Good day and welcome to the iAccess Alpha Virtual Best Ideas Winter Investment Conference of 2025. The next presenting company is Strattec Security Corp. If you would like to ask a question during the webcast, you may do so at any point during the presentation by clicking on the Ask Question button on the left side of your screen. Type your question into the box and hit send to submit. I'd now like to turn the floor over to today's host, Jennifer Slater, President and CEO of Strattec Security Corp. The floor is yours. Thank you. Good morning, everyone. I'm Jennifer Slater, President and CEO of Strattec. I'm here today with our CFO, Matt Pauli, and we're excited to tell you more about Strattec. Before we begin, as you are aware, we may make some forward-looking statements during this presentation as well as during our Q&A. As noted here, these statements are covered under a safe harbor. First, for those of you who may not be familiar with Strattec, we were founded in 1908 and became public in 1995. We're an automotive supplier that provides highly engineered and innovative solutions across a wide range of products that you can find on your vehicle, from power tailgates to frunk latches and key fobs. Our customer mix has been historically concentrated across the North American original equipment customers with General Motors, Ford, Ford, and Stellantis. Our product portfolio is relatively balanced. While the majority of our products serve directly those original equipment customers, we do have about 8% of our business that is sold into the aftermarket. Our footprint is concentrated in North America with our headquarters in Milwaukee, Wisconsin, a customer center in Michigan, a distribution center in El Paso, Texas, and then the majority of our assembly operations are in Mexico. Beyond our strong development and testing capability, we also have strong manufacturing capabilities from a component standpoint with die cast, stamping, injection molding, and PCBA manufacturing capabilities, but we also have strong system assembly manufacturing. I joined the company last July, and since then, we've been singularly focused on transforming the business across four strategic initiatives. Starting with making sure we have the right capabilities, culture, and alignment, we have a full new executive team and have been making progress with key capabilities throughout the other layers of the organization. We're keenly focused on increasing communication and expectations on our culture pillars to drive increased innovation, improve collaboration, break down silos, and drive for results. From an innovation standpoint, this is not just at a product level, but we are also looking at new ways to enable our business processes. We're also refocusing on the customer to make sure we have the appropriate external view of our business, which is fundamental to our growth. Clear and consistent communication, goal alignment, and prioritization have been key in our culture and our leadership transformation. Secondly, to make sure we're driving results on the key priorities, we instituted a strong business operating system. This has allowed us to make the improvement in our margin cash flow and helps us continuously evaluate and address our cost structure. We're still making progress here, but I'm proud of the team, the work the team has done to drive more stability in the business. As we think about our revenue growth, we took a strong look at our pricing opportunities, and we were able to capitalize on short-term opportunities. While I feel we primarily address the low-hanging fruit in the business, we continue to build the capability to think about our pricing in a more strategic manner. Finally, but extremely important, we've been on a journey to modernize our business. Our starting point was very low, so there's been very simple things like automating our benefits, moving from paper expense report, and building other basic business processes, but they've really been critical in our transformation to help enable our teams to focus on the more critical items that drive the business. I'm extremely proud of the progress the team has made. We've navigated a significant amount of change in the business, but there's still a significant amount of work to be done on our underlying operations and continuing to lay the groundwork for our long-term growth. This slide really translates the actions from our transformation into the results. We've been able to improve our margins and cash balance steadily over the past five quarters. As I mentioned, we definitely have more to do, but I'm pleased that our transformation effort actions are delivering bottom-line results. Shifting to our future, our products have historically been categorized in three areas. Our security and authorization products are our traditional locksets, key, and key fob products. We've continued to drive innovation here with our digital key technology, which I'll cover in a couple of slides. Next, the company acquired a division of Delphi in 2008, which includes our power access products and also contains all of our other access products, including door handles, which are supported by our joint venture partner. Our engineers did a great job taking what we historically did in our security and authorization business and what capabilities we gained in our vehicle access business to create a new product portfolio with select user interface controls. This created new customers and new products, but as we've continued to look at the market, there's less and less switches going in consumer vehicles. The market is already served, so we will continue to support the customers we have in this space with legacy continuity, but are more focused on our growth in our security and authorization and vehicle access business. Diving into our power access products a bit more, these products have a strong depth of technical expertise to provide strong value for our customers. Our products combine the electronics engineering, software engineering, and manufacturing expertise to drive seamless system performance to the end-item customer. Historically, we've had strong relationships with the North American OEMs, and we feel as access proliferates throughout the vehicle, we have opportunity to provide increased content across a wider subset of customers, starting in North America, where we have a strong supply chain. As a reminder, in automotive, it's a very long-cycle business, so laying the groundwork today translates to longer-term revenue growth. Moving on to our digital key product. This is the next generation of a key fob for your vehicle that integrates seamlessly with your phone using Bluetooth and ultra-wideband connection technology. While there are advancements made in vehicle access, we feel strongly that key fobs will still be an important