Investment Pitches

Pitch Summary:
Coats Group Plc is strategically pivoting from its traditional apparel threads business towards higher-margin technical and sustainable products. The acquisition of OrthoLite in late 2025 marks a significant step in strengthening its position in the global footwear industry. The company's 'Growth & Returns' plan aims to balance organic investment with capital discipline, focusing on expanding its Performance Materials segment. However, the legacy apparel thread business faces cyclical challenges and margin pressures from low-cost competition. The Performance Materials division, while promising, is capital-intensive and subject to long qualification cycles. Recent macroeconomic uncertainties and increased leverage from the OrthoLite acquisition present additional challenges.

BSD Analysis:
Coats Group's leadership in the industrial thread market is undisputed, and its shift towards sustainable and high-performance materials offers a differentiated growth story. The company's focus on achieving carbon neutrality by 2030 and driving technical differentiation through R&D is commendable. However, the cyclical nature of the apparel market and the capital-intensive nature of the Performance Materials division pose risks. The company's ability to maintain an EBIT margin within the 19–21% range will be crucial in navigating these challenges. Additionally, macroeconomic and tariff uncertainties could impact ordering patterns and financial performance. Coats must continue to innovate and expand margins while managing its debt levels to ensure long-term shareholder value.

Pitch Summary:
One of the worst performers in the group for the year, which averaged an 80-bp short position and added 0.4% to absolute performance, was HubSpot. If you are anxious to know what severe economic challenges HubSpot faced to send its shares crashing more than 40%, we will have to disappoint you—HubSpot grew its customers and revenues by broadly 20% during the year without compromising margins. Quite simply, high expectations for huge earnings beats meant that even strong results were viewed as insufficient, leading to sharp sell-offs. This is a key reason why we are not obsessing over identifying the catalyst for future growth stock underperformance—the weight of expectation built into valuations will inevitably lead to investor disappointment at some point.

BSD Analysis:
HubSpot is the "AI-Front-Office" for the global SMB market, ruthlessly automating marketing, sales, and service workflows for companies that don't have the budget for Salesforce's complexity. Their newly launched "Smart CRM" is the first to truly integrate generative AI into every customer touchpoint, turning a simple database into an autonomous growth engine. Management is successfully moving "up-market," winning larger enterprise deals by offering a unified, easy-to-use platform that actually gets adopted by employees. In 2026, HubSpot isn't just a software company; they are the indispensable AI partner for millions of businesses trying to navigate the "Scale-or-Die" digital landscape.

Pitch Summary:
TREX Company, Inc. (TREX) We chose to exit our position in TREX during the fourth quarter. We initiated the position in 2022 with the belief that the company’s decking products would benefit from a secular tailwind as consumers continued to shift from wood to composite decking, and that TREX possessed a strong competitive advantage due to its brand, scale, and distribution network. Over the course of our holding period, we sold more than half of our shares into market strength and entered 2025 with a relatively small position. During the year, the competitive dynamics within the decking industry changed meaningfully, prompting us to reassess whether the remaining position warranted additional capital. Given these changes, and considering the opportunity set elsewhere in the portfolio, we chose to exit the position as we judged the risk-reward profile of alternative investments to be more attractive at this time.

BSD Analysis:
Trex is the undisputed king of the "Outdoor Living" premiumization trend, turning recycled plastic film into high-margin composite decking that homeowners can’t get enough of. They are currently feasting on the massive "repair and remodel" backlog, as consumers choose to upgrade their existing homes rather than enter the brutal 2026 housing market. Management’s recent capacity expansions are coming online just in time to capture a surge in demand for their new, lower-priced product lines aimed at the middle-market DIYer. It’s a green-tech success story that proves you can build a multi-billion dollar moat out of trash, as long as you have the best branding and distribution in the business.

Pitch Summary:
Timken Company (TKR) We exited our position in TKR after a long and successful investment in favor of more attractive opportunities. Despite still believing TKR has strong and durable brands in industrial bearings, we don’t expect the company’s strategy of redeploying capital into acquiring industrial motion businesses to create material value for shareholders. The recent CEO transition – the second in as many years - also did not give us confidence that the organization had clear strategic direction or the imperative to drive execution and value creation.

BSD Analysis:
Timken monetizes motion and power transmission in markets where reliability beats price. Bearings and engineered components look commoditized until you realize failure shuts down entire systems. Investors lump Timken into industrial beta and miss aftermarket exposure that smooths cycles. Pricing power stems from engineering depth and certification barriers. Diversification across aerospace, energy, and industrial limits single-market risk. Capital allocation has been disciplined rather than empire-building. This is industrial infrastructure compounding through mechanical necessity.

