Financial Data and Key Metrics Changes - The company reported a 2% increase in sales year-over-year, reaching $760 million, with organic constant currency sales consistent with the prior year [25][10] - Gross margin increased by 165 basis points to 41.6%, while operating margin expanded by 390 basis points to 10.7% [26][10] - Earnings per share (EPS) surged by 240% compared to the previous year, reaching $0.07, primarily driven by higher margins and lower interest expenses due to significant debt reduction [26][10] Business Line Data and Key Metrics Changes - The intimate apparel category experienced a mid-teens decline, while other segments showed growth: low single-digit growth in Basics, mid single-digit growth in Active, and a 60% increase in new businesses, including scrubs and loungewear [12][10] - Operating profit increased by 61%, reflecting the benefits of cost restructuring and assortment management initiatives [10] Market Data and Key Metrics Changes - International sales grew by 4% on an organic constant currency basis, driven by growth in Australia and Asia, while U.S. sales decreased by 1% [11][10] - Approximately 75% of sales and cost of goods are from the U.S., with 25% from international markets, which are less impacted by U.S. tariffs [14][29] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes cost reductions, pricing actions, and leveraging strong retailer relationships to capture new revenue opportunities [6][7] - The company aims to fully mitigate tariff impacts through various levers, including cost savings and strategic pricing actions, while maintaining a diversified supply chain [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment, citing a proactive approach and a strong balance sheet after reducing over $1 billion in debt [9][17] - The outlook for the second quarter includes continued margin expansion and operating profit growth, with expected sales of approximately $970 million and EPS of approximately $0.18 [28][30] Other Important Information - The company has no exposure to sourcing from China, which historically accounted for a low single-digit percentage of U.S. cost of goods [16][10] - The company is not pursuing private label opportunities but is focused on expanding its branded offerings [51][52] Q&A Session Summary Question: Can you elaborate on the effective tariff rate and revenue opportunities? - Management stated they can fully mitigate tariff headwinds, with tariffs not expected to impact until Q4, and emphasized their proactive approach to managing costs and pricing [34][36] Question: What contributed to the upside in EPS? - The upside was attributed to better-than-expected sales, cost savings, and improved gross profit margins [44][46] Question: What are the current market conditions and competitor pricing? - Retailers are managing inventory tightly, and while there haven't been significant price moves yet, the company is prepared to implement strategic pricing as necessary [50][56] Question: What is the outlook for the women's business and market share? - The intimate apparel category is facing challenges, but the overall women's business is performing well, with plans to improve the Made and Form segment [60][64] Question: What is the capacity for new revenue opportunities? - The company has sufficient capacity for growth and flexibility in its supply chain to meet new demand, particularly from its Western Hemisphere manufacturing capabilities [78][76]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $223.8 million, reflecting an 11.9% year-over-year increase [26] - Adjusted EBITDA margin improved to 13.1%, up nearly 200 basis points year-over-year [6][34] - The company achieved its first quarter of positive GAAP net income as a public company [6] Business Line Data and Key Metrics Changes - Retail revenue increased by 14.8% year-over-year, while e-commerce revenue grew by 5.5%, marking its highest quarterly growth since 2021 [26] - Glasses revenue grew by 9.1%, contact lens revenue surged by 25.1%, and eye care revenue increased by approximately 40% year-over-year [28] - Active customers reached 2.57 million, representing an 8.7% year-over-year growth [27] Market Data and Key Metrics Changes - The company opened 11 new stores in Q1, the highest number for that quarter, bringing the total to 287 stores [28] - Retail productivity was reported at 99.8% compared to the same period last year [29] - The penetration of contact lenses increased from 9.2% of revenue in Q1 2024 to 10.3% in Q1 2025 [28] Company Strategy and Development Direction - The company plans to invest in marketing at a rate in the low teens as a percentage of revenue while optimizing media spend [8] - Continued focus on product innovation with the launch of seven new collections, including a premium light-responsive lens [9] - The company aims to open 45 new stores in 2025, including shop-in-shops with Target [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current