Ronan Kennedy

Ronan Kennedy asked about Robert Half's optimism regarding sequential growth leading to positive year-over-year growth in Q3, the indicators needed to confirm a multi-quarter recovery, and the reliability of external leading indicators. He also questioned the current assessment of capital allocation and the sustainability of the dividend.

Answer

CEO Keith Waddell expressed optimism based on client discussions and encouraging weekly results, noting that current trends suggest positive year-over-year growth by Q3. He mentioned monitoring various external indicators like ASA, SIA, NFIB, and PMIs, which collectively point to an upward trend in the staffing industry, with Robert Half's SMB focus causing a slight lag. CFO Michael Buckley highlighted strong Q4 2025 operating cash flow, which covered the dividend for the full year, and projected sufficient free cash flow in 2026 to cover the dividend, allowing for potential stock repurchases from the balance sheet.

Ronan Kennedy asked about Robert Half's optimism regarding a potential multi-quarter recovery and what specific internal or external indicators, beyond weekly revenue trends, would confirm sustained positive growth. He also inquired about the current assessment of capital allocation and dividend sustainability.

Answer

CEO Keith Waddell expressed optimism based on client discussions and encouraging weekly results, noting that while no single external indicator is a 'magic bullet,' the overall staffing industry is trending upward. He explained Robert Half's slight lag is due to its SMB focus, but current trends suggest positive year-over-year growth by Q3. CFO Michael Buckley highlighted strong Q4 operating cash flow, which covered the 2025 dividend, and projected sufficient free cash flow to cover the dividend in 2026, attributing this to excellent working capital management and a tax act benefit.

Ronan Kennedy asked for clarification on the margin driver dynamics and puts and takes for the Q4 margins guide, including the role of mix, conversion, wage rate, bill-pay spreads, and segment-specific call-outs. He also inquired about the trends exiting Q3 and early Q4 for permanent placement versus contract, and what this indicates about a potential recovery.

Answer

CEO Keith Waddell explained that Q4's shorter billing days lead to negative leverage on fixed costs, impacting Protiviti's gross margin and Talent Solutions' SG&A. He noted Talent Solutions' gross margins are expected to be flat sequentially, reinforcing their value. Protiviti's gross margins are projected to be down slightly, which is better than the prior year. Overall operating income is expected to be down 1.3 percentage points sequentially, consistent with historical Q3 to Q4 trends. For perm vs. contract, Mr. Waddell noted perm was surprisingly better than contract in early Q4, attributing Q3 perm softness to candidate turndowns rather than client demand. He concluded that trends for both are positive.

Ronan Kennedy inquired about the margin driver dynamics and the puts and takes for fourth-quarter margins, including the role of mix, conversion, wage rate, bill-pay spreads, and any segment-specific callouts. He also asked about the trends for permanent placement versus contract exiting Q3 and early Q4, and what these dynamics suggest about a potential recovery.

Answer

CEO Keith Waddell explained that fewer billing days in Q4 lead to negative leverage on fixed costs, impacting Protiviti's gross margin and Talent Solutions' SG&A. He noted flat sequential Talent Solutions gross margins, reinforcing client value, and Protiviti's gross margins were down slightly due to the shorter quarter but better than the prior year. Overall operating income decline was consistent with historical Q3 to Q4 trends. For trends, Mr. Waddell stated that permanent placement, while more volatile, was performing better than contract, despite some Q3 softness due to candidate-side issues rather than client demand. He concluded that positive trends for both contract and perm from September into October informed the Q4 guidance.

Ronan Kennedy sought clarification on recent macro demand trends, reconciling comments on stabilization with reported declines, and asked about the key drivers for the guided Q3 margins.

Answer

President & CEO M. Keith Waddell clarified that their focus is on sequential trends, which stabilized in June after a modest fall, and noted an improved tone in client conversations. Regarding margins, he stated Talent Solutions SG&A has stabilized, while Protiviti's seasonal margin lift in Q3 will be muted by lower revenue from large projects completing.

Ronan Kennedy of Barclays inquired about UniFirst's long-term objectives for mid-single-digit organic growth and high-teens Adjusted EBITDA margins, seeking clarity on the timeline, key milestones for fiscal years 2026 and 2027, and the company's confidence in successful execution. He also asked about the impact of strategic investments in sales, service, and the UniFirst Way on new customer acquisitions and retention.

