Financial Data and Key Metrics Changes - For Q1 2025, the company reported net sales of $62.99 million, a decrease of 3.5% from $65.25 million in Q1 2024 [2][3] - The operating income for Q1 2025 was $11,000, a significant improvement from an operating loss of $857,000 in Q1 2024 [2][5] - The net loss from continuing operations was $1.58 million or $0.11 per diluted share, compared to a net loss of $2.41 million or $0.16 per diluted share in the same quarter of 2024 [3] Business Line Data and Key Metrics Changes - Sales of soft floor covering products outperformed hard surface products, with continued market share gains in the soft surface category [3] - Premium products consistently performed better than the market across all categories, contributing to improved gross margins [4][11] Market Data and Key Metrics Changes - The industry is facing weak market conditions due to low existing home sales and lower consumer confidence [3][10] - The residential remodeling market continues to experience a multiyear slump, with uncertainty regarding when market dynamics will change [12] Company Strategy and Development Direction - The company is focused on creating differentiated styles for the residential market, emphasizing color, pattern, and texture [11] - Efforts are being made to simplify product lines and enhance consumer-friendly messaging, particularly in the TrueCore brand [12] - The company aims to manage expenses and capital expenditures while improving gross margins in anticipation of a future market upturn [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that low consumer confidence was exacerbated by uncertainty around tariff increases, impacting product costs [10] - The company is optimistic about its position for future growth when interest rates decline and the housing market rebounds [14] Other Important Information - The company closed a new $75 million senior credit facility, which will support operations and improve financial flexibility [8][9] - Inventory management has been a focus, with a planned reduction leading to a decrease in net inventory from $75 million in Q1 2024 to $66.7 million in Q1 2025 [6] Q&A Session Summary Question: Is the stock buyback program still in effect? - The stock buyback program is no longer in effect, having ceased during the latter part of the previous year [16] Question: Are there signs of consolidation in the industry? - There has not been much consolidation among manufacturers, although some smaller retailers have gone out of business [17] Question: Have buying habits changed between big box stores and boutique retailers? - Premium products are performing better overall, with the Fabrica brand seeing exceptional success in the soft covering market [18]

Financial Data and Key Metrics Changes - The company reported Q1 sales of $50.7 million, an increase from $41.9 million in the same quarter last year, representing a year-over-year growth of 21% [10][12] - Operating income for Q1 was $3.4 million, down from $4.1 million in the previous year, leading to a decrease in operating margin to 6.7% from 9.7% [15] - Net income was $1.9 million or $0.11 per share on a GAAP basis, compared to $2.9 million or $0.18 per share for the same quarter last year [15][16] - Adjusted EBITDA was $5.4 million, or 10.7% of sales, compared to $5.2 million or 12.5% for the prior year quarter [16] Business Line Data and Key Metrics Changes - Revenues from the Battery and Energy Products segment were $46.3 million, up from $35 million last year, with a 10.6% organic growth excluding Electrochem sales [10][11] - Government defense sales in the Battery segment increased by 53.6%, while medical battery sales decreased by 12.3% [11] - The Communications Systems segment saw revenues decline by 36.2% to $4.4 million, primarily due to large shipments in the prior year [12][14] Market Data and Key Metrics Changes - The sales split between commercial and government defense for the battery business was 64% to 36%, with a domestic to international split of 78% to 22% [11] - The total backlog exiting Q1 was $95 million, representing 55% of trailing twelve-month sales, indicating a healthy demand outlook [12] Company Strategy and Development Direction - The company aims to complete the integration of the Electrochem acquisition by the end of Q2, focusing on ERP system setup and leveraging vertical integration opportunities [19][27] - There is a commitment to improve sales pipelines and stabilize gross margins through pricing adjustments and lean productivity projects [20][21] - The company is expanding its product offerings in both the Communications Systems and Battery segments, targeting military and medical markets [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in profitable growth despite macroeconomic uncertainties, noting that Q1 performance exceeded expectations [42][43] - The