call

United States lawmakers have written to Andrew, Britain’s disgraced former prince, requesting that he sit for a formal interview about his friendship with convicted sex offender Jeffrey Epstein, a day after King Charles III formally stripped his younger brother of his royal titles.

Separately, a secluded desert ranch where Epstein once entertained guests is coming under renewed scrutiny in the US state of New Mexico, with two state legislators proposing a “truth commission” to uncover the full extent of the financier’s crimes there.

On Thursday, 16 Democratic Party members of Congress signed a letter addressed to “Mr Mountbatten Windsor”, as Andrew is now known, to participate in a “transcribed interview” with the US House of Representatives oversight committee’s investigation into Epstein.

“The committee is seeking to uncover the identities of Mr Epstein’s co-conspirators and enablers and to understand the full extent of his criminal operations,” the letter read.

“Well-documented allegations against you, along with your longstanding friendship with Mr Epstein, indicate that you may possess knowledge of his activities relevant to our investigation,” it added.

The letter asked Andrew to respond by November 20.

The US Congress has no power to compel testimony from foreigners, making it unlikely Andrew will give evidence.

The letter will be another unwelcome development for the disgraced former prince after a turbulent few weeks.

On October 30, Buckingham Palace said King Charles had “initiated a formal process” to revoke Andrew’s royal status after weeks of pressure to act over his relationship with Epstein – who took his own life in prison in 2019 while facing sex trafficking charges.

The rare move to strip a British prince or princess of their title – last taken in 1919 after Prince Ernest Augustus sided with Germany during World War I – also meant that Andrew was evicted from his lavish Royal Lodge mansion in Windsor and moved into “private accommodation”.

King Charles formally made the changes with an announcement published on Wednesday in The Gazette – the United Kingdom’s official public record – saying Andrew “shall no longer be entitled to hold and enjoy the style, title or attribute of ‘Royal Highness’ and the titular dignity of ‘Prince’”.

Andrew surrendered his use of the title Duke of York earlier in October following new abuse allegations from his accuser, Virginia Roberts Giuffre, in her posthumous memoir, which hit shelves last month.

The Democrat lawmakers referenced Giuffre’s memoir in their letter, specifically claims that she feared “retaliation if she made allegations against” Andrew, and that he had asked his personal protection officer to “dig up dirt” on his accuser for a smear campaign in 2011.

“This fear of retaliation has been a persistent obstacle to many of those who were victimised in their fight for justice,” the letter said. “In addition to Mr. Epstein’s crimes, we are investigating any such efforts to silence, intimidate, or threaten victims.”

Giuffre, who alleges that Epstein trafficked her to have sex with Andrew on three occasions, twice when she was just 17, took her own life in Australia in April.

In 2022, Andrew paid Giuffre a multimillion-pound settlement to resolve a civil lawsuit she had levelled against him. Andrew denied the allegations, and he has not been charged with any crime.

On Thursday, Democratic lawmakers also turned the spotlight on Zorro Ranch, proposing to the House of Representatives’ Courts, Corrections and Justice Interim Committee that a commission be created to investigate alleged crimes against young girls at the New Mexico property, which Epstein purchased in 1993.

State Representative Andrea Romero said several survivors of Epstein’s abuse have signalled that sex trafficking activity extended to the secluded desert ranch with a hilltop mansion and private runway in Stanley, about 56 kilometres (35 miles) south of the state capital, Santa Fe.

“This commission will specifically seek the truth about what officials knew, how crimes were unreported or reported, and how the state can ensure that this essentially never happens again,” Romero told a panel of legislators.

“There’s no complete record of what occurred,” she said.

Representative Marianna Anaya, presenting to the committee alongside Romero, said state authorities missed several opportunities over decades to stop Epstein.

“Even after all these years, you know, there are still questions of New Mexico’s role as a state, our roles in terms of oversight and accountability for the survivors who are harmed,” she said.

New Mexico laws allowed Epstein to avoid registering locally as a sex offender long after he was required to register in Florida, where he was convicted of soliciting a minor for prostitution in 2008.

Republican Representative Andrea Reeb said she believed New Mexicans “have a right to know what happened at this ranch” and she didn’t feel the commission was going to be a “big political thing”.

To move forward, approval will be needed from the state House when the legislature convenes in January.

Coronation Street fans are convinced Cassie Plummer and Becky Swain are linked in some way, and now a scene on the ITV soap featuring a phone call has added fuel to the theory

Fans think there’s a secret link between two Coronation Street characters, and the latest episode may have ‘confirmed’ this.

Cassie Plummer spoke about helping someone with business in Spain, before speaking in Spanish on the phone. With fans already suspecting prior to this that Cassie could be somehow linked to villain Becky Swain, this scene left fans wondering if it was a given now.

After all, Becky returned from the dead months ago and it was revealed for the past four years, she has been hiding out in Spain. She’s now being told she has to return there to stop her cover being blown, with Becky wanting daughter Betsy to go with her, as well as her ex Lisa Swain.

All the sudden talk about Spain, and a scene last week that involved both Cassie and Becky, has sparked a theory that they secretly know each other. So when Cassie spoke in Spanish and revealed all about her link to the country, fans wondered if this was proof that she and Becky know each other, and that Cassie knows all about her dodgy dealings.

READ MORE: Coronation Street fans ‘work out’ Glenda’s new love interest – and he’s a familiar faceREAD MORE: Coronation Street’s Jodie Prenger promises more comedy after criticism over dark scenes

Taking to social media, one fan said: “Cassie speaking Spanish and knowing someone in Spain… helped him with his business… she must know Becky!! The links are starting to link.”

Another fan agreed: “If this isn’t a clue to Cassie knowing or recognising dodgy business in Spain *couch* Becky I don’t know what is. Surely this isn’t coincidence.”

A third fan added: “So Cassie can speak Spanish and helped an ex out with his ‘business’ in Spain. Oh she is so gonna be the one to reveal backhand Becky’s dodgy dealings!”

A final comment read: “So, Cassie’s talking about a Spanish boyfriend, Peter’s name being dropped recently, and Becky’s been living in Alicante. Is this all a coincidence??”

It follows another theory suggesting Cassie might know Becky, and could trigger her downfall. Fans noted her watching as Carla Connor confronted Becky for kissing Lisa Swain, and she seemed very interested.

Viewers may recall Cassie was sleeping rough while she was taking drugs. She’s now in recovery, but could Cassie and Becky have crossed paths when Cassie was on drugs?

One theory is that Becky was her dealer as others wondered if she arrested her. A fan commented: “Cassie looked like she thinks she’s seen Becky somewhere before!”

Another said: “Right it can’t just be me, it’s going to transpire Cassie knows Becky somehow isn’t it? ISN’T IT?!” A third fan wrote: “That was a look of recognition for Cassie surely. Has Becky arrested her in the past?”

A theory suggested: “Oh she’s come across her before in her past… drugs?” as another read: “I reckon she was a mate of that Tia and was in the shadows and witnessed her murder/death.” A further tweet said: “Sold her drugs is more like it.”

The theories kept on coming with one reading: “Has Becky arrested her at some point?” as someone suggested they met in Spain. A final tweet said: “I’m thinking Cassie may have had some dealings with Rebecca in the past.”

Coronation Street airs Mondays, Wednesdays and Fridays at 8pm on ITV1 and ITV X. * Follow Mirror Celebs and TV on TikTok , Snapchat , Instagram , Twitter , Facebook , YouTube and Threads .

The Los Angeles Police Department has released a report that identifies several shortcomings in its response to the devastating Palisades fire, including communication breakdowns, inconsistent record-keeping and poor coordination at times with other agencies — most notably the city’s Fire Department.

The after-action report called the January blaze a “once in a lifetime cataclysmic event” and praised the heroic actions of many officers, but said the LAPD’s missteps presented a “valuable learning opportunity” with more climate-related disasters likely looming in the future.

LAPD leaders released the 92-page report and presented the findings to the Police Commission at the civilian oversight panel’s public meeting Tuesday.

The report found that while the Fire Department was the lead agency, coordination with the LAPD was “poor” on Jan. 7, the first day of the fire. Though personnel from both agencies were working out of the same command post, they failed to “collectively establish a unified command structure or identify shared objectives, missions, or strategies,” the report said.

Uncertainty about who was in charge was another persistent issue, with more confusion sown by National Guard troops that were deployed to the area. Department leaders were given no clear guidelines on what the guard’s role would be when they arrived, the report said.

The mix-ups were the result of responding to a wildfire of unprecedented scale, officials said. At times the flames were advancing at 300 yards a minute, LAPD assistant chief Michael Rimkunas told the commission.

“Hopefully we don’t have to experience another natural disaster, but you never know,” Rimkunas said, adding that the endeavor was “one of the largest and most complex traffic control operations in its history.”

Between Jan. 11 and Jan. 16, when the LAPD’s operation was at its peak, more than 700 officers a day were assigned to the fire, the report said.

The report found that officials failed to maintain a chronological log about the comings and goings of LAPD personnel at the fire zone.

“While it is understandable that the life-threatening situation at hand took precedence over the completion of administrative documentation,” the report said, “confusion at the command post about how many officers were in the field “resulted in diminished situational awareness.”

After the fire first erupted, the department received more than 160 calls for assistance, many of them for elderly or disabled residents who were stuck in their homes — though the report noted that the disruption of cell service contributed to widespread confusion.

The communication challenges continued throughout the day, the report found.

Encroaching flames forced authorities to move their command post several times. An initial staging area, which was in the path of the evacuation route and the fire, was consumed within 30 minutes, authorities said.

But because of communication breakdowns caused by downed radio and cellphone towers, dispatchers sometimes had trouble reaching officers in the field and police were forced to “hand deliver” important paper documents from a command post to its staging area on Zuma Beach, about 20 miles away.

Several commissioners asked about reports of journalists being turned away from fire zones in the weeks that followed the fire’s outbreak.

Assistant Chief Dominic Choi said there was some trepidation about whether to allow journalists into the fire-ravaged area while authorities were still continuing their search for bodies of fire victims.

Commissioner Rasha Gerges Shields said that while she had some concerns about the LAPD’s performance, overall she was impressed and suggested that officers should be commended for their courage. The department has said that dozens of officers lost their homes to the fires.

The report also recommended that the department issue masks and personal protective equipment after there was a shortage for officers on the front lines throughout the first days of the blaze.

The Palisades fire was one of the costliest and most destructive disasters in city history, engulfing nearly 23,000 acres, leveling more than 6,000 structures and killing 12 people. More than 60,000 people were evacuated. The deaths of five people within L.A. city limits remain under investigation by the LAPD’s Major Crimes Division and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

The LAPD reports details how at 11:15 a.m., about 45 minutes after the first 911 calls, the call was made to issue a citywide tactical alert, the report said. The department stayed in a heightened state of alert for 29 days, allowing it to draw resources from other parts of the city, but also meaning that certain calls would not receive a timely police response.

As the flames began to engulf a nearby hillside, more officers began responding to the area, including a contingent that had been providing security at a visit by President Trump.

Initially, LAPD officers operated in largely a rescue- and traffic-control role. But as the fire wore on, police began to conduct crime suppression sweeps in the evacuation zones where opportunistic burglars were breaking into homes they knew were empty.

In all, 90 crimes were reported in the fire zone, including four crimes against people, a robbery and three aggravated assaults, 46 property crimes, and 40 other cases, ranging from a weapons violation to identity theft. The department made 19 arrests.

The new report comes weeks after the city of Los Angeles put out its own assessment of the fire response — and on the heels of federal prosecutors arresting and charging a 29-year-old Uber driver with intentionally setting a fire Jan. 1 that later grew into the Palisades fire.

The LAPD’s Major Crimes and Robbery-Homicide units also worked with the ATF to investigate the fire’s cause.

President Donald Trump has thrown himself into the ongoing debate over the United States government shutdown, calling on the Senate to scrap the filibuster and reopen the government.

But that idea was swiftly rejected on Friday by Republican leaders who have long opposed such a move.

The filibuster refers to a Senate rule that requires 60 votes to overcome objections. Currently, that rule gives the minority Democrats a check on Republican power in the Senate.

In the chamber that’s currently split 53 to 47, Democrats have had enough votes to keep the government closed while they demand an extension of healthcare subsidies. Yet, neither party has seriously wanted to nuke the rule.

“THE CHOICE IS CLEAR – INITIATE THE ‘NUCLEAR OPTION,’ GET RID OF THE FILIBUSTER,” Trump said in a late-night social media post Thursday.

Trump’s sudden decision to assert himself in the now 31-day-long shutdown – with his highly charged demand to end the filibuster – is certain to set the Senate on edge. It could spur senators towards their own compromise or send the chamber spiralling towards a new sense of crisis. Or, it might be ignored.

Republican leaders responded quickly, and unequivocally, setting themselves at odds with Trump, a president few have dared to publicly counter.

Senate Majority Leader John Thune has repeatedly said he is not considering changing the rules to end the shutdown, arguing that it is vital to the institution of the Senate and has allowed Republicans to halt Democratic policies when they are in the minority.

The leader’s “position on the importance of the legislative filibuster is unchanged”, Thune spokesman Ryan Wrasse said Friday.

A spokeswoman for Wyoming Senator John Barrasso, the number-two Republican, said his position opposing a filibuster change also remains unchanged.

And former Republican leader Mitch McConnell, who firmly opposed Trump’s filibuster pleas in his first term, remains in the Senate.

House Speaker Mike Johnson also defended the filibuster Friday, while conceding “it’s not my call” from his chamber across the Capitol.

“The safeguard in the Senate has always been the filibuster,” Johnson said, adding that Trump’s comments are a reflection of “the president’s anger at the situation”.

Even if Thune wanted to change the filibuster, he would not currently have the votes to do so in the divided Senate.

“The filibuster forces us to find common ground in the Senate,” Republican Senator John Curtis of Utah posted on the social media platform X on Friday morning, responding to Trump’s comments. “Power changes hands, but principles shouldn’t. I’m a firm no on eliminating it.”

Debate has swirled around the legislative filibuster for years. Many Democrats pushed to eliminate it when they had full power in Washington, as the Republicans do now, four years ago.

But ultimately, enough Democratic senators opposed the move, predicting such an action would come back to haunt them.

Trump’s demand comes as he has declined to engage with Democratic leaders on ways to end the shutdown, on track to become the longest in history.

He said in his post that he gave a “great deal” of thought to his choice on his flight home from Asia, and that one question that kept coming up during his trip was why “powerful Republicans allow” the Democrats to shut down parts of the government.

But later Friday, he did not mention the filibuster again as he spoke to reporters departing Washington and arriving in Florida for a weekend at his Mar-a-Lago home.

While quiet talks are under way, particularly among bipartisan senators, Trump has not been seriously involved.

Democrats refuse to vote to reopen the government until Republicans negotiate an extension to the healthcare subsidies. The Republicans say they won’t negotiate until the government is reopened.

House Democratic Leader Hakeem Jeffries said on CNN that Trump needs to start negotiating with Democrats, arguing the president has spent more time with global leaders than dealing with the shutdown back home.

From coast to coast, fallout from the dysfunction of the shuttered federal government is hitting home. SNAP food aid is scheduled to shut off. Flights are being delayed. Workers are going without paychecks.

And Americans are getting a first glimpse of the skyrocketing healthcare insurance costs that are at the centre of the deadlock.

“People are stressing,” said Senator Lisa Murkowski of Alaska, as food options in her state grow scarce. “We are well past time to have this behind us.”

Tehran rebukes US plans for nuclear tests, citing hypocrisy over peaceful nuclear programme accusations.

Iranian Foreign Minister Abbas Araghchi has condemned calls by United States President Donald Trump for the Pentagon to resume nuclear weapons testing, calling the move both “regressive” and irresponsible”.

“Having rebranded its ‘Department of Defense’ as the ‘Department of War,’ a nuclear-armed bully is resuming testing of atomic weapons,” Araghchi wrote in a post on X late Thursday.

“The same bully has been demonising Iran’s peaceful nuclear program and threatening further strikes on our safeguarded nuclear facilities, all in blatant violation of international law,” he said.

Trump made the surprise announcement in a Truth Social post on Thursday shortly before meeting with Chinese President Xi Jinping in South Korea on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit.

Trump said he had instructed the Pentagon to immediately resume nuclear weapons testing “on an equal basis” with other countries like Russia and China, whose nuclear weapons arsenal will match the US in “five years”, according to Trump.

Ankit Panda, a nuclear security expert and senior fellow at the Carnegie Endowment for International Peace, told Al Jazeera that Trump’s decision was likely a response to recent actions by Russia and China rather than Washington’s ongoing dispute with Iran over its nuclear programme.

Russian President Vladimir Putin announced this week that Moscow had tested its Poseidon nuclear-powered super torpedo, after separately testing new Burevestnik nuclear-powered cruise missiles earlier in the month, according to the Reuters news agency.

China also recently displayed its nuclear prowess at a military parade in September, which featured new and modified nuclear weapons systems like the Dongfeng-5 nuclear-capable intercontinental ballistic missile.

Having rebranded its “Department of Defense” as the “Department of War”, a nuclear-armed bully is resuming testing of atomic weapons. The same bully has been demonizing Iran’s peaceful nuclear program and threatening further strikes on our safeguarded nuclear facilities, all in… pic.twitter.com/ft4ZGWnFiw

— Seyed Abbas Araghchi (@araghchi) October 30, 2025

Despite these public displays of firepower, neither Russia nor China has carried out a nuclear test – defined as a nuclear explosion above ground, underground, or underwater – in decades, according to the United Nations.

Nuclear testing is banned by the Comprehensive Nuclear Test-Ban-Treaty of 1996. The US, China, and Iran all signed but have not ratified the original treaty, while Russia withdrew its ratification in 2023.

Moscow carried out its last nuclear test in 1990 while still the Soviet Union, and China carried out its last nuclear test in 1996, according to the UN. The last nuclear test by the United Kingdom was in 1991, followed by the US in 1992 and France in 1996. North Korea is the only country that has carried out nuclear tests in the past two decades, with its last test in 2017.

Trevor Findlay, a nuclear security expert and honorary professional fellow at the University of Melbourne, told Al Jazeera that it was unclear what type of testing Trump was referring to in his post.

“My assumption is that he means missile launches of nuclear-capable missiles, as North Korea and Russia have been doing very publicly. These do not carry an actual nuclear warhead [but likely a dummy], nor do they create a nuclear explosion,” he said.

“The US already tests its own missiles periodically, both existing ones and ones in development, often splashing down in the Pacific. It does announce them but tends not to make a big deal of it, like North Korea and Russia,” he said.

Trump, meanwhile, has called for the “total dismantlement” of Iran’s nuclear programme and says he does not want Tehran to obtain a nuclear weapon. In June, the US and Israel also carried out air strikes on Iranian military and nuclear facilities in part to slow its progress.

Tehran has maintained that its nuclear programme is for civilian purposes only, and it has never carried out a nuclear test, according to the Carnegie Endowment’s Panda.

“Iran has never done any nuclear tests. They’ve constantly been saying they are not intending to make a nuclear bomb,” Panda told Al Jazeera. “The only thing that Iran has which might be taken seriously is some highly enriched uranium. That’s it. They have not even tested a nuclear ballistic missile.”

India have called up batter Shafali Verma in place of the injured Pratika Rawal for their Women’s World Cup semi-final against Australia.

Rawal sustained an ankle injury while fielding during India’s final group game against Bangladesh on Sunday.

The 25-year-old opener tried to stop a boundary on the slippery outfield at the DY Patil Stadium in Navi Mumbai and was later unable to bat in the match.

Rawal is the tournament’s second-highest run-scorer with 308 in six innings at 51.33, behind only fellow India opening batter Smriti Mandhana.

India’s request to replace Rawal in their squad with Verma was approved by the International Cricket Council’s event technical committee for the tournament.

Verma has not played a one-day international for India since October 2024 but has played 50-over cricket for India A in recent months.

The 21-year-old was left out of India’s original squad for the World Cup but will now come into contention for a place against Australia in the semi-final showdown on 30 October.

Amanjot Kaur opened against Bangladesh after Rawal limped out while Uma Chetry and Jemimah Rodrigues are other potential partners for Mandhana at the top of the order.

Dodgers catcher Ben Rortvedt connects for a double against the Cincinnati Reds during Game 2 of the National League Wildcard Series at Dodger Stadium on Oct. 1.

(Gina Ferazzi/Los Angeles Times)

Neither Alex Call nor Ben Rortvedt had appeared in a playoff game until this season. And though neither Dodger reserve got off the bench in the first two games of the World Series, they’re a lot closer to the action then they expected to be before the July trades that brought them to Los Angeles.

“It’s really cool. I’m just soaking it all in,” said Call, who came over from the Washington Nationals at the deadline.

“It’s been a whirlwind,” added Rortvedt, who was acquired from the Tampa Bay Rays, then spent most of the summer in triple A before being called up when Will Smith got hurt in early September. “I’ve been taking it more day by day, so it hasn’t kind of struck me as much as people think it would. Definitely when this is done I’m really going to reflect and kind of realize how crazy it has been to kind of be on this team and be where we are now.”

Call, 31, who also played with the Cleveland Guardians in a five-year big-league career, appeared in one game in each of the Dodgers’ first three playoff series, going three for four with two walks, getting hit by a pitch and scoring a run.

“It’s kind of crazy because it feels like it should have been harder,” Call said of reaching the World Series. “With the Nats, it’s like we were going to have to grind our way all the way to the top. And then you get to come over the Dodgers and you’re the favorites, World Series champs. You’ve got probably the best roster ever assembled, with amazing stars up and down the lineup, and then they’re like, ‘Oh yeah, we want Alex Call on our team.’

“That’s kind of an amazing compliment.”

Rortvedt, 28, who also played with the Yankees and Minnesota Twins in four seasons, started the first four games of the postseason and hit .429.

“If I pinch myself, it’s kind of like I’m not sure [I’m here,]” he said. “I just try to be as prepared as I can, understand the magnitude of things, and just try to be prepared and try to slow everything down and do my best.”

WASHINGTON — Plans are on hold for President Trump to sit down with Russian leader Vladimir Putin to talk about resolving the war in Ukraine, according to a U.S. official.

The meeting had been announced last week. It was supposed to take place in Budapest, although a date had not been set.

The decision was made following a call between U.S. Secretary of State Marco Rubio and Russian Foreign Minister Sergey Lavrov.

The official requested anonymity because they weren’t authorized to speak publicly.

The back-and-forth over Trump’s plans are the latest bout of whiplash caused by his stutter-step efforts to resolve a conflict that has persisted for nearly four years.

Lee writes for the Associated Press. This is a developing story that will update.

Ajike “AJ” Owens was a dedicated 35-year-old mother of four when she was shot and killed by her 58-year-old neighbor, Susan Lorincz, in June 2023. The tragedy, which rocked the otherwise peaceful, tight-knit community of Ocala, Fla., followed years of Lorincz making habitual calls to the police to report neighborhood kids, including Owens’, for playing in a vacant lot next to her home. Lorincz, who is white, claimed that the children — most of whom are Black and were under 12 — were a threat, citing one of the nation’s many “stand your ground” laws, which allow individuals to use deadly force to protect themselves if they feel their life is in danger.

Now award-winning filmmaker Geeta Gandbhir, with the support of producer-husband Nikon Kwantu and such nonfiction luminaries as Sam Pollard and Soledad O’Brien, has chronicled the two years leading up to Owens’ death in “The Perfect Neighbor,” premiering Friday on Netflix after an Oscar-qualifying theatrical run. Composed almost entirely of police body camera footage, the moving and powerful verité documentary uses the case to depict the perils of such laws, which are all too easily misused or abused in a society where not every claim of self-defense is treated equally.

A jury convicted Lorincz of manslaughter in August 2024, but the repercussions of her erratic and violent behavior continue to impact the Owens family and their neighbors. Gandbhir, whose sister-in-law was a close friend of Owens, hopes “The Perfect Neighbor” will honor Owens’ memory while showing how our nation’s growing fear of “the other” and the proliferation of “stand your ground” laws are a deadly combination.

Initially, you weren’t planning on making a film about this tragic killing, but you were documenting the aftermath of the crime. Why?

We got a call the night Ajike was killed, and we immediately jumped into action to try to help the family. We stepped in to be the media liaisons. They looked to us to try to keep the story alive in the media, just because they were worried [it would be overlooked]. This is Ocala, Fla., the heart of where “stand your ground” was born. Susan wasn’t arrested for four days because they were doing a “stand your ground” investigation. We were not thinking about making a doc, really. We were just terrified that there would be no justice.

