EnerSys ($ENS)

Good morning, everyone and welcome to EnerSys 2026 Investor Day. We appreciate you taking the time to be here with us today, whether you're here in person or joining us virtually. I'm Charlotte Murnan, Senior Analyst of Investor Relations, and I'm pleased to welcome you to today's event. We're excited to spend the morning with you and provide a more detailed view into our company, our strategic priorities and the opportunities ahead of us. Before I get to the agenda, I want to remind everybody that we'll be making some forward-looking statements. There are risks and uncertainties related to these statements. Please refer to the details in our safe harbor slide as well as our 10-K, which is a full list of those risks and uncertainties. With that covered, let's go to the agenda. We have a full event planned this morning. We're going to begin with Shawn O'Connell, our President and Chief Executive Officer, who will discuss our focused strategy and how EnerSys is positioned to win as leaders in the diverse and growing end markets that we serve. Following Shawn, Mark Matthews, our Chief Technology Officer and President of our Precision Power Solutions, will dive deep into our customer-centric approach to innovation and new product development. From there, Keith Fisher will discuss Network and Infrastructure Solutions, followed by Chad Uplinger, who will discuss Industrial Mobility Solutions. At the conclusion of Chad's presentation, we'll take a short break and then return for John Benetti to cover Precision Power Solutions. Andy Funk, our Chief Financial Officer, will then tie everything together and discuss how we are driving financial focus and discipline to deliver our long-term value creation framework and shareholder returns. Shawn will share some closing remarks, and we'll jump into 45 minutes of Q&A. For those in person today, we'll conclude with a lunch and a product showcase, which will give you the opportunity to see the elements of our unique customer-centric solutions. Before I turn it over to Shawn, we want to share a quick video with you that will preview the exciting things you're set to hear about today. [Presentation]

Thank you, Charlotte. Good morning. For those who don't know me or I have not met, I'm Shawn O'Connell, President and CEO of EnerSys. I'm happy to say I see a lot of faces in the audience I do recognize and certainly, thank you to those joining us virtually today. I've been around the industry about 30 years. I've been in the EnerSys universe since 2003. I actually started as an outside representative of the company, a power integration business on the West Coast, largely doing what you're going to hear in Keith Fisher's business today, power integration. So I actually got to see this great company from the outside in a customer, if you will. And then I joined in 2011 as an employee and since that time, I've held leadership positions throughout our business, the privilege to work in every area of our company. And so I have a deep fundamental understanding of what we do and our customers. Today, for us, is it about one thing, describing to you and explaining to you how EnerSys is positioned to win in a changing energy landscape. For our part, we've sharpened our strategy. We've aligned an amazing leadership team. You're going to hear from some of them today, and we are together focused on what we need to do to drive profitable growth. And what we plan to do today is walk you through how we're going to leverage all of our strengths to deliver to you long-term shareholder value. As we go through the morning, I want you to contemplate 4 key points. We're going to start this way and in this way, when you think of our value proposition. First, and probably the most common question I've gotten in my -- I've now just finished my first full year tenure as CEO of the business. And the most common question I get is, Shawn, what's going to be different? And I'll tell you, and I want to be very clear here, it's focus. It's focused on our core markets, focus where we have meaningful share where we have a lot of mass customer understanding and a clear right to win. Secondarily, our customers are all grappling with 2 main themes at the moment: energy security and labor scarcity. Let me bifurcate for you in your minds, you understand it, this energy security issue. For most of our careers in the Western world, power was just something you could depend on. Now that's not true. There's an aging grid infrastructure. It's not ready for the loads that are hitting it now or tomorrow. So just the access to reliable power for operational continuity is no longer assured and the cost of what you and all of our customers are going to pay for energy can only go up as that infrastructure gets invested in. EnerSys can solve these 2 main challenges, not for the whole market, for our space, that specialized space. The third thing I want you to take away from today is EnerSys really stands alone when you finally -- when we walk you through what our markets are and how they are differentiated in that space, we stand alone being able to provide these end-to-end solutions from products, software and services to walk this journey with our customers and deliver value in these very attractive but very specialized growth markets. And then the final thing you should take away from today, and I hope it comes through in the presentations is that this team that we have here today, it's not a collection of individuals working together. It's a team. It's working together. It's hitting its stride. And it's actually totally aligned on our energized strategic framework and how we're going to continue to transform our company and deliver value and growth. I'm going to