Methode Electronics, Inc.

positioned us for future growth and operational efficiency. We look forward to being closer to our automotive customers and to having almost all of our functions under one roof. Please turn to slide five. Methods power solutions offerings actually go back more than 60 years, and we are using this history and our expertise to bring solutions to our customers. Our data center activity was just over $40 million in fiscal 2024, and last year generated over $80 million in annual sales. We continue to expect to see long-term growth in this area. One of the most exciting aspects for me in this business is the ability to apply core competencies that have been built over decades to current and future products in different end markets. These capabilities can be brought to bear to better address the megatrend-fueled opportunities in the EV and data center spaces. Looking ahead, as we implement more customer-focused solutions like vendor-managed inventory, utilize our global footprint more aggressively, and develop solutions for problems like high voltage and data centers, it provides us with opportunities to differentiate method in ways that we have not in the past. We continue to expect our fiscal 2026 power sales to be in line with fiscal 2025. We also expect a sales acceleration in the future as our data center growth strategy positions us to take a larger share of customer demand. Our power solution offerings are clearly a long-term growth engine for Method. Please turn to slide six. As you think about the transformation of Method, it has been a journey, and the starting point for that 18-month journey was to stabilize the base. It started by fixing launch execution, and we had 50-plus launches between fiscal 2025 and fiscal 2026 to deliver, while improving customer satisfaction and product quality in multiple regions. So we needed to address these fundamental challenges first. A revamp of our most important plans in Mexico and Egypt, both from a leadership and from an execution standpoint, was next. We've changed all but two of the senior leaders, and many of the team members below those leaders in the company. Standing up a new team who are driving a more global approach, diagnosing situations, and pinpointing weaknesses has dramatically helped move things forward. We are nearing the end of this foundation building phase of our transformation journey, and now starting to discuss what the next chapter is as the foundation is corrected. In this next phase, we can start talking about leveraging synergies with credibility. Because without execution as a foundation, we would not have the credibility with customers and shareholders to talk about what's next. Overall, we've been laser focused on improving execution and making Method a more reliable and resilient company and is showing up in our results. I'll now turn it over to Laura for a discussion of our financial results.

Thanks, John. And turning to slide seven. First, let me note that fiscal 2026 is a 52-week year and fiscal 2025 was a 53-week fiscal year. The three months ended November 1st, 2025 and November 2nd, 2024 were 13 and 14-week periods respectively. Second quarter net sales were $246.9 million compared to $292.6 million in fiscal 2025 as a decrease of 16% while on a sequential basis, sales increased 3%. The year-over-year decrease in sales reflected lower volume across all segments. Second quarter adjusted net loss was $6.7 million, an $11.9 million change from fiscal 2025, and on a sequential quarter basis, a reduction of adjusted net loss by $1.1 million. Second quarter adjusted EBITDA was $17.6 million, down $9.1 million from the same period last year, and on a sequential quarter basis, adjusted EBITDA increased $1.9 million. Second quarter adjusted diluted loss per share was 19 cents, a 33-cent decrease from the prior year second quarter and a 3-cent improvement from Q1 fiscal 2026. Overall, our improvement efforts to drive expanded margins when we return to sales growth are still underway. Please turn to slide eight, where I will discuss the progress made with our disciplined capital allocation strategy. Net debt was down $29.6 million compared to the same period last year as we continue to drive cash flow and debt reduction. We ended the quarter with $118.5 million in cash, which was up $21.5 million year over year. Operating cash usage in the second quarter was $7.4 million, but we generated $17.7 million in the first half of fiscal 2026. An item to note in the quarter was a $10 million inventory bill to support the transition to vendor-managed inventory for our data center customers. With that said, our operating cash flow performance in the quarter would have been positive without the vendor-managed inventory impact. Second quarter free cash flow was a usage of $11.6 million compared to a usage of $58.4 million in the fiscal second quarter 2025, reflecting a $46.8 million improvement on a year-over-year basis. Turning to slide nine. Again, please note that fiscal 2025 was a 53-week fiscal year and fiscal 2026 is a 52-week fiscal year. For fiscal 2026, we are reaffirming our expectation for sales to be in a range of $900 million to $1 billion and for adjusted EBITDA to be in a range of $70 to $80 million. We expect our second half results to be higher than the first half as we have previously communicated. Q3 results will reflect traditional seasonality with improvement expected in Q4. For fiscal year 2026, We expect free cash flow to be positive compared to an outflow of $15 million in the previous fiscal year. Our fiscal 2026 guidance represents a solid foundation for the method team to further build on. We are pleased with the results here today, and our team is focused on finishing the second half of fiscal 2026 strongly. With that, I will hand it back to John for closing remarks.

Thanks, Laura. Please turn to slide 10. The method team is not standing still. and is working with a high sense of urgency and purpose to drive improved execution. This quarter's results demonstrate that our business is moving decisively in the right direction, yet there is still important work ahead as we rebuild the future of Method. We are aggressively driving financial improvement to strengthen our balance sheet and deliver our fiscal 2026 guidance. At the same time, we are selectively investing in initiatives such as data centers that will position Method for long-term growth. We are transforming Method into a more reliable and resilient company, one that is poised to generate long-term value for our shareholders. And with that, operator, please open the line for questions.