government defense sector is expected to remain strong, with potential increases in NATO spending anticipated over the next 18 to 24 months [54] - The medical battery segment is expected to stabilize as replacement cycles for COVID-related devices approach [52] Other Important Information - The company ended Q1 with working capital of $70 million and a current ratio of 3.2, indicating solid liquidity [17] - The company received $1.5 million from the employee retention credit, which was used to reduce acquisition debt [17] Q&A Session Summary Question: How have conversations with customers on tariff pass-throughs evolved? - Management noted that customers are concerned about cash flow impacts due to tariffs, which could affect their ability to invest in product development [32][34] Question: What are the major milestones left for the Electrochem integration? - The integration is on track for completion by Q2, with most systems set up and data transitioned [36][37] Question: What markets are targeted for the IVAS battery? - The focus is primarily on foreign military markets, with some commercial engagements anticipated [41] Question: Can you discuss trends across key end markets? - The medical market is steady with known replacement cycles, while government defense remains strong with a good backlog [52][54] Question: How is free cash flow expected to trend over 2025? - Free cash flow is expected to be consistent, with plans to continue paying down debt ahead of schedule [55][56]

Financial Data and Key Metrics Changes - Total investment income for Q1 2025 was $36.5 million, a decrease of $1 million from Q4 2024, primarily due to a decline in interest income [13] - Adjusted net investment income (NII) for Q1 2025 was $18.5 million, compared to $18.1 million in Q1 2024, with adjusted NII per share at $0.54, down from $0.59 year-over-year [9] - Net asset value at quarter end was $677.9 million, or $19.39 per share, compared to $655.7 million, or $19.33 per share as of 12/31/2024 [9] Business Line Data and Key Metrics Changes - Originations totaled $115.6 million for Q1 2025, with $102.1 million invested in seven new portfolio companies [10] - Debt investments amounted to $111.6 million, with first lien securities accounting for approximately 94% of the total [10] - The debt portfolio was valued at approximately $1 billion, with 79% consisting of first lien investments [11] Market Data and Key Metrics Changes - Deal activity in the lower middle market was described as modest, continuing the trend of lackluster M&A activity [7] - The company expects continued activity in the lower middle market, albeit at lower levels than before [30] Company Strategy and Development Direction - The company focuses on investing in high-quality companies with resilient business models and strong cash flow generation [7] - The management believes the current economic environment may present interesting investment opportunities, particularly in periods of high volatility [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience against macroeconomic challenges, noting that most portfolio companies are domestic with limited tariff exposure [11] - The outlook for originations in Q2 2025 is positive, supported by a strong investment pipeline [12] Other Important Information - The company declared a total dividend of $0.54 per share for Q2 2025, consistent with the previous quarter [9] - The company ended Q1 2025 with $545.6 million of debt outstanding, with a net debt to equity ratio of 0.7 times [15] Q&A Session Summary Question: Impact of tariffs on portfolio companies - Management indicated that direct exposure to tariffs is limited to just over 5% of the portfolio, and plans are in place to manage risks effectively [24][25] Question: Conditions for M&A market rebound - Management believes that uncertainty is the primary factor affecting the M&A market, and stability rather than the removal of tariffs is needed for a rebound [28][29] Question: Prepayment risk among top-performing companies - Management acknowledged prepayment risk but noted that it is a common aspect of the business, with some companies expected to be refinanced [47][49] Question: Update on distressed investment in Quest software - Management expressed confidence in the long-term outlook for Quest, despite current challenges, and noted that the risk profile is reflected in the investment's valuation [51][52]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $213 million, a 3% increase year over year, driven by a 3% increase in both Medical and Industrial segments [23][24] - Non-GAAP gross margin was 36%, up from 33% in the same quarter last year, reflecting improved volume and productivity gains [9][27] - Adjusted EBITDA for the quarter was $34 million, compared to $25 million in the previous year [9][23] - Cash from operations was strong at $17 million, with