Answer

Steven Sintros, President and CEO, stated that specific fiscal years for achieving these milestones haven't been given, but steady improvement is expected through 2027 and 2028, with mid-single-digit growth closer by the third year. He noted that significant profitability benefits are anticipated in the next 18-24 months from key initiatives and tech projects, with inflection expected by 2027, though tariffs could be a factor. Sintros detailed strategic investments in a tiered sales organization and increased service headcount, which are improving sales rep productivity, account management, and customer retention, with the UniFirst Way driving discipline in account renewal processes.

Ronan Kennedy asked about UniFirst's long-term objectives for mid-single-digit organic growth and high-teens adjusted EBITDA margins, including the timeline for achievement, key milestones for fiscal years 2026 and 2027, and management's confidence in execution. He also inquired about the sustained momentum in new account installations, strategic investments in the sales force and service organization, and the initial impacts of the UniFirst Way initiatives. Additionally, Kennedy questioned the impact of a softer employment climate and net wear levels on growth, the rationale for unchanged revenue guidance despite positive momentum, and the specific categories of savings and operational flow-through expected from margin improvement initiatives, particularly the 2027 inflection point. Finally, he asked about the proportion of sales and service investments in Q1 and the status and timeline of the ERP implementation.

Answer

Steven Sintros (President and CEO) clarified that specific fiscal years for long-term objectives were not provided, but anticipated steady improvement towards mid-single-digit growth by fiscal 2028 and profitability inflection by fiscal 2027, driven by key initiatives and tech projects. He expressed confidence in the plan, acknowledging potential tariff impacts. Sintros detailed the tiered sales organization and strategic headcount additions in sales and service, noting improved sales rep productivity, account management, retention, and upsell, linking these to the UniFirst Way's operational discipline. He explained that new account growth is strongest in mid-size accounts due to the tiered sales model and acknowledged an incremental headwind from the softer employment climate and net wear levels, identifying existing account penetration and retention as key growth opportunities. Sintros stated that while top-line momentum is positive, it's too early in the year to adjust guidance, also citing some economic weakness. He outlined margin improvement initiatives, including global inventory sharing, new facility service product launches with sourcing improvements, and G&A moderation through technology and automation, with full impacts expected later in 2027 and into 2028. Sintros confirmed that Q1 likely saw the most pronounced impact from specific sales and service investments. Shane O’Connor (EVP and CFO) reiterated that the ERP timeline extends largely through 2027, with core financial modules this year and supply chain enhancements in 2027, enabling benefits in late 2027 and 2028.

Ronan Kennedy of Barclays inquired about the key factors influencing UniFirst's guided 2.6% organic growth for Uniform and Facility Service Solutions, specifically asking whether the outlook is primarily driven by the timing of strategic initiatives or the broader economic environment, including employment cycles and wearer reductions.

Answer

President and CEO Steven Sintros explained that the guidance reflects both the positive momentum from sales and retention improvements, which are expected to build through 2026 and into 2027, and the anticipated headwind from a softer employment environment leading to negative wearer ads versus reductions. He emphasized that current investments are designed to accelerate growth in subsequent years.

Ronan Kennedy of Barclays inquired about the key drivers influencing the projected 2.6% organic growth for Uniform & Facility Services in fiscal 2026, specifically asking if the pace of improvement from strategic initiatives or external factors like employment cycles and wearer reductions are more impactful. He also asked for a breakdown of the puts and takes affecting 2026 margins, considering operational improvements against investments and tariff impacts.

Answer

President and CEO Steve Sintros confirmed that both internal initiatives (sales and retention improvements, expected to build momentum through 2026 and into 2027) and external headwinds (softer employment environment, negative wearer ads vs. reductions) are contributing factors to the organic growth outlook. Regarding margins, Mr. Sintros identified tariffs, sales investments, service investments, and peaking digital transformation costs as the primary factors, each contributing roughly 20 basis points to an overall 80-90 basis point impact, with ERP-enabled benefits expected in 2027 and beyond. He characterized 2026 as a transitional year for these investments.

Ronan Kennedy of Barclays asked for a deeper analysis of UniFirst's organic growth, questioning the balance between new business wins, improved retention, challenging pricing, and softer wearer levels, and also inquired about the current demand environment and specific pricing dynamics.

