment, we saw strong revenue growth of 7.8% or $8 million, led by increased turnaround demand in our U.S. operations and improved year-over-year top-line performance in Canada. With both our IHT and MS segments demonstrating top-line growth, it should come as no surprise that our adjusted EBITDA for the third quarter increased by $3.2 million year-over-year, with adjusted EBITDA margin up 110 basis points to 6.5% of our consolidated revenue. Additionally, we continue to see benefits from our cost discipline in the third quarter, lowering our adjusted selling, general, and administrative expense, which excludes expenses not representative of Team's ongoing operations such as non-recurring fees and non-cash expenses, to 20.8% of consolidated revenue versus 21.7% in 2024. We believe that our ability to continuously deliver on our cost control and margin expansion initiatives and improving our balance sheet will continue to drive future shareholder value and stock appreciation. To that end, in September 2025, we completed the private placement of preferred stock with Stellix Capital Management, which strengthened our balance sheet and enhanced financial flexibility. This $75 million investment recognizes the impactful progress made to date in our ongoing program to improve margins and lower our cost structure, as well as reinforces the significant opportunities that remain for further improvements in margins and top-line growth. We are excited to partner with Stellix and look forward to working together to accelerate our value creation plan. We believe that our ongoing actions and continued focus on executing our strategic vision will help lead to more top-line growth and further improvements to our margins and free cash flow generation. We have seen some outstanding numbers reported in our 2025 results from our actions thus far, and during the third quarter, we continue to work on identifying additional opportunities to improve cost efficiencies and accelerate top-line growth. We expect to see additional impacts to our full-year 2025 operational and financial results. Looking ahead, we believe our diversified portfolio of service offerings across multiple industries and our geographic footprint positions us to better navigate macroeconomic uncertainty. We see top-line growth over the prior year across both segments and improved adjusted EBITDA levels for 2025. We have line of sight to full-year 2025 revenue growth of approximately 5% and adjusted EBITDA growth of approximately 13%. Our organization is focused on the things we can control, which are continued cost and capital discipline, and execution on our commercial initiatives that include aggressively leveraging our technical expertise and end markets with attractive margin profiles such as power, aerospace, and LNG into increased wallet share. We remain committed to delivering profitable growth that enhances our financial results and drives shareholder value. With that, I would like to turn it over to Nelson M. Haight to discuss our financial accomplishments. Nelson M. Haight: Thank you, Keith. Before I go into third quarter financial results, I would like to discuss in more detail the recent actions we have taken to strengthen our balance sheet. Over the last several years, we have diligently improved our balance sheet and enhanced our financial flexibility. And in 2025, we made further improvements. In March, we closed a refinancing transaction that lowered our blended interest rate by over 100 basis points, simplified our capital structure, and extended out our term loan maturities to 2030. In September, we successfully closed on a $75 million private placement of preferred stock and warrants with Stellix that helped us pay down about $67 million of debt. As part of the same transaction, we also amended our ABL credit facility to increase the commitment by $20 million in order to provide additional flexibility during the seasonal spring and fall demands on our working capital and to reduce the applicable interest rate margin. We also amended our first lien term loan facility to reduce the applicable interest rate margin and improve financial flexibility. Finally, the private placement includes a delayed draw feature that will allow the company to raise up to an additional $30 million in proceeds through the placement of additional preferred stock and warrants over the next twenty-four months. Our success since 2022 in improving our financial and operating performance helped make these transactions possible. We believe these improvements to our balance sheet help better position Team to accelerate execution of our long-term strategic plan focused on top-line growth, lowering our cost structure, and strengthening our cash flow. We also look to lean on Stellix as a partner whose insight and expertise we expect will help us achieve our strategic goals faster and more efficiently. These actions have helped to increase our liquidity, which at September 30, 2025, had increased to $57.1 million, consisting of unrestricted cash of $10.6 million and $46.5 million of undrawn availability under various credit facilities. This does not include the $30 million of potential additional proceeds from any future preferred stock issuances that I spoke about earlier. Turning to our financial results, we are very pleased to see strong top-line growth in both of our segments in the third quarter. For the first nine months of 2025, our IHT segment delivered 9.4% year-over-year growth and our Mechanical Services segment delivered revenue growth of just under 1%. On a combined basis, this is almost $33 million of additional year-over-year revenue. Thus far in 2025, we have also seen a 12% improvement in adjusted EBITDA or about $5 million year-over-year. While our absolute adjusted selling, general, and administrative costs, which excludes expenses not representative of our ongoing operations in other non-cash amounts, has marginally increased over the first nine months of 2025, those expenses as a percentage of consolidated revenue are down 70 basis points year-over-year to 20.7% of revenue. Our adjusted net loss for the first nine months of 2025 is also down $7 million compared to the first nine months of 2024. We have generated over $44 million in adjusted EBITDA through the first nine months of 2025, and we are on pace to deliver strong year-over-year growth. We have increased our adjusted EBITDA every year since 2021, and we are forecasting approximately 13% growth in adjusted EBITDA for the full year 2025 and believe that our continued focus on expanding our margins through cost discipline and growing higher margin work will help us accomplish this goal while building positive momentum as we head into 2026. As you have heard from both Keith and myself this morning, we are executing on our strategic roadmap designed to deliver profitable growth and improved cash flow generation. Year to date, our free cash flow has been negatively affected by non-recurring refinancing and transaction fees and related expenses as well as negative working capital impacts specifically around accounts receivable and payables. Looking forward, we expect fewer non-recurring professional fees and we expect these adverse working capital trends to begin reversing in the fourth quarter, all of which should help improve our future free cash flow generation. Over the last three plus years, we have made significant progress in improving the financial position and operating performance of the company. The balance sheet is healthier, margins have improved, and the top line is growing while the company continues to safely deliver best-in-class technical solutions to our customers. With our employees' continued focus and dedication, I am confident in our ability to build off our progress to date with further improvements in our overall financial and operating performance that will ultimately unlock the inherent value in Team. With that, let me now turn it back over to Keith D. Tucker for some closing comments. Keith D. Tucker: Thanks, Nelson. We have worked hard to streamline our business, expand our margins, simplify our cost structure, and improve our balance sheet. Looking ahead, we expect to continue seeing strong operational and financial results in 2025 with year-over-year growth in the top line, continued improved performance from our Canadian and other international operations, and further meaningful progress towards our adjusted EBITDA target margin of at least 10%, all of which we believe will enhance shareholder value. I am very proud of our safety culture and our focus on continuous improvement because at the end of the day, our people are our most vital asset and no job is too important not to be done safely. In closing, I remain confident about our future because I am a firm believer in our capabilities, talented employees, and this leadership team. We have delivered improving results over the past three years, and we remain committed to continuous improvement in margin, cost discipline, and cash flow generation. I believe that we are well positioned to sustainably and profitably grow Team well into the future. Thank you for joining us today and for your continued interest in Team. Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and welcome to the Cellectar Biosciences, Inc. Third Quarter 2025 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press 0 for the operator. This call is being recorded on Thursday, November 13, 2025. I would like to turn the call over to Anne Marie Fields. Good morning, and welcome to Cellectar Biosciences, Inc. third quarter 2025 Financial Results and Business Update Conference Call. Anne Marie Fields: Joining us today from Cellectar Biosciences, Inc. are Jim Caruso, President and CEO, who will provide an overview of the company's progress, before turning the call over to Chad Kolean, CFO, for a financial review of the quarter. Following this, Jarrod Longcor, Chief Operating Officer, will give an update on the company's progress and plans for its promising clinical development pipeline of radiopharmaceuticals. Cellectar Biosciences, Inc. issued a press release earlier this morning detailing the content of today's call. A copy can be found on the investor page of Cellectar Biosciences, Inc.'s corporate website. I want to remind callers that the information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. I caution listeners that management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and in our SEC filings. The content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 13, 2025. The company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call and webcast. As a reminder, this conference call and webcast are being recorded and archived. We'll begin the call with prepared remarks and then open the call to your questions. I'll now turn the call over to Jim Caruso. Jim? Jim Caruso: Thank you, Anne Marie, and thanks to all