That’s happened before …

Yes, Trayvon Martin’s case being the most notorious.

But in Ajike’s case, there’s reams of footage and audio recordings that captured what happened. How were you able to obtain so much of that material from the police department?

Anthony Thomas, who works with [civil rights attorney] Benjamin Crump, had sued the police department through the Freedom of Information Act and got them to release all of the material that they had pertaining to the case. That’s how we got the footage. What came to us was the police body camera footage, detective interviews, Ring camera footage and cellphone footage. There was also all the audio calls that Susan had made to the police, and then after the night of the [killing], the calls the community had made. There was basically a plethora of stuff that we were handed, in a jumble, and Anthony was like, “Sort this out. See if you can find anything that makes sense for the news, like snippets we can share.”

I was surprised at how much material there was, and I’m just talking about what made it into the film.

It speaks to how much Susan called the police. Basically, the body cam footage [was a result of those calls]. What’s interesting is the reaction when we screened the film for the community. They agreed to be part of this so we wanted to show them before it came out. We’re very concerned with participant care and the ethics of this. They said that they didn’t think that we had everything, because Susan [allegedly] called the police sometimes, like, 10 times a day. They [said they] think the police gave us maybe what they could organize, where they don’t look terrible. But they don’t think that that’s everything.

Ajike “AJ” Owens, pictured on the poster, was shot and killed by her neighbor in 2023. The crime is at the center of Geeta Gandbhir’s new documentary “The Perfect Neighbor.”

Ajike’s mother, Pamela Dias, has been a major force in keeping her daughter’s memory alive — and seeking justice. How did she feel about you making this film?

I went to Pamela and said I could make a movie and maybe we could make a change. It’s quite an endeavor to try to change gun laws or the “stand your ground” law, but maybe we can reach people. She said yes. This is a woman who by her own admission was blinded by grief [when Ajike was killed], who said she couldn’t see two feet in front of her. But she knew even then that her daughter’s story had to be told. She said her daughter died standing up for her kids, and she felt it was her turn to stand up.

I told her the material was graphic. But Pam was inspired by Emmett Till and how his mother had an open-casket funeral and told the photographers to take pictures because she wanted the world to know what had happened to her baby. Plus, we thought about George Floyd and [how footage of his killing] sparked a movement. It is a terrible thing to bear witness, but if we let these things continue to happen in the shadows, then they will happen forever. It’s only by bearing witness that things might change.

What about your own emotional well-being while making this film?

See all my gray hair? [Laughs.] I realized later it was grief work for me, because I needed to know what happened. I had to know what happened. I couldn’t understand how someone could pick up a gun and kill their neighbor over children playing nearby. How did we get here? So many questions were just eating me, so the work was in some ways cathartic. Then once we had it all strung out and I thought it was a film, I brought on Viridiana Lieberman, who’s our editor. We had a similar sensibility about what we wanted this to be and we really committed to living in the body camera footage.

“Body camera footage is a violent tool of the state,” Gandbhir says. “It’s often used to criminalize us, particularly people of color. It’s used to dehumanize us, to surveil us, to protect the police. What I wanted to do with this material was flip that narrative and use it to humanize this community.”

(Christina House / Los Angeles Times)

Why not use narration?

I worked for 12 years in narratives and scripted before I segued into documentary. I learned that the best vérité documentaries are show and not tell. If you tell people what they’re seeing, there’s some room for doubt or for your bias or some questioning around it. But to me, this footage plays like vérité. There’s no reporter on the ground. There’s no one influencing what’s happening in the neighborhood, other than the police who are coming in and asking questions. I felt that made the footage and the story undeniable. No one could say that we were down there asking provocative questions. And the body camera footage is so incredibly immersive, I wanted people to have the experience of what the community experienced.

How would you describe what they went through?

Their experience felt a bit like a horror film. You have this beautiful, diverse community living together with a strong social network, taking care of each other and each other’s kids. What was so powerful to me in the body camera footage is you really got to see this community as they were before [the tragedy], and you never get that. There’s horrible shootings all the time, and we see the aftermath, right? We see the grieving family, we see the funeral. We have to re-create what their lives were like before. And in this, you see this beautiful community thriving and living together, and that was so profound. I wanted to rebuild their world so everyone could see the damage done by one outlier with a gun. How she was the only one who was repeatedly calling the police and seeing threats where there were none.

We’re used to seeing police body cam footage used as evidence following a police brutality incident, or as entertainment in true crime shows. It’s used to tell a very different story in your film.

I wanted to subvert the use of body cam footage. Body camera footage is a violent tool of the state. It’s often used to criminalize us, particularly people of color. It’s used to dehumanize us, to surveil us, to protect the police. What I wanted to do with this material was flip that narrative and use it to humanize this community.

Why do you think that Susan was not seen as a threat by the police?

She’s a middle-aged white lady. She weaponized her race, her status, and she kept trying to weaponize the police against the community. The fact that she was using hate speech against children [she allegedly called them the N-word]. She was filming them. She was throwing things at them. She was cursing at them. But the police didn’t flag her as more than just a nuisance…. After the third time she called and it was unfounded and not about an actual crime, there should have been some measure taken to reprimand her. They didn’t tell the community that they could file charges against her: “She’s harassing you all. She’s harassing your children.” It was systemic neglect. And honestly, should the police be a catch-all for everything? Probably not. But they were not equipped. They didn’t take the necessary steps and the worst outcomes happened, which is that we lost Ajike, and Susan is in prison for the rest of her life. I’m sure that’s not the outcome she wanted.

There’s a moment in the film where a policeman knocks on Susan’s sliding glass door. She doesn’t know it’s a cop. She opens the curtain and screams at him in a terrifying, almost demonic voice. It’s quite a switch from her nervous, genial 911 calls.

Yeah, the jump scare. That was one of the moments where I was like, “Oh, there she is.” And the 911 call, after she shot Ajike. She was hysterical. Then her voice changes when she says, “They keep bothering me and bothering me, and they won’t f— stop.” I felt my heart clench, because it’s like, “Oh, there she really is.” She has this way of going between victim and aggressor. A little Jekyll and Hyde. It’s frightening.

The victim/aggressor dynamic is part of what makes “stand your ground” laws so dangerous. They can be weaponized.

“Stand your ground” policy was born in Ocala and now it’s in around 38 states, in different forms. It’s a law that emboldens people to pick up a gun to solve a dispute. If you can other-ize your neighbor to the extent of [killing] them, the question is, what else will you do? What else will we tolerate? As human beings, how we show up in our communities is a reflection of how we show up in the world. This film takes place on this tiny street, but it is a microcosm of what is happening today. Susan represented the dangers, and that little community represented the best of what’s under threat.

Bereaved families are calling for a public inquiry into what they say are “repeated failures” by the UK government to protect vulnerable people from a website promoting suicide.

A report by the Molly Rose Foundation says departments were warned 65 times about the online forum, which BBC News is not naming, and others like it but did not act.

The suicide prevention charity says at least 133 people have died in the UK as a result of a toxic chemical promoted by the site and similar forums.

The government has not said whether it will consider an inquiry but said sites must prevent users from accessing illegal suicide and self-harm content or face “robust enforcement, including substantial fines”.

Families and survivors have written to Prime Minister Sir Keir Starmer asking him for an inquiry to look into why warnings from coroners and campaigners have been ignored.

David Parfett, whose son Tom took his own life in 2021, told the BBC successive governments had offered sympathy but no accountability.

“The people who host the suicide platforms to spread their cult-like messages that suicide is normal – and earn money from selling death – continue to be several steps ahead of government ministers and law enforcement bodies,” he said.

“I can think of no better memorial for my son than knowing people like him are protected from harm while they recover their mental health.”

David and six other families are being represented by the law firm Leigh Day who have also written a letter to the prime minister highlighting their concerns about the main suicide forum.

The letter says victims were groomed online, and tended to be in their early 20s, with the youngest known victim being 13.

It argues a public inquiry is needed because coroners’ courts cannot institute the changes needed to protect vulnerable people.

According to the report, coroners raised concerns and sent repeated warnings to the Home Office, Department for Science, Innovation and Technology, and Department of Health and Social Care on dozens of occasions since 2019, when the forum that has been criticised by the families first emerged.

The report highlighted four main findings:

• The Home Office’s refusal to tighten regulation of the substance, which remains easily obtainable online, while UK Border Force “struggles to respond to imports” from overseas sellers

• The media regulator Ofcom’s decision to rely on “voluntary measures” from the main forum’s operators rather than taking steps to restrict UK access

• Repeated failures by government departments to act on coroners’ warnings

• Operational shortcomings, including inconsistent police welfare checks and delays in making antidotes available to emergency services

A government spokesperson said that the substance in question “is closely monitored and is reportable under the Poisons Act” meaning retailers should tell the authorities if they suspect it is being bought to cause harm.

But campaigners say the government’s response has been fragmented and slow, with officials “passing the parcel” rather than taking co-ordinated action.

Adele Zeynep Walton, whose sister Aimee died in 2022, said families like hers had been “ignored and dismissed”.

“She was creative, a very talented artist, gifted musician,” she told BBC News.

“Aimee was hardworking and achieved great GCSE results, however she was shy and quiet and struggled to make friends.

“Every time I learn of a new life lost to the website that killed my sister three years ago, I’m infuriated that another family has had to go through this preventable tragedy.”

The demand for an inquiry follows concerns raised by the BBC in 2023, when an investigation revealed sites offering instructions and encouragement for suicide and evading regulations.

Andy Burrows, chief executive of the Molly Rose Foundation, said the state’s failure to act had “cost countless lives”.

He also accused Ofcom of being “inexplicably slow” to restrict UK access to the main website the Foundation has raised concerns about.

Under the Online Safety Act, which became law in October 2023, Ofcom got the power in March 2025 to take action against sites hosting illegal content, which includes assisting suicide. If sites fail to show they have systems in place to remove illegal material, Ofcom can block them or impose fines of up to £18m.

UK users are currently unable to access the forum, which is based in the US. A message on the forum’s homepage says it was not blocked to people in the UK as a result of government action but instead because of a “proactive” decision to “protect the platform and its users”.

“We operate under the protection of the First Amendment. However, UK authorities have signalled intentions to enforce their domestic laws on foreign platforms, potentially leading to criminal liability or service disruption,” the message reads.

In a statement, Ofcom said: “In response to our enforcement action, the online suicide forum put in place a geo-block to restrict access by people with UK IP addresses.

“Services that choose to block access by people in the UK must not encourage or promote ways to avoid these restrictions.”

It added the forum remained on its watchlist and a previously-launched investigation into it remained open while it checked the block was being maintained.

• If you, or someone you know, has been affected by mental health issues BBC Action Line has put together a list of organisations which can help.

Image source: The Motley Fool.

Date

Friday, Oct. 17, 2025, at 8 a.m. ET

Call participants

• President & Chief Executive Officer — Mikael Bratt
• Chief Financial Officer — Fredrik Westin
• Vice President, Investor Relations — Anders Trapp

Need a quote from a Motley Fool analyst? Email [email protected]

Risks

• Regional Production Mix — Adjusted operating margin was negatively impacted by a 20 basis point dilution in Q3 2025, due to not-yet-recovered tariffs and the partial recovery of tariff compensations.
• Engineering Income Decline — “We expect higher depreciation costs due to new manufacturing capacity to meet demand in the key regions, and that the temporary decline in engineering income will persist, driven by the timing of specific customer development projects,” said CEO Mikael Bratt.
• European OEM Production Stoppages — “We continue to see downside risks for Europe’s light vehicle production, driven by announced production stoppage at several key customers,” explained Bratt.

Takeaways

• Net Sales — $2.7 billion, up 6% year-over-year, with organic sales growth of 4% excluding currency effects and including tariff compensation.
• Adjusted Operating Income — $271 million, up 14% year-over-year, with a 10.0% adjusted operating margin, 70 basis points above last year.
• Gross Margin — 19.3%, an increase of 130 basis points year-over-year, primarily driven by improved direct labor efficiency, headcount reductions, and supplier compensation.
• Operating Cash Flow — $258 million in operating cash flow, representing a 46% increase, supported by higher net income and a net $53 million negative impact from working capital.
• Free Operating Cash Flow — $153 million in Q3 2025 compared to $32 million in Q3 2024, due to higher operating cash flow and a $40 million reduction in net capital expenditures.
• Adjusted EPS — Diluted adjusted earnings per share increased 26% or $0.48, mainly from $0.29 higher operating income, $0.09 taxes, and $0.08 lower share count.
• Shareholder Returns — Dividend raised to $0.85 per share; $100 million in share repurchases completed, with 0.8 million shares retired.
• China Performance — Sales to Chinese domestic OEMs grew by nearly 23%, outpacing their light vehicle production growth by 8%.
• India Performance — India contributed one-third of global organic growth, now representing 5% of total sales, with content per vehicle rising from $120 in 2024 to $140 in 2025.
• Tariff Compensation — 75% of tariff costs recovered; remainder expected to be compensated by year-end.
• Capital Expenditures — CapEx net was 3.9% of sales, down from 5.7% in Q3 2024, with company guidance now at 4.5% for the full year 2025.
• Leverage Ratio — Net leverage at 1.3 times, maintained below the 1.5 times target.
• Strategic Initiatives — New second R&D center in China, partnership with CATARC, and a joint venture with HSAE to produce advanced safety electronics announced.
• Outlook and Guidance — Organic sales projected to increase by ~3% and adjusted operating margin expected at 10%-10.5% for full-year 2025; operating cash flow guidance of ~$1.2 billion; tax rate forecasted at ~28%.

Summary

Autoliv (ALV -2.72%) delivered record net sales and adjusted operating income in Q3 2025, reflecting successful execution of efficiency initiatives. Management confirmed transactions to deepen presence in China and cited the joint venture with HSAE as an entry into advanced automotive safety electronics. Working capital increased by $197 million in Q3 2025 compared to Q3 2024, mainly due to higher accounts receivable from strong sales and delayed tariff reimbursements, which management described as temporary effects. The company achieved a 94% coil-off accuracy rate in Q3 2025, highlighting this improvement as a significant contributor to its operational targets. Light vehicle production outperformed the market, driven by strong organic momentum in India and among Chinese OEMs, although negative regional and customer mixes offset some gains in Q3 2025.

• Chief Financial Officer Fredrik Westin said, “The $50 million there is a one-time, and it is compensation from a supplier for historical costs that we had versus our customers there. It is one time in the quarter here, for previous costs that we have had.”
• Management noted, “we expect to be in the middle of the range” for full-year 2025 adjusted operating margin guidance, after citing headwinds from lower out-of-period inflation compensation, higher depreciation, and temporary engineering income declines heading into the fourth quarter.
• CEO Mikael Bratt stated, “Expanding in China is key to strengthening Autoliv’s innovation, global competitiveness, and long-term growth,” underlining China as a principal driver of strategy and resource allocation.
• The shift toward normalized capital expenditures follows the completion of large-scale, multi-region footprint investments over recent years, enabling lower capital intensity moving forward.

Industry glossary

• Coil-off Accuracy: Percentage metric tracking adherence of parts inventory depletion to schedule, reflecting production planning effectiveness and supply chain reliability.
• OEM: Original Equipment Manufacturer; refers here to carmakers that buy Autoliv’s safety products for installation in new vehicles.
• ECU: Electronic Control Unit, a core component in automotive electronics, governing safety features like active seatbelts and detection systems.
• RD&E: Research, Development & Engineering expenses, comprising spending on new products, process improvement, and engineering-driven customer projects.
• CapEx: Capital expenditures, defined as spending on property, plant, and equipment.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Autoliv, Inc. third quarter 2025 financial results conference call and webcast. (Operator Instructions) Please note that today’s conference is being recorded. I would now like to turn the conference over to your first speaker, Anders Trapp, Vice President of Investor Relations.

Please go ahead.

Anders Trapp: Thank you, Lars. Welcome, everyone, to our third quarter 2025 earnings call. On this call, we have our President and Chief Executive Officer, Mikael Bratt; our Chief Financial Officer, Fredrik Westin; and me Anders Trapp, VP, Investor Relations. During today’s earnings call, we will highlight several key areas, including our record-breaking third quarter sales and earnings, as well as our continued strategic investments to drive long-term success with Chinese OEMs. We also provide an update on market developments and the evolving tariff landscape impacting the automotive industry.

Finally, our robust balance sheet and strong asset returns reinforce our financial resilience and support sustained high levels of shareholder returns. Following the presentation, we will be available to answer your questions. And as usual, the slides are available at autoliv.com.

Turning to the next slide, we have the Safe Harbor Statement, which is an integrated part of this presentation and includes the Q&A that follows. During the presentation, we will reference some non-U.S. GAAP measures. The reconciliations of historical U.S. GAAP and non-U.S. GAAP measures are disclosed in our quarterly earnings release available on autoliv.com and in the 10-Q that will be filed with the SEC or at the end of this presentation. Lastly, I should mention that this call is intended to conclude with a reach CET, so please wait for your questions in person. I now hand it over to our CEO, Mikael Bratt.

Mikael Bratt: Thank you, Anders. Looking on the next slide, I am pleased to share yet another record-breaking quarter, underscoring our strong market position. This success is a testament to the strength of our customer relationships and our commitment to continuous improvement as we navigate the complexities of tariffs and other challenging economic factors. We saw a significant sales growth driven by higher-than-expected light vehicle production across multiple regions, especially in China and North America. Our high growth in India continues, accounting for one-third of our global organic growth. I am pleased to highlight that our sales growth with Chinese OEMs has returned to outperformance, driven by recent product launches and encouraging development.

Looking ahead, we anticipate to significantly outperform light vehicle production in China during the fourth quarter. We improved our operating profit and operating margin compared to a year ago. This strong performance was primarily driven by well-executed activities to improve efficiency, higher sales, and a supplier compensation for an earlier recall. We successfully recovered approximately 75% of the tariff costs incurred during the third quarter and expect to recover most of the remaining portions of existing tariffs later this year. The combination of not-yet-recovered tariffs and the dilutive effects of the recovered portion resulted in a negative impact of approximately 20 basis points on our operating margin in the quarter.

We also achieved record earnings per share for the third quarter. Over the past five years, we have more than tripled our earnings per share, mainly driven by strong net profit growth but also supported by a reduced share count. Our cash flow remained robust despite higher receivables driven by higher sales and tariff compensations later in the quarter. Our solid performance, combined with a healthy debt level ratio, supports continuous strong shareholder returns. We remain committed to our ambition of achieving $300 to $500 million annual in stock repurchases, as outlined during our Capital Markets Day in June.

Additionally, we have increased our quarter dividend to $0.85 per share, reflecting our confidence in our continued financial strength and long-term value creation. Expanding in China is key to strengthening Autoliv’s innovation, global competitiveness, and long-term growth. To support our growing partnerships with Chinese OEMs, we are investing in a second R&D center in China. In October, we announced a new important collaboration in China, as illustrated on the next slide. We have signed a strategic agreement with CATARC, the leading research institution setting standards in the Chinese automotive sector. This partnership marks a new chapter in our commitment to shaping the future of automotive safety.

Together with CATARC, we aim to define the next generation of safety standards and enhance the safety on the roads in China and globally. We are also broadening our reach in automotive safety electronics, as shown on the next slide. We recently announced our plans to form a joint venture with HSAE, a leading Chinese automotive electronics developer, to develop and manufacture advanced safety electronics. The joint venture will concentrate on high-growth areas in advanced safety electronics, including ECUs for active seatbelts, hands-on detection systems for steering wheels, and the development and production of steering wheel switches.

Through this new joint venture, we intend to capture more value from steering wheels and active seatbelts while minimizing CapEx and competence expansions, enabling faster market entry with lower technology and execution risks. Looking now on financials in more detail on the next slide. Third quarter sales increased by 6% year-over-year, driven by strong outperformance relative to light vehicle production in Asia and South America, along with favorable currency effects and tariff-related compensations. This growth was partly offset by an unfavorable regional and customer mix. The adjusted operating income for Q3 increased by 14% to $271 million, from $237 million last year. The adjusted operating margin was 10%, 70 basis points better than in the same quarter last year.

Operating cash flow was a solid $258 million, an increase of $81 million, or 46% compared to last year. Looking now on the next slide, we continue to deliver broad-based improvements, with particularly strong progress in direct costs and SG&A expenses. Our positive direct labor productivity trend continues as we reduced our direct production personnel by 1,900 year-over-year. This is supported by the implementation of our strategic initiatives, including automation and digitalization. Our gross margin was 19.3%, an increase of 130 basis points year-over-year. The improvement was mainly the result of direct labor efficiency, headcount reductions, and compensation from a supplier.

Our G&E net costs rose both sequentially and year-over-year, primarily due to lower engineering income due to timing of specific customer development projects. Thanks to our cost-saving initiatives, SG&A expenses decreased from the first half-year level. Combined with the increased gross margin, this led to 70 basis points improvement in adjusted operating margin. Looking now on the market developments in the third quarter on the next slide. According to S&P Global data from October, global light vehicle production for the third quarter increased 4.6%, exceeding the expectations from the beginning of the quarter by 4 percentage points. Supported by the scrapping and replacement subsidy policy, we continue to see strong growth for domestic OEMs in China.

Light vehicle demand and production in North America have proven significantly more resilient than previously anticipated. In contrast, light vehicle production in other high-content-per-vehicle markets, namely Western Europe and Japan, declined by approximately 2% to 3%, respectively. The global regional light vehicle production mix was approximately 1 percentage point unfavorable during the quarter, despite the important North American market showing a positive trend. In the quarter, we did see coil-off volatility continue to improve year-over-year and sequentially from the first half-year. The industry may experience increased volatility in the fourth quarter, stemming from a recent fire incident at an aluminum production plant in North America and production adjustments by a key European customer in response to shifting demand.

We will talk about the market development more in detail later in the presentation. Looking now on sales growth in more detail on the next slide. Our consolidated net sales were over $2.7 billion, the highest for the third quarter so far. This was around $150 million higher than last year, driven by price volume, positive currency translation effects, and $14 million from tariff-related compensations. Excluding currencies, our organic sales growth by 4%, including tariff costs and compensations. China accounted for 90% of our group sales. Asia, excluding China, accounted for 20%. Americas for 33%, and Europe for around 28%. We outline our organic sales growth compared to light vehicle production on the next slide.

Our quarterly sales were robust and exceeded our expectations, driven by strong performance across most regions, particularly in the Americas, West Asia, and China. Based on light vehicle production data from October, we underperformed light vehicle production by 0.7% globally, as a result of a negative regional mix of 1.3%. We underperformed slightly in Europe, primarily due to an unfavorable model and customer mix. In the rest of Asia, we outperformed the market with 8%, driven primarily by strong sales growth in India and, to a lesser extent, in South Korea.

While the organic light vehicle production mix shifts continued to impact our overall performance in China, our sales to domestic OEMs grew by almost 23%, 8% more than their light vehicle production growth. Our sales development with the global customers in China was 5% lower than their light vehicle production development, as our sales declined to some key customers, such as Volkswagen, Toyota, and Mercedes. On the next slide, we show some key model launches. The third quarter of 2025 went through a high number of new launches, primarily in Asia, including China. Although some of these new launches in China remained undisclosed here due to confidentiality, the new launches reflect a strong momentum for Autoliv in these important markets.

The models displayed here feature Autoliv content per vehicle from $150 to close to $400. We’re also pleased to have launched airbags and seatbelts on another small Japanese vehicle, A-Cars. This is a meaningful forward step because Autoliv has historically had limited exposure to this segment in Japan. In terms of Autoliv’s sales potential, the Onvo L90 is the most significant. Higher content per vehicle is driven by front center airbags on five of these vehicles. Now looking at the next slide, I will now hand it over to Fredrik Westin.

Fredrik Westin: Thank you, Mikael. I will talk about the financials more in detail now on the slides, so turn to the next slide. This slide highlights our key figures for the third quarter of 2025 compared to the third quarter of 2024. The net sales were approximately $2.7 billion, representing a 6% increase. The gross profit increased by $63 million, and the gross margin increased by 130 basis points. The drivers behind the gross profit improvement were mainly lower material costs, positive effects from the higher sales, and improved operational efficiency. This was partly offset by negative effects from recalls and warranty, depreciation, and unrecovered tariff costs.

