EnerSys

Hello and thank you for standing by. My name is Bella and I will be your conference operator today. At this time, I would like to welcome everyone to NRC's Q3 Fiscal 26 Earnings webcast and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. We do request for today's session that you please limit to one question and one follow up. If you would like to ask a question during this time, Simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Lisa Langell, Vice President, Investor Relations and Corporate Communications. You may begin.

Good morning, everyone. Thank you for joining us today to discuss NRSYS fiscal third quarter results. On the call with me are Sean O'Connell, NRSYS President and Chief Executive Officer, and Andy Funk, NRSIS Executive Vice President and Chief Financial Officer. Last evening, we published our third quarter results with the SEC, which are available on our website. We also posted slides that we'll be referring to during this 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 which could affect our future results, please refer to our recent Form 8A and 10Q filed with the SEC. In addition, we will be presenting certain non-GAAP financial metrics, 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 8K, which includes our press release dated February 4th Lisa Veloz- Now I'll turn the call over to our CEO, Sean O'Connell.

Sean O' Thank you, Lisa, and good morning. Please turn to slide four. Sean O' During the call today, we will provide an overview of our third quarter results, share progress on our energized strategic framework, update you on the latest demand trends we are seeing in our diverse end markets, and provide guidance for our fourth quarter. Please turn to slide five. We delivered strong earnings in the third quarter with adjusted diluted EPS X45X of $1.84, up 50% year over year, and a company record for our third fiscal quarter. Net sales were up 1%, in line with the low end of our guidance range, a strong price mix and favorable FX offset lower volumes. Earnings growth outpaced revenue growth, driven by favorable product mix, pricing discipline, and our cost improvement efforts. resulted in adjusted operating earnings up 34% and adjusted EBITDA up 30%, both excluding 45X. We continue to be excited about mounting growth catalysts across all of our end markets, though near-term softness persists in motor power and transportation. A few highlights from our lines of business. Energy Systems delivered its first double-digit AOE margin on modest sales growth. Despite slightly lower year-on-year sales, motive power margins remained in line with prior year. And finally, specialty delivered remarkable performance improvement with sales up high single digits and AOE more than twice that of prior year, resuming double-digit AOE margins for the first time in three years. Free cash flow in the quarter was also particularly strong, and we are pleased to return $94 million in capital to our shareholders this quarter through share repurchases and dividends. Please turn to slide six. Through our energized strategic framework, we are continuing to further optimize our core, invigorate our operating model, and accelerate our growth. We are capturing realignment savings as planned, and our centers of excellence are continuing to improve execution, speed, and consistency. We are also progressing on some of our key growth verticals. The reduction in force actions we announced in July are now largely complete, and we are committed to preserving these savings by disciplined cost management going forward. The closure of our Monterey battery plant is substantially complete, with all manufacturing transitioned to our Richmond, Kentucky facility in November, one month earlier than planned. We expect to begin realizing the benefits mid-fiscal 27 as the savings work their way through our inventory. We've turned the corner on our services improvement, having delivered revenue and margin expansion over the past two quarters in this important road to vertical. This is a direct result of improved execution enabled by deploying new project management tools to bring real-time visibility, clear communication, and tighter project control. We are also seeing encouraging momentum in our new product development pipeline aided by our invigorated operating model in which we have enhanced alignment between our engineering teams, centers of excellence, and lines of business. This renewed collaboration is helping us accelerate innovation, focusing on expanding our share of wallet in our core markets, where we have a right to win. From battery energy storage systems to next-gen power electronics, TPPL, and lithium solutions with embedded software, we are developing products that solve our customers' most critical energy challenges. Although the progress on optimizing our core is already becoming evident in our financial results, I am most excited about the speed and focus we're making on our new product development initiatives. While this work won't material impact revenue in the next few quarters, the milestones achieved represent important building blocks for our future growth. We will have more to share in our long-term technology roadmap during our investor day on June 11th. We have also made notable progress aligning our planned lithium cell factory with current administration priorities. and we believe we are close to finalizing our updated plan with the Department of Energy. Progress has been slower than anticipated, but we believe the extra time will result in very favorable outcome adapted to current market dynamics. We'll provide updates when our plans are finalized. Please turn to slide seven. We continue to manage the impact of tariffs on our bottom line. In the third quarter, we fully offset the tariffs realized in our P&L through proactive supply chain actions and pricing strategies. While we anticipate continuing policy shifts, our total exposure remains stable at around 22% of U.S. sourcing, with our estimated direct tariff exposure unchanged from last quarter at around $70 million annualized for fiscal 26. Our task force and lines of business continue mitigating risk and enhancing supply chain optionality. Please turn to slide eight. Our diversified business model is proving its resilience as positive demand signals across most of our end markets help offset near-term softness in tariff-sensitive industries such as forklifts and Class A trucking. Both Q3 orders and backlog grew up sequentially and year-over-year in all business segments except motor power and transportation, illustrating the near-term dynamic conditions we are seeing market-to-market In mode of power, industry data for forklift orders in December were up 40% versus prior year, a leading indicator for us, which gives us optimism. However, we are not yet confident a firm recovery is underway, as our battery orders were up only 1% sequentially, and thus we expect the slowness may continue into mid-fiscal 27. In transportation, Class 8 trucking is still at the bottom of the cycle, but we are managing the impact through pricing, cost improvement, and aftermarket growth. Based on conversations with our customers in both trucking and logistics, we understand that fleets are aging and investment is being deferred through delayed ordering cycles, which translates into pent-up demand. This underinvestment is unsustainable, and when our customers need to ramp up swiftly in future quarters, we will be prepared to address the demand associated with the technological deficit that has been created. In communications, Our customers are updating their networks and planning upgrades. We are continuing to see constructive momentum as they review the need to replace aging equipment across their installed base and improve capabilities to meet the expanding consumer and government demand for quicker and more reliable data delivery and backup power. Our data center business remains strong with Q3 sales up 28% over prior year. Despite the acceleration we've seen to date, The data center market remains in the early stages of a multi-year growth cycle driven by the rapid expansion of AI workloads and a rising need for energy resilience. Our customers rely upon our solutions to help safeguard essential energy infrastructure. While deployment timing can vary by affecting quarterly trends, we look forward to continuing to benefit from the critical role our products play in the AI development super cycle and compounding that impact with new product offerings in the future. The dynamic geopolitical environment continues to drive an increase in global defense budgets and demand for next-gen power technologies, both tactical and mobile soldier applications, as well as military drones. As such, A&D activity remained robust in the quarter. Overall, we're pleased with our earning strength and margin performance, reflecting our renewed discipline, execution, and operational rigor. As we look ahead, our teams are aligned around the actions that will drive long-term value including organic innovation and strategic opportunities to expand our capabilities. We are highly confident in our focused growth strategy, supported by durable secular demand trends, including the growing need for energy security and high performance energy storage solutions. Now I'll turn it over to Andy to discuss our financial results and outlook in greater detail. Andy?