Methode Electronics, Inc.

Good day, everyone, and welcome to the Method Electronics First Quarter Fiscal 2026 results. At this time, all participants are 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, Rob Cherry, Vice President, Investor Relations. Sir, the floor is yours.

Thank you, Operator. Good morning, and welcome to Method Electronics Fiscal 2026 First Quarter Earnings Conference Call. For this call, we have prepared a presentation entitled Fiscal 2026 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 Method's filings with the Securities and Exchange Commission, such as our 10 and 10 reports. On slide four, Please see an agenda for our call today. We will begin with a business update, then a financial update, followed by a Q&A session. At this time, I'd like to turn the call over to Mr. John DeGainer, President and Chief Executive Officer.

John DeGainer Thanks, Rob, and good morning, everyone. Thank you for joining us for our first quarter earnings conference call. I'm also joined today by Laura Kowalczyk, our Chief Financial Officer. Let's start with the key messages. Please turn to slide five. I'm happy to report that the method transformation is firmly on track. There's still much more to do, but the trajectory is according to plan. We had another good quarter for data center power product sales with growth over the prior year. Our income from operations was up $9 million from the prior year. This was the result of reduction in SG&A costs and operational improvements that we have been sharing with you. This is clear evidence of methods starting to earn the right, as we like to say. Another example of execution improvement is the third straight quarter of strong free cash flow and net debt reduction. Our management team is maintaining a key focus on both the income statement and the balance sheet. As we look to the remainder of fiscal 26, we are confidently affirming our guidance. Despite all the various headwinds that we are facing, the company still expects to double its EBITDA for the full year, even with a $100 million decline in sales driven by lower EV demand. The ability to affirm this profit growth is a direct result of the significant and tireless efforts of the Method team. They've put a lot of work into our transformation, and the progress is tangible. Turning to slide six and our results for the quarter, our sales were $241 million, down $18 million year-over-year as we continue to navigate the transition and programs that we have previously communicated. We remain on track to launch over 30 new programs this year, with most of the launches scheduled for the remainder of the year. In addition, the ongoing strength of our power products activity was able to partially offset the program transition headwind. We recorded a $9 million increase in operating income driven by the SG&A reductions and operational improvements that I previously mentioned. At the adjusted EBITDA level, we delivered $16 million, up $6 million year over year. All of this is further evidence of the actions that we have taken to improve our operations, supply chain, and product launch capabilities. In these three key areas, our performance in EMEA, particularly in Egypt, has notably improved. while we continue to see solid ongoing performance in Asia. Both free cash flow and debt reduction continue to be good stories for us. The business delivered free cash flow of $18 million in the quarter, which was the third quarter in a row of strong free cash flow. In turn, we reduced our net debt level, also for the third quarter in a row, and we have now reduced it by $41 million over the three quarters. These results provide more evidence of an organization whose operating efficiency is improving. Turning to EV activity, sales were down slightly year over year, but we were up on a percentage basis. For the quarter, they were 19% of our consolidated total, an increase from 18% last year. On a sequential basis, they were down from 20%. We do remain bullish on the long-term megatrend in EVs. the near-term outlook remains soft, mostly in North America, which is partially being offset by the strength in Europe and Asia. Based on customer EDI forecasts and third-party industry projections, we still expect a significant overall rebound in EV sales in fiscal 27. Turning to data centers, sales growth was a solid 12% year-over-year. As a reminder, we did have record sales in the fourth quarter of 25, So, not surprisingly, our sales were lower sequentially. However, we still expect fiscal 26 sales to be similar to fiscal 25 with some upside potential. As I mentioned last quarter, we are achieving this performance based on our existing product technologies. We also have an opportunity to leverage our power expertise, developed over decades and honed by our EV activity, to capture even more growth. The opportunity is being driven by vast increases in power density sought by data center operators for future installations. Again, it's too early to share any more details on this, but it is very promising for future growth in our power solutions enterprise. Turning to slide seven, I want to spend a little more time on our power solutions enterprise. Power products are in methods DNA. Our experience goes back many years. to the time when we supplied bus bars and connectors on the Apollo lunar landers and on the original IBM mainframe computers. Now, those years of experience and expertise are being leveraged on today's power distribution needs in electric vehicle, data center, and military and aerospace applications. As you can see from the chart on this slide, those applications have helped drive our power solution sales to a healthy 30 percent compound annual growth rate over the last three years. Going forward, we see even more opportunities for sales growth. For data centers, the need for higher voltage bus bars is driving further product innovation. In EVs, we are starting to supply interconnect boards for a more efficient power architecture. Lastly, for military and aerospace applications, we are supplying advanced products to meet the growing needs of defense equipment manufacturers. In all these cases, we are bringing our one-method mindset to bear and drawing on our global creativity to drive innovation by listening to customers' needs and bringing them solutions like cutting-edge high-voltage power products. Our power history and DNA are providing method with a competitive differentiation in the marketplace. In regard to our forecast for fiscal 26 power sales, given our guidance for flat data centers and decline in EV, our sales will moderate this year before re-accelerating next year. Power Solutions are clearly a long-term growth engine for Method, and we are actively investing in this area. Turning to slide eight, I'll give a brief update on where Method is on its transformation journey. As I have said before, transformations are never easy, and I make a distinction between transformations and turnarounds. Quite simply, a transformation is about fixing a business in a way that enables it to evolve and positions it for future growth. The method journey is undoubtedly a transformation. Like any journey, the path is not linear. The first order of business was stabilizing the base, which included the significant organizational changes that we made in previous quarters. It meant focusing on executing program launches while simultaneously revamping plans and installing a new team, all in the face of numerous external distractions. We have worked hard to remediate practices that had atrophied or institute practices where they didn't exist. We now have better visibility into the business and are driving more global collaboration and efficiency, especially around engineering, product management, and supply chain. The work is showing in many areas, but is exemplified in our improved working capital. We are now better positioned to leverage synergies and utilize core competencies to align with market megatrends like data centers and EVs. Our improvements are creating opportunities in other areas as well. We have seen a notable uptick in RFQs and RFPs, which is being driven by our ability to leverage our global footprint and respond to market changes. As a result, we are seeing potential future sales growth from takeover business. This takeover business is in both auto and non-auto markets, and it will likely result in even more customer diversity for Method. While the financial results are not yet where we want them, our team has accomplished much since the beginning of our transformation journey, and a foundation has been laid for us to drive consistent and improved execution. At this point, I'll turn the call over to Laura, who will provide more detail on our first quarter financial results and guidance.