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]

Financial Data and Key Metrics Changes - The company achieved net sales of $153 million, representing a 3.3% increase in core business compared to the prior year [14][48] - Gross margins improved to 41.9%, an increase of 910 basis points from 32.8% in the prior year [15][49] - Free cash flow for the quarter was negative $10.8 million, a decrease of $28.6 million compared to the prior year [15][51] - Adjusted EBITDA margin improved to 17.8%, an increase of 460 basis points from the prior year [16][50] Business Line Data and Key Metrics Changes - The direct-to-consumer channel saw significant growth with more than a 10% increase, while third-party platforms like Amazon and eBay experienced growth of over 50% [13][12] - The B2B channel strengthened relationships with partners, resulting in over 2.5% growth [12][22] - The domestic muscle vertical experienced a 3% year-over-year growth, while the Euro and import division recorded the highest growth at 17% [22] Market Data and Key Metrics Changes - The company is gaining market share despite a challenging macroeconomic environment, with no material pre-buy observed from customers in the second quarter [10][11] - The overall consumer sentiment has declined, indicating growing concerns regarding inflation and economic viability, which could moderate spending in the near term [53] Company Strategy and Development Direction - The company is focused on operational excellence and cash flow optimization, with a strategic framework that includes enhancing customer relationships and product innovation [23][54] - The company is implementing proactive cost reductions and strategic sourcing initiatives to mitigate tariff impacts [14][30] - The strategic initiatives have driven $15 million in revenue across key areas and achieved $3.1 million in cost reductions [30] Management's Comments on Operating Environment and Future Outlook - Management noted that the financial health of consumers shows signs of strain, which could impact discretionary spending [53] - The company is maintaining its revenue guidance for 2025 of $580 million to $600 million, implying approximately 2.5% growth at the midpoint [55] - Management expressed confidence in the company's ability to navigate near-term challenges while preserving free cash flow [54] Other Important Information - The company launched several new products across various divisions, contributing approximately $8.1 million in revenue for the quarter [14][19] - The company has made significant progress in reducing inventory levels, achieving a reduction of over $3 million since year-end 2024 [20][47] Q&A Session Summary Question: How does Holley's sourcing mix and capabilities to respond differ from peers? - Management highlighted that Holley's breadth and depth of product across various categories positions the company to take market share, especially with most production costs based in the U.S. [58][60] Question: What has been the feedback on the price increase from distribution partners? - Overall feedback has been positive, with distribution partners appreciating the blended approach across the portfolio, contrasting with competitors who have implemented larger price increases [61][63] Question: Can you elaborate on the moderation in demand witnessed in the first quarter? - Management noted that January and February saw slow sales due to weather conditions, but March was strong, and current demand trends remain stable [67][69] Question: What is the approach to pricing in light of tariffs? - The company is implementing a blended price increase across its portfolio, with a focus on maintaining competitive pricing relative to peers [70][72] Question: How much exposure does the company have to China regarding tariffs? - Management indicated that while most production is U.S.-based, the evolving tariff situation requires ongoing analysis and mitigation efforts [90][92] Question: How are Holley events being optimized for revenue generation? - The company is enhancing event structures to increase attendance and merchandise sales, providing more opportunities for engagement with enthusiasts [93][95]

