Financial Data and Key Metrics Changes - Net sales for Q2 2026 increased by 6.4% to $221.5 million from $208.2 million in the prior year [13][14] - Gross profit for Q2 2026 increased by 3.5% to a record $42.7 million from $41.3 million a year earlier [15] - Operating income for Q2 2026 increased by 30.8% to $16.4 million from $12.5 million in the prior year [17] - Net bank debt decreased by $17.7 million to $56.7 million during Q2 2026 [23] - EBITDA for Q2 2026 was $16.5 million, reflecting $6.3 million of non-cash expenses [19] Business Line Data and Key Metrics Changes - The brake offerings category, particularly brake calipers, is experiencing strong market share growth [6][10] - Heavy-duty business is gaining momentum, with increased demand for aftermarket products in Mexico [8] - The diagnostic business is also growing, with the JBT1 benchtop tester leading the industry [8] Market Data and Key Metrics Changes - The average age of U.S. light vehicles has risen to 12.8 years, increasing replacement opportunities for aftermarket parts [5] - The number of vehicles on the road increased to 293.5 million from 289 million a year ago [5] Company Strategy and Development Direction - The company aims to be the leading supplier of non-discretionary automotive aftermarket parts, focusing on continuous improvement and shareholder value [4][5] - There is a strong emphasis on leveraging financial strength and operational footprint to gain competitive advantage [5] - The company is committed to enhancing margins through cost reduction initiatives and strategic supply chain sourcing [9] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about future growth opportunities despite recent consumer demand deferrals [10][27] - The company expects to maintain momentum and meet annual guidance expectations [27] - Management believes that non-discretionary products will continue to see demand despite some short-term deferrals [29] Other Important Information - The company repurchased 90,114 shares for $1.4 million at an average price of $15.41 during Q2 2026 [24] - Non-cash expenses impacted net loss for Q2 2026, which was $2.1 million, or $0.11 per share [18] Q&A Session Summary Question: Impact of deferral on the quarter - Management acknowledged a temporary deferral of purchases from a customer due to operational changes, expecting to recover this in the second half of the year [26][27] Question: Consumer behavior and demand deferral - Management noted that while there is some deferral in discretionary spending, their products are non-discretionary, meaning essential replacements cannot be delayed for long [29][30] Question: Market share trends and First Brands situation - Management indicated no major changes in market share but noted that brake-related products are gaining momentum [31] Question: Future cash flow utilization and debt levels - Management expressed intent to continue share repurchases if undervaluation persists and confirmed that debt levels are low and will continue to decrease [32][33]

Financial Data and Key Metrics Changes - Net sales increased by 5.5% to a record $757 million for fiscal year 2025, with fourth-quarter net sales rising by 1.9% to $193.1 million [20][21] - Gross profit for fiscal year 2025 increased by 16.1% to a record $153.8 million, with fourth-quarter gross profit rising by 10.6% to $38.5 million [20][21] - Cash flow from operating activities was $45.5 million, and net bank debt was reduced by $32.6 million to $81.4 million [20][28] - The company repurchased 542,134 shares for $4.8 million at an average price of $8.91 [7][20] Business Line Data and Key Metrics Changes - The hard parts business, particularly in rotating electrical components, continues to perform well, driven by the non-discretionary nature of products [9][10] - Brake-related applications are the second-largest product category, showing strong performance supported by quality and customer service [10][18] - The diagnostic business is experiencing growth, particularly with the JBT-one benchtop tester, which is expected to generate additional service-related revenue [14][15] Market Data and Key Metrics Changes - The average age of U.S. light vehicles has risen to 12.8 years, leading to increased replacement opportunities [10] - Vehicle registrations in 2024 surpassed 16 million for the first time since 2019, exceeding scrappage rates [10] - The company is gaining momentum in the Mexican market, with increased demand for aftermarket parts [14] Company Strategy and Development Direction - The company is focused on reducing dependency on Chinese supply chains, with less than 25% of products sourced from China [8][32] - Strategies are in place to enhance competitive edge, including direct shipping from factories to mitigate tariff impacts [33] - The company aims to leverage its strong market position and operational efficiencies to drive sales growth and margin improvement [12][18] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future growth, citing favorable long-term industry dynamics for non-discretionary aftermarket parts [15][49] - The company expects continued organic growth supported by favorable market conditions and operational efficiencies [17][28] - Tariffs are seen as a challenge, but management believes they can be offset through pricing strategies and operational adjustments [16][42] Other Important Information - The company experienced a net loss of $19.5 million for fiscal year 2025, primarily due to non-cash expenses and one-time cash expenses [26][27] - EBITDA for fiscal year 2025 was $50.3 million, impacted by non-cash and one-time cash expenses [27] - The company expects net sales for fiscal year 2026 to be between $780 million and $800 million, representing year-over-year growth of 3.5% to 5.6% [28] Q&A Session Summary Question: How do tariffs potentially help market share? - Management indicated that they have adjusted their supply chain to be less dependent on China, which positions them favorably compared to competitors who may face higher cash requirements due to tariffs [32][33] Question: Impact of customer price increases on gross margin? - Management acknowledged that while tariffs may slightly negatively impact gross margin, other initiatives to expand gross margin should offset this effect [35][36] Question: Clarification on tariff impacts and price increases? - Management noted that the timing of tariff impacts is unpredictable but expects that most price increases have been accepted [42][44] Question: Expected margin expansion catalysts? - Management highlighted initiatives focused on lowering costs per unit and increasing sales per unit as key drivers for margin expansion [45][46]