dynamic macro environment, emphasizing the resilience of their omnichannel model [11][23] - The company is taking a cautious approach to guidance due to potential consumer sentiment volatility [45][47] - Management believes that their value proposition positions them well to gain market share during economic uncertainty [23][58] Other Important Information - The company has reduced its exposure to China in its cost of goods sold from approximately 20% to less than 10% by year-end [13][39] - Adjusted SG&A expenses were reported at $110.3 million, or 49.3% of revenue, showing a decrease from the previous year [32] Q&A Session Summary Question: Change in revenue outlook for the year - Management noted a more cautious approach to guidance due to consumer sentiment volatility and potential elongation in purchase cycles [45][46] Question: Impact of tariffs on gross margin and EBITDA margin - Management indicated that they expect to mitigate the majority of the potential tariff impact through strategic pricing and supply chain adjustments [50][79] Question: Customer traffic and consumer confidence - Management observed pockets of strength and volatility in customer behavior, with confidence in their competitive positioning during market disruptions [56][58] Question: Marketing spend efficiency - Management reported consistent efficiency in marketing investments, leveraging a diversified media mix to optimize spend [66][67] Question: Insurance customer behavior - Management highlighted positive trends in insurance customer utilization and ongoing efforts to improve access to benefits [71][72] Question: Sources of leverage in EBITDA - Management outlined plans for significant leverage from non-marketing SG&A and strategic pricing adjustments to offset tariff impacts [77][79] Question: Consumer behavior of new cohorts - Management reported consistent consumer behavior across new and existing cohorts, with significant opportunities in the optical market [96][97]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $223.8 million, reflecting an 11.9% year-over-year increase [24] - Adjusted EBITDA margin improved to 13.1%, up nearly 200 basis points year-over-year [5][33] - The company achieved its first quarter of positive GAAP net income as a public company [5] Business Line Data and Key Metrics Changes - Retail revenue increased by 14.8% year-over-year, while e-commerce revenue grew by 5.5%, marking its highest quarterly growth since 2021 [25] - Glasses revenue grew by 9.1%, contact lens revenue surged by 25.1%, and eye care revenue increased by approximately 40% year-over-year [26] - Active customers reached 2.57 million, representing an 8.7% year-over-year growth [25] Market Data and Key Metrics Changes - The share of contact lenses in total revenue increased from 9.2% in Q1 2024 to 10.3% in Q1 2025, while eye care's share rose from 4.7% to 5.8% [27] - The company opened 11 new stores in Q1, the highest number for that quarter, bringing the total to 287 stores [27] Company Strategy and Development Direction - The company plans to open 45 new stores in 2025, including shop-in-shops with Target [9][38] - Continued investment in marketing is planned at low teens as a percentage of revenue, leveraging analytics to optimize media spend [6][20] - The company is focused on product innovation, having launched seven collections in 2025, including a new premium light-responsive lens [7] Management's Comments on Operating Environment and Future Outlook - Management expressed a cautious outlook due to macroeconomic uncertainties and potential impacts on consumer sentiment [46][48] - The company is confident in its ability to adapt to changing environments, citing past experiences with tariffs and the COVID-19 pandemic [10][22] - The updated revenue guidance for 2025 is between $869 million and $886 million, reflecting a 13% to 15% growth year-over-year [38] Other Important Information - The company has significantly reduced its sourcing from China, estimating that it will decrease from approximately 20% to less than 10% of COGS by year-end [12][37] - Adjusted SG&A expenses were $110.3 million, or 49.3% of revenue, showing a decrease from 51.7% in the previous year [31] Q&A Session Summary Question: Change in revenue outlook for the year - Management noted a more cautious approach to guidance due to consumer sentiment and market volatility, adjusting the growth projection from 14%-16% to 13%-15% [45][48] Question: Impact of tariffs on gross margin and EBITDA margin - Management indicated that the shape of the year for EBITDA would likely follow a similar pattern to previous years, with Q1 being the highest margin quarter [50][51] Question: Customer traffic and consumer confidence - Management observed pockets of strength and volatility in customer behavior, with confidence that the company will benefit from its value proposition during economic uncertainty [56][57] Question: Marketing spend efficiency - The company reported consistent efficiency in marketing investments, with a diversified media mix helping to optimize spend [66] Question: Insurance customer behavior - Management highlighted positive progress in integrating insurance benefits, with insurance customers spending more and showing higher repeat purchase rates [72][73] Question: Consumer behavior of new cohorts - Management noted consistent consumer behavior across new and existing cohorts, with strong market opportunities remaining [95]

