Q2 2025 PHINIA Inc Earnings Call
Audra: Good morning, my name is Audra and I will be your conference operator today.
Audra: At this time, I would like to welcome everyone to the FINIA Second Quarter 2025 Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.
Good morning. My name is Audra and I will be your conference operator today.
at this time, I would like to welcome everyone to the Phineas second quarter 2025 earnings call
Today's conference is being recorded.
Audra: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Kellen Ferris: At this time, I would like to turn the conference over to Kellen Ferris, Vice President of Investor Relations. Please go ahead. Thank you.
All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again,
Speaker Change: at this time, I would like to turn the conference over to Kellen. Ferris, vice president of investor relations. Please go ahead.
Brady Ericson: Good morning, everyone. We appreciate you joining us. Our conference call materials were issued this morning and are available on Finneas Investor Relations' website, including a slide deck that we'll be referencing in our remarks. We are also broadcasting this call via webcast.
Kellen Ferris: Thank you and good morning, everyone. We appreciate you joining us.
Kellen Ferris: Our conference call materials were issued this morning and are available on continuous industrial relations website, including a slide deck. It will be referencing in our remarks.
Brady Ericson: Joining us today are Brady Ericson, CEO, and Chris Gropp, CFO. During this call, we will make forward-looking statements which are based on management's current expectations and are subject to risks and uncertainties. Actual results may differ materially from these statements due to a variety of factors, including those described in our SEC file.
Speaker Change: We're also broadcasting in this call Via webcast. Joining us today are Brady Ericson CEO and Chris Graff CFO
Speaker Change: During this call, we will make forward-looking statements, which are based on Management's, current expectations, in our subject to risks and uncertainties.
Brady Ericson: We caution listeners not to place undue reliance upon any such board links.
Speaker Change: Actual results May differ materially from these statements due to a variety of factors including those described in our SEC filings.
Brady Ericson: And with that, it is my pleasure to turn the call over to Thank you, Kellen, and thank you, everyone, for joining us this morning. I will start with some overall comments on the second quarter and then provide some thoughts on 2025 and beyond.
Speaker Change: We caution listeners not to place undue Reliance upon any such forward-looking statements and with that is my pleasure to turn the call over to Brady.
Brady Ericson: Thank you, Carolyn, and thank you everyone for joining us this morning.
Chris Gropp: Chris will then provide additional details on our financials and discuss our 2025 guidance.
Brady Ericson: I will start with some overall comments on the second quarter and then provide some thoughts on 2025 and Beyond.
Brady Ericson: We will then open the call for questions. Earlier this month, we celebrated the two year anniversary of the spinoff from our former parents. We've accomplished a lot in that short period of time. expanding into new markets, establishing a strong foundation, refinancing our debt, and notably, returning over $464 million to shareholders in the form of dividends and share repurchases.
Brady Ericson: Chris will then provide additional details on our financials and discuss our 2025 guidance.
Brady Ericson: We will then open the call for questions.
Brady Ericson: Earlier this month, we celebrated the 2-year anniversary of the spin-off, from our former parent.
Brady Ericson: For all their hard work and dedication, I want to say thank you to our entire FINIA team. Now, the results of the second quarter highlight the strength and resiliency of our business in the face of a challenging and unpredictable environment. Before getting into the specific operating results and commentary, I want to highlight a few key messages from the quarter. We've returned approximately $50 million to shareholders via share repurchase and dividends. Our balance sheet remains healthy.
Brady Ericson: Shareholders, in the form of dividends and share repurchases.
Brady Ericson: For all their hard work and dedication. I want to say thank you to our entire finia team.
Brady Ericson: Now, our results for the second quarter highlights, the strength and resiliency of our business in the face of a challenging and unpredictable environment.
Brady Ericson: Before getting into the specific operating results and commentary. I want to highlight a few key messages from the quarter.
Brady Ericson: We returned approximately 50 million to shareholders via share repurchase and dividends.
Brady Ericson: for Moving into New Markets and Winning New Business, including Conquest.
Brady Ericson: Our balance sheet remains healthy.
Brady Ericson: We recently announced our first acquisition. Both segments performed well as we managed tariffs.
Brady Ericson: We're moving into new markets and winning new business, including conquests.
Brady Ericson: we recently announced our first acquisition,
Brady Ericson: And lastly, we are refining to a narrow 2025.
Brady Ericson: Both segments performed. Well, as we manage tariffs.
Brady Ericson: And lastly, we are refining to a narrow 2025 guidance.
Brady Ericson: Now let me discuss each of these in more detail. During the second quarter and for the first time since the spin, both aftermarket segment sales and fuel system segment sales were higher on a year-over-year basis. all be it benefiting from favorable effects and customer tariff recoveries. It was still nice to see. Net sales in the quarter were $890 million, up 2.5% from the same period of the prior year, which included contract manufacturing or CMA sales. Excluding the impacts of foreign currency and CMAs that ended in 24, sales increased 1%. Both segments also had strong adjusted operating income performance.
Brady Ericson: Now, let me discuss each of these in more detail.
Brady Ericson: During the second quarter for the first time since the spin, both aftermarket, segment sales and fuel system, segments sales or higher on a year-over-year basis. Albeit benefiting from favorable FX and customer tariff, recoveries, it was still nice to see.
Brady Ericson: Net sales in the quarter were 890 million up 2.5%, from the same period of the prior year, which included contract manufacturing or CMA sales.
Brady Ericson: Excluding the impacts of foreign currency and CMAs had ended in 24 sales increased 1%.
Brady Ericson: Aftermarket again over 16% and fuel systems returning above 10% to 11.5%. While the external environment continues to evolve, our results reflect our strong operational execution, along with our diverse products, markets, and customers we serve, which drive more stable and predictable results. We reported adjusted EBITDA of $126 million with a margin of 14.2%, a 60 basis point year-over-year expansion. Our EBITDA margin expansion highlights the success of the actions we are taking which include an increased focus on pricing, supplier cost savings efforts, and productivity improvement. Total segment-adjusted operating margin was 13.4 percent, a 120 basis point increase when compared with the second quarter of 2024.
Brady Ericson: Both segments also had strong adjusted operating income performance aftermarket. Again, over 16% and fuel systems returning above 10% to 11.5%.
Brady Ericson: While the external environment continues to evolve our results, reflect our strong operational execution, along with our diverse products markets and customers, we serve which drive more stable and predictable results.
Brady Ericson: we reported adjusted ebit da 126 million with a margin of 14.2%, a 60 basis point year-over-year, expansion,
Brady Ericson: Our IBA margin expansion. Highlights the success of the actions. We are taking which include an increased focus on pricing supplier cost, savings efforts, and productivity improvements.