The adjusted operating income increased from $237 million to $271 million, and the adjusted operating margin increased by 70 basis points to 10.0%. The reported operating income of $267 million was $4 million lower than the adjusted operating income.

Adjusted earnings per share diluted increased 26% or by $0.48, where the main drivers were $0.29 from higher operating income, $0.09 from taxes, and $0.08 from a lower number of shares. This marks our ninth consecutive quarter of growth in adjusted earnings per share, underscoring the strength of our ongoing operational improvements and further bolstered by a reduced share count from our share buyback program. Our adjusted return on capital employed was a solid 25.5%, and our adjusted return on equity was 28.3%. We paid a dividend of $0.85 per share in the quarter, and we repurchased shares for $100 million and retired 0.8 million shares. Looking now on the adjusted operating income bridge on the next slide.

In the third quarter of 2025, our adjusted operating income increased by $34 million.

Operations contributed with $43 million, mainly from high organic sales and from the execution of operational improvement plans supported by better coil-off volatility. The out-of-period cost compensation was $8 million lower than last year. Costs for RD&E net and SG&A increased by $30 million, mainly due to lower engineering income. The net currency effect was $6 million positive, mainly from translation effects. Last year’s supplier settlement and this year’s supplier compensation combined had a $29 million positive impact. The combination of unrecovered tariffs and the dilutive effect of the recovered portion resulted in a negative impact of approximately 20 basis points on our operating margin in the quarter. Looking now at the cash flow on the next slide.

The operating cash flow for the third quarter of 2025 totaled $258 million, an increase of $81 million compared to the same period last year, mainly as a result of higher net income, partly offset by $53 million negative working capital effects. The negative working capital was primarily driven by higher receivables, reflecting strong sales and delayed tariff compensations toward the end of the quarter. Capital expenditures net decreased by $40 million. Capital expenditures net in relation to sales was 3.9% versus 5.7% a year earlier. The lower level of capital expenditures net is mainly related to lower footprint CapEx in Europe and Americas and less capacity expansion in Asia.

The free operating cash flow was $153 million compared to $32 million in the same period the prior year from higher operating cash flow and the lower CapEx net.

The cash conversion in the quarter, defined as free operating cash flow in relation to the net income, was around 87%, in line with our target of at least 80%. Now looking at our trade working capital development on the next slide. The trade working capital increased by $197 million compared to the prior year, where the main drivers were $165 million in higher accounts receivables, $8 million in higher accounts payables, and $40 million in higher inventories. The increase in trade working capital is mainly due to increased sales and temporarily higher inventories. In relation to sales, the trade working capital increased from 12.8% to 13.9%.

We view the increase in trade working capital as temporary, as our multi-year improvement program continues to deliver results. Additionally, enhanced customer coil-off accuracy should enable a more efficient inventory management. Now looking at our debt leverage ratio development on the next slide.

Autoliv’s balanced leverage strategy reflects our prudent financial management, enabling resilience, innovation, and sustained stakeholder value over time. The leverage ratio remains low at 1.3 times, below our target limit of 1.5 times, and has remained stable compared to both the end of the second quarter and the same period last year. This comes despite returning $530 million to shareholders over the past 12 months. Our net debt increased by $20 million, and the 12 months trailing adjusted EBITDA was $41 million higher in the quarter. With that, I hand it back to you, Mikael.

Mikael Bratt: Thank you, Fredrik. On to the next slide. The outlook for the global auto industry has improved, particularly for North America and China.

While the industry continues to navigate the trade volatility and other regional dynamics, S&P now forecasts global light vehicle production to grow by 2% in 2025, following growth of over 4% in the first nine months of the year. Their outlook for the fourth quarter has significantly improved. Nevertheless, they still anticipate a decline in light vehicle production of approximately 2.7% in the quarter. In North America, the outlook for light vehicle production has been significantly upgraded, driven by resilient demand and low new vehicle inventories. However, a recent fire incident at an aluminum production plant in North America may impact our customers.

For Europe, S&P forecasts a 1.8% decline in light vehicle production for the fourth quarter, despite some easing of U.S. import tariffs. We continue to see downside risks for Europe’s light vehicle production, driven by announced production stoppage at several key customers.

In China, light vehicle production is expected to decline by 5%, primarily due to an exceptionally strong Q4 in 2024. Nevertheless, S&P anticipates sustained growth in Chinese LVP over the medium term, supported by favorable government policies for new energy vehicles, more relaxed auto loan regulations, and increasing export volumes. The outlook for Japan’s light vehicle production has improved, as car makers are increasingly shifting exports to markets outside the U.S., aiming to mitigate reduced export volumes to the U.S. In South Korea, domestic demand has been steadily recovering, while exports have also risen, driven by increased shipments to other regions, compensating for the decline in exports to the U.S. Now looking on our way forward on the next slide.

We expect the fourth quarter of 2025 to be challenging for the automotive industry, with lower light vehicle production and geopolitical challenges.

However, our continued focus on efficiency should help offset some of these headwinds. Consistent with typical seasonal patterns, the fourth quarter is expected to be the strongest of the year. Despite the expected decline in global light vehicle production year-over-year, we foresee higher sales and continued outperformance, particularly in China. Unfortunately, we are also facing some year-over-year headwinds. Unlike the past three years, we do not expect out-of-period inflation compensation in the fourth quarter, given the shift in the inflationary environment. We expect higher depreciation costs due to new manufacturing capacity to meet demand in the key regions, and that the temporary decline in engineering income will persist, driven by the timing of specific customer development projects.

These factors combine in the reason for why we currently expect the full-year adjusted operating margin to come in at the midpoint of the guided range.

However, our solid cash conversion and balance sheet provide fast expansions and a robust foundation for maintaining high shareholder returns. Turning to the next slide. This slide shows our full-year 2025 guidance, which excludes effects from capacity alignment and antitrust-related matters. It is based on no material changes to tariffs or trade restrictions that are in effect as part of 2025, as well as no significant changes in the macroeconomic environment or changes in customer coil-off volatility or significant supply chain disruptions. Our organic sales are expected to increase by around 3%. The guidance for adjusted operating margin is around 10% to 10.5%.

With only one quarter remaining of the year, we expect to be in the middle of the range. Operating cash flow is expected to be around $1.2 billion. We now expect CapEx to be around 4.5% of sales, revised from the previous guidance of around 5%.

Our positive cash flow and strong balance sheet support our continued commitment to a high level of shareholder return. Our full-year guidance is based on a global light vehicle production growth of around 1.5% and a tax rate of around 28%. The net currency translation effect on sales will be around 1% positive. Looking on the next slide. This concludes our formal comments for today’s earnings call, and we would like to open the line for questions from analysts and investors. I now hand it back to Ras.

Operator: Thank you, Sir. As a reminder to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We are now going to proceed with our first question. The questions come from the line of Colin Langan from Wells Fargo Securities. Please ask your question.

Colin Langan: Oh, great. Thanks for taking my questions. You raised your light vehicle production forecast, you know, from down a half to up 1.5%, but organic sales didn’t change. Why aren’t you seeing any benefit from the stronger production environment on your organic?

Fredrik Westin: Yeah. Thanks for your question. There are a couple of components here. I mean, the first one is that some of these adjustments that we also now take into account are for past quarters. Some of the volumes have been raised also in the first half, whereas we had already recorded our sales for that. That doesn’t, yeah. We had a different outdoor underperformance in the first half of the year. That’s one part of the explanation. We also see a larger negative mix now after nine months and also expect that for the full year.

That is close to 2 percentage points, this negative market mix, which is also one of the reasons, and that’s, say, even less unfavorable now than we saw a quarter ago. Those are some explanations.

On top of that, we see that some of the launches in China have been a bit delayed, and that they are not coming through fully in line with our expectations that we had here about a quarter ago. Those are the main reasons why you don’t see that LVP estimate increase come through on our organic sales guidance.

Colin Langan: Got it. The margin in the quarter was very strong. I thought Q3 is typically one of your weaker margins. Anything unusual in the quarter? I noticed you flagged supplier settlements. I kind of get the non-repeat of bad news last year. Is the $15 million of supplier compensation additional good news? Is that one-time in nature? How should we think of that? Anything else that’s maybe possibly one-time in nature in the quarter that drove the strong margin?

Fredrik Westin: Yeah. The $50 million there is a one-time, and it is compensation from a supplier for historical costs that we had versus our customers there. It is one time in the quarter here, for previous costs that we have had. I would say here also that, I think what you saw in the quarter here was that we had slightly higher sales than expected. That was an important component, of course. I think most importantly here is that we continue to see a very strong delivery of the internal improvement work that we are so focused on and that we have been focused on for a while, leading to our targets here.

Good work done by the whole Autoliv team here across the whole value chain.

Colin Langan: Got it. All right. Thanks for taking my questions.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Björn Inoson from Danske Bank. Please ask your question.

Björn Inoson: Hi. Thanks for taking my question. On your implied guidance for Q4 and also on your a little bit cautious comments on Q4, it looks like there are a little bit of temporary negative effects that you are talking about. Should we extrapolate the Q4 trends looking into 2026? Are you quite happy with the productivity work and also that coil-offs look again a little bit better? Should we have as a base assumption that you should progress again towards the midterm target of 12%? How should we look upon that? Thank you.

Fredrik Westin: Yeah. I think, first of all, that we feel confident when it comes to our ability to eventually get to our 12% target. No doubt about that. What you see here in the Q3, Q4 movement is nothing if you read into that. I think, as I said before, we see very good progress in terms of the activities that we control ourselves. We see really good traction when it comes to the strategic initiatives that we have outlined some time back. Good progress there. I think when you look at Q4 over Q4, it’s, I would say, more of, first of all, a normalization of the quarters. Q4 is still the strongest quarter in the year.

Of course, in the previous last two, three years, it has been more pronounced since we had this out-of-period compensation that we referred to earlier, which you will not see in the same way now in this quarter in Q4 2025. There is a difference there. I would say also, you have seen a little bit stronger Q3 when it comes to sales. There is a timing effect between Q3 and Q4 compared to when we looked into the second half. There is also a part of the explanation. The bottom line, we feel comfortable with our own progress towards the targets that we have. Maybe just to build on that, just one more detail on the fourth quarter.

We do expect that we will have a slightly lower engineering income also in the fourth quarter, as you saw now in the third quarter.

This is temporary, and it’s very dependent on how the engineering activities are with certain customers. This should then also recover in 2026.

Björn Inoson: Okay. Yeah. I saw that comment. Did you say it’s likely to be recovered in early next year then?

Fredrik Westin: In next year overall, yes.

Björn Inoson: Overall. Okay.

Fredrik Westin: You should see a recovery ratio that is more in line with or a bit higher now than what you see in the second half of this year. That’s, again, very dependent on engineering activities with certain customers and how they reimburse us.

Björn Inoson: Okay. Got it.

Fredrik Westin: Yeah. In some cases, it’s built in the piece price. In some cases, it’s paid like engineering income specifically. Depending on how that mix looks over time, of course, you have some smaller fluctuation. That is really what we refer to here.

Björn Inoson: Okay. Very clear. Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Gautam Narayan from RBC Capital Markets. Please ask your question.

Gautam Narayan: Hi. Thanks for taking the question. Maybe a follow-up to that last one, the Q4 guidance. You call out three headwinds: the less compensation on inflation, I guess the higher depreciation, and then this engineering income. Just wondering if you could dimensionalize those three in terms of order of magnitude for Q4. I mean, we know the engineering income is temporary. The other two, you know, I guess, depends on certain factors. Just trying to dimensionalize those three in terms of what is temporary and what continues. I have a follow-up.

Fredrik Westin: Yeah. I think the engineering income, you can look at Q3 on a year-by-year basis and how that as a % of sales. That, I think, is a pretty good indication also for how that could be in the fourth quarter. That’s the largest headwind we will have. The next one is the fact that we had this out-of-period compensation from our customers related to inflation compensation last year. That falls away this year. That’s the second largest. The third largest is the depreciation expense increase.

Gautam Narayan: Okay. On the China commentary, we did see that BYD is losing share in China due to some government initiatives and whatnot. I would have thought that alone would maybe benefit you guys more. I know macro in China, the domestics are doing better than the globals. I see that. I understand that. Just wondering if the share loss that BYD is seeing—I know you’re under-indexed to them—is benefiting you guys. Thanks.

Fredrik Westin: Yeah. I mean, in the overall mix, of course, since we are only selling components to them, and you see their portion of the total market, you know, flattening out, of course, it’s supportive in the sense of measuring our outperformance relative to the COEMs, LVP as such. Mathematically, yes, you have that effect there.

Gautam Narayan: Great, thanks a lot. I’ll turn it over.

Operator: Thank you. We are now going to proceed with our next question. Our next questions come from the line of Michael Aspinall from Jefferies. Please ask your question.

Michael Aspinall: Thanks, Sam. Good day, Mikael, Fredrik, and Anders. One first on India. It was one-third of the organic growth. Can you just remind us where we are in the shift in content per vehicle in India, and how large India is in terms of sales now?

Fredrik Westin: Yeah. I think we are. See the strong development in India there. As I said, one-third of the growth in the quarter. It’s today around 5% of our turnover is coming from India. It’s not long ago, it was around 2%. A significant increase of importance there. We have a very strong market share in India, 60%. Of course, we are benefiting well from the volume growth you see there. We are expecting India to continue to grow. We have also invested in our investment footprint there to be able to defend our market share and to capture the growth here.

Content-wise, we expect it to go from, you know, it went from $120 in 2024 to roughly $140 this year. You have both content and light vehicle production growth in India to look forward to.

We expect it to go further up to around $160 to $170 in the next couple of years.

Michael Aspinall: Great. Excellent. Thank you. One more. Just on the JV with Hang Cheng, who were you purchasing these items from before? Were you purchasing from Hang Cheng and now to JV, or have you formed a JV with them and were purchasing from someone else previously?

Fredrik Westin: I mean, they have been an important supplier to us in the past as well. Of course, we have worked with them and established a very good relationship there. I couldn’t say it has been exclusively with them. We have a global supplier base here, but we see great opportunity here to not only produce but also develop components for our future models and programs here as we work together here, both on development and manufacturing.

Michael Aspinall: Okay. They’re moving, I guess, from a supplier, and now you guys are going to be working together?

Fredrik Westin: Yeah, yeah, exactly.

Michael Aspinall: Okay. Great. Thank you.

Fredrik Westin: Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Vijay Rakesh from Mizuho. Please ask your question.

Vijay Rakesh: Yeah. Hi, Mikael. Just quickly on the China side, I know you mentioned subsidies. When you look at the NEV and the scrapping subsidy, I believe it is down like 50% this year. Do you expect that to be extended to 2026, or is there going to be another step down? Then follow up.

Mikael Bratt: Yeah. I would say we are not speculating in that. I guess it’s anybody’s guess here. I think overall, we definitely look very positively on China. As we have mentioned here before, we are growing our share with the Chinese OEMs here and had good developments in the quarter here. We are also investing in China as well here. As I mentioned in the presentation here earlier, I mean, we are investing in a second R&D center in Wuhan to make sure that we also continue to work closer with the broader base of customers there, so adding capacity. We talked about JV just now here. The partnership with CATARC here is an important step here.

All in all, looking positively on China going forward here for sure. Subsidies or not, we will see, but overall, it’s pointing in the right direction here.

Vijay Rakesh: Got it. As you look at the European market, a lot of talk about price competition and imports coming in from Asia and tariffs, etc. How do you see the European auto market play out for 2026? Thanks.

Mikael Bratt: Yeah. I think we wait to comment on ’26 for the next quarterly earnings here when it’s time for it. As we have said here for the remainder of the year, we are cautious about the European market more from a demand point of view than anything else. I think that’s really the main question mark around the market than anything else in terms of OEM reshuffling or anything like that. I mean, it’s really the end consumer question here.

Vijay Rakesh: Got it.

Mikael Bratt: When it comes to Europe.

Vijay Rakesh: Yeah.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Emmanuel Rosner from Wolfe Research. Please ask your question.

Emmanuel Rosner: Oh, great. Thank you so much. My first question is actually a follow-up. I think on Colin’s question around the organic growth outlook, which is unchanged despite the better LVP. I’m not sure that I understood all the factors, but if we wanted to frame it as like growth above market, initially, you were going to grow 3% despite a shrinking market. Now you’re growing 3% in a market that would be growing 1.5%. Can you maybe just go back over the factors that are driving this different expectations for outperformance?

Fredrik Westin: Yeah. In that sense, the largest change over the capital quarters here since we started the year is the negative market mix. As I said, we now see a negative market mix for the full year of around 2%. That has deteriorated over the course of the year. That’s the largest part. We have also seen here in the third quarter the negatives in customer mix for us, mostly in North America and Europe. That’s also a deviation to what we expected going into the year. The last one that I already mentioned before is that we see some delays on the new launches, in particular in China.

They’re not coming through at the same pace that we had expected originally.

Emmanuel Rosner: Understood. Thank you. If I go back to your framework and your midterm margin targets, can you just maybe remind us the drivers that will get you from the 10 to 10.5% this year to towards the 12%? Where are we tracking on some of those? I did notice that you mentioned improved coil-off accuracy, both sequentially and year-over-year. Is that something that you expect to continue in and that will be helpful for that?

Fredrik Westin: Yeah. I mean, the framework has not changed as you would probably expect. It’s still, if we take 2024 as the base point with 9.7% adjusted operating margin, we still expect 80 basis points improvement from the indirect headcount reduction. In the reported numbers here now, you don’t see a movement in that, but we had about 260 employees from a labor law change in Tunisia that we now have to account for headcount. That distorts that number. If you adjust for that, we would also have shown further progress on the indirect headcount reduction. That is well on track. We said 60 basis points from normalization of coil-offs. That is developing well.

We saw 94% coil-off accuracy here and also in the third quarter, which is an improvement on a year-over-year basis.

We also talked about that we have decreased our direct headcount by 1,900 people despite that organic growth was at 4% on a year-over-year basis. That’s tracking very well. The remaining 90 basis points would be from growth component, where we are maybe a little bit behind now this year as we laid, or as you talked about before, and from automation digitalization. There again, you can see, I think, on the gross margin, even if you exclude the settlement here with a supplier, you can also see there that we are progressing well on that component.

Emmanuel Rosner: Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Jairam Nathan from Daiwa Capital Markets America. Please ask your question.

Jairam Nathan: Hi. Thanks for taking my question. I just wanted to kind of go back to the announcement out of China. I just wanted to understand better the timing. It seems it kind of coincided with also the announcement of Adient, the zero-gravity product. Just one, is this timing related to some new business win or more opportunities there?

Fredrik Westin: You’re talking about JV or?

Jairam Nathan: The JV, the CATARC partnership, as well as the kind of announced you kind of finalized the Adient zero-gravity product. Yeah.

Fredrik Westin: I was going to say they’re not connected at all as such. The JV here is really to vertically integrate in an effective way together with a partner to gain a broader product offering here to say that we offer also, yeah, more to our end customer, basically. CATARC is, of course, a development collaboration to make safer vehicles, safer roads for everyone. It’s including light vehicles, commercial vehicles, and vulnerable road users, meaning two-wheelers, etc. It is a broad-based research collaboration there. The Adient, of course, is connected to the zero-gravity. I mean, yeah, to some extent, of course, they are all about safety products as such, but they are not connected in any way.

Jairam Nathan: Okay. Thanks. Just to follow up, I wanted to understand the lower CapEx. Is that something that can be maintained as a % of sales into the future?

Fredrik Westin: Yeah. I think, I mean, we have been talking about this in the past also that our ambition is to bring down the CapEx levels in relation to sales compared to where we have been. We have been through a cycle here where we have invested a lot in our facilities around the world, Europe, where we have consolidated and upgraded a number of plants, India investments we talked about before, expanding capacity in China. We also upgraded in Japan, etc. In the last couple of years, we have invested heavily in upgrading our industrial footprint. We are coming out now into a more normalized phase here. That is why we can bring it down here.

We are not expecting to see CapEx jump up back in the near term here.

Jairam Nathan: Okay, thank you. That’s fine.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Hampus Engellau from Handelsbanken. Please ask your question.

Hampus Engellau: Thank you very much. A quick question from my side. Maybe a bit of a nitty-gritty question, but if I remember correctly, you covered about 80% of the tariff cost in the second quarter, and the remaining 20% came in Q3. Now you’re moving around 20% for Q3 you will get in Q4. Is the net effect like 100% compensation if you account for the things that came from second quarter to Q3, or are you still a net negative there on the margin?

Fredrik Westin: Yeah, please go ahead. …  Oh, please go ahead. … Okay. Yeah. Sorry. Let’s take this first, so we’re done with that one. We are still net negative here. As we said, we have received some of the outstanding $20 million in the second quarter in Q3, but most of it remains still. In the third quarter here, we got $75 million. We have accumulated more outstandings from Q2 to Q3. As we have indicated here, we still expect to get full compensation and catch up on this in the fourth quarter close. I think we are fully compensated. That’s our expectations here. Of course, the work is ongoing here as we speak with that, but that’s the net result right now.

Hampus Engellau: Fair enough. The last question was more related to from what you see today in terms of launches for 2026, and you maybe compare that to 2025 if you could share some light on that.

Fredrik Westin: I have no figure yet for 2026 to share with you here, but I think in general terms, I mean, we have a good order intake here to support our overall market position here. We see, however, some mixed, especially on the EV side, planned programs or launches being delayed or canceled here. There are some reshuffling there. What kind of impact that will have in 2026 compared to 2025, we are not ready to communicate that yet. As I said, we have good order intake here to support our market position.

Hampus Engellau: Thank you very much.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Edison Yu from Deutsche Bank. Please ask your question.

Edison Yu: Hi. This is Winnie on for Edison. Thanks for taking the call. My first question is on the supplier contract news that came out of GM, indicating maybe like a more less favorable contract terms for suppliers on a go-forward basis. I’m just curious if this is something that’s more isolated and more depends on like the OEM, or do you see like heading into 2026 maybe a broader trend that can pose potentially as a headwind heading into next year? I have a follow-up.

Fredrik Westin: No, I don’t want to comment specific customer contracts or conditions here. Of course, it’s a constantly ongoing development here in terms of what the OEMs want to put into their contract. I would say that I see a good ability to manage those clauses and contracts that are put in front of us here. I must say I don’t feel any major concerns around a more difficult situation. I think we are quite successful in negotiating and settling contracts with our customers here. Nothing exceptional there from our point of view, I would say.

Edison Yu: Got it. Thank you. On the Ford supplier impact, you did mention some potential impacts into Ford Q. I was just curious if you can help us delineate that. Is that something to be concerned about, or is it more of a negligible impact for you guys?

Fredrik Westin: Yeah. I think, I mean, every car that is not produced is not a good thing, of course, especially for the customer in question here. You have seen the announcements made by the OEMs here. Just as a reference, the Ford 150 is around 1% of our global sales. It’s not good, but it’s manageable, I would say, from our point of view. Just as a reference.

Edison Yu: Thank you so much.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Dan Levy from Barclays Bank. Please ask your question.

Dan Levy: Hi. Great. Thank you for taking the question. I just wanted to follow up on that prior question. You know, the headlines on Xperia yesterday causing some potential supply issues. Just how much of that of a potential risk have you seen or heard on that in the fourth quarter for European production?

Fredrik Westin: For the European production, no, I think it’s too early to comment on that. I mean, it’s just a few days, hours, or almost into the situation here. I think, first of all, we have a very good supply chain team that are on alert here and are managing through the situation here. We have been here before with supply chain constraints. I would say the last couple of years, there’s been many topics here. The team is well prepared to maneuver through this. We’ll see and come back on that. I would say it’s too early to be too granular or too detailed around that. As I said, it’s early days here.

We don’t see too much yet from the customers.

Dan Levy: Thank you. Just as a follow-up, I wanted to double-click on the China performance. You did very well outperformance with the domestic OEMs. In spite of that, the total China performance was negative 3 points, even though the domestics are the clear majority. I think we were all a bit surprised. I know you sort of unpacked this a bit before in one of the prior questions. Can you maybe just explain the dynamics of why, even though you outperformed the domestics, the overall China performance was negative? What can you explain what flips going forward that is leading you to say that your China growth going forward should outperform?

