Greetings. Welcome to the Method Electronics first quarter fiscal 2027 results. At this time, all participants are in a listen-only mode. 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. Please note this conference is being recorded. I will now turn the conference over to your host, Joni Constantelos, Managing Director. You may begin.

Good morning and welcome to Methode Electronics' fiscal 2027 first quarter earnings conference call. Our first quarter results, including a press release and presentation, can be found on the Methode Investor Relations website. I am joined today by John DeGaynor, President and Chief Executive Officer, and Laura Kowalchik, 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 security clause. 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 financial 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 Methods 5 of the Securities and Exchange Commission, such as our 10-K and 10-Q. Please turn to slide 3, and I will now turn the call over to Joni Keener.

Thank you, Joni, and good morning, everyone. Thank you for joining us for Methods' first quarter fiscal year 2027 earnings conference call. We delivered a strong start to fiscal 2027, with net sales up 10% year-over-year to $265 million, driven by higher volumes across our industrial portfolio, led by data center-related sales. That higher volume drove real profitability benefits, while we also saw genuine gains from our operational improvements. However, several items offset that progress. Some were one time in nature, and others reflected the investments we've made in talent and capabilities to strengthen the company's foundation. Laura will provide more details on this later in the call. On the commercial side, we booked new awards representing $75 million of peak annual revenue or approximately $400 million of lifetime revenue. These awards were primarily for USMCA-compliant components across power products with either new customers or product lines with existing customers. A good proof point for commercial the commercial momentum we are building. Our operational transformation journey remains on track as we continued to see the impact of cost actions and margin gains across key facilities while we implement our global operating model. We also continued to strengthen our balance sheet. We amended our credit agreement to extend certain maturities by one year and made net repayments on debt of $10 million while maintaining strong liquidity. Given all of this, were reaffirming our fiscal 2027 guidance. I want to emphasize that the progress of our transformation journey will not always move in a straight line. But despite quarter to quarter volatility, we remain confident in our ability to drive sustainable improvement. Now we'll walk through some of these items in greater detail, starting with the actions we've taken over the past two years. Turning to slide four. We made significant progress stabilizing and strengthening the foundation of the company. We upgraded talent. rebuilt leadership teams, resolved legacy overhangs, simplified our portfolio, and strengthened manufacturing execution, delivering real margin and cost improvement inside our facilities. That work is translating into better supply chain execution, shorter lead times, and stronger service levels, which is helping us earn the right to win with our customers. Our focus today is building on what we've already accomplished. There is still work to do, but we are actively working to drive top and bottom line growth across the company. We remain focused on investing in higher growth opportunities such as data centers and we've been pleased with the opportunities we're seeing in this market. But it's not just about data centers. We are also leveraging our capabilities and footprint to grow in other end markets and applications including automotive and commercial vehicles. Turning to slide five. The awards we booked this quarter were not in data centers. that came from commercial vehicle and automotive power applications, totaling $75 million of peak annual revenue or approximately $400 million of estimated lifetime revenue. These wins show the breadth of what our power and lighting capabilities, combined with our USMCA compliant footprint, bring to both new and existing customers. Customers are rethinking their overall supply chains, looking for localized manufacturing to mitigate tariff exposure, shorten lead times, and ensure quality. Our engineering and manufacturing capabilities and our footprint position us well for that shift. This is what earning the right to win looks like in practice. It's not a single award in a single market, but a broadening set of customers choosing method for our capabilities and because we're executing better than we have in the past. That's the commercial momentum we're building on. Turning to slide six. Part of our transformation has been moving from historically Decentralized organization to a global operating model with improved alignment and collaboration across the company. We've taken a number of actions to change how our operations work globally, rebuilding the organization from the ground up. We installed the global head of operations who's building a team to drive alignment. This includes new leadership in the areas of manufacturing strategy, quality, process engineering, and