Brady Ericson: We are also starting to show solid progress on reducing our tax rate and have adjusted our expected range for the full year accordingly. Adjusted earnings per diluted share, excluding non-operating items as detailed in the appendix, was $1.27, up from $0.88 in the same period of the prior year.
Brady Ericson: total segment adjusted operating margin was 13.4% 120 basis, point increase when compared with the second quarter of 2024,
Brady Ericson: We are also starting to show solid progress on reducing our tax rate and have adjusted. Our expected range for the full year accordingly.
Brady Ericson: Adjusted earnings per diluted, share excluding non-operating items as detailed in the appendix with a127.
Brady Ericson: In an uncertain market, our performance of the first half was solid.
Brady Ericson: Up from 88 cents in the same period of the prior year.
Brady Ericson: In an uncertain Market, our performance of the first half was solid.
Brady Ericson: Let me now provide a quick update on the impact of tariffs. Our strategy to source and produce in the same region where we sell to customers not only results in improved customer service, but also limits our exposure to tariffs. The diversification of our customer base and our geographic footprint puts us in an advantaged position. To the extent we have direct tariff exposure, we believe we have substantially mitigated the current tariffs with customer price increases, tariff recoveries from OEMs, and supply chain initiatives. We still had a net headwind in Q2, but substantial progress has been made, and we expect further progress in Q3, including completing the necessary customer audit.
Brady Ericson: Let me now provide a quick update on the impact of tariffs.
Brady Ericson: Our strategy to source and produce in the same region where we sell to customers, not only results in improved customer service, but also limits our exposure to tariffs.
Brady Ericson: The diversification of our customer base and our Geographic footprint, puts us in an advantage position.
Brady Ericson: To the extent, we have direct tariff exposure. We believe we have substantially mitigated. The current tariffs with customer price increases Sheriff, recoveries from oems and supply chain initiatives.
Brady Ericson: As a reminder, the majority of our products produced in Mexico are USMCA compliant, and we continue to work with customers and look at our operations for ways to drive our compliancy higher.
Brady Ericson: we still had a net headwind in Q2, but substantial progress has been made and we expect further progress in Q3 including completing the necessary customer audits
Brady Ericson: As a reminder, the majority of our products produced in Mexico are usmca compliant and we continue to work with customers and look at our operations for ways to drive our compliancy higher.
Brady Ericson: Our strong financial performance in the quarter is a testament to our team's disciplined execution in a highly dynamic environment. We remain nimble and focused on delivering positive revenue growth while managing costs in a deliberate manner and leveraging our global sourcing infrastructure to adeptly respond to geopolitical and market uncertainties.
Our strong financial performance in the quarter of the Testament, to our team's disciplined execution, in a highly Dynamic environment.
Brady Ericson: Let's now move to slides 5 and 6 for discussion of new business wins. We continue to leverage our strengths, particularly during these uncertain times, offering our customers great products manufactured at state-of-the-art facilities, industry-leading SKU coverage, and order fill rates. Our well-recognized brands and high-quality products are helping us secure new customers and increasing share of wallet with existing customers.
Brady Ericson: We remain Nimble and focused on delivering positive Revenue growth while managing costs in a deliberate Manner and leveraging our Global sourcing infrastructure to a deeply respond to geopolitical and Market uncertainties.
Brady Ericson: Let us now move the slides 5 and 6 for discussion of new business wins.
Brady Ericson: We continue to leverage our strengths, particularly, during these uncertain times, offering our customers. Great products manufactured at state-of-the-art facilities.
Brady Ericson: Industry-leading SKU coverage and Order fill rates.
Brady Ericson: We are privileged to work with a diverse and innovative group of customers.
Brady Ericson: Are well recognized Brands and high-quality products are helping us secure new customers and increasing share of wallet with existing customers.
Brady Ericson: Let me highlight a few recent business wins on page five. New Business Award for a Gas Direct Injection or GDI fuel rail assembly and pump for a leading domestic Chinese OEM to be applied on new hybrid engine platform for multiple vehicle models within China and for a Brazilian market FlexFuel E100 application. first GDI pump business with a leading North American OEM.
Brady Ericson: We are privileged to work with a diverse and Innovative group of customers.
Brady Ericson: New business award for a gas direct injection or GDI fuel rail assembly, and pump for a leading. Domestic Chinese OEM to be applied on new Hybrid engine platform for multiple vehicle models within China. And for a Brazilian Market, Flex Fuel, E100 application,
Brady Ericson: A port fuel injection, or PFI compressed natural gas injector, for a major Indian OEM. Our first PFI application with this custom.
Brady Ericson: First GDI pump business, with a leading North American OEM.
Brady Ericson: a port fuel injection or PFI compressed natural gas injector for a major Indian OEM our first PFI application with this customer
Brady Ericson: Moving next to our aftermarket business, which is an important driver of sales. As shown on slide 6, we're also winning both new business and expanding relationships with existing customers. We highlighted an aftermarket business win with a new diesel fuel injection service with major off-road equipment supplier in our earnings release. But as shown on this page, there were other key wins across product lines and geographic regions, including shared wallet gains with customers, growing our propulsion agnostic braking and suspension technology. The Outlook is encouraging for non-discretionary aftermarket parts for the internal combustion engine market. According to industry reports, the average age of U.S.
Brady Ericson: moving next to our aftermarket business, which is an important driver of sales.
Brady Ericson: As shown on slide 6. We're also winning both new business and expanding relationships with existing customers.
Brady Ericson: We highlighted an aftermarket business win with a new diesel fuel injection service with major off-road equipment supplier in our earnings release.
Brady Ericson: That as shown on this page, there were other key wins across product lines and geographic regions, including share of wallet, gains with customers growing, our propulsion, agnostic braking, and suspension technology.
Brady Ericson: The Outlook is encouraging for non-discretionary aftermarket parts for the internal combustion engine Market.
Brady Ericson: light vehicles increased by two months for the second consecutive year and rose to roughly 12.8 years, according to the same report. We're focused on leveraging our ability to offer a broad range of products for all makes and models. Not only light passenger vehicles globally, but also light commercial trucks. Medium Duty Trucks, and Heavy Duty Class A Trucks. Tariffs continue to cause uncertainty, but despite these challenges, we expect rational prices for our products from our customers. We remain committed to offering quality products and being a reliable partner.
Brady Ericson: According to Industry reports, the average age of us, light Vehicles increased by 2 months for the second consecutive year and Rose to roughly 12.8 years according to the same report.
Brady Ericson: We're focused on leveraging, our ability to offer a broad range of products for all makes and models. Not only light passenger, vehicles globally but also Light commercial trucks.
Brady Ericson: Medium duty trucks and heavy duty Class 8 trucks.
Brady Ericson: Tariffs continue to cause uncertainty, but despite these challenges, we expect rational prices for our products from our customers.