participants for joining us this morning as we review Cellectar Biosciences, Inc.'s progress in 2025. I'm pleased to share that we have made significant strides throughout the quarter, marking a period of strong operational execution on key corporate priorities, including the strengthening of our balance sheet, making significant advancements with our global regulatory strategy for iopofosine I-131 and Waldenstrom's macroglobulinemia, or WM, and advancing our clinical and preclinical programs. These achievements underscore our commitment to innovation in oncology and position Cellectar Biosciences, Inc. as a company with transformative potential as we head into the final stretch of the year and prepare for an impactful 2026. Let me begin with our lead asset, iopofosine I-131, which continues to show strong promise as a first-in-class radio conjugate therapy for patients with WM. The third quarter brought exciting developments that further validate its potential and may accelerate its path to market. We've been closely collaborating with the EMA to align on a clear regulatory strategy. Importantly, following a thorough review by the EMA scientific working party, we received confirmation of our eligibility to file for conditional marketing approval in the EU based upon the Clover Wham study. A major milestone that could bring iopofosine to patients as early as 2027. This endorsement not only reflects the strength of our data and the urgency of the unmet need but also carries a high probability of success, with 80% of such filings ultimately receiving approval. Confirmation of our eligibility to file a conditional marketing authorization in the EMA gives us further confidence in our regulatory strategy with the US FDA. As previously reported, the FDA requested twelve-month follow-up data on all patients from the Clover Wham study. With the twelve-month follow-up data now available, we plan to submit an NDA under the accelerated approval pathway upon initiation of a confirmatory phase three trial. As you may be aware, in the second quarter of this year, iopofosine was granted breakthrough designation for WM by the FDA. Data from a recent Jefferies research report showed that 79% of oncology drugs which have been granted breakthrough designation are successfully awarded accelerated approval by the FDA. The momentum provided by the success of our global regulatory strategy in Europe and our strengthened regulatory position in the US significantly enhances the value of iopofosine, potentially reducing time to commercialization and making it an increasingly attractive opportunity for strategic collaborations. To support these efforts, we are in active discussions with potential partners both regional and global, who share our vision for these partnerships are designed to provide iopofosine I-131 to patients as quickly as possible, to secure non-dilutive capital and commercial expertise while preserving long-term value for our shareholders. With our bolus of positive clinical data, a favorable safety profile, expedited review designations in the US and Europe, as well as a compelling commercial market potential, we believe I-131 represents an attractive candidate for potential collaborations or partners seeking impactful innovation and oncology assets with accelerated pathways to the global market. We remain equally excited about the progress from our next-generation radiopharmaceutical pipeline, including our recently initiated phase 1b study of CLR125 or iodine-125, an Auger-emitting agent which targets solid tumors such as triple-negative breast cancer, and CLR225, or actinium alpha-emitting radio conjugate targeting several other solid tumors with significant unmet need, including pancreatic cancer. We have also been extremely active in showcasing data from these programs at medical meetings throughout the quarter, including posters and oral presentations at the American Association for Cancer Research and special conferences in cancer research. We encourage everyone to visit the posters and publications section of our investor website to view our presentations. Operationally, we have raised approximately $12.7 million in recent financings to help strengthen our balance sheet and have also engaged in selective supply and trial support agreements with partners to secure the necessary supply of actinium-225 and to complete our phase 1 study for CLR125 for the treatment of triple-negative breast cancer. In summary, we are closing out 2025 with strong momentum and entering the new year with a clear regulatory path for iopofosine in Europe and the US, and maintain the promise of a unique and robust pipeline addressing challenging solid tumor cancers with significant unmet medical need. As a result, we have several near-term milestones to look forward to that we believe place Cellectar Biosciences, Inc. in a position of rapid growth. We are energized by the opportunities ahead and remain deeply committed to delivering innovative, life-extending therapies to patients with cancers. Chad Kolean: With that overview, I'll now turn the call over to Chad Kolean, our Chief Financial Officer, for a review of our financials. Chad? Thank you, Jim. And good morning, everyone. Here are my comments on our financial results for the third quarter ended September 30, 2025. We ended the quarter with cash and cash equivalents of $12.6 million, which is compared to $23.3 million as of December 31, 2024. In July 2025, we raised a net of $5.8 million through the issuance of common stock, prefunded warrants, and new common warrants. Following the close of the third quarter, we raised an additional $5 million net through investors exercising certain outstanding warrants and the issuance of new common warrants. We now expect that our cash on hand is adequate to fund budgeted operations into the third quarter of 2026. Turning to our results from operations, research and development expenses for the three months ended September 30, 2025, were approximately $2.5 million, compared to approximately $5.5 million for the three months ended September 30, 2024. The overall decrease in research and development was a result of lower costs related to the Clover Wham study, where the patient follow-up effort continues to decline as patients are moving off study. Additionally, manufacturing costs have declined as in 2024, we were investing more heavily in establishing a second manufacturing source for iopofosine, an effort that is now complete. General and administrative expenses for the three months ended September 30, 2025, were $2.3 million, compared to $7.8 million for the same period of 2024. The decrease in G&A was primarily driven by a reduction in pre-commercialization and market assessment efforts and lower personnel costs. Net loss for the three months ended September 30, 2025, was $4.4 million, or $1.41 per basic and diluted common share, as compared with $14.7 million, or $11.18 per basic and $12.13 per diluted common share during the three months ended September 30, 2024. With that, let me turn the call over to Jarrod Longcor for a regulatory and operational update. Jarrod Longcor: Thank you, Chad. And good morning, everyone. As Jim just reviewed, we believe iopofosine I-131 has a high probability of approval in the EU, and pending the initiation of the confirmatory study, its approval in the US. We have had extensive communications with both the EMA and the US FDA throughout 2025 and look forward to continuing these interactions through the approval process. As a reminder, this is a program that has received EMA prime designation, FDA breakthrough therapy designation for the treatment of WM, five rare pediatric disease designations, most recently one for relapsed refractory pediatric high-grade glioma, as well as multiple FDA and EMA orphan drug designations. These rare pediatric disease designations provide eligibility to receive a priority review voucher, which can be used to expedite the review process for future new drug applications or biological licensing applications for any drug, or can be sold or transferred to another party. All of these updates have positioned iopofosine as a major value creator heading into the fourth quarter and early 2026 and underscore its potential in strategic collaborations. Now let's turn to our two exciting earlier-stage radio conjugates, CLR125, our lead Auger emitter, and CLR225, our alpha-emitting actinium-based compound. CLR125 may provide the greatest precision in targeted radiotherapy as the Auger emissions only travel a few nanometers, meaning the isotope has to be delivered within the cell and near the nucleus or the DNA. Our phospholipid delivery mechanism provides this necessary targeting to the tumor entry into the cell and transport to the nucleus as validated through clinical studies. It has been demonstrated that CLR125 has significant tumor uptake and, depending on the dose, results in tumor volume reduction or growth inhibition with no toxicities being noted, including no hematologic toxicities at any of the doses tested across multiple challenging animal models, including triple-negative breast cancer, or TNBC, and metastatic breast cancer. The phase 1b study of CLR125 in relapsed triple-negative breast cancer will utilize dosimetry to determine tumor versus normal tissue uptake and will evaluate the activity of three distinct doses of CLR125. A dose of 32.75 millicuries per dose for four cycles versus 62.5 millicuries per dose for three cycles versus 95 millicuries per dose for two cycles, with four doses per cycle and approximately 15 patients per arm with a planned expansion arm in the proposed phase two dose. The primary endpoint for the study will be to determine the recommended phase two dose and dosing regimen, and we will also evaluate safety and tolerability as well as initial response assessments for RECIST as well as progression-free could have multiple patients dosed by the end of the year. For the phase 1b study, we will be partnering with Avesquia for full CRO services, with the Mayo Clinic Network serving as a treatment center for the trial and Dr. Puja Advani acting as our lead investigator. The initiation of this trial will be a significant milestone for Cellectar Biosciences, Inc., as it brings us closer to being able to evaluate the safety and dosing of CLR125. We expect to have dosimetry data and efficacy data throughout 2026. Moving to CLR225, our lead alpha-emitting radio conjugate product candidate, which also has shown excellent biodistribution and uptake into solid tumors preclinically with demonstrated activity across multiple solid tumor animal models, including challenging-to-treat pancreatic and refractory colorectal cancers. CLR225 has been observed to be well tolerated in these experiments, which we highlighted in our presentation at the AACR Advances in Pancreatic Cancer Research Conference held in Boston in September. Pending the