supply chain planning. We've also continued to upgrade site leadership in Egypt, Malta, Mexico, and China over the last 18 months. The breadth of these changes is being felt across the entire organization. Egypt is the strongest example of what these operational improvements can deliver. The business drove more than 700 basis points of margin improvement in fiscal 2026, the product of stronger leadership, tighter operational rigor, and greater process discipline with additional savings expected in fiscal 2027. In Malta, The structuring and operational improvements are driving approximately $5 million in annualized savings, including lower scrap, better quality, and other efficiencies. We are applying that same global playbook and leadership discipline to our Mexico region. To help understand the challenges in Mexico, this chart shows annual sales generated from the region over the last several years. Revenue dropped more than 50% from fiscal 2023 to fiscal 2026. mainly due to the roll-off of a major OEM user interface program along with delays and cancellations across North American EV programs. Those changes left us with significantly underutilized capacity and a fixed cost base that wasn't appropriately sized for the reduced revenue. We've taken foundational action to improve both operational and financial performance of this facility. We brought in new leadership, implemented best practice operating procedures, removed structural costs and continued to drive alignment between our cost base and current demand. Early results indicate more than 500 basis points of margin improvement year over year at the Mexico facilities. Importantly, that improvement came without significant revenue tailwinds. We also saw an opportunity across our industrial portfolio by capitalizing on our customers' needs for localized USMCA-compliant production. Historically, our business operated as siloed units, with capacity dedicated to serving one segment alone. Now our globalized model, footprint, and manufacturing synergies are helping us meet those requirements. We've begun transferring a portion of our production from Asia to Mexico, repositioning open capacity across the automotive data center and commercial vehicle markets, enabling us to take share, win new business, and diversify our demand base. This also allows us to spread fixed costs more effectively, benefiting margins in both segments. All together, Mexico is becoming one platform serving three markets with strong incremental adjusted EBITDA improvement. This is already built into our current guidance, but it gives you a sense of the transformation underway. Importantly, we are not just focused on these three sites. We continue to drive performance improvement and consolidation across our entire footprint. In China, we will consolidate sites. We will also exit a facility in the UK and at least one in Germany. Turning to slide seven. Our power solutions offerings are a fundamental piece of our long-term growth strategy. We are applying more than 60 years of expertise designing and manufacturing complex, high-performance power interconnect solutions, often pushing the limits of thermal and electromagnetic constraints to meet demanding power density, weight, and reliability requirements. We are partnering closely with our customers to understand and address their needs, whether through supply chain or product design solutions. Our product portfolio and our footprint give us the breadth to serve customers across end markets, which is a meaningful competitive advantage as we look ahead. On data centers specifically, the Mexico repositioning I just described is one example which leverages existing capacity that we can begin dedicating to hyperscaler customers who desire shorter lead times and supply chain stability. We are also rotating engineering and commercial resources toward data centers to support that growth and bring in customers innovative solutions that address AI driven demand for power density. Helping enable a more efficient future built on safe deployment of 800 volt DC rack architectures. In vehicle electrification, we are leveraging our capabilities to drive growth with other customers and hybridization, including the new business awards I mentioned earlier. We continue to ramp up EV programs in EMEA and we're expanding our commercial and engineering activity in Asia Pacific In Millero, we're restructuring our commercial organization to better align with broader market dynamics and growth opportunities. Our transformation is a multi-year effort. Progress won't always be linear, but I'm confident we have the right strategy and the right team in place to deliver on the commitments we're making to our employees, our customers, and our shareholders. We are proud of what we've accomplished so far, and we know there is more work ahead. Before I turn the call over to Laura to review the financials, I wanted to share that we will be hosting an Investor Day on December 17th at the New York Stock Exchange. This half-day event will include presentations from our Chief Strategy Officer and our Head of Mobility, and will also include product demonstrations. We will send out more information soon, but look forward to seeing you there. With that, I'll turn the call over to Laura to review our first quarter financial results in more detail.

