Kimball Electronics, Inc.

Good morning, ladies and gentlemen. Welcome to Kimball Electronics' third quarter fiscal 2026 earnings conference call. My name is Rob, and I'll be your facilitator for today's call. All lines have been placed in a listen-only mode to prevent any background noise. After the completion of the prepared remarks from the Kimball Electronics leadership team, there will be a question and answer period. To ask a question, simply press star and a number 1 on your telephone keypad. Today's call, May 6, 2026, is being recorded. A replay will be available on the Investor Relations page of Kimball Electronics' website. At this time, I'd like to turn the call over to Andy Regret, Vice President, Investor Relations, Strategic Development and Treasurer. Mr. Regret, you may now begin.

Thank you, and good morning, everyone. Welcome to our third quarter conference call. With me here today is Rick Phillips, our Chief Executive Officer, and Jana Kroon, Chief Financial Officer. We issued a press release yesterday afternoon with our results for the third quarter of fiscal 2026, ended March 31st, 2026. To accompany today's call, a presentation has been posted to the investor relations page on our company website. Before we get started, I'd like to remind you that we will be making forward-looking statements that involve risk and uncertainty and are subject to our safe harbor provisions as stated in our press release and SEC filings. and that actual results can differ materially from the forward-looking statements. Our commentary today will be focused on adjusted non-GAAP results. Reconciliations of GAAP to non-GAAP amounts are available in our press release. This morning, Rick will start the call with a few opening comments. Jana will review the financial results for the quarter and guidance for fiscal 2026. And Rick will complete our prepared remarks before taking your questions. I'll now turn the call over to Rick.

Thank you, Andy. And good morning, everyone. Results for the third quarter were in line with expectations. Sales increased sequentially compared to Q2, driven by strong growth in our medical vertical market. Margins remained solid, and cash from operations was positive for the ninth consecutive quarter. We expect Q4 to be a good finish to the year, and we are affirming our guidance for fiscal 2026 with adjusted operating margin estimated to be at the high end of the range. As we look forward, the medical CMO continues to be a key part of our strategy, and we are making deliberate investments in our capabilities, operating capacity, and commercial focus. When volumes ramp, we expect it to become a meaningful driver of both top-line growth and margin expansion. In addition, we continue to focus on inorganic growth as a possible compliment to this strategy. We believe this could be a powerful combination for the future of our company. Turning to the third quarter, net sales were $353 million, an increase of 3.4% compared to the prior quarter, with medical up 10%. At face value, this result was a 6% decline compared to Q3 last year, and all three end market verticals were down. It's important to highlight, however, that the third quarter of fiscal 25 included a non-recurring sale of consigned inventory, totaling $24 million in the medical market. If we normalize the comparison for that event, total company sales this quarter increased nearly 1% year-over-year, with medical up a robust 17%. This would represent our third consecutive quarter of double-digit medical growth and year-to-date growth of 15% in this vertical. Drilling down a little deeper into medical, sales in the third quarter were $106 million, or 30% of the total company, which at nearly one-third of the portfolio is a key milestone in our strategic objective to balance the verticals with a higher concentration of medical business. North America accounted for slightly less than half of the sales in the quarter, while the other half was roughly split between Asia and Europe. The growth in Q3 after adjusting for the inventory sale last year occurred primarily in Asia and North America with increases in respiratory care, imaging systems, drug delivery devices, and blood separation products. Sales in Europe were low single digits driven primarily by patient monitoring systems. Medical continues to be a compelling opportunity to diversify our top line and leverage core strengths. Our strategy, is to support new and existing blue chip customers in need of manufacturing capacity to keep pace with overall market growth. And our state-of-the-art manufacturing facility in Indianapolis is designed to do just that. With capabilities in precision injected molded plastics, complete device assembly, and cold chain management, We are uniquely positioned to produce medical disposables, surgical instruments, and selected drug delivery devices such as auto injectors. Our recent investments in this new facility underscore our deep commitment to the medical CMO market. Next is automotive, with sales in the third quarter of $161 million, down 3% compared to Q3 of last year, and 46% of the total company. The decline this quarter was primarily in Asia and North America, partially offset by growth in Europe. Similar to Q2, Poland and Romania reported strong sales resulting from the ramp up of new programs in steering and braking. Combined, these two locations were up 20% in automotive sales in the quarter, and we expect this strength to continue for the balance of 26. In addition, We are carefully monitoring the demand for electronic steering systems for EVs, particularly in North America, where legislative changes significantly impacted consumer incentives and market, which unfortunately has significantly reduced the demand for EV programs we had won over the past few years. As you might imagine, this situation is fluid, particularly as gasoline prices move upward in the U.S. Finally, Sales in industrial totaled $86 million, an 8% decrease compared to Q3 last year, and 24% of total company sales. Once again this quarter, our industrial business was heavily concentrated in North America, where the majority of the decline occurred from lower demand for HVAC systems. Off-highway equipment and green energy were also down, partially offset by higher sales in public safety and smart meters, which continued to rebound in Europe but may be impacted near-term by a protracted war in the Middle East. I'll now turn the call over to Jana for more detail on third quarter results and our guidance for fiscal 2026. Jana?