Methode Electronics, Inc.

Good morning, ladies and gentlemen, and welcome to the Method Electronics second quarter fiscal 2022 results. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Robert Cherry, Vice President of Investor Relations of Method Electronics. Sir, the floor is yours.

Thank you, Operator. Good morning, and welcome to Method Electronics fiscal 2022 second quarter earnings conference call. For this call, we have prepared a presentation entitled Fiscal 2022 Second 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'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 law. Method undertakes no duty to update any forward-looking statements 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 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 Method's 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.

Don Duda Thank you, Rob, and good morning, everyone. Thank you for joining us for our fiscal 2022 second 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 highlights on slide four. Our sales for the quarter were 296 million. We had a significant headwind in our automotive segment due to the ongoing supply chain disruptions, particularly the semiconductor shortage. That shortage led to auto OEM production slowdowns and, in some cases, production shutdowns. This, in turn, led directly to lower sales in our automotive segment, especially in North America. Helping to offset that auto headwind were near record sales in our industrial segment, There was strength in sales across all our industrial product categories, but in particular, we saw growth in electric vehicle bus bars, commercial vehicle lighting, and radio remote controls. Respectively, these products are benefiting from the macro growth trends of electrification, e-commerce, and automation. The industrial sales in our portfolio relative to our automotive sales continue to grow. As I mentioned, our team continued to face supply chain challenges. These include the ongoing semiconductor chip shortage, pandemic-related supply chain disruptions, and port congestion, all of which are increasing costs and consequently negatively impacting margins. Our team has worked diligently to mitigate these challenges, which in many cases require remedial actions such as expedited shipping and premium component pricing. In addition, we are working relentlessly with our customers to share in the absorption of these costs. The timing of these cost recoveries is not certain. At this point, our expectation is that these conditions will last until the end of our fiscal year. This extended period of demand recovery and margin pressure is the driver of our revised guidance for the full fiscal year. The situation is fluid, and our mitigation efforts are ongoing, but we are confident that we will continue to execute and meet our customers' requirements. Ron will provide more detail on our guidance later in the call. On the new order front, we were encouraged by the diversity of awards across key applications. In addition to our traditional automotive market, we secured awards in cloud computing, commercial vehicle, and EV applications. Focusing on EV, last quarter we reported that sales into EV applications were 16% of the consolidated sales. This quarter, EV sales were, again, 16% of consolidated sales. However, on a dollar basis, they were higher and, in fact, were a record for methode. Our expectation for that percentage for the full year continues to be in the mid-teens. Our EV activity is being fueled by growth in our power distribution offerings, where we leverage over 40 years of expertise to supply power products to various EV OEMs. In the quarter, we further reduced debt generated positive operating cash flow, and continued to return capital to shareholders. Our free cash flow was positive, even though we invested in inventory to support our deliveries to customers and to help mitigate supply chain disruptions. While our debt was down, we did have an increase in net debt as we utilized a portion of our available cash to execute a $35 million share buyback in the quarter. We have now executed half of the $100 million stock buyback authorization since it was announced last March. Before I provide detail on our business awards, I want to provide some information on an existing program. I can now share with you a little more detail on our largest truck center council program. We expect a small portion of the sales from this program to start to roll off late this fiscal year, which was included in our original full-year guidance. Then in fiscal 2023, We expect the bulk of the remaining truck program sales to roll off in the range of $90 to $100 million. The fiscal 2024 impact is negligible. As I've mentioned in recent quarters, our business awards over the last couple of years have put us on track in aggregate to replace the sales from the roll off of this truck program. Moving to slide five, Methode had another solid quarter of business awards. These awards continue to capitalize on key market trends like cloud computing and vehicle electrification. The awards identified here represent some of the key business wins in the quarter and represent $25 million in annual sales at full production. In non-EV automotive, we're awarded programs for lighting and user interface applications. In cloud computing, we saw demand for our power distribution products and data center applications. In commercial vehicles, were signs of an upcycled continue, we were awarded programs for exterior lighting solutions. In EV, we won awards for switch, lighting, and power distribution programs. Overall, our business awards are delivering on our strategic priority to drive customer, product, and geographic diversity. To conclude, despite the ongoing demand fluctuations and supply chain challenges, we are still in a position to deliver solid organic growth sales for fiscal 2022 while generating positive free cash flow. At this point, I'll turn the call over to Ron, who will provide more detail on second quarter financial results. Ron.