GPGI, Inc. (GPGI) Q3 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the GPGI Third Quarter 2026 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, GPGI's Corporate Secretary. Please go ahead.

Good morning, and welcome to GPGI's third quarter conference call. This morning's remarks will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially, including those disclosed in our SEC filings available at sec.gov and on our Investor Relations website. Additionally, definitions and reconciliations for non-GAAP measures used today appear in today's press release and earnings presentation, which are available in our SEC filings and on our Investor Relations website. As a reminder, following the Resolute Holdings spin-off, current GAAP interpretation requires GPGI to account for GPGI Holdings, including our CompoSecure and Husky businesses under the equity method of accounting. With that, I will turn the call over to our Executive Chairman, Dave Cote.

Good morning, everyone. In the third quarter, GPGI delivered results in line with our expectations. The results were driven by continued strength at CompoSecure and improving demand at Husky. Starting with CompoSecure, ROS is taking hold deeper in the organization and its impact on growth and profitability continues. The company delivered record sales and adjusted EBITDA margin expansion and strong operating performance in the quarter. With robust demand from an expanding base of leading issuers, CompoSecure is well positioned to close out 2026, while Graham and his team are also doing the necessary seed planning for 2027 and beyond. We're proud of the cultural change that has occurred at Compo. The results you see are an outcome of a high-performance culture, combined with smart strategic investments in a business that has a great position in a good industry. Turning to Husky. We've owned the business for approximately 10 months. And while the performance to date has not lived up to our high expectations, Husky is a fundamentally great business. We faced severe macro headwinds shortly after closing with the Iran war created a resin price shock that significantly impacted customer purchasing behavior overnight. With evolving demand picture, we have also faced margin headwinds due primarily to cost actions that have taken us longer to realize than anticipated. That said, I have full confidence in the trajectory of the business as we see demand improving, our pipeline and orders accelerating, cost actions back on track and margins stabilizing with clear opportunity for Husky to accelerate performance in 2027. We're focused on driving cultural change at Husky to execute today while also making the investments necessary for the company to achieve its potential. This work was made more challenging with the market issues in the first half of the year, but our commitment to doing what is necessary in the business is unwavering. Husky does have a great position in a good industry. Market disruptions happen, and we're using this as a culture change accelerant. Husky performed in line with our expectations this quarter with sales recovering year-over-year and margins improving sequentially, led by the return to growth in systems and strength in our service business. While we still face some delays in orders converting to revenue and customer deferrals on aftermarket tooling, excluding service, we see a clear uplift in orders, which provides the momentum and backlog coverage for a strong start to 2027. Specifically, our pipeline is up approximately 16% year-over-year. Total orders were up approximately 7% year-over-year and recurring aftermarket orders were up approximately 13% year-over-year through the third quarter. Notably, we anticipate further acceleration in the fourth quarter given a strengthening high confidence near-term pipeline, particularly for new systems. This momentum is not unexpected as Husky serves an underlying market that grows consistently. This means that while demand can be deferred, especially for new system purchases as we saw in the first 2 quarters of the year, it is more consistent over time. It is important to note that pipeline and order growth is occurring despite resin prices moving higher and remaining at elevated levels. We expect demand to continue returning to more normalized levels as customers require our mission-critical equipment to fulfill growing end market demand. At the same time, we anticipate improved operating leverage and partial realization of ongoing cost actions to drive a return to more normalized profitability in the fourth quarter. Looking ahead, we are adjusting our full year 2026 guidance while still expecting a sequentially strong fourth quarter, consistent with historical seasonality. For the fourth quarter, we now anticipate low single-digit organic revenue growth and high single-digit EBITDA growth at the midpoint of the range. For full year 2026, we expect to achieve our prior revenue forecast from May, but are lowering the range for adjusted EBITDA and adjusted free cash flow due primarily to delayed realization of cost actions and mix at Husky, offsetting continued strong performance of CompoSecure. Tom will go deeper into our forward guidance. Rob will provide more information than we would typically share regarding Husky. But I would note that while 2026 has been a foundational year for GPGI, we expect to see a return to our long-term growth algorithm next year. And intend to grow GPGI's earnings and cash flow faster than the market to deliver superior, durable through-the-cycle returns for our investors. As a reminder, the long-term growth algorithm we previously outlined is to deliver mid- to high single-digit annual organic growth, over 100 basis points of annual margin expansion through the deployment of ROS, resulting in double-digit plus annual EBITDA growth. This performance is driven by our continued strategic investments in the businesses we own, fueling the seed planting today that is necessary for them to achieve their potential tomorrow. ROS lies at the core of how we operate GPGI. It is an end-to-end commitment to grow sales, control costs and generate the cash necessary for accretive investing, which should compound returns for our investors. Businesses are a collection of connected processes, and we are highly focused on end-to-end improvement that translates operational efficiencies into durable financial performance. Graham and Rob will each discuss examples of how ROS is transforming CompoSecure and Husky, but I will emphasize how driving this daily mindset compounds performance over time. ROS is fundamentally a system designed to give businesses the necessary tools to become world-class operations that turn superior customer experiences into a catalyst for profitable growth. To conclude, we are making progress across the platform. Both CompoSecure and Husky are companies with great positions in good industries, and they are businesses we are proud to own. We remain focused on execution to deliver in the fourth quarter while also taking the necessary steps to position the platform for strong performance next year. With that, I'll turn it over to Tom Knott, our Chief Investment Officer.

