Financial Data and Key Metrics Changes - Net sales for Q4 2024 decreased approximately 10% to $140.1 million compared to $156 million in the same period last year [21][49] - Gross margin improved significantly by 690 basis points year-over-year to 45.6%, with gross profit at $63.9 million [22][51] - Adjusted EBITDA for Q4 was $29.1 million, up from $28.5 million in the prior year, with an adjusted EBITDA margin increase of 250 basis points to 20.8% [53] - For the full year 2024, net sales totaled $602.2 million, down from $659.7 million in 2023, while adjusted EBITDA was $110.5 million, down from $130.9 million [60][62] Business Line Data and Key Metrics Changes - Direct-to-consumer sales grew by 8% year-over-year, with significant growth in 17 brands across all channels [17][31] - The B2B channel saw a 12% growth driven by enhanced sales support and strategic partnerships [18][33] - Operational improvements led to a 22% year-over-year reduction in past dues, reflecting a commitment to operational efficiency [19] Market Data and Key Metrics Changes - The overall market sentiment has reverted to a cautious stance, with consumers holding back due to high prices and economic uncertainty [12][14] - The Mexican market is estimated to be between $3 billion and $5 billion, with opportunities in older car parks and modifications [80] Company Strategy and Development Direction - The company aims to become a $1 billion enthusiast platform, focusing on enhancing consumer experiences and balancing sales channels [8][10] - Strategic initiatives include digital modernization, operational improvements, and expanding into new markets, including Mexico [20][30] - The company is committed to maintaining rigorous financial discipline while driving growth through strategic partnerships and product innovation [11][36] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding consumer spending and highlighted the impact of economic uncertainty on consumer confidence [12][64] - The guidance for 2025 assumes that consumer confidence does not worsen, with expectations for growth in the back half of the year [90][71] - The company remains optimistic about its transformative initiatives driving core business growth despite potential market softness [72][102] Other Important Information - The company achieved significant operational improvements, including $7.8 million in cost of service savings and a successful product launch strategy [24][25] - The company has made substantial progress in debt reduction, with $75 million prepaid on its term loan [48][57] Q&A Session Summary Question: Can you talk about the Mexico opportunity? - The Mexican market is estimated to be between $3 billion and $5 billion, with a focus on older car parks and modifications [80] Question: Can you provide more detail on gross margin performance in Q4? - Gross margin improvements were driven by cost to serve efforts and purchasing price variance, with expectations for a more balanced margin throughout 2025 [84][87] Question: Does your guidance assume consumer confidence improves? - The guidance assumes that consumer confidence does not worsen, with potential for growth if conditions improve [90] Question: How are inventories in the channel? - Inventory levels are healthier than last year, with improved alignment between sell-in and sell-through [92] Question: Can you discuss the Cataclean acquisition? - The acquisition of Cataclean is seen as a growth opportunity in the chemicals sector, expanding the company's portfolio [108] Question: How is the modern truck segment performing? - The modern truck and off-road vertical is performing well, with 80% of vehicles sold in the U.S. being trucks, CVs, and SUVs [111] Question: Can you provide details on your core customer demographics? - The core customer demographic is modestly higher income, with expectations of new car purchases showing some hesitancy [114][116] Question: What impact did new product demand have on the top line in 2024? - New product launches contributed positively, with several achieving significant sales, but the primary growth driver remains B2B relationship repair [118][120]