Fredrik Westin: Yeah. I mean, we still, for us, as we said before here, we believe that we will see improvements here in the quarter to come. I think it is a really important milestone here, what we reported on the COEM outperformance, which was really strong here in the quarter. Still, the global OEMs is a bigger majority of our total sales, and some of our customers here that are significant had a negative mix impact on us this quarter, unfortunately. That was on the negative side here. We don’t see this as a major trend shift here. It’s a mixed effect that we see from quarter to quarter here.

I think the important takeaway here is that we see this strong growth development with the Chinese OEMs that is also growing their share of the total market.

Fredrik Westin: That sets us up for, I would say, good development in China over time.

Dan Levy: Okay. Thank you.

Operator: Given the time constraint, this concludes the question and answer session. I will now hand back to Mr. Mikael Bratt for closing remarks.

Mikael Bratt: Thank you very much, Ras. Before we conclude today’s call, I want to reaffirm our commitment to meeting our financial targets. We remain focused on cost efficiency, innovation, quality, sustainability, and mitigating tariffs. With ongoing market headwinds, we anticipate strong fourth quarter performance. Our fourth quarter call is scheduled for Friday, January 30, 2026. Thank you for your attention. Until next time, stay safe.

Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

WASHINGTON — President Trump is hosting Ukrainian President Volodymyr Zelensky for talks at the White House on Friday, with the U.S. leader signaling he’s not ready to agree to sell Kyiv a long-range missile system that the Ukrainians say they desperately need.

Zelensky arrived with top aides to discuss the latest developments with Trump over lunch, a day after the U.S. president and Russian President Vladimir Putin held a lengthy phone call to discuss the conflict.

At the start of the talks, Zelensky congratulated Trump over landing last week’s ceasefire and hostage deal in Gaza and said Trump now has “momentum” to stop the Russia-Ukraine conflict.

“President Trump now has a big chance to finish this war,” Zelensky added.

In recent days, Trump had shown an openness to selling Ukraine long-range Tomahawk cruise missiles, even as Putin warned that such a move would further strain the U.S.-Russian relationship.

But following Thursday’s call with Putin, Trump appeared to downplay the prospects of Ukraine getting the missiles, which have a range of about 995 miles.

“We need Tomahawks for the United States of America too,” Trump said. “We have a lot of them, but we need them. I mean we can’t deplete our country.”

Zelensky had been seeking the weapons, which would allow Ukrainian forces to strike deep into Russian territory and target key military sites, energy facilities and critical infrastructure. Zelensky has argued that the potential for such strikes would help compel Putin to take Trump’s calls for direct negotiations to end the war more seriously.

But Putin warned Trump during the call that supplying Kyiv with the Tomahawks “won’t change the situation on the battlefield, but would cause substantial damage to the relationship between our countries,” according to Yuri Ushakov, Putin’s foreign policy adviser.

Ukrainian Foreign Minister Andrii Sybiha said that talk of providing Tomahawks had already served a purpose by pushing Putin into talks. “The conclusion is that we need to continue with strong steps. Strength can truly create momentum for peace,” Sybiha said on the social platform X late Thursday.

Ukrainian officials have also indicated that Zelensky plans to appeal to Trump’s economic interests by aiming to discuss the possibility of energy deals with the U.S.

Zelensky is expected to offer to store American liquefied natural gas in Ukraine’s gas storage facilities, which would allow for an American presence in the European energy market.

He previewed the strategy on Thursday in meetings with Energy Secretary Chris Wright and the heads of American energy companies, leading him to post on X that it is important to restore Ukraine’s energy infrastructure after Russian attacks and expand “the presence of American businesses in Ukraine.”

It will be the fourth face-to-face meeting for Trump and Zelensky since the Republican returned to office in January, and their second in less than a month.

Trump announced following Thursday’s call with Putin that he would soon meet with the Russian leader in Budapest, Hungary, to discuss ways to end the war. The two also agreed that their senior aides, including Secretary of State Marco Rubio, would meet next week at an unspecified location.

Fresh off brokering a ceasefire and hostage agreement between Israel and Hamas, Trump has said finding an endgame to the war in Ukraine is now his top foreign policy priority and has expressed new confidence about the prospects of getting it done.

Ahead of his call with Putin, Trump had shown signs of increased frustration with the Russian leader.

Last month, he announced that he believed Ukraine could win back all territory lost to Russia, a dramatic shift from the U.S. leader’s repeated calls for Kyiv to make concessions to end the war.

Trump, going back to his 2024 campaign, insisted he would quickly end the war, but his peace efforts appeared to stall following a diplomatic blitz in August, when he held a summit with Putin in Alaska and a White House meeting with Zelensky and European allies.

Trump emerged from those meetings certain he was on track to arranging direct talks between Zelensky and Putin. But the Russian leader hasn’t shown any interest in meeting with Zelensky and Moscow has only intensified its bombardment of Ukraine.

Trump, for his part, offered a notably more neutral tone about Ukraine following what he described a “very productive” call with Putin.

He also hinted that negotiations between Putin and Zelensky might be have to be conducted indirectly.

“They don’t get along too well those two,” Trump said. “So we may do something where we’re separate. Separate but equal.”

Madhani writes for the Associated Press.

What began as banter between fans during a contentious playoff game took a darker turn when a woman threatened to call ICE on a Southern California man during Tuesday’s National League Championship game between the Dodgers and the Milwaukee Brewers.

The exchange began when Dodgers fan Ricardo Fosado trash-talked nearby Brewers fans moments after third baseman Max Muncy clobbered a solo home run in the top of the sixth inning to give visiting Los Angeles a 3-1 lead.

Fosado repeatedly asked, “Why is everybody quiet?” to distraught Milwaukee fans in a social media clip that has since gone viral.

One fan, identified by Milwaukee media as an attorney named Shannon Kobylarczyk, responded by threatening to call U.S. Immigration and Customs Enforcement on Fosado.

“You know what?” she asked a nearby fan. “Let’s call ICE.”

Fosado, a former Bellflower City Council candidate, told Kobylarczyk to “call ICE.”

“ICE is not going to do anything to me,” said Fosado, who noted he was a war veteran and a U.S. citizen. “Good luck.”

On the video, the woman then uses a derogatory term to question Fosado’s masculinity, remarking, “real men drink beer.” Fosado was instead enjoying a fruity alcoholic beverage.

Fosado then told Kobylarczyk one last time to call ICE before calling her an idiot, punctuating the remark with an expletive.

An email to Fosado was not immediately returned Thursday.

Fosado told Milwaukee television station WISN 12 News that the incident “just shows the level where a person’s heart is and how she really feels as a human being.”

The station also confirmed that Kobylarczyk’s employment with the Milwaukee-based staffing firm Manpower had ended.

Kobylarczyk also reportedly stepped down from the board of Wisconsin’s Make-a-Wish chapter.

Fosado did not escape unscathed, however. He said he and a friend were ejected from the game shortly after the exchange.

The Dodgers ended up winning the game 5-1 and led the best-of-seven series, 2-0. The series now shifts to Dodger Stadium, with the first pitch of Game 3 is scheduled for 3:08 p.m. Thursday.

Image source: The Motley Fool.

Date

Thursday, Oct. 16, 2025 at 9:00 a.m. ET

Call participants

Chairman and Chief Executive Officer — Alan Schnitzer

Chief Financial Officer — Dan Frey

President, Business Insurance — Greg Toczydlowski

President, Bond & Specialty Insurance — Jeffrey Klenk

President, Personal Insurance — Michael Klein

Senior Vice President, Investor Relations — Abbe Goldstein

Need a quote from a Motley Fool analyst? Email [email protected]

Takeaways

Core Income — $1.9 billion in core income, or $8.14 per diluted share, driven by underwriting gains and increased investment income.

Return on Equity — Core return on equity was 22.6% for the quarter; trailing twelve-month core return on equity at 18.7%.

Underwriting Income — $1.4 billion pretax, doubling compared to the prior-year quarter, aided by reduced catastrophe losses and a 1.7-point improvement in the underlying combined ratio to 83.9%.

Net Investment Income (After Tax) — $850 million, a 15% year-over-year increase, driven by fixed income portfolio growth and higher yields.

Net Written Premiums — $11.5 billion in net written premiums, with Business Insurance at $5.7 billion (up 3%), Bond & Specialty at $1.1 billion, and Personal Insurance at $4.7 billion.

Segment Combined Ratios — Business Insurance: 92.9% (88.3% underlying); Bond & Specialty: 81.6% (85.8% underlying); Personal Insurance: 81.3% (77.7% underlying).

Shareholder Capital Return — $878 million returned, with $628 million in share repurchases and $250 million in dividends.

Adjusted Book Value Per Share — Adjusted book value per share was $150.55 at quarter end, up 15% from a year earlier.

Expense Ratio — 28.6% (year-to-date 28.5%), with management maintaining a 28% target for both 2025 and 2026.

Catastrophe Losses — $42 million pretax, described as “benign,” driven largely by tornado and hail events in the Central U.S.

Net Favorable Prior Year Reserve Development (PYD) — $22 million pretax (includes $277 million asbestos charge in Business Insurance, offset by favorable PYD in other lines).

Operating Cash Flow — Record $4.2 billion, with holding company liquidity of $2.8 billion at quarter end.

Share Repurchase Outlook — Management expects Q4 repurchases to reach about $1.3 billion, with a total of approximately $3.5 billion projected over Q3 2025 through Q1 2026, equating to a 5% reduction in share count.

Business Insurance Pricing Metrics — Renewal premium change (RPC) of 7.1% segment-wide, increasing to 9% ex-property; renewal rate change of 6.7%; retention at 85%.

Bond & Specialty Insurance — Segment retention of 87% in management liability, renewal premium change of 3.7% in domestic management liability, and a 40% increase in new lines of business sold to existing customers (private and nonprofit).

Personal Insurance Homeowners Metrics — Renewal premium change at 18%, expected to decrease to single digits in early 2026 as insured values align with replacement costs; retention at 84%.

Personal Insurance Auto Metrics — Combined ratio of 84.9%, underlying combined ratio of 88.3%, auto new business premium up year-over-year for the fourth consecutive quarter; retention at 82%.

Investment Portfolio Update — Portfolio grew by approximately $4 billion; more than 90% in fixed income with an average credit rating of AA; net unrealized investment loss narrowed from $3 billion to $2 billion after tax.

Debt Issuance — $1.25 billion issued (split between $500 million ten-year and $750 million thirty-year notes) for ordinary capital management.

Technology Investment — $13 billion invested since 2016 in technology, enabling a 300-basis-point reduction in expense ratio and access to over 65 billion clean data points to power AI and analytics initiatives, as disclosed by management.

Summary

Travelers (TRV -3.30%) reported substantial earnings growth, citing record profitability driven by improved underwriting and investment performance. Management highlighted excess capital and liquidity, with plans to accelerate share repurchases through Q1 2026 and indicated additional buybacks linked to the Canadian operations sale, specifically referencing a three-quarter period. The call outlined targeted underwriting strategies, with disciplined risk selection in property and actions to optimize exposure in high-catastrophe geographies. The company emphasized advancements in technology and AI, quantifying its scale, data advantage, and focus on sustainable cost improvements and operating leverage. Leadership reaffirmed a measured approach to capital deployment, prioritizing technology and potential M&A before returning excess to shareholders.

Chairman Schnitzer said, “we anticipate a higher level of share repurchase over the next couple of quarters,” underscoring shareholder return as a key use of surplus capital.

CFO Frey stated, “Our outlook for fixed income NII, including earnings from short-term securities, has increased from the outlook we provided a quarter ago,” signaling rising yield expectations for the investment portfolio.

President Klein provided forward guidance: We expect RPC to remain elevated and then drop into single digits beginning in early 2026.

President Toczydlowski disclosed middle market new business of $391 million—its highest third-quarter result—up 7% from the prior year, despite selective property underwriting and competitive market dynamics.

Industry glossary

Renewal Premium Change (RPC): The percentage change in premium for renewed policies, reflecting both pricing actions and changes in exposure or insured value.

Combined Ratio: A measure of underwriting profitability, calculated by summing incurred losses and expenses as a percentage of earned premiums; a ratio below 100% indicates underwriting profit.

PYC/PYD (Prior Year Reserve Development): The adjustment (favorable or unfavorable) to reserves set aside in prior periods for claims, as new information becomes available.

Retention: The proportion of policies or premium renewed with the company, stated as a percentage.

Middle Market: The business segment serving mid-sized commercial insurance customers, distinct from small businesses (“Select”) and large national accounts.

Travis: Travelers’ proprietary digital experience platform for distribution partners.

Full Conference Call Transcript

Alan Schnitzer chairman and CEO Dan Frey CFO and our three segment presidents. Greg Toczydlowski of Business Insurance, Jeff Klenk of Bond and Specialty Insurance, and Michael Klein of Personal Insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks, and then we will take questions before I turn the call over to Alan, I’d like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward looking statements. The company cautions investors that any forward looking statement involves risks and uncertainties and is not a guarantee of future performance.

Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10-Q and 10-Ks filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement, and other materials available in the Investors section on our website. And now I’d like to turn the call over to Alan Schnitzer.

Alan Schnitzer: Thank you, Abby. Good morning, everyone, and thank you for joining us today. We are pleased to report excellent third-quarter results. We earned core income of $1.9 billion or $8.14 per diluted share. Our return on equity for the quarter was 22.6%, bringing our core return on equity for the trailing twelve months to 18.7%. Very strong underwriting results and higher investment income drove the bottom line. Underwriting income of $1.4 billion pretax more than doubled compared to the prior year quarter, benefiting from both the lower level of catastrophe losses and higher underlying underwriting income. The underlying result was driven by higher net earned premiums and an underlying combined ratio that improved 1.7 points to an exceptional 83.9%.

Underwriting income was higher in all three segments. Our high-quality investment portfolio also continued to perform well, generating after-tax net investment income of $850 million for the quarter, up 15%, driven by strong and reliable returns from our growing fixed income portfolio. Our underwriting and investment results, together with our strong balance sheet, enabled us to return almost $900 million of capital to shareholders during the quarter, including $628 million of share repurchases. At the same time, we continue to make strategic investments in our business. Even after this deployment of capital, adjusted book value per share was up 15% compared to a year ago.

With strong results over the past year and a particularly light cat quarter, we have a higher than usual level of excess capital and liquidity. Consequently, we anticipate a higher level of share repurchase over the next couple of quarters. Dan will have more to say about that in a minute. Turning to the top line, we grew net written premiums to $11.5 billion in the quarter. In business insurance, we grew net written premiums by 3% to $5.7 billion, led by 4% growth in our domestic business. Excluding the property line, we grew domestic net written premiums in the segment by more than 6%. The declining premium volume in property continues to be a large account dynamic.

In fact, we grew property in both middle market and small commercial. We’ve seen this dynamic in the large property market before, and we won’t compromise our underwriting discipline. Over time, particularly as catastrophic events inevitably unfold, the value of that discipline and the cost to those who abandon it will become unmistakable. Renewal premium and change in business insurance was 7.1%, driven by continued historically high RPC in our middle market and select business businesses. Excluding the property line, renewal premium change in the segment was a very strong 9%, and renewal rate change was a very strong 6.7%. Greg will share additional detail by line. Retention in the segment was 85%.

Given the high quality of the book, we were very pleased with that result. In Bond and Specialty Insurance, we grew net written premiums to $1.1 billion with higher renewal premium change and continued strong retention of 87% in our high-quality management liability business. Net written premiums in our market-leading surety business remained strong. In personal insurance, written premiums were $4.7 billion with strong renewal premium change in our homeowners business. You’ll hear more shortly from Greg, Jeff, and Michael about our segment results. As we head toward the end of the year, our planning for 2026 is well underway. As always, that process involves assessing the environment ahead.

There are uncertainties out there: economic, political, geopolitical, not to mention the loss environment. We are very confident that we’re built and very well positioned for whatever lies ahead. We’re operating from a position of considerable strength. Profitability is strong, reflecting our leading underwriting expertise and the operating leverage we’ve built through a sustained focus on productivity and efficiency. Our competitive advantages have never been stronger or more relevant. Strong underwriting is the flywheel that sets everything in motion. Our premium growth at attractive margins has generated strong cash flow, which enables us to make strategic investments in our business, return excess capital to shareholders, and grow our investment portfolio.

Since 2016, we have successfully invested $13 billion in technology, returned more than $20 billion of excess capital to our shareholders, and grown our investment portfolio by nearly 50% to more than $100 billion. Scale matters, increasingly so. We have the scale to win in an environment where technology and AI will continue to segment the marketplace. We have a track record of identifying the right strategic priorities and driving value from them. You can see that in the 300 basis point reduction we’ve achieved in our expense ratio since 2016, even while we were significantly increasing our overall technology spend.

Importantly, our size gives us the data to power AI, creating a virtuous cycle: better insights, better decisions, better outcomes, more resources to invest. For example, our long-time focus on organizing and curating data has given us access to more than 65 billion clean data points from decades of history across multiple business lines. We leverage that to sharpen our underwriting and shape our claim strategies. With the vast majority of our business in North America, we hold a leading position in the largest and most stable insurance market in the world, an advantage that insulates us from much of the risk arising from the economic instability and geopolitical uncertainty around the globe.

Our fortress balance sheet and exceptional cash flow provide us with the financial strength to invest consistently in the business regardless of the external conditions. Our financial strength also enables us to manage comfortably through large loss events like the January California wildfires. When it comes to the loss environment, from weather volatility to the impact of social inflation on casualty lines, no one is better positioned. Diversification provides powerful protection. In fact, our business mix produces a consolidated loss ratio that’s actually less volatile than the loss ratio of our least volatile segment. That’s the power of a balanced and diversified portfolio. Equally important is our demonstrated ability to confront the loss environment head-on.

We have the data, the analytics, and the discipline to establish reserves and loss picks appropriately and generally ahead of the market. That matters because until you have an accurate view of the loss environment, your risk selection, underwriting, and claim strategies are all operating with the wrong inputs. Since our early identification of the acceleration of social inflation in 2019, we’ve grown the business and delivered significantly improved margins. Getting an accurate and timely view of the loss environment isn’t just about the balance sheet. It’s foundational to running the business effectively. Our internally managed investment portfolio was another source of strength.

Our disciplined focus on achieving appropriate risk-adjusted returns has served us exceptionally well through various markets, especially during periods of market turmoil. More than 90% of our portfolio is in fixed income with an average credit rating of AA. We’re highly selective. We don’t reach for yield. We hold the vast majority of our fixed income securities to maturity. And we carefully coordinate the duration of our assets and liabilities. The track record speaks for itself. Our default rates during the most challenging environments over the past two decades were a fraction of industry averages. This consistency comes from a world-class investment team, with extraordinary tenure and a shared long-term perspective.

In short, the franchise we’ve built, the capabilities we’ve developed, and our depth of expertise create advantages that are durable across operating environments. Before I wrap up, I’ll share that we’re just back from one of the industry’s premier conferences, where we had the opportunity to meet with dozens of our key agents and brokers, who collectively represent a substantial amount of our business. We left as convinced as ever that our position with the independent distribution channel is an unmatched strategic advantage. We heard clearly that our strategic investments are resonating and that looking ahead, we’re focused on the right priorities to extend that advantage. I want to acknowledge and thank all of our distribution partners.

I also want to reiterate our unwavering commitment to being an indispensable partner for them and the undeniable choice for their customers. To sum it up, we’re very well positioned and very optimistic about the road ahead. And with that, I’m pleased to turn the call over to Dan.

Dan Frey: Thank you, Alan. In the third quarter, we once again delivered excellent financial results on a consolidated basis and in each of our three segments. Core income for the quarter of $1.9 billion resulted in core return on equity of 22.6%, reflecting both excellent underwriting results and strong investment income. We generated higher levels of written premium and earned premium while delivering excellent combined ratios on both a reported and underlying basis. At 83.9%, the underlying combined ratio marked its fourth consecutive quarter below 85. The combination of higher premiums and the excellent underlying combined ratio led to an 18% increase in after-tax underlying underwriting income, which surpassed $1 billion for the fifth consecutive quarter.

The expense ratio for the third quarter was 28.6%, bringing the year-to-date expense ratio to 28.5%. We continue to expect an expense ratio of around 28% for the full year 2025 and expect to manage to that level again in 2026. Catastrophe losses in the quarter were fairly benign at $42 million pretax, consisting mainly of tornado hail events in the Central United States. Turning to prior year reserve development, we had total net favorable development of $22 million pretax. In Business Insurance, the annual asbestos review resulted in a charge of $277 million. Excluding asbestos, business insurance had net favorable PYD of $152 million driven by continued favorability in workers’ comp.

In Bond and Specialty, net favorable PYD was $43 million pretax with favorability in Fidelity and Surety. Personal insurance had net favorable PYD of $104 million pretax driven by favorability in auto. After-tax net investment income of $850 million increased by 15% from the prior year quarter. Fixed maturity NII was again the driver of the increase, reflecting both the benefit of higher invested assets and higher average yields. Returns in the non-fixed income portfolio were also up from the prior year quarter. During the quarter, we grew our investment portfolio by approximately $4 billion. Our outlook for fixed income NII, including earnings from short-term securities, has increased from the outlook we provided a quarter ago.

And we now expect approximately $810 million after tax in the fourth quarter. For 2026, we expect more than $3.3 billion, with quarterly figures starting at around $810 million in Q1 and growing to around $885 million in Q4. New money rates as of September 30 are roughly 70 to 75 basis points above the yield embedded in the portfolio. Turning to capital management. Operating cash flows for the quarter were a new record at $4.2 billion, and we ended the quarter with holding company liquidity of approximately $2.8 billion.

Interest rates decreased during the quarter, and as a result, our net unrealized investment loss decreased from $3 billion after tax at June 30 to $2 billion after tax at September 30. Adjusted book value per share, which excludes net unrealized investment gains and losses, was $150.55 at quarter end, up 8% from year end and up 15% from a year ago. Also of note for Q3, we issued $1.25 billion of debt back in July, with $500 million of ten-year notes and $750 million of thirty-year notes. This was simply ordinary course capital management, maintaining a debt-to-capital ratio in our target range as we continue to grow the business.

Sticking with the theme of capital management, we returned $878 million of our capital to shareholders this quarter, comprising share repurchases of $628 million and dividends of $250 million. As Alan shared, our very strong earnings over the past year have provided us with an elevated level of capital and liquidity well in excess of what we had planned to use for investment and to support continued growth. As a result, we expect to increase the level of share repurchases in the fourth quarter to roughly $1.3 billion.

Also, keep in mind that we previously shared our plan to deploy about $700 million from the sale of our Canadian operations, expected to close in early 2026, for additional share repurchases as well. So if we look across the three-quarter period from Q3 2025 through Q1 2026, our repurchases in Q3 combined with our current outlook for the next two quarters has us repurchasing a total of somewhere around $3.5 billion worth of our stock. Using the average share price over the past thirty days for purchases during the next two quarters, that would result in a reduction of our outstanding share count of about 5% in the nine-month period.

Of course, the actual amount and timing of repurchases will depend on a number of factors, including the timing of the closing of the transaction in Canada, actual quarterly earnings, and other factors we disclose in our SEC filings. Recapping our results, Q3 was another quarter of excellent underwriting profitability on both an underlying and as-reported basis, and another quarter of rising net investment income. These strong fundamentals delivered core return on equity of 22.6% for the quarter and 18.7% on a trailing twelve-month basis, and position us very well to continue delivering strong results in the future. And now for a discussion of results in Business Insurance, I’ll turn the call over to Greg.

Greg Toczydlowski: Thanks, Dan. Business Insurance had a very strong quarter, delivering a record third-quarter segment income of $907 million and an all-in combined ratio of 92.9%. The quarter reflected relatively benign catastrophes and the continued strong contribution from our exceptional underlying underwriting results. This quarter’s underlying combined ratio of 88.3% marked the twelfth consecutive quarter where we’ve produced an underlying combined ratio below 90%. We’re pleased that our ongoing strategic investments have contributed to this sustained level of profitability. In particular, through meaningful advancements in data and analytics, we continue to advance our underwriting tools.

One specific highlight is the development and utilization of sophisticated models that derive risk characteristics, refine technical pricing, and summarize historical and modeled loss experience, all of which is provided to our underwriters at the point of sale. Moving to the top line, our net written premiums increased to an all-time third-quarter high of $5.7 billion. We grew our leading middle market and select businesses by 7% and 4%, respectively. These two markets make up 70% of the net written premiums in business insurance. We saw a decline in net written premiums in National Property and Other, which, as you heard from Alan, reflects our disciplined execution in terms of risk selection, pricing, and terms and conditions.