total cash, cash equivalents, and marketable securities at $226 million, up $36 million year over year [9][31] Business Line Data and Key Metrics Changes - Medical segment revenues were $154 million, constituting 72% of total revenue, while Industrial segment revenues were $59 million, making up 28% [24] - Sales in the Medical segment were led by strong global sales of CT tubes, with fluoroscopy, oncology, mammography, and dental modalities all performing above their respective sales trends [10] - The Industrial segment saw strong demand, particularly in global security screening, which drove sales of cargo inspection components and systems [11] Market Data and Key Metrics Changes - Americas revenue increased by 2%, EMEA revenues were flat, and APAC revenues increased by 8%, primarily due to increased sales in China [24] - Sales in China increased by 25% year over year but declined by 11% compared to the prior quarter, with China sales constituting 15% of total sales [24][25] Company Strategy and Development Direction - The company plans to mitigate the impact of tariffs through various strategies, including localizing manufacturing and pursuing operational strategies to reduce costs for customers [12][14][22] - The focus remains on long-term growth strategies based on innovation and cost leadership, with continued investment in regional manufacturing operations [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand trends across the business, despite headwinds from tariffs, and noted that no orders have been canceled from the $316 million backlog [21][22] - The company anticipates a sales impact of approximately $20 million in China due to tariffs, with a potential EPS reduction of $0.15 to $0.20 in the third quarter [32] Other Important Information - The company plans to use restricted cash from a senior secured debt offering to repay outstanding convertible notes upon maturity in June [9][31] - The gross debt outstanding at the end of the quarter was $570 million, with a net debt leverage ratio of approximately 2.1 times adjusted EBITDA [31] Q&A Session Summary Question: Update on orders in China and customer purchasing behavior - Management noted that while some customers are pausing purchases, they continue to place orders for essential products, particularly for high-end tubes [35][36][40] - Customers are trying to manage inventory while awaiting potential tariff resolutions [41][42] Question: Impact of the $25 million cargo inspection order on capacity - Management confirmed that lead times for delivery are typically 120 to 180 days, with civil works affecting timelines [47][48][50] Question: Clarification on tariff impacts and revenue drivers in China - The majority of revenue in China comes from CT tubes, and customers are currently delaying orders while exploring alternatives [57][58][62] Question: Trends outside of China and overall demand - Management indicated that demand trends outside of China remain strong, with broad-based strength in both medical and industrial segments [78][80] Question: Updates on the India plant and tariff mitigation strategies - The company is accelerating activities in India to help mitigate tariff impacts and is qualifying suppliers from India [85][86] Question: Anticipated impact of tariffs on industrial business - Tariffs are expected to impact the industrial business as well, but the sales of industrial products into China are minimal [94] Question: Potential for near-term tariff relief and its impact - Management indicated that any near-term relief could lead to immediate recovery in sales, depending on timing [102][103]

Financial Data and Key Metrics Changes - Total revenue for the second quarter was $213 million, a 3% increase year over year, driven by both Medical and Industrial segments [22][23] - Non-GAAP gross margin was 36%, up from 33% in the same quarter last year, reflecting improved volume and productivity gains [7][25] - Adjusted EBITDA for the quarter was $34 million, compared to $25 million in the previous year [7][22] - Cash from operations was strong at $17 million, with total cash, cash equivalents, and marketable securities reaching $226 million, an increase of $36 million year over year [8][29] Business Line Data and Key Metrics Changes - Medical segment revenues were $154 million, accounting for 72% of total revenue, while Industrial segment revenues were $59 million, making up 28% [23][24] - Sales in the Medical segment increased, particularly in CT tubes, fluoroscopy, oncology, mammography, and dental modalities, while radiography sales were below trend [9][10] - The Industrial segment saw strong demand, particularly in cargo inspection systems and non-destructive inspection applications [10][19] Market Data and Key Metrics Changes - Americas revenue increased by 2%, EMEA revenues were flat, and APAC revenues rose by 8%, primarily