on working capital discipline, which helps strengthen our cash position entering the final quarter of the year. Turning to slide 15, our balance sheet remains strong and flexible, which is critical in today's operating environment. At quarter end, we had approximately $1.8 billion of total liquidity, including $924 million of cash and roughly $834 million of available revolver capacity, giving a substantial financial flexibility to manage volatility, support the business, and remain disciplined in our capital allocation. As I highlighted on the previous slide, it's important to note that the quarter-end cash balance included the approximate $45 million of customer payment timing, which we expect to reverse in the fourth quarter. The progress we've made strengthening the business was also recognized externally with Moody's upgrading Addient's corporate credit rating to BA3 during the quarter. We view that as a validation of our improved balance sheet, consistent execution, and disciplined financial management. Our leverage ratio ended the quarter at 1.7 times, comfortably within our targeted range of one and a half to two times. Also mentioned that we have no near-term debt maturities. We've also returned capital to our shareholders, repurchasing approximately 1.3 million shares for $30 million during the quarter. As always, we'll remain disciplined and balanced in how we deploy capital, prioritizing long-term shareholder value while maintaining financial flexibility to support the business. Overall, we believe we're entering the final quarter of the year from a position of strength with a healthy balance sheet, ample liquidity, and flexibility to navigate a dynamic operating environment. Turning to our updated outlook for fiscal 26, we are increasing our revenue guidance to approximately $15 billion, primarily reflecting improved customer production schedules and, to a lesser extent, favorable foreign exchange. The higher revenue outlook is supported by recent launch activity, growth with key customers, and expected strong execution across the business. At the same time, we are maintaining our adjusted EBITDA guidance of approximately $885 million and free cash flow guidance of approximately $130 million. While underlying operational performance remains solid, persistent headwinds resulting from the ongoing Middle East conflict, such as elevated commodity and freight costs, are expected to pressure near-term results. As we enter Q4, our priorities remain clear. Execute for our customers, manage the factors within our control, deliver on our commitments, and position adiant to create value in fiscal year 27 and beyond. Before we open the line for questions, I want to spend a few moments on slide 17 and briefly share our thoughts on a few of the key drivers likely to impact fiscal year 27 results we will issue formal guidance for fiscal 27 in November as in prior years as the team continues to fine-tune and gain clarity on such items as vehicle production foreign exchange trade policy input costs capital expenditures and restructuring that said based on what we see today, we believe the business is positioned for above-market growth in the Americas and China, supported by on-shoring wins, recent new and conquest awards, and ramping programs with key customers, especially with our continued progress with domestic Chinese OEMs in our Asia business. In the Americas, that growth will be partially offset by planned exit of certain low-margin and third-party metals business. Positive business performance to be driven by our focus on automation, restructuring, commercial discipline, and continuous improvement across all disciplines. From a capital allocation perspective, our priorities remain unchanged. We expect to maintain a strong and flexible balance sheet, operate within our target leverage range, and continue balancing investment and profitable growth with returning capital to our shareholders. As we've discussed, approximately $80 million remain under our current share repurchase authorization. Given our balance sheet position and cash generation profile, we expect the board to increase the authorization later this year. So while it's still early, the underlying positive momentum of the business as we look towards fiscal 2027. And with that, operator, we can move to the question and answer portion of the call.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please unmute your line and press star 1. You will be prompted to record your name. To withdraw your question, you may press star 2. Again, press star 1 to ask a question. And one moment, please, for our first question. Our first question comes from Joe Spack with UBS. You may ask your question.

Thanks. Good morning, everyone. Mark, maybe just to start on some of the higher Middle East costs and resins, and I just want to make sure I understand some of the commentary here. So, you know, I guess you're going to sort of try to go back and retroactively get, you know, some payment for the higher costs incurred. And, you know, we'll see, I guess, how successful that is. But your other comment about stabilization, I just want to make sure I understand that secondarily. Like, does that mean that if those price increases moderate from here, like, you'll begin to be able to reprice for those higher prices so that's less of a headwind? And when should we expect that to occur if it does stable?

Good morning, Joe. Yeah, good question. Good morning. I guess I'd look at it in two fronts, Joe. So first of all, the costs that we're incurring there, you could break it up into two buckets. The Middle East cost, you know, which for the quarter, call it about $20 million. That includes like higher freight, fuel, and as you indicated, the resin costs or the commodity costs for our chemical foaming operations, right? For the foaming operations, we do have pass-throughs and escalators in place with about 90% of that business, right? So those refunds or those recoveries will come. It will obviously be on about a two-quarter lag is what we typically experience. And so with the war continuing, we would expect that to also continue into Q4, right, with some of the recovery starting, obviously, in Q4. So for full year, you know, call those Middle East costs, you know, somewhere in that 35 to 40 million dollars from where we are today the other call it 10 or 12 million dollars that make up that 32 million that we called out this quarter is really the customer driven costs right and those would be you know just inefficient operating patterns at certain of our customers as they continue to you know work with what i'd call inefficient operating patterns there you know so that was about 12 million for the quarter bringing that total to 32 million so So, you know, we would look as we go into Q4, those do start to subside, right? So net-net, you know, as I look at full year, that $32 million probably becomes somewhere around $35,000, $40,000 for the full year. Does that help?