necessary financing, our phase one trial for CLR225 is designed to comprehensively evaluate the compound's biodistribution, safety, and tolerability in patients with pancreatic adenocarcinoma. The study will commence with a dosimetry phase aimed at determining the absorbed dose in both normal and tumor tissues. Following dosimetry, the study will progress to a dose-escalation phase, systematically evaluating increasing doses of CLR225 to establish the maximum tolerated dose. We believe this approach gives us an opportunity to demonstrate proof of concept for our innovative combination of phospholipid ether technology with alpha emitters, potentially showcasing its radio conjugate's unique ability to safely treat large, bulky solid tumors like pancreatic cancer. We also recently announced a partnership with ITM, wherein they will provide actinium-225 to help support our alpha-labeled phospholipid radiopharmaceutical candidates, CLR225. Actinium-225 is a powerful alpha-emitting isotope used in targeted cancer therapies and is a rare and in limited supply isotope. This collaboration further underscores our strategic approach to a diversified supply chain to ensure the supply of key resources and thereby guarantee patient access to these therapies. All of these updates and more reinforce our position as a premier radiopharmaceutical company to watch as we look towards the end of the year. There is incredible value to be found in the iopofosine story that will aid in spurring the development of CLR125 and CLR225. With alignment from US and European agencies, we feel more confident than ever in the position of our programs. With that overview, let me turn the call back to Jim for closing remarks. Jim? Jim Caruso: Alright. Thank you, Jarrod. This has been a very successful quarter for our team. We've maintained consistent dialogue with the appropriate global regulatory authorities and feel that iopofosine now maintains its strongest position for marketing approval and commercialization. With our earlier-stage assets, CLR125 and CLR225, we have made significant progress advancing these radio conjugates and have recently initiated the phase 1b study for CLR125 in triple-negative breast cancer. Additionally, we've strengthened our balance sheet with runway out to 2026 and are positioned to execute across multiple near-term priorities, including filing for iopofosine conditional marketing approval in the EU and initiation of our CLR125 phase 1b clinical trial, with important dosimetry and early efficacy data readouts over 2026. We continue to advance our plans to file for accelerated approval of iopofosine in the US pending funding required to initiate the phase three confirmatory study. We remain committed to achieving these key milestones and are confident that these achievements will create value over time. We look forward to finishing the year and believe we are in a strong position to bring iopofosine I-131 and our pipeline of radiopharmaceutical therapies to the patients who continue to battle cancers with high unmet need. With that, operator, we are ready to open the call to questions. Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one at this time. You'll hear a prompt acknowledging that your hand has been raised. Should you wish to withdraw your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any key. One moment please for your first question. First question comes from Aydin Huseynov, Luxembourg. Please go ahead. Aydin Huseynov: Hi. Good morning, guys. Congratulations on the significant progress with the EMA application. I have a couple of questions. With the EMA strategy and the decision from the Scientific Advice Working Party, could you help us better understand the specific data they were considering before making a recommendation? Because it sounds like they're allowing you to do it post-BTK, which puts it in the second line, and in your trial, your prior lines, I think the median prior lines were four lines. So could you help us better understand what they were looking for? Jim Caruso: Hi, Aydin. This is Jim. First of all, thanks for your participation in the call today, and certainly appreciate your question. As you are likely aware, we put together very comprehensive data for our friends across the pond. And as you appropriately identified, we have recently received data from Clover Wham relative to post-BTKi, which gives us a high degree of confidence in our capacity to move iopofosine further upstream. And as you suggest, post-BTKi could be as early as the second line. But with that as an opening comment, I'll turn this over to Jarrod to provide some additional detail relative to the package itself and the consumption of that data from the EMA. Jarrod? Jarrod Longcor: Yeah. Thanks, Jim. And thank you, Aydin. Great question. So let me sort of try to unpack that a little bit for you. There are a couple of elements. One, the EU prescribing pattern is a bit different than in the US. In the US, as you just outlined, BTKIs are now generally used in the first-line setting, either in monotherapy or in combination, but predominantly first-line setting anymore. Which would mean a post-BTKi population or post-BTKi approval in the United States is representative of a second line. However, in Europe, at this time, the post-BTKi patient population would still be a third-line setting. Generally, in Europe, they start with a rituximab combination and continue to follow that with BTKi. At this juncture, they are starting to shift to earlier utilization of BTKi, but that hasn't taken over in the vast majority of the 28 member countries at this juncture. So based on that, what the EMA evaluated was the totality of our data. So all patient population. But they did focus in on that in their opinion. In Europe at this juncture, the greatest unmet need that would warrant a conditional market authorization is a post-BTKi. As Jim just alluded to, when we look at that patient population, we have, you know, the vast majority of our patients in our Clover Wham study are post-BTKi. And of those, many of them, you know, obviously, the majority of them responded well to the treatment. Did very well. So we do have statistical significance there. And you know, when we look even deeper into that, into varying subsets of that where we look at combination of refractoriness across those patients, what you see is a continued high response rate and even in some sets, a much higher response rate than that of the general population. And based on that, the agency, the EMA, as the SAWP, felt that the drug warranted or should apply for conditional market approval, focusing in on that post-BTKi patient population at this time. Jim Caruso: Thank you, Jarrod. And, Aydin, as I think you brought to our attention a handful of months back, you know, approximately 80% of all drugs that apply for conditional marketing authorization that have received eligibility to apply for a conditional marketing authorization are granted the CMA. Aydin Huseynov: Right. Yeah. That's great news. And given that I know you don't have to run any trial, you just need to submit. And for the FDA, you only need to initiate a phase three trial. So how much resources do you think you need just to initiate a trial in the US and whether your current balance sheet would be enough just to start it? It's only two to four months. And so can you just start the trial and finish it once you have more resources? Jim Caruso: Yep. That's a very good question, Aydin. Based on our assessment, you know, the total overall cost of the study in totality, including, you know, multiple years of follow-up, is approximately $40 million. Importantly, we're estimating approximately $15 million to full patient enrollment, and it's $10 million to initiate the trial. I'll have Jarrod in a moment talk to, you know, detail around expectations by the FDA for accelerated approval. But the net here is, essentially, it's trial initiation, which would allow us to submit the NDA and then have a study which is ongoing enrolling patients at the time of the FDA assessment of our accelerated approval. And as you know, with breakthrough designation and fast track, that's approximately six months further downstream. Based on the high level of interest in iopofosine, by both patients suffering from WM as well as thought leadership in the area, we would expect the study to enroll very, very quickly. But, Jarrod, I think it's fair to say based on our assessment, approximately $15 million or so to full patient enrollment. Jarrod Longcor: Let me correct that. It's about $28 million for full patient enrollment. It's about $15 million to the point at which we would have sufficient enrollment for the agency to act on an accelerated approval application. So, Aydin, if I back you up a little bit, as Jim said, to initiate the study itself because of CRO cost and the start-up cost, that's approximately about $10 million of the $40 million that Jim outlined as the total. Then what happens is, obviously, you get the study started. The requirement, as you alluded to, is initiation of a confirmatory study. Assuming that would happen, then the statement in the regulations now. The agency also has the obligation or the requirement that the study must be considered ongoing, which they have enunciated as some level of enrollment. They have not specified what level of enrollment. We are estimating that somewhere between 10-25% of patient enrollment will probably be satisfactory. In our calculation, that is somewhere between twenty and fifty patients. In order to achieve that, we think it would take about $15 million including the $10 million start-up to achieve that number. And then obviously, as Jim said, $28 million to get full enrollment, and then $40 million to see out the rest of the study, including all of the long-term follow-up. We do believe that if we were to have enough funding to really launch the study and get to that first metric, I think of having the agency work respond to the submission. We would absolutely want to initiate and go. Aydin Huseynov: Yeah. That's not a lot of money. Jim Caruso: No. I appreciate the question, Aydin. And Jarrod, thank you for the clarification on that. And as I cited in my opening comments, a recent assessment by Jefferies research report identified those oncology drugs that had been awarded breakthrough designation, there's a 79% approval rating for accelerated approvals. Aydin Huseynov: Right. And given that it appears that you will be first launching in Europe then in the US and given the old days MFN discussions. So could you help us understand its pricing potential for iopofosine in Europe and the US, and also whether you would consider different brands maybe given potentially different labels for EMA and FDA? Just curious to hear your thoughts on this. Jim Caruso: Yeah. I'll open. You know, we anticipate submitting our application for the CMA in 2026 if