Financial Data and Key Metrics Changes - Sales for the first quarter of 2025 were $195 million, exceeding the top end of guidance by $5 million, but still below prior year levels due to ongoing end market weakness [9][18] - Adjusted EBITDA margin was 17.3%, with cash from operations increasing by 7% year over year to $19 million despite sales contraction [10][24] - Diluted EPS was $0.22, down 21% from the previous year, primarily due to an 8% decline in sales [20] Business Line Data and Key Metrics Changes - Hydraulic sales declined by 11% year over year, reflecting weakness in agriculture, mobile, and industrial end markets [21] - Electronics sales remained relatively unchanged, with growth in health and wellness and recreational markets offsetting declines in industrial and mobile sectors [23] - Gross margin for hydraulics contracted by 170 basis points, while electronics gross margin held steady [19][22] Market Data and Key Metrics Changes - Asia Pacific sales in the electronics segment increased by 24% year over year, driven by growth in the health and wellness end market [18] - Overall, sales declined in all regions compared to the previous year, highlighting persistent weakness in most end markets [18] Company Strategy and Development Direction - The company is refocusing on customer-centric initiatives to drive business success and improve shareholder returns [7][8] - A strategy to mitigate tariff impacts includes localizing production and leveraging existing manufacturing capabilities in China and the APAC region [30][31] - The company aims to capitalize on market share opportunities created by competitors relying on Chinese manufacturing [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the downstream effects of prolonged tariff escalations, including rising costs and pricing pressures [9] - Despite challenges, there are positive trends in order intake, with a focus on improving customer relationships and product offerings [12][13] - The company expects second quarter sales to range from $198 million to $206 million, indicating a sequential increase from the first quarter [35] Other Important Information - The company has reduced debt by 15% over the last twelve months and has a strong liquidity position with nearly $400 million available [11][27] - Capital expenditures for 2025 will focus on maintenance and productivity enhancements with evident returns on investment [26] Q&A Session Summary Question: Insights from the listening tour and specific actions taken - Management highlighted the importance of customer engagement and accountability, emphasizing a shift from a passive to a more aggressive sales approach [44][45] Question: Impact of tariffs on manufacturing and costs - The company is transferring manufacturing to mitigate tariff impacts, with minimal investment required due to existing operations in the region [49][50] Question: Competitive positioning around tariffs - Management sees market share gain opportunities due to competitors' reliance on Chinese imports, particularly in hydraulics and electronics [59][60] Question: Demand changes and guidance for Q2 - Management noted positive order intake trends and expects to see some revenue from tariff-related opportunities in Q2, but significant impacts are anticipated in the back half of the year [65][66] Question: Portfolio assessment and potential divestitures - The company is open to evaluating its portfolio for strategic fit and financial performance, focusing on debt reduction before considering acquisitions [85]

Financial Data and Key Metrics Changes - Sales for Q1 2025 were $195 million, exceeding the top end of guidance but below prior year levels due to continued end market weakness [10][19] - Adjusted EBITDA margin was 17.3%, with cash from operations increasing by 7% year over year to $19 million despite sales contraction [11][25] - Diluted EPS was $0.22, down 21% from the previous year, primarily due to an 8% decline in sales [21] Business Line Data and Key Metrics Changes - Hydraulic sales declined by 11% year over year, reflecting weakness in agriculture, mobile, and industrial end markets [22] - Electronics sales remained relatively unchanged, with growth in health and wellness and recreational markets offsetting declines in industrial and mobile sectors [24] Market Data and Key Metrics Changes - Asia Pacific sales in the electronics segment increased by 24% year over year, driven by a return to growth in the health and wellness end market [19] - Overall sales declined in all regions compared to the previous year, with foreign exchange negatively impacting sales by $2.3 million [19] Company Strategy and Development Direction - The company is refocusing on customer-centric initiatives to drive business success and improve shareholder returns [7][8] - A strategy to mitigate tariff impacts includes leveraging regional manufacturing capabilities and enhancing local production to reduce costs [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about prolonged tariff escalations affecting costs and end market demand but remains committed to long-term strategic decisions [9][30] - The company anticipates a sequential sales increase in Q2 2025, projecting sales between $198 million and $206 million [36] Other Important Information - The company has reduced debt by 15% over the last year and has maintained a strong liquidity position with nearly $400 million available [12][27] - The company is prioritizing capital expenditures for impactful projects with quick payback periods [12][26] Q&A Session Summary Question: Insights from the listening tour and specific actions taken - Management highlighted the importance of customer engagement and aggressive market strategies, moving from a passive to a more proactive approach [44][46] Question: Impact of tariffs on manufacturing and costs - Management indicated that transferring manufacturing to local regions is already in progress, with minimal investment required due to existing capabilities [49][51] Question: Competitive positioning around tariffs - Management sees significant market share gain opportunities due to competitors relying on Chinese manufacturing, which is now less cost-competitive [60][62] Question: Guidance for Q2 and demand changes - Management noted that order intake has exceeded sales for five consecutive months, indicating positive demand trends despite uncertainties [100][104]