Thank you, Dave. Going to Slide 4. GPGI delivered results in line with our expectations with pro forma adjusted net sales of $509.6 million, up approximately 5% from the prior year, pro forma adjusted EBITDA of $146.3 million, up approximately 7% from the prior year and pro forma adjusted EBITDA margins of 28.7%, up approximately 60 basis points from the prior year. GPGI also generated approximately $81 million in pro forma adjusted free cash flow in the third quarter, higher than the prior year. Turning to Slide 5. We are issuing guidance for the fourth quarter that reflects continued strength at CompoSecure, offset by the delayed realization of identified cost actions and margin headwinds at Husky. We expect pro forma adjusted net sales to be between $630 million and $660 million, up approximately 1% from the prior year at the midpoint of the range. Pro forma adjusted EBITDA between $178 million and $208 million, up approximately 8% from the prior year at the midpoint of the rang. Pro forma adjusted EBITDA margins between 27% and 29%, flat from the prior year at the midpoint of the range and pro forma adjusted free cash flow between $77 million and $127 million. At a segment level, we anticipate CompoSecure to continue delivering strong revenue growth and profitability with fourth quarter revenue growth in the high teens year-over-year. For Husky, despite geopolitical uncertainty and elevated resin prices, we now expect a range of plus/minus low single-digit growth consistent with historical seasonality, coupled with sequential margin expansion driven by improving operating leverage, ROS-led efficiency gains and the partial realizations of savings from ongoing cost actions. We are also adjusting our full year 2026 guidance. With better visibility into Husky's order book and delivery dates for the seasonally largest quarter of the year, we anticipate revenue to be on the higher end of our prior range and for GPGI to deliver low single-digit revenue growth year-over-year. Concurrently, we are lowering our outlook for adjusted EBITDA, margins and free cash flow due to margin headwinds at Husky, primarily due to delayed realization of identified cost actions, product mix, higher freight costs and continued investments necessary to position the business for growth in 2027 and beyond. These investments partially offset some of the realized cost savings to date, as Rob will explain in more detail. Taken together, we expect pro forma adjusted net sales to be between $2.034 billion and $2.064 billion, up approximately 1% year-over-year at the midpoint of the range. Pro forma adjusted EBITDA to be between $520 million and $550 million, down approximately 2% year-over-year at the midpoint of the range. Pro forma adjusted EBITDA margins between 25% and 27%, down approximately 80 basis points year-over-year at the midpoint of the range and pro forma adjusted free cash flow between $250 million and $300 million, reflecting healthy cash generation even with elevated growth CapEx. Importantly, despite the market-driven headwinds at Husky, we still anticipate full year growth across the recurring part of our business, aftermarket tooling, spare parts and service contracts. This resilience is consistent with our original investment thesis and is enabled by the non-discretionary nature of the markets we serve with our large and growing installed base. While we expect systems revenue to decline high single to low double digits year-over-year in 2026, we anticipate a return to growth in 2027, evidenced by the growing pipeline and order book we are seeing today because customers can only delay system orders for so long if they are to have the capacity needed to fulfill the consumption-driven demand they serve. As Dave mentioned, with the demand picture improving at Husky, we are focused on executing on the cost actions necessary to position the business well for 2027. We expect the realization of identified cost actions and improving operational efficiencies to drive sustained margin expansion at Husky in line with our long-term growth algorithm throughout 2027. With that, I will turn the call over to Graham Robinson, the CEO of CompoSecure.