Answer

President & CEO Steven Sintros explained that a cautious customer base, particularly in some manufacturing sectors, has led to targeted employment cutbacks and softer wearer levels. This softness has partially offset gains from solid new business sales and improved retention. Regarding pricing, Sintros described the environment as a fluid, "in-between state" as the market transitions from a high-inflationary period to one with potential tariff impacts, making the near-term outlook uncertain.

Ronan Kennedy asked for clarification on UniFirst's strategy to create shareholder value equivalent to the rejected Cintas offer, including the timeframe for achieving its goals and the near-term margin impact of its strategic initiatives.

Answer

President and CEO Steven Sintros reiterated the company's long-term goals of achieving mid-single-digit top-line growth and high-teens EBITDA margins. He stated that while the journey will take time, with full benefits from technology investments expected post-ERP deployment around fiscal '27, the company is already making steady progress and expects to see continued improvements.

Ronan Kennedy from Barclays inquired about the expected sequential revenue trends for the remainder of the fiscal year and into 2026, given the challenging pricing environment. He also asked for an update on the company's position in its overall transformation journey and the timing of potential inflection points for growth and margins.

Answer

CEO Steven Sintros stated that while the company doesn't provide quarterly guidance, the goal is to build momentum by year-end for fiscal 2026. CFO Shane O'Connor added that Q1's 1.7% organic growth was in line with the full-year forecast. Regarding the transformation, Mr. Sintros described it as a multi-year investment in technology, people, and capabilities, with long-term goals of mid-single-digit growth and high-teens EBITDA margins, but did not provide a specific timeline for an inflection point.

Ronan Kennedy of Barclays inquired about recent industry activity, including potential new entrants to the U.S. market, and asked for an assessment of the current competitive landscape. He also requested clarification on the dynamic between a challenging pricing environment impacting retention and the simultaneous success in renewing contracts at improved rates and seeing higher NPS scores.

Answer

President and CEO Steven Sintros stated he could not comment on industry activity beyond public statements, but reiterated UniFirst's untapped potential. He explained that the market is transitioning from a high-inflation period. As a result, customers are more cost-conscious, leading to more contracts going to bid and impacting retention. However, he noted that recent positive trends in contract renewal rates and NPS scores indicate the company is successfully navigating this cyclical challenge and is positioned for future improvement.

Ronan Kennedy from Barclays inquired about the cultural transformation needed at Vestis, the readiness of the current team to execute the strategic plan, and the long-term financial framework beyond the 2026 guidance, specifically regarding organic growth and margin profile.

Answer

Jim Barber, President and CEO of Vestis Corporation, emphasized that the transformation focuses on operational excellence and rigor, particularly optimizing plant operations which account for three-quarters of the $75 million savings. He expressed confidence in the team, stating that the vision and strategies will enable their success. Regarding the long-term financial framework, Mr. Barber indicated that more details for 2027 and beyond would be provided after executing through the initial quarters of 2026, focusing first on establishing a strong foundation.

Ronan Kennedy inquired about Vestis Corporation's cultural transformation, assessing the current team's capability to execute the strategic plan, and sought insights into the financial framework for organic growth and margin profile beyond fiscal 2026.

Answer

President and CEO Jim Barber emphasized that culture is foundational, focusing on operational excellence and rigor, particularly in optimizing plant operations which account for three-quarters of the $75 million savings. He expressed confidence in the existing team, stating that the vision and strategies will enable their success. Regarding the long-term financial framework, Jim Barber indicated that more details would be provided after executing the initial phases of the 2026 plan.

Ronan Kennedy inquired about new CEO Jim Barber's initial assessment of Vestis's strengths and weaknesses, and asked about the strategic shift from volume to profitability ahead of the formal Q4 update.

Answer

President, CEO & Director Jim Barber explained that his experience in similar route-based, asset-intensive businesses is directly applicable to Vestis. He identified opportunities in improving plant reliability, reducing employee turnover, and implementing a value-based pricing model to enhance operating leverage. Barber emphasized that the focus is shifting to how well the company grows, not just how much, with a goal of creating significant value improvement starting in 2026.

Speaking for Manav Patnaik, Ronan Kennedy asked about the macro demand environment, performance across key verticals, potential impacts from new tariffs, and priorities for capital expenditures.

Answer

CEO Kimberly Scott described the demand environment as strong within a large addressable market, noting no specific vertical weakness due to end-market diversification. She confirmed Vestis is monitoring potential tariff impacts and has been de-risking its supply chain. CapEx is prioritized for general maintenance and investments supporting logistics and plant optimization efforts.

