EnerSys

Good day and thank you for standing by. Welcome to the third quarter fiscal 2025 NRCSIS earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Lisa Hartman, Vice President Investor Relations and Corporate Communications. Please go ahead.

Good morning, everyone. Thank you for joining us today to discuss NRSIS third quarter fiscal 2025 results. On the call with me today are David Schaefer, NRSIS Chief Executive Officer, Sean O'Connell, NRSIS President and Chief Operating Officer, and Andrea Funk, NRSIS Executive Vice President and Chief Financial Officer. Last evening we published our third quarter 2025 results and our 10Q with the SEC, which are available on our website. We also posted slides that we will be referencing during the call. The slides are available on the Presentations page within the Investor Relations section of our website. As a reminder, we will be presenting certain forward-looking statements on this call that are subject to uncertainties and changes in circumstances. Our actual results may differ materially from these forward-looking statements for a number of reasons. These statements are made only as of today. For a list of forward-looking statements and factors that could affect our future results, please refer to our recent Form 8K and 10K filed with the SEC. In addition, we will be presenting certain non-GAAP financial measures, particularly concerning our adjusted consolidated operating earnings performance free cash flow, adjusted diluted earnings per share, and adjusted EBITDA, which excludes certain items. For an explanation of the difference between the GAAP and non-GAAP financial metrics, please see our company's Form 8-K, which includes our press release dated February 5, 2025. Now I'll turn the call over to NRSA CEO, Dave Schaefer.