As for production across the segment, pricing remained attractive with renewal premium change just over 7%. Renewal premium change remains strong in select and middle market. From a line of business perspective, renewal premium change was positive in all lines, double digits in umbrella, CMP, and auto, and up from the second quarter or stable in all lines other than property. As you heard from Alan, excluding the property line, renewal premium change in this segment was 9%. Retention remained excellent at 85%, and new business of $673 million was about flat to a very strong prior year level. We’re very pleased with these production results and particularly our field’s execution for our proven segmentation strategy.

Across the book, pricing and retention results this quarter reflect excellent execution, aligning price, terms, and conditions with environmental trends for each lot. As for the individual businesses, in select, renewal premium change of 10.8% was about flat with the second quarter. Retention ticked up as expected as we near completion of our targeted CMP risk return optimization efforts. And lastly, for Select, we generated new business of $134 million, up 3% over the prior year. As we’ve mentioned previously, we’ve made meaningful strategic investments in this market in both product and user experience.

Our new BOP and auto products have been well received in the market, and we’re pleased that the industry-leading segmentation contained in both products is contributing to profitable growth. We’re also very pleased with the success of Travis, our digital experience platform for our distribution partners. As we continue our strategic rollout, Travis is already producing over 1 million transactions annually. In our core middle market business, renewal premium change of 8.3% was also about flat sequentially from the second quarter. Price increases remain broad-based as we achieved higher prices on more than three-quarters of our middle market accounts. And at the same time, the granular execution was excellent, with meaningful spread from our best-performing accounts to our lower-performing accounts.

We’re pleased that retention of 88% remained exceptional given the level of price increases we achieved. And finally, new business of $391 million was our highest ever third-quarter result and up 7% over the prior year. We’re pleased with the new business risk selection and strength of pricing and overall with the combination of strong returns and customer growth in middle market. On a strategic note for middle market, we continue to enhance our industry-leading underwriting workstation with models that assess new business opportunities for risk characteristics with the propensity to produce the highest level of lifetime profitability.

This information helps our field organization focus on the highest priority opportunities, resulting in a greater likelihood of success in winning more accounts that contribute to strong margins. To sum up, Business Insurance had another terrific quarter. We’re pleased with our execution in driving strong financial and production results while continuing to invest in the business for long-term profitable growth. With that, I’ll turn the call over to Jeff.

Jeffrey Klenk: Thanks, Greg. Bond and Specialty delivered very strong third-quarter results. We generated segment income of $250 million and an outstanding combined ratio of 81.6%, nearly one point better than the prior year quarter. The strong underlying combined ratio of 85.8% drove very attractive returns in the segment. Turning to the top line, we grew net written premiums in the quarter to $1.1 billion. In our high-quality domestic management liability business, renewal premium change improved to 3.7% while retention remained strong at 87%. These results reflect our intentional and segmented initiatives to improve pricing in certain lines, with a focus on employment practices liability, cyber, and public company D&O.

We’re pleased with the strong underlying pricing segmentation achieved by our outstanding field organization on both renewal and new business, enabled by our advanced analytics and sophisticated pricing models. New business was lower than in 2024, as Corvus production was reflected as new business in the prior year quarter and is now mostly reflected as renewal premium. Comparisons to prior year new business levels will be similarly impacted for the remainder of the year. Outside of the Corvus impact, we’re pleased with early returns on multiple tech and operational investments we’ve made to drive account growth. For example, in our private and nonprofit business, we’re leveraging predictive analytics and AI to enhance our customer segmentation and sales effectiveness.

We’re pleased that these initiatives drove a 40% increase in new lines of business sold to existing customers as compared to the prior year quarter. Turning to our market-leading surety business, where production can be lumpy based on the timing of bonded construction projects, net written premiums remain strong relative to the record high quarter in the prior year. This reflects our customers’ continued confidence in our industry-leading surety expertise and value-added service offerings, as well as benefits from digital investments we’ve made to enhance distribution experiences in our small commercial surety business.

So we’re pleased to have once again delivered strong results this quarter, driven by our continued underwriting and risk management diligence, excellent execution by our field organization, and the benefits of our market-leading competitive advantages. And with that, I’ll turn the call over to Mike.

Michael Klein: Thanks, Jeff, and good morning, everyone. In Personal Insurance, we delivered third-quarter segment income of $807 million, an excellent result that reflects the continued impact of our disciplined approach to selecting, pricing, and managing risks. The combined ratio of 81.3% improved 11 points relative to the prior year quarter, driven primarily by lower catastrophe losses and a lower underlying combined ratio. The underlying combined ratio of 77.7% was five points better compared to the prior year quarter, driven by continued improvement in both homeowners and other and auto.

Net written premiums of $4.7 billion in the third quarter reflect our continued focus on improving profitability in homeowners while seeking growth in auto as we execute our strategies to deliver appropriate risk-adjusted returns across the portfolio. The ceded premium impact of the enhanced personal insurance excess of loss reinsurance program we announced last quarter reduced net written premium growth in the quarter by one point as the full year’s worth of ceded premium was booked in the third quarter. In auto, the third-quarter combined ratio was very strong at 84.9%, reflecting lower catastrophe losses, a strong underlying combined ratio, and favorable net prior year development.

The underlying combined ratio of 88.3% improved by 2.9 points compared to the prior year quarter. The improvement was driven by favorable loss experience in bodily injury and, to a lesser extent, vehicle coverages. Similar to last year’s third-quarter result, this quarter’s underlying combined ratio included a two-point benefit related to the re-estimation of prior quarters and the current year. The year-to-date underlying combined ratio was also 88.3%, reflecting sustained profitability in an auto book that is larger than it was five years ago, both in terms of premium dollars and policy count.

Looking ahead to 2025, it’s important to remember that the fourth-quarter auto underlying loss ratio has historically been six to seven points above the average for the first three quarters because of winter weather and holiday driving. In Homeowners and Other, the third-quarter combined ratio of 78% improved by 13.5 points compared to the prior year quarter, primarily because of lower catastrophe losses and improvement in the underlying combined ratio. Net prior year development was favorable but lower compared to the prior year. The underlying combined ratio of 68% improved by almost 6.5 points compared to the prior year quarter. The year-over-year favorability in homeowners was primarily related to the benefit of earned pricing, as well as favorable non-catastrophe weather.

Overall, these outstanding results reflect favorable weather conditions throughout the third quarter, along with our actions to manage exposures in high catastrophe risk geographies to help optimize risk and reward. Turning to production, we’re making progress in positioning our diversified portfolio to deliver long-term profitable growth. While our production results don’t quite show it yet, we’re confident that the actions we’re taking will build momentum toward this objective. In domestic auto, retention of 82% remained consistent with recent quarters. Renewal premium change of 3.9% continued to moderate and will continue to decline in the fourth quarter, reflective of improved profitability and our focus on generating growth.

Auto new business premium was up year over year for the fourth consecutive quarter, as new business momentum continued in states less impacted by our property actions. In Homeowners and Other, retention of 84% remained relatively consistent with recent quarters. Renewal premium change remained strong at 18%, as we continue to align replacement costs with insured values. We expect RPC to remain elevated in the fourth quarter and then drop into single digits beginning in early 2026 as values will have largely aligned with replacement costs. We continued to execute actions to reduce exposure and manage volatility in high-risk catastrophe geographies in the quarter, causing further declines in property new business premium and policies in force.

Most of our property actions will be completed by the end of the year, at which point the downward pressure on both property and auto growth should begin to moderate. As we conclude this year and head into 2026, we’re focused on building momentum toward generating profitable growth.

To that end, we have a range of actions currently or soon to be in market, including the following: adjusting pricing, appetite, terms, and conditions to better reflect improved profitability in both Auto and Home; removing temporary binding restrictions and winding down some of our property new non-renewal actions in certain geographies; appointing new agents and partnering with existing agents to consolidate books of business; continuing to modernize our specialty products and platforms; and investing in artificial intelligence and digitization to deliver better experiences for our agents and customers. These messages resonate as we share them in the marketplace, reinforcing our commitment to being the undeniable choice for consumers and an indispensable partner for our agents.

To sum up, we delivered terrific segment income as our team continued to invest in capabilities and deliver value to customers and agents. These results position us well to build on a long track of profitably growing our business over time. Now I’ll turn the call back over to Abby.

Abbe Goldstein: Thanks, Michael. And with that, we’re ready to open up for Q&A.

Operator: Thank you. We will now begin the question and answer session. Your first question today comes from the line of Gregory Peters from Raymond James.

Gregory Peters: Well, good morning, everyone. Boy, you’re producing great bottom line results. Kind of surprising the stock’s down as much as it is on the open. I think it’s probably a reflection of the top line. And I know you spoke in detail about the different headwinds that you’re facing, whether it’s in business insurance, the property, Corvus and Bond and Specialty, or the underwriting actions in personal insurance that have affected your top line. When you go beyond the balance of this year and you start thinking at 26%, 27%, what does the Travelers business model look like in terms of top line growth on a consolidated basis? And how are you thinking about them?

Alan Schnitzer: Hey, good morning, Greg. It’s Alan. Thanks for the thoughts and the question. So we’re not going to give outlook on the top line, as you can imagine. But clearly, we understand that in order to meet our objective of delivering industry-leading return on equity over time, we need to grow over time. So it’s a priority for us. And if you look back over the last couple of years, we’ve been very successful with that. In our, you know, we, as you noted by segment, we’ve talked about what’s driving the results this quarter. But I guess what I would say is we are very confident that we’ve got the right value proposition.

We’re investing in the right capabilities to make sure we’re positioned to grow this business. So we feel very good about the execution in the quarter. We feel very good about what we’ve accomplished in recent periods, and we feel very good about the outlook.

Gregory Peters: Okay. The other I seem to ask this like every other quarter on the technology front, but you keep bringing it up, talked about the digital initiative you have going on in business insurance. Talk about some of the stuff going on in personal insurance. I think one of your peers came out earlier in the third quarter and talked about the potential of artificial intelligence to deliver human resource savings and headcount reductions over time of maybe up to 20%.

I’m just curious if we can just go back to, I know you’ve got best use case on technology and AI, but go back to how you’re thinking about this in the three to five-year period in terms of what it might mean to your expense ratio?

Alan Schnitzer: Yes. So Greg, I’ll tell you, we are very bullish on AI, and we’re leaning into it. You know, we’re spending, you know, more than a billion dollars a year on technology. A lot of that is focused on AI. We expect significant benefits from it. And I think we’ve got a long track record, as I said in my prepared remarks, of identifying the right strategic initiatives and driving value from them. We’re not going to tell you what our plan is for the expense ratio beyond next year, but I’ll also tell you that more than our focus is on the expense ratio, it’s on creating operating leverage.

And that’s what gives us the flexibility to deploy those gains however we want to deploy them. And so maybe it’ll be efficiency, maybe it’ll be productivity, but we are very bullish about the opportunity for investments that we have underway. We’re very bullish about the data we have to fuel the AI. And think that it’ll make a big difference in the years to come.

Gregory Peters: Got it. Thanks for the answers.

Operator: Thank you. Your next question comes from the line of David Motemaden from Evercore. Your line is open.

David Motemaden: Hey, thanks. Good morning. I had a question. You gave the RPC and rate ex property. I was wondering, that’s a new disclosure. Wondering if you can just talk about what that was last quarter versus this quarter and then maybe zooming in specifically in business insurance. What do you guys see in property pricing outside of national property this quarter?

Greg Toczydlowski: Yes, certainly. Well, on the first one, David, it is a metric that we’re not going to give every quarter, and we’re not going to go back and give that. We offered it up this quarter just to give you some color and let you know how much property the leverage it had on the pricing for this particular quarter. As we’ve shared with you, the large property has definitely been a market where typically leads in terms of when softening may happen, and it certainly has been the case over the last couple of quarters. In the select and middle market, to directly answer your question, we continue to get positive price increases there.

But it’s certainly, we’re feeling some deceleration. But again, certainly still seeing positive increases.

David Motemaden: Got it. Thank you. And then maybe this is just sort of related to your answer there. But on business insurance premium growth by market. So it’s good to see the tick up in select year over year and national accounts, you know, sort of we know the story there. But I’m surprised we saw the deceleration in growth in middle market. I was hoping you could just impact that a little bit. Is that just sort of the property dynamics you just mentioned?

Greg Toczydlowski: Yes. And if you’re looking at overall quarter of middle market, I think you’re reading that wrong. The quarter alone was up for middle market 7% relative to year to date of five.

David Motemaden: Got it. Yeah. No, I was just looking at the because I know 1Q had the reinsurance dynamic. So I was just comparing it to 2Q, the 10 decelerating to seven. That’s what I was looking at there. But, no, appreciate the answer.

Operator: Your next question comes from the line of Mike Zaremski from BMO. Your line is open.

Michael Zaremski: Great. My first question is on the loss cost trend line. I know it’s not easy pinning a broad brush, but if we look at kind of your reserve release trend line, loss ratio trend line, we’re also adding IBNR. But a lot of good things going on. Curious if your view on loss cost inflation has changed at all or directionally, is it the I feel like you’ve only raised it over recent years. Over long periods of time. It flattening out? Thanks.

Dan Frey: Hey, Mike, it’s Dan. So another quarter of net favorable PYD despite the asbestos charge. I don’t really think you can put a trend on PYD. Really what matters for us is in aggregate across the enterprise is that favorable or unfavorable, and we’ve got now a very long track record of generally having that favorable. As it relates to loss trend, we haven’t explicitly commented on loss trend for a while because we think it’s just too narrow a way to look at the business in terms of what’s pure rate versus what’s some blended number of loss trend, but it hasn’t moved dramatically in recent periods. Alan’s talked about that in prior quarters.

We do take a look at it every quarter. Some lines do move up a little bit. Some lines do move down a little bit over time. But it’s been pretty stable for a while now. Mike, there was nothing in the quarter that particularly surprised us when it comes to loss activity.

Michael Zaremski: Okay, great. And my follow-up is honing in on the home segment. Maybe you need a comment on auto too since there’s a lot of bundle in there. But if we look at the RPC trends, they remain very high on I’m assuming there’s terms and conditions changes that you’re incorporating in kind of those double-digit RPC increases. But the last few years haven’t been great for you all in the industry. Consensus kind of has you guys pegged at a 95 combined ratio for the foreseeable future in home. If you can kind of remind us what do we expect RPC to eventually fall? Are those terms and conditions changes going to help?

Is 95% the right combined ratio that you guys are targeting given how profitable auto is? Thanks.

Michael Klein: Sure. Thanks, Mike. It’s Michael. So just to unpack the RPC part of your question for starters, as I mentioned in my prepared remarks, RPC remains elevated. Again, it’s rate and exposure, right? So RPC remains elevated largely because we’re raising insured limits to keep up with rising replacement costs. And my point about RPC dropping to single digits in 2026 is we’ll have largely caught up in getting replacement costs in line with insured values. And so the change in RPC as we head into 2026 will really be those the premium impact from increasing coverage A, the dwelling limits on property coming back to more normal levels.

Yes, baked into RPC is also a reflection of a number of the other actions we’re taking on the book. I think increasing deductibles, particularly across the Midwest, think different strategies around targeted limits on how big a coverage A we’re going to write in some hail-prone geographies, other things like that are all rolled into that figure. And again, I think it’s just reflective of the actions that we’re taking to improve the profitability of that book. As respect to target combined ratio, we’re not going to really disclose the target combined ratio by line. We are certainly encouraged by the progress we’ve made, particularly in improving the underlying combined ratio in property.

It’s down period to period, quarter over quarter for something like the last ten or eleven quarters in a row. So it’s demonstrative of the progress that we’re making there. And again, continue to be pleased with our progress there.

Operator: Your next question comes from the line of Meyer Shields from KBW. Your line is open.

Meyer Shields: Great, thanks. Good morning. I don’t know if this is a question for Alan or Greg, but is there really a disentangling the how much of a property premium decline in BI is from nonrenewed business as opposed to accepting lower rates because you still have adequacy?

Alan Schnitzer: Meyer, I don’t think we’re gonna unpack that. Certainly not right here right now. I don’t think we’re gonna get into that level of detail. And I honestly, we don’t have that level of data at our fingertips right now.

Meyer Shields: Okay. Fair enough. Also, to talk a little bit, Michael talked about, I guess, book rolls in personal lines. Does that involve any changes to agency commissions? Or what other tools are you using to encourage that?

Michael Klein: Sure, Meyer. Thanks for the question. Yes. So typically, and again, book growth consolidations in the personal lines space are pretty much standard operating procedure. We had stepped away from them. The reason I mentioned it is because we had stepped away from them as we were working to improve profitability. And I think it’s an important point to recognize that we’re back actively engaged in the marketplace in those conversations with agents looking for situations where their book of business may be disrupted for one reason or another. It is fairly typical in a book consolidation scenario to offer enhanced commission on that book roll for the first term as that business comes over.

Operator: Your next question comes from the line of Tracey Banque from Wolfe Research. Your line is open.

Tracey Banque: Good morning. My first question is for Mike. I’m curious what you’re seeing that’s driving favorable loss experience in bodily injury. And, to a lesser extent, vehicle coverages?

Michael Klein: Tracy. Thanks for the question. I mean, really is a combination of favorable frequency in both bodily injury and physical damage losses, as well as continued moderation in severity again really across coverages.

Tracey Banque: Got it. And a follow-up on Dan’s comment about elevated level of capital liquidity. Driven by your earnings that’s well in excess of your investment needed to growth. As you know, capital is a big focus for me. And I’ve really not seen so much excess capital for the entire sector. Is it fair to assume that your excess capital position surpasses the buyback targets you shared and could we expect concurrent deployment of capital on the technology side and or M and A.

Dan Frey: Yes, Tracy, it’s Dan. So I think I understand the question. So I guess I’d start by saying, look, there’s no change at all to what has been now our long-standing capital management philosophy, which is we’ve got a business that’s generating terrific margins. We generate a lot of capital. We generate more than we need just to support the growth of the business. First objective for that excess capital is going to be to find a way to deploy it and generate a return. And so we’ll make all the technology investments that we think we can and should make. Always be open to M and A, open to any opportunity to generate returns on an excess capital.

Once we’ve exhausted all those opportunities, then it’s not our capital, it’s the shareholders we’re going to give it back through dividends and buybacks.

Tracey Banque: Got it. Thank you.

Operator: Your next question comes from the line of Robert Cox from Goldman Sachs. Your line is open.

Robert Cox: Hey, thanks. Good morning. Yes, just wanted to go back to the removal of the growth restrictions. It looks like a couple of parts of the business, CMP, within Select and then also in homeowners you give us a sense of how much business is being unlocked for growth here? And if easing those can result in a noticeable uplift in growth?

Greg Toczydlowski: Robert, this is Greg. I’ll start off and then Michael can talk about the PI. We’ve been talking about the select mix optimization for some time now. And as we begin to finalize some of those actions, you saw a slight tick up in our retention. We’re not really going to quantify what that means for overall growth, but that was the reason that we pointed out the slight pickup in retention.

Michael Klein: Yeah. And Robert, Michael, up here on the personal lines side. I think the important point to note in terms of the impact on growth in personal insurance as we relax those property restrictions as our goal is to leverage that property capacity to write package business. And so if you my suggestion, if you want to sort of dimensionalize it, is just look back historically at retention in new business levels in property and in auto. You can see that retention remains depressed right now given the actions we’re taking. Again, the property actions depressed retention in both lines.

And you can see particularly in property the new business levels are pretty significantly depressed relative to what they’ve run historically. And so those levers, I think, would give you a way to kind of dimensionalize it.

Robert Cox: Okay, great. Thanks for the color there. And then I just wanted to follow-up on the business insurance underlying loss ratio. When you think about the margin improvements during this year, are we seeing improved picks in casualty at all? Or is the improvement year to date largely been a shift lower in some of the shorter tail exposures?

Dan Frey: Hey, Rob, it’s Dan. Look, I think if you look at the improvement in you’re talking about business insurance specifically, right?

Robert Cox: Yes. Is that correct?

Dan Frey: Yes. I think the single biggest factor we’d say in terms of that sort of 50 basis point improvement on a year-to-date basis has been the continued benefit of earned price. So in the casualty lines especially, and we’ve talked about this a couple of times, we’re continuing to include some provision for a level of uncertainty in those lines that we think is going to serve us well in the long term as opposed to taking those picks down the improvement in the loss ratio. You have other things that impact every quarter too. Mix will change a little bit.

But headline number the main driver of the improvement year over year has been the continued benefit of earned price.

Robert Cox: Thank you.

Operator: Your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.

Elyse Greenspan: Hi, good morning. I guess I want to stick there with business insurance. So if we look I guess, just specifically at the underlying loss ratio that was stable year over year in the Q3. So I’m not sure if there were certain pushes and pulls that you want to point out specific to the third quarter or if maybe this quarter rate you know, earned rate, you know, got close to trend and that’s kind of what we’re seeing in the numbers. And just how do we think from here, you know, just given, you know, slowing pricing, which I know is mostly driven by fiber property, do we think about just the underlying loss ratio and BI?

Should we think about that starting to deteriorate as rate gets closer to trend?

Dan Frey: Yeah. Good morning, Elyse. Let’s just start with where the margins are in business. I mean, they are pretty spectacular margins. And I don’t think we’re to parse out that level of detail. We’re certainly not going to get into what the outlook for margins is. But I’ll tell you at these margins, we really like the margins and we really like the business that we’re putting on the books at these margins.

Elyse Greenspan: Okay. And then I guess, you know, my second question would be, I guess, maybe shifting to personal auto. Have you guys did you guys see any impact of tariffs at all in the quarter, whether it was September relative to July and August? And how are you guys currently thinking about a potential impact of tariffs on the margins in that business?

Michael Klein: Sure Elyse, it’s Michael. Thanks for the question. I would say we haven’t seen a ton of impact to date from tariffs. But our results for the third quarter do include a small impact from tariffs. That said, it’s well below the single-digit severity numbers that we discussed a couple of quarters ago. There certainly is the potential for that impact to grow the longer tariffs remain in effect. As you know, it’s a very fluid situation. Tariff changes weekly, daily, fairly frequently. So predicting is challenging, but we are keeping a very close eye on it. To your point, there are some external industries that show some moderate increases. Others look largely unaffected.

So we’re going to continue to closely monitor it. But there is a little bit of a provision in the third quarter results for tariff increases, but it’s not yet at the level that we had potentially forecast. And just to be clear, Michael, correct me if I’m wrong, we’ve got a provision in there because we expected that we might see it. We’re not really seeing it in any meaningful way.

Michael Klein: Yes. It’s significant. Again, we’re seeing it on the margins, and so we booked the provision for it. But again, well below the mid-single-digit level that we had described before.

Elyse Greenspan: Thank you.

Operator: Your next question comes from the line of Paul Newsome from Piper Sandler. Your line is open.

Paul Newsome: Good morning. Yesterday, Progressive gave us a little unpleasant news about their poor charge. Just curious if that is something that you’ve looked at yourself and I’m also curious about the accounting related to these kinds of things. I know that orders not unique. There are other states that have restrictions on proper on profitability. Just curious about how you account for that as well.

Michael Klein: Sure, Paul. It’s Michael. I’ll start with sort of response on the overall situation. Maybe Dan can chime in on accounting. The Florida excess profit provision and the statute isn’t actually a new thing. It’s sort of standard operating procedure in Florida. It’s actually fairly infrequent that people have to return premiums given the statute. What I would say about our business in Florida is we’re pleased with our auto business in Florida. But we don’t expect to need to make a return of premium to policyholders in Florida due to excess profits for the 2023 to 2025 accident year period for which we would make the filing in 2026.

The other thing I would say is given the size of our business in Florida, think of our Florida auto business less than 10% of our PI auto business. Think of the Florida PI auto business 1.5% of Travelers’ overall premium. I mean, it’s just not going to be a significant issue for the organization even if we were to need to make a return of premium, which we don’t anticipate.

Dan Frey: Then Paul, it’s Dan. With regard to the accounting, I guess I’m going to not give a definitive answer. And one of the reasons I won’t give a definitive answer is if you go back to COVID, when we and some of our peer companies returned premium because frequency and losses declined so rapidly, so quickly, not every company accounted for that the same way. So we had a view of how that should be accounting for. That’s what we reflected in our results. Other peer companies had slightly different view of how that should be accounted for.

