Methode Electronics, Inc.

Greetings and welcome to the Method Electronics third quarter fiscal 2026 results conference call. At this time, all participants are on a listen-only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note this conference is being recorded. I will now turn the conference over to your host, Joni Constantelos, Managing Director of Riveron. Ma, the floor is yours.

Good morning and welcome to Method Electronics' fiscal 2026 third quarter earnings conference call. Our fiscal 2026 third quarter financial results, including a press release and presentation, can be found on the Method Investor Relations website. I'm joined today by John DeGainer, President and Chief Executive Officer, and Laura Kowalczyk, Chief Financial Officer. Please turn to slide two for our safe harbor statements. 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. We will also be discussing non-GAAP information and performance measures, which we believe are useful in evaluating the company's operating performance. Reconciliations for these non-GAAP measures can be found in the conference call materials. The factors that could cause actual results to differ materially from our expectations are detailed in Method's filings with the SEC, such as the 10-K and 10-Q. Please turn to slide three, and I will now turn the call over to John DeGainer.

Thanks, Joni, and good morning. Welcome to Method's third quarter 2026 earnings call. I want to begin by recognizing our global team for their continued focus on serving our customers in the face of a challenging and rapidly evolving environment while driving forward our multi-year transformation journey. Across our manufacturing sites and corporate functions, our teams have demonstrated resilience as we work through industry headwinds and advance our transformation initiatives. Your discipline, collaboration, and commitment to continuous improvement are strengthening our foundation and positioning us for better long-term performance. Thank you. Moving to our third quarter results. We generated 234 million in sales and 7.3 million in adjusted EBITDA. While profitability was pressured year-over-year, we delivered positive pre-cash flow of $10 million in the quarter and approximately $17 million in year-to-date cash flow, as we remain on track to achieve our fiscal 26 pre-cash flow targets. Importantly, our industrial segment sales increased 9.5% year-over-year, reflecting continued strength in off-road lighting and power distribution solutions supporting data center applications. That performance demonstrates the benefit of our growing exposure to higher growth industrial power markets and helps offset some of the headwinds we are seeing in North American automotive and in commercial vehicle lighting. Generating cash while navigating a volatile revenue environment is a clear reflection of the operational discipline we are building into this organization. Please turn to slide four. Our transformation journey continues. As I've said before, progress will not be linear and is not something that can be measured in a single quarter or even a few quarters. Our transformation is a multi-year effort focused on strengthening the foundation of the company, utilizing our resources as efficiently as possible, and finding new sources of value. Along the way, we must refine our portfolio, align our business structure, optimize our footprint, and embed operational discipline into everything we do. At the same time, there are factors outside of our near-term control, commercial vehicle market softness, EV program delays, and macro volatility, particularly in North American automotive, that will impact our improvement trajectory. We are addressing those realities directly with our teams and with our customers, but we are not allowing them to distract us from executing our priorities. Let me briefly recap these priorities. First, stabilize and improve our operational execution. When we started this journey, we had two facilities that were extremely challenged, Egypt and Mexico. We continue to see positive trends in Egypt as a result of the changes we have made there. The transformation of our Mexico facility is not as far along. We're making progress in upgrading the team and improving execution on both existing programs and new programs. However, we have not seen the productivity improvements as quickly as we initially expected, which has been exacerbated by commercial vehicle volume reductions and program delays from multiple North American customers. These external factors were the primary driver of our EBITDA guidance revision that Laura will talk about later in the call. We've built an entirely new leadership team in Mexico, and we are supplementing that team with both corporate and specialist external resources. Our new leadership team is getting fully up to speed and working hard to tackle the challenges in our two Mexico facilities, understanding root causes, driving accountability, and resetting expectations. Naturally, when you're transforming an operation, there is a cleanup involved. You have to surface issues before you can permanently fix them. This is part of the process. It is not comfortable, but it is necessary. We are taking focused actions to improve execution, efficiency, and cost control, and we expect performance to strengthen as those actions take hold. Second, we are refining and simplifying the portfolio. A clear example is the completed sale of the Datamate business, which I'll talk about more in a minute. Third, align our cost structure and footprint. We completed the move of our headquarters from Chicago and subleased that facility. We've signed a purchase agreement on our Howard Heights facility in Illinois facility that formerly housed our DataMate business, so we are making good progress in reducing our overall footprint. And fourth, position the company to capitalize on secular growth opportunities, particularly in power solutions. We are actively capitalizing on the data center and vehicle electrification megatrends, reallocating resources toward the areas where the strongest long-term return potential. These are deliberate, measurable actions, and we are doing what we said we would do, These are not concepts, they are actions. Turning to slide five. For background, DataMate is a supplier of copper transceivers for enterprise and telecom networks. While it was a solid business, it was not aligned with our long-term power solution strategy. Divesting it allows us to redeploy capital and management toward higher growth, higher return opportunities, particularly in our industrial power solutions business. We are concentrating our capital management, capital and management attention, and engineering resources on the areas that can generate the greatest long-term returns. The proceeds from this sale and the Harvard Heights facility sale will be used primarily to repay debt and further strengthen our balance sheet, consistent with our disciplined capital allocation approach. Turning to slide six. Our solutions has been part of the method DNA for more than 60 years. We are now leveraging that deep expertise to serve today's most demanding applications across EV, industrial, and data center markets. We're expanding our customer base. We are adding experienced industry veterans into the industrial power business, and we are rotating engineering and commercial resources toward higher growth opportunities. This is not a short-term pivot. It is a structural reallocation of talent and capital, and we expect this to pay dividends over time, but we are still early in this journey. Let me spend a minute on data centers. Based on Q4 order patterns, we now have line of sight toward 120 million annualized run rate. This represents a significant increase in run rate year over year. Importantly, this run rate reflects current end customers to various contract manufacturers. It does not assume incremental wins from new accounts. Our actions regarding additional commercial and engineering resources and our investment in items like vendor managed inventory are enabling us to react much more quickly to customers. We are seeing increasing momentum as a result of these actions. We are expanding our customer base, but our current run rate is supported solely by existing relationships. As momentum builds, the trajectory suggests a 50% increase in run rate year over year in the near term. This is a meaningful growth driver for Method both for today and the future. Turning to slide seven. Transformation is not linear. There will be turbulence, particularly in North American automotive, and we are seeing that today. But we are building a stronger operational foundation underneath the business. At the same time, we are executing every day. We're shipping product, we're supporting launches, and we are managing working capital. This dual focus of transformation while operating is critical. Transformation does not happen in isolation. We remain encouraged by opportunities in our industrial segment, especially in power distribution solutions supporting data center infrastructure. Those align directly with our core competencies. While there is more work ahead, we are making measurable progress, strengthening execution, simplifying the organization, improving the balance sheet, and positioning method for improved performance over time. And I'll turn it over to Laura to go through the financials.