Good day, ladies and gentlemen. Thank you for standing by, and welcome to the EnerSys' second quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press the star then the one key on your touchtone telephone. Please be advised that today's conference is being recorded. If you require operator assistance, please press star then zero. I would now like to hand the conference over to your speaker host today, to Mr. David Shaffer, President and CEO. Please go ahead, sir. Thanks, Olivia. Good morning, and thank you for joining us for our second quarter fiscal 2022 earnings call. On the call with me this morning is Mike Schmidtlein, our Chief Financial Officer, and Andrea Funk, our Vice President of Finance of the Americas. Before we get started, I would like to wish everybody a Happy Veterans Day. Last evening, we posted slides on our website that we will be referencing during the call this morning. If you didn't get a chance to see this information, you can go to the Webcast tab in the Investors section of our website at www.enersys.com. I'm going to ask Mike to cover information regarding forward-looking statements. Thank you, Dave, and good morning to everyone. As a reminder, we will be presenting certain forward-looking statements on this call that are based on management's current expectations and views regarding future events and operating performance and are subject to uncertainties and changes in circumstances. Our actual results may differ materially from the forward-looking statements for a number of reasons. Our forward-looking statements are applicable only as of the date of this presentation. For a list of factors which could affect our future results, including our earnings estimates, see forward-looking statements included in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, set forth in our quarterly report on Form 10-Q for the fiscal quarter ended October 3rd, 2021, which was filed with the US Securities and Exchange Commission. In addition, we will also be presenting certain non-GAAP financial measures, particularly concerning our adjusted consolidated operating earnings performance and our adjusted diluted earnings per share, which excludes certain highlighted items. For an explanation of the differences between comparable GAAP financial information and the non-GAAP information, please see our company's Form 8-K, which includes our press release dated November 10th, 2021, which is located on our website at www.enersys.com. Now let me turn it back to you, Dave. Thanks, Mike. Please turn to slide three. Our second quarter results reflected a combination of record market demand across all of our segments, with Q2 2022 orders 36% higher than the same period pre-COVID fiscal year 2020, but accompanied by continued inflation and supply chain challenges. We reported second quarter adjusted earnings of $1 per diluted share, which was a slight increase over the second quarter of last year. Our Motive Power and Specialty businesses delivered better than expected results, while Energy Systems continued to be disproportionately impacted by its Asia-sourced supply chain. Strong demand led to our quarter-end backlog reaching an all-time record exceeding $1 billion, which is more than double normalized levels. The backlog growth primarily occurred in our Energy Systems and Specialty lines of business and is indicative of extremely robust end- market demand over and above the COVID recovery. Let me take a minute to provide you some added color of the current economic environment. As has been a common theme among most industrial companies this earnings cycle, we are facing a number of challenges in the wake of the global economic recovery as businesses aggressively compete for labor, materials, and transportation, all while still navigating isolated COVID disruptions. The trend we saw in Q1 has continued with nearly $20 million of sequential cost increases in freight, wages, lead, non-lead commodities, and semiconductors. Our team continues to take aggressive actions to mitigate these pressures, including the implementation of additional price increases, resourcing of materials, and engineering redesigns. As these issues stabilize, our financial results will more fully reflect our record backlog, enhanced profitability, and across-the-board demand for our products. I'd now like to provide a little more color on some of our key markets. Please turn to slide four. Let's start with our largest segment, Energy Systems, which continues to see robust demand with Q2 2022 order rates increasing over 50% compared to pre-COVID Q2 2020. We saw exceptionally strong demand in 5G mid-spectrum and broadband. We also received our first orders for the California Public Utilities Commission Public Safety Power Shutoff Extended Network Backup program. Shipments for these orders are expected to ramp in Q3, Q4, and into fiscal year 2023. In addition, we believe these programs may be extended to other states, presenting another opportunity for future growth. Countering the strong demand is the fact that Energy Systems has our longest and most complicated supply chain, which was therefore the hardest hit by the macroeconomic environment in the quarter. The Energy Systems price recapture cycle is longer due to the project nature of this business while working through the contractual obligations of its lengthy backlog. As a result, in Q2, ongoing pricing actions lagged inflation and were largely offset by mix. With more service revenue offsetting higher margin electronics orders that could not be shipped or could not be delivered due to chip shortages. Tariff mitigation strategies, including our efforts to move contract manufacturing out of China and closer to home, continue to be slowed by semiconductor availability. Freight costs for Energy Systems alone rose sequentially an additional $6 million in the quarter, doubling the prior year level. While Energy Systems operating earnings this quarter were disappointing, market demand and macro trends, combined with additional price increases and the resourcing of electronics, still point to an extremely positive long-term path for the business. However, due to the current state of the global supply chain, especially availability of semiconductors, our third quarter will remain challenged. That