talk a lot about where we're headed today, but let me just tell you where we're at. EnerSys today is about $3.8 billion top line revenue company. We have excellent earnings generation, excellent cash generation, well above the average. We serve over 10,000 customers around the world through 3 primary segments: Network and Infrastructure Solutions, industrial mobility solutions and Precision Power Solutions, and I'll describe these to you in a moment in more detail. But these are different businesses. These are different lanes for us. But from a technology stack perspective, we can very elegantly deploy our technology stack across them. And when we do, we get a great deal of resilience to that diversity because these markets tend to operate in slightly different cycles. And then on top of that, we get multiple growth levers. So I told you I'm going to describe the segments. And if you've been in the stock, I'll tell you what it was before the current name. But only last month, we announced resegmentation and renaming our businesses. And what this is about is that word I started with, focus. We want to deliver absolute clarity to our own teams, to our customers, to our suppliers and to you what the mission of these businesses are and where we're going to spend our time, money and energy. So Network & Infrastructure Solutions is the business that is -- used to be known as Energy Systems that's providing critical power systems into communications networks, data centers and powering industrial utilities. Our next segment is now Industrial Mobility Solutions. It would have -- it now has in it what would have been motive power and the transportation portion that was in our specialty business. So they are now combined, and this is powering warehousing and logistics and over-the-road Class 8 trucking for the material handling network. If you think about it, it makes perfect sense. Some of our largest forklift fleet customers operate some of the largest Class 8 truck customers. So now we're getting all that customer synergy and benefit in being able to put that mass together in those accounts. Finally, Precision Power Solutions. This is the aerospace and defense component of what was in the specialty business, along with some of the other critical applications that they do. And the name is exactly -- is a perfect fit for what these guys do. They offer the most demanding or support the most demanding critical power applications on and off planet Earth. Mark and John will tell you later, we were on the Artemis program that everybody just watched on TV. We were powering several platforms on that program and programs like that. So Precision Power Solutions. Again, our technology stack can be very easily and elegantly deployed for us across these 3 segments to offer that great resilience and great growth lever. We are not trying to be all things to all people. We purport to solve those 2 major challenges I told you about, energy security and labor scarcity, this aging grid that isn't ready for what's happening and being accelerated by AI. And I don't want you to think about AI in terms of, well, it's just giving the data centers a lot of power consumption. Those big large training model data centers, they consume massive amounts of power, and they have a dirty little secret. They can go from 100% load to no load in milliseconds. And when you're managing a power grid, having too much capacity is just as bad as not enough capacity from a stability standpoint. And the grid operator only has one choice, just turn it off, right, close breakers. So this is a big problem for our customers. The grid is becoming unstable. And at a time when they most need labor to solve it, they can't get it, certainly not qualified labor. So EnerSys is going to stay in our lane, not solve these problems for the market at large, but in these specialized high-growth markets that we serve and where we have a right to win, we'll deploy our technology stack to solve these issues. I've been talking about our technology stack. Let me just go into it in a little bit of detail here, so you understand what we're talking about. EnerSys -- there's really 4 elements, battery energy storage, power electronics, software and services. At our core, we have always been a battery energy storage company. I've hand signed drawings from Thomas Edison in my office and writing because we trace our evolution all the way back to Edison. But we are a chemistry-agnostic battery company at our core. It might surprise you to know, I often get asked, how is EnerSys going to handle the lithium transition? We make 9 chemistries of lithium batteries at EnerSys today. In fact, we have for decades. We're going to talk about some of the things we're powering with the most demanding lithium battery applications on the planet that we already make. We have a full suite of lead acid technology solutions. We have our advanced thin plate pure lead technology that's growing at a double-digit CAGR in many of our markets. But the point is this, there's no one battery that just fits every application, right? No one battery does that. But there's a good battery depending upon the application, and that's how we deploy the technology. Power electronics, what do they do? Their job is to keep that battery that we selected in a healthy state of charge and ready to do its job and disperse power to the end application. The software that we deploy manages those power systems to the extent that they can without human intervention to help with that labor issue. They also aggregate power across multiple systems. Why? Because it gives our users optionality in additional revenue streams, additional power or energy arbitrage, additional cost offsets with their