Enersize Plc

Hello, and thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Anarsys Inc. Q2 for Year 2026 Earnings Webcast and Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remark, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. And to withdraw your question, press star one again. Now, I would like to turn the call over to Lisa Lanchel, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Good morning, everyone. Thank you for joining us today to discuss NRSIS fiscal second quarter results. On the call with me are Sean O'Connell, NRSIS President and Chief Executive Officer, and Andy Funk, NRSIS Executive Vice President and Chief Financial Officer. Last evening, we published our second quarter results with the SEC, which are available on our website. We also posted slides that we will be referring to during this call. The slides are available on the presentations page within the investor relations section of our website. As a reminder, we will be presenting certain forward-looking statements on this call that are subject to uncertainties and changes in circumstances. Our actual results may differ materially from these forward-looking statements for a number of reasons. These statements are made only as of today. For a list of forward-looking statements and factors which could affect our future results, please refer to our recent form 8K and 10Q filed with the SEC. In addition, we will be presenting certain non-GAAP financial measures, particularly concerning our adjusted consolidated operating earnings performance, free cash flow, adjusted diluted earnings per share, and adjusted EBITDA, which excludes certain items. For an explanation of the difference between the GAAP and non-GAAP financial metrics, please see our company's form 8K, which includes our press release dated November 5th, 2025. Now, I'll turn the call over to NRSA CEO, Sean O'Connell.

Thank you, Lisa, and good morning. Please turn to slide four. During the call today, we will provide an overview of our second quarter results, share progress on our energized strategic framework, update you on the latest demand trends we are seeing in our diverse end markets, and provide guidance for our third quarter. Please turn to slide five. Our performance in the second quarter was strong, with net sales up 8% year over year. Earnings growth outpaced revenue growth, driven by favorable price mix more than offsetting higher costs, resulting in both adjusted operating earnings and EBITDA being up 13%. Excluding 45x benefits, Adjusted diluted EPS on our base business was up 15% versus prior year on the higher earnings, as well as our lower share count. Our net sales and adjusted diluted EPS both marked new Q2 records driven by strong growth in data center, industrial, and A&D. We are seeing positive trends in the majority of our markets, albeit with some lumpiness. Energy systems led the way this quarter, with year-over-year sales growth seen across all end markets. data center, industrials and communications, as well as continued margin improvement. Motive Power improved sequentially, but was lower versus prior year as expected on suppressed volumes. Specialty delivered notable performance improvement nearing double digit AOE margins on A&D revenue and margin expansion. Free cash flow in the quarter was particularly strong. We were pleased to return $78 million in capital to our shareholders this quarter through share repurchases and dividends. Please turn to slide six. Through our energized strategic framework, we are optimizing our core, invigorating our operating model, and accelerating our growth. We are reallocating resources to higher impact projects, and we are focusing on where we have a right to win. We're putting in place the structure that enables our people to focus, specialize and execute with agility and speed. We've made great progress over the past two quarters, and I'm excited to update you on these recent highlights. First, the reduction in force actions we announced in July are nearing completion and support our efforts to right-size the organization. Early benefits are materializing from the $80 million annual cost-saving initiative, and the realization of these savings will grow in the third and fourth quarters. launched our three centers of excellence, lead acid, power electronics, and lithium, which are leveraging innovation and best practices across these critical areas to deliver products faster and lower costs. We are already beginning to see ensuing benefits. As an example, our exceptional performance in energy systems was bolstered by approved agility from our power electronics center of excellence. The COE cut validation time on new components from weeks to days using in-region audits and smarter collaboration. This effort, along with other optimization improvements in our Missouri plants and SIOP, helped us support a major communications customer. We delivered a solution within one quarter on an initiative that previously could have taken up to 18 months. This is just one instance of how our transformation initiatives are improving execution and accelerating revenue growth. We are also leveraging AI to drive increased efficiency. For example, our lead acid center of excellence has implemented AI trained inspection cameras and software. This tool enables us to identify defects and battery plates faster and lower scrap rates. We are increasing our rigor around new product introductions and capex investments, reallocating resources to focus on higher return opportunities and executing with greater speed. As a data point, our capital spending in the quarter was reduced to 30% to 21 million from 30 million in Q2 25, even with much of the spend this quarter coming from projects we started last fiscal year. Aligned with our new product roadmap for lithium technology, we are evaluating our make versus buy options for our lithium cell supply, which includes our planned lithium cell factory. Recent discussions with relevant government officials have been constructive, and we expect to provide an update to you on our new lithium factory plans next quarter. Please turn to slide seven. In the second quarter, we fully offset the tariffs realized in our P&L through proactive supply chain actions and pricing strategies. As we've previously shared, approximately 22% of our U.S. sourcing Estimated direct tariff exposure is now some $70 million annualized for fiscal year 26. This is improved from our prior estimate of $94 million as a result of supply chain mitigation activities. While we anticipate ongoing volatility and further policy shifts, we remain confident we will be able to fully offset the impact of tariffs to our P&L. Our task force continues to proactively mitigate direct and indirect exposure of tariffs enhance supply chain optionality, and assess impact on demand. Please turn to slide eight. Market uncertainty abated somewhat the quarter. However, our order book does not yet reflect normalized market conditions. We expect that improving macro conditions and increasing clarity on public policy will continue to support more stable dynamics in the coming quarters. Q2 orders pared back sequentially after strong orders in Q1. which illustrates the dynamic conditions we are currently seeing in the market. In Q2, backlog and specialty was up, supported by strong demand in A&E. However, backlog was down a motive power on a mix of tariff uncertainty and a return to pre-COVID buying patterns, with levels of book and ship business continuing to increase. Energy systems backlog is stable. In communications, we are seeing more spending on network refreshes than network expansions. We remain encouraged by the opportunities these customers are reviewing to replace large inventories of older equipment out in the field. Data centers continue to be a key growth vector for Intersys. While deployment timing can vary by project, demand in this market remains strong. As part of our strategy to accelerate our growth, we are focusing on opportunities to leverage our leading lead asset market share and expand our share of wallet through new product introductions in this segment. The data center market is in the early phase of a multi-year growth cycle driven by the rise of AI and the increasing need for energy resilience. The dynamic geopolitical environment continues to drive an increase in global defense budgets and demand for next-gen power technologies for both tactical and mobile soldier applications. A&D activity in the quarter was robust with visibility to increasing sales for upcoming quarters as the government personnel and spend disruptions settled. Although the class eight market remains soft, we saw some improved demand signals and transportation with significant order reflection, both sequentially and year over year. Please turn to slide nine. We are proud to have published our fiscal year 2025 sustainability report in October, highlighting how we are delivering measurable energy savings, improving efficiency, and reducing costs for NRSIS and our customers. It emphasizes our commitment to communities operational excellence, and our role in supporting global energy resilience. The report reflects the progress we've made and our sustainability journey aligns with Energize, demonstrating how strategic improvements in energy usage, data, and systems management drive both efficiency and financial performance. My vision for Enersys is clear, to embed sustainability, resilience, and operational excellence in every part of our enterprise. These principles are not just strategic. They are foundational to delivering long term value to our customers, communities and shareholders. Please turn to slide 10. We are excited to announce that we plan to hold our next investor day on June 11, 2026 in New York City. We look forward to sharing more details and progress on our strategic roadmap and longer term financial targets with you then. In summary, Our progress this quarter reflects not only strong execution, but also a shared commitment to continuous improvement and collaboration across the company. We are positioning Enersys for long-term, sustainable success in delivering solutions for our customers and generating value for our shareholders. Now I'll turn it over to Andy to discuss our financial results and outlook in greater detail. Andy?