Methode Electronics, Inc.

and welcome to Metho Electronics' third quarter fiscal 2021 results. Participants are in place in a listen-only mode and the floor will be open for your questions following the presentation. It is now my pleasure to welcome your host, Rob Cherry, Vice President of Investment Relations. Sir, it's yours.

Thank you, Operator. Good morning and welcome to Metho Electronics' fiscal 2021 third quarter earnings conference call. For this call, we have prepared a presentation entitled Fiscal 2021 Third Quarter Financial Results, which can be viewed on the webcast of this call or found at metho.com on the Investors page. This conference call contains certain forward-looking statements, which reflect management 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 Disaster Security Laws. The method undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the method's expectations on a quarterly basis or otherwise. The forward-looking statements in this conference call involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in methods filings with the Securities and Exchange Commission, such as our 10-K and 10-Q reports. At this time, I'd like to turn the call over to Mr. Don Duda, President and Chief Executive Officer.

Thank you, Rob, and good morning, everyone, and thank you for joining us for our fiscal 2021 third quarter earnings conference call. I'm joined today by Ron Zumis, our Chief Financial Officer, Both Ron and I will have opening comments and then we will take your questions. Let's begin with the business highlights on slide four. Our sales for the quarter were $295 million. As noted in our release this morning, the company's accounting period for this quarter included 13 weeks as compared to 14 weeks for the third quarter of fiscal 2020. Our discussions of year-over-year comparative results should be viewed in this context. For illustration, our sales on a weekly run rate basis and excluding favorable currency translation were up 8% from the prior year. We share this to give investors insight in how we view the underlying strength of our business, which clearly improved year over year. While the top line was strong, we did have some headwinds to gross margin in the quarter. Supply chain disruptions led to additional costs such as premium freight as well as to factory inefficiencies. Moving forward, these challenges will linger and be joined by demand disruptions caused by the ongoing semiconductor and potentially other material shortages, some of which are related to the recent extreme weather events in the US. This is driving a level of near-term uncertainty that can be seen in our wide guidance range for the fourth quarter. However, none of these issues are systemic, and we expect most to be resolved by the middle of this calendar year. Our confidence in the situation improving is evidenced by our decision to give an early indication of our anticipated sales for fiscal 2022 of over 10% organic growth. In addition, as the commercial vehicle market continues to rebound, our sales mix is expected to further improve gross margin. Turning to our automotive business, we continue to see strength in demand. Our sales in EV grew and we had a strong awards for power, lighting, and user interface programs in the quarter. Focusing on EV, last quarter we reported that sales into EV applications were over 9% of consolidated sales and were expected to be in the high single digits for fiscal 2021. This quarter, EV sales were over 12% of consolidated sales, and we now expect that number to be over 10% for fiscal 2021. Furthermore, our healthy pipeline of EV programs now gives us visibility to project that this percentage will be in the mid-teens in fiscal 2022. Method's combination of user interface, LED lighting, and power distribution solutions is a winning formula in EV and positions us well for continued growth in this exciting market. Regarding our balance sheet, we generated over $80 million in free cash flow and significantly reduced our net debt in the quarter. The debt reduction was driven by the full repayment of our $100 million revolver draw from March of last year. We continue to have ample liquidity and our net leverage ratio is now near zero. The strength and flexibility of our balance sheet allows us to consider the multiple paths to invest in the business in order to drive growth and ultimately shareholder return. In addition to the COVID-19 pandemic, we faced a growing impact from a semiconductor shortage in the quarter. While the COVID-19 situation is improving, the ongoing operating issues from it remain. In regard to the chip shortage situation, the impact to Methos in the third quarter was minimal. However, we do anticipate a financial impact in our fourth quarter and beyond as a result of the aforementioned issues as well as other potential supply chain disruptions. Moving to slide five, Methode had its best quarter of this fiscal year for booked awards. These awards continue to capitalize in key market trends like vehicle electrification, LED lighting and auto, and sensors and e-bikes. The awards identified here represent a cross-section of the business wins in the quarter and represent over $50 million in annual business. In vehicle electrification, we won awards for bus bar, power distribution, and user interface programs. We continue to win programs with OEMs globally in auto, commercial truck, and even charging station applications. In non-EV LED lighting, we were awarded programs for several auto applications. We also continue to participate in the growth of e-bikes, which utilizes our proprietary magneto-elastic technology. Lastly, we won two sizable awards for user interface programs with international automotive OEMs. For the first three quarters of the fiscal year, Method has booked awards of over $150 million in potential annual sales. We continue to build on our foundation for organic growth. Regarding the anticipated roll-off of our largest auto program, while we can't comment on our customers' timing, We are pleased that our strong new program bookings over the last several quarters have put us on a track, in aggregate, to replace the sales from that program. We are also pleased to project that our sales from any single customer is expected to drop below 25% from a high of approximately 50% four years ago, all while we continue to grow our top line. We are definitely making progress on reducing both customer and program concentrations. Turning to slide six, I would like to elaborate further on our footprint in EVs. As I have shared with you before, the method has become uniquely qualified. A three-pronged solution provided for EVs. Those solutions include user interface, LED lighting, and power distribution. The architecture of EV is generally divided into two parts, the top hat and the skateboards. The top hat is essentially the body of the vehicle and varies from model to model. The skateboard is the chassis or framework of the vehicle. As many of you know, this type of vehicle architecture is a game changer with EVs as it can be standardized and leveraged across multiple models and platforms. On the top hat, Method offers its traditional vehicle solutions of user interface and LED lighting along with some EV-specific solutions such as charging ports. These charging ports are fairly complex and include features such as actuators and lighting, in addition to the power connection itself. On slide seven, we show a skateboard. This is where Method leveraged its unique combination of auto-grade manufacturing operations, our auto pedigree, and power distribution expertise to supply various bus bars, connectors, and battery disconnect units to the EV OEMs. We are also gaining traction with sensor solutions for bi-wire systems and battery monitoring. However, it is in the power distribution where the largest content growth opportunity lies. Historically, our participation with power products on internal combustion vehicles was minimal. In EVs, it is quickly growing and has reached approximately half of our product sales for EV applications. Consequently, Method has a clear opportunity to incrementally grow our content per vehicle with the transition to EVs. The additional content in EV could range from 20% to over 100% of our current content on an internal combustion vehicle. As I've said in the past, EV is a definite organic growth tailwind for Method. To conclude, given the recent supply chain challenges and the ongoing pandemic situation, I am extremely pleased that our strategy and our team were able to deliver at the high end of our previous guidance, generate significant free cash flow, and win substantial new program awards in the quarter. At this point, I'll turn the call over to Ron, who will provide more detail on our third quarter financial results.