Ronan Kennedy asked about the investments in commercial pest control, the timing and impact on demand drivers, the double-digit recurring growth in Orkin Commercial, and competitive dynamics. He also inquired about the drivers of the 31% incremental margin (excluding adjustments), specifically pricing and productivity, and the expected trajectory for coming quarters.

Answer

Ken Krause (EVP and CFO) and Jerry Gahlhoff (President and CEO) detailed significant investments in commercial, including dedicated branches and increased sales staff, which are now yielding strong growth (8.3% organic in Q3) and improved productivity. Ken Krause further explained that both pricing (CPI-plus) and productivity are driving the incremental margin, with a high 50s incremental gross margin leading to a 30%+ overall profile due to SG&A leverage.

Ronan Kennedy of Barclays inquired about the components of organic growth, specifically the contributions from pricing versus volume. He also asked for clarification on margin impacts from investments and the updated guidance for incremental margins.

Answer

EVP & CFO Kenneth Krause explained that pricing is targeted in the 3-4% range, with the remainder of the 7.3% organic growth coming from volume. He stated that excluding legacy auto claims, incremental margins were roughly 25%, and would have been closer to 28-30% without peak season investments. Krause reiterated confidence in the business model's ability to deliver double-digit earnings growth and strong cash flow, framing the 25-30% incremental margin guidance within that context.

Ron Kennedy, on for Manav Patnaik, requested a high-level overview of top-line growth drivers, margin resilience in a downturn, and an update on the M&A pipeline, including whether market uncertainty might spur a more sizable transaction.

Answer

CFO Ken Krause identified pricing at CPI-plus levels, healthy volume growth, and a robust M&A environment as key growth drivers. He highlighted the company's variable cost model as a lever in a potential downturn. CEO Jerry Gahlhoff emphasized the multi-brand strategy as a core differentiator for consistent revenue. Regarding M&A, Ken Krause described the pipeline as healthy but stressed a pragmatic and paced approach to integration, with no urgency to chase deals.

Ronan Kennedy asked for reconfirmation of the leading indicators of demand informing the assessment of stabilization, with specifics on regions and brands. He also inquired about the global coverage and timeline for Sophie AI deployment, its impact on KPIs like win rates and revenue, and examples of pivots based on AI-enabled intelligence.

Answer

Chairman and CEO Jonas Prising clarified that stabilization primarily applies to Europe and the U.S., noting Manpower brand growth. He highlighted Sophie AI's role in lead generation and prospecting, with 30% of new client revenue derived from AI-rated probability and deployment across 14 key markets. EVP and CFO Jack McGinnis added that AI has significantly impacted pipeline management and sales team focus across multiple verticals, helping prioritize opportunities amidst delayed client decisions.

Ronan Kennedy asked for reconfirmation of leading indicators of demand, specifically noting any regional or brand-specific insights. He also questioned the global coverage and deployment timeline for Sophy AI, seeking metrics like new client revenue, producer time, or time to fill, and examples of AI enabling quick pivots to growth opportunities.

Answer

Chairman and CEO Jonas Prising confirmed leading indicators apply mostly to Europe and the U.S., noting Manpower brand growth despite a 'frozen' labor market. He highlighted Sophy AI's role in lead generation, driving 30% of new client revenue from AI-rated probability in the largest market, and its deployment across 14 key markets. EVP and CFO Jack McGinnis added that AI impacts pipeline management across all industries, helping sales teams focus on best opportunities.

Ronan Kennedy from Barclays questioned how broader macroeconomic factors beyond federal funding, such as a weakening labor market, could impact fundamental demand. He also asked what provides confidence that initiatives like the 'opportunity region' will effectively improve enrollment.

Answer

CEO Paul Thompson expressed confidence that overall demand for childcare still significantly outweighs supply, and pricing studies show affordability is not the primary concern. Regarding the 'opportunity region,' he explained that a localized, data-driven approach is being used to provide tailored support to underperforming centers, with early results showing encouraging performance. CFO Tony Amandy added that this initiative has not required significant additional spending.

John Ronan Kennedy, on for Manav Patnaik, questioned how the full-year guidance accounts for macro uncertainty and whether the company has previously observed similar delays in enrollment decisions. He also asked if the contribution mix from various growth levers is expected to change.

