Executive Summary

Q2 2025 revenue of $172.0M declined 11.2% YoY but improved sequentially, with gross margin rising 80 bps vs Q1 on operational efficiency; adjusted EBITDA was $5.2M (3.0% margin) and adjusted EPS was $(0.09) .
Versus S&P Global consensus, revenue beat ($172.0M vs $161.6M*) while normalized EPS missed (−$0.09 vs −$0.07*); EBITDA modestly beat ($5.30M vs $4.88M*) (Values retrieved from S&P Global).
Management cut FY25 revenue to $650–$670M and adjusted EBITDA to $21–$25M, but raised free cash flow guidance to >$30M given working capital progress .
Segment mix: Global Electrical Systems stabilized (flat YoY revenue; adj. op income +$0.4M YoY), Seating improved adj. margins on lower SG&A, while Trim faced the sharpest demand pressure .
Catalysts: continued tariff pass-through negotiations, SG&A and manufacturing cost actions, and ongoing gross margin improvement; management reiterated focus on debt paydown and expects net leverage to decline into 2026 .

What Went Well and What Went Wrong

What Went Well

Strong free cash generation: Q2 free cash flow from continuing operations was $17.3M, bringing YTD to $28.5M; management raised FY25 FCF outlook to at least $30M .
Sequential margin progress: gross margin expanded 80 bps vs Q1 on efficiency initiatives (freight, labor, plant overhead), with two straight quarters of sequential improvement .
Global Electrical Systems stabilizing: revenue flat YoY at $53.6M, with adj. operating income up to $1.2M (from $0.8M) aided by lower salary expense and ramp at low-cost facilities .
Quote (CEO): “We made progress in implementing operational improvements and right sizing our manufacturing footprint, which drove sequential gross margin improvement for the second consecutive quarter.”
Quote (CFO): “Given our successful working capital initiatives, we are raising our free cash outlook to at least $30 million for the full fiscal year.”

What Went Wrong

Demand softness: revenues down 11.2% YoY on lower volumes across all segments; adjusted EBITDA margin fell to 3.0% from 4.2% YoY .
Trim Systems and Components under pressure: revenue −23.8% YoY to $43.9M and adj. operating income down to $0.3M from $4.0M, reflecting weaker North American Class 8 exposure .
EPS pressure: GAAP diluted EPS from continuing operations was $(0.12); adjusted diluted EPS was $(0.09) vs $0.05 in the prior year .
Tariff/macro headwinds: management continues to mitigate tariff impacts via customer negotiations and supply chain actions; Q&A indicated ongoing dynamic renegotiation across customers and suppliers .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025	Q2 2025 Consensus
Revenue ($M)	$193.7	$169.8	$172.0	$161.6*
GAAP Diluted EPS (Continuing Ops)	$(0.04)	$(0.09)	$(0.12)	n/a
Adjusted Diluted EPS	$0.05	$(0.08)	$(0.09)	−$0.07*
Gross Margin	10.6%	10.5%	11.3%	n/a
Adjusted Gross Margin	12.4%	10.8%	12.0%	n/a
Operating Margin	0.6%	0.8%	0.5%	n/a
Adjusted Operating Margin	2.5%	1.2%	1.1%	n/a
Adjusted EBITDA ($M)	$8.2	$5.8	$5.2	$4.88*
Adjusted EBITDA Margin	4.2%	3.4%	3.0%	n/a

Notes: Consensus values marked with * are from S&P Global (Values retrieved from S&P Global).

Segment performance (Q2 2025 vs Q2 2024):

Segment	Revenue Q2 2024 ($M)	Revenue Q2 2025 ($M)	YoY %	Adj. Op Inc Q2 2024 ($M)	Adj. Op Inc Q2 2025 ($M)
Global Seating	$82.4	$74.5	−9.6%	$2.9	$3.1
Global Electrical Systems	$53.6	$53.6	~0%	$0.8	$1.2
Trim Systems & Components	$57.6	$43.9	−23.8%	$4.0	$0.3

Key KPIs and Balance Sheet:

KPI	Q1 2025	Q2 2025	Comment
Free Cash Flow – Continuing Ops ($M)	$11.2	$17.3	Strong sequential improvement
Cash ($M)	$20.2 (3/31)	$45.3 (6/30)	Higher liquidity
Revolver/Other Debt ($M)	$32.4 U.S. revolver, $0 China (3/31)	$30.3 U.S. revolver, $4.2 China (6/30)	Reduced net debt
Total Liquidity ($M)	$122.7 (3/31)	$135.9 (6/30)	Availability + cash
Net Leverage (TTM Adj. EBITDA)	n/a	4.8x (end Q2)	Down from 5.0x in Q1

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($M)	FY 2025	$660–$690 (May 6)	$650–$670 (Aug 4)	Lowered
Adjusted EBITDA ($M)	FY 2025	$22–$27 (May 6)	$21–$25 (Aug 4)	Lowered
Free Cash Flow	FY 2025	>$20 (May 6)	>$30 (Aug 4)	Raised