Financial Data and Key Metrics Changes - Emerson reported underlying orders growth of 4%, exceeding expectations, with all regions showing positive results, including China [6][12] - Underlying sales were up 2%, with Process and Hybrid businesses growing mid-single digits, while adjusted earnings per share increased by 9% year over year to $1.48 [12][24] - Free cash flow was $738 million, reflecting a 14% increase year over year, with a free cash flow margin of 17% [24][25] Business Line Data and Key Metrics Changes - Process and Hybrid markets grew by 6%, while Discrete businesses turned positive with Test and Measurement orders up 8% [6][14] - Software and Control segment grew by 7%, driven by higher software sales, while Intelligent Devices remained flat due to safety and productivity issues [22] - The Industrial Software business saw an 11% year-over-year increase in annual contract value (ACV), supported by strong demand for AspenTech's offerings [21] Market Data and Key Metrics Changes - Demand for Process and Hybrid businesses remained strong, particularly in energy and LNG projects, with significant capital investment noted in regions like the Middle East, Africa, and India [14][18] - The Americas experienced mid-single-digit growth, while Europe saw low single-digit growth, with continued momentum in Energy Transition and Life Sciences [18][19] - The company expects mid-single-digit growth in Process and Hybrid sales in the second half, with a more muted recovery anticipated in factory automation and automotive sectors [20][36] Company Strategy and Development Direction - Emerson is focused on integrating AspenTech as a key priority for 2025, targeting $100 million in cost synergies by 2028 [10] - The company has completed its portfolio transformation, retaining the Safety and Productivity business due to its strong profitability and cash generation potential [11] - Emerson aims to maintain disciplined capital allocation, prioritizing reinvestment in the business, dividends, and share repurchases while targeting bolt-on acquisitions under $1 billion [39][96] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's plans for the year, guiding for underlying sales growth of approximately 4% and raising the midpoint of adjusted EPS guidance to between $5.90 and $6.05 [9][34] - The management noted that while there are signs of tariff-induced impacts, they have not seen widespread indications affecting demand [16][32] - The company anticipates a favorable spending environment in LNG and power sectors, driven by energy security and self-reliance commitments [16][36] Other Important Information - Emerson's gross exposure to tariffs is estimated at $245 million for 2025, which the company expects to fully mitigate through pricing actions and operational adjustments [7][31] - The company reported a backlog of $7.5 billion, with a book-to-bill ratio of 1.04, indicating a healthy order flow [22] Q&A Session Summary Question: What is improving in discrete automation? - Management highlighted recovery in Test and Measurement driven by Aerospace and Defense, while noting continued weakness in automotive sectors, particularly in China and Germany [42][44] Question: How real is the pharmaceutical spending? - Management confirmed that the commitments from pharmaceutical companies are genuine, with early projects emerging in the life sciences sector [46][48] Question: What can be done with AspenTech now that the deal is closed? - Management expressed excitement about the growth opportunities with AspenTech, emphasizing the potential for double-digit ACV growth and enhanced collaboration with existing Emerson platforms [53][55] Question: Will tariff impacts be offset by the end of the fiscal year? - Management confirmed that they expect to completely cover the tariff impacts by the end of fiscal 2025 [57][59] Question: Why retain the Safety and Productivity business? - Management concluded that retaining the business would provide the best value for shareholders, given its strong profitability and alignment with U.S. manufacturing trends [66][68] Question: What data points indicate softness in China? - Management noted that softness is primarily in the chemical sector, with some positive signs in power generation and marine business [70][72] Question: What is the outlook for Test and Measurement? - Management indicated strong growth in Aerospace and Defense and a recovery in semiconductors, while automotive remains a concern [92][94]

Financial Performance - Adient's Q2 FY25 consolidated revenue was approximately $3.6 billion, a decrease of 4% year-over-year[11, 36] - Adjusted EBITDA for Q2 FY25 was $233 million, an increase of $6 million year-over-year, with an adjusted EBITDA margin of 6.5%, up 40 bps year-over-year[11, 36, 40] - Free cash flow for Q2 FY25 was negative $90 million[11, 43] - The company maintains a strong cash balance of $754 million as of March 31, 2025[11] - Gross debt and net debt were approximately $2.4 billion and $1.6 billion, respectively[11] Tariff Mitigation - Adient estimates approximately monthly tariff exposure of $8 million, with the largest exposure concentrated from goods coming from China[14, 15, 17] - The company has mitigated over 75% of tariff risk and is actively working to