Financial Data and Key Metrics Changes - Adjusted earnings per share increased to $0.30, up 25% year over year and 30% sequentially [5][9] - Adjusted EBITDA rose to $14 million, reflecting a 14.4% margin, up from 12.5% in the previous quarter [9] - Sales were $97.1 million, up 5.8% year over year, driven by strength in defense and aerospace markets [8][9] - Net debt ended at $48.2 million with leverage at 0.9x [10] Business Line Data and Key Metrics Changes - Electron segment sales increased 19% year over year to $50.1 million, with adjusted EBITDA rising to $9.1 million and margins expanding to 18.2% [11] - Gas cylinders delivered sales of $47 million, up 14% from the first quarter, although down 6% year over year [12][13] - Specialty industrial and transportation segments saw modest growth, while defense and healthcare sales declined 15% year over year [13][14] Market Data and Key Metrics Changes - Demand for MREs, flares, and UGRE platforms remained high, supported by defense restocking and a buoyant aerospace market [5][6] - Clean energy market remains subdued, impacting gas cylinder sales, but the company is optimistic about long-term growth in this area [15][30] Company Strategy and Development Direction - The divestiture of the Graphic Arts business allows the company to focus on higher-margin opportunities within core markets [6][19] - A relocation project for composite cylinder production aims to generate savings of up to $4 million annually through enhanced operational efficiencies [7][19] - The company is transitioning towards higher value sectors, including aerospace and defense, to improve profitability [6][19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the full-year outlook, supported by strong demand in defense and aerospace [16][17] - There are early signs of pressure in the automotive sector affecting the electron business, which has been factored into guidance [17][31] - The impact of tariffs on the business has been modest, with the main concerns being general macroeconomic factors [31][32] Other Important Information - The company has improved its full-year guidance for adjusted EPS to a range of $0.97 to $1.05 and adjusted EBITDA between $49 million and $52 million [16] - Projected free cash flow remains unchanged at $20 million to $25 million, incorporating proceeds from the Graphic Arts sale [16] Q&A Session Summary Question: What contributed to the bounce back in gas cylinders, and is it sustainable? - Management noted sustained demand for first response products and strong sales in the specialty gas market, particularly in space exploration, indicating ongoing momentum into the second half of the year [23][24] Question: Why not raise the high end of the guidance range despite strong performance? - Management acknowledged the strong Q2 performance but cited uncertainties around tariffs and softening in the automotive sector as reasons for maintaining guidance [25][26] Question: Does the Riverside consolidation have the capacity to meet potential growth in both alternative fuels and space exploration? - Management confirmed that there is sufficient capacity in both Riverside and Canadian facilities to meet expected growth in these markets [27][28] Question: How have tariffs impacted the business and guidance? - Management stated that tariffs have not had a significant direct impact, with the main effects being on general macro factors, particularly in the automotive sector [31][32] Question: What are the long-term implications of the Graphic Arts sale on cash flow and business focus? - Management expressed that the sale allows for a concentrated focus on growth opportunities in gas cylinders and Electron, with increased capital investment planned for growth and automation [33][35]