Financial Data and Key Metrics Changes - Consolidated net sales for Q2 2025 were $12.7 million, a decrease of approximately $800,000 or 6.7% compared to Q2 2024 [9] - Gross profit was $2 million, representing 16% of sales for Q2 2025 [9] - Adjusted EBITDA for the first half of 2025 was $1.469 million, a decrease of $306,000 or 17% from the prior year [10] - The company reported a net loss of $422,000 or $0.11 per share in 2025, compared to net income of $298,000 or $0.09 per share in 2024 [10] Business Line Data and Key Metrics Changes - The company faced delays in customer approvals and extended lead times from subcontractors, impacting overall results [4] - Cost-cutting initiatives, including a workforce reduction, are expected to save approximately $1 million annually [5] - The backlog grew to record levels, indicating sustained demand for products, with significant contracts such as a $5 million order for landing gear components for the B-52 aircraft [6] Market Data and Key Metrics Changes - The company noted that long lead times for raw materials and complex product manufacturing mean that sales from the backlog will primarily be realized in fiscal 2026 and beyond [6][7] - The business development team has been actively pursuing new opportunities, particularly following the Paris Air Show [7] Company Strategy and Development Direction - The company is focused on recovering from decreased revenue streams with legacy customers while reinforcing relationships with existing clients and expanding into new markets [12] - Recent accomplishments include receiving a significant long-term agreement from Northrop Grumman and increasing content on the CH-53K helicopter [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the disappointing results for Q2 2025 but expressed confidence in the long-term business outlook despite recent headwinds [5] - The company anticipates that the fourth quarter of 2025 will be the strongest quarter of the year [5] - Management emphasized that the backlog is healthy and that delays in customer approvals are temporary [32] Other Important Information - The company successfully completed an at-the-market offering, raising nearly $4 million, which enhances liquidity and reduces net debt [11] - Total debt has declined by over $1 million, while inventory has increased by about $1.3 million [11] Q&A Session Summary Question: Concerns about credit facility and liquidity - Management is in discussions with the current lender and is confident about extending the credit facility [19][20] Question: Nature of recent capital raise - The capital raise was part of a planned process initiated in December 2024, not solely opportunistic [21] Question: European sales potential - The company does not have significant European customers but is optimistic about potential sales due to increased European defense spending [23][26] Question: Clarification on declining sales - Sales decline is attributed to timing issues with customer approvals and delays in first articles [32][33] Question: Consideration of selling the company - Management stated that while sales have been stagnant, there has been growth in certain operations, and they are open to opportunities that benefit shareholders [36][39] Question: Backlog conversion rates - The backlog consists of firm and full backlog, with a significant portion being firm orders that cannot be easily canceled [41][43] Question: Future of manned aircraft vs. drones - Management believes that manned aircraft will continue to play a crucial role alongside drones, as they are not expected to be replaced in the near future [46][48]

Financial Data and Key Metrics Changes - Revenue, excluding fuel surcharge, increased by 1.9% year over year, while adjusted operating income improved by 17.2% or $15.2 million year over year [10] - GAAP earnings per diluted share for Q2 2025 were $0.21, a 61.5% year over year increase, and adjusted EPS was $0.35, a 45.8% year over year increase [10] - Consolidated adjusted operating ratio was 93.8%, which was 80 basis points better than the prior year [10] Business Line Data and Key Metrics Changes - Truckload revenue, excluding fuel surcharge, decreased by 2.7% year over year, with loaded miles declining 2.8% [12] - The LTL segment grew revenue, excluding fuel surcharge, by 28.4% year over year, driven by a 21.7% increase in shipments per day [18] - The Logistics segment experienced a revenue decline of 2.6% year over year, driven by an 11.7% decrease in load count [23] - Intermodal segment revenue declined 13.8% year over year, impacted by a 12.4% decrease in load count [25] Market Data and Key Metrics Changes - There was a general softness in freight demand for most of the quarter, especially on the West Coast, although a mild lift in freight opportunities was noted near the end of the quarter [5][6] - The fluid policy environment has made forecasting more challenging, but discussions with customers regarding potential projects during peak season are ongoing [8] Company Strategy and Development Direction - The company is focused on maintaining competitive advantages through industry-leading scale and flexibility in its over-the-road model while driving costs out of its businesses [7] - Ongoing expansion of the LTL network and customer base is a priority, with a commitment to maintaining strong service levels [7] - The company is implementing multiple initiatives to normalize operational fundamentals and regain efficiencies in cost performance [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in being well-positioned to capitalize on future opportunities despite current market challenges [9] - The company anticipates that as freight flows normalize, realized revenue per mile will recover [12] - Management noted that while the market remains soft, there are signs of potential strength in the latter part of the quarter [38] Other Important Information - The effective tax rate was 29.2% on GAAP results and 28% on non-GAAP results, both lower year over year but higher than previously projected [11] - The company is projecting adjusted EPS for Q3 2025 to be in the range of $0.36 to $0.42, assuming stable conditions and some seasonality [28] Q&A Session Summary Question: General market equilibrium and inventory concerns - Management noted that capacity is slowly exiting the market, and demand appears stable, with some discussions about potential peak projects [34][39] Question: Truckload earnings growth outlook - Management expects mid-cycle margins in the truckload segment to operate in the mid-80s, with opportunities for margin improvement as the market stabilizes [44][46] Question: LTL segment growth and cost management - Management highlighted the importance of optimizing costs and leveraging technology to improve margins in the LTL segment while continuing to grow the customer base [56][60] Question: Fourth quarter earnings expectations - Management refrained from providing specific guidance for Q4 due to uncertainty but indicated that adjustments in revenue recognition could lead to more consistent revenue generation [67] Question: Impact of brokers on market pricing - Management acknowledged increased market transparency due to brokers and third-party data, which can lead to faster cycles in pricing adjustments [96][100]