XPEL (XPEL) Q2 2026 Earnings Call Transcript

Questions can be submitted in writing during the call by using the Q&A feature in Zoom. With that, I will hand it over to Pablo. The company undertakes no obligation to update any information discussed in this call at any time. Before we begin, I'd like to note our upcoming investor events. This week, Freightos will participate virtually in the SIDOTI MicroCap conference. In September, management will attend the HC Wainwright Annual Investment Conference in New York. Links to webcast, when applicable, and other event updates can be found on our website. Today's earnings call will begin with a business and financial overview by Pablo, followed by Ian, who will discuss our product strategy in more detail. Next, Pablo will present the guidance for Q3 and full year 2026. We will conclude with Q&A. Please be aware that today's discussion contains forward-looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors. Please refer to today's press release and our SEC filings for more information on risk factors and other factors, which could impact forward-looking statements. Copies of these reports are available online. In discussing the results of our operations, we'll be providing and referring to certain non-IFRS financial measures. You can find reconciliations to the most directly comparable IFRS financial measures along with additional information regarding those non-IFRS financial measures in the press release on our website at freightos.com/investors. Anat Earon-Heilborn: Hello, and welcome to Freightos' Q2 2026 earnings conference call. A press release with detailed financial results was released earlier today and is available on the Investor Relations website -- section of our website, freightos.com/investors. My name is Anat Earon-Heilborn, and I'm joined today by Pablo Pinillos, Freightos' CEO and Interim CFO; and Ian Arroyo, Chief Strategy Officer. Following the prepared remarks, we'll open the call for questions. We are sharing slides during the call and using video. So we recommend using Zoom on a computer rather than dialing in by phone. The slides as well as a recording of this earnings call will be available on our website shortly after the call. Story Continues Pablo Pinillos: Thank you, Anat, and thank you, everyone, for joining us today. We delivered record revenues of $7.7 million, ahead of our expectations. Adjusted EBITDA loss improved to a record low negative $2 million primarily due to our tight cost discipline, and Platform revenue grew 19%. At the same time, Solutions revenue declined 4%, reflecting the execution gaps identified during 2025 in building a recurring revenue stream. However, with the disciplined changes and sharper prioritization now in place, we expect results to begin showing in H2. The quarter demonstrated that our global offering remains resilient and increasingly vital to customers navigating industry headwinds, while our operating discipline continues to improve. As we said at the beginning of the year, 2026 is a transition year. Our focus this year is on disciplined execution, tighter prioritization and building the foundation for long-term growth. As we look at our progress in the second quarter, I would highlight 3 themes. First, we continue to strengthen Freightos' position across the freight ecosystem, advancing our vision of becoming the infrastructure layer that connects the global freight industry. Second, we continue to execute against the plan we outlined earlier this year. In Q1, we focused the organization on alignment and prioritization. In Q2, that execution is increasingly reflected in the evolution of our product offering. While our updated full year outlook reflects areas where execution needs to accelerate, we expect the crossover to adjusted EBITDA breakeven to occur at some point during the fourth quarter. We see the business exiting 2026 at a breakeven run rate, and from there, becoming cash generative by mid-2027, ensuring our financial stability and ability to fund future growth. Before turning to the quarter, I would like to briefly note the appointment of Yaron Eldad as Freightos' new Chief Financial Officer, effective September 1. Yaron brings more than 25 years of senior financial leadership experience, including significant public company and international operating experience. His appointment is an important step in our management transition and strengthens the leadership team as we remain focused on delivering against our goals. We are very pleased to have him joining Freightos. Now let's discuss the results of the quarter. Total revenue for the second quarter was above our expectations and up 3% from Q2 last year. The outperformance was driven by Platform revenue of $2.9 million, increasing 19% compared to last year, whereas Solutions revenue of $4.8 million was down 4% from last year. The Platform outperforms this quarter reflects the breadth of our Platform revenue base. While the Middle East conflict continued to weigh on booking volumes in affected corridors, tariffs-driven reimbursement activity through Clearit provided a meaningful offsetting tailwind with one source of Platform revenue under pressure and another exceeding plan. The net result was Platform revenue above expectations. What we have seen in the Middle East, routes were still disruptive through the second quarter, but recovery was stronger than what we had previously anticipated. So our Platform facilitated 458,000 transactions, up 15% from Q2 last year. Excluding routes involving Middle East origin, destination or airspace, transactions