Brady Ericson: We remain committed to offering quality products and being a reliable partner.
Brady Ericson: combined with exceptional value-added services, will continue to distinguish our company. Our expanded portfolio of innovative solutions has further diversified our end market.
Brady Ericson: This.
Brady Ericson: Combined with exceptional, value added services will continue to distinguish our company.
Brady Ericson: As I mentioned on a previous call, we're now winning new business in the aerospace and defense industry, and we're actively pursuing additional opportunities across both military and civil aviation. To support this initiative, we recently exhibited at the Paris Air Show. our first time as an exhibitor.
Brady Ericson: Our expanded portfolio of innovative solutions has further Diversified our end markets.
Brady Ericson: As I mentioned on a previous call, we're now winning new business in the Aerospace and defense industry. And we're actively pursuing additional opportunities across both military and civil aviation.
Brady Ericson: To support this initiative. We recently exhibited at the Paris Air Show.
Brady Ericson: We are bringing our expertise for high-performance applications to this industry and are committed to becoming a long-term, high-value partner in the global aerospace supply chain.
Brady Ericson: Our first time as an exhibitor.
Brady Ericson: We are bringing our expertise for high performance applications to this industry and are committed to becoming a long-term high-value partner in the global Aerospace supply chain.
Brady Ericson: As a reminder on slide 7, our long-term strategy is to grow our CV Industrial and Aerospace OE business and aftermarket and service offerings, which currently account for 73 percent, or roughly $2.5 billion of our revenues, while maintaining our light vehicle OE sales level at roughly $900 million through market share gains. Favorable long-term industry dynamics continue to bode well for the company and we're well positioned for sustainable top and bottom line growth.
Brady Ericson: As a reminder on slide 7, our long-term strategy is to grow our CV industrial and Aerospace, OE business and aftermarket and service offerings, which currently accounts for 73% or roughly 2.5 billion of our revenues. While maintaining our light vehicle. OE sales level at roughly 900 million through market, share gains,
Brady Ericson: Favorable long-term industry, Dynamics continue to bode well for the company and we're well positioned for sustainable top.
Brady Ericson: And bottom line growth.
Brady Ericson: Now moving on to slide 8, capital allocation. Consistent with our capital allocation priorities to invest in our business for the long term profitable growth, we invested $34 million in capital expenditures during the quarter.
Brady Ericson: Now, moving on to slide 8 Capital allocation
Brady Ericson: I'm also pleased that in June we announced our first acquisition with plans to acquire Swedish Electromagnetic Invest, or SEM. a 100-year-old leading provider of advanced natural gas, hydrogen, and other alternative fuel ignition systems, injector stators, and linear position sensors to the commercial vehicle and off-highway sector. This strategic transaction brings together two industry leaders in alternative fuel technology. SEM also opens up adjacent market opportunities for us, as well as providing customers with a wider range of products and turnkey solutions. We will pay approximately $47 million for SEM, which is expected to generate approximately $50 million in annual revenue and approximately $10 million of annual adjusted EBITDA.
Brady Ericson: Consistent with our Capital allocation priorities to invest in our business. For the long term profitable growth. We invested 34 million in capital expenditure during the quarter.
Brady Ericson: I'm also pleased that in June, we announced our first acquisition with plans to acquire Swedish, electromagnetic, invest, or sem
Brady Ericson: 100 year old leading provider of advanced natural gas hydrogen and other alternative fuel ignition systems injector stirs and linear position sensors to the commercial vehicle and off Highway sectors.
Brady Ericson: This strategic transaction brings together, 2 industry leaders and alternative fuel technology.
Sem also opens up adjacent Market opportunities for us, as well as providing customers with a wider range of products, and TurnKey Solutions.
Brady Ericson: We expect the transaction to close in the third quarter. Also, on the capital allocation front, during the quarter, we've returned $50 million to our shareholders, including $10 million in quarterly dividends and $40 million in share repurchases. We have $224 million remaining under the current repurchase authorization. We expect to continue to look at what's best for our shareholders on a quarterly basis. Since the spinoff in July of 23, we have repurchased approximately 18.6 of the outstanding shares. We have a solid balance sheet with cash and cash equivalents of $347 million. and combined with our undrawn revolver, our total liquidity is approximately $850 million.
Brady Ericson: We will pay approximately 47 million for sem which is expected to generate approximately 50 million annual revenue and approximately 10 million of annual adjusted IBA, we expect the transaction to close in the third quarter.
Brady Ericson: Also on the capital allocation front during the quarter, we've returned 50 million to our shareholders, including 10 million in quarterly dividends and 40 million in share repurchases.
Brady Ericson: We have 224 million remaining under the current repurchase authorization. We expect to continue to look at what's best for our shareholders on a quarterly basis.
Brady Ericson: Since the spin-off in July of 23, we have repurchased approximately 18.6 of the outstanding shares.
Brady Ericson: Importantly, our net leverage ratio remained at 1.4, just under our 1.5 times target.
Brady Ericson: combined with our undrawn revolver, our total liquidity is approximately 850 million
Brady Ericson: importantly, our net leverage ratio remained at 1.4 just under our 1.5 times Target.
Brady Ericson: Looking forward, global economic activity remains subdued, but we continue to perform well and are maintaining our full year outlook, which Chris will discuss in more detail. To wrap up, we're pleased with our solid first half performance and the momentum we carry into the second half of the year. This reflects the operational improvements we've made and continue to make throughout the business. Despite ongoing economic uncertainties, we are optimistic and encouraged by our team's execution.
Brady Ericson: looking forward global economic activity, remains subdued, but we continue to perform well in our maintaining our full year outlook which Chris will discuss in more detail,
Brady Ericson: To wrap up or pleased with our solid first half performance. And the momentum, we carry into the second half of the year.
Brady Ericson: This reflects the operational improvements we made and continue to make throughout the business.
Brady Ericson: Looking to Q3, I look forward to another milestone when we compare our results to a clean numbers from Q3 of 2024, as we had substantially exited all TSAs and CMAs by then. along with all corporate costs being in place.
Brady Ericson: Despite ongoing economic uncertainties, we are optimistic and encouraged by our teams execution.
Brady Ericson: Look into Q3. I look forward to another Milestone. When we compare our results to a clean numbers from Q3 of 2024, as we had substantially exited all tsas, and CMAs by then.
Chris Gropp: With that, I'll hand it over to Chris, who will walk us through our Q2 results and discuss our outlook for the year. Thanks, Brady, and thank you all for joining us this morning.
Brady Ericson: Along with all corporate costs being in place.
Brady Ericson: With that. I'll hand it over to Chris who will walk us through our Q2 results and discuss our outlook for the year.
Brady Ericson: Chris.