Thanks, Tom, and good morning, everyone. Looking at Slides 6 and 7. We delivered another strong quarter in line with our expectations as we continue to accelerate our commercial and operational momentum. ROS-led initiatives continue to translate into improved growth and profitability as we achieved record adjusted net sales of $140.7 million, up approximately 16% compared to the prior year, underscoring both the robust demand for premium metal cards and the effectiveness of our commercial execution across regions. We also delivered record adjusted EBITDA of $61.2 million this quarter, up approximately 23% from the prior year and saw adjusted EBITDA margins expand approximately 230 basis points year-over-year and approximately 220 basis points sequentially to 43.5%. The margin expansion reflects the net impact of consistent incremental efficiency gains, partially offset by reinvestment in the business. In the third quarter, we also marked 2 years since Resolute's initial investment. And this milestone presents an opportunity to reflect on the ROF-led cultural transformation. We have firmly established a high-performance culture where we operate with a strong sense of accountability and urgency each day. I have seen our team galvanized around this cultural shift and the buy-in is contagious. Importantly, it is directly translating into financial results. Over the past year, we reduced manufacturing rates by approximately 30% as a result of our ROS focus. These efficiency gains continue to increase yields, expand output and drive financial results. This transformation demonstrates the power of collaborative problem solving to unlock constraints and deliver for our customers. Our investment in the commercial organization is translating into accelerating issuer activity and program wins across a broadening and diversified customer base. Our signature program wins reflect the breadth of demand for premium card solutions and our differentiated value proposition, combining advanced design, engineering and manufacturing capabilities to reinforce our position as the partner of choice for issuers launching high-impact card programs. The third quarter also featured a premium metal debit card for a leading wealth management bank. We have always believed that the metal debit card value proposition to financial institutions was an overlooked opportunity, and the traction we are seeing in debit is starting to prove this thesis out. Metal debit cards for premium clients allow financial institutions to promote a differentiated and distinguished customer experience, which in turn should help retain those clients' deposit base, provide significant value well in excess of the incremental cost of metal and further cementing the ROA-driven value of metal cards. While encouraged by our progress, we maintain a relentless focus on investing in our future and executing on our 3 pillars of growth, which include accelerating organic growth, driving international expansion and increasing Arculus momentum. Select initiatives to support these strategic priorities include penetration of the debit card market, an introductory metal card for issuers upgrading from plastic, a new design center in London to closely collaborate with international customers and active evaluation of new verticals beyond payment cards. In aggregate, our results highlight the tangible benefits we continue to unlock from a high-performance culture and the systematic deployment of ROS. Turning to Slide 8. I want to take a moment to walk through why we are so excited about the business going into 2027. CompoSecure is a category creator. We pioneered the premium metal card and continue to push boundaries of innovation with new product launches that translate to new signature programs. We are trusted by leading global issuers to produce their top-of-wallet cards, and we have a growing diversified base of long-tenured customers. Importantly, our metal cards represent low-cost, high criticality products for issuers that create a force multiplier to drive high ROI, low breakeven and enhance customer loyalty. We also see tailwinds that directly support our commercial momentum. Metal cards still have an ultra-low penetration of a large total addressable market. And we see issuers ramping spending on marketing and rewards to support an accelerating adoption of metal cards. And while we have over 200 active programs today, we still see significant runway for international expansion as well as new product adjacencies to complement our core business. Overall, we are operating from a position of strength and are confident in our ability to capitalize upon the significant opportunity ahead. With that, I'll turn the call over to Rob Domodossola, the CEO of Husky.