Pitch Summary:
Dycom Industries, Inc. (DY) After a long and successful ownership of DY, we decided to exit our position in the fourth quarter in favor of more attractive opportunities. The business is experiencing strong demand from internet providers for fiber deployment, but we believe much of the recent valuation expansion is being driven by AI exuberance. Although fiber connections to new AI data centers will be an incremental opportunity for DY, we do not expect AI related fiber demand to be material to the overall value of the business. Furthermore, we were skeptical of the new CEO’s decision to make a large, ~$2B acquisition of an electrical contractor with ~90% of its revenues from data center projects. Historically, DY had been disciplined with its focus on wireline and wireless telecommunications, but this acquisition marked a significant departure from this discipline.

BSD Analysis:
Dycom is fiber deployment infrastructure tied to the slow, expensive reality of broadband buildout. Investors treat it like generic construction cyclicality and miss that telecom densification and rural expansion are multi-year mandates, not fads. When carriers and hyperscalers spend, they need contractors who can actually execute at scale. Backlog visibility matters more than quarterly revenue noise. Labor intensity creates friction, but it also limits new competition. Operating leverage shows up quickly when project cadence tightens. This is physical connectivity buildout paid for by data demand, not consumer sentiment.

Pitch Summary:
Extreme Networks, Inc. (EXTR) Earlier in 2025, we added EXTR to the Small Cap strategy. [...] We believe EXTR has the opportunity to grow revenues in the low double-digit range and gain market share due to advantages in product architecture, pricing, and customer experience. [...] Given Extreme Networks’ competitive positioning, improving mix of recurring revenues, and attractive valuation, we believe the company fits well within both of our strategies, where we seek businesses with strong market positions, financial flexibility, capable management teams and clear opportunities to improve operating performance and the potential to compound value over time.

BSD Analysis:
Extreme Networks is the "agile disruptor" of the networking world, stealing market share from bloated giants by offering the simplest, most flexible cloud-managed fabric on the market. They are feasting on the "AI-at-the-edge" trend, providing the high-speed, secure connectivity required for smart stadiums, hospitals, and automated factories. Management’s "One Network, One Cloud" strategy is resonating with IT departments that are sick of the complexity and high licensing fees of the legacy incumbents. In 2026, Extreme is no longer just the "budget" option; they are the high-performance, AI-native alternative that is winning the war for the modern enterprise network.

Pitch Summary:
Live Oak Bancshares, Inc. (LOB) We initiated a position in Live Oak Bancshares, Inc. during the fourth quarter of 2025. Live Oak is the largest originator of SBA 7(a) loans in the United States and has continued to expand its market leadership through the current small business credit cycle. [...] We believe Live Oak has firmly established itself as a differentiated leader in small business banking with a long runway for growth. While the macro environment and small business credit cycle remain challenging, the company’s scale advantages in SBA lending, disciplined underwriting, increasing use of technology, and a growing deposit franchise position it well for attractive risk-adjusted returns over time. We are particularly encouraged by management’s progress in embedding AI and automation across the organization, which we believe can drive both efficiency and improved customer outcomes. With a strong culture, aligned leadership, and a clear strategic vision, Live Oak represents a high-quality banking franchise that we are pleased to own.

BSD Analysis:
Live Oak is the "Silicon Valley Bank of Main Street," dominating the SBA (Small Business Administration) lending space through a high-tech, digital-first platform that leaves traditional community banks in the dust. They’ve carved out a peerless niche in high-growth "verticals" like veterinary clinics, solar installers, and craft breweries, where their specialized underwriting gives them a massive competitive edge. In 2026, the firm is leveraging its digital core to scale into national deposit-gathering without the heavy overhead of a traditional branch network. It’s a high-margin, tech-enabled lending machine that proves you don't need a physical presence to own the most profitable segments of the U.S. small business economy.

Pitch Summary:
Oshkosh Corporation (OSK) was added to the SMID strategy in the fourth quarter. OSK is a global manufacturer of specialized vehicles and equipment used in essential and mission-critical applications. The company operates across three primary segments: Access equipment, Vocational vehicles, and Transport, serving customers in construction, airport and municipal services, fire and emergency response, defense, and delivery markets. Across these businesses, Oshkosh competes in categories where performance, reliability, and total cost of ownership are more important than price, supporting durable competitive positions. Oshkosh also holds strong positions in airport equipment, including aircraft rescue and firefighting vehicles, ground support equipment, and passenger boarding bridges, where safety, reliability, and long service life are critical and competition is limited. [...] Supported by a strong backlog, a solid balance sheet, and shares trading at a discount to long-term earnings potential, we believe Oshkosh is well positioned to deliver improving profitability and shareholder value over time.

