Methode Electronics, Inc.

Please stand by. Good day, ladies and gentlemen, and welcome to the Method Electronics fourth quarter fiscal 2020 results call. After the presentation, there will be a question and answer session. If you should require assistance during the call, please press star zero and an operator will assist you. At this time, it's my pleasure to turn the floor over to Mr. Rob Cherry, Vice President of Investor Relations. Sir, the floor is yours.

Thank you, operator. Good morning, and welcome to Metho Electronics Fiscal Year 2020 Fourth Quarter Earnings Conference Call. For this call, we have prepared a presentation entitled Fiscal 2020 Fourth Quarter and Full Year Financial Results, which can be viewed on the webcast of this call or found at metho.com in the Investors section. This conference call contains certain forward-looking statements. which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the safe harbor protection provided under the securities laws. Method owner takes no duty to update any forward-looking statement to conform the statement to actual results or changes in method's expectations on a quarterly basis or otherwise. The forward-looking statements in this call involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from expectations are detailed in methods filings with the Securities and Exchange Commission, such as their annual and quarterly reports. Such factors may include, without limitation, the following. Impact from pandemics. such as the COVID-19 pandemic. Dependence on the automotive, appliance, commercial vehicle, computer and communications industries. Dependence on a small number of large customers, including two large automotive customers. International trade disputes resulting in tariffs and our ability to mitigate tariffs. Timing, quality and cost of new program launches. Ability to withstand price pressure, including pricing reductions Failure to attract and retain qualified personnel Ability to successfully market and sell De Beers surface products Currency fluctuations Customary risks related to conducting global operations Costs associated with environmental health and safety regulations Ability to withstand business interruptions Recognition of goodwill and long-lived asset impairment charges Ability to successfully benefit from acquisitions and divestitures Investment in programs prior to the recognition of revenue Dependence on the availability and price of materials Dependence on our supply chain Judgments related to accounting for tax positions Income tax rate fluctuations Ability to keep pace with rapid technological changes Impacts to our information technology systems Ability to avoid design or manufacturing defects Costs associated with reorganization activities Ability to compete effectively Ability to protect our intellectual property Success Upgrade Con and or our ability to implement and profit from new applications of the required technology, significant adjustments to expense related to our performance-based stock awards in our long-term incentive plan, ability to manage our debt levels and any restrictions there under, and impact to interest expense from the placement or modification of LIBOR. At this time, I'd like to turn the call over to Mr. Don Duda, President and Chief Executive Officer.