Thanks, Graham. Turning to Slide 9. Husky saw a return to top line growth and stabilizing profitability, delivering adjusted net sales of $368.9 million, up 0.5% from prior year. Pro forma adjusted EBITDA of $88.8 million, down 0.9% from prior year and pro forma adjusted EBITDA margins of 24.1%, down approximately 30 basis points from prior year. Our performance was in line with expectations as we navigated the recovering demand environment and saw a return to growth in system sales as well as high single-digit growth in our service business. We saw improving order demand as total orders increased by 7% year-over-year and 4% sequentially, aftermarket tooling orders up 19% year-over-year and spare parts orders up 17% year-over-year. Year-to-date through the end of the third quarter, systems orders are now up 4%. Aftermarket tooling orders are up 9%, spare parts orders are up 10%. And this momentum in orders continued through October as we saw total orders up 21% year-over-year and aftermarket orders up 8% year-over-year. While these orders take time to translate into revenue, these trends, coupled with our expanding backlog and near-term pipeline give us confidence in delivering the fourth quarter and accelerating into 2027. As sales grew sequentially, we expanded margins by approximately 500 basis points quarter-over-quarter through improving labor and fixed cost absorption as well as from partially realization of ongoing cost actions. We expect these trends to continue in the seasonally strongest fourth quarter, consistent with historic performance. As leveraging -- as operating leverage from higher revenues drives improved margins, further enhanced by our in-flight cost and productivity initiatives. We are encouraged by these early operational efficiency gains and recognize there remains significant opportunity to improve and sustain higher profitability through the ongoing deployment of ROS. Our culture and operational transformation is fundamentally changing the way we operate every single day. Even while navigating a turbulent macro environment, ROS provides the structure, the discipline and the visibility needed to drive continuous improvement across our businesses. We start each morning with an improved cross-functional S&OP process to understand real-time demand trends, improve factory loading, reduce lead time and waste and increase production outputs. We have redesigned our sales force to strengthen commercial effectiveness, and we're beginning to see the signs of new capabilities translate into accelerating pipeline and orders. We have also enhanced our global coordination across factories and are deploying a blitz of Kaizens to improve unit cost production and shorten lead times. There is a significant runway for ROS deployment, but it has already driven measurable improvements in growth, operations and financial performance. We remain firmly committed to making strategic investments in innovation and product development to ensure our solutions remain best-in-class, helping our customers maximize output, improve productivity and reduce the total cost of ownership. I also want to highlight the recent launches and strong customer reception to our HyCAP PRO beverage closure platform and our HyCAP 4.0 next-generation tooling platform. These products are specifically engineered to help beverage closure manufacturers achieve ultra lightweight tethered and high-performance designs with improved precision, durability and efficiency. It is yet another example of Husky's committed to customer-centric innovation that delivers industry-leading efficiencies and a lower total cost of ownership than competitors. Now going to Slide 10, I want to provide additional context for our financial performance. As Tom mentioned, while demand is improving, we have been slow in executing the cost actions identified early in the year. We are refocused and executing on them now to prepare for 2027. These actions focus on optimizing labor utilization, reducing discretionary spend and driving greater fixed cost discipline across the organization. This is an intentional strategy behind these initiatives. We are focused on enhancing efficiency and profitability while preserving our ability to respond quickly when demand fully recovers. This balance is critical as we want to ensure that Husky remains positioned to capture growth opportunities as market conditions improve. We expect margins to continue to improve sequentially in the fourth quarter. Margin expansion is expected to be directly -- driven directly by improved fixed costs, ongoing cost-saving initiatives and operating improvements from ROS, partially offset by necessary growth investments and product mix. We continue to closely monitor the evolving tariff policy changes, but do not expect tariffs to have a material impact to our financial performance. In summary, while market conditions remain dynamic, we believe Husky remains well positioned to deliver in the fourth quarter and accelerate into the first quarter of 2027. We have improved visibility on pipeline and orders and have already booked significantly more systems into our production queue for the first quarter than last year. In addition, we continue to make disciplined investments in R&D and innovation with several new products and technology advancements progressing through our pipeline. These investments reinforce our technology leadership and position us to capture additional growth opportunities as customer demand recovers. Now turning to Slide 11. Let me provide a more granular view on the commercial momentum that gives us confidence and visibility for delivery in 2027. As we have mentioned, the total pipeline is building sequentially, and we also have seen strength in our high confidence near-term pipeline, particularly in systems for the fourth quarter. For the third quarter orders, not only were we up 7% year-over-year, but our ending October was up 21% year-over-year, demonstrating strengthening demand from our customers. Our backlog was up 5% at quarter end and sequentially, and we expect it to be approximately double-digit plus to the end of the year. To reiterate the importance of our aftermarket business, aftermarket orders were up 13% year-over-year through the third quarter and up 8% year-over-year in October. With a growing installed base and bottlers increasingly pursuing lightweighting, this supports reoccurring aftermarket demand for Husky over time. Moving to Slide 12. It is worth acknowledging the second half seasonality inherent to Husky. Across both adjusted net sales and adjusted EBITDA, you can see the consistency in the higher second half weighing over the past 3 years. While we lower our full year guidance for adjusted EBITDA due to margin headwinds, we expect our second half performance to be -- to fall in line with historical seasonality. Going to Slide 13, I want to provide some additional context on how Husky's forecast evolved for this period of uncertainty. While our end market demand is improving and the second half sales increase is materializing as forecasted, many primary drivers of EBITDA guidance adjustments are delayed in executing identified cost reduction initiatives and unfavorable mix. When we provided our outlook in May, we had planned a contribution -- a combination of furloughs, direct and indirect headcount reductions and indirect cost expenses reductions. While we were successful implementing 2 rounds of furloughs and also reducing some indirect spend, we have been slow to deliver fully on planned cost actions. These delays, net of EBITDA contribution from incremental sales represents approximately $20 million of EBITDA headwind. We are focused on addressing this to position the company well for 2027. We have instituted a more rigorous S&OP process to better align direct labor with demand while improving workforce visibility and variability in our factories. Additionally, the planned indirect headcount reductions are expected to be complete by year-end with a full benefit flowing through in 2027. Separately, unfavorable machine and auxiliary mix is weighing on margins in the near term. However, system sales expand our installed base and create opportunities for higher aftermarket revenue over time. Overall, while the EBITDA shortfall is disappointing, improvement is now more in our control with demand strengthening, and we have identified the levers to drive that improvement, positioning the business for stronger execution and for better profitability. With that, I will hand it back to Dave.