Financial Data and Key Metrics Changes - The company reported revenue of $97 million for Q1 2025, representing a 13% year-over-year growth [10][28] - Gross margin increased by 170 basis points to 39% [11][30] - Positive net income of $3 million was achieved, marking an increase of $5 million from the previous year [32] - Adjusted EBITDA margin improved to 7%, up from 3% in the prior year [33] Business Line Data and Key Metrics Changes - The wipes portfolio and baby personal care collection were highlighted as strong performers, with wipes consumption growth exceeding 40% [14][18] - The sensitive skin portfolio grew by 35% year-over-year, driven by new product launches [14] - Diaper performance faced headwinds due to distribution changes at a key retailer, impacting overall growth [19][58] Market Data and Key Metrics Changes - The Honest brand's household penetration increased to 7.3%, a growth of 55 basis points year-over-year [12] - Competitive categories experienced a decline of 1% in the same period, indicating Honest's outperformance [12][61] - The diaper category remains under pressure, with modest declines observed [58][92] Company Strategy and Development Direction - The company is focused on three transformation pillars: brand maximization, margin enhancement, and operating discipline [10][25] - A comprehensive approach to managing tariffs has been established, including inventory management and cost savings initiatives [22][36] - The company aims to continue investing in marketing and innovation to support brand growth [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious confidence in navigating the evolving economic landscape while reaffirming the 2025 financial outlook [26][35] - The company anticipates a first half growth rate within the range of its annual revenue outlook, despite expected headwinds in the diaper business [29][35] - Management acknowledged the importance of consumer sentiment and potential changes in shopping behavior [37][61] Other Important Information - Curtis Bruce has been appointed as the new Chief Financial Officer, succeeding David Loretta [6][9] - The company ended the quarter with $73 million in cash and no debt outstanding, providing financial flexibility [34] Q&A Session Summary Question: Can you quantify the shipping impact in Q1 and its reversal in Q2? - Management noted that the pull forward of shipments in Q1 was approximately five percentage points, which will reverse in Q2 [46] Question: What are the marketing plans for 2025? - The company plans to continue strong investments in marketing, particularly for the new diaper launch and expanding wipes into new retailers [50][51] Question: What factors contributed to the deceleration in consumption? - The deceleration was primarily isolated to the Target channel, particularly in the diaper category, while other markets showed strong growth [58][92] Question: How is the company managing tariff impacts? - The company has a three-pronged strategy to mitigate tariff impacts, focusing on agile planning, inventory management, and supplier partnerships [36][78] Question: What are the long-term margin opportunities? - Management believes there are still opportunities to expand margins, particularly through supply chain efficiencies [92]

Financial Data and Key Metrics Changes - The company reported revenue of $97 million for Q1 2025, reflecting a 13% year-over-year growth [10][28] - Gross margin increased by 170 basis points to 39% [11][30] - Positive net income of $3 million was achieved, marking a $5 million increase from the previous year [32] - Adjusted EBITDA margin improved to 7%, up from 3% in the prior year [33] Business Line Data and Key Metrics Changes - The wipes portfolio and baby personal care collection were highlighted as strong performers, with wipes consumption growth exceeding 40% [14][18] - The sensitive skin portfolio grew by 35% year-over-year, driven by new product launches [14] - Diaper performance faced headwinds due to distribution changes at a key retailer, impacting overall growth [19][56] Market Data and Key Metrics Changes - The Honest brand's consumption growth of 8% outpaced the competitive categories, which declined by 1% [12][60] - Household penetration increased to 7.3%, a growth of 55 basis points year-over-year [12] - The diaper category remains under pressure, with a modest decline observed [56][90] Company Strategy and Development Direction - The company is focused on three transformation pillars: brand maximization, margin enhancement, and operating discipline [10][25] - A comprehensive approach to managing tariffs has been established, including inventory management and cost savings initiatives [22][36] - The company aims to continue investing in marketing and innovation to support brand growth [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious confidence in navigating the evolving economic landscape while reaffirming the 2025 financial outlook [26][37] - The company anticipates a first half growth rate within the range of its annual revenue outlook, despite expected headwinds in the diaper business [29][35] - Management emphasized the importance of consumer trust in their products, particularly for sensitive skin needs [13][61] Other Important Information - Curtis Bruce has been appointed as the new Chief Financial Officer, succeeding David Loretta [6][9] - The company ended the quarter with $73 million in cash and no debt outstanding, providing financial flexibility [34] Q&A Session Questions and Answers Question: Can you quantify the shipping impact in Q1 and how it affects Q2? - Management noted that the pull forward of shipments in Q1 was approximately five percentage points, which will reverse in Q2 [46] Question: What are the marketing plans for 2025? - The company plans to continue strong investments in marketing, particularly for the new diaper launch and expanding wipes into new retailers [50][51] Question: What factors contributed to the deceleration in Q2? - The deceleration was primarily isolated to the Target channel, particularly in the diaper category, while other markets showed strong growth [56][90] Question: How is the company managing tariff impacts? - The company has a three-pronged strategy to mitigate tariff impacts, focusing on agile planning, inventory management, and supplier partnerships [36][79] Question: Are there margin opportunities despite current challenges? - Management believes there are still opportunities to expand margins, particularly through supply chain efficiencies [90]

Financial Data and Key Metrics Changes - The company reported revenue of $97 million, representing a 13% year-over-year growth [9][27] - Gross margin increased by 170 basis points to 39% [10][29] - Positive net income of $3 million was achieved, marking a $5 million increase from the previous year [31] - Adjusted EBITDA margin improved to 7%, up from 3% in the prior year [31][32] - The company ended the quarter with $73 million in cash and no debt outstanding [32] Business Line Data and Key Metrics Changes - The wipes portfolio and baby personal care collection were highlighted as strong performers, with wipes consumption growth exceeding 40% [13][14] - The sensitive skin portfolio grew by 35% year-over-year, driven by new product launches [13] - Diaper performance faced headwinds due to distribution changes at a key retailer, impacting overall growth [17][19] Market Data and Key Metrics Changes - The Honest brand's consumption growth of 8% outpaced the competitive categories, which declined by 1% [11][60] - Household penetration increased to 7.3%, a growth of 55 basis points year-over-year [11] - The diaper category remains under pressure, with a modest decline observed [58][90] Company Strategy and Development Direction - The company is focused on three transformation pillars: brand maximization, margin enhancement, and operating discipline [8][24] - A comprehensive approach to managing tariffs is in place, with a three-pronged strategy to mitigate impacts [21][34] - Continued investment in marketing and innovation is planned to support brand growth and product launches [49][92] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious confidence in navigating the evolving economic landscape while reaffirming the 2025 financial outlook [25][33] - The company anticipates a reversal of retailer inventory builds in the second quarter, impacting growth rates [28] - Management acknowledged the need for ongoing innovation in the diaper category to address consumer feedback [18][19] Other Important Information - The company announced the retirement of CFO Dave Loretta and the appointment of Curtis Bruce as the new CFO [5][6] - The Honest brand is now the leading natural wipes brand nationally, surpassing previous category leaders [16] Q&A Session Summary Question: Impact of shipping on sales and guidance for 2Q - Management noted that pull-forward shipments in 1Q were primarily due to Amazon, which will reverse in 2Q, impacting growth rates [41][43][45] Question: Marketing plans for 2025 - The company plans to continue strong investments in marketing, particularly for the new diaper launch and expanding wipes into new retailers [46][49] Question: Deceleration trends and category performance - Deceleration was primarily isolated to the Target