close the gap with customers, targeting 100% recovery/cost offsets[16, 17, 21] - Approximately 95% of Adient's parts produced in Mexico and Canada and shipped to the U S are USMCA compliant, representing about $100 million monthly imports[17] Regional Performance - Americas sales outperformed the market by 700 bps due to favorable volume/mix and slow ramping launches on high-volume customer programs last year[39] - EMEA sales were mostly in line with the broader market[39] - Sales in China underperformed industry production primarily due to production declines from traditional luxury OEMs[39] - Growth in the rest of Asia outpaced the broader market by 300 bps, driven by new customer launches in H2FY24 reaching full production volumes[39] Outlook - Adient maintains its FY25 revenue and adjusted EBITDA outlook, expecting positive momentum from H1 to carry into H2, excluding potential tariff-related volume impacts[12, 58] - Free cash flow is now forecast between $150 million and $170 million, influenced by the timing of customer recoveries and potential acceleration of European restructuring cash costs[59]

Financial Performance - Revenue for Q1 2025 was $356 million, a decrease of $32 million compared to Q1 2024 [15] - Adjusted EBITDA for Q1 2025 was $17 million, a decrease of $35 million compared to Q1 2024 [15] - Adjusted Free Cash Flow generation was $10 million, an increase of $26 million from Q1 2024 [15] - The company is providing Adjusted EBITDA guidance of $175-$185 million and Adjusted Free Cash Flow guidance of $5-$15 million for 2025 [15] Segment Performance - Cellulose Specialties net sales were $201 million in Q1 2025 [16] - Cellulose Commodities net sales were $75 million in Q1 2025 [22] - Biomaterials net sales were $7 million in Q1 2025 [28] - Paperboard net sales decreased by $4 million, driven by a 4% decline in sales prices and a 3% decline in sales volumes [38] - High-Yield Pulp net sales decreased by $3 million, driven by a 7% decrease in sales prices and a 4% decrease in sales volumes [43] Capital Structure and Liquidity - Adjusted Net Debt was $653 million, a $90 million reduction from Q1 2024 [50] - Net Secured Debt was $624 million, a $97 million reduction from Q1 2024 [50] - Total liquidity was $272 million, including $130 million of cash [48, 50] Tariff Impact and Mitigation - The company faces tariff exposure on Cellulose Specialties (~$160 million revenue), Cellulose Commodities (~$85 million revenue), and Paperboard (~$175 million revenue) [57] - Mitigation strategies include customer advocacy, market diversification, and operational adjustments [52, 56]

Financial Data and Key Metrics Changes - Total net revenue for Q1 2025 was approximately $1,800,000,000, representing a 19% year-over-year growth [5] - Total gross margin increased to 28.9%, up 200 basis points year-over-year [6] - Adjusted EBITDA grew 23% year-over-year to $168,000,000 [6] - Adjusted earnings per share rose 34% year-over-year to $0.63 [6] Business Segment Data and Key Metrics Changes - Products and Solutions segment achieved 6% organic revenue growth year-over-year, with total revenue growth of 5% [14] - ADI segment reported 29% year-over-year growth in reported net revenue, with 4% organic net revenue growth despite two fewer selling days [22] - ADI's organic average daily sales grew 7% year-over-year [22] Market Data and Key Metrics Changes - Demand for new Honeywell Home Focus Pro thermostats and First Alert Vista H series security products remains strong [6] - Customer demand in Q1 was healthy across both business segments, with minimal signs of customer hesitancy or order cancellations [11] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through price increases and strategic inventory purchases [10][11] - Continued emphasis on new product introductions, with several scheduled for launch later in 2025 [20] - The integration of SnapOne is progressing well, with nearly 100 new products launched in the quarter [25][26] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautious outlook on the macroeconomic environment but believes in the strength of execution to navigate uncertainties [32] - The company is reaffirming its 2025 full-year outlook, planning phased price increases to offset tariff costs [34][36] - Management expressed optimism about ongoing gross margin improvements driven by structural efficiencies and new product launches [70][71] Other Important Information - Approximately 90% of goods sold in the U.S. are produced in Mexico, with 98% being USMCA compliant and exempt from tariffs [9][18] - The company absorbed an immaterial amount of tariff-related expenses prior to USMCA tariff preference treatment [18] Q&A Session Summary Question: Pricing strategy