grew year-on-year at a rate well in line with the company's long-term model of 20% to 30% transactions growth. The gross booking value of these transactions reached a record of $422 million, up 33% from Q2 last year. This reflects both the transaction volume and the fact that the average air freight rates remain high, about 25% above their pre-conflict levels. Platform revenue benefited from higher-than-expected contribution from Clearit, our custom transactions business line. Clearit processed many refund claims following tariff policy changes. This activity carries higher revenue per transaction and typical customs transactions and was a meaningful largely temporarily contributor to Q2 outperformance. We expect a moderate contribution in Q3 and a smaller contribution in Q4. Nevertheless, it is a reminder of the importance of having a broad Platform revenue base. We announced the addition of Korean Air to Freightos' network. This is the major Asian cargo airline whose addition we referred on our Q1 quarter call. We have said for some time that expanding airline participation in Asia is a strategic priority for us. So confirming Korean Air as part of the network is an important milestone. As we continue adding leading carriers across key geographies, we strengthen network connectivity, increase the depth of the network and create more opportunities for better procurement and decision-making across the Platform. Every leading carrier we add has increased the data flow through the network, and that cumulative effect of building a larger, more connected network over time is really the bigger story here. Active carrier count, active meaning that they've received more than 5 transactions each in the quarter, was 75 compared with 79 in Q1 and 75 a year ago. The quarter-on-quarter decrease reflects some carriers falling down below the threshold, partially offset by the addition of other carriers. So the active carrier count can fluctuate quarter-on-quarter as individual carriers move above or below the threshold. But we are focused on the long-term trajectory and customer value, adding leading carriers, expanding geographic coverage, deepening the network, increasing available capacity. Turning to Solutions. Revenue for the second quarter was down year-on-year, reflecting the execution gap identified during 2025. New bookings were not sufficient to cover for the shortfall, and we are seeing some pricing pressure on renewals. We are not satisfied with this performance, and we are being direct about that. We continue to build a strong pipeline, up 30% quarter-on-quarter that is progressing correctly through the sales cycle, but the pipeline is not the outcome, bookings and revenue are. We are measuring progress through conversion rates, sales cycle duration, renewals and customer go-lives. We will judge ourselves on those outcomes, and we expect it to start converting during H2. The strategic logic connecting solutions to the rest of the offering hasn't changed. Our solutions become embedded into customers' procurement, pricing and booking workflows, driving increasing platform activity, which is -- which in turn generates richer data and market intelligence that makes the solutions themselves more valuable. That reinforcing dynamic is intact. But for it to work, we need to convert more effectively on deal velocity, on demonstrating clear ROI to customers in a market where procurement budgets are under scrutiny and on closing the gap between pipeline strength and bookings. Part of that, we have done to share -- part of what we have done to sharpen that customer value is to bring our product portfolio together under a single Freightos identity. And Ian will walk through the product implications in a moment, but at the strategic level, here's why it matters. This is an evolution in how we present the company and how we operate both internally and externally. Over the years, we have built multiple products serving different parts of the freight ecosystem. As those capabilities have become increasingly integrated, it became important that our brand reflects that reality. Our ambition is not simply to offer great logistics offer. Our ambition is to build a connected platform where procurement, pricing, booking, payment, data and decision intelligence work

As part of the firm order for our fourth FLNG, we have also secured an option for an incremental Mark II FLNG with CIMC Raffles, i.e., an option unit, and today, we also announced a letter of intent with Seatrium Shipyard in Singapore for further incremental growth units utilizing our Mark I or Mark II design. We will provide further color on our growth ambitions later in the presentation. Our liquidity stands at approximately $1.5 billion, inclusive of the $600 million revolving credit facility secured during Q2. Turning to Slide 4, we highlight our long-term charter contracts with Hilli, Gimi and Esperanza contracted through 2045 and with a total EBITDA backlog of $17 billion before commodity upside and inflationary adjustments. The order has been placed on the back of strong interest from prospective charters as well as Golar's stated policy of adding additional FLNG capacity once the existing fleet has secured long-term charter commitments. Across Hilli, Gimi and the Mark II under construction, now named the FLNG Esperanza, Golar has a total EBITDA backlog of $17 billion before commodity upside and before a charter on the fourth FLNG unit. During the quarter, Hilli completed her 8-year contract for Perenco offshore Cameroon with 100% economic uptime for the life of the contract. Gimi