Thank you, John, and good morning, everyone. Please turn to slide eight. As a reminder, unless otherwise noted, all year-over-year comparisons are from the same period in the prior year. First quarter net sales for $265.4 million, up 10.4%. The increase primarily reflected higher volumes and mix in the industrial segment, partially offset by lower sales in the interface segment related to portfolio refinements. First quarter gross profit increased to $47.7 million from $43.5 million. The increase was primarily driven by higher industrial segment net sales and mix and operational improvements across both segments. This was partially offset by higher material and freight inflation as well as premium freight costs related to the moving of a portion of production from Asia to Mexico. Selling and administrative expenses were $45.9 million in the first quarter compared to $36.6 million. The increase was primarily driven by investments in talent and capabilities and higher professional fees. Income tax expense was $4.1 million in the first quarter compared to $4.2 million. First quarter adjusted net loss was $7.7 million or 22 cents per diluted share compared to an adjusted net loss of $7.8 million or 22 cents per diluted share. First quarter adjusted EBITDA was $13.7 million compared to $15.7 million. As John mentioned earlier, the underlying profitability was offset by expenses that were one time in nature, including a $3.8 million impact from portfolio refinements and a $2.3 million premium freight related to the transfer of production from Asia to Mexico, along with the recovery actions where there is a lag effect before the recovery comes through. Taken together, these expenses were a $6.7 million headwind on adjusted EBITDA. Importantly, the underlying ongoing drivers of the business, including volume, mix, and operational execution, represented a positive $4.7 million impact on a net basis, reflecting genuine underlying progress. Turning to our segment results on slide 9. First quarter automotive segment net sales were $105.7 million, a decrease of 0.4%. Lower volumes in EMEA and Asia were mostly offset by higher sales in North America. Automotive segment operating loss narrowed to $11.7 million, representing a 6% improvement from the prior year, reflecting lower inventory adjustments and lower scrap, partially offset by higher material cost inflation. We expect to see continued improvement, specifically related to Mexico, as we transition available capacity and related fixed costs to our industrial business. The industrial segment continued to deliver strong performance. First quarter 2027 net sales increased 27% to $156.8 million, driven by continued momentum and data center power distribution and strong demand for off-road lighting solutions. Additionally, during the quarter, we recognized $2.2 million in recoveries from commercial vehicle lighting customers. Industrial segment operating income expanded 19% to $31.6 million, driven by higher volumes of mix, customer recoveries, and operational improvements, partially offset by higher material and freight inflation, increased expedited freight expense, and investments in talent and capabilities. The interface segment net sales declined 73% to $2.9 million. Loss from operations was $800,000 compared to income from operations of $3 million. The decline primarily reflected the divestiture of the Datamate business as part of our ongoing portfolio optimization efforts, as well as the planned roll-off of a major appliance program. Turning to slide 10. We ended the quarter with $116.2 million in cash and cash equivalents compared to $139 million at the end of fiscal 2026. Total debt was $310.5 million at the quarter end, down $14.5 million from the end of fiscal 2026, reflecting $10 million of net repayments and $4.5 million of favorable currency impact. Net debt increased from $185.4 million at the end of fiscal 2026 to $194.3 million in the first quarter due to the decrease in cash and cash equivalents. As you probably saw in our earnings release, subsequent to quarter end, we completed an amendment that extends the maturity date of certain revolving loans by 12 months to October 2028. As part of that extension, we reduced our revolving credit facility from $400 million to $375 million at closing. Capital expenditures were $3.1 million, down from $7.1 million. Free cash flow was an outflow of $10.9 million in the quarter, compared to an inflow of $18 million. The free cash outflow in the quarter was largely driven by higher working capital levels primarily reflecting a planned inventory build to support the transition of production from Asia to Mexico. This was partially offset by customer recoveries. Turning to slide 11. Our capital allocation framework continues to guide how we deploy capital with clear priorities including strengthening our balance sheet, funding core operations, selectively reinvesting in high return growth opportunities, and returning capital to shareholders. We remain focused on reducing leverage while directing capital towards the highest return opportunities across the business. Turning to fiscal 2027 guidance on slide 12. We are affirming the fiscal 2027 guidance we provided last quarter, which continues to reflect our current market outlook, including third-party industry forecasts, customer production schedules, current U.S. tariff policies, and bank forecasts for currency. We continue to expect next sales in the range of $1.025 billion to $1.075 billion and adjusted EBITDA between $72 million and $82 million, representing an adjusted EBITDA margin of approximately 7 to 7.6%. We continue to expect free cash flow comparable to fiscal 2026. All other elements of our fiscal 2027 guidance remain unchanged. This guidance reflects our expectations for data center growth, ongoing operational improvement in Mexico, improving commercial vehicle demand, and further cost savings and operational improvements across the business. We've included the fiscal 2027 guidance bridge we shared last quarter in the appendix section of the slide presentation. This bridges our fiscal 2026 result to the midpoint of our fiscal 2027 guidance for both net sales and adjusted EBITDA, which we are affirming. With that, I will turn the call back to the operator for questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Luke Young with Baird.

