Financial Data and Key Metrics Changes - In Q4 2025, sales increased by 2% to $10.8 billion, with adjusted EBIT margin expanding by 100 basis points to 7.5% [8][12] - For the full year, sales were $42 billion, slightly down due to softer volumes in North America and Europe, while adjusted EBIT margin rose by 20 basis points to 5.6% [9][12] - Adjusted EPS for Q4 rose by 29% to $2.18, and for the full year, it increased by 6% to $5.73 [8][9] - Free cash flow for the full year reached $1.9 billion, an increase of $849 million [9][18] Business Line Data and Key Metrics Changes - Three of the four segments posted higher sales year-over-year, with seating seeing an 8% increase, while complete vehicles were down 10% [16] - Body exteriors and structures, and seating segments posted strong increases in adjusted EBIT margin year-over-year [16][17] - Power and vision margins were negatively impacted by discrete items, but operational improvements are expected to drive margin expansion in 2026 [17][61] Market Data and Key Metrics Changes - Global light vehicle production was down 1% overall in Q4, with North America and China declining, while Europe saw an increase [13] - Magna's sales growth is expected to be near flat to up 3.5% in 2026, driven by new program launches and foreign currency translation benefits [21][22] Company Strategy and Development Direction - The company is focused on operational excellence initiatives, which contributed to margin expansion and are expected to continue delivering benefits in 2026 [10][27] - A disciplined approach to capital spending is emphasized, with plans to repurchase approximately 22 million shares under the NCIB [7][24] - The company aims to maintain strong free cash flow and EPS growth while reducing leverage [7][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing their capital allocation strategy and driving EPS growth alongside strong free cash flow [7][28] - The outlook for 2026 includes expectations for adjusted EBIT margin expansion of 40-100 basis points and free cash flow of $1.6 billion to $1.8 billion [7][22] Other Important Information - The company achieved significant operational milestones in 2025, including securing 90% of its 2028 business and receiving 151 customer awards for quality and performance [9][10] - The company has been recognized as one of the world's most ethical companies and most admired companies [11] Q&A Session Summary Question: Guidance for outgrowth ex complete vehicles of 1%-4% - Management attributed the outgrowth to operational excellence activities and new programs with favorable economic terms [31][34] Question: Operational excellence and commercial recoveries - Management indicated that operational excellence is a continuing journey with visibility on margin improvements, while commercial recoveries are expected to be neutral year-over-year [36][39] Question: Seating segment outlook and cost actions - Management confirmed that no incumbent seating programs have been lost, and the seating segment remains core and profitable despite some program roll-offs [44][46] Question: Free cash flow sustainability - Management expects free cash flow in the range of $1.6 billion to $1.8 billion to be sustainable, supported by disciplined CapEx [49] Question: Ford recall and warranty hit - Management clarified that one recall matter has been resolved, while another is ongoing, impacting margins in the power and vision segment [52][59] Question: Growth in power and vision segment - Management highlighted that growth is driven by new launches and operational improvements, with expectations for margin expansion in 2026 [61][62]

Magna International (NYSE:MGA) Q4 2025 Earnings call February 13, 2026 08:00 AM ET Speaker9Good morning, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Magna International Fourth Quarter Full Year 2025 Results and 2026 Outlook. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question durin ...

