Financial Data and Key Metrics Changes - Sales reached a record $454 million, up 4.8% from $433 million in the same period last year, driven by higher volumes and pricing despite unfavorable foreign exchange impacts [12][18] - Adjusted EBITDA was $95 million, representing a margin of 21%, compared to $93 million and 21.4% in the prior year [12][19] - Adjusted earnings per share increased to $0.75 from $0.71 year-over-year [13][19] - Adjusted free cash flow was $36 million, up from $34 million in the prior year [20] Business Line Data and Key Metrics Changes - The aftermarket segment showed strong growth, supported by expanded product coverage and distribution partnerships, while first fit business faced challenges due to regulatory uncertainties [9][48] - The company achieved a 4% increase in volume, with aftermarket contributing significantly to this growth [44][64] Market Data and Key Metrics Changes - The U.S. market is expected to decline by 15% to 25% in heavy and medium-duty segments due to regulatory uncertainties and tariff policies [15] - In China, the market showed temporary growth, but challenging conditions are expected to persist [16] - Overall company revenue guidance for 2025 was raised to a range of 1% to 4% growth compared to the prior year [16] Company Strategy and Development Direction - The company is focused on a four-pillar growth strategy: growing share in first fit, accelerating aftermarket growth, transforming the supply chain, and expanding into the industrial filtration market [8][11] - The operational separation from Cummins is on track for completion in the third quarter, which is expected to enhance operational flexibility [6][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating uncertainties and maintaining operational performance, with expectations for continued growth despite market challenges [5][16] - The company anticipates pricing to provide approximately 2.2% revenue growth, with tariffs expected to fluctuate [14][27] Other Important Information - The company has repurchased $20 million of stock in the second quarter, totaling $30 million year-to-date, with plans for further repurchases [7] - The effective tax rate for 2025 was reported at 21.9%, slightly up from 21.8% in the previous year [20] Q&A Session Summary Question: Pricing expectations and tariff impacts - Management clarified that pricing expectations were adjusted due to changes in tariffs, particularly related to China, with a current expectation of 0.8% pricing impact from tariffs [24][26] Question: EBITDA margin guidance - Management explained that the expected EBITDA margin for the second half is below 19%, influenced by seasonality and market conditions [33][35] Question: Volume experience in the second quarter - Management noted strong volume performance, with some pre-buy activity due to midyear price increases and tariff uncertainties [44][47] Question: Industrial filtration market entry - Management confirmed ongoing efforts to enter the industrial filtration market through both organic and inorganic strategies, with modest growth expected [58][59] Question: Drivers of outperformance in the quarter - Management attributed the outperformance to share gains, effective pricing strategies, and successful tariff mitigation efforts [64][66]