Good morning. Thanks for taking the questions. I wanted to start on the margin progression going through the year, specifically your comment that you expect to see some improvement in auto margins as you transfer and some fixed costs in the industrial segment. John and Laura, can you just put some guardrails around the materiality there? And I would assume that's primarily a gross margin related consideration. Thank you.

Good morning, Luke, and thanks for the question.

Yeah, Luke. So as we mentioned, we did see in Mexico 500 basis points improvement already year over year. We do expect that to continue as we do make more operational improvements. improvements, and the production transfers to then the fixed costs there.

Yeah, would you say is the production transfer the bigger factor there, or I'm just trying to size kind of the buckets?

Yeah. The base performance improvement in Mexico, the production transfers will help, but the biggest thing is performance within the plant reduction of premium freight and scraps.

And then second, just be great to get your perspective, John, on the investments and talent and capabilities in your EBITDA bridge. I know you've been reinvesting some dollars from an engineering standpoint and flowing it to the highest growth opportunities. Can we just maybe reconcile your interest in those incremental dollars and sort of the underlying support that we maybe can't see from the reallocation?

Yeah, so thanks for the question, Luke. I'll give some top-level thoughts and I'll let Laura give some additional detail. I think it's important that part of what you're seeing is the sequential impact because we're looking at it on a quarter-over-quarter basis, first quarter 2026 versus first quarter 2027 fiscal, there's a little bit of a timing impact here. If you would look at the comparison or run rate comparison of the executive teams, it's actually not a significant change. As a matter of fact, it's a reduction from the structure in the past. But as we've added talent and we have a timing impact, that's why you see this change on a year-over-year basis, although part of it is also variable count.

Yeah, and these costs reflect the leadership changes we've made over the past 12 months to strengthen our foundation and position us to capture the growth ahead. We've upgraded talent. We're building out a global organization. We're bringing a new global leadership across operations, manufacturing, strategy, and supply chain. We also need some of the ongoing external support to help us get through this transformation.

And I think, Luke, another thing to keep in mind is we've talked about There's a rotation of investment to support data centers from some of our existing business. There's also some new talent that has to be brought in there to help us from an engineering perspective. And honestly, there is some spend as we think about it from a global planning and a global strategic activity that we're spending that from an SG&A standpoint but it's what is allowing us to drive the performance and reduce some of the other costs and better serve our customers. So I'd rather spend it with talent that helps us drive the growth than in premium freight and scrap.

Speaking of data center in the slides, you mentioned that there was just a bit of a timing benefit in data center sales this quarter. Can you size that or maybe more importantly just explain what's going on there?

Yeah, there were some just pull-aheads. So we're not expecting the full year to change, but we did have pull-aheads come up into Q1 from later in the year.

We're still reaffirming the number that we gave you from a year-over-year.

At 103.

And then last question for you, John, just curious to get an update on How are you thinking about some of the pillar franchises within the company, especially some of the areas we don't discuss as much, such as lighting or electronic, and just where we are in the life cycle of this transformation journey that you're on. Are we at a stage where you're starting to think about any portfolio actions or just, yeah, what you're thinking is there right now would be helpful.