you estimate an approximately twelve-month review by our friends across the pond. You know, that's an approximately 2027 marketing or commercial launch ex-US. And to your point, it's not only Europe, it's 30 major countries except for China, Japan, and the US. That would have the capacity to market iopofosine. So it's a significant market size comparable certainly to that of the US when you look at incidence and prevalence numbers for WM. Now taking a step back before we address the pricing question, and we're not gonna give you specific numbers, but we'll give you, you know, it's clearly a premium-priced opportunity. But as you cited earlier, with the approximate $10 million to initiate our phase three confirmatory study in the US, and with that, as Jarrod cited, approximately six months or so to get to the necessary patient enrollment, that we would believe would satisfy the FDA's requirement for the granting of an accelerated approval, you could actually have a horse race depending on when that study was initiated. So if in fact the study is initiated in the first quarter or second quarter of next year, within six months, you're obviously submitting your application to our friends at the FDA and because of breakthrough and fast track, etcetera, it would be an approximate six-month review. So in reality, you could have access to the US market and approval in the US market prior to that of the EMA. And so from a pricing perspective, that would certainly make pricing both in the US and ex-US a little bit easier. Jarrod, without providing price points, if you could provide any additional detail for Aydin and our call participants, I think that would be helpful. Jarrod Longcor: Absolutely. And I'm gonna go in two directions or to pick this in two steps again. As you mentioned, Aydin, the most favored nation discussion has resulted in some interesting outcomes. I think as I'm sure you are aware, that pharmaceutical pricing nature, that some companies, some of the larger companies, have taken a position of rather than decreasing prices in the US, they've taken a strategy of a more flat universal price globally and thereby negotiating harder in Europe and other places for higher prices. And I think that that is a trend that is going to likely continue. You know, there will likely be some downtick in the US price in order to sort of get them more mirrored. But there's a significant increase in Europe. Now as it relates to iopofosine directly, obviously, one of the processes that we have to go through is now to work through the HTA process, which was recently earlier this year. Announced particularly for oncology drugs, this has to be done sort of in parallel with our CMA. That process has been, you know, I can't as Jim sort of alluded to, we're not positioned at this time yet to give specificity on pricing. We have given what we believe and based off our pricing estimates what we would expect in the US. Traditionally, in Europe, those prices can be anywhere from similar to 50% of that as a whole, but, you know, that really comes down to that discussion. The HTA requirement is for even if you do not have a comparator in your clinical study, or in your initial, in our case, in the initial study for CMA, what it would require is that we would do research to evaluate the potential clinical benefit of iopofosine I-131 over comparative drugs. I think the key takeaway on that is that, obviously, based off of the regulatory, the SAWP, and in general, the EMA process prime and everything else, there is a significant unmet medical need that this drug is meeting. And in their own words, that is essentially driven by the fact that these patients do not have treatment options available to them. So there is a justification for negotiating higher percentages under that, the more, the greater the value to the patient and the patient outcomes, the greater the price point can be. And so our expectation is based off the research we have historically done, recognizing that there is no direct comparator that one utilizes, that we are in a position of strength to negotiate or with a partner, negotiate a stronger price point in Europe. Aydin Huseynov: Yeah. Super helpful. Super helpful. And, you know, for modeling purposes, sounds like 2027 is the launch year for both US and EU, which makes it sort of a global launch perspective. Thank you. Thanks so much, and congratulations on this significant progress this quarter. Jim Caruso: Yeah. Thank you, Aydin. Appreciate your participation. Appreciate the questions. Very helpful. Operator: Okay. Our next question comes from Jeff Jones, Oppenheimer. Please go ahead. Jeff Jones: Good morning, guys, and congrats on the progress and the regulatory wins so far. So great progress. Can you comment at all on how the partnering discussions have evolved since the regulatory update? And how you're thinking about partnering, be it US, Europe, or globally? Jim Caruso: Hi, Jeff. Thank you for the question. Much appreciated. Hope you're doing well on your end. Obviously, when we anticipated a positive outcome with our friends across the pond, and did the necessary work on the costs associated with our clinical trial or confirmatory study for the US, it became apparent to us to slow play corporate development discussions until we had the blessing certainly from the EMA on our capacity to file. Obviously, that becomes now iopofosine as a near-term oncology asset in a very robust US market at a minimum. And then when we also, based on our further communications with the FDA, were able to really drill down in terms of line of sight. And this, you know, $10 to $15 million for an upfront-ish to for us to receive an answer from our friends at the FDA. We felt as if we would be in a much better position with both of those. And so we kind of over the early part of the year here, middle part of the year, really slow-played our discussions. It also allowed a handful of other companies to kind of get up to speed on their diligence. So we have a number of companies all in and around the same spot in terms of their understanding of, you know, where we currently sit certainly from a regulatory perspective. And also, quite frankly, the latest data that we've mined from our clinical trial is also very, very supportive of our regulatory approach. So Jarrod has been overseeing and has done a great job in terms of communication on the corporate development side and making certain that we were in a position of strength to optimize the potential value for our stockholders with iopofosine on a number of different fronts. And I'll turn this over to him to provide some additional detail. Jarrod? Jarrod Longcor: Sure. And I'll put that stress great to talk to you. But I'll confess that I'm not sure that I can add much more detail. Jim did a great job there explaining, you know, exactly where we sit. I would say that we, you know, obviously, as you get closer and closer to a regulatory approval, the interest and activity heats up. Especially when you start to be able to position this sort of as we just talked about with Aydin with the potential, you know, conditional market approval in Europe, potential to negotiate from a position of strength on pricing through the HTA process. They can state the potential to, you know, the potential and our approach to manufacture and cost of goods, all of those things put us in a very positive light with most various partners and opportunities. And so we've seen, as Jim said, an increase in that. I think the second part of your question, which might I can dig into a little bit more, which is the strategy. You know, I think we've talked about this before. And we continue to be in this situation. We have ongoing discussions with parties who I would say are either globally focused or are focused on the two predominant regions right now for radiopharmaceuticals, which are the US and Europe. We do have various regional conversations ongoing that are advancing rapidly. So those are, you know, those might be part of those territories or all of those territories. Said another way, be, you know, solely Europe. It could be solely US, could be other territories outside of that. But as Jim alluded to, we have quite a number of parties right now who have either completed or nearly completed their diligence, who have supplied and moved forward into the next phases of partnering. And we continue to try to drive that to maximize both the return for the organization and to ensure, as Jim said in his opening remarks, ensure that the drug is developed in such a way that it does get the patient actual benefit. Jeff Jones: Great. Really appreciate it, Jarrod. And apologies if I missed this on the call. With respect to CLR225 and the pancreatic program, I know you're moving CLR125 ahead in that trial's taking off. Any gating items on CLR225 to begin that trial, or is that something you would move ahead with absent additional financing? Or is that one pending? Jim Caruso: Yep. I believe the team, Jeff, has put us on the precipice of a phase one ready study there with the pancreatic cancer of CLR225. It is a function essentially of financing as the gating issue there. Jarrod, any additional color you'd like to provide? Jarrod Longcor: No. I would agree with you. I think that I'm quite happy to see Danny. Getting element. And as Jim said, we currently sit in a position to essentially initiate the study as soon as the capital is in hand, so to speak. We have the CRO. We have the submissions. We have sites. We have everything ready to run for that study. And as you can see, part of the reason we have announced the various supply agreements is because particularly around actinium, is because what we've done is make sure that we have a consistent supply of actinium so that we are not delayed in any way, shape, or form as it relates to that. Premium sourcing. And that supply gets us from where we sit today based off our forecasting all the way through into commercialization on the actinium program. And that's exactly why we've done that since there are no hiccups or delays on that front. As we've seen with other parties. And so we expect, you know, again, if pending the capital, we expect to initiate that phase one and I'll call it phase one a study. It's really it is a dose-escalation safety study. With the dosimetry component. So at the end of the day, what we'd be looking at is, you know, clear safety and understanding of the uptake and distribution of the molecule, which we don't expect to be very different than what we've seen historically. Jeff Jones: Got it. Great. I appreciate it. Jim Caruso: No. It's alright. I was just gonna make a comment. No worries. I was just gonna make a comment on how significant we view the trip, you know, as an example, the triple-negative breast cancer study. It's a solid tumor. As Jarrod cited, we believe our drug, our conjugate, will behave in a very similar manner