And reflected it differently in their results, by which I mean some companies took that as an expense, some companies took that as a return to premium. And as Michael said, since we’ve not had to deal with the Florida excess profit issue, we haven’t done a real deep dive on how we think it would come through the P and L. But most importantly, I think as Michael said, we ever had it, we wouldn’t expect it to be much of an impact on our consolidated results in any event.

Paul Newsome: Great. That’s super helpful. That’s all I had. Appreciate it.

Operator: Your next question comes from the line of Josh Shanker from Bank of America. Your line is open.

Josh Shanker: Yes. Very much for taking my question here at the end. I was trying to understand a little bit about the retention effective retention numbers that you give in the back of the supplement about auto and home. Your retention bottomed, I guess, about three quarters ago. And it’s ticked up, but you’re still losing more of cars or more policies than you were before. Is that a projected retention based on where you’re pricing the business today, or have you already seen retention bottom and it’s improving here?

Dan Frey: Josh, it’s Dan. So retention is a way that we try to give you color relative to what’s the change in net written premium. So a couple of things we know definitively. We know definitively at any point in time how many policies are enforced. We give you that number. We know definitively at any point in time how much premium made it into the ledger. We give you that number. Production statistics like retention, renewal premium change, new business, are all in the disclosure say. They’re all subject to actuarial estimate of what do we think the ultimate retention is going to be.

Because you could start on day one of a policy and look like you’d retained all of them, but we know that there’s some peer period of those that are going to cancel early in the term and either go somewhere else or drop their insurance. So it’s very challenging to do, I think, you’re trying to do at a very specific level and go A plus B equals C. Production statistics are really color around what’s happening with the top line. And I’m sorry, can’t give you a more helpful answer than that.

Josh Shanker: If I look back at 3Q 2024, is that a more because now you have all that data. Is that a more accurate representation of what you know to have happened over the past year?

Dan Frey: Production statistics do get updated. So if you went back in true in business insurance, true in personal insurance, if you looked at historical quarters, you could almost do a triangle of what was retention as originally reported because it’s an estimate. We true those up as time goes on.

Josh Shanker: And can you confidently say, and I’ll leave it at this, that retention has improved from where it was a year ago, or it’s still not certain?

Dan Frey: I think we’re pretty confident in saying that retention has improved from where it was a year ago.

Josh Shanker: Okay. Thank you.

Operator: Your next question comes from the line of Alex Scott from Barclays. Your line is open.

Alex Scott: Hey, thanks. First one I have is on commercial auto and general liability. Just noticing, you know, those are, you know, sort of the lines where net written premium is growing more and was just interested in if that’s more a reflection of, you know, the rate’s obviously different there than maybe some of the other lines where there’s pressure. But, you know, is there anything about the commercial auto product launch and some of the things you’re doing that are actually causing you to lean into businesses a little more?

Greg Toczydlowski: Hey, Alex. This is Greg. You know, just to get the second part of your question, we did roll out a new automobile product across all business insurance that includes select and middle market that would roll up into the aggregate commercial auto numbers. So we do think that’s our most sophisticated product in auto that we brought into the marketplace. So that helps us from a segmentation point of view. But we’ve been very thoughtful around our growth in commercial auto. The thrust of what you’re seeing there in premium deltas really is based on renewal premium change. And that’s why I gave you some of that color in my prepared comments at a product line level.

Alex Scott: Got it. Okay. That’s helpful. And over in personal lines, I mean, the appetite you’ve been pretty clear on in that should help on the growth front. Is there anything from just a marketing spend kind of standpoint and thinking through the expense ratio that we should be aware of is you think through ramping up growth?

Michael Klein: Sure, Alex. It’s Michael. I would say that on the margins, we have increased our marketing spend in personal insurance largely in support of our direct-to-consumer business. But it’s a very different ballgame for us than marketing spend other places. Our direct-to-consumer business is less than 10% of our overall business. So we are on the margin increasing marketing spend there to drive more growth. But it doesn’t have a dramatic impact on the overall financial results of the business.

Alex Scott: Got it. Thank you.

Operator: And we have time for one more question. And that question comes from the line of Ryan Tunis from Cantor. Your line is open.

Ryan Tunis: I just had a question, just one on in business insurance, just on incurred loss. But I guess it’s, in national property, we don’t trend losses like we do or property for that matter. We trend losses like we do with other stuff, but certainly are still attritional losses on that line. I guess I’m just curious if those attritional losses have run better or worse or in line with your expectations so far this year? Thanks.

Dan Frey: Hey, Ryan, it’s Dan. I think the quarter results are really strong. Weather was generally leaning towards favorable, including in business insurance. If you’re wondering about whether it’s so significant that we would say this isn’t really a clean jump-off point for business insurance and you’d make some big adjustment, we would say no sort of inside of the normal realm of variability from quarter to quarter, but leaning towards the favorable.

Operator: And we have reached the end of our question and answer session. I will now turn the call back over to Abby Goldstein for closing remarks.

Abbe Goldstein: Thanks, everyone, for joining us today. And as always, please follow up with Investor Relations if you have any other questions. Have a good day.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.

Image source: The Motley Fool.

DATE

Wednesday, October 15, 2025 at 5:00 p.m. ET

CALL PARTICIPANTS

Chief Executive Officer — Shelley Simpson

Chief Financial Officer — Brad Delco

Executive Vice President, Commercial — Spencer Frazier

Chief Operating Officer — Nick Hobbs

President, Highway Services — Brad Hicks

President, Intermodal — Darren Field

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

Revenue — Roughly flat year over year, indicating limited top-line growth in a soft freight demand environment.

Operating income — Operating income improved 8% compared to the prior year period, reflecting successful cost discipline and margin repair efforts.

Diluted earnings per share — Diluted earnings per share increased 18% compared to the prior year period, despite inflationary headwinds in insurance, wages, and equipment costs.

Share repurchases — Over $780 million used to buy back 5.4 million shares year to date, maintaining balance sheet leverage around one times trailing twelve-month EBITDA.

Cost reduction initiative — More than $20 million of structural costs eliminated, with the majority of the $100 million target expected to be realized in 2026.

Intermodal volume — Decreased 1% year over year, with monthly trends of -3% in July, -2% in August, and flat in September.

Dedicated Contract Services (DCS) sales — Approximately 280 trucks sold, with ongoing visibility to fleet losses resulting in a truck count decline of about 85 units sequentially.

DCS margins — Maintained double-digit margins despite mature location losses and startup costs for new business.

ICS (Brokerage) rates — Reflecting improved new customer wins during the bid season.

Net Promoter Score (NPS) — Achieved a score of 53 in Intermodal.

Final Mile Services — Ongoing demand weakness for furniture, exercise equipment, and appliances, with challenged market conditions expected through year-end and anticipated legacy appliance business losses in 2026.

Safety performance — Achieved record-low DOT preventable accidents per million miles for the third consecutive year, improving further through the current period.

Regulatory impact — Recent U.S. regulations, such as English language proficiency and non-domiciled CDL, are reducing industry capacity but are not materially affecting the company’s own operations.

Technology & automation — Deployed 50 AI agents, automated 60% of third-party check calls, more than 73% of orders are auto-accepted, automated 80% of paper invoice payments, and saved about 100,000 hours annually across highway, dedicated, and CE teams.

Capital allocation priorities — Investment in the business is prioritized over buybacks and dividends, with an emphasis on maintaining investment-grade leverage.

SUMMARY

Management of J.B. Hunt Transport Services (JBHT -0.53%) reiterated strategic clarity on long-term operational excellence, pursuing aggressive cost reductions and process automation to strengthen margins in challenging market conditions. Executive commentary directly addressed the implications of rail industry consolidation, emphasizing the company’s experience in prior mergers and robust long-term agreements with key rail providers. Sequential volume trends in Intermodal highlighted ongoing softness offset by service-driven share gains. Technology deployment and automation initiatives were positioned as critical levers for future efficiency gains and margin sustainability. Near-term expectations for DCS and Final Mile Services included persistent end-market headwinds but pointed to a return to modest fleet growth and targeted business mix shifts in 2025 and 2026. The company explicitly reaffirmed its balanced capital allocation strategy focused on core investment.

Simpson stated, “we are making good progress towards reaching our $100 million savings goal and advancing towards our long-term margin target.”

Delco highlighted, “productivity and cost management efforts more than offset those headwinds to drive our improved results.”

Frazier noted, “truckload capacity continued to exit the market, and the pace of exits is accelerating,” though soft demand is limiting immediate pricing effects.

Spencer Frazier explained that intermodal volumes benefited from conversions “primarily because more customers are converting freight to intermodal from the highway as they see our commitment to operational excellence differentiating J.B. Hunt Transport Services, Inc.”

Brad Delco directly attributed recent improvements to “service efficiencies, balancing our networks, dynamically serving customers to meet their needs, focusing even more on discretionary spending, and driving greater asset utilization.”

Hicks indicated DCS expects “operating income to be approximately flat compared to 2024,” with potential for further growth in 2026 driven by new business startups.

Simpson emphasized strategic adaptability to rail consolidation: “our scale and influence allow us to coordinate complex intermodal moves and deliver unique solutions for our customers.”

INDUSTRY GLOSSARY

Drayage: The movement of freight over a short distance, typically as part of an intermodal shipment within a port or between rail terminals and customer locations.

DOT preventable accident rate: A safety performance measure calculated as the number of Department of Transportation (DOT)-recordable, preventable accidents per million miles driven.

Steel wheel interchange: The movement of an intermodal rail container car between two railroads without unloading the cargo, typically using physical rail routing connections.

Headhaul/Backhaul: ‘Headhaul’ refers to high-demand freight moves in a preferred direction, often at higher rates; ‘Backhaul’ refers to return moves that typically have lower rates or less freight volume.

IMC: Intermodal Marketing Company — a non-asset third-party intermediary arranging intermodal freight movement between shippers and railroads/trucking firms.

Full Conference Call Transcript

Shelley Simpson: Thank you, Andrew, and good afternoon. Throughout the year, our focus has been on three clear priorities: operational excellence, scaling into our investments, and continuing to repair our margins to drive stronger financial performance. We are executing these priorities with discipline and determination, guided by a strategy designed to strengthen our competitive position and unlock long-term value for our shareholders. I am highly confident that our approach is building a stronger company, one that is fully equipped to capitalize on meaningful growth opportunities ahead while driving stronger financial performance. Across our businesses, service levels remain excellent. We have systemically elevated our service standards to drive disciplined profitable growth with both new and existing customers.

Even as overall freight demand softened during the quarter, our unwavering commitment to service enabled our intermodal and highway businesses to capture additional volume and outperform the market. Operational excellence is now synonymous with J.B. Hunt Transport Services, Inc., and we are leveraging this reputation to drive strategic growth and maximize returns on our investments to match the unique value and strong service levels we provide for customers. We remain focused on controlling what we can, optimizing costs in the near term without sacrificing our future earnings power potential. In addition, we are placing a heightened emphasis on operational efficiency throughout the organization.

By streamlining processes, adopting best practices, and leveraging technology, we aim to utilize every resource as effectively as possible to maximize productivity and performance. Our initiative to lower our cost to serve, announced last quarter, is focused on removing structural costs from our business. The organization’s collaborative efforts continue to gain momentum, and Brad will share more details on our progress. This initiative marks our latest evolution in expense discipline, and we are making good progress towards reaching our $100 million savings goal and advancing towards our long-term margin target. Now, let me address the elephant in the room: rail consolidation. J.B.

Hunt Transport Services, Inc.’s position is rooted in our commitment to delivering exceptional intermodal service and creating long-term value for our customers and shareholders. We recognize both the opportunities and risks that consolidation presents. But our decades of experience, including navigating seven prior Class I railroad mergers, and our thoughtfully developed long-term agreements and strong relationships with NS, CSX, and BNSF should provide the basis for us to adapt to any changes in the industry. As the largest domestic intermodal provider, our scale and influence allow us to coordinate complex intermodal moves and deliver unique solutions for our customers. We are consistently rated best in class by third-party industry surveys of intermodal customers.

And our ability to deliver seamless, differentiated service across the entire North American intermodal network is a key competitive advantage. Our focus remains on providing reliable, efficient, and innovative service that benefits our customers now and into the future. As the rail industry evolves, we expect our proven adaptability and unwavering dedication to service will not only safeguard our leadership position but should also continuously set higher standards of excellence for our customers. I want to close by recognizing the entire organization for their hard work and progress across many areas of focus. The third quarter is extra special at J.B. Hunt Transport Services, Inc. as it includes National Truck Driver and National Technician Appreciation Week.

Our professional drivers and maintenance teams are the backbone of our success. And their record-breaking safety performance is a testament to their skill, dedication, and attention to safety every day. We appreciate all they do to keep our company, our customers, and our communities safe. With that, I’d like to turn the call over to our newly appointed CFO, Brad Delco.

Brad Delco: Thanks, Shelley, and good afternoon. I will hit on some highlights of the quarter, review our capital allocation plan, and give an update on the lowering our cost to serve initiative. Let me start with the quarter. As you have already seen from our release, revenue was roughly flat year over year while operating income improved 8% and diluted earnings per share improved 18% versus the prior year period. While inflation in insurance, wages, and employee benefits and equipment costs were all up, our productivity and cost management efforts more than offset those headwinds to drive our improved results.

Over the years, you have heard us talk about investing in our long-term growth, maintaining cost discipline without jeopardizing our future earnings power, and creating operating leverage when the market returns. Well, it’s no secret the market hasn’t returned yet, but the notable improvement in our financial performance this quarter should serve as a true testament to the talent and capabilities of the people throughout our organization and the execution of our strategy towards operational excellence in safety, service, and lowering our cost to serve. On capital allocation, our balance sheet remains healthy, maintaining leverage around our target of one times trailing twelve-month EBITDA while purchasing over $780 million or 5.4 million shares of our stock year to date.

This aligns with our messaging around prefunding our long-term future growth during the downturn and having the flexibility with the strong cash flow generation of the business to be opportunistic with share repurchases as a way to return value to our shareholders. We will be disciplined in our capital allocation approach with investing in the business as priority number one, sustaining our investment-grade balance sheet, supporting future dividend growth, and finally continuing our opportunistic repurchases. Last quarter, we outlined our lowering our cost serve initiative to remove $100 million of structural costs from the business. I’m happy to share we are off to a good start, having eliminated greater than $20 million in the quarter.

Examples of our success are in service efficiencies, balancing our networks, dynamically serving customers to meet their needs, focusing even more on discretionary spending, and driving greater asset utilization. We remain committed to updating you on our progress going forward. But our intent is to demonstrate our progress in our reported results rather than just speak to them. As we noted last quarter, we will realize a portion of these benefits this year, with the majority of the impact realized in 2026. Let me close with this and what I hope you take away from our quarter. First, our company continues to execute from a position of strength.

We have been transparent with our strategy, our investments to be best prepared to service our customers’ future capacity needs. Second, we also continue to remove structural costs from the business. We are off to a good start and have more work to do. Third, our business continues to generate a significant amount of cash, and we remain focused on generating strong returns with our deployed capital. We have been opportunistic with our share repurchases, all while maintaining modest leverage on our balance sheet. That concludes my remarks. Now I’d like to turn it over to Spencer.

Spencer Frazier: Thank you, Brad, and good afternoon. I’ll provide an update on our view of the market and some feedback we are hearing from our customers. Overall demand trended below normal seasonality for much of the quarter outside of the seasonal lift we saw at quarter-end. On the supply side, truckload capacity continued to exit the market, and the pace of exits is accelerating. But the soft demand environment is likely muting the market impact of capacity attrition. Outside of recent weeks, truckload spot rates remained under pressure in the quarter. More recent regulatory developments and, more importantly, regulatory enforcement is having an impact on capacity.

While this industry may have a chicken little reputation when it comes to predicting capacity changes, the capacity bubble may be deflating as we speak. In the near term, customers will remain skeptical of any predicted change, only believing it when they experience it. Shifting to intermodal, volumes declined 1% year over year. We believe our volumes held up better relative to the broader truckload market decline, primarily because more customers are converting freight to intermodal from the highway as they see our commitment to operational excellence differentiating J.B. Hunt Transport Services, Inc. Intermodal from the competition.

The service we provide ranks us at the top of our customer scorecards, and we continue to be ranked at the top of industry surveys as well, with a Net Promoter Score of 53. When we go to market, we work with customers to dynamically solve their supply chain needs by designing and executing our operations to meet their requirements. For example, in our intermodal business, customers trust us to select the most efficient service regardless of the rail provider to seamlessly move their freight throughout North America. Today, roughly half of our interchange volume on transcontinental shipments occurs through a steel wheel interchange.

This ratio can change dynamically and demonstrates our ability to be agile at scale to execute and meet our customer expectations. Regardless of how the rail landscape and operating scenarios might change over the next couple of years, we remain committed to delivering exceptional service and growing with our customers. Regarding the current peak season, the strong container volume into the West Coast in July generated headlines regarding a potential pull forward. Ocean peak season came early. That said, it is important to disconnect the timing of peak season on the water from the peak season of the inland supply chain. Our customers are still expecting a peak season, although the magnitude and duration of peak volumes will vary.

Our conversations indicate there is a large amount of freight that was imported early that hasn’t moved through the inland supply chain yet. No one has canceled Christmas. I’ll close with some customer feedback. Our customers realize the financial health of the transportation industry is not great. And as a result, they are choosing to do more with the best carriers and more with fewer carriers. Shippers are focused on creating efficiencies in their supply chains by working with providers who are safe and financially sound and who execute with agility and predictability. Our scroll of services continues to operate from a position of strength, creating value as the go-to transportation provider for our customers.

I would now like to turn the call over to Nick.

Nick Hobbs: Thanks, Spencer, and good afternoon. I’ll provide an update on our areas of focus across our operations, followed by an update on our Final Mile, truckload, and brokerage businesses. I’ll start on our safety performance. Safety is a core piece of our culture and a key differentiator of our value proposition in the market. We are coming off of two consecutive years of record performance measured by DOT preventable accidents per million miles, and our safety results through the third quarter are performing even better than these record performances. This performance is a testament to our people and the attention to detail they bring to the job every day, as well as our focus on proper training and technology.

Our safety performance is a key piece of driving out cost and will continue to be an area of focus. While the ultimate impact on industry capacity is hard to pinpoint, we believe the recent developments on regulations and enforcement, when taken together, could have a noticeable impact on available industry capacity. These include new regulations around English language proficiency, B1 Visas, FMCSA, biometric ID verification, and non-domiciled CDLs. Importantly, for J.B. Hunt Transport Services, Inc., we do not expect to see any material impact on our capacity. There have been some signs based on what we are seeing in our truck and brokerage operations that it could have a broader industry impact.

Moving to the business, let’s start with the final mile. As we said last quarter, business conditions in our end markets remain challenged with soft demand for furniture, exercise equipment, and appliances. We continue to see positive demand in our fulfillment network driven by off-price retail. Going forward, we expect market conditions to remain challenged through at least year-end. Our focus remains on providing the highest service levels, being safe and secure, ensuring that the value we provide in the market is realized to drive appropriate returns. In 2026, we do anticipate losing some legacy appliance-related business, but we will be working diligently on backfilling with other brands and service offerings in this segment of our business.

Moving to JBT, our focus in this business hasn’t changed, and we are winning business with strong service from both new and existing customers, leading to our highest quarterly volume in over a decade. We are remaining disciplined with our growth to ensure our network remains balanced in order to drive the best utilization of our trailing assets. Going forward, we are pleased with the direction of this business in this soft demand environment and the progress we are making on lowering our cost to serve. We see an opportunity for further efficiency and automation gains in the future as we continue to leverage our 360 platform.

That said, meaningful improvements in our profitability in this business will be driven by greater levels of rate improvement and overall demand for truckload drop trailing solutions. I’ll close with ICS. During the third quarter, volumes modestly improved sequentially as new volume from recent bid wins was partially offset by soft demand in the overall truckload market. Truckload spot rates remained depressed throughout the quarter, but we saw gross margins remain healthy. We are almost through bid season and are pleased with the awards we have received, with rates up low to mid-single digits, winning volume with new customers. Our focus here remains on profitable growth with the right customers where we can differentiate ourselves with service.

Going forward, we will remain focused on scaling into our while continuing to make improvements to our cost structure and leveraging our 360 platform to drive greater efficiency and automation, which will help lower our cost to serve. With that, I’d now like to turn the call over to Brad.

Brad Hicks: Thanks, Nick, and good afternoon everybody. I’ll provide an update on our dedicated results. Starting with the quarter, at a high level, our third quarter results were very strong, particularly in light of this challenging freight environment. We believe our results are a testament to the strength and diversification of our model, the value we create for our customers, and how we drive accountability at each site and customer location. As a result, we continue to see good demand for our professional outsourced private fleet solutions. During the third quarter, we sold approximately 280 trucks of new deals.

As a reminder, our annual net sales target is for 800 to 1,000 new trucks per year, and we would be on pace with this target absent the known losses disclosed almost two years ago. Encouragingly, our overall sales pipeline remains strong as our value proposition in the market remains differentiated. Our sales cycle in dedicated is typically eighteen months from start to finish, and our pipeline includes both large and small fleets at various stages of completion, all underwritten to our return targets. Overall, I remain pleased with the momentum and activity in the pipeline.

As I just mentioned and as we have communicated over the past eighteen months, we have had visibility to fleet losses that wrapped up in early July, which negatively impacted our third quarter ’25 truck count by about 85 trucks versus our second quarter results. Navigating through these losses, in addition to call outs we’ve had related to some customer bankruptcies and the overall market dynamics, demonstrates our discipline and strong execution. While we were losing locations that had historically delivered mature margins, we were simultaneously absorbing startup costs from onboarding new business. Despite facing these two margin pressures, we still maintain double-digit margins during this period. I am extremely proud of all of our teams for their effort.

Hope going forward, knowing that most of our fleet losses are behind us, is that we are back on track with our net fleet growth plan moving forward. We believe the performance of our dedicated business has been a standout not only for our company but also the industry. We have great visibility into the financial performance of each account, which provides a high level of accountability at each location and a diversified customer base with our managers on-site with our customers, which we believe creates unique value that is a differentiator for us. Going forward, with our known losses behind us, our expectation for modest fleet growth in 2025 has not changed.

As we have said previously, when we sell new truck deals, and that business starts up, we do incur some expenses as that business is onboarded. That said, this isn’t new for us. We are starting up new customer locations each quarter. Given our progress with respect to lowering our cost to serve, we expect our 2025 operating income to be approximately flat compared to 2024. The magnitude of any potential variance higher or lower to this outlook will be driven by the number of locations we start up during the quarter. We believe the setup is favorable for us to continue our growth trajectory in 2026 and beyond.

Our business model and value proposition are differentiated in the market and continue to attract new customers. We remain confident in our ability to compound our growth over many years to further penetrate our large addressable market. With that, I’d like to turn it over to Darren.

Darren Field: Thank you, Brad. Thank you to everyone for joining us this afternoon. I’d like to start by saying I feel really good about our performance and how our strategy and solid execution drove meaningful improvements in our results. I believe this is a true testament to our focus on operational excellence, cost discipline, and progress on lowering our cost serve initiative. Before we get into more detail on the results, I want to follow up on some of Shelley’s comments regarding the potential for Class I rail consolidation. First, there are still a lot of unknowns. But I am confident J.B.

Hunt Transport Services, Inc. should be a primary consideration and actively engaged in all discussions involving the future of the intermodal industry as well as the execution of all Class one’s desire to take share from the highway to grow their intermodal service offering. We have offered seamless transcontinental intermodal services for decades, connecting BNSF with both Eastern railroads, and believe that opportunity could exist well into the future regardless of the various outcomes we know are either announced or speculated in the market.

We continue to see a large opportunity to convert highway shipments to intermodal, and if the motivation for consolidation is to compete more with trucks, we believe this will present our industry-leading intermodal franchise additional growth opportunities. We are one of the largest purchasers of rail capacity in North America, and we will engage in discussions with all rail providers to execute on a strategy and plan that we think is in the best interest of our shareholders. Turning to the quarter, demand for our domestic intermodal service wasn’t all that strong, but nonetheless, we saw sequential improvement in volumes and executed some of the most efficient dray service in our history, particularly in September.