Chris Gropp: As a reminder, reconciliations of all non-GAAP financial measures that I will discuss can be found in today's press release and in the presentation, both of which are on our website. Looking at slide four, our business and financial results were solid and in line with our expectations in the face of a challenging geopolitical economic environment. We generated $890 million in net sales, an increase of 2.5% versus the same period a year ago. In contrast to the first quarter, we experienced favorable foreign exchange tailwinds and began recovery of new tariff regimes from customers. Excluding the impact from foreign currency and contract manufacturing sales that ended last year, sales increased 1% year-over-year, reflecting the noted tariff recoveries and improved pricing.
Brady Ericson: Thanks, Brady, and thank you all for joining us this morning as a reminder, reconciliations of all non-gaap Financial measures that I will discuss can be found in today's press release. And in the presentation, both of which are on our website,
Brady Ericson: Looking at slide 4.
Brady Ericson: Our business and financial results were solid and in line with our expectations in the face of a challenging geopolitical economic environment.
Brady Ericson: We generated 890 million in net sales, an increase of 2.5% versus the same period a year ago.
Brady Ericson: In contrast to the first quarter. We experienced favorable foreign exchange tailwind and began recovery of new tariff regimes from customers.
It's including the impact from foreign currency in contract manufacturing sales, that ended last year, sales increased 1% year-over-year reflecting the noted tariff, recoveries and improved pricing
Chris Gropp: Our aftermarket segment sales were up slightly year over year, primarily due to favorable FX, tariff recoveries, and volume increases in the European aftermarket. This was partially offset by lower OE volumes in North America, mainly related to heavy duty product lines. Fuel system segment sales were up 3.7%, including prior year contract manufacturing sales. or 4.7% excluding the effect of contract manufacturing. The increase in fuel systems was also attributable to favorable effects and customer tariff recovery. From a core business performance standpoint, our segments reported solid overall margins. Q2 segment adjusted operating margin was healthy at 13.4%, up 120 basis points from the same period of the prior year.
Brady Ericson: Our aftermarket segment sales were up slightly year-over-year primarily due to favorable, SX Sheriff, recovery and volume increases in the European aftermarket.
Brady Ericson: This was partially offset by lower OE volumes in North America mainly related to heavy duty products lines.
Brady Ericson: Fuel system, segments sales were up 3.7% including prior year contract, manufacturing sales.
Brady Ericson: For 4.7% excluding the effect of contract Manufacturing.
Brady Ericson: The increase in fuel systems was also attributable to favorable FX and customer tariff recovery.
Brady Ericson: From a Core Business performance. Standpoint are segments, reported solid overall margins.
Brady Ericson: Q2 segment adjusted operating margin was healthy at 13.4%
Chris Gropp: This was primarily related to favorable volume and product mix combined with positive supply chain savings offset by net tariffs and other costs.
Brady Ericson: up 120 basis points from the same period of the prior year.
Chris Gropp: Our adjusted net earnings for diluted share in the second quarter were $1.27, which excludes non-operating items, which are described in the appendix of our presentation, and influenced by lower share count as we continued share repurchase. Moving to slide 10, Adjusted Operating Income was $94 million or 10.6% up 90 basis points. Corporate costs were higher mainly on increased employee stock compensation. The aftermarket segment margin increased 100 basis points, ending the quarter at 16.1%, benefiting from favorable product mix. This was partially offset by some slower customer tariff recoveries, which we expect to recover via pass through to customers in the coming months.
Brady Ericson: This was primarily related to favorable volume in product, mix combined with positive supply chain. Savings offset by net tariffs, and other costs.
Brady Ericson: Our adjusted net earnings per diluted share in the second quarter were $1.27 which excludes non-operating items which are described in the appendix of our presentation in influence by lower share count as we continue to share repurchases.
Brady Ericson: Moving to slide 10 adjusted, operating income was 94 million or 10.6% up, 90 basis points.
Brady Ericson: Corporate costs were higher mainly on increased employees, stock compensation plans.
Brady Ericson: The aftermarket segment margin increased 100 basis points, ending the quarter at 16.1% benefiting from favorable product mix.
Brady Ericson: This was partially offset by some slower to customer tariff recovery, which we expect to recover the a pass through to customers in the coming months.
Chris Gropp: Q2 fuel system segment margins were 11.5 up 140 basis points year-over-year primarily due to supply chain savings, productivity improvements, and favorable foreign currency impact.
Q2 fuel system, segments, margins were 11.5% up, 140, basis points year-over-year primarily due to supply chain savings productivity improvements in favorable, foreign currency impacts
Chris Gropp: Let me now bridge our adjusted revenue and adjusted EBITDA for the second quarter, which you can find on pages 11 and 12 in the presentation. beginning with revenue. Compared to Q2 2024, FX was a tailwind of $18 million as the dollar weakened mainly against the British Pound in Europe. Revenue in the quarter also benefited from tariff recovery of $5 million. Overall, we saw strength in sales with an independent aftermarket in Europe, light passenger and light commercial vehicle sales in China, while commercial and heavy-duty vehicle sales remain flat to down in all regions.
Brady Ericson: Let me now Bridge our adjusted revenue and adjusted ebit da for the second quarter which you can find on pages, 11 and 12 in the presentation.
Brady Ericson: Beginning with Revenue.
Brady Ericson: FX was a Tailwind of 18 million as the dollar weakened mainly against the British pound in Europe.
Brady Ericson: Revenue in the quarter. Also benefited from tariff recovery of 9 million.
Brady Ericson: Overall, we saw strength in sales with an independent aftermarket in Europe.
Brady Ericson: Light passenger and Light commercial vehicle sales in China while commercial and heavy duty vehicle sales, remain flat to down in all regions.
Chris Gropp: Moving next to the bridge on slide 12. Adjusted EBITDA was $126 million with a margin of 14.2%, representing a year-over-year increase of $9,060,000. Higher sales created a tailwind of $6 million in the quarter on positive product sales mix. Corporate costs were higher by $4 million, reflecting increased employee costs. foreign exchange created gains of $8 million. Supplier cost savings were a tailwind of $6 million, offset by net tariff costs of $2 million and other costs of $5 million.
Brady Ericson: Moving next to the bridge on slide 12 adjusted Eva de was 126 million with a margin of 14.2%, representing a year-over-year increase of 9 million and 60 basis points.
Brady Ericson: higher sales, created a Tailwind of 6 million in the quarter on positive product sales mix
Brady Ericson: Corporate costs were higher by 4 million reflecting increased employee costs.
Brady Ericson: Foreign exchange created gains of 8 million.
Brady Ericson: Supplier cost savings were a Tailwind of 6 million offset by net. Tariff costs of 2 million and other costs of 5 million.