utility. And then when human intervention is necessary, we have a team of highly trained associates around the world that are EnerSys employees that can do everything from the design phase, installation, implementation, system maintenance and certainly end-of-life services to wrap the customer in that entire experience. I mentioned at the beginning, a big differentiator for us. In our space, we really stand alone in being able to offer all of these organically at EnerSys. This is a very important slide. If you remember one today, remember this one. Now that I've showed you our technology stack, I need to go a little bit deeper on our differentiation. EnerSys and Mark Matthews, our CTO, will talk about today how we make a decision whether we would make a cell or buy a cell because there's a different value proposition based on the market and who we're selling to. But most of our value add after that begins after the cell. And the reason I tell you this, I've been at investor conferences and somebody says, boy, I open the Wall Street Journal and the relative cost of an automotive battery pack is so low, how is EnerSys ever going to compete? You got big companies in Asia doing 40 gigawatt hour. We don't really care. All things being equal in the open market, everybody is going to buy the cell at that price, and those aren't the cells where we're adding value anyway. Everything we do starts after that. For example, there's not a pack we deploy today in the world that looks anything like an automotive battery pack. So our value add begins immediately as we put batteries into a form factor that works for the application. We then have to take that battery, whichever one we selected and make sure that there's a battery management system that manages that one. Again, a level of customization and a level of departure from that EV battery pack. We then have to figure out what power electronics are going to go with it, how that battery communicates with the end application. And believe me, it's different in every one of our markets. And then we put all of that into an end packaging. Maybe in telecommunications, it's the enclosure that you see at the bottom of a macro site. When we do that, they all have their own safety requirements, whether it's UL or CE, they all have their own regulatory requirements, IEEE requirements, telecommunications standards. So it's a lot of work and a lot of knowledge and a lot of EnerSys history is tied up in making sure we know how to do that for the customer and in the end, those deployment and services piece. And when we do this, we are no longer a vendor or supplier for our users. We've actually been in co-development with them. At this point, we're actually just more like a member of their operational team solving these issues. Big differentiator here for us. And so I really need to make sure this is clear in your mind when you leave here today. This gets us into our sustainable competitive advantages. These are very high-trust environments. I'll pick on data center for a second. You might think with all trillions of dollars of investment, there's a lot of people managing the environmentals inside data centers. In fact, it might surprise you to know this is a very small cadre of people that actually manage data center environmental. It's very small. Very small. I'd say battery is a small [indiscernible] industry. They're even smaller than us. There's not a lot of people doing this. They can't make a bad bet on a supplier. There's too much at stake. They have the investment, they have the revenue goals. So a shiny new widget to them with somebody that they don't know can walk the walk and be there for them when there's an issue, doesn't mean a lot. EnerSys has these deep relationships and a seat at the table in these accounts. Then we have our domain expertise, which has been informed over decades of engineering investment, co-development with our customers, service experience and the customer locations. We've walked the walk with them. So we understand exactly how they function, what the challenge is now and what they're trying to achieve. Then we have our modular technology stack. I talked about this being a huge differentiator that we can deploy. And Mark likes to say, all of our customer issues are the same problem, disguised in slightly different packaging. And for us, that's true. For us, it doesn't matter if you go up to an 800-volt data center battery down to a 24-volt telecommunications battery. It's power electronics, it's a voltage, it's a battery component. For us, it looks very similar. But we can very elegantly better than most deploy our technology stack at scale across these end markets. And of course, those end markets to reiterate, give us a great deal of resilience. We couple that with a phenomenal balance sheet. We're in a great position, phenomenal cash generation, so we can continue to invest in those markets for our customers. Finally, as a going concern, we have a large operational footprint. And that operational footprint is going to provide additional -- you've seen some of them this year. It's going to provide additional opportunities for us to squeeze value out of that apparatus and deliver that long-term growth and value. One last thing on this slide that I thought was kind of interesting. I had our team put it on here. Battery energy storage, late markets to battery energy storage. There are some players out there now. It seems that their battle cry is how many gigawatts of power are under management for them. I guess it's a way to tell the Street that they're being successful. And there's one now that's very popular. It gets a lot of press. I'm not going to name them. And I think they have 22 gigawatts of