As Spencer mentioned, we still expect the peak season as lots of volume that moved on the water earlier this year will still need to advance in the inland supply chain ahead of the holidays. Volumes in the quarter were down 1% year over year and by month were down 3% in July, down 2% in August, and flat in September. After seeing unique strength off the West Coast last year due to the threat of the East Coast port labor disruption, TransCon volumes were down percent in the quarter, while Eastern loads were up 6%.

As we’ve communicated all year, we had a bid season strategy focused on getting better balance in our network to grow volumes and repair our margins with more price, particularly in our headhaul lanes. Last quarter, we talked about our success in the bid season, particularly around balance, and we think that success combined with our lowering our cost to serve initiatives were key contributors to our year-over-year and sequential performance improvement. Our service performance remains strong. Our primary rail providers BNSF, NS, and CSX continue to deliver excellent service, which we believe is taking share from Highway. I am confident our service offering is being recognized in the market.

Customers are reengaging with us with additional opportunities largely driven by our differentiated service and value compared to both highway and IMCs. As you all are keenly aware, we have the capacity and ability to execute on a meaningful growth plan over the coming years based on investments we’ve already made. In closing, we remain very confident in our intermodal franchise and the value we provide for our customers. We have shown the ability to grow and generate strong returns through many rail consolidation events over the past few decades and look forward to the opportunities we have in front of us. With that, I’d like to turn it back to the operator to open the call for questions.

Operator: Thank you. We will now begin the question and answer session. The first question comes from Chris Wetherbee with Wells Fargo. Please go ahead.

Chris Wetherbee: Hey, thanks. Good afternoon, guys. Hey, good afternoon. I guess maybe if we could start on the cost side and maybe unpack, I think you said $20 million in the quarter, I think $100 million is the total program. Can you give us a little sense maybe by segment how that played out? Any examples that you can provide in terms of detail would be great too. And then I guess as you think forward, is it sort of progressive from the 20 to the 100 over the several quarters? Any sort of insight there? And I guess in that context, boxes were down sequentially for the first time in quite some time.

So just kind of curious how that is sort of part of the plan if it is?

Brad Delco: Chris, I’ll try to address the first part and I’ll pass it over to Darren to address the second part. Really there’s progress across all areas of the business. And so when we think about, as we laid out last quarter, what are the three buckets that we were targeting for this initiative? It was around efficiency and productivity. That’s not just in the business, that’s also in back office and how all that gets allocated to businesses. Driving better asset utilization, I mean, saw that in intermodal. We certainly saw that and you heard some comments about almost record performance in our tractor utilization in our dray operations. You saw good improvement in productivity in Dedicated.

I wouldn’t want to say one segment versus the other, but I think you’ve seen it in the results across the board. In terms of how we’re going to progress going forward, I said in my comments, we’re going to give you an update each quarter. We said we think most of this will reveal itself next year. Listen, we’re off to a good start. We wanted to share that and I think you see it in the results. And while we do speak to it and we will speak to it each quarter, really the intent here is for you guys to see it in the results.

And I’m glad that you guys can see it in the results we printed this afternoon. So I’m going to pass it over to Darren and let him address maybe the container count question and appreciate the question, Chris.

Darren Field: Yes. I mean, the container count isn’t down. We have equipment that reaches useful life every quarter. It’s a small amount. Sometimes there’s a repair bill that may be greater than what the book value of that piece of equipment is, and we’ll retire it. The other component is we’ve worked closely with Dedicated in a few examples where we found what had been leased trailers in an account, we were able to use containers instead. It’s a pretty small number, but those would be the kind of moving pieces there. Nothing significant in terms of a real change in direction on container equipment.

Operator: The next question comes from Brian Ossenbeck with JPMorgan. Please go ahead.

Brian Ossenbeck: Hey, good evening. Thanks for taking the question. I think Mike was giving some commentary about pricing for next year. I think it was in ICS low to mid-single. So hoping you can kind of run through what you’re expecting across the different modes. And if I’m hearing you correctly, lowering the cost to serve, if rates do stay flat or don’t move a whole lot for next year, it sounds like the structural reductions here mean that the performance like this can be more durable and perhaps even better whenever we do get to that long-awaited upcycle? Thank you.

Nick Hobbs: Yes. Thank you. I was really talking about what we’ve seen in recent bids and the awards that we’ve seen, not really what we thought next year was going to be on rates. But we’ve seen in ICS in particular, we’ve seen some success and growth in the amount of loads and in our pricing as we kind of focus on the more difficult challenging business that’s not as commoditized, and so I think you see that in our gross margin. So it’s just the type of business that we’re working on that we saw that.

And then Brian, to the second part of your question, I mean, clearly, the rate environment has been challenged now for quite some time for our industry. This initiative, again, that we launched, you really dig in on the deep into all the details, we have a spreadsheet that has over 100 lines of things that we’re going to attack. And we’ve had very healthy debates around our executive table about what’s structural, what’s temporary, what we think are just cost avoidance versus are things that we’re removing. And the numbers we’re sharing, I mean, I think we said last quarter, our goal is and what we’ve identified as something far greater than $100 million.

We’ve always been, I believe we’ve always been a fairly conservative company. We have a very strong say-do culture. If we say something, we’re really setting out to do it. And so we’re comfortable sharing the $100 million. Again, we’re off to a good start. Our hope is while we’ve had tremendous headwinds in this industry, at some point headwinds will turn to tailwinds. And I think it will make it, it’ll make the work we’re doing look even stronger. Again, in my comments, you heard us say, we really are trying to set this business up to drive stronger incrementals when the market is more in our favor.

And I think some of the discipline we have around cost is setting us up very nicely for that.

Operator: The next question comes from Jonathan Chappell with Evercore ISI. Please go ahead.

Jonathan Chappell: Thank you. Good afternoon. Don’t know who wants to answer this, maybe Darren or Spencer or even Brad, but you’ve talked about the demand challenges. We all know about that. Pricing in the spot market doesn’t seem to have done very much from three months ago either. But if you look at revenue per load in both intermodal and you had a pretty nice sequential improvement. So I’m trying to understand is that a decision you have to make versus volume, volume versus pricing? Is that a mix situation? Is that surcharges? And is that now the starting point? You always talk about like the cake being baked into the next year.

Given that sequential increase down to 3Q, is this the starting point of which the cake is baked? Or is there a risk that could actually move backward closer to the 2Q levels?

Darren Field: Okay. This is Darren. I’ll try to tackle at least part of that. If Spencer has anything to add, he can certainly jump in. So we’ve often talked about we implement about 30% of prices in the first quarter, thirty percent second quarter, 30% third quarter, and call it 10% in the fourth quarter. I have long said the third quarter is the best time to see the results of the previous bid cycle. And I think that’s what we did just show in terms of the results is that’s a fully implemented bid season. What is washed in the results is there is some good pricing movement in the headhauls. There is some negative pricing in backhauls.

And when you combine them, it looks relatively muted in terms of price per load. We reported minus 1%. And so I don’t know that the sequential change did that come from some sort of a mix shift? It could have probably has some element of mix in there. I would say while our transcon volumes weren’t up year over year, I do believe our transcon volumes were up sequentially. And so that can play a role in terms of what happens sequentially from a revenue per load position.

Nick Hobbs: Yes. And Jonathan, this is Nick. I’ll talk about ICS. I would just say it’s really mix in ours and type of business from just think about team or hazmat, just various different things that we’re going after. It’s a little bit more difficult, multi-stop. So those carry a little higher rate. So it’s the type of business that we’re targeting in ICS.

Operator: The next question comes from Scott Group with Wolfe Research. Please go ahead.

Scott Group: Hey, thanks. Afternoon. So I want to follow-up maybe similar to that last question. So obviously, very good sequential margin improvement from Q2 to Q3 in intermodal. Like how much of that do you think is the cost side of what you’re talking about versus the yield side? I know we had earlier peak season surcharges this year. Ultimately, I’m trying to just figure out like the sustainability of this and as costs continue to ramp, should we be expecting further sort of sequential improvement off of this trough?

Q2 to Q3, further improvement in Q3 to Q4, or is it not necessarily going to play out that way given some of the puts and takes with timing of peak surcharges and things like that?

Darren Field: Well, clearly, peak season surcharges got a lot of press. We went early because a lot of customers had believed that they needed extra capacity. I wouldn’t say that the third quarter was a particularly strong peak season surcharge quarter. Frankly, we were disappointed in demand off the West Coast during the quarter and even adjusted our peak program in the middle of the quarter as an example. So I wouldn’t want our analysts to believe that’s driven largely by peak season charges. Really when we set out with our bid strategy a year ago, we wanted to grow clearly. We wanted to improve price and we wanted to improve balance.

And the improvement in balance, whether that be from growth westbound or an improvement in some price eastbound in the headhauls. I mean, of that result is driving improvements that we feel confident we can continue to sustain as we move forward. The cost side, we did, we were able to implement some small technology enhancements during the summer that really began at the end of the second quarter that helped define for our entire operations planning team some new flexibility that our customers had given us in some cases. And from that, we were able to drive real efficiency in our driver base. We were able to drive out some empty miles on the drayage system.

So these are areas that we feel are sustainable. And as we continue to look for opportunities to grow, what I don’t want anyone to hear is that growing in imbalanced lanes is a bad thing. It doesn’t have to be bad. It just ultimately the pricing on those loads has to cover the cost of positioning empties. And in a lot of cases, I think our customers are beginning to look hard at their supply chains, what’s happening with them, and can we look into the future and find a way to get back growing in markets that maybe are in balance that doesn’t have to be a bad thing for us.

But I believe the cost improvements that we made during the quarter, we must sustain those moving forward.

Operator: The next question comes from Brady Lares with Stephens. Please go ahead.

Brady Lares: Hey, great. Thanks. I wanted to touch on DCS for just a moment. Sales have continued to be pretty strong over the last few quarters despite trade uncertainty and a tough freight backdrop. Can you talk about what’s driving these wins at this point? Four years into a freight recession? And despite the strength in sales, you mentioned in your prepared remarks, you saw a pretty meaningful improvement in margins. Can you think of help us think about how much of that was just an improvement in your cost to serve versus kind of a maturation of these earlier sales?

Brad Hicks: Yes. Thanks, Brady. This is Brad. First, let me say just how remarkably proud I am of our entire team in DCS. The effort, the service, our drivers, maintenance teams, all the support personnel, our operators, just fantastic results in the quarter, both from an execution standpoint, from a safety standpoint, and certainly from a value creation and value delivery to our customers. And I think that the reason I say that is, I think that is one of the differentiations for J.B. Hunt Transport Services, Inc. is really our CVD program, customer value delivery.

And so when I think about the value that we can create for our customers, both through creative solutions, but also just our density and our ability to leverage and share our resources across multiple customers and multiple business types to really drive and create valuable solutions. The second part of that is, yes, we have worked hard and similar to Darren, there’s a variety of initiatives that we’ve kicked off. Some earlier in the year, some more recent. There’s been great work done by our maintenance teams helping lower our cost to serve, both by creating more uptime for our equipment and also lowering the cost of the actual maintenance program that we have.

And then lastly, risk is a critical component of private fleet, and the environment we’re in and what insurance has done the last several years that we’ve talked about often. And we’re doing a fantastic job there, as Shelley mentioned and Nick did as well in the prepared comments. And so can’t really say it’s one thing. It’s all those things together that makes our program different, we believe. And I think that’s why we’ve continued to have success even though the backdrop of this market has been pretty terrible as we all know.

Operator: The next question comes from Ken Hoexter with Bank of America. Please go ahead.

Ken Hoexter: Great. Good afternoon. Nick, you mentioned kind of seeing signs of impacts of ELP and the P1 visas. Is that what’s driving kind of spot rates up the last few weeks? Is that capacity removal already being seen in the market? Not the demand side, but the supply side? And then Shelley or Darren, I think you mentioned about the state of the potential rail mergers, but have you had conversations with UNP or Norfolk on sustaining your access or anything? Is that a discussion you’ve had at this point? Ahead of their filing?

Nick Hobbs: Yes. Well, Ken, I’ll start with one and let Darren get over to question two here in a second. So question one, yes, that’s the reason you’ve seen spot rates up in the last couple of weeks. It’s been because of enforcement activity and when you see the pockets, I would say it’s been able to cover freight, it’s just tightened it up and so we’ve seen a little tightness in probably eight to 10 markets and I think you can kind of follow the news around and see where ICE is active and in big metropolitan areas. And so it’s a combination of non-domicile. It’s also some cabotage. It’s also some fear factors.

But we’re prepared for that for whatever happens. We’re set up with intermodal, dedicated, our brokerage, just like when we went through COVID. We will be able to get the capacity no matter what happens in the market. So but we are seeing it in some spots, just a little notice, nothing extreme.

Darren Field: And for your second question there, Ken, clearly got two questions in there, very different subject. I don’t know how that slipped by the new IR guy. So I’m not going to talk through any kind of rail conversations. I think it is important that all of our shareholders and all of our customers hear any future merger that would be approved for whatever reason has been perceived that J.B. Hunt Transport Services, Inc. would have to move our traffic to CSX. And that’s not accurate at all. There’s nothing about a future state new railroad that would mean our current Norfolk Southern footprint that we have today would be required to change.

I think we referenced that we would intend to speak to all of the railroads to make sure that we can solve for our customers’ networks and continue to be what we’ve been to the market for decades now. And that’s just drive home the ability to take a customer’s needs, translate that into what the railroad capacity and capabilities are, combine it with our world-class drayage system, and provide intermodal solutions for those customers using the best solution available. And that will be our approach for as long as I’m here.

Operator: The next question comes from Jordan Alliger with Goldman Sachs. Please go ahead.

Jordan Alliger: Yes, hi. So given sort of the color and commentary on customers still expect peak season and load still to advance inland against the pull forward, is there any way you could sort of put that together a little bit and think through sort of loads and volumes for you guys relative to what we just saw in the third quarter as we look out the next quarter or so? Just from a high-level perspective, thanks.

Spencer Frazier: Yes. Hey, John, this is Spencer. Thanks for the question. The main point that I really wanted to make there, there’s been quite a few headlines that come out and say, hey, peak is over. There’s not going to be a peak. And I totally agree with that from an ocean perspective. But we always have to remember that domestic, that inland supply chain, the timing of that is really driven by actual consumer and customer demand. And that’s going to take place at the same time it does every year, associated with the holidays. So that was kind of point number one. And then back to our customers are expecting a peak season.

I think even the NRS came out with their retail sales number or retail sales for September being up 5.7%. Our customers are working to keep their consumers, to keep all of us engaged and make sure that they can hit their sales targets and goals for the holiday season. And that they’re expecting to do that. Now for us, definitely the deals and agreements and support that we have for our customers is unique. And each one of our customers is unique on how they’re executing their peak volume.

But the big thing when you think about going forward to your question, you look at last year, last year was artificially inflated due to the East Coast strike concerns and other issues. And that really started in the ‘4. And carried through to really where West Coast port volumes were up 20% significantly all the way through the year. I expect the comps associated with that change and really the current import volumes to really be challenged all the way through March ‘6. So I think that where we’re at today and what we’ve done and what we’re going to do to help our customers through peak, we’re looking forward to doing that.

And working with those customers that have provided us with the forecast and what their needs are.

Operator: The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.

Ravi Shanker: Great, thanks. I’m going to throw in a long-term question here and maybe sharing this topic close to your heart. Just kind of given you guys probably led peers on JV360 and all the tech investments kind of many years ago, can you talk about kind of what you guys are working on right now? What that technology capital envelope looks like? Key initiatives there and kind of how the ICS business would look like from a tech and automation perspective maybe three, four years from now? Thank you.

Shelley Simpson: Thank you, Ravi. And love to talk about technology. Our strategy is rooted in how we transform our logistics. We want to be smarter, more predictive, and automated through JBM360. And if you just think about what our platform does, it supports $2 billion in carrier freight transactions, and that gives us scale to innovate. And we could do that quickly and effectively. As I think about what we’re working on, we’ve deployed 50 AI agents. That’s across the business. We’re trying to automate tasks, streamline our operations. And maybe just a few examples. Today, 60% of our third-party care check calls, those are automated.

More than 73% of our orders are auto accepted, 80% of our paper invoices are paid without a manual touch. Our dynamic quote API responds to 2 million quotes a year. And we’ve automated about 100,000 or a little more than one hundred thousand hours annually across our highway, dedicated, and CE teams. And so it’s not just about AI for us, it is about how we think about technology, but how does it empower our people. And so whether that’s engineering better processes or using robotic automation, leveraging AI, we’re focused on helping our teams work smarter and become more efficient. And that’s going to improve our operational performance and enhance our customers’ visibility and their experience.

So as we continue to refine our technology strategy, our goal remains very clear to us. We’re going to deliver measurable gains in cost savings, we’re going to increase our customer satisfaction, and we want to gain market share as a result. Now as I think about ICS, they have a great opportunity to do even more work when it comes to automation because the nature of the new customers they’re onboarding are less sophisticated from a technology perspective. So it’s really a new for them. If you think about our overall company, our company and the percentage of customers that we have that are large shippers, we’re heavily distorted to.

And so I would say that’s our opportunity to really grow with those small to midsized customers and that’s where automation will help significantly. We’ve got a clear path of things that we’re working on. And then I want to make sure that I do mention we did talk about Up Labs, which is a company that we’ve partnered with and really having them attack two of our areas that we believe need rewritten from a process and even more importantly technology where they’re integrating AI into those processes. Those two areas I would say, we’re in the middle of, really investigating and determining next path forward. But for us, all of this is about efficiency across our entire system.

And so that’s part of our lowering our cost to serve. It’s part of our transformation work. And I don’t think it just has to be AI that makes that happen. It could be a combination of processes, robotics, and AI.

Operator: The next question comes from Bascome Majors with SIG. Please go ahead.

Bascome Majors: Brad, as you get into the planning period for next year, can you talk a little bit about some of the higher visibility big-ticket cost items in the budget, be it health and welfare or insurance? Just what is the inflationary backdrop you’re continuing with now? And how do you think shifts into next year? And you put it on the blender with the $50 million plus incremental cost savings, how much do you really need to get from pricing and growth to offset that? Thank you.

Brad Delco: Well, Bascome, the way you started with that question, I was just going to say yes, yes, yes, and yes. I would say the big areas where we’re seeing inflationary pressure always on our people and wages but in particular around benefits. Group medical healthcare costs are, I don’t think it’s unique to J.B. Hunt Transport Services, Inc. I think it’s a challenge for any and all businesses. So that’s certainly an area that I think is a hot topic as we’re thinking about planning for 2026. Insurance, yes, we’re in the renewal process now. It’s probably too early to comment on that.

But particularly as you get into certain layers or areas of coverage, we’re seeing greater cost and largely because of how and how these claims are settling. And I think it’s again, it’s not that’s not unique to J.B. Hunt Transport Services, Inc. The thing that I’m really proud of is, and you heard Shelley and Nick both talk to it and our whole company should be proud of, is our safety performance. I mean, we’re coming off of a very strong year last year, which was best, which bested the prior year.

And year to date, I’ll knock on wood here, our performance is better than last year and the best way to reduce our cost on claims and insurance items is to really to avoid any incidents. And so that’s the goal. The goal is zero and we got a long ways to go to get there. In terms of what do we need, our customers I know are going to push hard unless there is a meaningful change or a change in the supply-demand balance. I think Nick alluded to the fact that there are maybe some things that are starting to pop up that might be reasons for more concern about what the capacity situation looks like going forward.

But we got to at least get above inflation. And if inflation is running 3%, I feel like our industry needs something better than that to get into a healthier spot. And our industry is not in a healthy spot. And I think most of you who have covered this for a long time know that. So our goal and we had a lot of follow-up conversations after our last earnings call about is $100 million net or gross, and I jokingly will say this here, I’ve asked each of those investors to define it for me and they all gave me a different example.

At the end of the day, lowering our cost to serve of $100 million, we want that to show up and be very visible to our owners. And we want to be obviously visible to you as well. But I would say we need something mid-single digits next year for our to at least get back on a healthier path to margin recovery and particularly for some of these transportation providers to reinvest or be at reinvestable levels. So that’s a long answer. I know I didn’t answer it specifically because I don’t want to give guidance as to what our rate expectations might be next year.

But I would hope the value that we’re providing customers will allow us to earn an appropriate return on the investments and the risk we’re taking serving those customers.

Operator: The next question comes from Tom Wadewitz with UBS. Please go ahead.

Tom Wadewitz: Yes, good afternoon. Want to give Shelley a shot at a question here if she wants to take it or I guess could pass along certainly. But when I think about coming out of a downturn in the industry, it seems like there we look for kind of a catalyst to change the shipper mindset. And I know you’ve got tons of experience working with shippers over time. So do you think this the DOT efforts that you listed a number of them, I think there’s a lot of focus on the non-domiciled CDL issue right now. But do you think that those DOT efforts are really causing a lot of concern in the mindset?

And there’s potentially a shift in that mindset that seems important to pricing. And then I guess within that is the 200,000 number DOT talked about, is that you think that sounds right? Or does that not sound right? Thank you.

Shelley Simpson: Yes. Thank you, Tom. And let me start and I’ll have the team kind of jump in here. Overall. When I think about how our shippers are viewing the market, it has been a surprise to all of us. So to J.B. Hunt Transport Services, Inc. and our shippers, how this market still is in the same place it’s been over the more than three years. And so I would tell you, our customers a year ago they were prepared and understood the why. That we would need more price.

It’s not that our customers are unsympathetic to our position, but they’re managing their costs based on what they see from a bid perspective and what they see from a cost perspective. And so, I think it’s incumbent on us. One of the things I think is important is we are a growth company, but we’re a disciplined growth company. We can’t just grow. We have to be disciplined in our growth strategy. And making sure we articulate that.

I’ll tell you this Tom, as much as Darren’s talked about our pricing change, although that might seem really simple to do, in this environment, those were very difficult discussions, but they were really fueled by our operational excellence and being able to talk to our customers about what great work we’re doing and they saw value in that. I’ve not seen us have to fight so hard for 12% before. When you know inflation is so much more than that overall. So I would tell you, I think customers want to help us. We need the market to change in order to do that. Do I think that non-domicile CDL could be a catalyst? Sure.

It would at least make a little more sense to me why there’s so much capacity in the market versus just our statistics say today. But I would tell you things have to change from here. If that’s one of the things that happens, then does that happen in the next twelve months? Does that take twenty-four months for it to happen? But let me just take a pause there and let Nick maybe you want to jump in on the non-doms.

Nick Hobbs: No, yes. And I might just add a couple of quick things here, Shelley. I totally agree. Our customers really the last two years have been planning for changes in cost that really didn’t materialize because they didn’t have to. I think some of the things that we’re seeing right now with a little bit of a disconnect in spot price rates going up versus volumes going down, the first time we’ve seen that. Maybe in the history of some of the data. Our customers look at macro data and spot pricing and volumes. Let me go back to until they actually experience it or feel it at the dock level, until freight is not picked up.

They won’t make a meaningful change. So that’s the area where we’ve got to give them confidence and predictability of our capacity and service, which we’ve done through operational excellence. That as this thing does change, whether it’s near term or over time, they can count on us to take care of their business. Nick?

Nick Hobbs: I’ll just add a couple of things. On the non-dom, I think the $200,000 is fairly legit. But I think there’s a lot of other factors of drivers that’s coming across the border, call it, cabotage. It should only be in the border zone. Is some good data out there. From a couple of sources that’s come out recently to talk about that. And so I just think there’s other factors that’s going to continue to impact that. But really to see any impact in the speed, it’s going to take the economic side along with the regulation side and that’s what’s going to drive the timing is those two. In my opinion.

Operator: The last question comes from Brandon Oglenski with Barclays. Please go ahead.

Eric Morgan: Hey, good afternoon. This is Eric Morgan on for Brandon actually. Thanks for taking the question. Just a quick one on intermodal growth in the East. I think you referenced in the prepared remarks having the labor port issue kind of playing in there. So I’m just wondering how sustainable that level of growth is moving forward and maybe in the context of some of this different seasonality you’re seeing this year would be helpful. Thanks.