Chris Gropp: Now for a quick recap of our balance sheet and cash Maintaining a healthy balance sheet is a priority for us and provides the financial flexibility to support our growth initiatives and capital allocation priorities. We ended the quarter with substantial current liquidity. Cash and cash equivalents were $347 million, while available capacity under our credit facilities remained at approximately half a billion dollars for resulting liquidity of approximately $850 million. Net cash generated from operations in Q2 was $57 million compared to $109 million in the same period of the prior year. During the quarter, adjusted free cash flow was $20 million compared to $108 million in the same period of the prior year.
Brady Ericson: Now for a quick recap of our balance sheet and cash flow.
Brady Ericson: Maintaining a healthy balance sheet is a priority for us and provides the financial flexibility to support our growth initiatives and capital allocation priorities.
Brady Ericson: We ended the quarter with substantial current liquidity cash and cash equivalents for 347 million while available capacity under our credit facilities remained at approximately half a billion dollars for resulting, liquidity of approximately 850 million.
Brady Ericson: Net cash generated from operations in Q2 with 577 million compared to 109 million in the same period of the prior year.
Chris Gropp: Working capital was negative in the quarter, as our aftermarket segment added strategic inventory to help ensure full product coverage over the busy summer season, in addition to timing for capital spend. We continue to remain confident in our ability to generate full-year adjusted free cash flow in the $160 million to $200 million range as noted, and reiterated in our 2025 outlook. Capital spend was $34 million or 3.8% of sales and $69 million or 4.1% of sales for the three and six-month periods respectively. Funds were primarily used for investments in new machinery and equipment for new program launches.
Brady Ericson: During the quarter adjusted free. Cash flow was 20 million compared to 108 million in the same period of the prior year.
Brady Ericson: Working capital was negative in the quarter.
Brady Ericson: As our aftermarket segment added strategic inventory to help ensure a full product coverage over the busy summer season.
Brady Ericson: In addition to timing for Capital spend.
Brady Ericson: we continue to remain confident in our ability to generate full year, adjusted free cash flow and the 160 million to 200 million ranges, noted and reiterated in our 2025 Outlook,
Brady Ericson: Capital spin was 34 million or 3.8% of sales, and 69 million or 4.1% of sales. For the 3 and 6-month periods respectively.
Brady Ericson: Funds were primarily used for investments in new machinery and equipment for new program launches.
Chris Gropp: Now moving to slide 13 for a discussion of our 2025 Outlook. As a reminder, more than 60% of our sales are generated outside of the U.S., and our strategy is to source and produce in the same region where we sell to customers, which reduces our tariff exposure.
Now, moving to slide 13 for a discussion of our 2025 Outlook.
Chris Gropp: Also as a reminder, we have not closed on the announced SEM acquisition, so our outlook does not factor in the proposed transaction. With all this in mind, we are refining our outlook on net sales to increase the low end from $3.23 billion to $3.33 billion and keeping the high end of our range the same at $3.43 billion. This projection tightens our expected sales range and acknowledges the increased sales as a result of tariffs and foreign exchange, offset by continued softness in our C. V. Adjusted EBITDA and Adjusted EBITDA Margin are projected to be $455,013.7% of sales to $485,014.1% Adjusted from our previous guidance of 450,013.7% of sales to 490,014.5% of sales.
Brady Ericson: As a reminder more than 60% of our sales are generated outside of the us and our strategy is to source and produce in the same region where we sell to customers, which reduces our tariff exposures.
Also, as a reminder, we have not closed on the announced sem acquisition so our Outlook does not factor in the proposed transactions.
Brady Ericson: with all this in mind, we are refining our outlook on net sales to increase the low wind from 3.23 billion to 3.33 billion and keeping the high end of our range, the same at 3.43 billion,
Brady Ericson: This projection, tightens our expected sales range, and acknowledges, the increased sales, as the result of terrorists and foreign exchange offset by continued softness in our CV business.
Brady Ericson: Adjusted Eva de and adjusted ebit da margin are projected to they 455 million and 13.7% of sales to 485 million and 14.1 of sales.
Adjusted from our previous guidance of 450 million in 13.7 of sales, to 490 million and 14.5 percent of sales.
Chris Gropp: The performance of our segment gives us confidence that we can achieve our originally stated adjusted EBITDA. However, the addition of tariff revenue with zero margin will result in a slightly lower percentage of sales return. We project no changes to our full-year adjusted free cash flow guidance, which remains strong despite minor delays related to timing on tariff recovery. Our adjusted tax rate is now projected to be an improved 36% to 40% range from our original projection of 38% to 42%. As ongoing tax structuring projects gain traction and progress.
Speaker Change: The performance of our segments gives us confidence that we can achieve our original stated adjusted evit de. However, the addition of tariff, Revenue was Zero margin will result in a slightly lower percentage of sales return.
Speaker Change: We project no changes to our full year, adjusted free cash flow guidance, which remains strong despite minor delays related to timing on Tara recovery.
Chris Gropp: We do not expect this will have a material impact on our cash taxes in 2025. Our diverse and global customer base continues to provide resilience to our business in the face of a challenging macroeconomic environment. This strong foundation, combined with our performance year to date and our outlook for the second half, gives us a high level of confidence in our trajectory for the remainder of the year. We remain extremely proud of the focus and execution demonstrated by our teams who continue to drive value for our customers and shareholders alike. We will continue to execute on our strategic priorities in operating with excellence and driving productivity.
Speaker Change: Our adjusted tax rate is now, projected to be an improved 36% to 40% range from our original projection of 38%, to 42% as ongoing tax, structuring projects, gain traction and progress.
Speaker Change: On our cash taxes in 2025.
Our diverse and Global customer base continues to provide resilience to our business in the face of a challenging macroeconomic environment.
Speaker Change: This strong Foundation combined with our performance year to date and our outlook for the second half, gives us a high level of confidence in our trajectory for the remainder of the year.
Chris Gropp: We are pleased with our financial performance to date and are optimistic about the second half of the year as the teams are expected to welcome and work to integrate the SEM business into CINIA.
Speaker Change: We remain extremely proud of the focus and execution. Demonstrated by our teams who continue to drive value for our customers and shareholders alike. We will continue to execute on our strategic priorities and operating with excellence and driving productivity, we are pleased with our financial performance today and our optimistic about the second half of the year as the teams are expected to welcome and work to integrate the sem business into finia
Chris Gropp: In closing, we remain firmly committed to building sustainable value for all our states.
Speaker Change: in closing, we remain firmly, committed to building sustainable. Value for all our stakeholders,
Audra: Thank you all for your attention today and we will now move to the Q&A portion of our call. Operator, please open the lines for questions. Thank you. We will now begin the question and answer session.
Speaker Change: thank you all for your attention today and we will now move to the Q&A portion of our call.
Speaker Change: Operator. Please open the lines for questions.
