Executive Summary

Q2 2025 delivered margin expansion and an outlook raise: Adjusted EBITDA rose to $62.8M (8.9% margin), up from $50.9M YoY; GAAP net loss improved to $(1.4)M and adjusted EPS turned positive at $0.06 .
Management raised full‑year 2025 Adjusted EBITDA guidance to $220–$250M (from $200–$235M), while keeping sales at $2.7–$2.8B and trimming net cash taxes to $25–$30M .
Execution remains strong: 100% of 317 customer scorecards were green; lean/purchasing savings of $25M and restructuring savings of ~$4M in Q2 drove performance despite softer volumes and inflation .
Liquidity healthy at $272.8M (cash $121.6M; undrawn ABL availability), and management expects positive FY free cash flow with a net leverage ratio below 4x by year‑end, aided by working capital unwind and potential refinancing .
Near‑term stock catalysts: guidance raise, continued margin trajectory toward ~10% exit run‑rate by Q4, tariff pass‑through agreements, and improving customer schedules into Q3–Q4 .

What Went Well and What Went Wrong

What Went Well

Operational excellence and customer service at all‑time highs: 100% of 317 customer scorecards green; launch scorecards 97% green; world‑class safety with 0.26 incident rate and 44 plants at zero incidents in H1 .
Cost actions delivered: $25M lean/purchasing savings and ~$4M restructuring savings YoY in Q2; Adjusted EBITDA margin expanded 170 bps YoY to 8.9% despite lower volumes .
Commercial progress and awards: $77.1M net new business in Q2 (H1 total $132.0M), including wins aligned to hybrid/BEV platforms; Ford Supplier of the Year; strategic collaboration with Renault’s EmBlem project leveraging FlexiCore and Flush Seal .

What Went Wrong

Top‑line modestly softer: Q2 sales declined 0.3% YoY to $705.973M on unfavorable volume/mix and net price adjustments, partly offset by FX .
Free cash outflow in Q2: Free cash flow of $(23.352)M, reflecting normal seasonality, higher cash interest, and working capital build (AR normalization from strong Dec collections), expected to unwind in H2 .
Macro/tariff uncertainty persists: Global trade policy/tariff changes still a near‑term forecasting overhang; management expects tariff pass‑through/recoveries but acknowledges potential production volume impacts .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Sales ($USD Millions)	$660.753	$667.069	$705.973
Gross Profit ($USD Millions)	$82.020	$77.178	$93.051
Adjusted EBITDA ($USD Millions)	$54.283	$58.715	$62.765
Adjusted EBITDA Margin (%)	8.2%	8.8%	8.9%
Diluted EPS (GAAP) ($)	$2.24	$0.09	$(0.08)
Adjusted Diluted EPS ($)	$(0.16)	$0.19	$0.06

Estimate comparison (S&P Global consensus; Q4 shown for trend):

Metric	Q4 2024 Estimate	Q4 2024 Actual	Q1 2025 Estimate	Q1 2025 Actual	Q2 2025 Estimate	Q2 2025 Actual
Revenue ($USD Millions)	$679.9*	$660.753	$665.0*	$667.069	$687.0*	$705.973
Primary EPS ($)	$0.06*	$(0.16)	$(0.754)*	$0.19	$(0.056)*	$0.06
EBITDA ($USD Millions)	$63.6*	$54.961†	$48.0*	$47.409†	$57.0*	$63.786†

Values retrieved from S&P Global.
†EBITDA (unadjusted) reconstructed from press release/8‑K reconciliation tables: Q4 2024 $55.705M EBITDA vs $54.283M adjusted; Q1 2025 $56.702M EBITDA vs $58.715M adjusted; Q2 2025 $59.913M EBITDA vs $62.765M adjusted .

Q2 2025 vs estimates: Revenue beat; Primary EPS beat; Adjusted EBITDA beat (vs EBITDA consensus proxy).

Bolded in context: *Revenue +2.8% vs est ($705.973M vs $687.0M), *EPS beat (0.06 vs −0.056), *EBITDA beat (~$63.8M vs $57.0M)**.

Segment breakdown (Q2 2025):

Segment	Sales ($USD Thousands)	Sales YoY ($USD Thousands)	Adjusted EBITDA ($USD Thousands)	Adjusted EBITDA YoY ($USD Thousands)
Sealing Systems	$364,368	$(578) vs $364,946	$40,345	+$5,310 vs $35,035
Fluid Handling Systems	$322,430	$(312) vs $322,742	$26,997	+$10,715 vs $16,282

KPIs and cash metrics:

KPI	Q4 2024	Q1 2025	Q2 2025
Net New Business Awards ($USD Millions)	$181.4 FY 2024 context	$55.0	$77.1 (H1 total $132.0)
Free Cash Flow ($USD Millions)	$63.238	$(32.394)	$(23.352)
Capital Expenditures ($USD Millions)	$11.484	$17.543	$7.772
Cash & Equivalents ($USD Millions)	$170.035	$140.368	$121.620
Total Liquidity ($USD Millions)	$339.2	$300.1	$272.8

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales	FY 2025	$2.7–$2.8B	$2.7–$2.8B	Maintained
Adjusted EBITDA	FY 2025	$200–$235M	$220–$250M	Raised
Capital Expenditures	FY 2025	$45–$55M	$45–$55M	Maintained
Cash Restructuring	FY 2025	$20–$25M	$20–$25M	Maintained
Net Cash Interest	FY 2025	$105–$115M	$105–$115M	Maintained
Net Cash Taxes	FY 2025	$30–$35M	$25–$30M	Lowered

Light vehicle production assumptions updated (North America 14.9M; Europe 16.7M; China 31.2M; South America 3.2M) reflecting July 2025 S&P Global forecasts .

