Financial Performance and Key Metrics - The company achieved over $2 billion in annual sales for the first time, with a year-over-year net sales growth of 4.1% [8][10] - Consolidated net sales for Q4 2024 were $534 million, an 8% increase year-over-year, driven by strong customer demand [13][30] - Adjusted operating margin for Q4 was 17.5%, expanding 210 basis points compared to the same period last year [14][33] - Adjusted diluted EPS increased by 40% to $2.20 for the quarter [15][33] - Free cash flow for Q4 was $63 million, allowing for $54 million in debt repayment [15][41] Business Segment Performance - Light Duty segment saw net sales increase by 11% year-over-year, with a segment profit margin of 20.1%, up 350 basis points [35][36] - Heavy Duty segment experienced an 8% decline in net sales due to ongoing market challenges, with plans for new product development to capture market share when conditions improve [37][28] - Specialty Vehicles segment reported a 5% increase in net sales, driven by new product initiatives and an expanded dealer network [39][28] Market Data and Key Metrics - Vehicle miles traveled increased year-over-year, contributing to strong POS growth in the Light Duty segment [26] - The Heavy Duty market remains soft, with delayed repairs impacting sales performance [78][81] - Specialty Vehicle market showed signs of stabilization, but inflation and high interest rates continue to affect new machine acquisition [96] Company Strategy and Industry Competition - The company emphasizes innovation as a core strategy, focusing on new product development and operational excellence [16][20] - Plans to diversify and optimize the supply chain to enhance flexibility and reduce country-specific concentration [23] - The acquisition pipeline remains robust, with expectations for improved M&A activity as trade uncertainties clear [24][69] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the operational model and strategic growth opportunities for 2025, despite uncertainties around tariffs and macroeconomic factors [46][48] - The company expects net sales growth of 3% to 5% in 2025, with light duty driving solid sales growth [48][49] - Heavy Duty segment is expected to see flattish sales growth, while Specialty Vehicle is projected to experience modest growth [49] Other Important Information - The company has a new $500 million stock repurchase plan effective January 1, 2025, expiring in December 2027 [42][94] - The balance sheet remains strong, with net debt reduced to $426 million and total liquidity at $642 million [43][44] Q&A Session Summary Question: Update on tariff exposure related to China - Management indicated that approximately 30% of purchases will come from the U.S. in 2025, with 30% to 40% from China, making the current tariff situation manageable [61][60] Question: Early signs in the heavy-duty market and channel expansion - Management noted that the heavy-duty market is stabilizing, with a focus on new product launches and productivity initiatives [64][65] Question: Heavy-duty market performance drivers - Delayed repairs are impacting the heavy-duty market, with expectations for a robust ramp-up once the market inflects [78][81] Question: M&A pipeline opportunities - The M&A pipeline is robust across all segments, but activity has slowed due to trade uncertainties [69] Question: Capital allocation priorities - The company prioritizes debt management, internal investments, and then M&A, with share buybacks being opportunistic [93][94] Question: Specialty Vehicle market dynamics - The Specialty Vehicle market is down overall, but the company has focused on non-discretionary repair parts and channel expansion to outperform [97][96] Question: Margin profile of complex electronics - Complex electronics within the light vehicle segment have a strong margin profile, typically outperforming the overall business [108] Question: Inflation rate and pricing outlook - Management anticipates a low single-digit inflation rate in the absence of tariffs, with general inflation affecting costs [111]