power under management. And I thought, well, let's do our math. So I said, okay, let's just take a look at our annual production. Let's take a look at the average life of our systems deployed in the field. And we did that math very conservatively, we're probably powering about 85 gigawatts of power every day in the world and some of the most demanding critical applications out there. I'm not sure how many people could say that. In any event, our markets -- and for as much as I told you in the beginning, we have a compelling market share. We have leading market share, and we're focused on places that we lead. But even at $3.8 billion, you can see with our service addressable market that we have a lot of runway to produce value and a lot of room to grow. And we are exposed to 2 of the main megatrends of our time. This issue of energy security is affecting all of our customers. We happen to be one of the largest battery suppliers to data center in the world today, but it isn't just the data centers, it's everybody else that needs help with energy security. At the same time, we're the #1 supplier to the U.S. Department of Water for battery and many of our NATO allies. And what are they doing? The U.S. is going for $1.5 trillion budget with battlefield electrification at the top of their list. NATO allies are having their budgets increase. So we're right in the middle of one of the most compelling conversations that have ever existed in this space. I want to double-click just very quickly on this growing energy demand issue. I was talking to a gentleman in the room earlier. I happened to live in North Texas during the pandemic in Dallas. And at that time, the grid regulator of Dallas or the grid operator of Texas, ERCOT, had a situation where they had exceeded their safety margin and the demand on the grid exceeded their capacity to deploy power. And it was weird to watch whole sections of Dallas, Texas go offline and go dark. The reality was there were ample generation resources in the Gulf of Mexico with renewables. The problem was they didn't have the transmission lines to get the power from where it was generated to where it was needed. And this is sort of illustrative of what's going to happen to the power grid. There's now a multiyear, multibillion-dollar project to get that extra distribution in those transmission lines. It's going to take time. It's going to take money. There's going to be right-of-way lawsuits, all that kind of stuff before they can get that fully implemented. This is what's going to happen to the entire grid, and it's only going to get worse and that intermittency issue of those AI data centers to stabilizing the grid. And the only thing that can ameliorate these problems -- the only thing that can ameliorate these problems in the near term and even the midterm are going to be battery energy storage systems. EnerSys isn't going to solve that for the whole grid. We're going to solve it for our customers that want us to do this. The defense investment, a little bit different story. And this is a very important point here. The Ukraine conflict showed the entire world that the future of the battlefield is electrified. The future of the battlefield is drones, it's autonomous, and there's no way to do that without a battery. Here's the sticky wicket. Most battery constituent battery elements and cells either originate in or controlled by China. If you're the U.S. Department of War and your method of mounting and defense in the future is controlled -- battery is controlled by your #1 peer threat in the world, you have a major problem. And that's exactly their energy security issue. It's exactly the conversation that EnerSys is right in the middle of and being asked to help solve. Okay. I've been talking about what we're going to do. I'm going to still talk about what we're going to do in a minute. Let me tell you about how we're doing it. We announced last year our energized strategic framework. Very simply, once again, this is about focus. This is about being very clear to ourselves, our customers, our suppliers, our shareholders, what our focus is and what we're going to do. So optimizing our core wasn't just about the $80 million in cost saves we took. It was about cutting away anything that wasn't adding value and that was distracting us from our core mission. And the team has done a very nice job doing that. The next thing was reorganizing our business in a way and putting in the metrics, the operational metrics and rigor that enabled us to move faster and know with data on those metrics, whether we are being successful or not. And all of that was to enable us to move quicker, accelerate our growth with new product introduction and strategic M&A. For those of you in the room, when you go out into the foyer and when you spend time with our people, I want you to know there are products out there that were not conceived of a year ago, not just that we hadn't developed them. They weren't even conceived of. There are products out there on the floor. They're not plastic mockups. And every product you see out there is already in customer trials already. So we went from nothing to customer trials in a year. It has never happened in my time with EnerSys since 2003. I have never seen it in my industry and talking to some of my colleagues, that's fast for any industry. And that's exactly what's coming from the alignment and clarity that we're developing here at EnerSys. It was all enabled by our centers of excellence model sort of underpinned all of this. I'll just touch on this very briefly so that you understand what this means. We have 3 centers of excellence. But if you think about from the supply chain, procurement, engineering perspective, just