Darren Field: Sure. So I think in reference to the labor situation, that had more to do with last year’s comps on the West Coast. Volumes being strong. Our Eastern network volume really doesn’t have a lot of interaction with the import economy a ton. I think that the Eastern network continues to be where we see the best highway to rail conversion opportunity. Our East network also includes Mexico as an example. And so we have really nice solid growth coming northbound out of Mexico as part of that. We think that the vast majority of the millions of loads that remain to be converted from highway to intermodal are in the East.

So we’re encouraged by our growth in the East, and we expect and anticipate we can continue to grow in the East for years to come.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Mrs. Shelley Simpson for any closing remarks. Please go ahead.

Shelley Simpson: Hey, thanks everyone for joining. Hey, we’re pleased with our results in the short term, especially considering this environment. But we have more work to do and we’re not satisfied. We’re going to continue to remain focused on our priorities of operational excellence in both service and safety. We’re going to scale into our investments through disciplined growth, and then we’re going to keep repairing our margins, and that will drive stronger financial performance. We’re a growth company. It’s important, and we have the highest service across all five of our business units. I think the highest since I’ve been with the company from a consistency across the segments.

We see that metric as a key enabler to execute on our strategy and maintain our say-do culture on delivering what we say and what we expect from ourselves. Thanks for your interest, and we’ll see you next quarter.

Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

More than two decades after their peak, the music of Yellowcard is a pop punk message in a bottle. The note that washed ashore from a simpler time describes the image of a young, sharply-dressed band full of aspirations, thrashing on their instruments — violin included — in the echoey tomb of an underground parking garage in the music video for “Ocean Avenue” as the chorus kicks into overdrive.

“If I could find you now, things would get better, we could leave this town and run forever, let your waves crash down on me and take me away,” frontman Ryan Key sang ecstatically at the top of his lungs.

That hit song, the title track of 2003’s “Ocean Avenue,” created a tidal wave of success that changed the course of their career from struggling artists to a world-touring headliner and darlings of MTV’s Total Request Live.

“The first time it happened, we were really young,” Key said, gingerly grasping a spoon with his heavily tattooed hand while stirring a cup of hot tea. “We were quite literally a garage band one minute, and then we were playing on the MTV Video Music Awards and David Letterman and whatever else the next minute.”

It’s a moment that hasn’t escaped his memory 22 years later. Now, he and his bandmates — violinist Sean Mackin, bassist Josh Portman and guitarist Ryan Mendez — are far from the ocean but not too far from water as they look out at a sparkling pool from the window from a suite at the Yaamava’ Resort and Casino in Highland. A couple hours from now, the band will play a splashy pool party gig for 98.7 ALT FM. The set will include a raft of all the old hits, including “Ocean Avenue” of course, as well as their first new songs in almost a decade.

Before the release of the first singles for the new album, “Better Days,” it might’ve been easy to write off their 11th album as another release destined to be overshadowed by their early catalog. However, with the right amount of internal inspiration and outside help from Blink 182 drummer Travis Barker, who produced and played all the drums on the album, the result was a batch of new songs that haven’t simply been washed out to sea. Quite the opposite, actually.

Prior to the album’s release, the title track “Better Days” reached No. 1 on the Billboard Alternative Airplay chart. This achievement came after a 22-year wait since their first appearance on the chart with the “Ocean Avenue” single “Way Away.” Key also notes that it’s the first time fans are using the band’s new music for their TikTok videos instead of “Ocean Avenue.”

“That’s crazy,” Key said. “Everyone is using ‘Better Days.’ I don’t think we’re alone in that. I think for bands in our scene, new music is getting a lot of love and a lot of attention again, and it’s amazing to see.”

It’s been about three years since the band reemerged to play a reunion set at RiotFest in Chicago, following their 2017 farewell show at the House of Blues in Anaheim. At the point they were ready to call it quits, the band was struggling to sell enough tickets to their shows to keep the dream alive. For Mackin, fatherhood forced him to also consider his family’s financial stability, prompting him to enter the corporate workforce as a sales rep and eventually becoming a service director for Toyota. At one point, he was responsible for managing 120 employees. “I just thought that was going to be what I was going to do to take care of my family for the next 20 years,” Mackin said.

After Yellowcard’s hiatus, Key continued playing music in several projects that distanced themselves from the pop punk sound — including recording solo work under his full name William Ryan Key, touring with bassist Portman at his side. Key also produced a post-rock electronic-heavy project called Jedha with Mendez, and the pair also does a lot of TV and film scoring work. For a long time, Key and his bandmates mourned the loss of what they had with Yellowcard. It was the most important thing in Key’s life, though he said he didn’t realize how much the band truly shaped him until it was over.

During their hiatus, band members took day jobs. One member managed 120 Toyota employees before the 2022 Riot Fest reunion reignited their passion.

(Joe Brady)

“Ungrateful is not the word to use about how I felt back then. It’s more like I didn’t have the tools to appreciate it, to feel gratitude and really let things happen and and stay in the moment and stay focused. Because I was so young, I was so insecure about my place, my role in all of it,” Key said.

But after some time away, the raucous 2022 Riot Fest reunion show relit the band’s fire in a way they hadn’t expected. They followed up with a 2023 EP “Childhood Eyes” that pushed the band to take things further with a new full album. Along with these plans came the stunning news that Barker would sign on to produce and play drums for them on the project. For a band that grew up idolizing Blink 182 and Barker specifically as the band’s red-hot engine behind the kit who spent the last 20 years evolving into a music mogul, it was a surreal experience.

“We look at him like a general. It was never lost that the best drummer of our generation is playing drums with us,” Mackin said. “We know him as Travis now, but man, this guy is just oozing talent — he’s doing all these amazing things and he doesn’t seem overrun by it, not distracted one bit. While we were recording, he was right there with us.”

Key says he was initially intimidated singing in front of Barker in the studio and had a few moments where negative, self-conscious thoughts were getting the better of him in the vocal booth during recording. Instead of getting annoyed, he says Barker helped ease his anxiety with a few simple words.

“Travis came into the booth, closed the door, put his hand on my shoulder, and he said, ‘You’re gonna do this as many times as you need to do it. I’m gonna be here the whole time.’” Barker was truly speaking from experience. He told Key at the time that he’d just recorded 87 rough takes of his parts on “Lonely Road,” his hit song with Jelly Roll and MGK. “That was a real crossroads for me,” Key said.

The aspect of the album that feels most akin to “Ocean Avenue” was that Barker never really allowed them to overthink anything when it came to songwriting, a skill the band had unwittingly mastered as kids back in the “Ocean Avenue” days by writing songs on the fly in the studio with little time to care about how a song might end up before they recorded it.

“There’s something about the way we did this record with Travis, where we would walk in and did it in a way we haven’t done in 20 plus years with him saying ‘We’re gonna write and record a song today,’” Key said. “ It was a return to that style of songwriting where you have to kind of get out of your comfort zone and just throw and go.”

The final product moves swiftly over 10 songs, the track list starts with a flurry of energy from the bombastic opening drums of “Better Days” that propel a song on inner reflection on the past. It moves on to the high-energy heartbreak of “Love Letters,” featuring Matt Skiba of Alkaline Trio. Avril Lavigne lends her soaring vocals to the unrequited love song “You Broke Me Too.” Songs like “City of Angels” and “Bedroom Posters” track episodes in Key’s life where his band’s hiatus took a negative toll on his outlook on life but also about looking for a way back to rediscovering himself. The album wraps with the acoustic lullaby “Big Blue Eyes,” which Keys wrote as a tribute to his son.

Though the songs on “Better Days” frequently wrestle with self-doubt and uncertainty, the response from fans has been surprisingly supportive, Key said.

“I cannot recall seeing this level of overwhelming positive feedback. People are just flipping out over these songs,” the frontman said. “The recording was such a whirlwind. When I listen to it, it’s still kind of like ‘When did I write that song?’ It happened so fast, and we made the record so fast, but I’m glad we just did it.” Despite the success, Key is hesitant to label the band comeback kids, “probably because we are officially passed kids label,” he said.

“Maybe it’s the return of the gentlemen?” Mackin joked.

Blink-182 drummer Travis Barker produced the album, helping the band recapture the spontaneous energy that defined their 2003 breakthrough “Ocean Avenue.”

(Joe Brady)

Whatever they call themselves, coming back to the band after so many years of different experiences has made Yellowcard’s second shot at a career feel all the more rewarding.

“Because you feel like you know you’re capable of something other than being in this band, capable of connecting with your family in a way that you couldn’t when you were on the road all the time,” Mackin said. “There’s things that happened in that break that set us up for success as human beings, not just as creative people.”

For Key, it’s about taking all the lessons they’ve learned as a band and applying them to their future, realizing that the album’s title refers not just to the past behind them, but what lies ahead.

“This record needed to be the ultimate revival, the ultimate redemption song for our band,” Key said. “And so far it’s, it’s proven to be that.”

PHILADELPHIA — Even Dodgers fans steeped in the lore of Kirk Gibson might not remember the name of Mel Didier.

Didier was the scout who had issued this warning to the 1988 Dodgers: If you’re facing Dennis Eckersley, the mighty closer for the Oakland Athletics, and the count runs full, he’s going to throw a backdoor slider.

Eckersley threw it, Gibson hit it for a home run, and the Dodgers went on to win the World Series.

If these Dodgers go on to win the World Series, no one will struggle to remember the name of Mookie Betts, of course. On Monday, however, Betts pushed the Dodgers to within one win of the National League Championship Series — not with his bat and not with his glove, but with memory and aptitude to rival Didier.

“His mind is so far advanced,” Dodgers coach Dino Ebel said of Betts. “That was the ballgame right there.”

With the tying run at second base and none out in the ninth inning, he was the calm in a screaming madhouse. As the Dodgers infielders gathered at the mound and Alex Vesia entered from the bullpen, Betts thought back to a play he had participated in once, in an August game against the Angels. Miguel Rojas had taught him the so-called “wheel play.”

“All he had to do was tell me once,” Betts said. “To me, that was like a do-or-die situation. Them tying the game up turns all the momentum there. If we can find a way to stop it, that would be great.

“I just made a decision and rolled with it.”

On the mound, amid the bedlam, Betts put on the wheel play. It’s a bunt coverage: with a runner on second base, the third baseman and first baseman charge home, with the idea that one would field the bunt and throw out the runner at third.

In any previous decade, the Dodgers would have practiced this play in spring training, repeatedly.

“We don’t really even practice the wheel play, with pitchers not hitting any more,” third baseman Max Muncy said. “There’s very few times where you’re 100% sure that a guy is going to bunt.”

This was the time. The Phillies had opened the ninth with three consecutive hits, including a two-run double from Nick Castellanos.

The Dodgers led 4-3 with none out and Castellanos on second base. Phillies manager Rob Thomson said he wanted to play for the tie and take his chances to match his team’s bullpen against the Dodgers bullpen in extra innings.

And for the “never bunt” crowd: the chance to score one run is slightly higher with a runner on third base with one out than with a runner on second base and none out. The Phillies had the bottom of the order coming up — starting with infielder Bryson Stott, whom the Dodgers had evaluated as a good bunter.

Betts remembered how he had asked Rojas when to run the wheel play.

“In a do-or-die situation,” Rojas had told him.

So Betts took charge and put on the play.

“I don’t know if it was very comfortable, but somebody’s got to do it,” Betts said.

“I figured, if there was ever a good time to make a decision and roll with it, that was the time.”

Dodgers third baseman Max Muncy throws to third after fielding a bunt from Phillies second baseman Bryson Stott in the ninth inning in Game 2 of the NLDS on Monday.

(Robert Gauthier / Los Angeles Times)

Muncy would charge and, if the ball was bunted to him, would throw to Betts covering third base. First baseman Freddie Freeman then said he would charge and, if the ball was not bunted to him, would cover second base so Stott could not advance there, since second baseman Tommy Edman would be covering first. Later, on his PItchCom, Vesia said he heard an order to cover second base.

By the time Dodgers manager Dave Roberts got to the mound, the infielders said the play was on.

“When Doc came out and made the pitching change, we talked to him about it and he was all on board,” Muncy said. “I am going to credit Mook. It was his idea.”

Said Betts: “That was one of times where Doc called on us and said, you guys figure it out — in a very positive way. And we did.”

Rojas called Betts “an extension of the manager on the field.”

Said Rojas: “I’m happy that he called it right there on the field. Because it was the right play with the right runner, knowing the guy was going to bunt.”

All of this speaks well of Betts’ intuition and intelligence, but the postseason is not the time for “trust the process” blather. The postseason is the time when the right call is the one that actually works.

For Stott or anyone else, Thomson said, a batter that sees the wheel play in motion should forget about the bunt and swing away, given the holes left by two infielders charging the plate and the other two rushing to cover a base.

Stott bunted.

The first problem for the Phillies was that they had no one available to pinch-run for Castellanos. Aside from a backup catcher, they had two position players left: Harrison Bader, playing with a sore groin, and Weston Wilson, whom the Phillies had to save to run for Bader.

The second problem for the Phillies was that the Dodgers had only run the wheel play once this season, so even the best advance scouts could not have been warning the Phillies to beware.

“It’s something we have under our sleeve,” Rojas said.

The third and most critical problem for the Phillies was that Betts had lingered close to second base, shadowing Castellanos. By the time Stott could have seen Betts take off for third, it was too late.

“Mookie did a great job of disguising the wheel play,” Thomson said.

Muncy fielded the ball cleanly, and Betts beat Castellanos to the bag by so much that Betts had time to drop his knee and block the bag before tagging out Castellanos, holding onto the ball even as Castellanos upended him.

“Those guys executed it to perfection,” Roberts said. “It was a lot tougher — they made it look a lot easier than it was. And for me, that was our only chance, really, to win that game in that moment.”

If Muncy did not field the ball cleanly or did not make a good throw, or if Betts did not beat Castellanos to the bag or tag him out, the Phillies would have had the tying run at third base and the winning run at first base with none out.

But they did not, which meant the ensuing single did not tie the score. Two batters later, the Dodgers had won.

The play would be difficult enough for a lifelong shortstop. Betts is in his first season as a full-time shortstop.

“It shows his intuition in the game,” Muncy said. “It’s second to none out there. It doesn’t matter what position you put that guy at — he knows what’s going on. It’s honestly really impressive.”

Said Ebel: “He’s obsessed with being a great player. And he’s still learning. He’s still going to get better. That’s the scary thing about it.”

As the Dodgers headed for a happy flight back to Los Angeles, Betts offered this game a five-star review.

“I’ll take off my Dodgers hat and just put on a fan hat,” he said. “I think that was a really dope baseball game.”

Christopher Soto, the founder of the Center for California Literature.

Los Angeles is, historically, a haven for writers and poets. In its city sprawl and California light, L.A. has fostered legendary writers from Joan Didion to Octavia E. Butler, created countercultural literary communities like the Watts Writers Workshop, and inspired Raymond Chandler’s “The Long Goodbye” and Ray Bradbury’s “Fahrenheit 451.”

Despite Los Angeles’ contributions to a rich literary history, the literary community struggles to stay rooted in place as writers’ spaces and financial support move elsewhere.

Take the National Endowment for the Humanities, which canceled over $10.2 million in humanities and arts funding to already-awarded projects in California. Or the devastating Pasadena and Altadena wildfires that decimated historic libraries and cultural archives.

For writers across the city, L.A. can feel like shaky literary ground. That’s where Christopher Soto has stepped in.

Soto is a poet and author of the debut collection “Diaries of a Terrorist,” a contributing writer at Image and now the founder of the Center for California Literature.

The Center for California Literature is Soto’s hopeful initiative for connecting writers across L.A. through readings, conversations and advocacy. In a period in which writers feel unsupported and concerned about the state of the arts, Soto says that the center is needed in L.A. more than ever.

The inspiration came about after Soto was commissioned by the L.A. Times to write a piece titled “Writers on Loving and Leaving Los Angeles,” about writers having to move out of L.A. due to a lack of opportunities. He says right as he was working on the article, it was decommissioned. The reason? The books editor who would have worked on it was laid off and subsequently had to leave L.A.

“It was so ironic. That article and the research I did for it really led me to see that there is a need for a structural solution. People shouldn’t have to choose between having a thriving arts life and having to leave their home,” Soto says.

Soto knew that waiting would only exacerbate the literary loss; if he wanted change, he said he needed to make it. He reached out to inspiring writers in his community for their support and found that people were searching for a place to gather and organize themselves. Roxane Gay, renowned author of the New York Times bestselling novels “Bad Feminist” and “Hunger,” is one of the center’s biggest supporters.

“There’s a lot of stories that literature is dead, or that literary communities are dying, but clearly they’re not. They’re alive and they’re well and we have to remember that,” Gay says. “Writing is a very solitary endeavor, but while we might write alone, we don’t exist as writers in the public sphere alone. We need community, whether it’s people to share our work with, people who understand our frustrations, or having people who will read our work.”

Soto and Gay imagine a future where the center is shaped by writers’ needs. With community as a centerpoint, the organization aims to serve poets and authors by giving them a platform to share their work, attend workshops and create connections among peers.

Gay joined a collective of notable speakers the night of the center’s official launch, which took place at Central L.A. start-up gallery Giovanni’s Room and was co-hosted with the Los Angeles Review of Books. Outside the launch, pupusas were sizzling and poets and book nerds stood in line for a bite or a read from a nearby Libros con Alma pop-up book cart.

The long line approaching the door was full of chatter and reunited friends, who stepped into the lobby and talked closely over the music mixed by DJ Izla. Although the gallery itself filled up quickly, growing warm and pupusa-scented, the energy was one of excitement and anticipation for people’s favorite authors and for a new beginning in the L.A. writers world.

In a corner of the gallery, in front of a paper backdrop and lush potted plants, Grammy-nominated contemporary poet aja monet stepped before the mic to open the night. She was assertive the moment she spoke, clarifying the pronunciation of her name (ah-ja) and simply introducing poems from her time as a political organizer in Florida.

As monet delved into her work, her voice was serious, contained and bursting with emotion. With every stanza, she settled into a musical rhythm that was satiric and bitingly honest. Her poems ranged from swampy oppressive memories of Florida to the nature of poetry to musings on hypocritical activists.

“A poem can rinse, reflect and reveal us / I give thanks for the intimacy of planting poems / the living that brings poems into being,” monet read.

The crowd hummed and swayed in agreement and cheered in recognition of the feelings that she captured. After her moving set, Viet Thanh Nguyen picked up right where she left off. Nguyen is best known for his debut Pulitzer Prize-winning novel “The Sympathizer,” which discusses the Vietnam War’s impact on the U.S. through the lens of a Vietnamese American immigrant who navigates Hollywood social politics, integration and racial tension.

In the section Nguyen read that night, the main character challenges stereotypes of Vietnamese characters in a film, an attempt that is quickly shut down by a Hollywood executive. Nguyen chuckled as he finished — “The Sympathizer” was adapted into an HBO show, placing Nguyen into the very Hollywood spaces he criticized. He acknowledges this and affirmed that “after spending a lot of time in Hollywood, nobody has disputed this characterization.”

Author, actor and television writer Ryan O’Connell added to the conversation with a lengthy reading of “The Slut Diaries,” explorations of rediscovering sexuality in his 30s as a gay man with cerebral palsy. His reflections on sex and dating through the lens of gay and disabled identity, and the hilariously vulgar encounters that ensued, drew hoots and hollers from the crowd.

Camille Hernandez, a writer and poet laureate of Anaheim, was among O’Connell’s laughing audience.

“I love being from here, and I want to lift up the literature from here. It is really beautiful that you could be from some place with such a rich literary heritage, but it’s such a travesty that not many people know about it, so efforts like this are so important to uplifting writers like us, who can be funny and honest like Ryan O’Connell or inspiring like Roxane Gay once they have the community to support them,” Hernandez says. “We deserve this.”

As Gay closed the night, her brief statement encapsulated the promising energy of the center’s first gathering.

“We deserve the material and creative resources to practice our craft. We deserve an abundant community that is mindful of the past and active and engaging the present and able to imagine a radical and expansive future,” Gay said. “And so I hope that everyone here will join us in that work.”

As authors, poets and hopeful writers filtered out into the crisp night, conversations abounded about what was next. Some were excited for an afterparty rumored to feature Erykah Badu. Others projected a next reading presided by an even bigger crowd, feeding the hunger for the literary arts that the center aims to feed. Whatever comes next, the literary community of L.A. has a new home to gather in.

Israeli attacks across the besieged Gaza Strip have killed at least 61 Palestinians, medical sources said, despite calls from United States President Donald Trump for Israel to stop its bombardment after Hamas said it had accepted some elements of Trump’s 20-point plan to end Israel’s war.

At least 45 of the victims killed in bombardments and air strikes on Saturday were in the famine-struck Gaza City, where the Israeli army has been pressing an offensive in recent weeks, forcing some one million residents to flee to the overcrowded south.

Eighteen people were killed and several others wounded in an Israeli strike on a residential home in the Tuffah neighbourhood in Gaza City, medics said. The attack also damaged several buildings nearby.

In a statement shared on Telegram, Gaza’s civil defence agency said seven children between the ages of two months and eight years old were among those killed.

Israeli forces also targeted a displacement camp in al-Mawasi in southern Gaza, killing two children and wounding at least eight others.

Al-Mawasi is a so-called safe humanitarian zone that the Israeli army has been ordering Palestinian families to evacuate to. But the area has been repeatedly targeted over the last few weeks and months.

There have also been air raids on other areas, including in Nuseirat refugee camp in central Gaza, according to Al Jazeera’s Hind Khoudary, reporting from az-Zawayda.

“Hospitals are unable to treat all of these Palestinians,” she said, referring to the handful of battered medical facilities that remain functional in the north amid a severe fuel shortage.

“What is happening on the ground doesn’t show that there is any type of ceasefire,” she said.

Trump demands urgency

On Saturday, Trump urged Hamas to move quickly to release captives and finalise negotiations over his plan to end the war, “or else all bets will be off”.

“I will not tolerate delay, which many think will happen, or any outcome where Gaza poses a threat again. Let’s get this done, FAST. Everyone will be treated fairly!” Trump wrote on his Truth Social platform.

In a separate post later on Saturday, Trump said Israel had agreed to an initial “withdrawal line” and that it was also shared with Hamas.

“When Hamas confirms, the Ceasefire will be IMMEDIATELY effective, the Hostages and Prisoner Exchange will begin, and we will create the conditions for the next phase of withdrawal,” he wrote.

Hamas had agreed to certain key parts of Trump’s 20-point proposal, including Israel’s withdrawal from Gaza and the release of Israeli captives and Palestinian prisoners. But the group has left some questions unanswered, such as whether it would be willing to disarm.

Trump will be sending his envoys, Steve Witkoff and Jared Kushner, to Egypt to finalise the technical details of the captive release and discuss a lasting peace deal, according to a White House official. Egypt will also host delegations from Israel and Hamas on Monday to discuss things further, the country’s Ministry of Foreign Affairs said in a statement.

The first phase of Trump’s proposal includes the return of all captives, dead and alive, in exchange for nearly 2,000 Palestinian prisoners.

Speaking to reporters from Jerusalem, Israeli Prime Minister Benjamin Netanyahu confirmed negotiators will be working on a timeline for the release of the remaining captives under Trump’s Gaza plan in Egypt.

He also reiterated that the US proposal includes the demilitarisation of Hamas.

That will be achieved either through Trump’s proposal or through Israeli military action, he said. He added he hoped to announce the return of the captives, all while the Israeli military remained deep in Gaza.

Adnan Hayajneh, a professor of international relations and US foreign policy at Qatar University, said Hamas wants guarantees that if it releases the Israeli captives, there will be implementation of the rest of Trump’s 20-point plan. This includes a clear picture of what the future governance of Gaza will look like.

“There’ll be a long negotiation, and Hamas will take part in it,” Hayajneh told Al Jazeera.

Arab leaders also aired some reservations about the plan to Trump, “but most of the reservations were not taken into consideration regarding the governance of Gaza, the military forces … the future of arms,” said the professor.

“If you look at the plan, it’s almost a surrender for Hamas,” he added. “I think they’re leaving that bargaining chip, which is very important, the hostages, for the last minute.”

Israel’s war on Gaza has killed more than 67,000 people, according to Gaza’s Health Ministry, and experts believe the actual toll could be as much as three times higher.

Families and friends of Gaza-bound flotilla activists detained by Israeli forces joined a demonstration in the Netherlands demanding their release. Far-right Israeli officials have suggested the activists should be held in high-security prisons.