Answer

CEO Paul Thompson stated that the company remains confident in its full-year guidance due to its ability to manage expenses effectively. He explained that the current macro environment primarily impacts occupancy, while other growth levers like B2B, Champions, and new center openings are performing as expected, providing flexibility to the business model.

Ronan Kennedy, on for Manav Patnaik, asked about the operational playbook for improving lower-performing center cohorts and for the key drivers that would lead to the high or low end of the 2025 revenue and margin guidance.

Answer

CEO Paul Thompson explained that the playbook for lower-quintile centers focuses on teacher and family engagement to boost retention, while for top-tier centers, it's about sustaining the experience and using pricing power. CFO Tony Amandi added that achieving the high end of guidance depends on occupancy gains and M&A, while the low end could be influenced by the same factors. He noted that EBITDA performance is also tied to cost controls, especially labor management.

Ronan Kennedy of Barclays Investment Bank asked about the correlation between public labor market data (JOLTS, jobs reports) and the company's performance. He also questioned if maintaining guidance, despite a lower base growth forecast, implies an expectation of overperformance in new logos and upsell/cross-sell.

Answer

CEO Scott Staples explained that public labor data like JOLTS is not a direct correlate for their enterprise-focused business, and they rely more on their own order volumes and client conversations. CFO Steven Marks and Staples confirmed that to maintain guidance, they anticipate strong contributions from new logos and upsell/cross-sell, bolstered by large new deals coming online and faster-than-expected revenue realization from improved onboarding.

On behalf of Manav Patnaik, Ronan Kennedy from Barclays asked about the macro assumptions in the updated guidance, particularly regarding interest rates and trade policy. He also inquired about the outlook for a positive inflection in units on rent (UOR).

Answer

EVP & CFO Matthew Jacobsen stated that the outlook does not assume a significant change from interest rates this year, with any potential stimulus from rate cuts more likely in 2026. CEO Bradley Soultz added that due to seasonality, any macro improvement would likely benefit 2026 rather than the remainder of 2025. Regarding UOR, Jacobsen confirmed they no longer expect a positive inflection by year-end and are not in the business of forecasting non-residential starts, but will monitor trends for 2026.

John Ronan Kennedy, on for Manav Patnaik, asked about the historical correlation of the pending order book to activations and units on rent (UOR), and its reliability as a leading indicator. He also requested clarification on the guidance's underlying assumptions for volume inflection and AMR growth.

Answer

President and COO Timothy Boswell explained that the current order book is weighted more toward the near-term than last year, giving them confidence in Q2 activations. CFO Matthew Jacobsen added that the guidance assumes the volume headwind will ease throughout the year, approaching flattish by year-end, with AMR for modulars moving up in the 5-10% range and storage rates also improving.

Ronan Kennedy, on behalf of Manav Patnaik at Barclays, asked for more detail on the dichotomy between customer optimism post-election and caution around interest rates and tariffs. He also inquired about the potential impact of fiscal policy, immigration, and the contribution from mega-projects to the business.

Answer

President & COO Timothy Boswell described the market sentiment as 'bipolar,' citing mixed data like a low ABI but rising contractor backlogs, especially for larger firms, which aligns with WillScot's experience. He noted strong performance in education and utility sectors. Boswell discussed potential puts and takes from policy changes, such as immigration enforcement potentially causing project delays but also creating demand for support facilities. He confirmed that mega-projects remain a prominent and consistent source of demand across geographies, particularly for complex and FLEX units.

Ronan Kennedy from Barclays asked for an update on go-to-market optimization initiatives and sales channel expansion. He also questioned the drivers of customer attrition and the impact of the housing market on both churn and gross additions.

Answer

CEO Jim DeVries highlighted a process change to use 'tech engineers' who both sell and install equipment, which has boosted installation revenue. Regarding attrition, DeVries detailed the Q2 drivers, noting that lower relocation losses helped attrition but created a headwind for gross adds. He expressed long-term optimism for retention, citing improving NPS scores and call center metrics.

John Ronan Kennedy of Barclays asked for an assessment of the current macroeconomic demand environment, including the dual impact of the housing market on attrition and gross additions, and inquired about consumer strength indicators. He also followed up on the potential impact of tariffs and the company's mitigation strategies.

