Executive Summary

Q1 2025 was operationally better but demand-soft: revenue $169.8M (-12.7% y/y), adjusted EBITDA $5.8M (3.4% margin), adjusted EPS $(0.08) as cost actions and working-capital discipline improved sequential profitability and free cash flow ($11.2M) despite weaker end markets .
Clear beats vs S&P Global consensus: revenue $169.8M vs $163.5M (+$6.3M), EPS $(0.08) vs $(0.145), EBITDA $5.40M vs $2.19M; all three metrics outperformed consensus, aided by lower SG&A and freight/efficiency gains (see Estimates Context) *.
Guidance trimmed/tightened: FY25 revenue to $660–$690M (from $670–$710M) and adjusted EBITDA to $22–$27M (from $25–$30M); introduced ≥$20M FCF target tied to working-capital and capex reductions .
Strategic actions in 2024 (portfolio pruning, footprint optimization) and a new 3-segment structure supported sequential adjusted gross margin expansion of ~240–250 bps vs Q4 (10.8% in Q1) and debt reduction ($11.7M net) .
Key narrative moving the stock: margin/FCF improvement amid a cyclical trough, juxtaposed with a guidance cut on Class 8 and Con/Ag softness and tariff uncertainty—setup for operating leverage into a 2026 rebound (per ACT forecasts) if execution sustains .

What Went Well and What Went Wrong

What Went Well
- Sequential margin/FCF inflection: adjusted gross margin reached 10.8% (up ~240–250 bps q/q) and FCF improved by $17.7M y/y to $11.2M as expedited freight normalized and inventory fell ~$5M q/q .
- Cost/footprint actions working: management cited reductions in expedited freight, supplier term optimization, labor flexing, and shifting to lower-cost facilities as drivers of margin expansion .
- Debt and liquidity: net debt reduced by $11.7M in Q1; liquidity stood at $122.7M at quarter-end (cash $20.2M; $102.5M availability) .
- Quote: “Our first quarter results demonstrate sequential improvement in margins and free cash flow… streamlin[ing] operations, lower[ing] our cost structure, and driv[ing] cash generation to pay down debt.” — CEO James Ray .
What Went Wrong
- Demand-driven revenue decline: revenue down 12.7% y/y on weaker global Construction & Agriculture and North America Class 8 demand; adjusted EBITDA margin fell to 3.4% from 5.0% y/y .
- Segment pressure: Electrical Systems and Trim saw double-digit revenue declines and weaker operating income; higher freight and FX in Electrical and freight in Trim weighed on profitability .
- Guidance cut on macro/tariffs: FY25 revenue and EBITDA ranges lowered; management acknowledged volatile build schedules, tariff pass-through uncertainty and end-market softness persisting through 2025 .
- Analyst concern: extended downturn in Con/Ag and Class 8 orders (FTR) vs ACT’s 2026 build recovery—management stressed cost flexing and preparedness but visibility limited to ~10–13 weeks .

Financial Results

Consolidated trend (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$171.8	$163.3	$169.8
Adjusted EBITDA ($M)	$4.3	$0.9	$5.8
Adjusted EBITDA Margin (%)	2.5%	0.6%	3.4%
Diluted EPS (GAAP)	$(0.03)	$(1.04)	$(0.09)
Adjusted Diluted EPS	$(0.01)	$(0.15)	$(0.08)

Q1 2025 vs S&P Global consensus

Metric	Consensus	Actual	Surprise
Revenue ($M)	$163.5*	$169.8	+$6.3
Primary EPS	$(0.145)*	$(0.08)	+$0.065
EBITDA ($M)	$2.19*	$5.40†	+$3.21

† EBITDA actual reflects SPGI methodology; company-reported adjusted EBITDA was $5.8M .
Values with asterisks are retrieved from S&P Global.

Segment breakdown – Q1 2025 vs Q1 2024

Segment	Revenue Q1’24 ($M)	Revenue Q1’25 ($M)	YoY %	Adjusted Op Inc Q1’24 ($M)	Adjusted Op Inc Q1’25 ($M)
Global Seating	$80.8	$73.4	(9.1%)	$2.8	$2.7
Global Electrical Systems	$58.7	$50.5	(14.1%)	$1.5	$0.2
Trim Systems & Components	$55.1	$45.9	(16.6%)	$4.7	$1.6

KPIs and balance sheet

KPI	Q1 2024	Q4 2024	Q1 2025
Free Cash Flow – Continuing ($M)	$(6.5)	$0.8	$11.2
Adjusted Gross Margin (%)	12.7%	8.3%	10.8%
Net Leverage (T12M adj. EBITDA basis)	—	—	5.0x
Cash ($M)	—	$26.6	$20.2
Liquidity ($M)	—	$111.0	$122.7

Notes: Management cited ~240–250 bps sequential adjusted gross margin expansion vs Q4 on stabilized operations and reduced expedited freight (call: ~240 bps; release: 250 bps) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	FY 2025	$670–$710	$660–$690	Lowered/tightened
Adjusted EBITDA ($M)	FY 2025	$25–$30	$22–$27	Lowered
Free Cash Flow	FY 2025	—	≥$20M	Introduced