to what we've observed with other isotopes as well. CLR124, CLR125, you know, as well as CLR131. And so this is really, I think, for the company, and for validation of our platform, very significant. And, Jarrod, perhaps you could just expand a little bit for our audience, the imaging and dosimetry data that we, you know, expect to collect very early on in this study, that we believe will be, you know, further validating of our platform and in particular, our capacity to be very effective in challenging solid tumors. Jarrod Longcor: Sure. And so I'm gonna blend this because it's the same whether I'm talking about the actinium program in pancreatic cancer with, you know, CLR225. Or the triple-negative breast cancer program with CLR125. In both cases, we're utilizing dosimetry, and for folks that may not be as familiar with the radiopharmaceutical, radiotherapeutic targeted radiotherapeutic strategies here, the benefit of dosimetry is unlike other therapies where we take blood samples and we use that to sort of calculate and guesstimate the amount of uptake into the tumor, and they are also into other healthy tissues. In this case, what we're able to do is actually image the transit of the drug inside the human body. And we're able to identify exactly where it is at different time points. Utilizing that data, we're then able to calculate both the absorbed dose in the healthy tissue and be able to know when we might achieve a level that would be neurotoxic. And on the other side, we're able to calculate the absorbed dose into the tumor. And thereby calculate the expected dose and dosing regimen necessary to be an active therapy in that tumor type. Utilizing that data, you could get what's called a therapeutic window, and you get the opportunity. That is the difference between your therapeutic dose and when you start to see toxicity. And we expect, as we have seen with iopofosine, that this therapeutic window will be significantly wide enough. Interestingly enough, in the CLR225 program back to the pancreatic, so the piece for a moment. One of the great challenges in pancreatic cancer is not just the nature of the tumor and the late stage in which patients are diagnosed. But it's also there is a, what they call, interstitial pressure in the tumor, which prevents most drugs from actually being able to penetrate the tumor because there's fluid pressure pushing back against anything. And interestingly enough, as what we saw when we did this in the animal studies, our phospholipid ethers again give us a unique ability to actually penetrate through that and actually get inside the tumor and get deep inside the tumor, which is one of the reasons why we think particularly in pancreatic cancer, we have a competitive advantage over other programs in that tumor specifically. Obviously, in triple-negative breast cancer, with the CLR125, we've seen similar sort of results, but that comes at it from a different perspective particularly because you have limited targets now in breast cancer. And being able to overcome that with our targeting mechanism that is based off of needed. Jeff Jones: Greatly appreciated. Thank you, Jarrod. Operator: As a reminder, if there are any further questions, should you have a question at all, please press the star followed by the one at this time. You will hear a prompt acknowledging that your hand has been raised. And should you wish to withdraw your request, please press the star followed by the two. Our next question comes from Jonathan Aschoff, Roth. Please go ahead. Jonathan Aschoff: Hi, guys. Good morning. Congrats on the regulatory progress. I was curious just because the full approval is based on PFS. Can you remind us where you are in Clover WM follow-up and where that PFS last came out or at least what it at least is? Jim Caruso: Of course, Jonathan. So thanks for your participation. We have not updated our data since January relative to PFS. And at that point in time, it was very robust and well beyond what you normally would see with salvage therapies and the lines of therapy that we were treating. So, Jarrod, if you want to provide some detail there, I think it would be helpful for Jonathan and our audience. Jonathan Aschoff: Yeah, Jarrod. Please do that. I had eleven point four months after eight months, but you last said you had follow-up beyond twelve months. I just didn't get any further PFS with that additional follow-up. So I'm kind of just trying to reconcile where it is. Jarrod Longcor: Absolutely. And thank you. Thank you for confirming what I was about to say. What I was about to say is we it was eleven point four months with eight months of follow-up. We now have twelve months of follow-up on all patients. That is correct. That was one of the criteria that the FDA for submission for accelerated approval had requested. We now have that. As you might understand, as I'm sure you are aware, you know, basically, where we are in the process, we have not announced additional data. We do not wish we're not in a position, I only want to say, we do not wish. We're not in a position to announce additional data at this juncture largely in part because we are now in a process of trying to submit this for FDA regulation and we don't want to be caught in a situation where the FDA may view us as being promotional as it relates to this data prior to a submission. So at this juncture, the most recent data is that data from January, and that won't be updated in the near term. Or, you know, it's and I'll say in the near term, based off of the requirements in discussions with them. Jonathan Aschoff: Okay. And by the way, the order for pancreatic is file the IND, get funding, start the trial. Correct? Jarrod Longcor: Sort of. So, frankly sorry, Jim. If I jumped in there too fast. The pancreatic cancer study is one that we're not running in the US, so it will be filing and we have filed ex-US with the appropriate authority. To execute the study and have that accepted already. So we're in a position now where it is await the capital and then initiate the study. Jonathan Aschoff: Excellent. Thank you, guys. Jim Caruso: Yep. No worries. And the only additional information that I'll provide in regards to the PFS question, Jonathan, is that when we did multiple advisory boards with, you know, global thought leadership, before Waldenstrom's macroglobulinemia. And what came across very, very clearly was in the patient population, and just for all participants, this was, you know, iopofosine being used essentially as fifth-line therapy. For this patient population. One, you know, the response rate that we achieved was, you know, that sixty percent range was considered outstanding. And more importantly, they gave us insight that four to six months of PFS for that patient population would be an excellent outcome. And, you know, as you cited yourself, with our initial cut of data, we're at approximately one year of PFS. So almost doubling or greater the expectation of thought leadership in WM in terms of what would be considered, you know, an excellent result for patients. Operator: Okay. There are no further questions at this time. I will now turn the call over to Jim Caruso. Please continue. Jim Caruso: Terrific. Thank you, operator. This concludes our call for today. Certainly appreciate the great questions from our analysts and for your participation. As well as, you know, all participants. Of course, this will be up on our website, and a transcript will be following this call. Thank you all very much. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Steven F. Rossi: Sports quarter three 2025 earnings call. I am Steven Rossi, chief executive officer and founder of Worksport Ltd. With me today is our chief financial officer, Michael Johnston. Today, we will walk through our financial performance, operating progress, liquidity position, and how these results align with our strategy to build a high-margin, scalable platform in truck accessories and clean tech-enabled power solutions. We will be reviewing the financial results for the quarter ended 09/30/2025, which we filed earlier today in our Form 10-Q and can be accessed on our Investors Relation website at investors.worksport.com/#reports. Once again, investors.worksport.com/#reports. At the end of today's call, both our prepared remarks and the accompanying presentation deck will be available for download as well. After these remarks, we will open the line for questions from attending analysts. So on that, let's begin. First, safe harbor statements. We will make forward-looking statements, including statements regarding our financial outlook for the full year 2025 and 2026, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, opportunities, go-to-market initiatives, growth strategy, and business aspirations, our product initiatives, and the expected benefits of such initiatives. These statements are only predictions that are based on our current belief expectations, and assumptions based on forward look because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that may be difficult to predict and many of which are outside of our control. Actual results or events may differ materially. Therefore, you should not rely on any of these forward-looking statements. These forward-looking statements are subject to risk and other factors that could affect our performance and financial results, which we discuss in detail in our filings with the SEC including included in our annual report on our Form 10-K and quarterly reports on Form 10-Q, and other SEC filings. The forward-looking statements made in this earnings call are made only as of today's date. Worksport assumes no obligation to update any forward-looking statements we may make on today's webinar. So here's today's agenda. On today's call, we will cover Q3 2025 key performance outcomes, production scaling and operational execution, tariff environment and cost management, Solis and Core commercial launch roadmap, R&D next steps, including AetherLux, cash and capital strategy, 2025 to 2026 outlook and path to cash flow positivity, and key takeaways as well as some Q&A. With that, let's move into our numbers. Mike will walk us through the Q3 2025 financial highlights. Thanks, Steve. Michael D. Johnston: Q3 was another solid step forward in Worksport's growth journey, the third consecutive quarter of growth. Net sales reached $5 million representing a 61% growth year over year and 22% sequential growth from Q2's net sales of $4.1 million. Gross margin continued to expand. 