said, as many of our commodities inflation trends appear to have peaked, we are confident our price recapture initiatives will catch up in the near future. Please turn to slide five. Despite the challenges we noted in our Energy Systems business, one of EnerSys' core strengths is our diversification. Our Motive Power business continued its positive momentum during the quarter, outperforming both top- line and profitability expectations as demand returned to pre-COVID levels. Revenue decreased $15 million from Q1 due to the traditional European summer holidays. Nevertheless, we believe this business has not yet reached its full potential as our OEM customers' demand has been hampered by their ability to secure chips. Margins improved as a result of price and mix improvements as well as ongoing OpEx efficiencies, with Motive Power enjoying nearly 20% higher operating earnings than the same pre-COVID period in FY 2020. Our NexSys TPPL and recently released lithium variants continue to generate enthusiasm in the market. In addition, the restructuring of our Hagen, Germany facility nears completion ahead of schedule on cost and timing, with savings beginning to be realized. We will also continue to extract additional savings with further standardization of our legacy product offering and other business transformation initiatives. We remain well-positioned to benefit from a steady recovery in this business throughout the balance of the fiscal year. Please turn to slide six. Similar to Motive Power, our Specialty business delivered a solid quarter. A&D is performing well, and demand in the transportation business remains extremely strong, slowed only by TPPL supply constraints in Americas and Europe. We expect very robust transportation growth in Q3 as a result of our focus on aligning capacity with demand, and our belief that the truck market will continue its growth into calendar year 2022 as a result of the improving economy and their anticipation that chip shortages will improve. Our thin plate pure lead production capacity continues to grow, and we will exit the fiscal year at our planned run rate of $1.2 billion per year. The financial performance for TPPL manufacturing has been under significant pressure all year long, with COVID-related staffing and supply chain shortages hampering productivity. We expect significant reductions in manufacturing variances next fiscal year as the supply chain issues slowly subside. Reduced manufacturing variances combined with a record backlog and continued strong demand signals from our transportation customers gives us immense confidence in the future of our specialty business. Please turn to slide seven. Our product roadmap is one of the most exciting areas of our business, as the technology advancement of our product pipeline has been long in the making but well worth the wait. We have fully launched 11 lithium variants for Motive Power Group and continue to expand our product portfolio. We have received OEM approvals, and the family has successfully completed all witness UL testing. The demand for lithium products throughout our Energy Systems Group also continues to grow. In addition to the lithium portion of the California PUC success mentioned earlier, telecom and residential home energy products are all performing well on UL tests. Progress on the development of the Touch Safe product with Corning continues to go well. Customer plans for their high-frequency networks using this solution are accelerating. Last but certainly not least, our EV fast charge and storage initiative is quickly moving forward. Feedback from our potential launch partner customer has been very positive, including speed and development as well as the level of software maturity. We should see our first revenue for this product next fiscal year. EV charging is a key focus of the recently passed infrastructure bill. Please turn to slide eight. Looking ahead, our near-term challenges revolve around addressing global supply chain issues as well as rising commodity and labor costs and shortages. We are actively working to mitigate these pressures through incremental price increases, alternative sourcing, engineering redesigns, and aggressive hiring actions. We will remain nimble as we adjust to the changing environment. Despite these hurdles, there is a lot about EnerSys to generate real excitement. Current demand for our products is greater than I can ever remember, fueled by a massive 5G build-out and high-growth categories such as transportation. Our future growth opportunities include significant investments in rural broadband, high-frequency small cell deployment, EV charging, home energy storage, transportation market share growth, increased defense allocations, and material handling OEMs returning to normalized levels. We will continue to execute on our strategic initiatives and look forward to providing you updates on our progress in the quarters ahead. With that, I'll now ask Mike to provide further information on our second quarter results and go-forward guidance. Thanks, Dave. For those of you following along on our webcast, we have provided the information on slide nine for your reference. I am starting with slide 10. Our second quarter net sales increased 12% over the prior year to $791 million due to an 11% increase from volume and 1% from price net of mix. On a line of business basis, our second quarter net sales in Energy Systems were up 9% to $370 million. Specialty was down 3% to $101 million, and Motive Power revenues were up 22% to $321 million. Motive Power's improvement was mostly from 20% growth in organic volume and 2% improvement from pricing. The prior year, Motive Power second-quarter revenues were significantly impacted by the pandemic, resulting in a 21% decrease in organic volume. Our Motive Power revenues for H1 of this year, however, are comparable to the pre-pandemic levels of two years ago. Energy Systems had a 9% increase from volume, as well as 1% improvement from FX, but had a 1% decrease in price after including negative mix. Specialty had a 5% pricing improvement that was offset by an 8% erosion in volume, due largely to delayed shipments. We had no impact on revenue from acquisitions in the quarter. On a geographical basis, net sales for the Americas were up 