EnerSys

Hello and welcome to the NRCS Q4 and full year 2026 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. If you would like to ask a question at that time, just press star followed by the number one on your telephone keypad. If you would like to withdraw your question, just press star one again. And please leave me to one question and one follow-up. Thank you. Now I would like to turn the call over to Lisa Hartman-Lenko, Vice President of Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us today to discuss NRSA's fourth quarter and full fiscal year 2026 results. On the call with me are Sean O'Connell, NRSA's President and Chief Executive Officer, and Andy Funk, NRSA's Executive Vice President and Chief Financial Officer. Last evening, we published our fourth quarter and fiscal year 2026 results and our 10-K with the SEC, which are available on our website. We also posted slides that we will 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 8K and 10K 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 8-K, which includes our press release dated May 20th, 2026. Now I'll turn the call over to Enersys CEO, Sean O'Connell.

Thank you, Lisa, and good morning. Please turn to slide four. During today's call, we will review our fourth quarter and full year fiscal 26 results, update you on our energized strategic framework and demand trends, and close with guidance for the first quarter of fiscal year 27. Please turn to slide five. In the fourth quarter, we delivered our highest quarterly adjusted EPS, with and without 45X, on our second highest quarterly revenue and strong free cash flow, driven by favorable price mix, ongoing OPEX discipline, and the impact of our accelerating stock buybacks. We ended the year with full year record sales, adjusted gross profit, adjusted operating earnings, and adjusted diluted earnings per share, all before the benefit of 45X. It is notable that our ability to generate this level of earnings during the year in which demand in the electric forklift and transportation markets was down is a testament to the effectiveness of our energized strategic framework, the strength of our diversified business, and our renewed ability to perform across varied demand conditions going forward. We have structurally enhanced our business and are well positioned to deliver further value. Please turn to slide six. In fiscal 26, we implemented our energized strategic framework and are seeing meaningful benefits across the business, starting with optimizing our core. This quarter, we announced the closure of our Tijuana, Mexico facility and the shift to production to our Springfield, Missouri plant which we expect will generate approximately $20 million of incremental 45X benefits beginning in fiscal 28. We also substantially completed our previously announced plant closure in Monterrey, Mexico, in which we expect to yield approximately $19 million of savings in fiscal 27 and have already seen early realization of related incremental 45X benefits this quarter. These two projects will further optimize our manufacturing footprint maximize 45x tax benefits, support the continued transition to our higher margin, higher performance solutions, and mitigate future risks associated with tariffs, all while better serving our customers. We are also invigorating our operating model to improve execution speed and strength and alignment across the organization. As an example, our Centers of Excellence delivered early working capital improvements through better collaboration of our supply chain and purchasing teams contributing to our strong free cash flow. Additionally, work progressed to accelerate our growth through new product developments and deeper service and software capabilities. Two top priorities on our roadmap, our lithium data center solution and battery energy storage solutions for warehouse operators, both advanced into customer commissioning this quarter. As these launches gain traction in upcoming years, we expect the driver of earnings improvement to shift increasingly from margin expansion toward top-line growth. Over the past year, we have refined our overall go-to-market strategy to bring new products to market faster, do customer-focused projects, optimize product design, streamline supply chains, and the competitive advantage of our technology stack, particularly for our lithium solutions. As part of this evolution, we have rescoped the strategy for our lithium cell factory in Greenville, South Carolina, With an increased focus on applications for customers that value secure, domestic, FEOC-compliant supply chains, particularly within aerospace and defense markets, the growing need for electrification across defense platforms, drones, counter-drone systems, and soldier power applications continues to reinforce the strategic importance of trusted U.S.