channel, with strong performance in other markets [56][58][90] Question: Distribution and product portfolio growth - The company is focusing on a hero distribution strategy, increasing distribution in grocery and drug channels while managing overall points of distribution [68][70] Question: Tariff impact and mitigation strategies - Management discussed the ongoing tariff impacts, particularly from China, and emphasized their proactive strategies to manage costs [77][79][84]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $0.56 for Q3, up from $0.48 in the prior year, while GAAP EPS was $0.14 compared to $0.31 last year [20] - Q3 revenue reached $316.2 million, reflecting a 6% organic growth year over year and a 4% reported growth [20] - Adjusted gross margin was 71.6%, slightly down from 71.9% last year, while adjusted operating margin improved to 34.9%, up 190 basis points from the prior year [22] Business Line Data and Key Metrics Changes - The Protein Sciences segment achieved reported sales of $227.7 million, with organic revenue growth of 7% [25] - The Diagnostics and Spatial Biology segment reported sales of $89.2 million, with both reported and organic growth at 2% [26] - The GMP reagents business saw trailing twelve-month growth of over 13%, while the cell and gene therapy product line had a trailing twelve-month growth rate of over 30% [12][79] Market Data and Key Metrics Changes - North America experienced low single-digit growth, driven primarily by pharma customers, while Europe saw mid single-digit growth led by academic customers [21] - China faced a mid single-digit decline due to challenging economic conditions, but the rest of Asia increased mid-teens [21] - The academic market in the U.S. was flat, impacted by NIH funding uncertainties, while the diagnostics reagents division showed year-to-date growth in the high single digits [15][21] Company Strategy and Development Direction - The company is focused on balancing investments for future growth while driving operational efficiencies, maintaining industry-leading profitability [5] - The FDA's recent emphasis on reducing animal testing is seen as an opportunity for the company's organoid solutions, which are expected to accelerate growth [11] - The company is actively managing tariff impacts through optimization of its global footprint and supply chain adjustments [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties related to NIH funding and tariffs, noting that past experiences suggest severe cuts to NIH funding are unlikely [28][66] - The company anticipates a temporary slowdown in growth momentum to low single digits in Q4 due to macro uncertainties [31] - Management remains optimistic about long-term growth prospects, emphasizing the alignment of their product portfolio with NIH research priorities [9][66] Other Important Information - The company returned $12.6 million in dividends and $100 million through stock buybacks during Q3, with a new share repurchase program authorized for up to $500 million [24] - The balance sheet remains strong with $140.7 million in cash and a total leverage ratio well below one times EBITDA [24] Q&A Session Summary Question: Impact of NIH funding uncertainties on guidance - Management indicated that while NIH funding uncertainties are a concern, they believe the impact on long-term growth will be immaterial, as historical trends show Congress often increases NIH budgets despite proposed cuts [66][68] Question: Clarification on pharma growth rates - Management clarified that pharma experienced double-digit growth in Q3, but they expect a step down in organic growth in Q4 due to tariff impacts and academic market slowdowns [36][38] Question: Local manufacturing footprint in China - Management confirmed that tariffs have not changed their strategy for local manufacturing in China, which is seen as beneficial for minimizing cross-border tariff impacts [51] Question: Expectations for fiscal year 2026 - Management stated that they will provide a soft guide for fiscal year 2026 in three months, anticipating more clarity on headwinds affecting end markets [42][63] Question: Biotech customer spending trends - Management noted that biotech funding is sensitive to capital markets, leading to more frugal spending, which was reflected in flat growth for biotech customers in Q3 [88]