Core Insights - The company reported adjusted EBITDA of BRL 450 million with a margin of 9.2% for Q4, indicating strong operational strategies amidst changing market conditions [1] - For fiscal year 2025, net revenues reached $18.5 billion, with adjusted EBITDA rising to $2.3 billion and a margin of 12.3%, driven by strong demand in the U.S. and operational efficiencies [3] - The company continues to diversify its portfolio, with significant growth in fresh and prepared foods, and is making strategic investments to enhance operational efficiency and capacity [2][20] Financial Performance - Q4 adjusted EBITDA was BRL 450 million, with a margin of 9.2%, while for the full year, adjusted EBITDA was $2.27 billion, reflecting a 2.5% increase from the previous year [26][27] - The U.S. business achieved net revenues of $11 billion in fiscal 2025, up from $10.6 billion in 2024, with an adjusted EBITDA margin of 14.8% [27] - Europe’s adjusted EBITDA improved by 11.4% to $453.1 million in 2025, driven by poultry sales growth and operational efficiencies [28] Market Dynamics - The U.S. fresh operations saw increased market share through a focus on quality and innovation, while prepared foods continued to drive growth across retail and foodservice [1][3] - Consumer demand for chicken remains strong due to its affordability compared to other proteins, with chicken experiencing volume growth across all cuts [6][8] - In Mexico, sales grew despite challenges from increased imports of animal-based proteins, with the company initiating investments to drive profitable growth [2][20] Operational Strategies - The company is enhancing its manufacturing efficiency and optimizing its product mix in Europe, leading to improved margins and adjusted EBITDA [2] - Investments in fresh and prepared foods are aimed at driving growth while reducing business volatility, with a focus on key customer partnerships [2][20] - The company is converting a Big Bird plant to a case-ready facility to support key customer growth and is expanding its prepared foods capacity in Georgia [22][39] Consumer Trends - Consumer sentiment remains low due to economic uncertainty, but chicken's affordability is driving demand, particularly in retail [6][8] - The company is seeing increased promotional activity in foodservice to attract consumers, especially in QSRs, despite overall traffic challenges [8][66] - The Just BARE brand has shown significant growth, with sales more than doubling compared to last year, indicating strong consumer acceptance [20][67] Supply Chain and Production - The USDA projects a 1.9% year-over-year decline in the layer flock, which may impact supply growth in 2026 [5] - Corn prices increased slightly in Q4 but moderated in January, with expectations of higher ending stocks for corn and soybeans [10][30] - The company is managing production and operational efficiencies to mitigate commodity pricing volatility and enhance margins [13][23]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, even amidst a lower price cycle, indicating resilience and competitiveness in its business model [5][6] - The cash cost reached BRL 778 per ton in Q4 2025, a 3% reduction from Q3 2025, marking the lowest cash cost performance since Q4 2021 [23][24] - The company generated a positive free cash flow of $400 million in Q4 2025, reducing net debt to $12.6 billion and decreasing leverage to 3.2 times [26] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, driven by operational excellence in the supply chain [4] - The paper and packaging business unit saw strong volumes, particularly in the U.S., with a 21% year-over-year increase in packaging prices despite declining paper prices in export markets [8][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results by reallocating production to more competitive mills [12] Market Data and Key Metrics Changes - In Brazil, print and write paper demand increased by 1% in the first two months of Q4 2025, while paperboard demand grew by 2% [9] - The U.S. market experienced stable shipments in Q4 2025, but production increased by 2% due to new capacity, leading to pressure on operating rates [10] - In China, paper and board production increased by 17% in Q4 2025 compared to Q4 2024, contributing to higher demand for hardwood pulp [13] Company Strategy and Development Direction - The company views 2025 as an inflection point for total operational disbursement (TOD), aiming to improve competitiveness and cash generation capabilities [5][29] - A comprehensive multi-year program is being implemented to enhance competitiveness, focusing on reducing total operational disbursement [24] - The company is strategically positioning inventories for Q2 2026, anticipating maintenance downtimes that will reduce output [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [29] - The delay of new market pulp capacity in Indonesia and the revocation of forestry licenses are expected to tighten supply, positively impacting market dynamics [71][73] - The company anticipates a gradual decline in cash costs throughout 2026, despite challenges in the first quarter due to planned maintenance [24][60] Other Important Information - The company renewed its revolving credit facility, increasing the line from $1.3 billion to $1.8 billion while reducing costs [26] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months, following a previous buyback of 15 million shares [28] Q&A Session Summary Question: Insights on pulp market dynamics in China - Management indicated that despite new pulp capacity, the net effect on supply is neutral due to lower operating rates and shutdowns, leading to a positive import trend for hardwood pulp [34][35] Question: Future CAPEX trends - Management acknowledged potential for lower CAPEX in 2026 