part of the majority of vehicles over the next 10 years. We're also finding that customers that were going away from the mechanical lock and key fob are looking to put these back into their product planning for transferability, safety, and security. Our products are uniquely positioned based on our long-standing history to provide software and electronics packaging that meets customer requirements, along with our USMCA manufacturing footprint. To sum things up before I hand it over to Matt, we expect our revenue to closely follow North American production in 2026. We are proud of the margin improvements and cash generation that we delivered from our transformation actions and are working through several near-term supply chain challenges in the market that impact vehicle production and efficiency. We will continue to be focused on our transformation. With some of the big rocks dealt with operationally, we're now providing a heavier focus on our products and our growth, and with that, I'll turn it over to Matt. Thanks, Jen. Before we open up for Q&A, I'll review our most recent financial results. As a reminder for everyone, we are at June 30th, fiscal year-end, so our most recently completed quarter ended September 30th. Our first quarter results, we ended with $152.4 million in sales, so it's up about 9.6% on a year-over-year basis. That's on a backdrop of the North American Automotive production that was up about 4%-5% in the same period. So our performance in the first quarter outperformed the market, largely driven by pricing benefits for some pricing actions that we implemented in 2025, excuse me, favorable sales mix, and we also had some new program launches that benefited us. As we look forward, we would assume that the program launches will level out here in the back half of fiscal 2026. On the right-hand side of the slide, you see our annual revenue numbers from fiscal 2022 through fiscal 2025. On a trailing 12-month basis, we're at about $578 million in sales. It's about a 4% growth rate over the last four years, a combination of both pricing actions as well as additional volumes. Next, if we look at our cost structure, both gross margin and our SAE, from a gross margin perspective, our gross margin was 17.3% for the first quarter, which was up about 370 basis points year-over-year. The improvement in gross profit was driven by increased volumes, restructuring savings for actions that we took in 2025, and also the pricing actions. Jen mentioned our footprint. We do have operations both here in Milwaukee as well as in Mexico. In Mexico, we do have the headwind from increased labor costs on a year-over-year basis, just given increased labor driven by the government-mandated increases, and we also have a headwind from FX. From an SAE standpoint, we expect our SAE to be in the 10%-11% range, and the increase on a year-over-year basis was driven by higher equity compensation costs and some investments in the business. Next, if we look at our bottom-line results on slide 14, whether it's net income, adjusted net income, or adjusted EBITDA, you'll see the improvement in our results over the last five quarters. The highlight for first quarter is we delivered $9.2 million in adjusted net income, or $2.22 per share, and we delivered $15.6 million in adjusted EBITDA, or roughly 10%. Next, if we look at our balance sheet and kind of cash generation and capital flexibility, at the end of the first quarter, we had $90 million of cash on the balance sheet and only $5 million of debt outstanding. The outstanding debt relates to a revolver on our joint venture. We also have a Strattec revolver of $40 million that we recently extended the maturity for an additional three years. During the first quarter, we generated $11 million of cash from operations, which is consistent on a year-over-year basis. From a CapEx standpoint, think about our CapEx as roughly 2%-2.5% of sales on an annual basis. When we think about our capital priorities, our capital priorities in the near term are more internally focused. We'll continue to generate cash and add it to the balance sheet. We do acknowledge we're in North American Automotive. It's a cyclical business. There's some uncertainties regarding the supply chain, tariffs, and so we'll be conservative on our cash, but also use some of that cash to drive organic growth as well as some of the operating improvements for the transformation. On a longer-term basis, we'll consider M&A, but obviously, that's a longer-term process. We're in the early innings of defining what that framework would look like for Strattec. And lastly, just to leave you with kind of the Strattec investment rationale, these are hopefully points that Jen and I covered this morning. The Strattec story is a transformation story. We're in the early innings of that transformation, and it's a combination of both driving additional sales growth as well as improving our operating efficiency and our cost structure. We've got a new executive team that's excited about the opportunity, and lastly, we've got a strong balance sheet to support us in those transformation efforts. With that, I'll open it up for Q&A. If you have any questions, please go ahead and enter them into the chat. We have one question. What are the main drivers behind the improving gross margin trend this year? Yeah, so the improvement in gross margin is really, there's kind of three key drivers. First off, it's the additional volume. So as you saw in our first quarter with over $150 million in revenue, the volume definitely helped us from a gross margin perspective. We also implemented pricing, and then we did some restructuring actions in 2025. So you see the benefit of those three things really driving the margin improvement on a year-over-year basis. The next question in the queue is, where are supply chain costs and logistics trending compared to last year? Yeah, first on the supply chain costs, we haven't necessarily seen significant inflationary cost increases in the business. There's obviously some pockets with certain individual suppliers, but on a broader perspective, we haven't seen significant increases in supply chain costs. Logistics, I would say, is similar. Obviously, the biggest challenge we face right now in kind of the supply chain logistics is the tariffs and mitigating the tariffs and working with our supply chain team there. Yeah, I do think that there are things happening also in the environment with the Novelis fire, the Nexperia chip issue. There's been some recent border issues that also impact supply chain because it's our goal just to make sure that we're meeting on-time delivery, and whenever you have unpredictability in where the North America production is and blips that impact your supply chain, it drives inefficiencies into the business. The next question is, are you