overproduced 15% versus contractual volume and the FLNG Esperanza remains on time and on budget. Karl Staubo: Thank you, operator. Good morning, and welcome to Golar LNG's Q2 2026 Earnings Results Presentation. My name is Karl Fredrik Staubo, I'm the CEO of Golar, and I'm accompanied today by our CFO, Eduardo Maranhao, to present this quarter's results. Before we get into the presentation, please note the forward-looking statements on Slide 2. Starting on Slide 3, we start with an exciting announcement. Overnight, we signed our fourth FLNG unit, which is another Mark II FLNG to be constructed at CIMC Raffles Shipyard in China. That's the same shipyard already constructing our existing Mark II FLNG on order. The fourth FLNG order will deliver within 2029 and be the earliest available FLNG capacity globally. Operator: Good day, and thank you for standing by. Welcome to the Golar LNG Limited Second Quarter 2026 Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Karl Fredrik Staubo, CEO. Story Continues With our fourth FLNG order, we see potential to meaningfully increase our earnings capacity, and we'll now elaborate on that on Slide 5. Today's announced order marks a 41% increase in Golar controlled liquefaction capacity, increasing our total fleet capacity from 8.6 million tonnes to more than 12 million tonnes on a fully delivered basis. Assuming that we can achieve contractual terms in line with those achieved for Esperanza last year, we see potential for a 50% increase in our earnings capacity. Our fourth unit is also expected to bring diversification of our earnings backlog, both with regards to charter counterparts as well as geographical exposure. Today's announced order will also be the world's earliest available liquefaction capacity, at least 1 to 2 years ahead of any alternatives. And this again will drive charter interest in the unit. The incremental options, both on CIMC and through the LOI with Seatrium create a replicable model and a capacity to meet some of the demand we see for FLNG deployments. On Slide 6, we lay out the overview of the FLNG industry by owner. With our fourth order, we now regained the position as the market-leading owner of FLNG capacity with number of units at par with ENI, but higher in terms of controlled liquefaction capacity. We expect to see another 1 to 3 FLNG orders from the existing owners on this page within the next 6 to 12 months further building on our thesis that the FLNG market will see similar development to that of the FPSO industry, which started in 1985 and now has grown to more than 250 units globally. Golar maintains the position as the only proven provider of FLNG as a service. Turning to Slide 7. We have laid out the same overview of the FLNG units globally, but here divided by the shipyard of construction. As you can clearly see from the slide, Samsung is the market leader for delivery of FLNGs. Wison shipyard in China has also built 3 newbuilds and continue to actively market newbuild FLNGs, while Hanwha Ocean delivered 1 unit in 2016 and don't have near-term capacity to add additional units. 2 shipyards on the far right, both Seatrium and CIMC have only ever built units for Golar and only done conversions. The way we see the market today, we do not expect other players actively pursuing conversion candidates. Hence, they are focused on Samsung or Wison. Based on conversations with both shipyards, we believe Samsung is at the very earliest able to deliver incremental capacity sometime in 2031. We do expect Wison to be in prime position to win 2 large FLNG units in the relatively near future, and then they will also be spoken for, for well into the 2030s. Hence, the way we see the market right now, we believe the only incremental capacity that can be added with relatively near-term delivery is Golar conversions at Seatrium and CIMC. In addition to yard capacity, we see significant pressure on critical long lead equipment. Equipment like turbines, dual fuel engine, steam generators and cold boxes see significant competition from other industries, including AI data centers, shipbuilding and the aircraft industry. Hence, further pressure on these long leads further drives lead times for incremental orders. Therefore, we believe today's announcements, both of a firm order #4 and option for another unit at CIMC as well as an LOI with Seatrium secures Golar with a growth trajectory to capture market opportunities ahead of competition. We will remain with our policy of only having one open vessel at the time. So as soon as we lock in the contract for #4, we're then likely to proceed at #5, but we have no ambition to overextend. Again, this is furthermore in line with our announced strategy and also strategic review that we are looking at alternatives to accelerate our FLNG growth, and this speaks to that statement. Turning to Slide 8 and an overview of the LNG industry and what's going on in the market as we see it. The industry is set to grow around 40% between 2026 and 2031. As stated on our Q1 call, the 2 largest exporters in the world, U.S. and Qatar, are at the same time expected to increase their market share from 40% to 53% of global supply. Hence, as much as we see a growing market, we see very significant increase in supply concentration. Turning to the middle graph, geopolitical events make such concentration with increasing uncertainty for offtakers. The world's second largest exporter of LNG, Qatar, was directly hit in military action during Middle East events and the Ras Laffan liquefaction plant has estimates that they will be out by around 17 million tonnes out of a total capacity of 88 million for at least 3 to 5 years. We, therefore, see a need for the global LNG market to further diversify its supply. This is where we think FLNG will play a vital role. And on the graph on the far right, you can see the location of FLNG projects globally. 