in ADI and potential demand impact - Management indicated that they have taken a phased approach to pass through price increases from suppliers and do not expect material demand changes [40][42] Question: Customer buying behavior and demand in April - Management noted minimal buying ahead and strong demand continued into April, with no significant changes in customer behavior [56][58] Question: Overall spending cycle in residential and commercial markets - Management described the current housing market as somewhat depressed but noted healthy remodeling activity and recovery in new home sales [61][64] Question: Gross margin leverage when the macro environment improves - Management expressed optimism about structural improvements in gross margins, expecting ongoing growth without setting specific targets [70][71]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $219.5 million, with non-GAAP revenues at $212.1 million after excluding $7.4 million from discontinued operations [28] - Non-GAAP gross margin improved to 7.8% from a negative 39.5% in Q4 2024 [31] - Non-GAAP operating loss decreased to $72.4 million from $184.1 million in the previous quarter [31] - Non-GAAP net loss was $66.1 million in Q1, compared to $202.5 million in Q4 [31] - Free cash flow generated in Q1 was approximately $20 million, marking the second consecutive quarter of positive free cash flow [32] Business Line Data and Key Metrics Changes - In Q1, 50% of total megawatt shipments were commercial and utility products, while the other 50% were residential [29] - The average selling price (ASP) per watt was $0.01, down 17% from Q4 due to lower pricing in Europe [30] - Battery shipments totaled 180 MWh, with a blended ASP per kilowatt-hour of $267, up from $262 in Q4 [30] Market Data and Key Metrics Changes - North America sell-through was approximately $370 million, down 18% quarter-over-quarter, primarily due to seasonality [25] - European sales grew by 6% quarter-over-quarter, with expectations for normalized inventory levels by the end of Q2 2025 [26] - The company shipped 642 megawatts to the U.S., 324 megawatts to Europe, and 242 megawatts to international markets, totaling approximately 1.2 GW of shipments [29] Company Strategy and Development Direction - The company has set four strategic priorities: strengthening financials, regaining market share, accelerating innovation, and ramping up U.S. manufacturing [11] - The company aims to mitigate the impact of tariffs by diversifying its supply chain and optimizing sourcing [22] - A multi-year strategic partnership was established with a global leader in logistics real estate to integrate SolarEdge products across its portfolio [15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about turning the corner in market share position, particularly in Europe [16] - The company expects a limited negative impact of 2% on gross margin due to tariffs in Q2, with a potential 4% to 6% impact in the second half of the year [23] - Management emphasized the importance of operational efficiency and innovation to drive future growth [12][19] Other Important Information - The company has created nearly 2,000 jobs in the U.S. and reached a capacity of 70,000 inverters per quarter [21] - The company divested its tracker business to reduce operating expenses without significantly impacting revenue [12] Q&A Session Summary Question: Can you provide insights on commercial storage growth? - Management noted strong growth in commercial battery attach rates but did not disclose specific numbers [39] Question: How will tariffs impact gross margins? - Management indicated that the 145% tariff on Chinese products would have a higher impact compared to the 10% tariff on other regions, with ongoing efforts to optimize the supply chain [41][42] Question: What is the pricing strategy moving forward? - The company plans to price products based on the value provided to customers and competitive advantages in specific markets [45] Question: What is the outlook for inventory levels? - Management expects the majority of distributors to reach normalized inventory levels by the end of Q2, which may influence revenue levels in Q3 [108] Question: How is the utility segment performing? - Management highlighted that SolarEdge technology optimizes power production and is gaining traction in the utility market, contributing to increased revenue [102]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $219.5 million, with non-GAAP revenues at $212.1 million after excluding $7.4 million from discontinued operations [25] - Non-GAAP gross margin improved to 7.8% from negative 39.5% in Q4 2024 [29] - Non-GAAP operating loss decreased to $72.4 million from $184.1 million in the previous