14% year-over-year to $550 million with 14% more volume. EMEA was up 5% to $180 million from a 3% increase in volume and 2% in pricing. Asia was up 10% at $61 million on 7% more volume and 3% currency improvements. On a sequential basis, moving to slide 11, our second quarter net sales were down 3% from the first quarter, largely due to the normal vacation holidays in Europe and supply chain shortages. On a line- of- business basis, Specialty decreased 6%, with supply constraints pushing out order fulfillments into Q3. Motive Power was down 5% due to the European holiday season previously mentioned, and EMEA was flat. Excuse me, Energy Systems was flat. On a geographical basis, Americas was also relatively flat and Asia revenues were up 8%, while EMEA was down 11%, mostly from lower volumes. Please now turn to slide 12. On a year-over-year basis, adjusted consolidated operating earnings in the second quarter decreased approximately $5 million to $61 million, with the operating margin down 160 basis points. On a sequential basis, our second quarter operating earnings dollars eroded $14 million from $75 million, while the OE margin decreased 150 basis points to 7.8%, primarily due to the persistent supply chain headwinds and inflation in Energy Systems which Dave has addressed. Operating expenses, when excluding highlighted items, were at 14% of sales for the second quarter, compared to 15.7% in the prior year and 16.1% from two years ago as our revenue growth exceeded our spending growth, and we have maintained a more efficient operating leverage. On a sequential basis, our operating expenses were relatively flat. Excluded from operating expenses recorded on a GAAP basis in Q2 are pre-tax charges of approximately $12 million related to $6 million in Alpha and NorthStar amortizations and $4 million in restructuring charges from the previously announced closure of our flooded Motive Power manufacturing site in Hagen, Germany. Excluding those charges, our Motive Power business generated operating earnings of $41 million or 12.8%, which was 370 basis points higher than the 9.2% in the second quarter of last year due to strong demand and easing of pandemic-related restrictions, favorable mix from maintenance-free growth and ongoing OpEx constraint or restraint. Operating earnings dollars for Motive Power increased over $17 million from the prior year and $6 million from two years ago. On a sequential basis, Motive Power's second quarter OE decreased 220 basis points from the 15.1% margin posted in the first quarter due to the vacation season volume decline noted earlier, along with higher lead and other input costs. Energy Systems' operating earnings percentage of 2.3% was down from last year's 8.8% and the prior quarter's 3.5%. OE dollars of $9 million were $5 million below last quarter and $22 million below prior year. The costs from higher freight, tariffs, and materials caused the OE erosion, with unfavorable mix from supply shortages offsetting the lagging pricing improvement realization. Specialty operating earnings percentage of 11.8% was up from last quarter's 10.6% and last year's 11.4%. OE dollars were largely flat sequentially and year-over-year. Driving the margin improvement from improving pricing was the lower sales volume. Please move to slide 13. As previously reflected on slide 12, our second quarter adjusted consolidated operating earnings is $61 million, with a decrease of $5 million or 7% from the prior year. Our adjusted consolidated net earnings of $44 million was in line with prior year, but $11 million lower than the prior quarter. Our adjusted net earnings reflect the changes in operating earnings along with a lower adjusted tax rate. Our adjusted effective income tax rate of 16% for the second quarter was slightly below the prior year's rate of 17% and lower than the prior quarter's rate of 18%. Discrete tax items caused most of these variations. Second quarter EPS rose slightly year- over- year to $1.01, although it was slightly below the bottom of our guidance range. We expect our weighted average shares in the third fiscal quarter of 2022 to be approximately 42.5 million, versus the 43.3 million in the second quarter. As announced in our subsequent events footnote and last night's press release, we acquired nearly 743,000 ENS shares for just under $57 million after the second fiscal quarter ended. Our board of directors also recently renewed the $100 million share buyback authorization we had in place over the last two years that was completed with these recent October purchases. Last week, we also announced our quarterly dividend, which remains unchanged from prior levels. Slides 14 and 15 reflect year-to-date results and are provided for your reference, but I don't intend to cover these at this time. Please now turn to slide 16. Our balance sheet remains strong and positions us well to navigate the current economic environment. We have $408 million of cash on hand, and our credit agreement leverage ratio is now at 2.0 x, which allows nearly $550 million in additional borrowing capacity. In July, we extended and amended our credit facility on favorable terms, which now is in place through 2026. We expect our leverage ratio to remain between 2.0 and 2.5 x in fiscal 2022. Our year-to-date cash flow from operations was a negative $66 million. Included in that amount was $28 million in spending on the previously announced restructuring of our Hagen, Germany Motive Power plant, which in the second quarter started delivering on cost savings that should exceed $20 million annually. The negative operating cash flow was also due to our inventory expanding $123 million to meet rising revenues, as well as from higher input costs and transit times, along with the other inefficiencies induced by supply chain disruptions. Capital expenditures of $35 million were in line with our prior guidance. Our CapEx expectation for fiscal 2022 remains approximately $100 million and reflects major investment programs in lithium battery development and our continued expansion of our TPPL capacity. We anticipate our gross profit rate to remain near 22% in Q3 of fiscal 2022. As Dave has described, all three of our lines of business find their products in high demand. Near-term supply challenges are restricting our ability to