So, thanks for the question, Laura. The Nordic lights, let's talk first from a lighting standpoint. The Nordic Lights franchise and the Nordic Lights business has been pretty much underappreciated but an extremely successful acquisition and an extremely successful business. The team has done a great job of supporting customers around the world and we continue to grow there and we're seeing pretty significant growth on the scale of that business on a year-over-year basis. What we've done with regard to our creating the global structures is where actually the stuff that the customer does not see the commonality from a supply chain perspective and a commonality from an engineering perspective gives us the opportunity for some of, for example, the leader in engineering who came from Nordic Lights is now the lighting leader around the world. So we're using some of the Nordic Lights capabilities to help drive growth in other pieces within Method. Graycon, as we have talked to you before, has been challenged twofold. One, with regard to some past strategic decisions, and then also with regard to commercial vehicle volumes, particularly in North America. We're seeing those commercial vehicle volumes start to come back, and we've also got some initial business wins on the Graycon side. And honestly, one of the bookings that we had in the $75 million was a commercial vehicle win on the power side. that actually was built upon the relationships that the Greycon team had with our commercial vehicle OEMs. So what you're seeing is the lighting business continues to grow. We continue to build synergies behind the scenes on the back office side, engineering, operations, supply chain, while deepening our focus on each of our individual customers. So whether it's Nordic Lights or the Greycon brand, and I'm really, are all confident in where that's going and how that can continue to grow. With regard to Hetronix, it's a team that's continued to actually drive growth there. We've got some exciting new things with a couple of our customers there also. So both Hetronix and the controls business within Hetronix and the lighting business We don't talk about it as much, but we see growth on both sides. With regard to the portfolio, we're constantly looking at what can we do to refine the portfolio that fits with our strategic direction and also may give us some opportunities to further accelerate our balance sheet cleanup. Nothing to talk about right now, but that is how we think about it here. I'll leave it there. Thank you.

Your next question is from John Franjeb with Sidoti & Company.

Good morning, John and Laura. Thanks for taking the questions. Good morning, John. I guess I'd like to pick up where you just left off. When you talked about the new order being about $75 million annualized at peak and $400 million over the life duration, it sounds like a lot of that's coming from the commercial vehicle market. I'm curious about a couple of things. Does that peak run rate, is that something you'll probably hit within the next 12 to 18 months? And how much of that reflects the strong order book we see in CV? And you kind of just touched on some new market penetration also. I'm kind of curious if we can deconstruct that.

Yeah, so thanks, John. So primarily, so the $75 million is less than a third is commercial vehicle. The majority of it is new business wins with new automotive customers.

OK.

for electrification, but more for hybridization. So we have talked in previous earnings calls about opportunities that are being presented to us by new customers who are re-looking at their overall supply chain and their footprint, and if you will, their supplier footprint, and that's where the majority of those booking wins come. The Commercial Vehicle Award is for a power product, not on EV side, but using some of our power technology for one of the commercial vehicle OEMs. So the answer is nothing that we talked about in the 75 million is just tied to additional sales. It's not about a rising tide lifting all boats. These are new awards. Now, in answer to your second question with regard to when would we start to see the volumes, the majority of these launch Thank you. Thank you. and what this signals for growth beyond our data center growth that we talked so much about.

Thank you for that. And on the automotive side, I'm getting some mixed messages out there, so I'm curious to hear your thoughts. Are there any changes in your production assumptions for your customer base? I guess in your case, if we take it by geography, that would be the best way to kind of look at it for me.

Well, so As we talked about in the script, we're seeing some revenue tailwinds in North America. And that comes down to, and because we don't, we're not represented across the entire, as we've said before, John, we're not a SAR based, you can't just calculate our progress one way or the other based on SAR because we're not across all of the end customers. But with our customer mix and some of our products, we're seeing Some tailwinds with regard to SUVs and pickup trucks that are selling more. In EMEA and particularly Asia, are the revenues down a little bit? Yeah. And particularly in China with a couple of our customers, we've got some headwinds there. So overall automotive revenue, North America is up, China is down, and EMEA has got a little bit of headwinds as well.