Audra: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Bobby Brooks: We'll take our first question from Bobby Brooks at Northline Capital Markets. Hey, good morning, guys. Thank you for taking my question. So it was really great to see such a strong bounce back in the business from the first quarter. And you guys touched on it a little bit.
Speaker Change: Thank you. You want, we will now begin the question and answer session if you have dialed in and would like to ask a question. Please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Speaker Change: We'll take our first question from Bobby. Brooks at Northland Capital markets.
Brady Ericson: But I was curious if we could dive a little bit deeper on the dynamics driving that. Obviously, you guys had very good visibility on the bounce back. But maybe it was more so dynamics in the first quarter that were dragged and alleviated in QQ. Just curious to hear more discussion on this. Yeah, as we as we kind of explain at the end of Q1 call, you know, things came back from the kind of the Christmas holiday shutdown a little bit slower. And it took a little bit of while to kind of for people for folks to kind of ramp up as they did some inventory adjustments.
Bobby Brooks: Hey, good morning guys. Thank you for taking my question. So, it was really great to see such a strong bounce, back in the business from the first quarter and, and you guys touched on a little bit. But I was curious, if we could dive a little bit deeper on the Dynamics driving. That obviously, you guys have very good visibility on the bounce back, but maybe it was more so Dynamics in the first quarter that were dragging alleviated. In 2 2, just curious to hear more discussion on this.
Brady Ericson: And we kind of saw that and tried to communicate that into Q1 and which is why we had confidence in us still hitting, you know, our H1 kind of expectations. And with what the order board that we saw for for Q2 obviously had a little bit of benefit with with FX, a little bit of benefit with tariffs. But again, we saw some of that already coming in at the end of Q1. So we continue to see, you know, good momentum going into the second half as well, which is why we, we got the lower end of our revenue guide as well.
Yeah, as we as we kind of explained at the end of q1 call, you know, things came back, uh, from the kind of the Christmas holiday shutdown, a little bit slower. Uh, and it took a little bit of a while to kind of for, for folks, to kind of ramp up, as I did some inventory adjustments and we kind of saw that, uh, and tried to communicate that into q1 and which is why we had confidence in us, still hitting, you know, our our, our H1 kind of expectations. Uh, and with what, the order board that we saw for, for Q2, um, obviously, you had a little bit of benefit with, uh, with FX, uh, a little bit of benefit with tariffs. But, again, we saw some of that already coming in.
Bobby Brooks: Uh, at the end of q1.
So we we continue to see, you know, good momentum going into the second half as well, which is why we we up to lower end of our, our Revenue guide as well.
Bobby Brooks: Got it.
Brady Ericson: And then so you mentioned you hosted the booth for the first time of the Paris Air Show during the quarter. I was just curious to hear what were the conversations like there and maybe remind us on the timing and what exactly are some of those aerospace certifications you're working towards this year for launching your first product or producing your first products in the fourth quarter? Yeah, we've got our first launch in the fourth quarter, our second launch in Q1 of next year. Things are progressing well. I think at the Paris Air Show as well, we got our kind of first piece kind of plaque from our from our customer.
Bobby Brooks: Got it. Um, and then so you mentioned, you hosted the booth for the first time of the Paris air show during the quarter. I was just curious to hear what were the conversations like there and maybe remind us on the timing. And what exactly are some of those Aerospace certifications? You're working towards this year, for, uh, launching your first product producing your first products in the fourth quarter.
Brady Ericson: Saffron is the one that we're working with. And so had a great meeting with them as well as great meetings with a number of other folks while we're there. Our certification process is going well. We had another audit here this past month, or actually earlier this month went well, and we're just kind of going through that process. And so we're on pace to get, you know, fully certified and approved. And, you know, I think the final certification will come a little bit after SOP because they want to see some of the production going through, but everyone's very confident and excited about our progress so far.
Bobby Brooks: Got it.
Bobby Brooks: Yeah, we've got our first launch of the fourth quarter. Our second launch in q1 of next year. Uh, things are progressing. Well, um, I think at the Pierce, uh, air show as well. We've got our kind of first piece kind of plaque from our from our customer. Uh, saffron is the is the 1 that we're working with, um and so had a, a great meeting with them as well as great meetings with a number of other folks while we were there. Um our our certification process is going well we had another uh audit here this past month or or actually earlier this month went well and we're just kind of going through that process. And so we're on Pace to get uh you know fully certified and approved. And you know, I think the final certification will come a little bit after sop because they want to see some of the production going through, but everyone's very confident and excited about our progress so far.
Brady Ericson: And, and then you could you just for my last one, could you just dive a little bit deeper on the strategic rationale behind this some the FEM acquisition? Do you guys see significant cross sell opportunities to your current commercial vehicle customer base? And maybe how should we think about the growth opportunity with this? Because it seems like a really unique technology you could leverage. Yeah, I mean, obviously, they're focused on a lot of alternative tech or alternative fuels, you know, hydrogen, natural gas and others. That's an area that where we have a lot of fuel injection, and we have the engine control unit.
Speaker Change: Got it. And, and then you could you just for my last 1, could, you just dive a little bit deeper on the Strategic rationale behind this? Send the sem acquisition. Do you guys see significant cross-sell opportunities to your current commercial vehicle? Customer base? And maybe how should we think about the growth opportunity with this? Because it seems like a really unique technology. You could Leverage
Brady Ericson: And so we have a number of applications and test engines that we have going on or with customers that has the SEM injector ignition system, our injection system, and our ECU that's controlling the calibration of both the ignition as well as the fuel injection. And so we see this as a nice opportunity to provide greater system solutions for our customers, because we're already doing a lot of the calibration work on these components. And so this is a way for us to, you know, provide better service to them. And two, SEM is a small company, and they've had a difficult time, you know, expanding globally.
Speaker Change: Yeah. I mean, obviously they're focused on a lot of alternative Tech, uh, or alternative fuels, uh, you know, hydrogen natural, gas, and others. Um, that's an area that where we have a lot of fuel injection and we have the engine control unit and so
Brady Ericson: And so we can leverage our existing manufacturing sites, our existing engineering teams that are in all of the different regions to support customers locally and accelerate their growth. Our view is that on the commercial vehicle and industrial side, you know, alternative fuels, more carbon neutral and carbon free fuels are a good trend. And so we see opportunities for this product line to continue to grow along with our alternative fuel fuel injection.