execute fully on these opportunities. As a result, our guidance range of $0.96-$1.06 in our third fiscal quarter of 2022 reflects the impact of these supply chain challenges, which we continue to see as temporary. Please move to slide 17. On a longer term basis, we recently renewed or reviewed our updated five-year plan with our board of directors. We remain confident that our top- line growth and overall profitability goals are still achievable with respect to the final year's deliverables. However, those targets, as previously communicated, will take an additional year to be achieved compared to our investor day model in reflection of the delays the pandemic and supply chain challenges have had, not only on our own progress, but that of our customers and their broader markets. Now let me turn the call back to Dave. Thanks, Mike. Before we open the line for questions, I would like to discuss an announcement we made last night along with our usual filings. After more than 25 years with the company and 12 years as chief financial officer, Mike has announced his intention to retire at the end of this fiscal year. While we will miss his wisdom and experience, we are very confident that Andi Funk is the right person to fill this role and help EnerSys complete its transition from a battery maker to a world-class Energy Systems leader. Operator, we will now open the line for questions. Thank you. Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the star then the one key on your touchtone telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Now first question coming from the line of Noah Kaye with Oppenheimer. Your line is open. Good morning. Thank you for taking the questions. I'd start by congratulating Mike on his upcoming retirement and to Andi on her succession in the role. Good luck to both of you. Thanks, Mike. Thank you, Noah. Thank you. Maybe just focusing on Energy Systems to start, this is, I know, a little bit of a high level question. How do you think about structurally improving Energy Systems to make it a higher quality business, more predictable margins, better ability to pass on cost inflation? I mean, the price cost headwinds that were in this segment this quarter may be outsized when considering how rampant inflation is. To not have the ability to get price and obviously, you know, dealing with some significant supply chain constraints aside, how do you think about improving this business over the long term? Yeah, I bet it's. Thanks, Noah. This is Dave. The challenges in a lot of ways started with the tariff pressures and then sort of continued to grow headwind-wise with the shortages we're experiencing and supply chain challenges. They're all sort of mixed together in that. We've had difficulty with our onshoring of some of the products, a significant number of the products, due to semiconductor availability. You know, this business is different than the other businesses, largely based on its supply chain. Then the content of semiconductors in this business is much richer. To improve the quality of the business, kind of what we're trying to do first and foremost is what we can control, which is pricing. The price increases we've been enacting are lagging the rate at which inflation has been increasing, so we've been chasing it for a while. In terms of the competitive landscape, there's no reason to feel our competitors have any less susceptibility to these pressures. It's just a question of staying at it. I think what's in this business compared to the other businesses, it's more of a concentrated customer base. I think that's part of the challenge has been pushing through, and I think they, these customers were able to stiff-arm us a little bit longer than some of our other customer bases are. That said, we're past that phase now, so we've got to get the prices where we need them to be to offset the inflationary pressures. The next piece, this really can't be overstated. A lot of our margin comes from the higher mix content of our electronics products. That mix has been hurt. Our mix in this business has been hurt due to the constrained availability of these higher margin products. The business is unbelievable in terms of the demand side, and we're filling the portions of the orders that we can. A lot of service work, batteries, some enclosures, but these are the lower margin pieces of the business. I think that as semiconductor availability improves, and we are addressing that significantly. I think we're up to over 10% of our engineering resources now have been refocused off of new products onto redesigning to build our products around more readily available semiconductors. That's been a big initiative for us, and that's gonna help in not only the Energy Systems business, but also on the Motive Power business. The charger, the electronics is a smaller piece of Motive, but still very important to the margin. I think price recovery, and then the next phase obviously is an improvement in mix. When these two pieces improve, I think when you couple that with the strong backlog and, you know, I think well-controlled operating expenses, I think you're gonna see a dramatic improvement in these results. Noah, was there any more color you needed on that question? That's very helpful. Thanks. I guess staying with the topic of improving revenue capacity and improving mix, TPPL, good to hear that you're exiting the year on track to exit the year at target. As you think about the revenue uplift on that, and maybe you wanna look at that as something for next year, I guess what are the implications in terms of revenue uplift, and what are the implications for the OE dollars? Because obviously, there's some mix benefits with that, and there's also, I think, further reduction in manufacturing variances. If you can quantify any kind of components of that for us, I think it'd be very helpful. Well, certainly the manufacturing variances have been a very significant headwind this year. We're fighting our way to the $1.2 billion. It's been without the productivity. We've got substantial improvement. I don't have that number at my fingertips as to dimensioning that, but it's in the tens of millions of dollars of headwind we've been constrained with this year. I'm sure Mike can jump in here in a second and help out