31.3% this quarter compared to 7.9% in Q3 of last year, and 26.4% in 2025. Demonstrating the impact of operational efficiencies and a stronger product mix. Our net loss of $4.9 million reflects an ongoing expansion of product offerings and commitment to investing in scaling our manufacturing, ahead of commercialization milestones. While revenues and margins are getting stronger, we continue to invest in growth in brand and corporate awareness. We believe it will position us to reflect operational cash flow positivity and profitability in 2026. Ended the quarter with $3.8 million in cash and an additional $3.3 million available on our line of credit. Total working capital was $6.3 million. Importantly, total indebtedness reduced to $2.9 million down from $5.3 million at year-end 2024. Meaningful strengthening of our financial stability. Overall, Q3 demonstrates that our revenue growth and margin expansion are structural with some future-facing expenditures. In Q4, our expenditure profile is projected to begin transitioning from investment mode toward long-term profitability. Worksport's growth is being led by rapid scale-up of our US-made tonneau cover production. Q3 net sales reached $5 million up from $3.1 million a year ago. Year-to-date sales are $11.4 million, more than double the $5.6 million for the nine months ended 09/30/2024. Our strength this quarter came from strong continued growth from the AL4 hardcover, which launched in 2025, expanded relationships with several national distributors and major retail auto chains, continued growth in our dealer, jobber, and e-commerce channels. Our performance this fiscal year represents a recurring and diversified revenue base not a single channel surge. With new product launches and revenue streams entering the mix in the months ahead, we believe Worksport is on a path toward profitability in 2026. More on the upcoming product lines later. Gross margin is one of the clearest proof points of our strategy. Q3 gross profit was $1.6 million a 31.3% margin, up sharply from 7.9% in 2024 and 26.4% in Q2 this year. Year-to-date gross margin is 26.7% compared to 10.5% in 2024. Key drivers of this include higher production throughput and fixed cost absorption in our US production facility, a higher volume higher value product mix maturing and emerging sales channels, and greater operational efficiency as processes mature. We are now operating solidly in the 30% plus margin range, setting the stage for future operating leverage. We expect margins to approach 35% by year-end, continued improvement targeted for 2026. We remain committed to achieving near-term operational cash flow positivity. In Q3, operating expenses totaled $6.4 million compared with $4.2 million in 2024, and $4.7 million in 2025. The increase mainly reflects growth investments and marketing costs tied to the AL4 product launch and our Regulation A offering. We completed our offering in October 2025. Operationally, we supported 60% revenue growth from 2024 to 2025 while increasing G&A expenses only 20%. This shows improved scalability and cost discipline. And this path includes the following factors. Breakdown of the operating expenses for 2025. R&D spend was $300,000, lower year over year as we move past core tonneau cover development. G&A is $3 million. We're supporting which supported higher volumes, compliance, and facilities. Sales and marketing was $2.4 million. The driver of our gross spending. And this is focused on channel activation, brand marketing, and investor awareness. Professional fees were $700,000. And included advisory compliance and stock-based compensation items. Our operating loss was $4.8 million compared with $3.9 million in Q3 2024. And $3.6 million in Q2 2025. This investment in Q3 will partly carry into Q4 before reaching the tail end of our investment phase as we position the company for stronger leverage going forward. For the first nine months of 2025, our cash position reflects disciplined investment and growth financing activities. Our net cash used in operations was $11.2 million compared to $8 million in the same period last year. Our Q3 operating cash burn was approximately $4.3 million slightly higher than Q2 as we completed major production and marketing initiatives. We also incurred one-time expenses related to the Reg A marketing efforts. Our investing cash outflow is $485,000, It was represented mainly spending on machinery tooling and some intangible assets. Our financing inflows $7.1 million. This is from warrant exercises, the issuance of series C preferred stock and warrants connection with the Reg A units offering, net of repayments on revolving credit facility, the issuance of common stock. With respect to long-term debt, we continue to improve our leverage profile while managing our obligations. As of 09/30/2025, our total indebtedness, current and long-term equal $2.9 million. Which is down from $4.8 million on 12/31/2024. Revolving credit facility had a balance of $1.6 million and our other term debt. Had a balance of $1.3 million. Availability on revolving credit facility. We've got $3.3 million unused, which provides additional liquidity and flexibility to support our strategic priorities. Our path to profitability is becoming clearer each quarter supported by stronger unit economics, and upcoming revenue catalysts. Our gross margin is now consistently above 30%, up from under 10 last year, showing true structural improvement in profitability generated from production activities. Our operating leverage, while year-to-date revenue is up more than 60%, G&A expenses have risen only about 20%. Signaling scalability across our product. Offerings. On a revenue scale, applying our current margins to an annualized sales run rate approaching $20 million, positions us meaningfully closer to breakeven. Importantly, much of R&D investment over the last few years is now at the finish line. With the HD3 Tonneau cover line launching in Q4, and the Solis and Core system set for commercial orders in late 2025. Are not cost centers anymore. They are next revenue engines. As these products enter production and sales channels, we expect sustained gross margins in a 35% plus range. Continued expense efficiency and a clear trajectory towards cash flow positivity in 2026. We are building this profitability bridge step by step, product by product. We anticipate Worksport's need for cash provided by financing activities to decrease in 2026 given our projected path to cash flow positivity. Now back to Steven for key insights into business operations. Thanks, Mike. Steven F. Rossi: In Q3, we built a scalable ISO 9001 certified manufacturer base. Q3's 31.3% gross margin is the financial proof of that operational capability. It is expected to only improve from here. We produced 2,499 tonneau covers by hand in a four-week stretch from early to late July 2025, more than double our March 25 total monthly output. In Q4, we expect to increase production by another 50% compared to Q3. An increase in production will benefit our margins and selling the demand we have meticulously invested in creating the market over the last year. We achieved without proportional headcount increase, validating process efficiency. And Q3 margins confirm better utilization of our US production facility, improved fixed cost absorption, continued focus on quality and throughput sufficient to support national distribution and dealers. Let's talk a bit about our Tonneau Cover business, our profit engine. After years of strategic investment, our hard folding tonneau cover division is now Worksport's near-term economic engine. They're made in The USA with rising brand recognition and multi-distribution. We have proven ability to increase margins with scale, 35% plus gross margins at current volumes with margins projected to grow even further. And as production scales, the tonneau cover division can absorb a significant share of fixed cost overhead. Reduce reliance on external capital, and generate cash to fund clean tech initiatives. The tonneau cover product offering provides the financial backbone on which Core and Solis and Aetherlux are being built, giving Worksport a strong and self-funded foundation for growth. Now let's talk a little bit about tariffs and how we're managing them. Continue to operate in a dynamic tariff trade environment. We all know this. While tariffs remain a headwind they are manageable. And in the tonneau cover market, increasingly service a competitive tailwind for Worksport. First, US manufacturing advantage. The majority of tonneau cover production value is US-based, reducing exposure, compared to our import-heavy competitors. Cost containment. Historical 9.5 to 10% material cost pressure has been offset through efficiency gains, scale-driven overhead absorption, and pricing discipline. This is through domestic pricing inflation. Our competitive position. Tariffs often impact imported competing products more severely. While our domestic footprint brand marketing, and product quality is a clear differentiator, especially if trade frictions continue. Core and Solis considerations. While some components are globally sourced for Core and Solis, tariff exposures modeled into our pricing and margin forecast. With flexibility to adjust and mix pricing as needed further. Further to this, the 11/10/2025 tariff suspension provides near-term relief and validates our proactive planning. The thing everyone's been waiting for, talk a little bit about Solis and Core. From investment to revenue pipeline. As of October 2020 10/21/2025, the Worksport HD3 tonneau cover is now in production with initial sales expected to begin to B2B customers in November 2025, followed by sales to online customers later this year. Sorry. I wanted to talk we're gonna talk about Solis and Core. Let's talk about HD3 first. Which we just did for a second. The HD3 is a heavy-duty tonneau cover designed for commercial and fleet applications. Building on the AL3, it features upgraded materials, seals, and latching for maximum durability. While available through all channels, its primary focus is driving growth in our wholesale and B2B channels. Adding a new revenue stream, and completing our US-made tonneau cover lineup. So we're very, very excited about the HD3 and what it's gonna do for our B2B business channels. Innovation pipeline, our Solis and Core, After years of engineering, tooling, certifications, and partnership investments, Solis and Core are now set to be released for orders later this month. What has pure operating and capital expense is expected to become a visible high-margin revenue stream beginning in late Q4 2025 and scaling through 2026 and beyond. Let's highlight some of our most recent announcements. First, the official for the solar tonneau covered core portable power energy system is now 11/28/2025. Customers will be able to place initial orders with expected delivery in late December or early January 2026. The core starter kit is priced at $949 which includes the core inverter hub, as well as one core battery. The solar system starting price is at $1,999 and will go up as high as $2,499 depending on the model size or bed size of your truck. And our initial rollout plan for the core is 1,000 core units plus 900 additional battery packs with a limited Solis release representing a