due to increased sales in China [23] - Sales in China increased by 25% year over year but declined by 11% compared to the previous quarter, representing 15% of total sales [24] Company Strategy and Development Direction - The company plans to mitigate tariff impacts by localizing manufacturing and pursuing operational strategies [12][21] - Continued investment in regional manufacturing operations and supply chain capabilities is a priority [21] - The company remains committed to innovation and cost leadership as part of its long-term growth strategy [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand trends across the business, despite headwinds from tariffs [20] - The company does not anticipate restructuring in its China business and has not seen order cancellations in its backlog [20] - Future sales impacts from tariffs are expected to be temporary, with recovery anticipated in Q4 [67][68] Other Important Information - The company plans to use restricted cash to repay outstanding convertible notes upon maturity in June [8][29] - Gross debt outstanding at the end of the quarter was $570 million, with a net debt leverage ratio of approximately 2.1 times adjusted EBITDA [29] Q&A Session Summary Question: Update on orders in China and customer purchasing behavior - Management noted that while some customers are pausing purchases, orders for essential tubes continue, and customers are lobbying for tariff exemptions [35][36][41] Question: Impact of the $25 million cargo inspection order on delivery capacity - Management confirmed that lead times for delivery are typically 120 to 180 days, with civil works affecting timelines [46][48] Question: Clarification on tariff impacts and revenue drivers in China - Management indicated that the majority of revenue in China comes from CT tubes, and customers are currently holding off on orders due to tariffs [55][61] Question: Trends outside of China and overall demand - Management reported broad-based strength in both medical and industrial segments, with positive order intake rates [78] Question: Updates on the India plant and tariff mitigation strategies - Management confirmed that activities in India are proceeding as planned, with efforts to accelerate operations to mitigate tariff impacts [86] Question: Passing on tariff costs to customers - Management stated that they plan to pass tariff costs directly to customers without markups, and discussions are ongoing [88][89] Question: Anticipated impact of potential near-term tariff relief - Management suggested that any near-term relief could lead to immediate recovery in sales, depending on timing [103] Question: Timeline for reaching margin accretiveness in the inspection business - Management indicated that it may take at least two years for the inspection business to become margin accretive [111]

Core Viewpoint - Koss Corporation reported a slight increase in net sales for the third quarter of fiscal year 2025, but continued to experience net losses, highlighting challenges in certain market segments and the impact of external factors such as tariffs on product costs [2][4]. Financial Performance - Net sales for the three months ended March 31, 2025, were $2,781,006, an increase of $143,400, or 5.4%, compared to $2,637,606 for the same period in the prior year [2]. - For the nine months ended March 31, 2025, net sales reached $9,539,960, reflecting an increase of $168,292, or 1.8%, over the prior year's $9,371,668 [3]. - The net loss for the third quarter of fiscal year 2025 was $316,742, slightly higher than the net loss of $313,780 for the same quarter in the previous year [2]. - The net loss for the nine months ended March 31, 2025, was $642,135, showing improvement compared to a net loss of $840,542 for the same period in the prior year [3]. Sales and Market Dynamics - A significant increase in sales to distributors in Europe and Asia, driven by new product success, was a key factor in the overall sales improvement for the fiscal year-to-date [4]. - Direct-to-consumer (DTC) sales contributed to sales growth, but a nearly 60% drop in sales to the education markets due to project postponements and lower domestic distributor sales offset some of the gains [4]. Margin and Cost Analysis - Margin improvement of over 600 basis points during the first nine months of fiscal year 2025 was attributed to the adverse impact on prior year's margins from higher transit costs [4]. - The write-off of obsolete products during the current year partially offset margin gains [4]. Strategic Considerations - The company is closely monitoring recent tariff announcements that could significantly impact product costs, particularly since a substantial portion of its products are sourced from China [4]. - A strategic response is being developed to mitigate potential adverse effects on operations and financial condition [4].