BSD Analysis:
Oshkosh is currently the industrial muscle of the "Re-Industrialization" era, building the specialized electric trucks that are modernizing everything from the U.S. Postal Service to the world’s airports. Their tactical defense segment is seeing a massive resurgence as global geopolitical tensions drive record orders for high-mobility vehicles and unmanned platforms. Management has successfully navigated the "Electrification of the Fleet," proving that heavy-duty EVs can be both durable and highly profitable. With a record backlog and a dominant position in "vocational" vehicles, Oshkosh is the blue-chip play on the massive physical upgrade of the global industrial and defense base.

Pitch Summary:
Generac Holdings, Inc. (GNRC) was a bottom performer in the SMID Cap strategy in the fourth quarter. Generac's most profitable product group is Home Standby (HSB) generators, and in 2025, the U.S. experienced the fewest power outages (related to weather or other grid failures) since 2015. The lower demand for HSB will also create slightly lower margins for the year. The Commercial and Industrial segment is doing well with sales increasing 9% over last year, and their home automation business, led by the Ecobee product, is growing in revenue and profitability. In addition, they are seeing strong demand for their recently introduced large gensets that will be used for data center applications. We spent time with management during the quarter and continue to believe that GNRC is well positioned as the dominant player in HSB and is positioned well to take advantage of growth opportunities with data center customers.

BSD Analysis:
Generac is the primary beneficiary of a global power grid that is increasingly fragile and overtaxed by AI data centers and extreme weather. They’ve evolved from a simple generator company into a "Home Energy Architect," integrating battery storage and smart grid software to help consumers secede from the failing traditional utility model. Management is aggressively targeting the commercial and industrial (C&I) space, providing the backup power required for local edge computing sites that can’t afford a single millisecond of downtime. In 2026, Generac isn’t just selling peace of mind; they are selling the only reliable hedge against a crumbling energy infrastructure.

Pitch Summary:
Crane NXT (CXT) was a bottom contributor in the SMID Cap strategy during the quarter despite delivering solid operating performance in its most recent earnings release. The company reported sales of $445 million (+10% YoY) with a core sales increase of 1%, adjusted operating margin of 24.7%, and adjusted EPS of $1.28, while also raising full-year sales growth guidance. However, management also highlighted macroeconomic uncertainty impacting demand in the Payment Innovations segment, which we believe weighed on sentiment even as the Security & Authentication Technologies segment continued to show momentum and free cash flow conversion remained strong. Crane NXT also announced and completed the first phase of its strategic acquisition of an Italian technology firm - Antares Vision S.p.A. Antares is a global provider of inspection, detection and track-and-trace solutions that will expand the company’s exposure into life sciences (including pharmaceutical traceability) and the food & beverage sectors; the closing is expected in 2026. CXT is a recent addition to the portfolio, and we spent time with management in the 4th quarter and have further plans to visit with the team in 1q26. We are confident the business fundamentals and capital allocation discipline align with our objectives for risk and long-term capital appreciation.

BSD Analysis:
Crane NXT is the specialized tech power behind the world’s most secure physical and digital transactions, from high-security banknotes to advanced product authentication. Since its spinoff, the firm has operated as a lean, high-margin innovator, feasting on the demand for "trust technologies" in an era of deepfakes and sophisticated counterfeiting. They are aggressively expanding into the digital space, leveraging their deep cryptography expertise to secure global supply chains and high-value luxury goods. It’s a high-moat, niche monopoly that proves physical security and digital encryption are two sides of the same very profitable coin in 2026.

Pitch Summary:
APi Group Corp. (APG), a leading provider of fire and life safety, security, elevator and escalator, and specialty services, was a top contributor in the SMID Cap strategy this quarter. APG delivered record third-quarter results, with revenues up 14% (10% organic) and Adjusted EBITDA +15%. The company continued to execute its inspection-first strategy, delivering its 21st consecutive quarter of double-digit inspection growth in North America. Project demand was strong, and management highlighted durable demand across core end markets and record backlog in both segments—supporting confidence entering 2026. APG completed 4 bolt-on acquisitions in the quarter, bringing the year-to-date total to 11, and with Net Debt/Adjusted EBITDA at ~2x, they should have the capacity to continue funding bolt-on M&A with free cash flow. Overall, we continue to believe APG has a long runway for double digit EPS growth driven by strong organic inspection and service growth, margin expansion from mix shift and operational improvement in the international business, and bolt-on acquisitions. We also continue to have confidence that Russ Becker, CEO, and team are a rightly-fitted management team to execute on this opportunity.