roughly $2.5 million in near-term revenue opportunity with significant scaling plan through 2026. In terms of strategic positioning, Solis is a margin accretive product leveraging our tonneau cover expertise to enter into the premium solar tonneau cover market. Channel. CORE is a modular portable energy system designed as a recurring revenue platform, driving stable cash flow positive sales across work. Overlanding emergency and industrial markets. Together, these two platforms transform Worksport. From a single product channel manufacturer in a somewhat niche market into a multi-market clean tech company with recurring scalable revenue potential. Let's talk a little bit about R&D and our next steps. In 2026, we aim to transition R&D from heavy foundational build to commercial optimization and platform leverage. What this means is we're gonna switch from all the operational expenses relating to heavy R&D and developing new products to perfecting those new products and being able to increase margin and efficiencies. For Solis and Core, we're planning to finalize launch execution and early customer feedback loop. Optimize bill of material and logistics for margin enhancement post-launch, explore rapid scale cost savings, and expand integrations and form factors based on usage data, expanding the core platform for multiple product lines. For Tonneau Covers, we're gonna grow the HT3 product and launch an HT4 equivalent cover labeled internally as the Worksport B2. We expect this B2 cover to be extremely well received in all markets. More details will come on this will come in later in 2026. Incremental product improvements to maintain quality, compatibility, and margin strength. Aetherlux, gonna advance pilots and partnerships, including evaluations with institutions to validate performance and use cases. Finalize and select manufacturing partners, and focus spend on projects with clear commercialization paths and potential for 2026 impacts and beyond. A little bit about operating leverage and the roadmap there. Bringing it together, our operational model priorities for 2025 and 2026 are as follows. First, we're gonna obtain and sustain 35% gross margins. We're gonna get this we're gonna get this by maintaining manufacturing efficiency and pricing discipline. Gonna slow our operational expense OpEx growth as a percentage of net sales, especially in sales and marketing, and we're gonna treat Q3's elevated spending as a peak investment. Not the new baseline. We're gonna improve working capital turns by monetizing existing inventory and further align production scale with growing demand. And we're gonna layer new products into our existing cost-stabilized offerings. Tonneau, Solis, Core, and we're gonna share the infrastructure that we built and we're spending on. And amplify our leverage. Our priority supports our transition from capital-funded mindset to operations-funded growth. A little bit about risk management and mitigation. We are clear-eyed about key risks. Ongoing net loss and going concern language in 10-Q reflect reliance on external capital and execution risks. Tariff and supply chain volatility, particularly for globally sourced components, and launch risks that we see for Core and Solis, timing, adoption, and margin realization. Equity and warrant overhang impacting shareholder perception This is how we're gonna mitigate We're gonna tighten our spend to initiatives with measurable ROI. We're gonna maintain and selectively use diversified capital sources. And we're gonna stage clean tech production and inventory to complement demand signals. Communicate transparently about milestones. And capital deployment. Given the continued growth and healthy margins in our Tonneau Cover business, we are very confident in our ability to manage tariff-related cost inflations while advancing towards near-term cash flow positivity and maintaining our 2020 profitability target. I'm gonna pass it back to Mike with our updated fiscal year 2025 outlook and guidance. Michael D. Johnston: Thanks, Steve. So as far as our 2025 revenue framework concerned, in 2025, we then ARR of $20.4 million, substantively from $8.5 million in 2024. 2025 is expected to benefit from continued tonneau growth and channel expansion, initial Solis and Core orders, commencing 11/28/2025 with early but measured contribution. We project year-end revenues of $17 to $21 million and that depends on when the revenue recognition for the Core and Solis happens. 2026 revenue growth drivers we believe the base case for our U. Tonneau cover net sales will be $27 to $35 million next year. Further, we believe Solis and Core product lines can lead to an additional net sales in the tens of millions. We will update our shareholders on guidance after this product is rolled out later this year. In 2026, we'll have the full year impact of The US-made tonneau platform cover sale of 35% to 40% target gross margins. And first full year commercialization of the Core portable power system and Solis solar tonneau covers. Selective program on AetherLux is as a complimentary Cleantech platform to align with the defined technical and commercial milestones. And our focused OpEx discipline. OpEx growth below revenue growth to unlock operating leverage. And now our path to cash flow positivity. Our target is at operating cash flow becomes positive during Q1 2026. First half. Sorry. The 2026 driven by the stable 35% gross margins, Increasing sales will lead to higher utilization of existing manufacturing and distribution infrastructure with no major step up in fixed costs. Our tighter control of G&A, sales and marketing, professional fees with the spend tied to measurable ROI. And our launch of HD3 Solis and Core product lines. Our new margin sources. And now back to Steve with our concluding remarks. Steven F. Rossi: Thanks, Mike. Michael D. Johnston: Well, Steven F. Rossi: we built a high-margin US manufacturing platform working with rapid revenue growth. We've established national Core and Atherlux on top of that foundation. Our focus now is precise. Disciplined execution towards sustainable cash flow and profitability. We're seeing here on the charts Worksport's revenue growth, Worksport's margin growth, and Worksport's new products set to improve 2026 profitability. Michael D. Johnston: Thanks, everyone. This concludes our prepared remarks. Operator, please open the line for questions. Steven F. Rossi: Tate, I see you have your hand up and Scott, yeah, thanks for joining us today both. You guys are always great to join in, and I love your questions. So I'm gonna start with you, Tate. And, yeah, go ahead. Tate H. Sullivan: Thank you. Thanks, Steven. Can you talk about the tonneau market for tonneau covers in general in The United States? Are you seeing total demand growth in the market versus are you taking share to start, please? Steven F. Rossi: Yeah. So we're seeing you know, we're still seeing or still getting bits of information from the market We're seeing that we're taking we're I don't the market's still very healthy. We're seeing a slight shift into smaller trucks, different SKUs, so we're pivoting, and that's what's really good. As a domestic manufacturer because we could literally make whatever selling the day that we need to sell it, for instance. So in terms of the market, usually, there's difficult times, things start to sell less However, in our market, when we have geopolitical issues and other small issues that are happening or other issues happening within our economy, what we see is we just see a shift of what types of trucks are sold, not the amount of them. So we're still seeing the tonneau cover market in that $3 billion plus range, maybe a bit more. We're just seeing a shift to different applications with that that we make. And in fact, the different applications that are being sold more of are actually higher profit for us. So it's actually quite a benefit. So everything's still healthy as it was. Two or three years ago, and I feel that the market's primed for a strong '26 in terms of growth within the economy in The US specifically. And I think that we're gonna be able to capitalize on Tate H. Sullivan: Thank you. And then I saw on your 10-Q a mention about working with on the OEM sales channel, but related to the Core and Solis too, can you leverage your existing distribution, your sales channels for the tonneau covers for Solis and Core, or will it be different type of distribution, maybe starting more online or can you comment on that, Tanya? Yeah. Yeah. Steven F. Rossi: No. Great question. We're gonna start online. We're gonna start direct to consumer. That way, we get that feedback loop. With no you know, no broken telephone, no other way to say it. So we started with our beta testers. Those are individuals that we work with, and now we're gonna open it up to instead of select individuals, the broad consumer market. And then we have a significant amount of interest on the dealer side. We just presented. We just had a booth. At the SEMA show in Las Vegas. Some of it's available on our socials like Facebook and Instagram where Worksport posts. We used Twitter and LinkedIn more for investor stuff. But anyone that goes follow us on Instagram and Facebook, at Worksport Ltd, and you'll see some videos. We had these booths powered by our new energy products, and there was a significant amount of interest So I think that we could leverage We're just gonna be strategic in when we do so. So that it it's accretive to the target. Tate H. Sullivan: Okay. Thank you very much. Michael D. Johnston: Thanks, Tate. Scott? Steven F. Rossi: Good morning. Good morning, guys. Thanks for taking my questions. Scott Christian Buck: Steven, I was hoping that you might be able to give us a little bit of insight into your visibility on demand for Solis and Core. The language around the opportunity in '26 is pretty robust. So any kind of color you can give us there, I think, would be very helpful. Steven F. Rossi: So I think that the demand for the Solis is gonna be bigger than what I had otherwise believed. So you know, me as the leader of the company, I'll always have to be a blend of optimism and pessimism. So with that in mind, you know, I think that a new product that the likes of which has never existed is always a difficult path. And I believe that that's going to be true. I think that it's gonna be difficult and challenging to market and to attract customers for the Solis. But I also believe that what we've been able to launch in terms of an offering price at $1,900 is almost a no-brainer. And I think that the average consumer, when they look at something as a you know, two, three, or 4% of the cost of the truck expense while offering such measurable amounts of benefit. I think that it becomes a no-brainer. So I think that the Solis is poised to possibly become a trending item something that becomes a trend, almost like a fashion accessory for