Financial Data and Key Metrics Changes - Net revenue for the first quarter was $162 million, up 10% from last year, marking the twentieth consecutive quarter of year-over-year growth since the IPO in 2020 [8][20] - Gross profit for the first quarter rose to $62.5 million, or 38.5% of net revenue, compared to 39.8% of net revenue last year [21] - Net income decreased 11.2% to $16.9 million, or $0.37 per diluted share, compared to $19 million, or $0.43 per diluted share for the same period last year [23] - Adjusted EBITDA for the first quarter was $27.5 million, or 16.9% of net revenue, down from 19.7% in the prior year [23] Business Line Data and Key Metrics Changes - The Butter business saw robust growth, with first-quarter net revenue up 41% year-over-year [9] - Volume-related growth for egg products was below trend due to supply constraints, but demand remains strong [10][18] - The company added approximately 25 new family farms to its network in the first quarter, increasing the total to over 450 farms [14] Market Data and Key Metrics Changes - Brand awareness reached 31% by the end of the first quarter, a five-point increase since the beginning of the year [10] - The company is currently in only 11.3% of U.S. households, indicating significant growth potential [12] Company Strategy and Development Direction - The company aims to achieve $1 billion in net revenue by 2027, with a gross margin target of about 35% and an adjusted EBITDA margin of 12% to 14% [14][30] - Investments are being made in supply chain infrastructure and new facilities to increase capacity and support innovation [15][30] - The company plans to implement a modest low double-digit price increase for shell egg products to offset anticipated cost impacts from tariffs [17] Management's Comments on Operating Environment and Future Outlook - Management expects volume growth to improve beginning in the second quarter as new farms ramp up production [18] - The company remains confident in its ability to deliver on financial targets despite macroeconomic uncertainties and tariff impacts [27][28] - Management believes that consumer loyalty and brand strength will insulate the company from potential negative impacts of tariffs [28][87] Other Important Information - The company is on track to remediate a material weakness in internal controls related to revenue recognition, with no revenue inconsistencies found [26] - Capital expenditures for fiscal year 2025 are projected to be in the range of $50 million to $60 million, primarily for new facilities and digital transformation projects [28][29] Q&A Session Summary Question: Impact of price increase on retailer pricing - Management indicated that pricing is primarily focused on protecting gross margins and ensuring strong relationships with retail partners [39][40] Question: Current egg supply and retailer orders - Management noted that the category is still not fully servicing demand, with elevated orders from retailers [41][42] Question: Volume growth expectations for the year - Management expects volume growth to accelerate as new farms come online, with Q2 serving as a transition point [48] Question: Impact of tariffs on costs - Management confirmed that while there will be some cost pressures due to tariffs, the price increase is expected to cover these impacts [60][63] Question: Retail distribution increase - The increase in reported distribution from 24,000 to 26,000 stores is attributed to a change in data providers rather than a significant increase in new retailers [67][68] Question: Consumer behavior amidst macro uncertainty - Management observed that brand loyalty remains strong, with consumers less willing to trade down even in challenging economic conditions [76][87] Question: Dynamics of the butter business supply chain - Management discussed the transition in the butter supply chain and the expectation of consistent growth without bottlenecks [79]

Financial Data and Key Metrics Changes - Net revenue for Q1 2025 was $162 million, an increase of 10% year-over-year, marking the twentieth consecutive quarter of growth since the IPO in 2020 [6][18] - Gross profit rose to $62.5 million, representing 38.5% of net revenue, down from 39.8% the previous year due to increased investments and less efficient operations [19][20] - Net income decreased by 11.2% to $16.9 million, or $0.37 per diluted share, compared to $19 million, or $0.43 per diluted share in Q1 2024 [21] - Adjusted EBITDA for Q1 2025 was $27.5 million, or 16.9% of net revenue, down from 19.7% in the prior year [21] Business Line Data and Key Metrics Changes - The Butter business saw robust growth with net revenue up 41% year-over-year [7] - Egg product demand remains strong, but supply constraints have limited volume growth [8][16] - The company added approximately 25 new family farms in Q1 2025, increasing