6 of today's exporters would not have been exporters if it weren't for FLNG technology. Where Golar operates, we represent the only export facility. That's true for Mauritania, Senegal, it will be true for Argentina, and it was true for Cameroon before we left the country. Significant proven gas reserves remain stranded, which creates further opportunities for FLNG-led LNG supply diversification. Turning to Q2 and recent highlights and developments. As stated during the quarter, Gimi delivered 15% above its contractual day rate with a 41st cargo delivered. Hilli ended its 8-year contract in Cameroon with 100% economic uptime since contract startup and 156 cargoes delivered over the 8 years. The unit is now in transit to Singapore for modifications ahead of its 20-year contract in Argentina. SESA officially named the Mark II under construction, the FLNG Esperanza. We secured a $600 million revolving credit facility. We signed the fourth FLNG order and through the EPC for #4 and the LOI with Seatrium, we made a pathway to increase the fleet to over 7 units. Turning to Slide 11 with a focus on Hilli. On July 26, Golar delivered its final cargo under our contract with Perenco Offshore Cameroon. We're extremely proud to see the unit have 100% economic uptime since start-up. We're further pleased to see that the redeployment progress as planned. We exited the country and are in transit according to schedule. Once the modification work has completed, we will sail to Argentina, where we will start a contract in the second half of next year, where we will generate $285 million of annual EBITDA before further commodity upside. On Slide 12, we would like to extend our gratitude and thankfulness to our partners, SNH and Perenco for solid cooperation over 8 years in Cameroon. In addition to LNG export, the project has created meaningful value to the local economy and people. Golar's operations employed more than 100 Cameroonians or more than 40% local content on board the unit. In addition to significant scholarship and training courses, we have spent $80 million in local procurement and generated more than $1.5 billion in cash earnings to Cameroonian state interests. We've also voluntarily invested in critical infrastructure in country such as water holes, streetlights, school renovations, new sports centers, et cetera. We're motivated to work together again on potential gas monetization in Cameroon and hope to be back in the near future. Turning to Slide 13 and the Gimi. Gimi continues to produce above contractual levels. During the quarter, we produced 15% above the contracted capacity

We intend to use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included on our website in the investor relations section. Accordingly, investors should monitor our investor website in addition to following our press releases, SEC filings, and public conference calls and webcasts. And with that, I would like to turn the presentation over to our President and CEO, Warren Foust. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. I encourage you to read the disclosures in today's release, as well as on our filings with the SEC. Except as required by law, STAAR assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes. In addition, during today's discussion, we will reference certain non-GAAP financial measures including adjusted EBITDA and constant currency sales. Please refer to today's release for definitions and reconciliations of non-GAAP metrics. For brevity, unless otherwise specified, all comparisons on today's call will be on a year-over-year basis versus the relevant period. Finally, a quick reminder. Connie Johnson: Thank you, operator. Good afternoon and thank you for joining us. On the call today are Warren Foust, President and Chief Executive Officer of STAAR Surgical, and Deborah Andrews, Executive Vice President and Chief Financial Officer of STAAR Surgical. Earlier today, we reported our second quarter 2026 results via a press release in Form 8-K. We posted our results, release, and shareholder letter to our investor website at investors.staar.com. Today's call is scheduled for 1 hour and will include Q&A for publishing analysts. Webcast participants can also send questions for today's Q&A session to ir@staar.com. Before we get started, I want to remind you that during today's discussion, we will be making forward-looking statements. Operator: Welcome to the STAAR Surgical second quarter 2026 results conference call and webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Connie Johnson, Director of Investor Relations. Story Continues Warren Foust: Good afternoon, everyone, and thank you for joining us. Six months ago, Deborah and I stepped into our roles as interim co-CEOs. Looking back now, I am struck by how much we accomplished together. We navigated uncertainty and challenges and leaned into significant opportunities. And today, we are proud to report the strongest first half revenue performance in STAAR's history. That includes the launch of EVO Plus in China, which fueled market share gains and drove both year-over-year and sequential growth in the region, back-to-back record quarters in the U.S., and a return to profitability and free cash flow generation across the business. These results reflect the focus, resilience, and execution