-based battery manufacturing capabilities. We have made meaningful progress in discussions with the Department of Energy regarding our revised plan and are now in the final stages of the grant process. Our updated approach leverages more established and commercially proven cell technology, which we believe significantly de-risks the program, reduces complexity, enables a faster path to production. While we cannot disclose additional details on the planned facility until the award process is complete, We are currently expecting a more focused manufacturing footprint aligned with our competitive advantages and our customer value proposition. As such, we believe that the extra time will ultimately work to our shareholders' advantage. Please turn to slide seven. While the macro environment remains dynamic, we've taken actions needed to manage related exposures. Over the past year, our tariff task force has worked across the business to diversify supply chains, increase sourcing flexibility, and prioritize manufacturing in region for region. Our total tariff exposure remains stable at around 22% of U.S. sourcing and an annualized estimate of around 70 million before mitigations, as we believe additional Section 122 tariffs announced in February will have an impact roughly equal to the reversed IEPA tariffs. We have filed for reimbursement on all IEPA tariffs we are currently able to and begin receiving funds for this month. Those refunds are not included in our guidance and will not be presented in lines of business earnings. We are beginning to see both direct and indirect impacts from the conflict in the Middle East, consistent with what others across our markets are experiencing. Although we do not have operations in that region, we saw some direct impact in the form of elevated freight and other inflationary pressures emerge in the fourth fiscal quarter and would expect to continue as long as the conflict persists. While we are confident in our ability to mitigate those higher costs, there may be some temporary pressure until costs are recovered. The more significant risk remains the effect of heightened economic uncertainty on customer buying patterns, of which we experienced a bit this quarter. Across both trade policy and geopolitical disruption, our focus remains the same, actively manage what we can control, mitigate both direct and indirect costs, and preserve the flexibility to respond as conditions evolve. Please turn to slide eight. All of our end markets are showing encouraging signs, yet conditions remain dynamic. We are seeing strong underlying momentum in data centers, communications, and defense applications, while navigating softer but improving forklift and transportation markets. While volumes are down overall after the strong prior year comp, Q4 posted our highest book to bill in nearly four years at 1.1, with all lines of business Q4 orders outpacing revenue. early signs of improving trends we mentioned in our previous earnings call for motive power and transportation have continued with q4 representing a sequential and year-over-year improvement in orders for both businesses the geopolitical factors that can impact customer purchasing behavior remain but deferred investment in aging fleets and battery replacements is not sustainable thus the strength and order activity we're beginning to see we're cautiously anticipating orders to continue to trend positively gradually increasing through our fiscal 27, with a return to growth expected in both markets as the year progresses, led by motive power. In communications, we saw strong orders and record shipments for our broadband power supplies, driven by continued DOCSIS 4.0 buildup, as the need for additional power is driving network refreshes. We anticipate these encouraging demand trends to persist as customers modernize network infrastructure, replace aging equipment, and invest in more reliable backup power and resiliency capabilities to support growing data traffic and connectivity needs. In data centers, we continue to see healthy demand as customers invest in AI infrastructure and data center expansion. Today's data centers have an increasing need for higher energy density and faster demand response. Our TPPL technology is more suited to these high-rate, short-duration discharges that can exceed the capabilities of traditional lead-acid designs. While a majority of Greenfield data centers are adopting lithium, robust demand remains for lead-acid solutions where we have a leading market position as evidenced by our high-teens fiscal 26 year-on-year growth. Our new data center lithium battery will enable us to capture incremental and accelerating share of wallet while delivering solutions to our customers that best fit their needs regardless of technology. we saw particular order growth in munitions and space this quarter and continue to see robust underlying demand with increasing global defense budgets and a compelling long-term trajectory. We enter fiscal 27 cautiously optimistic around the broader demand environment while continue to focus on areas within our control, including executing with ongoing operational rigor, driving manufacturing and supply chain efficiencies, and accelerating our targeted high-value new product launch initiatives. Reflecting on my first year as CEO, I am proud of our accomplishments. Our enhanced focus on our core end markets, where our deep customer relationships and leading market share positions afford us the right to win, provides clarity on the targeted growth opportunities where we are doubling down to expand our share of wallet. Enersys is ideally positioned to address global secular trends including limited availability, increasing costs of both energy and labor, AI acceleration, and increasing defense spending, all of which require reliable, integrated stored energy solutions. During our investor day on June 11th, we look forward to sharing an update on our strategic priorities, our technology roadmap, and how our focus team is accelerating our profitable growth opportunities. I want to thank the entire Enersys team for the dedication and execution They bring every day in delivering the solutions and performance our customers depend on. Now I'll turn it over to Andy to discuss our financial results and outlook in greater detail. Andy?