its network to over 450 farms [13] Market Data and Key Metrics Changes - Brand awareness reached 31% by the end of Q1 2025, a five-point increase since the beginning of the year [9] - The company is currently in 11.3% of U.S. households, indicating significant room for growth [11] Company Strategy and Development Direction - The company aims to achieve $1 billion in net revenue by 2027, with a gross margin target of about 35% and an adjusted EBITDA margin of 12% to 14% [14][28] - Investments in supply chain infrastructure and farm expansion initiatives are expected to support sustained growth [14][29] - The company plans to implement a modest price increase for shell egg products to offset anticipated cost impacts from tariffs [15][26] Management's Comments on Operating Environment and Future Outlook - Management expects volume growth headwinds to ease in Q2 2025, leading to reaccelerated net revenue growth [16] - The company remains confident in its ability to navigate macroeconomic uncertainties and consumer behavior changes due to its strong brand loyalty [84] - Management reiterated its full-year guidance for net revenue of at least $740 million, representing at least 22% growth compared to 2024 [24][25] Other Important Information - The company is on track with its digital transformation initiative, with the launch of a new ERP system updated to early fall 2025 [27] - The company is addressing a material weakness in internal controls related to revenue recognition, with no revenue inconsistencies found [23] Q&A Session Summary Question: Impact of price increase on retailer pricing - Management indicated that pricing is primarily aimed at protecting gross margins and maintaining strong relationships with retail partners [39] Question: Current egg supply and retailer orders - Management noted that while the category is improving, supply constraints still exist, and elevated orders from retailers reflect ongoing demand [41] Question: Volume growth expectations for the year - Management expects volume growth to accelerate as new farms come online, with Q2 serving as a transition point [48] Question: Impact of tariffs on pricing and costs - Management confirmed that while tariffs could impact costs, the price increase is expected to cover these impacts [62] Question: Retail distribution increase clarification - The increase in reported distribution from 24,000 to 26,000 stores was due to a change in data providers rather than a significant increase in new retailers [67] Question: Consumer behavior amidst macro uncertainty - Management observed that brand loyalty remains strong, with consumers less likely to trade down even in challenging economic conditions [84]

Financial Data and Key Metrics Changes - Total reported revenue for Q1 2025 was $693 million, down from $711 million in the prior year, primarily due to lower COVID and donor screening revenue [18] - Excluding COVID and donor screening, the company achieved a mid single-digit revenue growth of 6% [18] - Adjusted EBITDA margin improved by 450 basis points year over year to 23%, with adjusted diluted EPS increasing by 68% to $0.74 [24][25] Business Line Data and Key Metrics Changes - Labs business, accounting for 54% of total revenue, grew by 7%, driven by clinical chemistry and immunoassay testing [10] - Immunohematology business grew by 4%, maintaining its global leadership position [10] - Point of Care business represented 25% of Q1 revenue and grew by 8% excluding COVID, with strong flu sales leading to an 18% year-over-year growth [10] - Molecular Diagnostics business grew by 11% excluding COVID, with ongoing clinical trials for the Savanna respiratory panel [11] Market Data and Key Metrics Changes - Revenue from the "Other" region (Japan, Asia Pacific, Latin America) grew by 12%, driven by a 17% increase in Labs revenue [19] - North America revenue declined by 6% due to lower COVID revenue and donor screening wind down, but grew by 5% when excluding these factors [19] - Europe, Middle East, and Africa grew by 9%, while China revenue remained flat, primarily due to order timing and decreased Triage revenue [20] Company Strategy and Development Direction - The company is focused on a narrow set of strategic initiatives, including increasing platform content and utility, expanding margins, and enhancing commercial execution [11] - Plans to realize $100 million in annualized cost savings, with $50 million expected in the first half of 2025 [12] - The company aims to maintain its manufacturing footprint and continue investing in U.S.-based manufacturing and R&D [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and operational discipline, highlighting strong Q1 results and ongoing initiatives [9] - The company anticipates potential tariff impacts of $30 million to $40 million in 2025 but believes mitigation plans will offset these impacts [15] - Full-year 2025 financial guidance remains unchanged, with expectations for total reported revenue between $2.6 billion and $2.81 billion [27] Other Important Information - The company has invested nearly $1 billion in U.S.