of teams across the company, and that is a milestone worth celebrating. Through it all, it's been a tremendous experience, one that I'm grateful for. As we move forward, I'm proud to do so as President and Chief Executive Officer. I thank the Board for their confidence and each of you for your continued support. I want to take a moment to recognize and thank Deborah Andrews. Over the past 6 months, Deborah has been an extraordinary partner, steady, wise, and tireless in her commitment to STAAR. Her clarity and focus on financial discipline, culture, and strategy have profoundly benefited this company. I'm thrilled that she continues as Chief Financial Officer and is doing so now as an Executive Vice President. I could not ask for a better partner as we lead our company forward. Now, let's talk about the quarter, which was a strong one. Our shareholder letter published today covers our second quarter results, regional performance, ERP implementation, and long-term priorities in detail. Rather than repeat all of that here, I want to focus on the 3 priorities that we laid out nearly 6 months ago. Revenue growth, profit expansion, and innovation acceleration. In the second quarter, we advanced all 3, and I'd like to walk you through where we stand. Starting with revenue growth, the second quarter was a strong revenue quarter. Net sales were $93.5 million, up 111% year over year. We delivered sequential growth in China, double-digit growth in the Americas, and double-digit growth in EMEA, excluding the Middle East. Deborah will take you through the details a little later, but the headline is clear. This business is performing. One important item I want to flag for your modeling. Our third quarter of 2025 results included the recognition of $25.9 million related to the 2024 order. On a consolidated basis, third quarter 2025 net sales were $94.7 million. Excluding that item, though, the comparable total base is $68.8 million. That revenue from the 2024 order will not repeat, and we encourage you to use the adjusted base when evaluating third quarter 2026 year-over-year results. Fourth quarter comparisons are unaffected. Fourth quarter 2025 net sales were $57.8 million. Now on China, I'm proud of our market share gains and of our expanding EVO Plus launch. China remains critical to our success in an area where we have a compelling opportunity ahead. In the quarter, China grew sequentially supported by increased adoption of EVO Plus, and importantly, we saw no evidence of inventory build at distributors or hospitals reinforcing that our growth is being driven by demand. The broader refractive market remains uneven. Recent industry commentary reinforces the view that procedures remain pressured in parts of China and APAC. Against that backdrop, STAAR's performance supports our belief that EVO is gaining market share. We're definitely getting a lift from the EVO Plus rollout, but more than that, we're seeing patients and surgeons really leaning into the benefits of lens-based surgery. People like that EVO is reversible and doesn't require removing corneal tissue, and that's a big differentiator as laser-based procedures continue to struggle in many markets around the world. We also want to provide more clarity on China's seasonality. As discussed in our shareholder letter, the quarterly pattern in China has evolved. The first and second quarters are emerging as our strongest revenue quarters, supported by Chinese New Year, a shift forward of military recruitment-related procedures, and summer demand. While the third quarter revenue is expected to be moderately lower than the second quarter due to shifts in seasonality, excluding the 1-time order of $25.9 million booked in the third quarter of 2025, we expect year-over-year growth. As is typical, the fourth quarter will remain seasonally softer than the first 3 quarters, but we are still planning for year-over-year growth. Outside China, we continue to see strong revenue contributions in key markets such as Japan and Korea, as well as double-digit growth in the U.S., the Americas broadly, and excluding the Middle East and EMEA as well. We also see compelling long-term opportunities in many other markets around the globe. In the Americas, growth was led by another greater than $6 million quarter in the U.S., our second consecutive quarter at that level. The U.S. market remains underpenetrated, and we continue to see opportunity to grow EVO sales and continue to take market share as practices look for differentiated, lens-based refractive alternatives to laser vision correction as demand for laser procedures continues to decline. In APAC outside of China, Japan remains an important market where EVO has strong category awareness, is a strong market leader, and has sustainable long-term potential. We continue to see solid underlying demand in Japan, bolstered by direct-to-consumer awareness initiatives launched in November of 2025. Unit volume rose 14%, though currency headwinds damaged the market and reported sales growth, which came in at 2%. Across the broader region, market dynamics vary, and we are being disciplined about where we invest. In EMEA, excluding the Middle East, the region grew double digits, reflecting solid underlying demand across much of the region. Across all regions, our approach is consistent. Invest where we see the clearest returns and support surgeons and patients through service, training, and education. While we continue driving the global shift from laser-based to lens-based refractive surgery, we are also working to increase our product availability in