quarter [29] - Non-GAAP net loss was $66.1 million in Q1, compared to $202.5 million in Q4 [29] - Free cash flow generated in Q1 was approximately $20 million, marking the second consecutive quarter of positive free cash flow [30] Business Line Data and Key Metrics Changes - In Q1, 50% of total megawatt shipments were commercial and utility products, while the other 50% were residential [26] - The average selling price (ASP) per watt was $0.0173, down 17% from Q4 due to lower pricing in Europe [27] - Battery shipments totaled 180 MWh, with a blended ASP per kilowatt-hour of $267, up from $262 in Q4 [28] Market Data and Key Metrics Changes - North America sell-through was approximately $370 million, down 18% quarter-over-quarter, primarily due to seasonality [23] - European sales grew by 6% quarter-over-quarter, with expectations for normalized inventory levels by the end of Q2 2025 [24] - The company shipped 642 megawatts to the U.S., 324 megawatts to Europe, and 242 megawatts to international markets, totaling approximately 1.2 GW of shipments [26] Company Strategy and Development Direction - The company has set four strategic priorities: strengthening financials, regaining market share, accelerating innovation, and ramping up U.S. manufacturing [8] - The company aims to mitigate the impact of tariffs by diversifying its supply chain and optimizing sourcing [21] - A multi-year strategic partnership was established with a global leader in logistics real estate to integrate SolarEdge products across its portfolio [13] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about turning the corner in market share position, particularly in Europe [14] - The company anticipates a 2% reduction in gross margin due to tariffs in Q2, with a potential 4% to 6% impact in the second half of the year [21] - Management emphasized the importance of operational efficiency and innovation to navigate the challenging global environment [9] Other Important Information - The company has created nearly 2,000 jobs in the U.S. and reached a capacity of 70,000 inverters per quarter [19] - The company divested its tracker business to reduce operating expenses without significantly impacting revenue [10] Q&A Session Summary Question: Growth of commercial storage - Management noted strong growth in commercial battery attach rates but did not disclose specific numbers [34][36] Question: Strategy regarding tariffs and pricing - The company is working on alternative sourcing to mitigate tariff impacts and is focused on maintaining product quality [39][40] Question: Pricing strategy and inventory management - Management stated that pricing will reflect the value provided to customers and that inventory levels are being actively managed [42][46] Question: Update on European market demand - Management indicated that while the European market is challenging, there are signs of improved market share and sales performance [70][71] Question: Utility segment performance - The company is seeing traction in the utility segment due to its optimized technology, which enhances power production [100]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $2.6 million or $0.19 per diluted share on net sales of $55.5 million, with gross margins increasing to 26.7% from 25% in the prior year period, reflecting a 161 basis point improvement driven by lower operational costs [19][20] - Selling, general, and administrative expenses decreased by 1.2% or $100,000 compared to the prior year, totaling $10.6 million, while earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by $500,000 to $4.9 million [19][20] - Total cash provided by operations for Q1 2025 was $3.8 million, a significant increase from $7,000 in the prior year period [20] Business Line Data and Key Metrics Changes - Despite a 3% year-over-year decline in net sales, the company experienced growth in key categories such as archery, safety, darting, and outdoor games, which outperformed the prior year [6][7] - Inventory levels rose modestly as the company built stock ahead of the spring selling season for archery, basketball, and playground categories [7] Market Data and Key Metrics Changes - The company noted ongoing softness in discretionary spending and declining consumer sentiment, yet maintained a diversified portfolio that resonated with consumers [6][11] - The company is actively analyzing and planning for expanded sourcing scenarios due to trade uncertainties, particularly concerning China [12][30] Company Strategy and Development Direction - The company is focused on operational discipline, innovation, and customer centricity, with a strategy that includes optimizing supply chains and expanding domestic manufacturing capacity [10][11] - The