Financial Data and Key Metrics Changes - Total revenue in Q2 2025 was $127.8 million, down 18.2% from the previous year, primarily due to lower volumes in the U.S. Consumer business as retailers paused purchases [18] - Gross profit was $35.1 million, compared to $40.5 million in the same period last year, with a gross margin increase of 160 basis points to 27.5% [19] - Operating profit was $5.9 million, or 4.7% of total revenue, down from $10 million or 6.4% in the previous year [21] - Net income was $4.5 million, or $0.33 per diluted share, compared to $6 million, or $0.42 per diluted share, a year ago [21] - For the first half of 2025, revenue was $261.1 million, down 8.2% from 2024, with gross margin increasing 120 basis points to 26% [21] Business Line Data and Key Metrics Changes - The core business maintained its number one position in units in North America despite top-line headwinds [12] - The Health business generated $1.7 million in revenue for Q2, significantly improving from $859,000 last year, while reducing operating segment loss from $2 million to $864,000 [32] - The commercial business contributed positively to gross margin expansion and profitability, with expectations for SunCast revenue to be about 5% of the commercial business in 2025 and double in 2026 [14] Market Data and Key Metrics Changes - The U.S. business was adversely affected by increased tariffs, leading to a decrease in retailer demand [6] - Retailers paused purchasing in response to new tariffs, impacting sales volume [18] - Visibility remains limited due to ongoing tariff negotiations and their potential impact on consumer buying [23] Company Strategy and Development Direction - The company is diversifying manufacturing away from China to other Asia Pacific countries to minimize tariff exposure [7] - Strategic pricing actions were taken in June to align with current tariff rate increases, which were accepted by retail partners [9] - The company is optimistic about market opportunities for its core business, with key placements secured for the holiday season [12] - The Lotus brand launch is expected to be heavily supported with over $5 million in marketing over the next 18 months [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and brand strength despite near-term challenges [15] - The company is focused on maintaining market leadership and achieving long-term success through proactive measures [15] - Ongoing geopolitical events and trade negotiations create uncertainty in retailer planning and consumer demand [23] Other Important Information - The company realized $10 million in annualized savings from cost management measures, including an 8% reduction in force [9] - Net cash used for operating activities was $23.8 million for the first half of 2025, compared to a net cash provided of $37.1 million in the same period last year [22] - The restructuring charge for the quarter was approximately $800,000 [49] Q&A Session Summary Question: Performance of Health Beacon in Q2 - Management reported that the Health business had $1.7 million in revenue for Q2, significantly improving from last year, and is on track to meet growth targets [32] Question: Capital allocation plan regarding buybacks - Management indicated that stock buybacks are opportunistic and aim to avoid dilution from stock issuances [34][36] Question: Cost savings program details - A significant portion of the $10 million in annualized savings is headcount-related, primarily from the retail segment [41] Question: Pricing increases and competitive landscape - Management noted that pricing adjustments were made to cover tariffs, and competitors face similar challenges [43][48] Question: Long-term growth strategy - Management emphasized a focus on growth, particularly in the premium space, and expressed confidence in the company's strategy despite recent challenges [56][60]