Strategic Performance Drivers and Operational Context – Record Q2 revenue of $143.1 million was driven by a 14.7% increase, including approximately $2 million in pull-ahead sales triggered by anticipated Q3 price increases. – The U.S. independent channel outperformed the…
alership channel, which continues to face headwinds from regulatory compliance concerns regarding FTC requirements. – China domestic sales remained resilient despite a broader 20% year-over-year decline in the domestic car market, supported by the successful integration of the regional distributor acquisition. – Middle East performance was impacted by the Iran conflict, primarily due to vehicle supply shortages rather than a collapse in consumer demand, with India emerging as a high-growth bright spot. – Gross margin improved to 44.1% as the company began selling through higher-priced inventory from the China acquisition, though some cost pressures persisted. – Management is aggressively reducing SKUs by approximately 10% to eliminate ‘fat’ in the portfolio and improve inventory turnover without compromising customer service levels. – The strategic shift to in-house manufacturing is designed to increase innovation speed and product quality control rather than just replacing turnkey vendor products. Manufacturing Strategy and Financial Outlook – Q3 revenue is projected between $137 million and $139 million, accounting for seasonal European holidays and the $1 million to $2 million in sales pulled forward into Q2. – A $110 million investment in manufacturing facilities in San Antonio and China is expected to yield incremental margin benefits starting in mid-2027. – Management targets a mid-20% operating margin run rate by the end of 2028, assuming current business fundamentals and project timelines remain stable. – Modest price increases are planned for Q3 in specific regions to offset ongoing price-cost pressures and support continued gross margin expansion. – Capital allocation will prioritize