company is investing in direct-to-consumer and e-commerce initiatives to deepen consumer engagement and build loyalty [14][17] - The company remains open to strategic acquisitions that enhance its brand portfolio and expand addressable markets, maintaining financial discipline in its approach [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a dynamic macroeconomic and geopolitical landscape but expressed confidence in the company's ability to navigate uncertainties through a diversified portfolio and strong margin structure [11][30] - The company is taking proactive steps to mitigate tariff impacts and is evaluating various scenarios to adapt to changing market conditions [12][31] Other Important Information - The company reduced bank debt by $1.8 million during the quarter and returned capital to shareholders through dividends and share repurchases [8] - The company completed remediation of material weaknesses in its internal financial reporting controls, which were initially disclosed in March 2024 [20][21] Q&A Session Summary Question: Follow-up on proactive steps to address the tariff situation - Management recognized high uncertainty in the marketplace but emphasized their diversified portfolio and agile supply position to navigate challenges [27][30] Question: Quantification of tariff impact in Q1 - The company indicated a little over 100 basis points negative impact from tariffs in Q1, despite achieving a 161 basis point improvement in gross margins [33] Question: Inventory levels and their implications - Management confirmed that inventory levels were strategically reduced, and existing inventory is valuable as it does not incur tariffs, contributing to lower costs [34][35]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of $2.6 million or $0.19 per diluted share on net sales of $55.5 million, with gross margins increasing to 26.7% from 25% in the prior year period, reflecting a 161 basis point improvement due to lower operational costs [17][18] - Selling, general and administrative expenses decreased by 1.2% or $100,000 to $10.6 million compared to the prior year [17] - Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by $500,000 to $4.9 million in Q1 2025 [17] Business Line Data and Key Metrics Changes - Net sales declined approximately 3% year over year, but gross margins expanded by more than 160 basis points, driven by lower manufacturing and logistics costs [5][17] - The company saw growth in key categories such as archery, safety, darting, and outdoor games, which outperformed the prior year period despite overall softness in discretionary spending [5] Market Data and Key Metrics Changes - Inventory levels rose modestly during the quarter as the company built inventory ahead of the spring selling season for archery, basketball, and playground categories [6] - The company maintained a strong focus on working capital efficiency, generating nearly $4 million in operating cash flow [6] Company Strategy and Development Direction - The company is focused on operational discipline, innovation, and customer centricity, with a strategy to strengthen direct-to-consumer and e-commerce presence [9][13] - Plans include expanding domestic manufacturing capacity and diversifying global sourcing to mitigate tariff impacts and enhance supply chain resilience [11][12][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing softness in consumer sentiment and discretionary spending but expressed confidence in the company's diversified portfolio and operational improvements [10][12] - The company is actively analyzing and planning for various sourcing scenarios in response to trade uncertainties, particularly regarding China [11][30] Other Important Information - The company reduced bank debt by $1.8 million and paid a quarterly dividend of $2.1 million during the quarter [7] - Total debt outstanding as of March 31, 2025, was $23.8 million, with a net leverage ratio of 0.8 times trailing twelve months EBITDA [18] Q&A Session Summary Question: Follow-up on proactive steps to address the tariff situation - Management highlighted the importance of a diversified category portfolio and agile supply position to navigate uncertainties, mentioning ongoing optimization of the supply chain and potential pricing actions [25][30] Question: Quantification of tariff impact in Q1 - Management indicated that there was a little over 100 basis points negative impact from tariffs in Q1, but still achieved a 161 basis point improvement in gross margins [32] Question: Inventory levels and their implications - Management explained that inventory levels were strategically reduced over the past few years, resulting in a more right-sized inventory that contributed to lower costs [33]