intellectually, even though you don't come from the business or may not come from the business, those lifts or those activities involved with lead acid, lead and separator paper and the heavy capital-intensive legacy lead acid battery manufacturing environment, much different than the folks that are dealing with the microprocessor supply chain, software, a lot of asset-light contract manufacturing. And those 2 things are much different than new technologies, lithium, those constituent supply chains, much different engineering lift. So we just made it official. We came up with 3 centers of excellence, and we tucked each one under a P&L leader. So there are no longer any participation trophies at EnerSys. You got to get something done and you're responsible for the P&L leader when you spend money. So Chad Uplinger has the lead acid COE. Keith Fisher has the Power Electronics COE, and Mark Matthews and his team of engineers that do those 9 chemistries of lithium batteries, they have the lithium-ion COE, and it's working very well for us. Okay. For all the talk about discipline and cost and all that, I don't want you to think we're not placing bets. We're placing 3 very big bets, but we think they're very safe bets and they're back in our core or either that or a near-term adjacency. We have a clear right to win. And in every case, we don't have a customer acquisition issue. In every case, customer is asking us to do it. Don't got to go out and find a customer. And in each case, this is in our technology wheelhouse. Let me start with battery energy storage. A lot of talk about battery energy storage in the world today. What are we doing that's different? Well, we're going back into our IMS segment, where we already in North America, as an example, have 55% market share powering the electric forklifts in these warehouses. So think of it this way. EnerSys is already the partner that manages the battery energy storage component they utilize today. We then -- these warehouses are going to the utility and saying, I want to add another bank of chargers. I want to extend my forklift fleet. And the utility because of that power famment issue or that energy security issue is saying, I don't have the capacity to give you or I have a 3-year wait to set a new transformer at your location. So what do they do? Just stop operating. They need help. Our battery energy storage system can solve this, but here's what we're doing different. Not only we already know the warehouse to manage the battery power in the forklifts, we can marry the 2 together with our technology and with our charger. You're going to hear more about that today. And we can offer a solution that's leveraging all of the energy storage assets in the facility to mitigate their power famine issue, to allow them to island if they want to, if they get no power, allow them to sell power back when forklifts are idle. So we can have a lot more optionality there. Again, those other players in energy storage don't have that material handling knowledge. It's a differentiator for us. The next big bet we're making is lithium data center. Now we have North America, a similar market -- over a 50% market share position in lead acid. Our TPPL batteries are growing in data center at a double-digit CAGR. We have a seat at the table with every UPS OEM out there for centralized UPS. We have a seat at the table with all the hyperscalers. We have contracts with many of them that we already maintain and service their equipment and deploy our battery. If we know lithium -- if we know how the battery is acting in the application, we already know lithium batteries. This isn't an adjacency for us. It's right in our core. We've just been slow to deploy this product until this year. There's one outside. You're going to walk out and see it. And that battery has a competitive advantage. It will take -- and they're going to get into this later and where another lithium supplier in the market today needs 5 cabinets, we can do in 2 cabinets. So it's going to give a big real estate benefit back. It's going to give a big cost benefit back. It's a really sharp system. But again, we have a right to win in this space. Customers are asking us to do it. We're already maintaining some of their lithium batteries in their network. There's no technical lift for us. It's just about getting it executing over the line. So we're very, very happy about that bet, but I think it's a safe bet. Finally, aerospace and defense. We are the #1 supplier to the U.S. defense apparatus for battery. Their whole goal now is electrification of the battlefield. With our Bren-Tronics acquisition, Rebel acquisition, we've consolidated our mass with the Department of War, and they are asking us to solve this problem of domestication of lithium batteries and not just for drones, but for drone charging out at the forward edge of battle and also counter drone activity that I'll tell you a little bit more about in a second. So we've -- in the past, more than a year ago, we announced we were going to do a lithium plant. We've spent the last year changing what that looks like. So there was an administration change. The old premise of the plant was we were going to do something in the electric vehicle supply chain, charging electric vehicles. And we didn't have -- at that time, there was an uncertain view of could we attract customers. We've totally changed that. We've totally derisked it. We've taken some time because we're moving at the pace of government. But now what we purport to do is solve their issue with domestic FDSC compliant supply chain. It's going to be a different cell form factor. We can't tell you all about it today, but I'll tell you a little bit about it. But think of it