due to non-recurring items but refrained from providing specific guidance [33][37] Question: Buyback execution strategy - The company remains focused on deleveraging but is opportunistic with buybacks, considering various market factors [41][42] Question: Potential divestments and their impact on deleveraging - Management noted that divestments are not a primary strategy for deleveraging, which will primarily come from operational improvements [43][44] Question: Paper prices in China and their impact on pulp prices - Management confirmed that while paper prices are a factor, pulp prices generally lead the market, and they expect a recovery in paper prices [48][50] Question: U.S. packaging market outlook - The company expressed confidence in its U.S. packaging business, citing stable demand and long-term contracts that insulate it from market volatility [53][55]

Financial Data and Key Metrics Changes - The company reported a strong operational cash flow and free cash flow in Q4 2025, demonstrating resilience despite lower price cycles [5][6] - EBITDA for Q4 2025 reached $4.8 billion, an 8% increase quarter-over-quarter, supported by higher volumes and better prices in US dollar terms [15][21] - Cash costs were reported at BRL 778 per ton, marking a 3% reduction from Q3 2025, driven by lower input costs and operational stability [21][22] Business Line Data and Key Metrics Changes - The pulp business unit achieved record shipment volumes in Q4 2025, with a notable price recovery in all markets, particularly in China and Asia [4][12] - The paper and packaging business unit also delivered strong volumes, with a 21% year-over-year increase in the U.S. market, despite declining paper prices in export markets [7][10] - The company ceased operations at its Rio Verde Mill, which had the highest cash cost in its portfolio, expecting a positive impact on 2026 results [11] Market Data and Key Metrics Changes - In Brazil, print and write demand increased by 1% in the first two months of Q4 compared to the same period last year, while paperboard demand grew by 2% [8][9] - The U.S. market saw stable SBS shipments in Q4, but production increased by 2%, leading to pressure on operating rates [9] - International markets remained weak, with declining demand and oversupply, particularly in Europe [8][10] Company Strategy and Development Direction - The company aims to improve competitiveness through a multi-year program focused on reducing total operational disbursement [22][23] - The management highlighted the importance of maintaining liquidity and reducing net debt, targeting a reduction to $11 billion [40] - The joint venture with KC is progressing as planned, with expectations for closing in mid-2026 [27] Management's Comments on Operating Environment and Future Outlook - Management noted a more constrictive business environment for 2026 due to changes in supply and demand dynamics, particularly in the pulp market [27][68] - The delay of new market pulp capacity and revocation of forestry licenses in Indonesia are expected to tighten supply further [68] - The company anticipates a gradual decline in cash costs over the course of 2026, despite challenges in the first half of the year [22][59] Other Important Information - The company generated positive free cash flow of $400 million in Q4 2025, contributing to a reduction in net debt to $12.6 billion [24] - A new buyback program was announced to acquire up to 40 million shares over the next 18 months [26] - The company is maintaining a healthy portfolio of FX hedges, with significant potential cash adjustments expected [25] Q&A Session All Questions and Answers Question: Insights on pulp market dynamics in China - Management provided updates on the pulp market, indicating a strong demand in China and a net zero effect of verticalization in 2025, with expectations for 2.8-3 million tons of new capacity in 2026 [32][34] Question: CAPEX trends and expectations - Management discussed the potential for lower CAPEX in 2026 due to non-recurring items, but did not provide specific guidance [31][35] Question: Buyback execution strategy - The company emphasized an opportunistic approach to buybacks, focusing on leveraging its balance sheet while considering market conditions [39][40] Question: Potential divestments and their impact on deleveraging - Management indicated that divestments would focus on non-core assets, particularly in the forestry business, but emphasized that deleveraging would primarily come from operational improvements [41][42] Question: Paper prices in China and their impact on pulp prices - Management noted that while paper prices are a factor, pulp prices typically drive paper prices, and they expect a recovery in paper prices [45][49] Question: U.S. packaging market outlook - The company highlighted its strong position in the U.S. packaging market, with stable demand and protected pricing under long-term contracts [51][52]