-based manufacturing and R&D over the past three years [13] - Adjusted free cash flow for Q1 2025 was $47 million, representing 29% of adjusted EBITDA [26] - The company plans to refinance its debt in the second half of 2025 or early 2026, depending on market conditions [31] Q&A Session Summary Question: Can you elaborate on the tariff impact and pricing actions? - Management indicated that selective pricing actions are being considered to offset tariff impacts, but competitive market conditions must be taken into account [36][37] Question: Will tariff impacts affect long-term manufacturing plans? - Management does not expect changes to the overall manufacturing footprint, emphasizing the importance of their global manufacturing network [38] Question: How confident is the company in mitigating tariff impacts? - Management expressed confidence in fully mitigating tariff impacts through various actions, including cost reductions and realigning inventories [43] Question: What underpins the confidence in China's growth rate? - Confidence in mid to high single-digit growth in China is based on strong performance in labs and immunohematology, despite some softness in Triage sales [49] Question: What is the status of the Savanna program? - The company is focused on completing the RBP4x submission to the FDA and is not speculating on outcomes beyond that [45][61] Question: How is the respiratory sales performance impacting guidance? - Management expects to maintain the guidance range for COVID revenue despite a decline, as flu sales have been strong [56][58]

Financial Data and Key Metrics Changes - The company generated $244.7 million of adjusted EBITDA in Q1 2025, down slightly compared to the same quarter last year despite a 20.5% decline in revenue [9][10] - Total adjusted SG&A expenses were $57.5 million, representing 85.6% of gross profit, down from $72.6 million or 87.9% of gross profit in the same quarter last year [10] - Cash outflows from operating activities were $6.9 million for Q1 2025, compared to cash inflows of $17 million for the same period in 2024 [14] Business Line Data and Key Metrics Changes - The Powersports Group sold 13,186 total major units, down 20.5% year over year, with new unit sales down 23.7% and pre-owned unit sales down 13.9% [11] - Gross margins for new units improved to 13.5% from 12.5% year over year, while pre-owned gross margins were 16.3%, down from 19.5% due to an elevated margin in the previous year [11] - Revenue from the powersports dealership group was $239.2 million, down 18.5% year over year, primarily due to lower major unit volume [13] Market Data and Key Metrics Changes - The asset-light vehicle transportation services segment, Wholesale Express, saw revenue decline by 61.5% year over year, with gross profit decreasing 68.6% to $1.1 million [14] - The overall decline in unit sales during the quarter impacted revenue and gross profit across various segments [12] Company Strategy and Development Direction - The company is focused on improving operational discipline and customer service, aiming for long-term financial success despite current challenges [8] - New key management additions are expected to strengthen the company's market position and align with strategic growth goals [6][7] - The company is actively evaluating opportunities to optimize its capital structure and lower its cost of capital [15] Management's Comments on Operating Environment and Future Outlook - The operating environment remains challenging due to tariffs and shifting consumer preferences, but the company is seeing robust demand in the pre-owned segment [7][8] - Management expressed confidence in the actions taken to position the company for long-term success, despite a difficult macroeconomic backdrop [4][8] Other Important Information - The company is engaged in a comprehensive search for a new CFO to lead future growth [6] - The company has fully repaid $38.8 million of convertible notes due on January 2 [14] Q&A Session Summary Question: How aggressive does the company want to be with the cash offer tool for pre-owned inventory? - The company can be aggressive with the cash offer tool, but it depends on the quality of the inventory available [17][18] Question: What are the expectations for inventory levels by year-end? - The company expects inventory levels to be about where they ended in 2024, possibly a little higher due to inflation [20][22] Question: What is the message from OEM partners regarding tariffs? - OEMs are currently absorbing tariff costs, and there is hope for a return to normal operating conditions soon [25][26]