with dimensions on the manufacturing variance piece side. Then one of the things that. This is something that's It's one of the advantages we have in the business, is we've had dramatic resin availability issues in our Energy Systems business, which has hurt again on the mix side. It's beyond semiconductors, there's been a mix issue. We've been able to offset that by rotating some of that capacity into our specialty business to help on the transportation side. I think as the resin availability improves, certainly that's gonna help and be part of the mix story on the Energy Systems part of the business. Mike, do you have some dimensions for us? Yeah, I was just, you know, on the TPPL question. No, I would say, you know, we'll exit the year at about a $1.2 billion capacity rate. Obviously, that means that sequentially going into next year, we should have $200 million-$300 million of additional TPPL revenue. Now, except in the case of Motive Power, we don't have any flooded variants that go into the specialty transportation market, or in Energy Systems, because we, for the most part, sell exclusively TPPL. It's not a swap like you might find in Motive Power, where we're taking flooded Motive Power and perhaps selling a maintenance-free solution of TPPL, where you get perhaps an incremental margin improvement over the flooded going to TPPL. In this instance, it's really just sales that we, you know, would capture with this increase in market share, which is really what we are doing, is taking more market share. You know, if we get that kind of number, and you put down that, you know, you're talking about. If the improvement itself is pretty substantial. If we can get the variances down, the integration, you get the incremental sales of additional TPPL volume, then you're talking about probably $50+ million of operating earnings on a full- year basis. It could be higher, depending on how well we execute. That, that's very helpful. I mean, it just seems with these two levers, improvement in Energy Systems and TPPL, I mean, there's a clear path to increase the operating earnings, you know, over the coming years. I think, the last question really is around the EV charging opportunity. It's good to hear that you're expecting some revenue next year. Can you just give us a little bit more color on where you're at in the development of the program, some of the things you're doing to, you know, make sure that, you know, the storage system plus the charging infrastructure, you know, delivers the spec for the customer, and any kind of additional color on specific timing within 2023. Would this be sort of front half, back half of the year? Sure. Let me kind of re-summarize that project. We are to put together a system that is an energy storage, a battery energy storage system. It's behind the meter, so it's on the customer side of the meter, and it's between, let's say, 350 and 500 kWh of battery energy storage. Picture a, it's like half of a sea container-sized battery system. That energy storage system is also connected to some 160 kW charging pedestals. We can use those charging pedestals to provide very rapid charging for electric vehicles. Our target so far for this system is commercial real estate partners that have the that enjoy the benefits of the mixed use of this system. They can not only enjoy the energy storage system in terms of peak shaving and solar renewable integration, emergency backup power, but they can also use the battery to provide a very rapid charging, the fastest available charging, for their EV clientele that want to charge their battery at the highest possible rate. In most cases, 99% of the time, our system will be able to provide more charging power than the vehicle is capable of accepting. It's a nuanced focus that we're going after. This isn't a big B to C change. We have a limited number of partners, and the project is moving exceptionally well. We had a good review of the project status with the board recently, our CTO. Again, as I noted earlier, my focus is the initial $100 million plus order for the trial phase. That $100 million looks like it's going to start next year, which we're very excited about. It's excellent progress, and as you may have noted, there's significant levels of committed dollars in the recently House-passed infrastructure bill dedicated towards energy, towards electric vehicle charging. On top of that, there's also a tremendous amount of money's available in that infrastructure bill to grid modernization. A big part of grid modernization is gonna be the introduction of energy storage systems, so that you can separate when you make electricity versus when you use electricity. That's the beauty of these energy- Mm-hmm. These battery energy storage systems. I think there's a lot of potential. It's that bill took a little longer to get through than we had expected, but the pieces that are important to us are very solid. You know, while we're on the topic of that bill, one of the most important parts of that bill that just comes straight into our business is the $65 billion that's dedicated for rural broadband initiatives. In my experience, for many, many years, you have to figure at least 2% of that $65 billion is gonna be related to power. We're extremely well-positioned on providing a vast array of power solutions for our broadband customers to help as they push their networks deeper and closer to rural America. It's a project that's near and dear to my heart, frankly. I think it's a tremendous unlevel playing field between rural America and urban. I couldn't support this project more fully. There's a lot of good things, even beyond the RDOF, the energy or the grid improvements, and then finally, the electric vehicle charging. I think the infrastructure bill is well matched to our investors. Great. Thanks for all the color. Thank you. Now, next question coming from the line of Greg Wasikowski with Webber Research. Your line is open. Hey, good morning, everyone. Thanks for taking the questions. Good morning, Greg. Morning, I was wondering if you could speak to the Energy Systems backlog. Is that strength mostly attributed to pent-up demand from the supply chain headwinds that we've been seeing? Could this maybe be the, you know, the start of the inflection point of the 5G