Financial Data and Key Metrics Changes - Organic net sales declined by 0.4%, but excluding lost distribution and prior year effects, organic net sales grew by 1.8% year over year [16][25] - Gross margin expanded by 440 basis points year over year to 41%, driven by business recovery in infant formula [16][25] - First quarter EPS increased by 107% year over year to $0.60 per share [16][28] Business Line Data and Key Metrics Changes - Infant formula net sales increased by 19% compared to the same quarter last year, contributing to overall recovery [7][19] - OTC brands achieved solid organic growth of 5.9% year over year, driven by strong sales of key products [10] - Operating income in the CSCI segment grew by 10% organically, while CSEA operating income grew by 90% due to infant formula recovery [27] Market Data and Key Metrics Changes - Dollar sales across self-care categories turned negative compared to the prior year, reflecting cautious consumer behavior due to inflation and reduced consumer confidence [11][12] - Total US OTC store brand volume gained 50 basis points over the last four weeks, indicating a shift in consumer buying patterns towards value-oriented products [15] Company Strategy and Development Direction - The company is focused on its 3S plan: stabilize, streamline, and strengthen, with positive results from stabilizing key parts of the business [6][21] - The synergistic relationship between store brand and OTC brands is being leveraged to drive growth, with substantial cash flow generated from store brands [10] - The company is enhancing its new product development process to create a more efficient pipeline [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertain macroeconomic environment but expressed confidence in the company's positioning to navigate these challenges [12][22] - The company is widening its 2025 net sales projections due to macroeconomic uncertainties while reaffirming its adjusted EPS range [12][30] - Management expects a significant ramp-up in infant formula sales in the second half of the year due to new product introductions [39] Other Important Information - The company plans to offset tariff-related cost increases through strategic pricing actions and sourcing more manufacturing to US facilities [14][30] - The gross increase in global cost of goods sold from tariffs is expected to be approximately 5.5% for the full year [32] Q&A Session Summary Question: Impact of tariffs on EPS for 2026 - Management expects that actions taken to mitigate tariff impacts will offset any major changes in EPS projections for 2025 and beyond [36][37] Question: Sales ramp for infant formula - Management anticipates a similar sales trajectory in Q2, with significant growth expected in the second half due to new SKU introductions [38][39] Question: Contract manufacturing activity - There is an increase in activity for contract manufacturing as competitors seek domestic supply routes [44] Question: Organic sales performance - Organic sales were broadly in line with expectations, with upper respiratory products performing well despite some regional variances [48][49] Question: Gross margin expectations - Management maintains a full-year gross margin expectation of around 40%, despite better-than-expected Q1 performance [52][53] Question: Widening net sales range - The widening range reflects dynamic shifts in consumer behavior and ongoing opportunities in the market [60][62] Question: Pharma-specific tariffs impact - Management anticipates a potential $100 million impact from pharma-specific tariffs, with plans to mitigate through pricing and sourcing strategies [84][85]

Financial Data and Key Metrics Changes - Acushnet reported worldwide net sales of $703 million, a 1% increase year-over-year [6] - Adjusted EBITDA was $139 million, reflecting a decrease of $15 million due to increased investments in the equipment segment [6][17] - Gross profit decreased by $5 million compared to the first quarter of 2024, primarily due to higher manufacturing costs [19] Business Line Data and Key Metrics Changes - Golf equipment net sales increased by almost 4%, driven by new product launches and strong performance in the EMEA region [7] - Titleist golf ball business grew by 4%, with significant gains in the EMEA region [7] - FootJoy sales declined by 5% due to lower closeout footwear sales and targeted product line rationalization [9][19] Market Data and Key Metrics Changes - The US market saw a 1% increase, while EMEA grew by 4% [11] - Japan and Korea experienced declines of 24% each, attributed to poor weather affecting the golf season [11] - Rounds of play in the US were down by 2%, but worldwide rounds were slightly up, particularly in EMEA and the UK [12] Company Strategy and Development Direction - The company is focused on executing a full slate of fitting events across all markets and enhancing product offerings [11] - Acushnet is adapting its supply chain to mitigate tariff impacts, with a focus on regional diversification and vertical integration [12][15] - The company plans to take pricing measures if tariff costs become permanent, but has not yet passed these costs to consumers [16] Management's Comments on Operating Environment and Future Outlook - Management characterized 2025 as a year of stability and improving profitability for FootJoy, with a focus on premium sales [10] - The macro environment remains uncertain due to changing trade policies, leading to a cautious approach in providing full-year guidance [24] - The core consumer