BSD Analysis:
APi Group is a "safety-first" compounding machine, dominating the life safety and specialty services market through a high-margin, recurring revenue model. They’ve mastered the art of the bolt-on acquisition, rolling up fragmented local competitors and immediately plugging them into their global inspection and maintenance platform. With over 50% of revenue coming from non-discretionary, mandated safety inspections, the firm is effectively recession-proof and flush with cash. Management’s relentless focus on "statutory" services makes this a low-beta, high-reward play for investors who value stability and predictable double-digit growth.

Pitch Summary:
Darling Ingredients (DAR) was a top contributor in the SMID Cap strategy in the fourth quarter. DAR is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. Darling has faced significant headwinds over the past couple of years, and the stock traded within a fairly tight range of $30-40 over the past twelve months. This downturn is, in our opinion, at or near a bottom. We see several fundamental and regulatory changes supporting our view that top line and bottom-line results will inflect higher in 2026. Recent announcements from Washington and from the company are supportive of our view. The base Food and Feed businesses are providing support for the struggling Fuel business – a natural hedge we have long discussed. In addition, the company’s vertically integrated supply chain and low-cost position have proven resilient in the face of such headwinds. We expect results for 4q25 to be challenged and believe this reality is accounted for in today’s share price. As the cycle turns, the operational improvements made over the past couple of years together with an upgraded asset base will, in our opinion, provide a boost to operating profitability and discretionary cash flow. While frustrated with the performance over the past couple of years, we were pleased to see stabilization in the business and the stock price in recent quarters and believe some meaningful relief is on the horizon.

BSD Analysis:
Darling is the undisputed heavyweight of the "Waste-to-Wealth" cycle, turning animal byproducts into the low-carbon fuel that the airline industry is desperate for. Their Diamond Green Diesel joint venture is a literal goldmine in 2026, benefiting from a massive spike in Sustainable Aviation Fuel (SAF) mandates across Europe and the U.S. While commodity price swings create volatility, the firm's vertical integration from slaughterhouse to fuel pump provides a moat that competitors can’t touch. It’s a messy business with a beautiful bottom line, acting as the ultimate ESG-friendly engine for the global energy transition.

Pitch Summary:
Timken Company (TKR) After a long and successful investment in TKR, we decided to exit our position in favor of more attractive opportunities. Despite still believing TKR has strong and durable brands in industrial bearings, we don’t expect the company’s strategy of redeploying capital into acquiring industrial motion businesses to create material value for shareholders. The recent CEO transition – the second in as many years - also did not give us confidence that the organization had clear strategic direction or the imperative to drive execution and value creation.

BSD Analysis:
Timken has successfully shed its image as a legacy rust-belt manufacturer to become a high-tech "motion architect" for the renewable energy and automation sectors. Their specialized bearings are now mission-critical components in giant wind turbines and robotic assembly lines, where failure isn't an option. Management is aggressively pivoting toward high-growth industrial distribution, moving away from cyclical automotive exposure to secure higher, recurring margins. With a fortress balance sheet and a relentless M&A strategy, Timken is proof that even the oldest industrial dogs can lead the pack in the 2026 tech-industrial revolution.

Pitch Summary:
Dycom Industries Inc. (DY) After a long and successful ownership of DY, we decided to exit our position in the fourth quarter in favor of more attractive opportunities. The business is experiencing strong demand from internet providers for fiber deployment, but we believe much of the recent valuation expansion is being driven by AI exuberance. Although fiber connections to new AI data centers will be an incremental opportunity for DY, we do not expect AI related fiber demand to be material to the overall value of the business. Furthermore, we were skeptical of the new CEO’s decision to make a large, ~$2B acquisition of an electrical contractor with ~90% of its revenues from data center projects. Historically, DY had been disciplined with its focus on wireline and wireless telecommunications, but this acquisition marked a significant departure from this discipline.