hockey stick, or is it some combination of both? Thanks. It's mostly, there's two major pieces to it. One is orders for power systems for mid-spectrum 5G build-out. Our customers are building out the mid-spectrum right now, and they're installing. You can envision maybe, like a refrigerator-sized cabinet that's filled with electronics and batteries, and they're using these cabinets to provide power and backup power to their 5G antennas. That's a big part of the backlog. Another big chunk of the backlog is related specifically to the California Public Utilities Commission program. As you know, the wildfires in California have created the need for PG&E and others to cut power to prevent, you know, additional fires. It's very frustrating for folks who live out in California to lose power so often. Sometimes these power outages are long, depending on the winds and the weather conditions. The California Public Utilities Commission has mandated that anybody providing lifeline 911 services provide a much longer extended backup. In the past, one of the options obviously was using generators for these extended backups. I know there's some concerns about generators and, potentially, putting into these fire hazard situations. A lot of our customers are opting to use batteries instead. That's a big chunk of the backlog as well. Not in the backlog yet, but should be starting, we're getting much stronger signals that some of the small cell 5G projects are starting to heat up a little bit. That's. That piece of the 5G isn't in there. It's mostly right now in the backlog. It's the 5G mid-spectrum. To your question, you know, we use contract manufacturers. There's a lot of capacity for us to do more on a revenue basis. What's constraining things right now is the availability of the semiconductors. What a lot of these semiconductor distributors and suppliers are doing is allocating their supplies based on your historic usage patterns. Our allocations are preventing us from achieving the revenue. That's part of the reason this is building up. We just can't get enough chips. As I noted, our engineering department is working very hard to redesign our systems around chips that are more readily available. Some chips you can get, and some chips you have to wait a long time on, depending on whether they're A, B, or C items at the foundry. That's a big part of the initiative. Once we can get our designs around available chips, we're gonna be able to ramp up. Part of our ramp-up on contract manufacturing is onshoring that to avoid some of the tariffs we've historically paid to contract manufacturing from China. A lot of our historic contract manufacturing has been Chinese-based, and that's part of the pressure I'd mentioned to Noah earlier. Part of the pressure is we haven't been able to unwind ourselves from that simply because our onshore contract manufacturers can't get an allocation of the chips they need for our products. It's a bit frustrating, but it is going to improve, and we're very excited of our ability to flex up on that contract manufacturing piece. Got it. Okay. Thanks, Dave. Could you comment on the recent delays we've seen in the 5G rollout for the airline safety issues? Is this something that could evolve and end up impacting demand in 2022 and beyond, or do you think it's more short-term in nature? I don't think this is the first time this concern has been flagged. I think this is the feedback we've received from our customers, that it's something they don't expect to be a long-term disruption to the business. It's related specifically to one of the frequencies that they're building out. They have different, there's the C-band obviously, and there's other frequency as well. It's possible that may get people to rotate more focus on some of the small cell construction as well, which operates at a much higher frequency. No, I haven't heard anything from our salespeople or from Drew or anybody yet about that being viewed as a long-term concern. Okay, great. Thanks for the color. Mike and Andi, congrats to both of you. Thanks, Greg. Thanks, Greg. Our next question coming from the line of John Franzreb with Sidoti. Good morning, everybody, and congrats, Mike and Andi. I'd like to start with the Motive Power business. A good quarter. I'm curious whether or not this is a recovery of some pent-up demand from last year, or has there been a meaningful change in the order trends? I know there was once a time you used to talk about, you know, global order rates. Has that moved meaningfully in recent months? I would say that what we're seeing in Motive is sort of a getting back to normal. I don't know that from a backlog perspective, an order rate perspective, that you're seeing much. I just told my people, I don't even look at the COVID year anymore. I don't wanna use it as a reference or a measuring stick for anything. I make everybody go back a year prior. What we see mostly, the biggest storyline in Motive from my perspective is that our OEMs, our OEM customers, are very constrained on their ability to ship, and they're having massive semiconductor and other supply chain issues. I'm very sympathetic. Their build rates are still below normal levels. As their backlogs, they have big backlogs of which we haven't seen the orders yet for the batteries to go along with that. They need to dig out. They're working with their suppliers. Their engineers are doing the same thing, ours are redesigning things. There's some runway left in the backlogs that our OEM customers have. To your point, I don't see Motive. To me, Motive is just getting back to where it should be. You know, it's much more of an acute issue in Energy Systems in terms of the semiconductor content. As I noted earlier, Motive's not been immune to that. There's been a lot of emotion and teeth gnashing even in the last week about making sure, because the margins on these products are accretive, and we miss the mix impact. Part of the upside we have in Motive yet to come is the OEMs getting back on a stronger footing, improving our mix with some more chargers in. Shawn, who's leading that business, has got a very keen focus on operating expense efficiency and modernizing some of the things. I noted in my prepared remarks about some standardization initiatives we have. We still