Okay, thanks for that. And one last question to maintain the CapEx guidance came out of the gate with only $3 million. So just a big pickup in spending. Can you kind of talk us where the spending is going and the timing of it?

So we spend, it's roughly half and half between maintenance capital and new business and new capital. And so some of that is just the timing of programs and the timing of when we are adding equipment. As we've said in the calls, We're doing a great deal of re-utilizing existing capital as we're supporting transfers, whether it's with the data center transfers or some of the other things. But there will be new investments that are put in place on the plant floor in order to support growth in multiple of our end markets. And yeah, we're comfortable with where we are from a CapEx forecast at this point.

OK. Thank you. I'll get back to you.

Thanks, John.

Your next question for today is from Ryan Sigdahl with Craig Hallam Capital Group.

Hey, good morning, John, Laura. Good morning, Ryan. I want to dig into the cost a little bit more. So you had 5.9 million recurring talent and capabilities. I presume that is a recurring cost going forward, but maybe help us level set if that's kind of the right assumption to continue to assume or if that needs to increase. And then They caught a 6.7 million of one-time costs. Is that right? Or are those kind of double counting between those buckets?

Yeah, thanks, Ryan. For the investment and the talent and capabilities, yes, we do expect that to continue this fiscal year. Going out into further years, though, we will not need as much support externally. That's included in that number. But throughout the rest of this fiscal year, we do see that continuing. As far as the one-time in nature costs, those were related to the divestiture in Q4, so we're going to continue to have that through this fiscal year, that decrease there. And then the premium freight, that was related to the production transfer, and there were execution issues with that from Asia to Mexico. and those issues have been resolved. So we do not see that continuing going into the rest of the fiscal year, just seeing probably minimal premium freight going forward.

How much specifically was that premium freight and execution issues?

If you look at slide 8 reference there, it's $2.3 million.

Great. And then just the talent and capabilities. I guess curious if you're willing to comment on how much of that is data centers and then give an update on the design work with your hyperscaler customers, specifically on 800-volt architecture, where you're at, any incremental details. Just curious if you're willing and able to share anything more at this point.

So, Ryan, thanks for the question. Let's start first with... When you look at investment and talent, as I said, it's a change in talent at the senior team, but it's not a change in expense at the senior team. Where you see the additional expenses is we've added commercial leadership from a data center standpoint. We're adding additional engineering there. We mentioned that we're adding commercial leadership in our millerial areas. We've done some things with regard to manufacturing strategy, a global head of quality, actually improving our overall strategy team. Those are all investments, shall we say, a couple layers down from me that really help to build a much more robust both planning and execution structure within the organization that, as we've talked together, making sure that when we talk about performance for method that there's a level of confidence going forward. We understand what underlies it. So that's where that investment comes in, is it's investment in capabilities across the organization to make us much more sustainable quarter over quarter, year over year with regard to our performance.

Any comment from a data center specifically?

I mean, are we spending more engineering on data? Are we spending more money in engineering for data centers as well as outside help? Yes. Are we breaking that out specifically? We are not.

Fair enough. Automotive, it's been in decline, obviously, for program roll-offs and reasons we've talked about for many years. You mentioned some crosswinds, some headwinds in Asia and Europe, maybe some tailwinds in North America, but maybe level set kind of today, I guess, directionally, do you think that from a revenue perspective. It's why we're able to reaffirm guidance. What we see right now from a SAR perspective and what we see right now with the equivalent of