this way. When you go out in the foyer, you're going to see the Rebel Hyperpower system. It provides hybridized power to the battlefield to the forward edge of battle. The center of that system is a Bren-Tronics lithium 6T NATO battery. The center of that battery is a cell that we buy today. When we build this factory, we will then make that cell. When we do that, we will close the loop on the entire ecosystem for drone powering. And I can safely say that we believe when we build this plant and do that, we will be the #1 supplier in the drone powering ecosystem on the planet for NATO and Western allies in the U.S. defense apparatus. One last thing on what we do, kind of cool. There was a Wall Street Journal article maybe a week before last, and they had -- it was all about counter drones, if you search counter drones in the journal. And there's a munition in there called Lightweight 30. It's a proximity round. And you can fire it into the air, gets anywhere near the drone, takes it out. That munition, you'll see it in John Benetti's presentation, it's got a little thermal -- or I'm sorry, liquid reserve lithium battery in there. It is made exclusively by EnerSys. So the #1 counter drone round in the world is powered by EnerSys. We make it in Horsham, Pennsylvania. So very excited about this. Incidentally, we're not going this investment alone. We're being co-invested by the U.S. government and the state of South Carolina. So a bet for us, but again, I think a very safe one. Okay. I can see on the confidence monitor, I've already exceeded my time. So I'm going to be coming to the end of my comments. We've done some amazing stuff this year, and all of the good growth things that we're working on are ahead of us. None of it is possible without a phenomenal team. You're going to hear from some of them today, but we have assembled a group of, frankly, rock stars. And we know we're not perfect. We know we've got a lot of work to do, but this team is totally aligned and working together to deliver on profitable growth and deliver long-term value. I'm so excited for you to hear from them today and see what I get to see every day. So with that, I'll turn it over to Mark Matthews, our CTO and President of PPS.

All right. Thank you, guys. I know I've been told I talk fast, but I feel like we're in the right city to talk fast today, so I'm not going to slow down. So again, Mark Matthews, I'm our CTO. I've been at EnerSys now going on 10 years. I've been in the battery industry for 30 years now, which is scary. So I've been in the aerospace and defense lithium business for a long time. You hear John Benetti and I have worked together. He's got aged as well as I have, but I'll leave that with him. But it's the most exciting time I've ever seen in the business. And I think, Shawn, when he talks about energize, we'll talk what that means to us. What that really means to us is understanding that our markets -- we happen to be in the right markets across the board. So when we talk about IMS and Chad, we'll talk about the products we're developing for that division, they are energy starved, and we can solve that problem. They're going to need our solutions. Data centers, you can't turn on the news about in data center. And the products you see out there, the team has done a great job of recognizing what our customer needs are and how we move that forward. And in aerospace and defense, as Shawn mentioned, we can't get enough manufacturing, electrification. It's -- we're in every conversation going forward. From my perspective, I have the coolest job in EnerSys because I'm responsible to deliver to Keith, Chad and John, the products that are going to make this business grow. So -- and that's what I love to do and what our team loves to do. So when we talk about expanding from the core, it's exciting because we already own these markets. and we're able to make products and align with those road maps to go forward. So I'm going to walk you through today really how we've evolved over the last year in terms of taking the EnerGize process and then turning that into new products and some of the shifts we've made to be more chemistry agnostics and those type of things going forward. So we'll walk through that. And obviously, we're very proud of the tech showcase we have here is go out and take a look at that, and we can walk you through. And the people that made those products a reality like Dave and Kerri and Kyle back there, they are the voices that turned it into a reality for us. So Shawn talked about it, so I'm not going to beat this up too much. The key drivers for us is about creating this customer-centric approach. I got the opportunity, I guess, 2 weeks ago, we were at our sales meeting in Phoenix, and you realize one of our key strengths is our contact with our customers. We have a huge depth of knowledge into our customer base, and we have a long history of being trusted with there. So our job became how do we take that knowledge and turn that into products. So that's been this customer-centric LOB aligned approach to innovation is something that we've really been driving hard with our teams, and that's why one of the big reasons we've been able to move faster. That market expertise we have is significant. We have people that have lived in those markets become part of EnerSys and that culture around our alignment and trust that we've developed with those customers over the 100 years of EnerSys is why we are different. We recognize -- I was told one time, I'm a chemical engineer. So I was told like one of our senior leaders, what do you think is the most important about EnerSys -- and like we're a chemistry company. He's like, no, no. We're a sales company that makes chemistry. And