Speaker Change: And test engines that we have uh, going on or with customers that has the SCM inject or uh ignition system, our injection system and our ECU, that's controlling the calibration of both the ignition, as well as the fuel injection. And so we see this as a as a nice opportunity to uh, provide greater system solutions for our customers because we're already doing a lot of the calibration work on these components. Uh, and so this is a way for us to, um, you know, provide better service to them and 2 scms a small company and they've had a difficult time, you know, expanding globally, uh and so we can leverage our existing manufacturing sites or existing engineering teams that are in all of the different regions to support customers locally, uh, and accelerate their their growth
Speaker Change: Our view is that on the commercial vehicle and Industrial side, you know, alternative fuels more carbon neutral and carbon-free fuels are are a good Trend. Uh, and so we see opportunities for, for this product line to continue to grow along with our, uh, alternative fuel fuel injection systems.
Bobby Brooks: Appreciate the call, as always, Brady. Thank you very much, and I'll return to the queue.
Brady Ericson: Appreciate the call. As always Brady, thank you very much, and uh, I'll return to the queue.
Audra: Thank you.
Speaker Change: Thank you.
Jake Scholl: We'll move next to Jake Scholl at BNP Paribas.
Jake Shaw: We'll move next to Jake. Shaw at BMP, paribus.
Jake Scholl: Hey, guys.
Brady Ericson: First, I just wanted to ask about the Ford recall announced in the quarter. So Ford announced a recall of 850,000 vehicles for potentially faulty fuel pump. Finia was the supplier named in the recall, so could you talk about just any impact you expect to have on your financials this year from the recall? Thank you. Yeah, I mean, we there's nothing we've we've updated our, we didn't update our disclosures. And there's really nothing for us to kind of say. I think this is a it's a Ford issue. They made a decision they're working with NHTSA on that decision.
Jake Shaw: Hey guys. Um, first I just wanted to ask about uh the Ford recall announced in the quarter. So Ford announced a recall of 850,000 vehicles for potentially faulty fuel pump.
Jake Shaw: Uh, final was the supplier named in the recall. So could you talk about, uh, just any impact you expect to have on your financials this year from the recall?
Jake Shaw: Thank you.
Brady Ericson: And we're comfortable with our with our numbers at this point.
Jake Scholl: Any specific questions on, you know, the cause or why we would reference the Ford Motor Company? All right. Thanks, Brady.
Jake Shaw: Yeah, I mean we there's nothing we've we've updated our well, I think so we didn't update our uh disclosures and there's really nothing for us to kind of say, I think this is a, it's a Ford issue. Uh, they made the decision, they're working with Nissa on that decision uh, and we're comfortable with our with our numbers at this point. Any specific questions on? You know, the cause or why? Uh, we would reference to the Ford Motor Company.
Jake Scholl: And then can you talk a little bit about your capital allocation intentions for the rest of the year? You did $42 million of buybacks in the quarter when most of the suppliers didn't do anything. And we also have the SEM acquisition closing later this year.
Jake Shaw: All right. Thanks. Brady. And then can you talk a little bit about your Capital allocation, intentions for the rest of the year? Uh, you did 42 million dollars of Buybacks in the quarter, uh, when most of the suppliers, uh, didn't do anything.
Brady Ericson: So how do you think about repurchases for the remainder of the year? Thank you. Yeah, I mean, just just to clarify, I think the total was actually 40. I think there was 2 million of tax, I think on their excise tax that comes with some of those buybacks. But I mean, again, as we mentioned in the call, we're going to continue to look at it, you know, we still have a very strong balance sheet, we have plenty of cash. Cash flow was a little bit, you know, lighter than we wanted in Q2 because of some of the working capital, but we're confident that we'll work through that throughout the year.
Jake Shaw: And we also have uh, the SCM acquisition closing later this year.
Jake Shaw: So, uh, how do you think about, uh, repurchases for the remainder of the Year? Thank you.
Brady Ericson: And so we'll still have, you know, plenty of cash flow even after the SDM acquisition, we're still under our leverage target as well. And we still feel that, you know, as we purchased in the quarter, we thought it was, you know, a good investment for shareholders to continue to purchase our shares at these prices. So I think we'll continue to look at it on a quarterly basis and take a look at our cash flow and our expectations and make a decision, you know, on our repurchase plans for the quarter. but I think we mentioned in the last one, I don't, SEM is not going to, I mean, it'll take some of our cash, but it's not, it's maybe a typical one quarter of our cash flow.
Jake Shaw: Yeah, I mean, just just to clarify. I think the total was actually 40. I think there was 2 million of, um, tax, I think on there the excise tax, uh, that comes with some of those BuyBacks. Um, but I mean, again, as, as we mentioned in the call, um, we're going to continue to look at, you know, we still have a very strong balance sheet, we have plenty of cash, um, cash flow was a little bit, you know, lighter than we wanted in Q2 because of some of the working capital, but we're confident that we'll work through that throughout the year. And so, we'll still have, you know, plenty of cash flow even after, uh, the SDM acquisition. Uh, we're still under our leverage Target as well, um, and we still feel that, you know, as as we purchased in the quarter, we thought it was, you know, a good investment for, for a shareholders, to continue to purchase our shares at these prices. So um, I think we'll continue to look at it on a quarterly basis and take a look at our cash flow and our expectations, uh, and make a decision. Um, you know on
Jake Shaw: On our rep purchase plans for the quarter.
Audra: And so we don't feel pressured on our cash or our balance sheet at this point. And as a reminder, if you would like to ask a question, please press star one.
Jake Shaw: But I think we mentioned in the last 1, I don't Semmes not going to, I mean, it'll take some of our cash but it's not, uh, it's maybe a typical 1 quarter of our cash flow. Um, and and so we don't feel pressured, uh, on our cash, uh, or our balance sheet at this point.
Brady Ericson: All right. Thanks Brady.
Joseph Spak: We'll go next to Joseph Spak at UBS.
Speaker Change: And as a reminder, if you would like to ask a question, please press star 1.
Speaker Change: We'll go next to Justice back at UBS.
Joseph Spak: Good morning, everyone. I guess just to Chris, maybe just to confirm, I'm just going through some of the notes you said, the tariff recoveries was you said, you know, I think you said about six or five million recoveries. My notes actually a little bit shaky here, but I just want to confirm that that was related to tariffs. And then you said the net tariff was minus two. So are those, are you talking about the same thing there when you're talking about recoveries and the net tariff added?
Speaker Change: Um, good morning, uh, everyone. Um,
Speaker Change: I guess just uh Chris maybe just uh uh confirm. I am just going through some of the notes. You said um, the Tariff recoveries was. You said, you know, um,
Speaker Change: 6. I'm sorry the I think you said about 6 or or 5 million, recoveries I my my notes actually a little bit uh um, a little bit shaky here, but I just want to confirm that, that was related to tariffs.
Speaker Change: Um, and then you said, the net, Tariff was minus 2. So are, are those, are you talking about the same thing there when you're talking about recoveries? And then that and the net terrified 1?
