Financial Data and Key Metrics Changes - The company reported second quarter organic sales growth of 0.6% and adjusted EPS growth of 5% to $0.80, slightly ahead of guidance [6][11] - Adjusted EBITDA margin expanded by 30 basis points to 17.2%, driven by favorable mix and productivity initiatives [6][11] - For the first half of the year, organic sales grew about 1%, with expectations for a similar demand environment in the second half [7][11] Business Line Data and Key Metrics Changes - The Color Additives and Inks segment saw adjusted EBITDA grow 4% despite a 2% decline in organic sales, with weaker demand in consumer and transportation markets [16][17] - Specialty Engineered Materials segment grew organic sales by 6%, driven by strong growth in defense and healthcare, with healthcare growing double digits [18][19] - Packaging Materials segment's sales were muted, but EBITDA margins expanded by 100 basis points through cost improvement initiatives [16][17] Market Data and Key Metrics Changes - In the U.S. and Canada, sales increased by 1% year over year, led by healthcare and defense, offsetting weaker demand in other sectors [20] - EMEA sales were slightly down, with robust healthcare and defense sales but muted packaging sales [21] - Latin America grew 6%, marking its sixth consecutive quarter of growth, while Asia delivered 3% organic growth [21] Company Strategy and Development Direction - The company aims to evolve from a specialty formulator to an innovator of material solutions, with a focus on strategic structural changes in R&D to enhance product differentiation [10][12] - The operational playbook is designed to navigate low demand and high uncertainty, targeting approximately $40 million in benefits for 2025 [8][12] - Continued investment in growth vectors and strategic initiatives is prioritized, with a focus on healthcare, defense, and telecommunications as key growth drivers [12][19] Management's Comments on Operating Environment and Future Outlook - Management noted that market trends are not improving, with customers remaining in a wait-and-see mode, particularly in consumer markets [6][7] - The company expects Q3 to mirror Q2, with continued strength in defense and healthcare offsetting consumer weakness [7][22] - There is cautious optimism regarding the second half of the year, with expectations for adjusted EPS of $0.70, representing 8% growth year over year [22][23] Other Important Information - The company has a strong cash position, having paid down $50 million of debt during the quarter, and is on track to reduce total debt by $100 million to $200 million by year-end [12][23] - Patent filings increased by 50% in 2024 compared to 2023, indicating a focus on innovation [13] - The company expects CapEx for the year to be approximately $110 million and free cash flow to range from $190 million to $210 million [23] Q&A Session Summary Question: Is there any pre-buying activity affecting sales? - Management indicated no significant pre-buying activity has been observed, as customers are managing inventory tightly in uncertain demand environments [26][28] Question: What is the outlook for raw material inflation? - The company expects raw material inflation to remain at 1% to 2%, with some fluctuations in specific materials [30][31] Question: What is the outlook for volume in the second half? - Management expects a continuation of trends from the first half, with healthcare, defense, and telecommunications driving growth, while consumer and packaging markets may see slight declines [35][36] Question: How has consumer weakness evolved? - Consumer sales were flat in Q1 but down 8% in Q2, with significant weakness noted in the U.S. and Canada [45][46] Question: What is the impact of planned maintenance on EBITDA? - The planned maintenance impacted EBITDA by approximately $3 million in Q2, but margins are expected to expand in the second half [47][48] Question: Are customers pressuring to absorb tariff costs? - Management acknowledged pressure from customers regarding pricing due to increased tariffs, but they are working to manage costs and maintain pricing [51][52] Question: Can you provide context on the healthcare growth? - Healthcare has shown strong growth, particularly in medical devices and drug delivery, with a long-term positive outlook [61][62] Question: What are the trends in key markets in China? - The color business in China is under pressure due to government policies, but growth is expected in high-performance computing [67][68]

Group 1: Yishitong - Yishitong has made progress in several new material projects, including solid oxide battery (SOC) systems, high-purity quartz sand, bismuth stone, thermally conductive spherical alumina, and flame-retardant materials [1] - The SOC system project is progressing as planned, with the single battery pilot line operating stably, and the stack pilot production line expected to be completed by 2025 [1] - High-purity quartz sand's technical indicators and performance optimization have been completed, with plans to test in a single crystal factory by 2025 and establish a thousand-ton pilot line [1] - Bismuth stone shipments are expected to increase in 2024, with a slight decrease in price, and significant shipment growth anticipated in Q1 2025 [1] - The sales revenue of ceramic flame-retardant materials is increasing, with plans to expand into more application scenarios [1] Group 2: Desay Battery - Desay Battery anticipates uncertainties in the macroeconomic environment but aims to explore new markets and businesses for performance growth [2] - In 2024, revenue from smartphone battery business is expected to decline by 10.39%, influenced by both volume and price [2] - In Q1 2025, revenue from smartphone batteries is projected to grow by 8.97%, while wearable device batteries are expected to increase by 15.79% [2] - Revenue from electric tools, smart home, and mobility businesses is expected to grow by 24.37%, while energy storage business revenue is projected to decline by 14.86% [2] - The company plans to continue expanding production capacity in Vietnam, with expected revenue growth in Vietnam to double compared to last year [2] Group 3: Yahui Pharmaceutical - Yahui Pharmaceutical has made progress in the approval and commercialization of APL-1702, with the listing application accepted and review underway [3] - APL-2501 has completed multiple experiments, with IND submission expected by mid-2026, showing strong clinical competitive potential [3] - The company is targeting patients with strong willingness to pay for the initial positioning of Haikewei, gradually promoting blue light cystoscopy technology as a standard solution [3] - APL-2302 shows good pharmacokinetic characteristics and significant anti-tumor effects, having entered clinical research [3] - The company expects rapid revenue growth in 2024 and plans to upgrade its commercialization system in 2025, including hiring a Chief Commercial Officer and optimizing the organizational structure [3]