So moving to Slide 14. I want to address the return to our long-term growth algorithm. Across both businesses, we see tailwinds developing that will allow GPGI to deliver accelerating growth and margin expansion in 2027. The total addressable market for CompoSecure is massive and remains untapped, evidenced by good momentum across traditional banks, fintechs and consumer co-brands, both domestically and internationally. At Husky, while resin price volatility caused demand deferrals that impacted the business, particularly in the timing of new system sales, global consumption of PET beverage bottles continues to exhibit healthy growth underscoring the quality of the market and our growing pipeline and backlog positions us well as we look to next year. At the same time, our R&D increases will continue and are a central pillar for bolstering our competitive advantage and generating additional demand with customer-centric innovation. We also expect in-flight ROS initiatives to deliver revenue growth and margin expansion through focused commercial execution, improved operating leverage and incremental productivity gains. Lastly, we are planning growth CapEx investments to scale capacity for both businesses in anticipation of long-term demand growth. While these growth investments will impact our near-term cash flow conversion, they are intentional strategic investments to position each business for further profitable growth. After prioritizing deleveraging, we anticipate reducing net debt by more than $200 million through the end of this year and ending the year at approximately 3.5x leverage. This will position us well to bring total leverage within our long-term target range next year. Turning to Slide 15. It's worth taking stock of our current valuation based on our expectations to return to the long-term growth algorithm, we believe we are significantly undervalued relative to both the market and the industrial sector. I would note that we intentionally structured GPGI to provide complete alignment of interest between our management team and our investors. My family personally owns nearly 18% of GPGI today, so there is significant skin in the game to deliver the performance we anticipate next year and beyond. As you've heard me say many times, and I still think it's true, buy now while supplies last. Despite the headwinds we faced in the first half, we're fully focused on delivering in the fourth quarter, accelerating into 2027 and returning to our growth algorithm. Both businesses are aggressively driving cultural and operational transformation under ROS, and we expect these critical process improvements to drive sustainable compounding returns. The market may not see it today, but CompoSecure and Husky are fundamentally high-quality businesses, each with great positions in good industries and with the ability and expectation to deliver compounding growth. I see even more opportunities for both businesses today than ever before. To close, GPGI's long-term platform strategy remains fully on track. Our unique combination of decentralized businesses, a proven operating system and disciplined capital allocation position us to deliver superior returns for our investors. With that, let's open it up to questions.

[Operator Instructions] Our first question comes from the line of Tomo Sano of JPMorgan.

Maybe just on CompoSecure, this is seeming to be performing well. As you look to accelerate growth from here in 2027, how are you thinking about commercializing opportunities beyond the core metal credit cards such as the debit cards and new designs or use cases in 2027 and then beyond?

Thanks for the question, Tomo. We are actively looking at a number of ways to drive growth with metal cards, whether it is international, whether it is leveraging Arculus for additional use cases. And we are working with a number of people to help to facilitate that across the board. In addition to that, we work with all the traditional banks, the fintechs, and we look to look at additional areas of customers for business models that will accelerate growth. So we are very, very confident and very, very optimistic about where we're positioned and our opportunity for growth.

And shifting gear to Husky business. As we look into 2027, how much of the growth and then incremental revenues do you expect to realize in this business? What gives you confidence that margins will improve as the sales growth in 2027?

