Methode Electronics, Inc.

Good morning, ladies and gentlemen, and welcome to the Methode Electronics first quarter fiscal 2023 results call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for 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. Sir, the floor is yours.

Thank you, Operator. Good morning. And welcome to Metho Electronics Fiscal 2023 First Quarter Earnings Conference Call. For this call, we have prepared a presentation entitled Fiscal 2023 First 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 laws. Method undertakes 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 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 METSO'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.

Thank you, Rob, and good morning, everyone. Thank you for joining us for our fiscal 2023 first 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'll take your questions. Let's begin with the highlights on slide four. Our sales for the quarter were $282 million. Helping our sales by $11 million were successful spot buy and premium freight cost recovery efforts. Working in the opposite direction was foreign currency, which had a negative $14 million impact on sales. Also working against us were market headwinds in our automotive segment, in Asia and Europe. In Asia, the COVID-19 lockdowns in China impacted the end of our fourth quarter as well as the beginning of our first quarter. In Europe, we saw continued weakness in the auto market due to macroeconomic conditions. Helping to offset the weaker auto sales was a record quarter of sales in our industrial segment. The surge in industrial sales was driven by power distribution both for data center and EV applications and by commercial vehicle lighting. This is in keeping with our strategic direction to grow our industrial segment. In the quarter, we continue to face the ongoing supply chain challenges. Our team is still working diligently to mitigate their impact, which requires remedial actions such as spot buys and expedited shipping. We have worked relentlessly with our customers to share in the absorption of these increased costs. These costs include inflation in materials, labor, and freight. Our ability to obtain reimbursement to offset these costs will lag as a matter of process as long as inflation continues. On the order front, we had another very strong quarter with over $90 million in program awards. As you will see later, these awards were in a variety of applications And once again, we're led by EV programs. Focusing on EV, like last quarter, EV sales were 17% of consolidated sales. This percentage, which was 19% two quarters ago, was again directly impacted by the COVID-19 lockdowns in China. With those lockdowns seemingly behind us and given the ongoing momentum in our EV activity, we still expect EV sales to reach a record 20 percent of our total sales in this fiscal year. In the quarter, we have positive free cash flow and purchased approximately $12 million of Metho stock. As of the end of the first quarter, we now have approximately $117 million of capacity in our buyback authorization, which expires in June 2024. Further, our debt is at its lowest level since the Greycon acquisition. Moving to slide five, Method had another very strong quarter of business awards. The awards identified here represent some of the key wins in the quarter and represent over $90 million in annual sales at full production. As a reminder, the full launch timing of most of these programs could be anywhere in the range of one to three years from now. Also, while most of the dollar value of these awards are for new programs, Some of these awards are for extensions or volume increases on existing programs. At the top of the list are EV programs representing over 40% of the total dollar value. The awards are mostly for power products and are from all of the additional big three U.S. automakers. The EV growth engine rolls on and our exposure to it continues to be robust. In non-EV automotive applications, We were awarded programs for all four of Method's core technologies, user interface, power, sensor, and lighting applications. Also notable is that they are in our two historically fastest growing regions, Europe and Asia. We also had solid awards for applications in motorsports, e-bikes, and millero. Here as well, we had good award diversity with lighting, sensor, and power products. Overall, It was a very successful quarter for awards that will drive organic sales growth in future years. To conclude, we continue to be cost challenged by inflation, which has yet to stabilize. However, our team is working every day to mitigate the impact, and we expect more progress as the year goes on. Looking forward, I am confident that Method is positioned to mitigate these pressures and deliver sales and earnings growth for fiscal 2023. This confidence has enabled us to confirm our sales and earnings guidance for the year. At this point, we'll turn the call over to Ron, who will provide more detail on our first quarter financial results and outlook for the full year.