seeing any signs of stabilization or recovery in North American auto production schedules? I would say in this quarter, like we talked about, there was the Novelis fire that impacted some of our customers. They're really working to build back what they, any softening that they've had in the quarter longer term. I think the market projections, external market projections, every quarter and every month that they are published, they're lifting a bit, but I think there is still quite a bit going on in the environment. So there still is a bit of uncertainty on what North America production is going to look like versus last year and any softening impact. The next question is, do you expect working capital needs to increase as new programs launch in 2026? Yeah, from a working capital perspective, our working capital is about 17% of sales. Our longer-term target is to be closer to 15%. We don't have significant new program launches in the back half of fiscal 2026, but I think the team has done a nice job in reducing our working capital over the last five quarters. So I don't see a significant increase in working capital as we look forward in the back half of the year. Yeah, and I think just to add on to Matt's point about launches, for our addressable customers who we've historically supported, they're actually in a lull of launches as well. While they transition their thinking with some of the regulation changes that are changing the balance of their electric vehicles and internal combustion engines, so it's more of just an output of where our customers are with their vehicle launches as well. The next question is, where do you see gross margins on new projects you are bidding on? Yeah, from a gross margin perspective, just to put it, our fiscal 2025, we ended at about 15% gross profit. In the first quarter here, we ended at 17% gross profit. Our longer-term expectation is to be in the 18%-20% for gross profit percentage. That's where the business has been in the past. And it's a combination of additional volume, pricing, and then some improvements in operational efficiencies. We're in the early innings of some of those opportunities, especially around automation on the shop floor. The next question is, can you expand on how the mix shift toward higher value lock and ignition products impacts profitability? I think from that, we are still doing quite a bit of work on kind of operational improvements and strategic pricing. So as we continue to improve the business and look at where the value is for our customers from a value-based pricing model, we're still working through where we think the opportunity will be. I think we've given some expectation on what our target margins are, but not necessarily at a product level. The next question is, shift back to internal combustion engines. What impact will that mix shift have on your business? The advantage for our product portfolio is we really are powertrain agnostic. So our products support both internal combustion engines and hybrid and electric vehicles. The impact that we do have is once we're sourced on a platform, we're sourced on that platform typically through the life of the platform. So as our customers are making changes in their platform mix, we may see some sensitivity based on the amount of content we have on one platform versus another, but there is not an impact of our product portfolio between internal combustion engines, hybrid, and electric vehicles. The next question is, are European manufacturers an opportunity for growth? In the presentation, when I talked about traditionally, our customers have been the North American OEMs. With a strong supply chain in North America and more focus from our customers on local supply for local manufactured platforms, we really are taking an approach to say, where do our products have a fit across all customers? As I said, the life cycle in automotive is long. Right now, laying the foundation of what products would apply to those customers that we haven't necessarily addressed to get into their vehicle platforms in 2029 and beyond. We're really taking a holistic view of the customer set and where our products will be a good fit for those customers. Just to add to that, roughly 60% of our volume gets shipped to a U.S. production facility. The other 40% is to Mexico, Canada, Korea, and to various European production sites. The next question is, can you provide more detail on new business wins this year and how they contribute in fiscal year 2026? I think for this, I'd really reiterate the long-cycle business in automotive. Typically, when you're looking at getting introduced on a new platform, you start pretty early before a request for quotation comes out. That's usually one to two years before an RFQ. When customers do sourcing in North America, once they release an RFQ, that platform then launches three to four years after that timeframe. So as I talked about, we're really balancing on improving the business as well as driving new customer relationships to support our growth, but we really see that as a longer-term growth opportunity. The next question is, how should we think about volume expectations from your EV and next-gen platform programs? I think I mentioned that our products are powertrain agnostic. We see that as an advantage as mix shifts change. We have a product portfolio that meets all powertrain types, and it's really just working with our customers on what platforms they're releasing in the market and when. The next question is, how are conversations with OEMs evolving around pricing and cost-sharing? I would say that that becomes more critical for us, has been more critical for us as we've navigated tariffs with our customers. Most of our customers, this is facing their entire supply base. So they've worked with suppliers to make sure that they've got a process for reimbursement, and obviously also working with the supply base to make sure that long-term suppliers have a plan to reduce any tariff impact. The fact that we are majority USMCA certified helps us with that because we don't have a tariff impact on our final assemblies from USMCA. We do have some components that come from other regions, and we're working longer term with our customers on how we would support a transition to more local supply, so with that, I appreciate everybody's time this morning. Hopefully, you have a better understanding of where we are on this transformation journey. As Matt said, we're still in early innings, but we're really proud of the team and the work and the progress that we've had over this past year, and we're looking forward to continuing to build on that progress as we move forward. I hope everybody has a great day, and thank you for your time. Thank you. That does conclude Strattec Security Corporation's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.