Financial Data and Key Metrics Changes - For Q1 2026, total reportable segments EBIT was $441 million, a 5% increase from the prior year, driven by strong performance in natural gas businesses and effective margin management in LPG operations [4][10] - Adjusted diluted EPS for the quarter was $1.26, down from $1.37 in the prior year, reflecting the absence of investment tax credits, higher interest expenses, and lost earnings from divestitures [10] - Available liquidity at the end of the quarter was $1.6 billion, an increase of $100 million year-over-year [15] Business Line Data and Key Metrics Changes - Utilities segment delivered EBIT of $157 million, up $16 million year-over-year, with a 16% increase in core market volumes due to colder weather [11] - Midstream and Marketing reported EBIT of $88 million, down from $95 million in the prior year, impacted by pipeline rate increases [12] - UGI International reported EBIT of $124 million, up $14 million year-over-year, due to operating efficiencies despite lower retail LPG volumes [14] Market Data and Key Metrics Changes - The gas utility service territories experienced temperatures approximately 21% colder than the prior year, contributing to increased demand [11] - Retail LPG volumes were lower due to reduced crop drying campaigns and divestitures, but total margin increased due to effective margin management [14] Company Strategy and Development Direction - The company is focused on operational excellence, safety, and cultural transformation to unlock intrinsic value [4] - Capital discipline is emphasized, with LPG portfolio optimization nearly complete and natural gas infrastructure positioned to capture growing demand [5] - A new Chief Strategic Officer role has been created to focus on medium to long-term growth opportunities and sustainability [36][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet strong winter demand, with improved safety metrics and operational efficiency [4][17] - The company is actively engaged in discussions with power providers to meet increasing natural gas demand in Pennsylvania [30] Other Important Information - Moody's upgraded AmeriGas's outlook to positive, reflecting operational and financial improvements [6][16] - The company filed a gas base rate case for UGI Utilities and Mountaineer Gas Company, requesting distribution rate increases to support infrastructure investments [8] Q&A Session Summary Question: How has AmeriGas performed through extreme winter weather? - Management noted improved performance metrics, with record safety and customer satisfaction, despite some delivery challenges due to road conditions [20][21] Question: Can you discuss the decision for a rate case in Pennsylvania? - Management clarified that the rate case focuses on maintaining affordability and efficiency, with no extraordinary structural changes [27][28] Question: What is the status of NDAs related to increasing natural gas demand? - Management indicated ongoing discussions with power providers, hoping to announce developments within the fiscal year [30][31] Question: Why create the Chief Strategic Officer role now? - The role is aimed at focusing on long-term growth and sustainability, reflecting the company's evolution and need for strategic oversight [36][39] Question: Can you quantify the lag in recovery of pipeline transportation costs? - Management estimated the lag to be around $5 million, which is expected to be recovered over the fiscal year [42][43]

Financial Data and Key Metrics Changes - For Q1 2026, total reportable segments EBIT was $441 million, a 5% increase from the prior year, driven by strong performance in natural gas businesses and effective margin management in LPG operations [4][10] - Adjusted diluted EPS for the quarter was $1.26, down from $1.37 in the prior year, reflecting the absence of investment tax credits, higher interest expenses, and lost earnings from divestitures [10] Business Line Data and Key Metrics Changes - Utilities segment delivered EBIT of $157 million, up $16 million year-over-year, with a 16% increase in core market volumes due to colder weather [11] - Midstream and Marketing reported EBIT of $88 million, down from $95 million in the prior year, impacted by pipeline rate increases [12] - UGI International reported EBIT of $124 million, up $14 million, due to operating efficiencies despite lower retail LPG volumes from divestitures [12][14] - AmeriGas reported EBIT of $72 million, down $2 million, with total retail LPG volume up due to colder weather, but impacted by divestitures [14] Market Data and Key Metrics Changes - The natural gas utility experienced temperatures approximately 21% colder than the prior year, contributing to increased volumes and margins [11] - The company deployed $225 million in capital during the quarter, with 73% allocated to regulated utilities for infrastructure improvements [7] Company Strategy and Development Direction - The company is focused on operational excellence, safety, and cultural transformation to unlock intrinsic value [4] - Capital discipline is emphasized, with LPG portfolio optimization nearly complete and natural gas infrastructure positioned for growth in Pennsylvania [5][7] - A new Chief Strategic Officer role has been created to focus on medium to long-term growth opportunities and sustainability [36][39] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand for propane during extreme winter weather, with operational improvements leading to better customer satisfaction metrics [22][49] - The company is committed to maintaining affordable natural gas service while investing in infrastructure upgrades [8][28] Other Important Information - Moody's upgraded AmeriGas's outlook to positive, reflecting operational and financial improvements [6][16] - The company filed gas base rate cases for UGI Utilities and Mountaineer Gas Company, requesting distribution rate increases to support ongoing investments [8] Q&A Session Summary Question: How has AmeriGas performed through extreme winter weather? - Management indicated improved performance metrics, with record safety and customer satisfaction, despite some delivery challenges due to road conditions [20][22] Question: What is the rationale behind the recent rate case in Pennsylvania? - Management emphasized ongoing efforts to manage operational expenses and maintain affordability for customers, with no extraordinary changes in the rate case structure [26][27] Question: What is the status of discussions regarding increasing natural gas demand in Pennsylvania? - Management confirmed ongoing discussions with power providers and hopes to announce developments within the fiscal year [29][30] Question: Why create the Chief Strategic Officer role now? - The role is intended to focus on long-term growth and sustainability, reflecting the company's evolution and need for strategic oversight [36][39] Question: Can you quantify the lag in recovery of pipeline transportation costs? - Management indicated a rate increase on FERC pipelines incurred, with an estimated recovery of around $5 million expected in fiscal 2026 [41][43]