Thank you, Lisa, and good morning. Please turn to slide four for a review of our third quarter performance. Q3 marked a return to growth. We executed well, increasing profitability and improving but still mixed market conditions. Revenue was up 5% year over year, supported by contributions from Brentronics and a gradual recovery in the U.S. communications market. Our year over year revenue increase was somewhat below our expectations, primarily due to FX headwinds, a slower than anticipated ramp in U.S. communications spend, and the impact of a large motive power customer's plant disruption in EMEA. We realized impressive margin expansion even before the IRA, driven by strong price mix across all lines of business, the accretive contributions of Brentronics, and operational improvements in energy systems. Adjusted EPS excluding IRA benefit was up 10% year-over-year and was up 22% inclusive of the IRA benefits. Free cash flow was down year over year, but increased substantially versus prior quarter, driven by higher earnings and a reduction in primary operating capital while continuing to make strategic investments. While market demand has yet to return to normal levels, we believe we have surpassed the inflection point. We are seeing a gradual recovery in the U.S. communications market and early indications of an upturn in the Class VIII OEM transportation sector. At the same time, we're executing our transformation initiatives, further optimizing our energy systems business and our Missouri plants in order to be best positioned for growth and flexibility at lower costs as demand continues to rebound. We are seeing promising demand indicators and positive momentum across our business, particularly as we approach the end of our fiscal year. Overall orders increase year over year, with Energy Systems Americas showing over 30% order growth in Q3. We have revised our full-year guidance to reflect our Q3 performance and expectations for significant growth in Q4 over prior year. Excluding the impact of the IRA, our Q4 guidance at the midpoint represents year-over-year revenue growth of 8% and an increase in adjusted EPS of nearly 60 cents per share, or approximately 50%. we remain confident in our strategic direction and the substantial growth opportunities emerging across our portfolio. Sean and Andy will give details by line of business on our third quarter fiscal 25 financial performance and outlook, but I will first provide a few highlights on our strategy and execution. I'd like to share some high level thoughts on the evolving policy landscape as the US administration implements new executive actions. We have been proactively assessing tariff scenarios and refining our supply chain strategies over the past two months, and we have already begun to undertake actions to optimize inventory and manufacturing processes to mitigate potential cost increases. In addition, given our strong and reasonable commercial relationships, we would enact swift and fair pricing actions as necessary. Our ability to navigate dynamic market conditions as we have successfully demonstrated through prior supply chain disruptions and tariff regulations, is one of our strengths, positioning us for long-term success in an evolving environment. Additionally, while it is possible that policy changes could impact the timing of our recent DOE funding and ultimate project plan delivery date, As 90-day administrative review processes are underway, we cannot speculate on the outcomes, but remain optimistic due to the importance of our products and planned investment for national security, domestic supply assurance, and American manufacturing job creation. Therefore, we are moving forward with a disciplined risk mitigation approach, ensuring our execution plans remain agile and adaptable. One area of bipartisan consensus is the importance of a robust domestic supply chain, particularly for defense-related products. Enersys is well positioned to support the U.S. government efforts in this area, reinforcing our role as a trusted partner in energy storage solutions, which would be further enhanced by our planned lithium gigafactory. Please turn to slide five. We remain at the forefront of innovation, introducing cutting-edge products such as software-driven energy management systems. These advancements equip our customers with adaptable and efficient solutions that evolve alongside their needs. We recognized our first revenue from our fast charge and storage system, marking an important milestone for the company. We are leveraging our fast charge and storage lithium and software technology to accelerate the development of a new battery energy storage system for a motive power warehouse and distribution center customers. We are designing the solution to tackle power continuity challenges, costly infrastructure upgrades, long lead times, and limited flexibility, barriers that often slow electrification efforts. Our BESS will enable peak shaving, power factor correction, and optimum energy use. Engineered for rapid deployment and semi-portability, our BESS will enhance flexibility and efficiency for our customers' operations. We look forward to previewing this new solution at both ProMat and LojaMat trade shows beginning this March. We will also be previewing our next generation charging solutions at both trade shows. This advanced line delivers exceptional efficiency and performance, featuring two-way data and energy flow capabilities to optimize energy use. Alongside our BESS, these solutions offer cloud-based data reporting for enhanced energy and operational management. Together, they lay the foundation for onsite microgrids, enabling our customers to efficiently store, manage, and utilize energy. We are also pleased to announce that YIQ battery monitoring devices are now standard on all applicable motive power products sold in North America, which is an integral first step in enabling new value-added services through our IoT strategy. YIQ provides fleet managers with performance insights and analytics, enabling data-driven decisions that optimize energy consumption, improve battery management, and extend asset life. This technology reduces downtime, lowers operational costs, and enhances sustainability, delivering measurable value to our customers while reinforcing Enersys as the leader in intelligent energy management solutions. Our thoughts are with those impacted by the recent wildfires in Los Angeles, and we extend our deepest sympathies to those affected communities. While it is unfortunate that our solutions were needed, We are proud that our Alpha XRT extended runtime power systems performed as expected, delivering 72-hour backup power to keep emergency services, telecommunications networks, and critical infrastructure connected when it mattered most. With over 5,000 XRT power modules deployed across California, this crisis reinforced the reliability and resilience of our technology. I also want to recognize the incredible efforts of our field service teams who provided on-the-ground support to our customers, ensuring seamless deployment, maintenance, and rapid response during the emergency. As extreme weather events become more frequent, our commitment to delivering high-performance energy solutions remains stronger than ever as it becomes increasingly critical to our customers and the communities they serve. we continue to focus on optimizing the business as well. Our investment in our Missouri factories have significantly progressed operational flexibility, allowing us to better adapt to shifts in customer demand while driving long-term efficiency gains. These enhancements remain on track for completion by the end of the fiscal year and position us for sustained operational excellence and growth, as is evidenced by our teams achieving a 20% year-over-year improvement in both our Springfield One scrap rate and our global TPPL scrap rate fiscal year to date. This quarter, we continue to accelerate the business through our transformation strategy. I am pleased to report that Brantronics' acquisition is contributing to revenue and earnings above our expectations, and all major U.S. integration milestones are complete. Please turn to slide six. We were proud to receive several recognitions this quarter, including being named to Newsweek's list of America's most responsible companies and receiving the 2025 Military Friendly Employee designation for the second year in a row. In closing, we anticipate dynamic conditions to persist in the coming months as markets absorb evolving U.S. administrative executive actions. We have successfully managed through similar external challenges in the past and our operational flexibility is even better than before. We are confident that we are well on track for continued top line and profit expansion as we close the fiscal year. I will now turn it over to Sean to take you through more details of our operations. Sean? Thank you, Dave.