your truck. Look what my otherwise analog accessory can do. It could power our battery generator, the core, or any battery generator. And when it's only you know, a little bit more than other tonneau covers, other competing tonneau covers are $1,500 for an extra $400 $499, you get a Solis. So I think the demand as we market it and we message what it does and how meaningful that is for individuals, I think that that's gonna be very, very popular for us. The Core is nebulous because the market is so big. What we've been able to do with the Core is tap in from you know, you gotta think, Scott, that the tonneau cover market is a subset of a subset of a subset. It's an individual that has a license that buys a truck that needs a tonneau cover. And then that wants ours. So it's a very, very niche market. And it's still we're seeing massive growth there. But the Core is literally for anybody, anywhere. You know, any demographic on a global scale. So I think that when you look at that, it becomes nebulous because now it's a much broader market to market to, so it could become expensive there. But I think that as we look at explaining how innovative our Core is and integrating the Core into other products that we plan on speaking about more next year. I think that it we know that one of our competitors, which was a foreign company, foreign produced, foreign owned company, did about a billion dollars. So we think that even a percentage of that market without the massive CAGR we're seeing, I think that the Core market could be highly accretive to the balance sheet. And in fact, I think that our clean energy division as of the business could become bigger than the tonneau cover business within a period of time. Scott Christian Buck: Great. I appreciate all that added color, Steve. That was helpful. Then my second question, just on margins. Clearly, you guys have made a ton of progress there. I'm curious what is just volume driven in that improvement versus actual improvements in the manufacturing and production process. Steven F. Rossi: That's a good question. So we have the best well, Worksport is around people, and everybody working at Worksport is beneficial. Our engineering team is a shout out. And our management team our leadership team in general has a lot to do with being able to find cost efficiencies without the phrase we use in the market is thinning the product out. And thinning means, you know, using a thinner aluminum or cheaper plastic or cheaper corrugated. So we haven't we've in fact increased the robustness of our product, but we've been able to find efficiencies through keen purchasing leveraging demand, and volumes. But the biggest, I would say, 60 to 70% of the cost saving is just overhead absorption. We started making our tonneau covers, our hours per unit how many man hours it took to make one unit, ranged between four and six. Hours per unit. Yesterday or on an average day today, we're kissing below two. And when you look at the cost of domestic labor, in the $20-$30 an hour range, you know, that's significant. And we think that we can get that labor component down even more. And then but what we're fighting against, Scott, is domestic inflation. We're significantly US our paint it comes from the 48 states, our aluminum, everything that in our most of what our product is made out of is sourced domestically. And even though the tariffs are for foreign products, we've been seeing a lot of domestic inflation. And once that eases, which it will eventually, whether it's a week, a month, a year, a decade from now, we're gonna see even better bill of material cost savings. Scott Christian Buck: Great. And are we kind of capped out at around 35% on the current product mix, Or when you know, a year from now, are we talking about pushing 40% into '27? Steven F. Rossi: It's gonna be there there's gonna be two different two different things that so first off, we may reduce discounts as the brand becomes more popular. So, you know, right now, we have a Black Friday sale, you know, and that sale is just us reducing our margin in essence. That's what all sales are, to sell more. So we're finding ways of being able to attract customers or there's marketing costs are gonna decrease while our branding increases, our brand recognition increases. Operational efficiencies, And then as we become a more popular brand, well in the marketplace, we could you know, we'll be more selective on sale price because I think that the value will be driven by the product's quality and our name brand to begin with. So all of those in aggregate, think that we could see higher than and in times But it's gonna take a lot of hard work. Scott Christian Buck: Great. Well, I appreciate the added color, guys, and congratulations on all the progress. Michael D. Johnston: Thank you, Scott. Steven F. Rossi: Steve, we have three more questions from the audience C.K. Poe Fratt: in the Q&A bubble. The first question is, if someone was to order the Solis and Core, on the November 28 release date, when would they reasonably expect to receive the product? Steven F. Rossi: Great question. So the Solis is made to order. It's made domestically here within our facilities in The US. It'll be, yeah, mostly made to order. We may stock some So it's all handmade white glove service. And we're thinking that it'll be one or two weeks for us to make the product test the product, package it, and then the concierge service respect to having it delivered to you. So it's not we're not just gonna throw it on a USPS truck and wave it away. It's a concierge white glove experience with the Solis. You have your own dedicated team for support and an install and these types of things even though it's very easy. So the Solis should be a couple of weeks depending on our availability for the photovoltaic panels. And that supply chain there. The Core, our first batch of 1,000 batch of Core units is expected to arrive in December. The reason why we're offering them for sale in late November is just because we expect significant demand, so we want to make sure that we have everyone's name in the hat that wants to be a part of it. And the Core is interesting again because you can buy multiple batteries. It's the only of its kind that offers a fully modular system. So the Solis recap should be a two-week lead time. Handmade. And the Core should be shipping sometime in late December mid to late December depending on the receipt of the products through our contract manufacturer. C.K. Poe Fratt: Thanks, Steve. And then we have another question about sales to the international Are we looking at international markets such as EU or Middle East? Steven F. Rossi: We had recently at the SEMA show in Vegas, the biggest automotive show in North America. We had an unprecedented interest in sales from Latin America. Which we didn't expect. We knew that the market was strong. We didn't know it was that strong. So it looks like we're gonna continue to focus our growth geocentric. What that means is closer to home than further. I think that we're gonna start looking at the Latin American, like Puerto Rican, and Central and South American markets. First, that should be relatively not easy, but it should be quick. Because we know everyone we need to know there. Set up distribution, and then we're gonna look at European Union and The Middle East for mostly the Core products. We feel that portable energy systems and small home power systems are gonna be very, very strong there. And also, we've been looking at over the past years the Australian market, which is big for both all of the product lines we sell. Inclusive of unit of the heat pump. Thank you. C.K. Poe Fratt: Another question on the heat pump. Specifically. When do we expect it to go into production? Steven F. Rossi: So I want to underline the amount of excitement that we all have about the AetherLux because it's so revolutionary, and it's revolutionary within such a large and growing market. I mean, there's really, like, a trident of amazing things that are happening here. It's revolutionary. The market is existingly large, and it's also growing massively for heat pumps. So we're very excited about that. So we have production intent or pre-production intent prototypes working. We're building additional prototypes for additional testing. So that's what November and December looks like. And then we're working with contract manufacturers to start looking at manufacturing the product. I'm broad in my wording because obviously, we can't disclose nonpublic information. But our intention is to begin manufacturing the product as quickly as possible once we've tooled it. Tested it, and certified it. And we, the company, want exactly what the shareholder wants, which is that date to be as close to today as possible. So the answer to the question is as fast as possible. You know, we want the same things as every shareholder and investor does. But there's the UL certification alone could be three to six months. Tooling and supply chain could be significant time drags, but we're much smarter today than we were a year ago, having done this now, executed on similar initiatives like the Core. So we're gonna keep it as tight as possible. C.K. Poe Fratt: Thanks, Steve. And I think it's important to mention that we'll continue to deliver transparent updates to investors as we get better alignment on the timeline and the progression on certification. So stay tuned for that. We have one other question regarding the four battery system. How much extra miles it would enable a truck be charged. The truck is out of the electric truck is out of energy. I can take that question, Steve, and I think the answer to that question is just mathematical calculation. So each battery is about one kilowatt hour of energy. So if you're And you can have easily about four batteries in your truck system. let's say, electric truck is 50 kilowatts, that would provide four out of 50. Almost an 11% range boost. Could be 30 miles, 40 miles, depending. On the efficiency of your truck. So the answer is four kilowatt hours. Steven F. Rossi: Yeah. We also want to be clear to state that the Solis itself is not presently configured to recharge or directly integrate into an electric truck. So the Solis will charge battery systems, and the battery systems can be used for level one charging of the trucks. Which is relatively slow, but it'll get you enough power to get out of a difficult situation where you might be out of energy off the side of the road, for instance. We have not yet integrated the Solis directly with an EV manufacturer, although that is a cog in the wheel for us. C.K. Poe Fratt: Thank you, Steve. There are no other questions in the Q&A box. Any other investor that does want to ask questions about our queue or future progress, please do email us or call us at our line. We thank you very much for attending this call. Steven F. Rossi: Thank you, everyone.