Chris Gropp: Morning, Joe. So the total tariff, I mean, you can see it in our queue pretty clearly in the quarter, we recovered 9 million. And then we had 11 outgoing. So that's the net of two negative. That combines with the 4 million that we had in Q1. So we, we see we're going to get it back all full year. But so right now, I mean, so 9 million is the starting point for starting to recovery. But there's just a little bit that's lagging. Yeah, I think the team did a good job. I think we closed the gap.
Speaker Change: Um, so the total tariff, if I mean you can see it in our Cube pretty clearly in the quarter, we recovered 9 million and then we had 11 out going. So that's the net of 2 negative, um, that combines with the 4 million that we had in q1. So we, um, we see, we're going to get it back all full year. But, uh, so right now, I mean
Chris Gropp: I think, as I mentioned, we're still got a little bit of work to do here in Q3 to kind of finalize that out. But team's making good progress.
Chris Gropp: Just a one note, I don't think the queue's out yet. So you may not have a queue. Sorry. Sorry about that, Joe. I live in my own world. OK, yeah, so I guess. Okay, so that And if I could, like, slide... 12. How does that, you said supplier savings are covering six million. So how do I guess how does that sort of tie into sort of the numbers you just gave like that's where I'm. Supplier savings is just GSM material savings, so that is not the same thing. Then if you go down, it says tariff cost net of recovery of two.
Speaker Change: So 9 million is the starting point for starting to recovery but there's just a little bit, that's lagging. Yeah, I think the team did a good job. I think we closed the Gap. I think, as I mentioned, we're, we still got a little bit of work to do here in Q3 to kind of finalize that out. Um, but teams making good progress. Just a 1 note, I don't think the q's out yet, so we may not have the queue. That's true. Sorry, so, sorry about that. Joe, I live in my own. I live in my own world.
Speaker Change: well, yeah, so then I guess
Speaker Change: Okay. Yeah, so that I guess. Um,
Speaker Change: Um, okay. So that
Speaker Change: and if I like it, like slide, um,
Chris Gropp: So, if you go to the preview, I mean, so we're not laying out the tariff in here. When the cue comes out, you'll see it very plainly because it's in the walk. So here it's a little bit more, but the supplier savings is literally just our GSM guys working on cost savings and material cost down. Okay.
Speaker Change: Um, uh, 12 that how does that? That you say supplier savings and recovering 6 million. So, how do I, I guess how does that sort of tie into sort of the numbers? You just gave like, that, that sort of where I'm confused. The flyer savings is just GSM material savings, so that is not the same thing. Then if you go down, it says tariff costs, net of recovery of 2. So,
Brady Ericson: And then, you know, I guess, since the queue is not yet out, but, you know, Brady, in relation to an answer earlier about the fuel pump issue with Ford, you mentioned you updated your disclosures. Is there anything else you could tell us there? Like, was there sort of a change to your accrual balance? And just broadly, when issues do arise, how does the rule of thumb for, like, who's responsible for what work, like parts versus labor? Or is that just a negotiation with your customers and maybe? Yeah, I guess in the queue, there's no change to our disclosures and no change to our expected accruals.
Speaker Change: It's, uh, if you go to the pre, I mean, so we're not laying out the Tariff in here, when the, when the queue comes out, you'll see it very plainly because it's in the walk. So here it's a little bit more, but the supplier savings is literally just our GSM guys, um you know, working on cost savings and um, material cost cost down. Okay.
Speaker Change: Okay. And then um, you know, I I guess um, since the queue is not yet out but um, you know, Brady and and in relation to an answer earlier about, um, the fuel pump issue with forward. You mentioned you updated your disclosures, is there, is there anything else you could? You could tell us there or um like was there sort of a change to your approval balance? Um and just broadly when it when issues do arise is is how does the rule of thumb for like who's responsible for what works like Parts versus labor? Or is that just a negotiation with with your customers? And and maybe that's a
Brady Ericson: You know, they're kind of in line. This is just unique in the fact that it's public. There's a lot of different discussions we have with customers. And it's a complex system. And so it was, you know, we were just got involved here just recently in that. And we'll leave it to Ford to kind of have any specific response to that. At this point, there's no change on our side. Okay, but is that conversation with Ford finalized at this point? Or is that still an ongoing discussion? I mean they haven't announced a fix yet so they don't have a solution of how they're going to solve it so it's still an ongoing discussion as we have many ongoing discussions in general.
Speaker Change: Yeah, I guess in the, in the queue and there's no no change to our disclosures and no change to our expected approvals. You know, they're kind of in line. This is just unique in the fact that it's public. There's a lot of different discussions we had with customers. Um, and it's a it's a, it's a complex, um, system.
Speaker Change: Um, and so it was, you know, we were just got involved here just recently, uh, in that and we'll leave it to Ford to kind of have any specific.
Speaker Change: uh, response to that but
Speaker Change: At this point, there's no change on our side.
Speaker Change: Okay. But is is that conversation with your with Ford finalized at this point? Or is that still an ongoing discussion?
Joseph Spak: Okay, thanks so much. Thank you.
Speaker Change: I mean they haven't announced a fix yet so they don't, um, have a have a solution of how they're going to solve it. So it's still an ongoing discussion as we have many ongoing discussions in general.
Speaker Change: Okay.
Speaker Change: Thanks so much team.
Speaker Change: Thank you. Thank you.
Audra: And that concludes our Q&A session.
Brady Ericson: I will now turn the conference back over to Brady Ericson for closing remarks. Great. Thanks, everybody. Thanks for the questions. Really appreciate it.
Speaker Change: And that concludes our Q&A session. I will now turn the conference back over to Brady Ericson for closing remarks.
Brady Ericson: And again, just want to thank all of our employees around the world. A good, solid quarter. We're kind of taking a look at things and, you know, I think it's one of our, revenue-wise, one of our best quarters since we've spawned. Really good EPS from the team as well, and really good, solid performance in a relatively challenging market. And we expect to continue to operate in a very efficient manner kind of going forward, and really, really thank the team for that.
Audra: So, thank you very much, and we'll talk to you soon.
Audra: And this concludes today's conference call. Thank you for your participation. You may now disconnect.
Brady Ericson: Great thanks everybody. Thanks for the questions. Uh, really appreciate it. And again, just want to thank all of our employees around the world. Uh, a good solid quarter. We're, we're kind of taking a look at things and, you know, I think it's 1 of our Revenue wise 1 of our, our best quarter since we've spun, uh, really good EPS, uh, from the team as well and, and, and really good solid performance in a in a relatively challenging Market. Um, and, and we expect to continue to to operate in a very efficient manner, kind of going forward. And really, really think the team for that. So, thank you very much and we'll talk to you soon.
Speaker Change: Thank you. And this concludes today's conference call. Thank you for your participation. You may now disconnect
Audra: Please wait, the conference will begin shortly.
Speaker Change: please wait the conference will begin shortly.