BSD Analysis:
Dycom is the high-voltage muscle behind the "Fiber Everywhere" and 5G buildouts, feasting on a massive backlog of government-subsidized infrastructure projects. They are the primary beneficiary of the BEAD program's multi-billion dollar rollout, providing the specialized labor that big telcos can’t live without. While labor costs are a persistent headache, Dycom’s massive scale allows them to dictate terms and maintain dominant margins across North America. For investors, it’s a pure-play infrastructure bet on the literal digging and wiring required to make the high-speed digital economy a reality.

Pitch Summary:
Dorman Products (DORM) was a bottom contributor in the period, even as fundamentals remained constructive in its latest earnings release. Dorman reported net sales of $543.7 million (+7.9% YoY) and meaningful gross profit improvement with gross profit at 44.4% of net sales (up from 40.5% a year ago), reflecting favorable mix and execution—particularly within Light Duty. We believe the share weakness was more about near-term market positioning and expectations than business deterioration, as we see continued strength in the core business and expect solid results to continue.

BSD Analysis:
Dorman is the "king of the aftermarket," thriving in 2026 as the average age of U.S. vehicles hits a record 13 years. They’ve moved beyond simple hardware to dominate "repair-not-replace" electronic modules, effectively capturing the high-margin complexity that used to be a dealer monopoly. With supply chains fully healed, management is squeezing the shorts by expanding their heavy-duty truck segment and leveraging a lean inventory model. As long as consumers are priced out of new cars, Dorman remains a high-conviction, non-discretionary play on the "Keep It Running" economy.

Pitch Summary:
Kadant Inc. (KAI) is a global supplier of critical components and engineered systems to process industries, primarily pulp, paper, and wood processing. Its products—including debarkers, stranders, chippers, balers, pulpers, rotary joints, and doctor systems—are essential to customers’ manufacturing operations. Given the high cost of downtime, customers place a premium on quality, reliability, and service, enabling KAI to price for value. Most of Kadant’s product lines hold #1 or #2 market share and have histories spanning over 100 years, resulting in a large installed base that drives a highly recurring parts and services revenue stream (approximately two-thirds of total revenue). While Kadant’s underlying end markets grow modestly (roughly 2–3% annually), the company has consistently supplemented organic growth through disciplined bolt-on acquisitions at attractive valuations, typically mid- to high-single-digit EBITDA multiples. Management has clearly articulated acquisition criteria—focused on market-leading positions, critical equipment, and high parts and consumables content—and has demonstrated discipline in adhering to this framework. The acquired businesses tend to generate high returns on tangible assets and strong free cash flow, which Kadant reinvests into additional acquisitions. We expect this capital-allocation flywheel to continue generating mid-teens returns over time. We have followed Kadant for several years and have engaged with management multiple times. We like management's philosophy of letting acquired business operate within a highly decentralized structure while also promoting the adoption of 80/20 principles. We also like that management has been prudent with their use of leverage, typically staying under 2x Net Debt/EBITDA. Until recently the stock did not meet our return hurdles, however, in the fourth quarter, a temporary market dislocation provided an opportunity to initiate a position at an attractive price. We are pleased to now be owners of this high-quality, durable compounder.

BSD Analysis:
Kadant sells process equipment and consumables into pulp, paper, and industrial markets where efficiency matters more than growth optics. Aftermarket and replacement demand provide ballast even when new orders slow. Investors fixate on paper exposure and miss diversification into recycling and industrial automation. Pricing power exists because downtime costs far exceed equipment prices. Operational leverage is meaningful when order activity turns. Capital allocation has been disciplined and accretive. This is industrial infrastructure monetizing efficiency improvements in unglamorous markets.