Financial Data and Key Metrics Changes - For Q1 2026, total reportable segments EBIT was $441 million, a 5% increase from the prior year, driven by strong performance in natural gas businesses and effective margin management in LPG operations [4][10] - Adjusted diluted EPS for the quarter was $1.26, down from $1.37 in the prior year, reflecting the absence of investment tax credits, higher interest expenses, and lost earnings from divestitures [10] - Available liquidity at the end of the quarter was $1.6 billion, an increase of $100 million over the prior year [14] Business Line Data and Key Metrics Changes - Utilities segment delivered EBIT of $157 million, up $16 million year-over-year, supported by colder weather and increased core market volumes [11] - Midstream and Marketing reported EBIT of $88 million, down from $95 million in the prior year, impacted by pipeline rate increases [12] - UGI International reported EBIT of $124 million, an increase of $14 million, due to operating efficiencies despite lower retail LPG volumes from divestitures [12][13] - AmeriGas reported EBIT of $72 million, down $2 million, with total retail LPG volume up due to colder weather in the east [13] Market Data and Key Metrics Changes - The gas utility service territories experienced temperatures approximately 21% colder than the prior year, driving a 16% increase in core market volumes [11] - Retail LPG volumes were lower due to reduced crop drying campaigns and divestitures, but total margin increased due to effective margin management [13] Company Strategy and Development Direction - The company is focused on operational excellence, safety, and cultural transformation to unlock intrinsic value [4] - Capital discipline is emphasized, with LPG portfolio optimization nearly complete and natural gas infrastructure positioned to capture growing demand [5] - A new Chief Strategic Officer role has been created to focus on medium to long-term growth opportunities and sustainability [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand during extreme winter weather, with efforts to redeploy resources to meet customer needs [20][21] - The company is committed to maintaining affordability for customers while investing in infrastructure and safety [25][26] - Discussions are ongoing regarding increasing natural gas demand in Pennsylvania, with hopes to announce developments during the fiscal year [27][28] Other Important Information - Moody's upgraded AmeriGas's outlook to positive, reflecting operational and financial improvements [6][15] - The company plans to contribute $3 million to the UGI Utilities Operation Share Energy Fund to assist low and moderate-income customers [8] Q&A Session Summary Question: How has AmeriGas performed through extreme winter weather? - Management indicated improved performance metrics, with record safety and customer satisfaction, despite some delivery challenges due to road conditions [19][20] Question: What is the rationale for the recent rate case in Pennsylvania? - The company emphasized ongoing efforts to manage operational expenses and maintain affordability for customers, with no extraordinary changes in the rate case structure [25][26] Question: What is the status of discussions regarding increasing natural gas demand? - Management confirmed ongoing discussions with power providers and hopes to announce developments within the fiscal year [27][28] Question: What is the impact of pipeline transportation cost recovery on the midstream business? - Management noted a timing lag in recovering pipeline transportation costs, with an estimated recovery of around $5 million expected [39][40]

Financial Data and Key Metrics Changes - Net sales for Q2 2026 were $188.6 million, a decrease of 5.8% compared to the previous year, with unit volume down 9.5% to 1,106 units [12][14] - Adjusted EBITDA decreased 52.5% to $8 million, with an adjusted EBITDA margin of 4.3%, down from 8.4% in the prior year [15][18] - GAAP net loss for the quarter was $2.5 million, compared to a net income of $2.4 million in the prior year [15] - Consolidated net sales per unit increased 4.1% to $170,544 per unit [13] Business Line Data and Key Metrics Changes - Malibu and Axis brands accounted for approximately 46.4% of unit sales, while saltwater fishing represented 25.5%, and Cobalt made up 28.1% [13] - Gross profit decreased 32.9% to $25.1 million, with a gross margin of 13.3%, down 540 basis points from the prior year [14] Market Data and Key Metrics Changes - The broader marine industry is experiencing a modest overhang on non-current inventory, but the company maintains a healthy inventory position for its model year 2026 boats [9][11] - The company expects the market to decline in the range of mid to high single digits for the fiscal year [17] Company Strategy and Development Direction - The company is focused on a "Build, Innovate, and Grow" framework, emphasizing customer-driven innovation and operational excellence [8][11] - Plans to introduce new models at the Miami International Boat Show, showcasing differentiated products [7] - The company is expanding its marine components business and enhancing dealer partnerships to capture market share [10] Management's Comments on Operating Environment and Future