STRATTEC SECURITY CORPORATION

Greetings and welcome to the Strat Tech third quarter fiscal year 2025 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Deborah Pawlowski, investor relations for Strat Tech. Please go ahead.

Thank you, and good morning, everyone. We greatly appreciate you joining us for Stratec's third quarter fiscal 25 financial results conference call. With me on the call are Jennifer Slater, President and CEO, and Matthew Pawley, Vice President and Chief Financial Officer. Jen and Matt are going to review our third quarter 2025 financial results and provide an update on the progress being made to transform Stratec. You can find a copy of the press release and the slides that accompany our conversation today on the investor relations section of the company's website. If you are reviewing those slides, please turn to slide two for the safe harbor statement. As you are aware, we may make some forward-looking statements on this call during the formal discussion, as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated on today's call. These risks and uncertainties and other factors are discussed in the earnings release as well as with other documents filed by the company with security and exchange commission. You can find these documents on our website or at SEC.com. I want to also point out that during today's call, we will discuss some non-GAAP measures, which we believe will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation. or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of non-GAAP to comparable GAAP measures in the tables accompanying the earnings release and slides. So with that, if you would please turn to slide three, I will turn it over to Jim to begin.

Thank you, Deb, and welcome, everyone. I'm pleased to share our third quarter fiscal 25 results and provide an update on the transformation of Stratec. Once again, we delivered solid performance with meaningful progress on both financial and strategic fronts. Let me begin with a few highlights from the quarter. We generated nearly $21 million in cash from operations in the third quarter, bringing our year-to-date total to $41.5 million. This strong cash generation reflects the significantly improved earnings power of the business and our disciplined approach to working capital management. With over $60 million in cash and limited borrowings on our revolver, we're operating from a position of strength, one that gives us considerable flexibility to navigate today's increasingly dynamic market conditions while executing on our long-term strategic priorities. The actions we have been taking to improve the business, including taking out costs and capturing price, were demonstrated by meaningful margin expansion. Year-over-year gross margin expanded 560 basis points, and sequentially, margin expanded 280 basis points. This improvement more than covered the investments we are making in talent within the organization, and as a result, we posted net income of $1.32 per diluted share, a more than threefold increase from last year's third quarter. Adjusted EBITDA was 12.9 million or 9% of sales, up from 4.4% in the prior year period. This continued margin expansion gives us confidence that Stratec is on the right path, but we believe there is more work to be done. Turning to our strategic transformation efforts, please turn to slide four. Our teams remain focused on strengthening Stratec's operational and financial position, We took another step forward by implementing a restructuring of our Mexico operations in March. Combined with earlier actions in Milwaukee, total annualized savings from fiscal 25 restructuring activities now total approximately $5 million. Importantly, these actions reflect a broader cultural shift, one where cost optimization and margin expansion are priorities for the organization. We are also taking proactive steps to manage through the evolving tariff risk. While the situation remains fluid, it's also important to note that over 90% of our US sales volume is USMCA compliant and therefore should not have any impact to our business. We estimate the annualized impact of recently announced US tariffs to be $9 to $12 million in added costs before mitigation. That said, we've moved quickly. We're actively adjusting logistic routes, engaging in pricing discussions with customers, and shifting sources in our supply chain. Matt will cover this topic in more detail during his section of the presentation. Our strong balance sheet and internal momentum give us confidence that we can absorb and adapt to these changes while continuing to drive performance. Let's turn to slide five to discuss our sales results. The modest improvement in sales year over year was a result of favorable pricing actions, improved product mix, and net new program launches. I'm especially pleased with the continued success we're seeing in placing higher value content on existing customer programs, a clear indication that our commercial and engineering investments are paying off. In summary, the work we began early in fiscal 25 is now showing up clearly in our results, in margins, in cash flow, and in our ability to control our destiny. While macro uncertainty remains, including tariffs and industry volume pressures, we've built a more agile, focused organization that is positioned to deliver through cycles. With that, I'll turn it over to Matt to walk through the financials in more detail.