Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $890 million, an increase of 2.5% year over year, with adjusted earnings per diluted share rising to $1.27 from $0.88 in the same period last year [7][10][21] - Adjusted EBITDA was $126 million with a margin of 14.2%, reflecting a 60 basis point year-over-year expansion [9][27] - Total segment adjusted operating margin increased to 13.4%, a 120 basis point rise compared to Q2 2024 [10][22] Business Line Data and Key Metrics Changes - Aftermarket segment sales increased slightly year over year, driven by favorable foreign exchange and tariff recoveries, while Fuel Systems segment sales rose by 3.7% [22][23] - Aftermarket segment margin improved to 16.1%, up 100 basis points, while Fuel Systems segment margins reached 11.5%, up 140 basis points year over year [25][26] Market Data and Key Metrics Changes - The average age of U.S. light vehicles increased to approximately 12.8 years, indicating a growing market for nondiscretionary aftermarket parts [14] - Sales strength was noted in the independent aftermarket in Europe and light vehicle sales in China, while commercial and heavy-duty vehicle sales remained flat to down across all regions [26] Company Strategy and Development Direction - The company is focused on expanding its CV industrial and aerospace OE business, which currently accounts for 73% of revenues, while maintaining light vehicle OE sales at approximately $900 million [17] - The recent acquisition of SEM is expected to enhance the company's capabilities in alternative fuel technology and open adjacent market opportunities [18][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite ongoing economic uncertainties, maintaining a full-year outlook [19][32] - The company is optimistic about the second half of the year, expecting to integrate the SEM business and continue executing strategic priorities [33] Other Important Information - The company returned approximately $50 million to shareholders through share repurchases and dividends during the quarter [6][18] - The balance sheet remains strong with cash and cash equivalents of $347 million and total liquidity of approximately $850 million [19][28] Q&A Session Summary Question: Dynamics driving the strong bounce back in Q2 - Management noted that the recovery was influenced by improved visibility and order board strength, along with favorable FX and tariff recoveries [35][36] Question: Conversations at the Paris Air Show - Management reported positive discussions with customers, including Safran, and confirmed progress in the aerospace certification process [38][39] Question: Strategic rationale behind the SEM acquisition - The acquisition is seen as an opportunity to provide greater system solutions for customers and leverage existing manufacturing capabilities to accelerate SEM's growth [40][42] Question: Impact of Ford recall on financials - Management indicated that the recall is primarily a Ford issue and does not expect a significant impact on their financials [47][48] Question: Capital allocation intentions for the rest of the year - Management confirmed plans to continue share repurchases while maintaining a strong balance sheet and cash flow [49][50] Question: Clarification on tariff recoveries and net tariff impact - Management clarified that the company recovered $9 million in tariffs but faced a net tariff cost of $2 million, indicating ongoing efforts to close the gap [54][55]