Financial Data and Key Metrics Changes - The company reported sales of $81.2 million, an increase of approximately 10% compared to the prior period, with strong gross margins reaching 26.7% [6][17] - On an organic basis, revenue increased by 1.7%, reflecting continued strength in the Veth product line, despite softened oil and gas shipments to China [6][17] - Net loss attributable to the company for the quarter was $1.5 million, or a loss of $0.11 per diluted share, compared to net income of $3.8 million, or $0.27 per diluted share in the prior year [17][18] - Gross profit margin improved sequentially from 24.1% last quarter to 26.7% this quarter, driven by operational efficiencies and an improved product mix [18] Business Line Data and Key Metrics Changes - Marine and Propulsion segment sales increased by 10.7%, largely due to acquisitions and robust demand in commercial marine and luxury yacht markets [10] - The industrial segment showed stable performance, supported by contributions from CASA and initial contributions from COBELT, with a strong backlog of approximately $134 million [12][13] - The oil and gas sector experienced muted newbuild activity, but the aftermarket business remained resilient due to fleet aging and ongoing maintenance needs [11][12] Market Data and Key Metrics Changes - Geographic sales growth was notable in European markets, benefiting from recent acquisitions and continued strength in marine-related projects [18] - The company anticipates approximately $500,000 of tariff-related impact for the upcoming fourth quarter, representing roughly 1% of the cost of goods sold [8][9] Company Strategy and Development Direction - The company continues to execute its long-term strategy of global footprint optimization, operational excellence, and strategic acquisitions [14] - Recent acquisitions of Katsa and Cobalt are aimed at expanding engineering capabilities and enhancing market reach [14][20] - The company is strategically positioned to capitalize on growing customer interest in electrification and hybrid propulsion systems [11][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, supported by a robust backlog and disciplined capital allocation [21] - The company remains vigilant in managing potential tariff impacts and global market uncertainties, leveraging operational flexibility [21] - Management highlighted ongoing investments in technology and innovation to drive sustainable growth [21] Other Important Information - The company ended the quarter with a cash balance of $16.2 million, maintaining adequate liquidity [19] - Operating cash flow generation was positive, totaling approximately $3.4 million, positioning the company for a strong fourth quarter [19] Q&A Session Summary Question: Order patterns and backlog stability - Management noted that there have been no significant cancellations in marine orders, with a strengthening trend in order rates [27][28] Question: Mitigating circumstances around tariffs and pricing initiatives - Management indicated proactive measures regarding pricing and sourcing strategies to mitigate tariff impacts, expecting minimal impact on Q4 margins [31][32] Question: Growth potential of COBELT and replication of Veth's success - Management expressed optimism about replicating the success of previous acquisitions, with significant growth potential in various markets [34][36] Question: Enhanced operational efficiencies and margin improvements - Management highlighted efforts in improving assembly processes and sourcing strategies to drive profitability in high-demand products [40][41]

Financial Data and Key Metrics Changes - The company reported sales of $81.2 million, an increase of approximately 10% compared to the prior period, with strong gross margins reaching 26.7% [5][16] - On an organic basis, revenue increased by 1.7%, driven by continued strength in the Veth product line, despite softened oil and gas shipments to China [5][6] - The net loss attributable to the company for the quarter was $1.5 million, or a loss of $0.11 per diluted share, compared to net income of $3.8 million, or $0.27 per diluted share in the prior year [16][17] - Gross profit margin improved sequentially from 24.1% to 26.7%, reflecting enhanced operational efficiencies and an improved product mix [17] Business Line Data and Key Metrics Changes - The Marine and Propulsion segment saw sales increase by 10.7%, largely due to acquisitions and robust demand in commercial marine and luxury yacht markets [8][10] - The Industrial segment showed stable performance, supported by positive contributions from recent acquisitions, with a backlog strengthening to approximately $134 million [11][12] - The land-based transmission business remained strong, driven by demand in the airport and firefighting markets [10] Market Data and Key Metrics Changes - Geographic sales growth was notable in European markets, benefiting from recent acquisitions and continued strength in marine-related projects [17] - The company noted stable volumes in China, although tariff uncertainties have led to a more measured pace in new build activity [11] Company Strategy and Development Direction - The company continues to execute its long-term strategy of global footprint optimization, operational excellence, and strategic acquisitions [13] - Recent acquisitions of Katsa and Cobalt are aimed at expanding engineering capabilities and enhancing market reach [13] - The company is strategically positioned to capitalize on growing customer interest in electrification and hybrid propulsion systems [10][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth trajectory, supported by a robust backlog and disciplined capital allocation [20] - The company remains vigilant in managing potential tariff impacts and global market uncertainties, leveraging operational flexibility [20] - Management anticipates continued positive margin trends driven by product mix and ongoing operational improvements [18] Other Important Information - The company estimates approximately $500,000 of tariff-related impact for the upcoming fourth quarter, representing roughly 1% of the cost of goods sold [7] - The company is actively evaluating alternative sourcing options to limit potential exposure to tariffs [7] Q&A Session Summary Question: Order patterns and backlog stability - Management noted that there have been no significant cancellations in marine orders, with order rates showing a strengthening trend [26][27] - The backlog was reported to be stable, with expectations of increasing orders in North America and Europe, particularly for patrol boats and military applications [27][28] Question: Mitigating circumstances around pricing and tariffs - Management indicated proactive measures regarding pricing and sourcing strategies to mitigate tariff impacts, with expectations of minimal impact on Q4 margins [30][31] Question: Insights on CoBelt acquisition - Management expressed optimism about replicating the success of previous acquisitions, with significant growth potential identified in CoBelt's product offerings [33][34] Question: Enhanced operational efficiencies - Management highlighted efforts in improving assembly processes and sourcing strategies to drive profitability, particularly for high-demand products [39][40]

Financial Data and Key Metrics Changes - The company reported second quarter sales of $89.3 million, reflecting a 23.2% year-over-year increase [4] - Net income attributable to the company was $900,000 or $0.07 per diluted share, compared to a net loss of $900,000 or $0.07 per diluted share in the same quarter of the previous year [13] - Gross profit margin decreased to 24.1% from 28.3% in the prior year, with gross profit increasing by 5% to $21.7 million [14][16] Business Line Data and Key Metrics Changes - Marine and Propulsion segment sales grew 23.9% year-over-year, driven by strong demand for Veth products [5][6] - Land Based Transmission sales increased by 19.8% year-over-year, supported by strong demand in the airport rescue and firefighting transmission business [8] - The Industrial segment saw a significant growth of 44.8% year-over-year, aided by the addition of Casa and a rebound in Lufkin orders [9][10] Market Data and Key Metrics Changes - The company experienced a decline in Oil and Gas exports, down about 24% year-over-year, accounting for a little under 8% of revenue for the quarter [24] - Sales in Europe increased due to the acquisition of Casa, while North American markets benefited from strength in Veth projects [15] Company Strategy and Development Direction - The company is focused on capitalizing on cross-selling opportunities, optimizing shared cost efficiencies, and maintaining strong execution [5] - The integration of Casa is expected to enhance engineering capabilities and market reach, particularly in Europe and North America [11] - The company aims to balance disciplined external investments with internal initiatives to ensure sustained growth and shareholder value creation [18] Management's Comments on Operating Environment and Future Outlook - Management noted a healthy backlog across all end markets and expressed optimism about the continued stabilization of the industrial business [5][10] - The company is committed to disciplined inventory management and optimizing costs to enhance profitability [17] - Management highlighted a renewed level of activity in the Oil and Gas market, although it is still early to draw definitive conclusions [27] Other Important Information - The company reported a cash balance of $15.9 million, which is 20.4% lower than the prior year [16] - Operating cash generation was strong at $4.3 million for the quarter, with EBITDA increasing to $6.3 million, up 13.5% year-over-year [16] Q&A Session Summary Question: Can you quantify how much your Oil and Gas business is this quarter? - The Oil and Gas business accounted for a little under 8% of revenue for the quarter and was down about 24% year-over-year [24] Question: Is the quoting activity primarily from North America or Asia? - Quoting activity is from both North America and Asia, as well as some South American activity [25] Question: Are you seeing a renewed level of activity in the Oil and Gas market? - There has been an increased level of activity and some new potential projects, indicating a renewed level of activity in that market [27] Question: What is your CapEx outlook for the year? - The company is targeting a CapEx range of $12 million to $14 million for the second half of the year [29] Question: Are you still targeting to convert 60% of your EBITDA to free cash flow? - The company aims to convert 60% of EBITDA to free cash flow, with Q2 showing a bounce back in free cash flow above $6.4 million [28] Question: Is there anything new being commercialized this year that will contribute to growth? - The focus remains on the hybrid electric market, with ongoing development and increasing traction, but no specific new products were ready to be discussed [31] Question: Any updates on the electric frac fleet pilot? - The electric frac fleet pilot is stable and ongoing, with no significant news to report for the quarter [34]