Earnings Call Themes & Trends

Topic	Q4 2024 (prior two quarters)	Q1 2025	Q2 2025	Trend
Tariffs & Pass‑Through	Expect to offset headwinds via efficiencies and pricing; initial 2025 guide set amid lower volume projections	Systems in place; minor tariff timing hit; expect real‑time recovery; majority of parts under free trade	Commercial negotiations largely complete; majority of direct tariff impacts recovered; focus returns to execution	Improving clarity; mitigated cost impact
Operational Excellence & Digital Tools	Cost savings from lean, restructuring drive margins	World‑class safety; 99% quality scorecards green; $20M lean savings, $8M restructuring YoY	100% quality scorecards green; 97% launch scorecards; AI‑supported CS Factorysis rollout to plants	Sustained excellence; broader digital deployment
Hybrid/BEV Product Content	EV/hybrid awards in 2024 new business	Hybrid production raised in S&P forecasts; ~80% content uplift for hybrid; eCoFlow Switch Pump innovation	Fluid Handling strategy leverages hybrid growth; ROIC targets; vertical/system integration upside not yet in plan	Increasing content & pipeline visibility
Working Capital & Free Cash Flow	Strong Q4 FCF; liquidity solid	Seasonal cash use; AR build expected to normalize	AR normalization from Dec overcollections; expect unwind; FY positive FCF despite ~$110M cash interest	H2 cash tailwind expected
Capital Structure & Ratings	Cash interest elevated; refinancing potential ahead	—	Moody’s outlook to positive; exploring options to refinance first/third lien notes; potential 100–300 bps savings depending on market ratings trajectory	Constructive path to de‑risk balance sheet

Management Commentary

“We ended the second quarter with a record 100% of our total 317 customer scorecards for quality and service being green… A huge shout‑out to our manufacturing leadership team, our plant managers, and our plant employees for this remarkable result.” — Jeff Edwards .
“Lean initiatives in purchasing and manufacturing contributed $25 million in savings… restructuring initiatives added $4 million… despite lower sales and production volumes.” — Jon Banas .
“We’ve successfully reached agreements with our customers that will allow us to pass through or recover the majority of all direct tariff impacts on our business.” — Jeff Edwards .
“We ended the second quarter with a cash balance of approximately $122 million… total liquidity of approximately $273 million… we believe we are on track to achieve positive free cash flow for the full year… net leverage ratio below four times at the end of this year.” — Jon Banas .

Q&A Highlights

Long‑term growth visibility: Discussion of 2030 targets implies ~80% of incremental $1B revenue is already booked (net new business split across Sealing/Fluid), with further upside from system integration in Fluid Handling not yet in plan .
Margin trajectory: Management reiterated an “outside shot” of approaching ~10% adjusted EBITDA margins by Q4 exit rate, contingent on volumes (S&P forecasts viewed as conservative versus releases) .
Working capital mechanics: AR normalization from unusually strong Dec collections drove H1 outflow; expected to unwind fully in H2; cash interest ~$110–$115M FY but still positive FY FCF .
Refinancing optionality: Ratings path toward single‑B could reduce interest costs; potential 100–300 bps improvement depends on market conditions, aiding deleveraging .

Estimates Context

Q2 2025 vs consensus: Revenue $705.973M vs $687.0M* (beat); Primary EPS $0.06 vs $(0.056)* (beat); EBITDA ~$63.8M† vs $57.0M* (beat). Full table above.
Q1 2025 vs consensus: Revenue slight beat; Primary EPS beat; EBITDA slightly below the consensus proxy, but Adjusted EBITDA improved materially YoY .
Q4 2024 vs consensus: Misses on revenue and EPS; EBITDA below estimates amid FX/volume headwinds .
Values retrieved from S&P Global. †EBITDA actual reflects GAAP EBITDA reconciled from filings .

Key Takeaways for Investors

Guidance raise and margin momentum: Full‑year Adjusted EBITDA increased to $220–$250M, with Q2 margins expanding despite softer volumes—supporting a path toward ~10% exit run‑rate by Q4 .
Cost discipline is sticking: Lean and restructuring savings are recurring drivers; Expect continued margin expansion as higher‑contribution programs launch .
Tariff risk largely mitigated: Commercial agreements allow pass‑through of most direct impacts; remaining uncertainty is volume‑related rather than margin structure .
H2 cash inflection: Working capital unwind plus seasonality and undrawn ABL support management’s positive FCF view for 2025; liquidity ample at ~$273M .
Segment catalysts: Sealing and Fluid both show double‑digit YoY EBITDA gains; hybrid content and system integration underpin Fluid’s medium‑term margin/ROIC targets .
Balance sheet optionality: Ratings outlook improving (Moody’s to positive) and potential refinancing could lower cash interest (100–300 bps range), accelerating deleveraging below 4x by YE .
Trading stance: Near‑term narrative favors guidance raise and execution vs macro noise; watch releases vs S&P production forecasts—upside to volumes would leverage fixed cost base and flow through EBITDA .

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