remains strong and resilient, with expectations for low single-digit sales growth in the first half of 2025 [26] Other Important Information - The company returned approximately $51 million to shareholders through share repurchases and dividends [23] - Capital expenditures for the first quarter were $11 million, with plans for approximately $85 million in 2025 [22] - The effective tax rate in Q1 was 17.9%, down from 21.7% the previous year [21] Q&A Session Summary Question: Guidance and Consumer Demand - Management indicated that the decision to pause guidance updates is due to less visibility rather than changes in consumer demand [30][31] Question: Tariff Mitigation Actions - Management emphasized that pricing is the last resort, focusing first on supply chain adjustments and cost-sharing with suppliers [35][36] Question: Impact of Tariffs on Financials - A significant portion of the estimated $75 million tariff impact is related to China, and management is exploring ways to mitigate this [42][25] Question: Demand Trends in Asia - Management noted a slow start in Japan and Korea due to weather but observed improvement in March and April [45][46] Question: Footwear Market Dynamics - Management expressed confidence in the footwear business, highlighting new product launches and a focus on premium offerings [71][72]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 was $233 million, up 3% year-on-year, with EBITDA margins expanding by 40 basis points to 6.5% [29][30] - Consolidated sales decreased to approximately $3.6 billion, a decline of $139 million compared to Q2 FY2024, primarily due to lower customer volumes and foreign exchange impacts [31][32] - Free cash flow for Q2 was an outflow of $90 million, consistent with internal expectations reflecting normal seasonality [39] Business Line Data and Key Metrics Changes - In the Americas, sales increased due to favorable comparisons with the previous year, driven by key customer programs reaching full run rates [31][32] - EMEA experienced lower production volumes but began to see improvements from restructuring benefits, with a recorded non-cash goodwill impairment of $333 million due to market value declines [20][29] - Asia's performance was flat year-on-year, with expectations of temporary pressure on China revenue, but new business with local OEMs is anticipated to drive growth [21][32] Market Data and Key Metrics Changes - The Americas outperformed industry volumes, while EMEA faced headwinds from weaker market demand [31][32] - In Asia, sales in China underperformed due to lower volumes from traditional luxury OEM customers, but the company continues to outperform the industry outside of China [32] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through resourcefulness and leveraging its global footprint to create value for customers [12][16] - Adient aims to drive operational excellence and invest in innovation, automation, and efficiency measures to enhance profitability [8][10] - The company is committed to maintaining a strong balance sheet and liquidity while navigating macroeconomic challenges [41][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage tariff exposures and emphasized the importance of customer relationships and operational flexibility [12][16] - The outlook for the second half of FY2025 remains positive, with expectations of continued strong business performance despite potential volume headwinds from tariffs [43][45] - Management reiterated guidance for FY2025 revenue and adjusted EBITDA, assuming no significant changes in tariff policies [44][45] Other Important Information - The company received multiple awards for supplier excellence, including recognition from GM and Toyota for quality and performance [10] - Adient's strong cash position includes $754 million in cash and $1.6 billion in total liquidity as of March 31, 2025 [41][42] Q&A Session Summary Question: Progress on tariff resolution and roadmap - Management indicated that the 75% resolved portion includes agreements for price recoveries, while the roadmap involves ongoing negotiations and cost offsets [57][58] Question: EMEA performance and expectations - Management noted that while EMEA showed positive performance, it is still subject to variability and should not be seen as a trend [60][62] Question: Direct tariff exposure and compliance - Management clarified that 95% of parts produced in Mexico and Canada are USMCA compliant, thus not subject to tariffs, and discussed the implications of Annex One [66][67] Question: Margin outlook and efficiency actions - Management expressed confidence in achieving higher margins through ongoing efficiency improvements and restructuring efforts [71][72] Question: Capital allocation strategy - Management reiterated a measured approach to capital allocation, focusing on investments in the business and potential share repurchases based on cash generation and market clarity [81][84]