order to satisfy the accelerating global demand that has outpaced our supply chain projections. The second area is profit expansion. In the second quarter, we demonstrated meaningful progress in expanding profitability. We grew gross profit and net income compared with both the prior year quarter and the first quarter. These improvements resulted in significant cash flow generation, increasing cash from $163.9 million at the end of the first quarter to $181.5 million at the end of the second quarter. This progress reflects the strength of our business model and the financial discipline that Deborah and the team had brought to the organization. The result is a company with strong gross margins, a strong balance sheet, no debt, an increasing cash balance, and the flexibility to invest in the business where it matters, commercial execution, customer support, product availability, innovation, and the systems that help us scale. Our ERP implementation demanded significant energy and focus across the organization in the quarter. And our teams delivered. We continued to sell EVO lenses. We provided support for our customers and achieved strong results. The ERP system is now live and we are actively optimizing the system in the third quarter. This is not just an operationa

Ryan Pape: Thank you, John, and good morning, everyone. Welcome to our second quarter 2026 call. Q2 was a good quarter for us. We had good financial performance and executed on some very important key strategic initiatives. Overall, revenue grew 14.7% to $143.1 million, which was a record for the company. I think it's fair to say this exceeded our expectations going into the quarter. We probably had about $2 million of pull-ahead sales based on our trend analysis ahead of either actual or perceived coming price increases that would go into effect in Q3. So all said, I still think that's really good performance. XPEL undertakes no obligation to publicly update or revise any forward-looking statement, whether a result of new information, future events or otherwise. With that, we will now turn -- I will now turn the call over to Ryan. Please go ahead. During the course of this call, we'll make certain forward-looking statements regarding XPEL, Inc. and its business, which may include, but are not limited to, anticipated use of proceeds from capital transactions, expansion into new markets and execution of the company's growth strategy. Such statements are based on our current expectations and assumptions, which are subject to known and unknown risk factors and uncertainties that could cause our actual results to be materially different from those expressed in these statements. Some of these factors are discussed in detail in our most recent Form 10-K, including under Item 1A Risk Factors filed with the SEC. John Nesbett: Good morning, and welcome to our conference call to discuss XPEL's second quarter 2026 financial results. On the call today, Ryan Pape, XPEL's President and Chief Executive Officer; and Barry Wood, XPEL's Senior Vice President and Chief Financial Officer, will provide an overview of the business operations and review the company's financial results. Immediately after the prepared comments, we'll take questions from call participants. A transcript of this call will be available on the company's website after the call. Take a moment to read the safe harbor statement. Operator: Good morning, everyone, and welcome to the XPEL, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] It's now my pleasure to turn the floor over to your host, John Nesbett of IMS Investor Relations. John, the floor is yours. Story Continues Our U.S. region turned in another solid quarter with revenue growing 11.7% to $78.6 million, which was a record high for the region. Our independent channel had another strong quarter. In contrast to the broader trend we've seen over previous quarters, we actually saw better performance in the independent channel versus the dealership channel on a relative basis this quarter. We're also still seeing some challenges from dealerships due to FTC concerns that we discussed on our last call, and this headwind remains. We're engaged with our dealership customers and are actually helping many of them to be compliant with FTC requirements. And I think we've been a good partner in terms of helping them ensure that compliance. With these challenges, though, there is opportunity as a flight to quality helps us in many of these scenarios. Our Canada region [Technical Difficulty] grew 10.8% in the quarter. If you recall from last quarter's call, we have a large distributor in Canada, and there's [Technical Difficulty] always some timing impact in terms of their ordering cadence. So last quarter, that was a bit of a drag. Obviously, it helped us this quarter. If we exclude that timing, revenue grew around 4%. So certainly a good for Canada, which has really sort of struggled in the past year. Our China region had a good quarter, revenue coming in at $15.9 million. In September, we'll cross the 1-year anniversary of our acquisition of the distributor there. The team is doing a really great job. I'm very happy in our progress in integrating the acquisition. And these are good results despite a very challenging Q2 for domestic car sales in China. Many focus on the headline sales, which includes exports. But if you subtract those out, which is really what we're focused on in the China market, the domestic sales, they're down something on the order of 20% year-over-year. So super challenging quarter in China for domestic sales. The rest of the APAC region also