Answer

CEO Jim DeVries described the business as 'exceptionally resilient,' noting that factors that pressure new subscriber additions, such as fewer home relocations, conversely benefit customer retention. CFO Jeff Likosar added that while there's a slight uptick in slower payments, it's not material, and it's offset by positive trends like higher average pricing and record-low attrition. Regarding tariffs, DeVries outlined mitigation plans including supplier negotiations and potential price adjustments, while Likosar confirmed that any net exposure could be managed within the existing full-year guidance ranges.

Ronan Kennedy from Barclays asked for an update on initiatives to optimize the sales process and go-to-market strategy, including offer structures and pricing. He also inquired about progress on digitization and AI, specifically in virtual service and call center efficiency.

Answer

CFO Jeff Likosar explained that with the new ADT+ platform, the company is actively learning how to optimize its new bundled offers, pricing, and financing for different customer segments. CEO Jim DeVries added that on the AI front, 50% of customer service chats are now handled by AI agents, with a goal of 90% by the end of Q1, and AI for voice calls is now being rolled out. He also noted that over 50% of service jobs are now addressed virtually.

Ronan Kennedy from Barclays Capital sought more granular detail on the drivers of the fiscal 2026 guidance, including the puts and takes for incremental margins and the expected revenue contributions from different segments and pricing.

Answer

President & CEO Todd Schneider confirmed the guidance accounts for investments like the SAP implementation in the Fire business and other potential input costs. For revenue, he stated the goal is mid-to-high single-digit growth overall, with the Rental business growing similarly, Fire and First Aid segments in the double digits, and Uniform Direct Sale in the low single digits.

Ronan Kennedy from Barclays Investment Bank, on for Manav Patnaik, requested a more granular breakdown of the drivers for the fiscal 2026 incremental margin and revenue guidance, including puts and takes from technology, supply chain, and segment performance.

Answer

President & CEO Todd Schneider affirmed the incremental margin guidance is within their target range and already accounts for investments like the SAP implementation in the Fire business and other potential input costs. For revenue, he outlined expectations for mid-to-high single-digit growth overall, with the Rental business growing similarly, Fire and First Aid in the double digits, and Uniform Direct Sale in the low single digits.

John Ronan Kennedy asked for confirmation of the primary drivers behind the impressive gross margins, their sustainability, and a more granular view of operating and incremental margins by segment.

Answer

President and CEO Todd Schneider reaffirmed the 25% to 35% incremental margin target, attributing the strong performance to solid execution, revenue leverage, material cost improvements, and technology. He detailed segment drivers, including garment-sharing tech in Rental, a favorable sales mix in First Aid, and leverage from growth and tech deployment in Fire, where an SAP implementation is also expected to yield future benefits.

Speaking for Manav Patnaik, Ronan Kennedy of Barclays asked if any one-time factors contributed to the strong margin expansion and questioned how recent industry activity might influence Cintas's views on competitive dynamics and capital allocation.

Answer

President and CEO Todd Schneider confirmed there were no one-time factors in the margin performance and that the company sees further opportunities for efficiency gains. Regarding M&A and competition, he stated that M&A remains an important component of their strategy and that Cintas is well-positioned to compete, continuously investing to maintain its strong market position.

John Ronan Kennedy, on for Manav Patnaik, asked how the drivers and pace of margin expansion will evolve as delivered product cost (DPC) deflationary tailwinds fade and inflation normalizes.

Answer

CEO Christophe Beck stated that DPC is expected to return to a normal, low single-digit inflationary trend starting in Q4. He explained that future margin expansion will be driven by continued volume growth, value pricing, and consistent SG&A productivity improvements of 20-30 basis points annually. This strategy underpins his confidence in delivering 12-15% EPS growth and reaching a 20% operating income margin within three years.

Asked for the company's perspective on the macroeconomic environment versus their expectations and what could happen in various scenarios. Also inquired about the potential for further cost-cutting measures beyond Project Nucleus if the economy worsens.

Answer

The macro got worse than expected in the back half of Q3, and this trend is expected to continue, which is reflected in the revised guidance. The company is pleased with its cost optimization efforts, on track for $10M savings this year and a $25M run rate. Further levers include automation, AI, and the highly variable nature of COGS. They feel the go-to-market approach is effective and wouldn't change it dramatically, but there is more room for SG&A optimization. Q4 adjusted OpEx is expected to be the lowest in 8 quarters.