S&P in EMEA and in Asia gives us a level of confidence that what we say from a revenue perspective were flat. Yes, there's some mix between the regions. From a performance perspective, as we said, we expect Egypt and Malta to continue to improve. on a year-over-year basis. We have 500 basis points worth of performance improvement in Mexico. We expect to see that to continue to improve. And we've got business and facility refinement broader in Europe and in Asia that will allow us to continue to drive profitability there. So the performance that we see on a year-over-year basis from an automotive and from an overall method standpoint isn't based on revenue tailwinds. It's really based on what we've done to take structural cost out and continue to take structural cost out. And the team around the world is absolutely focused on what do we do to drive that performance in each of the regions. So the answer to the question is we feel confident that we can continue to drive performance. Will there be some fits and starts as we go here? And it's part of why we've had to make the investment in talent that we've made and why we will still have some external support to help us through this, but we do feel good about where the profitability profile is and how we can drive more performance.

Thanks, John. Laura, good luck, guys.

Thank you.

As a reminder, if you would like to ask a question, please press star 1. Your next question for today is from Gary Prestopino with Barrington.

Hi, good morning, John and Laura. Good morning, Gary. John, I wanted to ask you on these new awards, particularly in the hybrid electric vehicle market, are the bulk of these awards dealing with actual hybrid vehicles, or how is it split in regard to pure EVs versus hybrids? and where are these new awards coming from? Are they domestic U.S., foreign, or are they in Europe?

So they're all hybrid awards. Let me be clear with that. They're not EV awards. Secondly, they are to be manufactured in, for all of these awards, they are to be manufactured in North America, so manufactured in Mexico. Other than the commercial vehicle award that we talked about, all of those awards are with new customers to Method. So Gary, it's directly consistent with what we've said that our footprint and our capabilities with the global turbulence from a supply chain standpoint, the global turbulence from a tariff standpoint, Our capabilities are creating opportunities for us, and these awards are a demonstration that those capabilities are being brought into fruition with tangible awards. Okay. All right.

And then I think this question was asked, but I don't know whether you really answered it, at least to my satisfaction. In the data center area, you're working on this 800-volt capability. Is that 800-volt architecture out in the market now, or is that something that we're going to see in a year or two?

So it is not out in the market now. And it's why, Gary, we have been very clear to say, yes, we're spending engineering on it. Yes, we are working with our partners on development activities, but none of it is in our guidance because it is not out in the market and we do not have any business awards. So all of the growth that we talk about from a revenue perspective in fiscal 2027 is with the current architectures. We are spending money on the advanced development and the future activities with regard to 800 volt, but none of that's in our revenue forecast. And we believe that we're in a strong position with the leaders in the space. So no, nothing's out in the market, and we do believe we're well positioned there.

Yeah, I guess the question I would have is when does this actually come to market?

Well, the first thing that has to happen is a demonstration that it's viable and, very importantly, that it's safe. With current architectures, the voltages at the racks are safe for the people around the rack. At 800 volts, with the sort of voltage and current that we're talking about, That is no longer the case. So what we're working on and the solutions that we are working on, we talk about bringing automotive related safety activities into the data center side is making sure that an 800 volt high current architecture can be done safely. So we have to demonstrate that first. And we expect that later this fiscal year, will have proof of concept and demonstrate that, and then that should turn into customer awards.

Okay. And then are you concerned at all about some of what's going on with the data center pushback? Various states are putting a moratorium on them and all that. I mean, give us your thoughts on that and what's going on in the markets.

So there was an interesting op-ed in the Wall Street Journal yesterday and a couple of things right on the headlines talking about the fact that, yes, it's a little bit of a political football, but that this is the right thing for the U.S. economy. So we watch it, we monitor it. We do believe that some of the pushback actually will drive additional efficiency in the architectures. So the 800-volt architecture will ultimately drive efficiency in the data center. And the way in which these things are done, there's a lag in what the world and what the press understands with regard to data centers. What we're working on is the future state, but some of that pushback due to the lag is pushing innovation. So are we watching it? We're not seeing any softness from a revenue forecast standpoint, and we do see that as we're working on advanced development, we're aligned with where those opportunities should go in the future. Okay, thank you.

We have reached the end of the question and answer session and today's conference call. You may disconnect your lines at this time. Thank you for your participation.