Financial Data and Key Metrics Changes - Consolidated net sales for Q2 were $53.2 million, a sequential improvement from $50.7 million in Q1, but a decline from $55.7 million in the prior year period [25] - Consolidated gross profit for the quarter was $5.8 million, or 10.9% of sales, compared to $6 million, or 10.8% of sales in the prior year [25] - SG&A expense for the quarter was $8.7 million, reflecting a 7% improvement compared to the prior year [26] - Loss from operations was $3.5 million for the quarter, an improvement from a loss of $5.4 million in the prior year [26] Business Line Data and Key Metrics Changes - Bedding segment sales for Q2 were $30.8 million, up approximately 10% sequentially and over 2% year-over-year [29] - Gross profit in the bedding segment was $3.1 million, or 10.1% of sales, a 200 basis points improvement from the prior year [30] - Upholstery segment sales for Q2 were $22.4 million, flat sequentially but down approximately 12% year-over-year [30] - Gross profit in the upholstery segment was $3.6 million, or 16.1% of sales, down from $4.3 million, or 16.9% of sales in the prior year [30] Market Data and Key Metrics Changes - The home furnishings industry continues to face significant challenges, with low consumer confidence and high levels of unsold homes impacting sales [6][19] - The bedding market is showing signs of stabilization, with expectations for an increase in unit activity driven by historical product replacement cycles [18][19] - Upholstery business remains impacted by weak consumer sentiment and housing market conditions, particularly affecting lower and middle-income segments [20][21] Company Strategy and Development Direction - The company is focused on winning market share and adjusting its cost structure to achieve profitability in the current market cycle [7] - A comprehensive restructuring project has been completed, expected to yield approximately $11 million in annualized cost savings [12][17] - The integration of the bedding and upholstery divisions aims to create a unified Culp-branded business, enhancing operational efficiency [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging demand environment for home furnishings but remains optimistic about the potential for recovery [34] - The company expects steady consolidated sales performance in Q3 and throughout the remainder of fiscal 2026, with higher expectations for the bedding segment [34] - Management emphasizes the importance of maintaining liquidity and managing capital expenditures to prioritize free cash flow [36] Other Important Information - The company has a net debt position of $7.6 million as of the end of Q2, with total cash of $10.7 million [31] - Capital expenditures were only $218,000 for the year-to-date period, reflecting a strategic focus on maintenance projects [33] Q&A Session Summary Question: What is the status of cost savings realization? - Management indicated that significant cost savings are being realized, with the majority expected to be reflected in Q4 [38][40] Question: What is the expected contribution margin from incremental sales growth? - Management stated that there is substantial built-up leverage to capitalize on any increase in sales, with fixed costs in place to retain a significant portion of incremental dollars [42] Question: Can you provide details on the new tariffs? - Management explained that recent tariff changes from Turkey and Haiti have created challenges, but the company is well-positioned to navigate these issues [43][46]

Financial Data and Key Metrics Changes - The company reported second quarter net sales of $219 million, down 16% in constant currency, which was in line with expectations [20] - Gross margin expanded by 480 basis points year-over-year, reaching 57.4%, marking the third consecutive quarter of gross margin improvement [21] - Adjusted operating income for Q2 was positive $4 million, compared to a loss of $17 million a year ago, resulting in an adjusted operating margin of 1.7% [25] Business Line Data and Key Metrics Changes - The wholesale channel showed continued improvement, with strong comparable sales trends in Fossil retail stores despite reduced promotional activity [5] - Traditional watch sales in the Americas increased by double digits in Q2, while India also showed strong momentum across brands and channels [13] - The company closed six underperforming retail locations in Q2, bringing total closures to 34 year-to-date, with plans to close 45 to 50 locations by year-end [24] Market Data and Key Metrics Changes - Performance in key markets such as the U.S., India, Germany, and the UK improved, while China remained under pressure due to the macro environment [12] - The company noted a resurgence in interest for traditional fashion watches among younger consumers, particularly in India and the Americas [48] Company Strategy and Development Direction - The company is focused on three key pillars: refocusing on core brands, rightsizing the cost structure, and strengthening the balance sheet [4][17] - A new Fossil brand platform is being developed to enhance design and storytelling, with a recent website redesign aimed at improving customer engagement [8] - The company is investing in upper funnel marketing initiatives