STRATTEC SECURITY CORPORATION

Greetings, and welcome to the Strat Tech Security Corporation Fourth Quarter Fiscal Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deb Palowski, Investor Relations for Stratex. Thank you. You may begin.

Thank you, and good morning, everyone. We greatly appreciate you joining us for Stratex fourth quarter and fiscal 25 year-end financial results conference call. Joining me on the call this morning are Jennifer Slater, President and CEO, and Matthew Pawley, Vice President and Chief Financial Officer. Jen and Matt will review our financial results, the progress being made to transform Stratec, and our expectations for fiscal 2026. 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 these 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. 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 Securities and Exchange Commission. You can find these documents on our website as well. 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 Jen to begin. Jen?

Thank you, Deb, and welcome, everyone. We ended fiscal 2025 on a strong note with solid sales growth, expanded margins, strong cash generation, and a much better business from where we were at the beginning of the fiscal year when I joined the company as CEO. Our success was the result of our team, whom I want to thank for their energy, perseverance, and hard work. We covered a lot of ground and underwent significant change in fiscal 25. We have a refreshed and energized executive team. We added critical talent throughout the organization and continue to do so. We simplified our operations and reduced headcount by 15%. We implemented an operating cadence and created communication channels that had not existed in the organization before. We also began the work to reshape our product portfolio and we advanced our plans to modernize our manufacturing operations. These efforts were clearly demonstrated in our financial results, which I will now touch on for the quarter and the year. We delivered very strong cash generation as we generated 30 million in cash from operations for the quarter and 71 million for the fiscal year. In addition to achieving stronger cash earnings, we improved our working capital velocity and benefited from some one-time opportunities to unlock value from the balance sheet that Matt will discuss later. Revenue grew 6% in the quarter and 5% for the year. Higher sales and favorable foreign currency exchange combined with the initial benefits from our restructuring efforts helped to drive 370 basis points of gross margin expansion for the quarter, as well as 280 basis points of margin improvement for the year. The fourth quarter EBITDA margin of 8.5% also demonstrated our continued progress through the year, but was up against a tough comparator in the prior year that benefited from a one-time engineering cost recovery of $4.8 million. Our efforts resulted in EBITDA margin expansion of 220 basis points for the year to 7.7%. Please turn to slide four. Our priorities for fiscal 2025 were to create shareholder value, which we believe our transformation actions to date have accomplished across key focus areas of the business. This is demonstrated by the significant progress we have made to improve our underlying operations, unlock working capital, and build a strong team. As we move into fiscal year 26, we will continue to focus on these same priorities. While we did unlock most of the low-hanging fruit, we still believe we have opportunity to improve our margin profile. We are also focusing on leveraging our product expertise in key areas of the business, such as digital key and power access, to expand our customer base and facilitate growth. Our healthy balance sheet will help us weather any weakening market condition and continue to invest in the growth of the business and create value for our shareholders. If you will turn to slide five, you can see that there were a number of drivers to sales growth in both the quarter and the year. The fourth quarter benefited from our strategic pricing initiatives as well as higher demand. Throughout the year, we have had the advantage of several new program launches as well as being well positioned on better selling platforms. We are expecting our growth from new vehicle launches to moderate as we are in between significant launch cycles with our existing customers. Due to the long cycle nature of our business, we are actively working today to be included on model year 29 and 30 platforms. We are also working to broaden our reach to a larger customer set than we have addressed historically. We are excited about the future for StratTech and expect that over the long term we can continue to drive a growing, stronger margin profile business with greater predictability and earnings power. Let me now turn it over to Matt.