Sure. I can take that. So I think the first part was with regards to the growth aspect of it. So we're seeing, like I said, an increase -- a significant increase in the pipeline, specifically in the high probability pipeline that gives us confidence in the next quarter of orders and specific to our high systems, so our high cavitation systems, which is a really good indicator of the market coming back. With regards to margins, the best thing for us is to fill the factory with ratable orders, and we're applying the discipline of the S&OP process to level load the factory. So with the increase in system orders that we're seeing flow through now and the more ratable cost of labor, we see increased margins improving.

Our next question comes from the line of Kurt Martinson of Locust Wood Capital.

A few. The first one for Rob. Could you just help us unpack the $25 million of cost that you put into the execution bucket? Did any of this reflect deliberate seed planting, stuff like bringing labor on or keeping labor on for the future recovery or retaining capacity versus actions that took you longer than you expected to realize? And how much did the tougher end market backdrop slow implementation? And beyond the indirect headcount actions finishing up by year-end, what really remains to be done so you have a clean jumping off point into 2027?

So there was definitely a mix. So starting with direct labor. We're still not there where we need to be with regards to the S&OP process. It took us longer to get there. The factories from the start of the month to the end of the quarter still saw some significant variability from a valley to a peak. And so that was a challenge to manage through, but we've significantly improved our S&OP process. We're level opening factory, like I said, consistently daily now. And so we should see that benefit flow through for the fourth quarter and beyond. So that was a big part of it for sure with regards to the cost variability that we saw. With regards to indirect costs, like I said, that will be done by the end of the year and should flow through for the full 2027.

Okay. Great. And then maybe this one is for Dave or Tom. But after owning Husky for the better part of the year, has anything changed on your longer-term view of Husky's overall margin expansion opportunity? I believe you talked about 500 basis points over 5 years or something to that order. And has your thinking evolved at all on where the biggest gains come from, whether that be productivity, procurement or commercial execution?

First of all, no. My view certainly hasn't changed. And I think I'm speaking for Tom when I say it's true for both of us. And the nice thing about it is every -- all the things you mentioned are opportunities for us. Everything could be better. And just focusing on things like cost competitiveness, the -- what we do on -- with purchasing, how well we run our SIOP, how well all our processes work, which is perfect for ROS, how do we make sure that we expand our global position. Man, all these things look just terrific. And kind of building on Rob's point on direct labor, I would say there was a misfire there that I think Rob would agree with that. There was kind of a hope that sales might turn out to be better than they were. So we carried direct labor a little longer than we should have. And that's been a big part of what he's been doing to inject real reality into the SIOP process. which should make our direct labor on an ongoing basis a lot more consistent with what sales are going to be. So no, actually, I feel quite good about all this. And both Tom and I were encouraged by the fact that despite all the concerns that existed about the second half ramp when it came to sales and all the discussion we had about historic seasonality, it turned out exactly that way. The part where we missed was on the cost side, and that's very fixable. And in fact, pretty much is fixed at this point. So as we go into 2027, we're both feeling pretty good about everything. Tom, anything you want to add?

Yes. I mean, Kurt, I would just add, I mean, I think all that Dave said is correct. Opportunity everywhere, and we're getting after it. I think one thing that we continue to look at is the performance in the aftermarket business. There's opportunity for us to do even better there. But I've been around the world recently, spent a lot of time with customers. I think the customer view of Husky products remains incredibly strong. What we serve them is really high-quality equipment that's mission-critical. The aftermarket is proving that even in a very challenging market. That's now abating as we talked about, and you can see the pipeline building. And so I feel very good about what's in front of us. We've got to go execute. And like Dave said, much of that's already done, and we'll be ready for '27.

Great. And then just on the Husky demand picture, it's great to see the recovery unfolding like you predicted the business would a few quarters ago, even in the darker days of late spring. Orders are obviously accelerating. You're talking about backlog ending the year up double digits. So with the caveat being that it's still early November and you're not ready to give explicit 2027 guidance yet, given the easier comparisons and everything that we -- I just went over, like is there a reason to believe that Husky's growth could be above the longer-term algorithm? Or are there other headwinds that we should factor in when thinking about the jumping off point as we exit 2026?

I'd say it's too early to commit to anything like that. But what you just described is possible, and it's one of the things that we're evaluating currently as we understand orders profile, backlog, how are things looking going into 2027. So yes, the whole idea of a market rebound is possible, but we're not committing to anything yet until we have a much better understanding of how November, December, January come together.

Great. Look forward to seeing this all come together for Husky as it mirrors the performance at CompoSecure next year.

Very good.

Thank you. I'm showing no further questions at this time. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.