Financial Data and Key Metrics Changes - For Q1 2025, net sales were $225.7 million, a decline of 35.5% compared to $349.9 million in the same quarter last year, primarily due to normalizing chassis shipment patterns after previous supply chain disruptions [6][7] - Gross profit for Q1 2025 was $33.9 million, representing 15% of net sales, an improvement from 12.6% in the prior year [6] - Net income for Q1 2025 was $8.1 million, or $0.69 per diluted share, down from $17 million or $1.47 per diluted share in the prior year [7][8] - The company returned $4.4 million to shareholders, including $2.1 million in share repurchases and a quarterly cash dividend of $0.20 per share [8] Business Line Data and Key Metrics Changes - The company has focused on reducing field inventory and product lead times, which has positively impacted gross margins due to a favorable product mix [5][10] - The inventory levels as of March 31, 2025, were $164.9 million, down from $186.2 million at the end of 2024, indicating a strategic reduction in inventory [9] Market Data and Key Metrics Changes - Demand for military vehicles remains strong, with continued RFQ activity both domestically and internationally [14] - The company has implemented a tariff surcharge on new orders and price increases on parts and accessories to mitigate tariff impacts [15][30] Company Strategy and Development Direction - The company is focused on returning to a normalized channel flow to position for future growth while managing supply chain challenges [5][12] - There is an ongoing effort to diversify the supply chain and reduce exposure to tariffs, particularly from China [15][30] - The company is evaluating capacity expansion opportunities in response to strong military sector activity [22] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the impact of tariffs and supply chain issues on future performance, maintaining a revenue guidance of $950 million to $1 billion for the year [23] - The company anticipates that chassis deliveries will increase throughout the year, which may affect gross margins [32] - Management is confident in improving free cash flow generation and prioritizing capital return to shareholders [18][22] Other Important Information - The company has a cash balance of $27.4 million as of March 31, 2025, and a debt balance of $75 million, with a focus on reducing debt levels [9][10] - The quarterly cash dividend of $0.20 per share represents a 5.3% increase compared to the prior year [21] Q&A Session Summary Question: Can you talk about broad demand for tow trucks regardless of who's buying the chassis? - Management noted that retail activity remains consistent, with customers cautious due to tariff impacts and potential tax incentives [27] Question: How much of your COGS comes from China? - Management indicated minimal direct exposure to China, but emphasized the importance of monitoring the broader supply chain [29][30] Question: Are there any headwinds affecting gross margins for the second half of the year? - Management remains cautiously optimistic, anticipating chassis shipments to increase, which may have a downward effect on margins [32] Question: How many months until dealers reach correct inventory levels? - Management expects another 30 to 90 days for dealers to normalize inventory levels, particularly for chassis [35]

Financial Data and Key Metrics Changes - For Q1 2025, net sales were $225.7 million, a decline of 35.5% compared to $349.9 million in the same quarter last year, primarily due to normalizing chassis shipment patterns after previous supply chain disruptions [6][7] - Gross profit for Q1 2025 was $33.9 million, representing 15% of net sales, compared to $44.2 million or 12.6% of net sales in Q1 2024, with margin improvement attributed to a favorable product mix [6][7] - Net income for Q1 2025 was $8.1 million or $0.69 per diluted share, down from $17 million or $1.47 per diluted share in the prior year [7] - The company returned $4.4 million to shareholders, including $2.1 million in share repurchases and a quarterly cash dividend of $0.20 per share [7][8] Business Line Data and Key Metrics Changes - The company is focused on reducing field inventory and product lead times while streamlining operations and evaluating the supply chain [5] - Inventory levels were $164.9 million as of March 31, 2025, down from $186.2 million at the end of 2024, indicating a strategic reduction following increased demand levels in 2024 [9][10] Market Data and Key Metrics Changes - Demand for military vehicles remains strong, with continued RFQ activity both domestically and internationally [14] - The company is monitoring the evolving tariff environment and has implemented a tariff surcharge on new orders to mitigate potential impacts [15][20] Company Strategy and Development Direction - The company aims to return to a normalized channel flow to position for future growth while maintaining a strong distribution network [5][4] - There is a focus on reducing debt levels and improving free cash flow generation, with ongoing evaluations for capacity expansion in both domestic and European markets [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the tariff situation and its potential impact on gross margins, anticipating chassis shipments to increase throughout the year [32] - The company reaffirmed its full-year revenue guidance of $950 million to $1 billion and expects EPS in the range of $2.9 to $3.2 per diluted share [23][24] Other Important Information - The company has a cash balance of $27.4 million as of March 31, 2025, an increase from $24.3 million at the end of 2024, and has reduced accounts payable by nearly $33 million [8][9] - The Board approved a quarterly cash dividend of $0.20 per share, marking the 58th consecutive quarter of dividend payments [7] Q&A Session Summary Question: Can you talk about broad demand for tow trucks regardless of who's buying the chassis? - Management noted that retail activity remains consistent, with customers cautious due to uncertainties in the marketplace, including tariffs and potential tax incentives [27] Question: Could you share a broad number regarding how much of your COGS comes from China? - Management indicated minimal direct exposure to China, emphasizing that they are monitoring the broader supply chain impacts closely [29][30] Question: Are there any headwinds to consider regarding gross margins for the second half of the year? - Management acknowledged that while they are cautiously optimistic, they anticipate chassis shipments to increase, which may exert downward pressure on margins [32] Question: Can you provide insight into the inventory situation at dealers? - Management expects another 30 to 90 days for dealers to reach optimal inventory levels, with chassis inventory now below body inventory, indicating positive progress [34]