Yeah, that does. And then the second question is, I guess, just on restructuring. And I know you sort of was on sort of your list of potential, you know, challenges, I guess, for next year. I guess just to maybe start, is there an updated restructuring number for this year? I think you previously mentioned something like 120 million, but it looks like it's only 77 million year to date. So I don't know if that means there's a larger amount coming or maybe some things are coming a little bit better. And then just bigger picture with, you know, concern over some of some customers restructuring in Europe. But, you know, even though I know that's probably not necessarily happening, you know, next year, but just to help level set investors, like if you assume the worst case and you had to like completely close a facility, like what would that cost you like $30 million or like can you sort of ballpark frame what that would sort of cost so we can level set expectations?

Sure, I'll start and Jerome, feel free to jump in. And so for the full year, we have not changed our outlook. So call that somewhere in that $120 million range, right? As I look into 27, that's one of the elements that we said we still need to get clarity on. We're working with customers as they, you know, look at their platforms, they look at their end of production, where they're going to move production to. That's the big wild card, Joe. So, you know, you're absolutely right with your magnitude, right? If there's a certain platform that all of a sudden is, you know, in one of our facilities and it comes out, you could be looking at a bill of $30 million or more. And that's why Jerome and I, you know, as we went through this year, we said we'd love to give you, like, what the next one, two, three years of restructuring charges looks like so that you guys could have clarity. The problem is we just don't have that clarity yet from our customers. And so, you know, we'll continue to, you know, if there is restructuring to do it in a very efficient way, we've come up with, you know, I'd say different tactics from the past where we've done long-distance JIT, for example, where we've been able to save on restructuring charges. But that is really the big wild card as we go into 2027.

Is it fair to say that, I mean, I know you sort of talked about sort of like the more long-term normalized restructuring level is lower. But is it fair to say that, you know, given timing and some of your initiatives and obviously some of the restructuring that you're doing now rolls off, that it's unlikely to get worse or it's still too early?

I think it's just probably too early to tell, only because, again, I'm waiting to hear from our customers in terms of what their final plans are. Do I think that over time it should trend down? Yes, but it's going to be very lumpy because it's only going to be dependent on when certain of those programs actually end production. For certain of the regions, like America's, for example, Joe, they've done a great job at what I call self-funding, right? So if they have to shut a facility down, you know, we've done very good at, you know, selling the plant, selling the facilities, right? So there are, what I'd say, different offsets to that, too, that we also have to, what I'd say, fine-tune as we go through the next couple of months because there will be some, you know, asset sales. There'll be some building sales, right, that we could lean on to help out with what I'd call the distributable cash that, you know, obviously gets put back to our owners.

Thank you so much. I'll pass it on.

Thank you.

Thank you. Our next question comes from Emmanuel Rosner with Wolf Research. You may ask your question.

Great. Thank you so much. My first question is on Asia and China. Just for China, can you just – I mentioned first your exposure to exports from the region to other regions. To what extent you are sort of like broadly in line with this sort of industry way there or more or less? And then on Asia, just with the direction of margins, year to date, maybe a couple of points lower, just how do you think about it on a go-forward basis, please?

I'll take the first one, Emmanuel. Thank you very much for the questions. As far as our export exposure in China directly, we are below what the total market export rate is today. You know, a lot of that is driven by what we were engaged in when we wound those down. You know, and Yangfang would have kept a large presence with a lot of the exporters there. And now we focus domestics, but then also, you know, rotating it towards in China, you know, that we view as more durable in the longer term. So we are under-indexed to in China. And then I'll turn it over to Mark for the second one.

Yes, yes, thank you.

And for your second question, just in terms of the margin contraction there, you know, obviously we've been very transparent as we've gone through the year there. You know, we did say that's going to be very manageable, call that 100 basis points or so. You've seen the outperformance there. So, again, you know, big picture, as long as I can continue to grow my top line, convert that into EBITDA and free cash flow, right, I view that as very manageable. The team's also doing a very good job at, you know, mitigating how much of that margin contraction there is. They're using, as Jerome indicated, you know, whether it's automation, you know, they're looking at different techniques, operating patterns over within the region over there. So, again, extreme focus on, you know, minimizing the impact of that contraction. I still look for that region. It's still a very, what I'd say, profitable region, very cash-generative region for us, and it will remain that way.

