Financial Data and Key Metrics Changes - For Q2 2025, the company reported net income of $1.8 million or $0.13 per diluted share on net sales of $54.3 million, reflecting a year-over-year decline of approximately 13% in net sales [14] - Gross margins increased to 24.7% from 24.2% in the prior year, driven by lower operational costs from facility consolidation and cost rationalization [14] - Earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased by $1.9 million to $3.9 million compared to the prior year [15] - Total cash provided by operations remained flat at $13.3 million, with a reduction in working capital needs due to lower inventory and accounts receivable levels [15] Business Line Data and Key Metrics Changes - The company faced a $1.6 million headwind from tariffs, which negatively impacted gross margin by approximately 200 basis points [14] - Inventory was reduced by approximately $14 million compared to the prior year, enhancing flexibility in navigating sourcing challenges [5] Market Data and Key Metrics Changes - Consumer sentiment remains below historical averages, with concerns about tariffs, inflation, and a potential economic slowdown affecting discretionary spending [7] - Elevated interest rates and a stagnant housing market have negatively impacted sales in indoor and outdoor recreational categories [8] Company Strategy and Development Direction - The company is focused on strengthening supply chain resiliency, increasing U.S.-based manufacturing capacity, and implementing measures to mitigate tariff impacts [6] - Continued investment in product innovation is emphasized, with new product launches planned for the second half of the year [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the current operating environment is challenging due to consumer behavior changes and tariff impacts, but the company is well-positioned to navigate these challenges [9] - The strategic groundwork laid in previous years is expected to enable the company to capitalize on market share opportunities as demand recovers [13] Other Important Information - The company repaid approximately $2 million in debt, reducing net leverage to 0.5 times trailing twelve months EBITDA, and repurchased nearly $800,000 of shares [12] - The company is evaluating strategic acquisition opportunities to expand its presence in core categories [13] Q&A Session Summary Question: Impact of tariff and retail inventory situation on new product launches - Management confirmed that they are working closely with key accounts for a strong holiday season and will not change their product launch cadence, instead accelerating new product introductions [19][20] Question: Details on unfavorable product mix affecting gross margins - Management indicated that weather conditions impacted sales of basketball and outdoor recreational products, and tariff situations affected shipment timing, contributing to the unfavorable product mix [23][24]