have a tremendous amount of runway left on that business, which I'm very excited about. Okay. Maybe just for my clarification, you mentioned something earlier. On the transportation truck product line, how much of that product is sold directly to OEMs and how much is sold through retail channels? Historically, our focus, as we've noted in prior calls, is a lot of it was with the truck OEMs, the factories. Right. What we've rotated to, because the truck build rates this year have been a little similar to the forklift market, the truck build rates are not yet back where they've been focused. What our sales teams have done is they've put more emphasis on the, what we call the OES. It's the operating original equipment service groups. That's been a tremendous opportunity. They're both for OEM customers, but one's for the factory, a nd one's been on the service side. In addition, as we've noted, but we just haven't had the capacity to fully realize yet, there's a tremendous amount of opportunity in the premium automotive space. That's if you remember from the Investor Day, we said our target is to achieve 20% market share in the Class 8 market and 2% market share in the automotive. I still feel extremely confident that we're on track to achieve that as we bring on additional TPPL capacity. Mike, do you wanna add anything? Yeah, I was just gonna say, John, the one thing you have to keep in mind on the truck OEM market is that oftentimes, you know, we focus on some of the big fleet operators and leasing companies, and they're really the ones that are driving the TPPL demand at the OEM level because they are requiring the manufacturer of that vehicle to put our batteries into it. So it's that pull-through that is really important to us. The OEMs themselves generally oftentimes don't have a great deal of incentive to put in a superior battery because the poorer the battery, the more likely they're gonna be back at their OES level, replacing them out sooner. So we focus on the pull-through from the customers themselves. Yeah, that's a good point, Mike. Okay. Thanks. That helps. Just one question. It's kinda bugging me here. You maintained your CapEx number at $100 million, but it looks like you only did about $35 million in the first half. That suggests a sizable step-up in the spend. What are you spending it on? Where is that money going to? Well, it remains the biggest line item is still the TPPL build-out. You know, some of those chunks are a little choppy in terms of when those suppliers and equipment makers are delivering on their milestones. You know, our expectation is that we will, you know, fully use up the $100 million, although it would look like the run rate would appear that that's not the case. We're still fairly confident that that's based on the projects we have and where we see them progressing, that we'll spend all of the $100 million. Where do we stand in the TPPL build-out? What's the kind of run rate we are at today? Right. Well, as I noted, right now, we're gonna exit this year at a $1.2 billion revenue runway. The max, as we're building out an additional CapEx is going in, we're working to a $1.6 billion number, and that's been previously communicated. All right. That's where we've been at. Andi, those are the right figures. You have any other color? Yeah. I think Mike had, you know, it's about $200 million increase a year, a little more than that, but it's actually a little higher because of some of the price increases that we've been getting with commodity. That's true. Okay. Position. Okay? Okay. Thank you, guys. Take my questions. Thanks. Thanks, John. Now next question coming from the line of Greg Lewis with BTIG. Your line is open. Hey, thank you and good morning, everybody. Hey, congratulations, Andi and Mike. Thanks for, you know, helping me, you know, over the last couple of years. I guess my first question is around, you know, it's been very well publicized everywhere that, you know, transportation supply, logistics remain a concern or gonna remain a concern. Is there anything that EnerSys is thinking about in terms of trying to, you know, minimize those risks, i.e., maybe looking at potentially doing, you know, medium or longer term logistics transportation agreements? Really what I'm trying to understand is, you know, clearly the quarter was hurt. It looks like next quarter is gonna be hurt. You know, is there any kind of way we can think about maybe returning to a more normalized supply chain where your margins aren't getting dinged by that? Well, you know, we had noted in the prepared remarks a lot of the things we are doing. On the semiconductor availability, we're trying to redesign products around more readily available chips. That's gonna help mix. That's gonna help the top line as well. The onshoring has been a big issue with the tariffs, and we think that once we can free up and get our products designed around more readily available chips, that's gonna accelerate some of the onshoring. In terms of the freight, that one has been particularly frustrating. I had a call with the CEO of one of our contract manufacturers in Thailand, and I was talking about chips, and he was talking about freight. I mean, the freight piece has been unbelievably, it's added a lot of inventory to our balance sheet. It's pressured the P&L. We told you that it's been staggering. Now, again, we're not unique in terms of an Asia-based supply chain for a lot of these systems products. To your point, we're always gonna be chasing the price increases until we get a slowdown or an inflection point. The biggest things we're focused on right now in terms of innovative thinking on freight and freight agreements, I don't have any good specifics for you. I'm certain our transport team is doing what they can, and I'll try to come back with what some of the initiatives they have. In general, the freight lines, both air and sea are just congested. The ports are congested, and it's been a big frustration for all of us. Mike, you have any insights? Yeah. Greg, you know, with the price of diesel going up, it's, you know, and labor for those drivers, we know that the truckers are under rate pressure, and they're passing it through. Most of our focus has been how can we be more efficient in our transportation? We're looking at