Thank you, Rob, and welcome to Methode. Good morning, everyone, and thank you for joining us today for our fiscal 2020 fourth quarter and full year financial results conference call. I'm joined today by Ron Zumas, our Chief Financial Officer. Both Ron and I have opening comments, and afterwards, we will take your questions. First, I would like to note that our fiscal 2020 accounting period included 53 weeks versus 52 weeks for fiscal 2019. Also, the fiscal 2020 results include 12 months of GRAECON activity as compared to seven and a half months of GRAECON activity in the fiscal 2019 results. As you can see on slide four, I would also like to draw your attention to our refreshed corporate and investor relations websites. We believe both provide an improved user experience as well as better depth and visibility of information. Please turn to slide five. Methode's full year revenue increased 2.4%, our net income increased 34.7%, and our diluted earnings per share increased 34.2% for the fiscal year ended May 2nd of 2020. All three financial measures were a record for Methode. The cost reduction and operational efficiency initiatives that we implemented in fiscal 2019 provided the savings we expected in fiscal 2020. On a non-GAAP basis, our adjusted net income increased 5.7% and adjusted diluted earnings per share was up 5.4%. These adjusted measures exclude expenses for initiatives to reduce overall costs and improve operational profitability. acquisition-related costs, long-term incentive plan accrual adjustments, and the transition tax benefits from U.S. tax reform in the applicable periods. As you can see, on both a GAAP and adjusted basis, it was a commendable performance for the year that drove record free cash flow, increasing over 48% for fiscal 2019. On slide six is our full-year revenue bridge, which includes the benefit of an extra four and a half months of GRACON activity and $76 million in sales from new program launches. Speaking of GRACON, I am happy to report that we completed the integration and are pleased that the acquisition delivered the results we expected. Adversely affecting the year was the UAW labor strike that occurred in our second quarter and the impact from COVID-19 in the fourth quarter. After the negative impact from foreign currency exchange, the full-year revenue performance was still up approximately $24 million to a record level. In regard to COVID-19, our focus continues to be on the health and safety of our employees who have shown incredible dedication to Method and our customers in light of extraordinary circumstances across the globe. Given this health crisis and business disruption, we have implemented measures to manage costs, preserve liquidity, and most importantly, address employee safety. These safety measures include enhanced cleaning and disinfection procedures at our facilities, the promotion of social distancing, a majority of office staff working from home, and stringent factory and office protocols for proactive COVID-19 mitigation. Method was able to apply the early lessons learned in its Asian operations, developing actions and protocols to deal with COVID-19 and leverage them in our plants and facilities and the rest of the world as the pandemic spread. As a result of these mitigations and given the essential nature of some of our businesses, all of our facilities remained open to a certain degree and operated at levels commensurate with customer orders. In fiscal 2021, we will continue to see significant headwinds, especially in the first quarter from the COVID-19 pandemic. However, I want to stress that we will continue to invest in our businesses for the long term. Moving to slide seven. During the fourth quarter, new awards in the automotive and industrial segments continue to capitalize on important trends including vehicle electrification and the incorporation of LED lighting and sensors to augment safety. We are very pleased that we booked over $36 million in new annual business in the fourth quarter with our total for fiscal 2020 exceeding $141 million. In the quarter, Method was awarded several key programs tied to our ongoing strategy. In electric vehicles, we were awarded programs for bus bars and AC power connectors, totaling $10 million annually. In sensors, we were awarded a program in China for e-bikes for $2.3 million annually. In vehicle exteriors, we were awarded an initial integrated tailgate module program for a Japanese auto OEM for $1.7 million. As we have successfully accomplished in the past, Method will continue to evolve its business with new technology and products such as our unique sensors, LED lighting, and power solutions for electric vehicles. And we will develop innovative products for new applications like remote controls for industrial drones, which is an up-and-coming market for our HITTRONIC business. In the medical segment, Our efforts to grow the DeVere product line in the corridor were hampered by the postponement of elective surgeries due to COVID-19. When the pandemic subsides and hospitals return to normal, we believe that business will return to a growth trajectory. Looking forward, we are not providing annual guidance for fiscal 2021 due to the ongoing market uncertainty and the resulting lack of customer demand visibility due to the COVID-19 pandemic, which includes our fiscal first quarter. Most auto and commercial vehicle production was shut down before the beginning of our fiscal 2021 first quarter until approximately mid-June, or roughly the first half of the quarter. When production did resume, the demand was irregular and we continue to see volatility in forecasts as of today. As such, any quarterly guidance we were to give would be heavily weighted to July and would carry a range of uncertainty that would not provide meaningful insight. While we are not providing any guidance at this time, we do intend to provide partial year guidance at a future date as soon as demand schedules stabilize and we are confident with our customers' forecasts. As part of our continuous improvement strategy and an effort to manage costs and cash, Method is taking further actions to consolidate operations and further streamline our organization in order to improve efficiencies and set the stage for continued growth. These actions will allow us to further improve on our S&A as a pretend of the sales and be in a better position to capitalize on opportunities as they present themselves. To conclude, given the current global macroeconomic situation and the significant headwinds faced by methods throughout this past fiscal year, I am extremely pleased that our strategy and team were able to deliver record revenue and income and generate record free cash flow. That said, our focus now has now turned to continuing to navigate COVID-19 while executing our long-term strategy as we enter a new fiscal year. At this point, I'll turn the call over to Ron, who will provide more detail on our financial results. Ron?