And then just a question on free cash flow, please. So last quarter you had shown, you know, walk towards normalized free cash flow, which was maybe something like $100 million more than what you have this year. About half of it is lower restructuring, and I understand that this is still TBD as we look into next year in terms of restructuring spend. I was curious about sort of like some of the other buckets. Like, are those, you know, would those still be on track to improve, you know, for 2027?

Okay. I'll start with the response, and I'll hand it over to Mark. I think, you know, as we look at that normalized cash flow, then the distributable potential of Addient, you know, long-term, that is still our clear objective and where we clearly view that we can get to. I think as you begin to size up 27, and kind of turning back to what Joe's question was, you know, restructuring will be an unknown that we'll sort through. On the capital expenditure side, which will be another large bucket, you know, would anticipate a uptick in capital expenditure given just the growth that we're going to see that we talked about earlier in the Americas, in China, you know, look to expand margins and drive margins higher. You know, automation is going to be a key lever associated with that. And that's why we haven't called it out yet, what we expect capital expenditures to be, because it's based on some of our more recent wins and the timing associated with them and when the capital will roll in. On the other buckets, such as interest expense, we will continue to be prudent on our capital. And then it is worth noting is marks higher this year due to a one-time payment that we had in one of our jurisdictions. We expect that to trend towards a more normal level as we Okay.

You had one more bar in there, which was fiscal 25 pull-ahead actions of $30 million. I assume that that would still not recur going forward, right? Thank you.

Thank you. Our next question comes from Raja Gupta with JPMorgan. You may ask your question.

Great. Thanks for taking the questions. I just wanted to follow up on just the Asia and China margin question, you know, you'd expected like 100 basis points, China margin compressions this year. Curious if you could quantify like how it was year to date and, you know, and how we should think about, you know, just the fourth quarter and into 2027 and have a quick follow-up.

Yeah, sure. So, so we, you're absolutely correct. We did, you know, indicate about 100 basis points of compression. You know, if I look at this year, you know, I would expect us to track pretty close to that as we go through the balance of this year. Again, it's just when I think about the mix of vehicles, the launch of vehicles that come on, what's happening from the commercial side of the business, right? When you think about commercial recoveries, that all plays into what I'd say the cadence of that margin as you progress through the year. And so, again, it's going to be lumpy between quarters, but I think that 100 basis points is pretty much the bogey that we're looking for.

Any read into 2027 yet on the trajectory for those margins?

Again, early days, we're still going through, obviously, certain of the fine-tuning there. I think what we do have very good insight is into the growth over there, what vehicles are going to be launching, what we're winning business with. As I indicated, we expect that to remain you know, significantly above market over there. The team also right now is going through, I'd say, the fine-tuning for what they're going to be doing in terms of, from an operational perspective, right, what type of automation tools they're going to implement at the plants, etc., right? So as they go through and fine-tune that, obviously that will weigh on, you know, the performance of whether or not we could contain the margins, you know, even, you know, I'd say closer, you know, to, you know, less than 100 basis points, but too early. But, you know, I'd say that overall still very manageable in terms of what we see in the forecast for remainder of 26 and into 27.

Understood. And just to follow up, you know, the China export question, like, you know, in reverse, I'm curious, like, what are you hearing from some of your European OEMs who export into China? And I'm curious, like, how – has there been any change in, like, you know, launch timing, you know, any delays that you're observing? You know, just curious, you know, what the latest conversations have suggested and how you feel about, you know, the 2027 margin trajectory in the region.

You broke up a little bit, but I think part of the question was around exports in our European business into China. And given our profile, yeah, so given our profile there, and even if you go back several years where Europe was a net exporter, they're now a net importer, and our exposure to exported platforms into China was generally fairly low with the exception of S-Class, where we supplied all the components on S-Class, and that was a large exporter into China. Outside of that, I wouldn't say significant exposure or risk on a go-forward basis on vehicle platforms that are exported over into China. As far as the margin profile of our European business going forward, Mark already talked about we already have now a clearer line of sight on metals projects that will start to roll off in fiscal year 27, which will present a tailwind for us. We also have positive balance in of other projects, and then some of the restructuring actions that were taken starting in 25, completed through 26, taking hold as well in 27. So, you know, all else being equal, we would expect to see margin expansion in our European operations next year.

Thanks for all the color, and good luck.

Our next question comes from Colin Langdon with Wells Fargo. You may ask your question.

Oh, great. Thanks for taking my questions. Just to follow up on Europe, I mean, on your slides, you indicated you expect outperformance in the Americas and Asia next year, but not Europe. Is that just purely the roll-off? Because you just mentioned a second ago that you have sort of backfill business there. So is that the roll-off of the metals business, or is there like a customer mix issue that's kind of dragging the performance down? In any way to remind us the size of the metals business, is that something like $500 million that's going to eventually roll off, or is it bigger and smaller?