and collaborations to drive brand awareness and cultural relevance [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a complex environment and emphasized the importance of operational and financial rigor [18] - The full-year guidance was raised, expecting breakeven to slightly positive adjusted operating margins, reflecting gross margin expansion and significant cost reductions [29] - Management highlighted the importance of maintaining strong relationships with wholesale partners and the positive feedback received from them [41] Other Important Information - The company successfully refinanced its revolving credit facility and entered into a transaction support agreement with bondholders to extend bond maturities into 2029, improving liquidity [26][27] - Year-to-date SG&A savings reached $48 million, with a target of $100 million for the full year [24] Q&A Session Summary Question: Impact of changes in promotional activity and price increases on gross margins - Management noted that the shift to a full-price model has led to improved gross margins, with consumers willing to pay for perceived value [34][35] Question: Trends and initiatives in the wholesale channel - Management highlighted strong relationships with wholesale partners and investments in store presentation and marketing activities [40][41] Question: Strength in the younger consumer category and collaboration initiatives - Management confirmed a resurgence in traditional watches among younger consumers, with successful limited edition collaborations driving brand momentum [46][48]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 6.4% year over year to $241.7 million, with organic revenue growth exceeding 8% when excluding currency and acquisitions [10] - Adjusted EBITDA rose by 13.5% to $39.7 million, with a margin improvement of 100 basis points to 16.4% [10] - Adjusted earnings per share increased to $0.46, representing a 24.3% growth year over year [11] - Consolidated operating profit increased by over 50% compared to Q1 2024, reflecting strong revenue growth and an expanded operating margin of 290 basis points [10] Business Line Data and Key Metrics Changes - Aerospace business achieved record sales of nearly $90 million, with organic growth of 27.8% [5][18] - Packaging segment experienced organic growth of 3.3%, with solid growth in dispensing products, although impacted by elevated customer inventory levels in closures [13][14] - Specialty Products segment sales decreased by $7.9 million, primarily due to the divestiture of AeroEngine and lower demand for cylinders [20] Market Data and Key Metrics Changes - The Aerospace segment benefited from a strong order book and increased demand in the aerospace and defense market [18] - The Packaging group is navigating challenges related to tariffs and geopolitical dynamics, with proactive measures taken to secure materials [16][17] - The Specialty Products segment is beginning to see an increase in cylinder order intake, indicating potential recovery [21] Company Strategy and Development Direction - The company is focused on continuous improvement and operational excellence, particularly in the Aerospace segment, which is expected to drive long-term growth [19] - TriMas is strategically relocating production to mitigate tariff impacts, with a new facility in Vietnam serving as a manufacturing hub [17] - The company aims to maintain a flexible capital structure to support both near-term operations and future strategic investments [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the outlook for 2025, despite uncertainties related to tariffs and geopolitical factors [23][24] - The company is monitoring order intake and market dynamics closely, particularly in the Aerospace and Packaging segments [19][16] - Management reaffirmed the full-year sales and earnings guidance, indicating a conservative approach due to the fluid environment [30][46] Other Important Information - The acquisition of GMT Aerospace is expected to enhance the company's positioning in the aerospace market [43] - The company has successfully refinanced its senior secured revolving credit facility, extending its maturity to February 2030 [11] Q&A Session Summary Question: Any change to the segment guidance provided last quarter? - Management indicated no changes to segment guidance at this point due to uncertainty [30] Question: How to think about other investments or potential headwinds relative to packaging? - Management noted that they do not foresee additional abnormal expenses beyond those incurred in Q1 and are focused on procurement strategies [32] Question: Aerospace organic growth was solid; how to think about order intake and operating leverage? - Management expects modest operating leverage gains as the year progresses but remains conservative due to uncertainty [37] Question: How will the acquisition of GMT Aerospace impact capacity and pricing? - Management expressed excitement about the acquisition and its potential to improve positioning with customers, while remaining cautious about guidance [44][46] Question: What drove gains in beauty and personal care? - Management indicated a combination of capturing market share and strong demand for specific product lines contributed to growth [50]