all the ways we move our product between our factories, make sure that we source as close to the point of the end customer as possible. That's really where we're trying to focus on is to plan smarter, so we don't have to be so susceptible to the freight. Okay, great. Then just one more for me. I mean, you know, in the presentation, you know, you talked about the lithium variants gaining acceptance. You know, I mean, any more color you can kind of, you know, provide there, like maybe how we should be thinking about, you know, maybe calendar year 2022 in terms of maybe a shift, business shift mix there in terms of the lithium acceptance. I think from a margin perspective, in the interim years, there's not a huge difference between lithium and flooded. The TPPL obviously is our best most favorable on the GP line. The rate at which a lithium builds out, again, part of our challenges with the lithium program is, you know, to be fully transparent, that the BMS, which is the battery management system, we have semiconductor availability issues as well, and electrical component issues as well, which is a constraint. Some of that, the rate of market acceptance of the lithium, I think it's we don't. You know, the industry statistics don't indicate us losing tremendous amounts of flooded share. The rate at which we cannibalize and move to lithium is gonna be somewhat governed by the availability of semiconductors. I'm certain all of our competitors have the same sorts of challenges. That may slow down things a bit. I think one of the other challenges, obviously for our Motive Power customers, is they're just under such tremendous pressure right now with their own supply chain issues. Things are just a little bit backed up. The point for you is whether we're selling flooded TPPL or lithium, we still have very, very good prospects in the Motive business. The rate at which that conversion takes place will just really maybe dictate some of the longer- term cash needs we might need for footprint rationalization in the long run. In the foreseeable future, all of our factories are gonna be busy. Okay. Great to hear. Thank you all very much for the time. Mm-hmm. Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to press the star then the one key on your touchtone telephone. Our next question coming from the line of Brian Drab with William Blair. Your line is open. Hi. Good morning. This is Blake Keating on for Brian. Hello, Blake. Hi, Blake. You know, I was just kinda curious, you know, what is the outlook, you know, for your forklift battery business over the next several quarters? You know, have you noticed that you're potentially losing share to other lithium battery providers in the forklifts and other markets? No, I would say our business is right now, as we noted, in pretty good shape. I think the mix has been hurt because of the electronics availability for the chargers more so than with the lithium batteries. We have very solid backlog prospects. Our quote log for lithium is very big in our sales force CRM. There's plenty of opportunities out there right now. It's just we're in a bit of a supply constraint situation. Blake, I'm not aware of any big changes recently or share changes. The industry statistics I receive on a fairly regular basis don't indicate any major shifts. For us, it's just Motive is sort of getting back to a normal footing. I think I love what we've done over the last five years on the product positioning and then I really like what Shawn's doing on the OpEx side. I think, again, I think the outlook is going to improve as semiconductors improve. I certainly don't. You never wanna stick your head in the sand, but I'm not aware of any significant share losses to competitive lithium products that have changed in the last six months or eight months, or however long. All right. Thank you for the details. Have you noticed any systemic limitations to your visibility compared to like a normal supply chain environment? You know, have you noticed anything just kind of pop up that you didn't, that you don't normally see in a normal environment? I think surprise is a word I hate, and it unfortunately is a new part of reality. When we're setting these forecasts and so forth, things can come up. A lot of it's freight related, a lot of it's port congestion related. Things that you think you're gonna ship this quarter aren't. One of the biggest pressures, and Mike was talking about how significant the manufacturing variance pressure has been this fiscal year -to- date, is one of the reasons because of the significant number of changeovers we're forced to do because parts just don't show up. You change over, you set up the line, you're getting ready to run something, and then it doesn't show. It also creates inventory mismatches where you order lids and boxes and parts for one thing 'cause you're gonna build something, and then a certain terminal doesn't show up, and now you're sitting on a bunch of lids and boxes that you can't use because you don't have all the parts. So it's been the worst in my 32-year career. I've never seen anything like it. Our ops people, you know, are working as hard as they can. But surprise, it's surprise after surprise. But that said, we just continue to adjust and look forward to a more predictable level of service from our suppliers, and most, in almost every case, it's not our suppliers, it's their suppliers. A lot of the root cause issues come down to the same things, which is semiconductors, or resins, you know. It's led to an inordinate amount of manufacturing variances this year. That's just not TPPL, that's all of the factories. Andi, did any- All right. Did I miss anything there? Okay. No, I think you got it. Thanks. All right. Anything else? No, I'm good. Thank you. Appreciate it. All right. Thanks, Blake. Thanks, Blake. I am showing no further questions at this time. I would now like to turn the call back over to Mr. David Shaffer for any closing remarks. Well, I wanna thank everybody for taking the time to attend our call today, and we look forward to providing further updates on our progress on our third quarter 2022 call in February. Have a good day, everyone. Ladies and gentlemen, that concludes our conference call today. Thank you for your participation. You may now disconnect.