Pitch Summary:
CSW Industrials, Inc. (CSW) is a diversified industrial growth company focused on niche, value added products across three segments: Contractor Solutions, Specialized Reliability Solutions, and Engineered Building Solutions. The portfolio is oriented around products that help customers do the job faster, avoid failures, and protect expensive assets—with core end markets spanning HVAC/R, plumbing, electrical, architecturally-specified building products, and industrial reliability. The core business is Contractor Solutions (~72% of TTM revenue, ~84% of Adj. EBITDA), which sells a broad set of replacement parts, installation accessories, and maintenance and repair tools predominantly used by residential and commercial HVAC and plumbing contractors. Products include HVAC motors and capacitors, evaporator coils, air handlers, condensate pads, pans, pumps, line-set covers, thread sealants, and maintenance chemicals – supported by well-known brands such as RectorSeal, Aspen, MARS, and others. Contractors often ask for CSW products by name and have been using the brands for many years, resulting in pricing power for CSW. Also, management has successfully executed an acquisition playbook in this segment, adding products which immediately benefit from gaining broader distribution through CSW’s distribution network. We have known the CFO, James Perry, for nearly 20 years and have been following the company since he joined in 2020. Since then, we have spent time with the rest of the team and grown to admire Joe Armes, the CEO, and his value framework, acquisition discipline, and conservative use of leverage (currently ~2x Net Debt/EBITDA). We also admire the employee stock ownership program (~4% of outstanding shares), which enables employees to participate in the value creation of the company. Despite meeting all of our qualitative criteria, the price didn’t meet our hurdle rate for investment and we remained on the sidelines. However, after the residential HVAC market in the US came under pressure in 2025, impacting CSW’s Contractor Solutions organic growth rate, we were able to establish a position as the stock came under pressure. We are pleased to have been able to add such a high-quality company to the portfolio.

BSD Analysis:
CSW is industrial compounding done through niche products that customers rarely switch. HVAC, plumbing, and specialty building products are small-ticket but mission-critical. Investors overlook CSW because it doesn’t sit neatly in one flashy category. Pricing power is rooted in performance reliability rather than brand glamour. Bolt-on acquisitions strengthen distribution and mix without overstretching the balance sheet. Margins expand through operational focus, not financial engineering. This is quiet industrial execution that compounds across cycles.

Pitch Summary:
Darling Ingredients (DAR) was a top contributor in the Small Cap strategy in the fourth quarter. DAR is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. Darling has faced significant headwinds over the past couple of years, and the stock traded within a fairly tight range of $30-40 over the past twelve months. This downturn is, in our opinion, at or near a bottom. We see several fundamental and regulatory changes supporting our view that top line and bottom-line results will inflect higher in 2026. Recent announcements from Washington and from the company are supportive of our view. The base Food and Feed businesses are providing support for the struggling Fuel business – a natural hedge we have long discussed. In addition, the company’s vertically integrated supply chain and low-cost position have proven resilient in the face of such headwinds. We expect results for 4q25 to be challenged and believe this reality is accounted for in today’s share price. As the cycle turns, the operational improvements made over the past couple of years together with an upgraded asset base will, in our opinion, provide a boost to operating profitability and discretionary cash flow. While frustrated with the performance over the past couple of years, we were pleased to see stabilization in the business and the stock price in recent quarters and believe some meaningful relief is on the horizon.

BSD Analysis:
Darling monetizes waste streams and turns them into fuel, feed, and specialty ingredients, which is a better business than it sounds. Demand is tied to food production and renewable diesel mandates, not discretionary consumer cycles. Investors fixate on biofuel policy volatility and miss the structural scarcity of feedstock. Integration across collection and processing creates cost advantages competitors struggle to replicate. Cash flow swings with commodity spreads, but asset relevance remains intact. Capital discipline determines upside capture. This is circular-economy infrastructure with real operating leverage.

Pitch Summary:
Advanced Energy Industries, Inc. (AEIS) was a top contributor in the Small Cap strategy during the quarter. AEIS provides highly engineered power conversion and control solutions for semiconductor equipment and data centers. Shares performed well after the company delivered a strong third-quarter report, exceeding the high end of guidance on the back of record Data Center Computing revenue that more than doubled year-over-year. Total revenue increased 24% year-over-year and Adjusted EPS rose 78%, reflecting both growth and operating leverage. Looking ahead, we spent time with management and others in and around the space during the quarter, and management reiterated that AI-driven demand remains robust and expects Data Center Computing to grow 25–30% in 2026 on secured design wins, supported by incremental capacity in the Philippines and Mexico and a Thailand facility that is ready to ramp quickly. In Semiconductor, customer validation of the eVerest and eVoS platforms underpins our expectation for growth as leading-edge logic and memory spending is expected to strengthen into 2026–2027. The balance sheet remains strong with a $192M net cash position.

BSD Analysis:
Advanced Energy sells precision power and control systems that sit inside semiconductor tools, industrial processes, and data infrastructure where stability is non-negotiable. Investors treat it like generic semi-capex beta and miss the diversification across industrial and medical end markets. As chip complexity rises, power management requirements increase, not decline. Installed base service and replacement demand soften the worst of cycle swings. Margin expansion hinges on mix and operational execution rather than volume heroics. Capital allocation has been pragmatic, not promotional. This is enabling technology paid to keep high-value systems running without error.