Yeah, Colin, so that is primarily the driver next year. I'd say next year you're probably talking about $90 million of it rolling off, followed by $28 million, another chunk of it, probably a little bit bigger in $28 million rolling off versus $27 million. But for planning purposes, yeah, $90 million next year rolling off is what you should be penciling in.

Yeah, and to the first part of your question, as Mark said, in particular, a portion of that is rolling off there. I do think for a mixed issue, as much as it is, it's been targeted by us on certain platforms where we've just deprioritized them or exited them, coupled with certain vehicle assembly plants being idled in Europe where we had exposure to. So it's really a mix of all three of those.

And then, you know, one of your top competitors talks a lot about automation. I noticed it was on your slides and in your commentary today. I mean, where do you think you stand in sort of the need to automate your production and how you think you are relative to your peers? Is that a disadvantage, or do you think you have some catching up to do? Do you think you need to spend more there in automation? Any thoughts there?

I have a question on it. I think certain regions we operate in, recent union agreements that have been settled, you know, that's all public information. You can see the wage inflation that we're facing, and we're committed to working to offset that. Looking at our supply, it's going to be a necessity. Seven, you know, we will see a, in terms of how we're trying to drive the automation through and where we're able to implement it at trading at variable cost how we deploy automation in our JIT factories, you know, based on kind of the run rate. If you contrast that to trim deployment, because we share those factories across multiple customers, we're better able to flex the hopefully that answers your question on automation.

That's very helpful. Thanks for taking my questions.

Yeah, no, thank you for the question, as always.

Thank you. Our next question comes from Dan Levy with Barclays. Your line is opening me. Ask your question.

Hi, good morning. Thanks for taking the questions. I wanted to start out with just what's going on with Americas and the backlog. Maybe you could just talk to this very strong outperformance you saw in the third quarter, which I know you said is unlikely to recur. But the additional piece of this is you talked about above market growth in the Americas. At one point in the past, you had mentioned that, you know, you could see America's growth over market at mid-single digits. You know, you've also said at some point that there could be $400 million of potential backlog opportunity in 2017, which would equate to a pretty significant step up of revenue. So maybe you could just go through some of the program revenue dynamics for the America's business. Thank you.

Yeah, I'll start and then I'll hand it over to Mark. You know, in the America's business, our high return on capital product lines, and, you know, when we talk about those, we're thinking about JIT, trim, and foam. I think we are, we do have a line of sight to above market growth on those. You know, we talked about the backlog with the onshoring. A good deal of those onshoring winds were fully integrated or will become fully integrated in the 28 timeframe. And so I think when we look at those product lines, we continue to see above, you know, is it 2%, 3%, or 5%. I think we'll have to see how mix shapes up next year and how quickly some of our truck platforms recover. That's going to be key. that when you look at the total region revenues is the wind-off of metals programs, which we've talked about. We continue to talk about that, and we will continue to see that as we move through fiscal year 27 and 28. So while the region as a whole may be slightly above market growth to, you know, potentially flat to market growth, and our high return on capital product lines, we will see above market growth, which will lead to margin expansion. And as we look at, you know, kind of net of automation deployment, expanding cash flows.

Great. Thank you. As a follow-up, I wanted to just ask about some of the dynamics of mix and the conversion to revenue. So in the second, in the third quarter, we saw volume mix on the EBITDA line was negative two on $147 million incremental revenue. Maybe you could just explain that. But as we go into 27 and you have this step up of America's backlog, you have a wind down of revenue of programs where the margin was fairly low. What types of incremental margins we should expect on the revenue dynamic? Should it be theoretically higher than what we've seen in the past because you have this lower margin business going on?

Yeah, I think, you know, I'll start there and, Jerome, feel free to jump in. But, you know, what we've typically said is, you know, somewhere in that 16%, 17% range is what I would look at for my incremental. And I wouldn't think that next year would be any different from that. I think when you look at, you know, this past year, for example, we've been absorbing certain of the Middle East costs, certain of the customer-driven costs, right, you know, despite, you know, some of the higher volumes there. So I think that, you know, gets behind us as we go into 2027. And as Jerome mentioned, you know, we will have some of that metals business rolling off next year. Call that about $100 million in metals business rolling off in the Americas. So, you know, again, you know, I'd say that you're probably right around that 16%, 17% incrementals as you see that revenue roll in next year.

Great. Thank you.

Thank you. At this time, I'll turn the call back over to the speakers. Thank you, Shirley. Thank you, everyone, for your interest in Adiant. We appreciate your interest, and if you have any follow-up questions, please don't hesitate to reach out. As a reminder, we will be in New York City next week at the J.P. Morgan Conference. Hope to see many of you there. Thank you, and have a nice day. Thank you. This does conclude today's conference. We thank you for your participation. At this time, you may disconnect your lines.