saw solid growth in the quarter. Our investments in the various countries are paying off. We would not be seeing the growth and development opportunities we have in Japan today and elsewhere if we didn't have the presence that we've built over the past few years. So absolutely convicted in that strategy and how that's going to pay off for us. We did begin to see some impacts from the Iran conflict in our India and Middle East region, where revenue declined 5% in the quarter. Overall, this impact was not as great as we feared. And in large part, it seems to be driven due to a shortage of vehicle availability in the region rather than a broader sort of collapse in consumer demand and confidence. I think when we looked at the quarter going in, we would have expected a larger impact. So we're pleased with that. And I also think given the vehicle availability issue, we'll see whether that means we can actually recapture some of that business in the second half if sales that we would have had are really deferred and not lost because the cars upon which we detach products just simply weren't available to be sold. So all in all, I think not quite as bad as feared in terms of the impact for our business. Certainly, a bright spot within that for us is the ongoing growth and development of the business in India, where we saw 60-plus percent growth in the quarter, obviously, on a much smaller base. We have a great team in India. It's the third largest market for car sales in the world. Many don't realize that and obviously still developing. So we're well positioned to continue to grow significantly in India and in the Middle East, very excited about it. We have great leadership driving our direction there. Our Europe region saw revenue decline 2.3% in the quarter. This was driven by multiple factors, including timing of distribution orders and lower year-over-year volumes in some of our OEM operations, which is really just driven from vehicle production cadence more than anything that we control. As compared to the prior year, we saw exceptional strength in vehicle volumes. And also, although we report our revenue by destination shipping address, there's products sold in Europe ultimately destined for the Middle East. So we likely saw impact from that as well. Finally, our LatAm region had another solid quarter. Our Brazil operation is getting up and running. And just as a reminder, that was really a new build distribution opportunity for us and one of the last countries where we're pursuing such a strategy now that we've built out most of the global distribution base that we think we need. So a lot of activity there. It feels like we're really on the right direction. When you put it together, we're expecting Q3 revenue to be in the $137 million to $139 million range, assumes consistent U.S. and Asia Pacific trending. Obviously, there's always a little bit of seasonality to Europe business as you hit holidays in August. So we expect to see that. And then also modest improvement in the Middle East, but we're not expecting really any of that recapture I mentioned. If that were to occur, that's certainly upside for us. And then we probably pulled $1 million or $2 million forward out of this number into the current quarter. So all in all, I think pretty good. Moving on, in May, we announced 2 key investments that will chart the course to accomplish our manufacturing strategy. First, we purchased a 4-building site that included our existing San Antonio facility. This site will serve as a centerpiece of our North American manufacturing and supply chain footprint. We will initially occupy a little over half the footprint of the building for our operations, while the remainder is leased to third parties. We believe this approach creates maximum optionality as we scale up these manufacturing operations. And then secondly, as we mentioned, we acquired a 75% interest in an existing manufacturing facility in China, which will round out our footprint there. And this facility will serve customers in China and some export markets. We don't expect much, if any, of that product to end up in the North American market, although it certainly will be capable of doing so should we need it. Overall, these investments will total approximately $110 million, and that includes what we've acquired and then further build-out and equipment in San Antonio and beyond. So we expect to begin seeing incremental margin benefit starting in mid-2027 and with the operating margin goal of ours reaching mid-20% range on a run rate basis as we exit 2028. Of course, assumes the fundamentals of the rest of the business stays as they are and assumes these projects remain on schedule, which as of today, they are. So really excited about that. It's taken a long time to get to this point, and our team is doing a really great job. Our gross margin in the quarter finished at 44.1%. This is up from 43.7% in Q1. As I said before, we'll be implementing some relatively modest price increases in some regions during Q3 to help offset some of the price-cost pressure we've been seeing, as I mentioned on the previous call. And our expectation remains that gross margin will continue to modestly increase through the rest of the year in spite of that. We'll talk more about that as it happens over the next few quarters. And overall, I think the cadence we're seeing in gross margin is what we expected as we sell through some higher-priced inventory acquired in the China distributor acquisition. If we hadn't seen some of the cost pressure come in, we'd probably see even a little bit incrementally