Management said the low end of ranges contemplates an EPA pushback of 2027 emission standards; focus remains on SG&A alignment, 50% capex cut, ~$20M working-capital reduction (inventory focus) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
End-market outlook (Class 8)	2024 softness; ACT 2024 at 316k; 2025 outlook set; volatile schedules	ACT: 2025 down ~23% y/y; 2026 +19% ahead of 2027 emissions; watch for possible EPA timing shift	Weak 2025, rebound 2026
Construction & Agriculture	2024 down 10–20% ; still soft into Q4	2025 expected down ~5–15% in both; recovery expected 2026	Persistent softness
Tariffs and pass-through	Heightened uncertainty late 2024	Negotiating recoveries; Mexico/Canada under USMCA with some relief; China exposure small (<10% in Seating)	Active mitigation
Cost actions/footprint	2024 disruptions and inefficiencies; restructuring, Morocco/Mexico additions	Reduced expedited freight, labor flexing, lower-cost shifts driving margin expansion	Executing, benefits visible
Working capital/FCF	Portfolio actions created 2024 cash headwinds	$11M FCF in Q1; targeted ≥$20M FY25; $5M inventory reduction in Q1	Improving
Segment reorg	Announced for 2025 (3 segments)	New segments live; clarity on correlation to end markets (Trim most tied to NA Class 8)	Implemented

Management Commentary

“10.8% adjusted gross margin… a 240 bps sequential improvement… driven by operational efficiency initiatives… divestiture of noncore businesses… conclusion of one-time costs” — CEO James Ray .
“Free cash generation of $11 million in the quarter… positions us well for further improvement… in 2025” — CEO James Ray .
“Consolidated Q1 revenue $169.8M; adjusted EBITDA $5.8M (3.4% margin)… net loss $(0.09) per diluted share; FCF from continuing operations $11.2M” — CFO Andy Cheung .
“We are lowering 2025 revenue to $660–$690M and adjusted EBITDA to $22–$27M; introducing ≥$20M FCF… focus on SG&A, capex down ~50%, ~$20M working-capital reduction” — CEO James Ray .
“We will discontinue reporting new business wins… annual guidance is the best way to model near term” — CEO James Ray .
Governance note: Board transition announced with Mr. Griffin’s planned retirement and Mr. Johnson expected as Chairman (effective May 15, 2025) .

Q&A Highlights

Normalized profitability: management targets ~15% gross margin supporting high single-digit EBITDA margins when demand normalizes and self-help compounds .
Tariff exposure and recovery: largest exposure tied to Mexico/Canada with USMCA relief; China content <10% of cost (Seating metals); pursuing customer recovery and supplier mitigations .
Leverage and covenants: net leverage 5.0x; amended covenant calc ~4x stepping down; in compliance; evaluating 2027 debt maturity refinancing options during 2025 .
Visibility and scheduling: OEM build visibility ~10–13 weeks, firmer within 4–8 weeks; July seasonal downtime expected; company flexing inventory and labor to match .
Incremental/decremental: currently ~20% on average, with potential to improve as Electrical utilization rebounds; Trim most correlated to NA Class 8 .
Freight costs: one-third of the ~240 bps sequential gross margin improvement from reducing expedited freight tied to 2024 footprint actions .

Estimates Context

Consensus vs actuals (S&P Global; oldest → newest)

Metric	Q3 2024 Cons	Q3 2024 Actual	Q4 2024 Cons	Q4 2024 Actual	Q1 2025 Cons	Q1 2025 Actual
Revenue ($M)	222.06*	171.77	158.36*	163.29	163.50*	169.80
Primary EPS	0.043*	$(0.01)	$(0.075)*	$(0.15)	$(0.145)*	$(0.08)
EBITDA ($M)	9.46*	4.05†	0.66*	(0.81)†	2.19*	5.40†

† EBITDA actuals per SPGI methodology; company-reported adjusted EBITDA were $4.3M (Q3’24), $0.9M (Q4’24), and $5.8M (Q1’25) .
Primary EPS “actual” aligns with adjusted EPS disclosures in Q1’25 ( $(0.08) ) .
Values with asterisks are retrieved from S&P Global.

Implications: Q1 2025 delivered broad beats vs consensus (revenue/EPS/EBITDA), while Q3/Q4 2024 had notable shortfalls on revenue/EBITDA amid portfolio and operational transitions; estimate paths likely move up on Q1 execution but remain capped by lowered FY25 guide and macro.

Key Takeaways for Investors

Sequential operating improvement is real: adjusted gross margin expanded ~240–250 bps and FCF turned strongly positive ($11.2M), validating structural cost actions and working-capital focus .
Broad beat in Q1 vs consensus (revenue, EPS, EBITDA) suggests estimate risk skews upward near-term if execution on SG&A, freight, and footprint efficiencies continues *.
Guidance reset frames 2025 as a trough year; 2026 setup attractive if ACT’s rebound materializes and tariff recovery holds—monitor OEM schedule volatility and EPA timing .
Segment lens: Trim correlates most with NA Class 8 cycles; Electrical carries FX and Con/Ag exposure but offers margin recovery leverage as utilization improves .
Balance sheet trend improving (net debt down $11.7M; liquidity $122.7M); watch leverage vs covenants and 2027 maturities as the company explores refinancing in 2025 .
Tactical trade: momentum traders may lean into margin/FCF inflection and consensus beats; risk remains macro/tariff-driven volume and pass-through timing; follow tariff recovery commentary and inventory progress through 1H’25 updates .
Medium-term thesis: structurally lower cost base + operating leverage to a 2026 cycle could drive EBITDA margin expansion toward high-single-digit ambitions if 15% gross margin is attained and demand normalizes .

Footnote: Values marked with an asterisk (*) are retrieved from S&P Global.

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