Outlook - Management noted a competitive promotional environment but expressed optimism about customer response to new models and the overall retail environment [6][11] - The company anticipates flat to mid-single digit sales declines for the full fiscal year, with Q3 net sales expected between $198 million and $202 million [17][18] Other Important Information - The company generated $8.4 million of free cash flow during Q2, with $4.4 million in capital expenditures [16] - A share repurchase program was expanded to $70 million, with $20.8 million completed during the quarter [16] Q&A Session Summary Question: Impact of higher boat show expenses on EBITDA margin - Management indicated about 50 basis points of cost pressure from promotional activities related to year-end sales events [23] Question: Inventory levels compared to the industry - Management stated that the industry is generally in a healthy position, with the company feeling good about its inventory levels [24] Question: MBI Acceptance program's impact on sales - Early feedback from dealers was positive, indicating higher take rates at boat shows, although it is still early to determine overall trends [30] Question: Centralized sourcing cost savings - Management expects significant benefits from centralized sourcing efforts to impact margins positively in the latter part of the fiscal year [32] Question: Dealer sentiment and inventory management - Feedback from dealers has been mixed, with some positive trends leading to additional orders, but a level of destocking is expected due to market conditions [36] Question: Outlook for labor costs - Management anticipates improvements in labor costs as operational effectiveness and centralized sourcing efforts take effect [41] Question: Competitive landscape in the ski and wake category - Management noted ongoing efforts to stimulate growth in the ski/wake segment, with collaboration among competitors [43] Question: Confidence in EBITDA margin expansion - Management outlined expectations for sequential growth, fixed-cost leverage, and reduced promotional spending as drivers for margin growth [47] Question: Update on M&A pipeline - Management is actively looking for opportunities and conducting due diligence on potential deals [57]

Financial Data and Key Metrics Changes - Net sales for Q2 2026 were $188.6 million, a decrease of 5.8% compared to the previous year, with unit volume down 9.5% to 1,106 units [12][15] - Adjusted EBITDA decreased 52.5% to $8 million, with adjusted EBITDA margin dropping to 4.3% from 8.4% in the prior year [15][17] - GAAP net loss for the quarter was $2.5 million, compared to a net income of $2.4 million in the prior year [15] Business Line Data and Key Metrics Changes - Malibu and Axis brands accounted for approximately 46.4% of unit sales, while saltwater fishing represented 25.5% and Cobalt made up 28.1% [13] - Consolidated net sales per unit increased by 4.1% to $170,544 per unit, driven by favorable model mix in Cobalt and saltwater fishing segments [13][14] Market Data and Key Metrics Changes - The broader marine industry is experiencing a modest overhang on non-current inventory, but the company maintains a healthy inventory position for its model year 2026 boats [9][11] - The company expects the market to decline in the range of mid to high single digits for the fiscal year [17] Company Strategy and Development Direction - The company is focused on a "Build, Innovate, and Grow" framework, emphasizing customer-driven innovation and operational excellence [8][11] - Plans to debut new models at the Miami International Boat Show, showcasing differentiated products [7] - The company is expanding its marine components business and enhancing dealer partnerships to strengthen its market position [10] Management's Comments on Operating Environment and Future Outlook - Management noted a competitive retail environment but expressed optimism about customer response to new models and the success of promotional events [5][6] - The company is closely monitoring market conditions and is prepared to scale production if demand improves [18] Other Important Information - The company generated $8.4 million of free cash flow during Q2, with $4.4 million in capital expenditures [16] - A share repurchase program was expanded to $70 million, with $20.8 million completed during the quarter [16] Q&A Session Summary Question: Impact of higher boat show expenses on EBITDA margin - Management indicated that higher promotional costs related to year-end sales events contributed about 50 basis points of cost pressure for the quarter [22][23] Question: Inventory levels compared to the industry - Management stated that the industry is generally in a healthy position, with the company feeling good about its inventory levels [24] Question: MBI Acceptance program rollout and its impact - Early feedback from dealers was positive, indicating a higher take rate on financing options, although it is still early to determine overall trends [30] Question: Dealer sentiment and inventory management - Feedback from dealers has been mixed, with some positive trends observed at boat shows, leading to additional orders [35] Question: Outlook for labor costs - Management expects to see benefits from operational effectiveness and centralized sourcing efforts, which should help manage labor costs moving forward [39][41] Question: Competitive landscape in the ski and wake category - Management noted ongoing efforts to stimulate growth in the ski/wake segment, collaborating with industry peers [42][43] Question: Q3 EBITDA margin guidance and operating leverage - Management expects sequential growth in top line and benefits from centralized sourcing to drive margin growth in the latter part of the year [46][47]