Context: Guidance incorporates Class 8 build forecasts (ACT 2025: ~252k units) and 5–15% declines in Construction & Agriculture; new wins in Electrical Systems expected to partially offset .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Operational efficiency / margin improvement	2024: portfolio actions, shifting to Morocco/Mexico; Q1: sequential margin gains and SG&A reduction focus	Two straight quarters of sequential gross margin improvement; continued freight/labor/overhead optimization	Improving
Free cash flow & deleveraging	Q4 guide for EBITDA growth and working capital reductions in 2025 ; Q1 strong FCF, debt paydown priority	Q2 FCF $17.3M; FY25 FCF raised to ≥$30M; net leverage down to 4.8x	Positive
Tariffs / trade policy	Q1 outlook flagged policy concerns and mitigation focus	Active customer pass-through negotiations; supplier mitigation; dynamic process with lags	Ongoing risk, mitigations in progress
Class 8 cycle dynamics	Q4/Q1: declines in NA Class 8; 2025 build forecasts highlighted	ACT now expects no 2026 pre-buy; flat 2026, recovery in 2027; downtime higher June–Aug	Near-term soft, medium-term normalizing
Electrical Systems new wins	2024: $97M wins concentrated in Electrical Systems ; Q1: re-segmentation to align with customers	Flat revenue YoY but adj. op income improved; ~15% of 2025 Electrical revenue from new wins; some launch delays	Stabilizing with better mix
Trim Systems (NA exposure)	2024: most cyclical (Class 8)	Steep YoY decline in revenue and profitability; remediation actions underway	Weakness persists

Management Commentary

Strategic focus: “We remain focused on execution, delivery, and driving operational efficiency, while managing the potential impact of trade policy.” — James Ray, CEO .
Margin drivers: “The operational efficiency improvements made related to freight, labor and plant level overhead continue to benefit our profitability.” — James Ray .
Cash and leverage: “We are raising our free cash flow outlook to at least $30 million for the full fiscal year… Continued free cash generation and debt paydown remain key focus areas.” — Andy Cheung, CFO .
Segment outlook: “Global Electrical Systems… new business wins offset weaker construction and agriculture demand… benefits of the restructuring actions… stabilizations we are seeing.” — Andy Cheung .

Q&A Highlights

New business wins pacing: Robust funnel with Q1/Q2 wins; ~15% of 2025 Electrical revenue from new wins; some implementation delays due to OEM issues and regulatory approvals in autonomy/EV .
Cost savings durability: $15–$20M savings targeted in 2025 via material, logistics, SG&A, and manufacturing productivity; savings are structural with outside consultants engaged for supply chain and overhead optimization .
Tariff recovery: Daily cross-functional work; tariff pass-through to customers underway with inherent lag; supplier negotiations emphasize initial mitigation before price .
Production cadence: Higher-than-expected OEM downtime June–Aug for model changeover/vacations; plants flexing labor and supply orders accordingly .
Leverage/covenants: Net leverage at 4.8x; new financing provides covenant headroom (>7x), with focus on cash generation and debt paydown targeting ~2x by 2026 .

Estimates Context

Q2 2025 vs consensus: Revenue $172.0M beat vs $161.6M*; Primary/normalized EPS −$0.09 vs −$0.07* (miss); EBITDA $5.30M vs $4.88M* (beat). (Values retrieved from S&P Global.)
Q1 2025 vs consensus: Revenue $169.8M vs $163.5M* (beat); Primary EPS −$0.08 vs −$0.145* (beat); EBITDA $5.40M vs $2.19M* (beat). (Values retrieved from S&P Global.)
FY 2025 consensus: Revenue ~$641.3M*; company guidance $650–$670M suggests a slightly higher top line than consensus midpoint; EBITDA guidance $21–$25M vs consensus ~$17.0M* indicates reliance on cost actions and cash conversion (Values retrieved from S&P Global) .

Key Takeaways for Investors

Sequential margin improvement with strong free cash flow are the bright spots; management raised FY25 FCF to >$30M, which supports ongoing deleveraging .
Top-line headwinds persist (Class 8, Construction & Agriculture), prompting modest guidance cuts on revenue and adjusted EBITDA; watch Trim Systems for stabilization .
Electrical Systems is showing healthier mix and incremental profitability from low-cost footprint; new wins should help offset end-market declines as launches mature .
Tariff pass-through and SG&A/manufacturing cost actions are central to defending margins; expect near-term noise from negotiation lags but improving run-rate thereafter .
Near-term trading setup: Mixed print with revenue/EBITDA beats vs normalized EPS miss could create choppiness; cash generation guidance raise is a potential support.
Medium-term thesis: If gross margin gains persist and cash conversion stays strong, deleveraging to ~2x by 2026 is plausible even in a flat Class 8 scenario, positioning for operating leverage when demand recovers .

References

Q2 2025 8-K earnings press release and exhibits: revenues, margins, segment results, liquidity and guidance .
Q2 2025 earnings call transcript: margin initiatives, FCF focus, leverage, tariffs, Class 8 outlook, Q&A .
Q1 2025 press release: sequential margin improvement, segment performance, guidance (May 6 update) .
Q4 2024 press release: baseline context, portfolio actions, 2025 initial guidance .

Consensus estimates marked with * are from S&P Global (Values retrieved from S&P Global).

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