he's right. We have such strong application expertise -- how do we use that and weaponize that to get products out. And that's been our alignment to make that a reality. And the other thing we do critical applications. So how do we get value out of that? The fact that we do things that cannot fail, the fact that Keith will talk about Five 9s reliability, and Benetti is going to talk about 11 billion hours in space without a failure. That is what our customers value. We are not just a battery. We're a system that allows them to do things and allows them to provide products and services that aren't allowed to fail. And we take a great deal of pride from an engineering standpoint that we can do that. So as we go through, just keep that in mind, that's the fundamental changes. It's around taking our market expertise and turning into products, and that's really what my focus is. We look at what we've done. So I think you'll see this in Chad's presentation, I was taken back by some of the numbers he put up as we put this together the last few weeks. But we talk about where we start. We are a great chemistry company and always have been. We do, as Shawn mentioned, 15 different chemistries that solve all different applications. I'm of the belief when we talk chemistry agnostic that any chemistry and there's no specific a bad chemistry, there's just a bad application of a chemistry. So we look and say, what is the right fit and how do we align the chemistry that we have with that solution, you'll see that chemistry-agnostic approach that we take. But we do that well. We've always manufactured and make chemistry well. The next thing we've done is power electronics, as Shawn mentioned. But what's key about our power electronics? What's key is we embed intelligence. And so what we've done over the last several years, and this started with the guys in IMS and you're seeing it in Keith's business as well, and we're now seeing it with the products we're making in PPS -- let's get that intelligence out there. So we're putting all these smart batteries, these smart systems, how do we then capture that data and evolve our systems going forward. So when we look at this, that is kind of the next step for us. So you'll see that we have tons of data points we're getting in all of our markets. Now how do we use that to create a solution product? And that's the evolution of our solutions is the power, the management of that power and then how we integrate that going forward. And that's where we see the Envision, the Fort and the Data Safe in the war really taking its shape. It's taking all that intelligence and power and power electronics and energy and then utilizing that to solve customers' problems. So it's a very simple concept. As Sean mentioned, we're not going to try to make it sounds complicated. We take stored energy and we release it when the customer needs it to solve their problem. That is it. And we do that better than anybody else, and we have the service teams to support that. So when you see these products, we have -- we can go fast because there's similarity in all these products that we're building, even though they're very different end applications. So this is the biggest difference in our development process is around the strategic acquisition and disciplined approach or strategic approach to product development. So what I like to tell people and our teams is that when Keith and Chad and John go talk to their customers and their teams go talk to their customers, we want those customers to look at us as the power electronics, battery energy arm of their business. They want them to be comfortable. And with that, we align with their road maps. So what this cyclical approach is around the innovation cycle is not only solving the problem next year, but how do we know what Keith's problems are going to be in 5 years and how we develop our core technologies that are going to differentiate and add value to us in that time frame. So as we created this process, we are much taking advantage of that leverage we have with our customers to share our road maps where we want to go, align that with them and then we can create products around that. The key to that is that creates one stickiness because we're engaged in next-generation solutions. The other thing it really does is it helps our ROIC. We're working on the right things. So we put a lot of discipline coming out of the aerospace and defense business, where John and I are project management is core to us. And we want to put discipline into our product development process that not only are we developing faster, we're developing the right things, and we're developing at the right cost. So this whole process helps to really narrow that down and align strategically, are we building the right things? Is this going to solve these customers' problems? Is today's data center in going to fix today? What does it look like in 3 years? What does it look like in 5 years? And do we have those products now to get the market? We're never going to be in a position where we're not ahead of our customers' needs going forward. That is critical to us because that means we're not taking advantage of what our core strength is of EnerSys. So this innovation cycle has started to take off. We're getting better at it. We'll get even better and better and faster as we go forward. And the other thing we wanted to make sure that we get across to this team and to our teams at the sales meeting was the products releasing now is Generation 1. We're going to have -- we're going to continue with this cycle to release products and improve on our products. So we're not chasing one product that's going to be great for the next 10 years. We're going to solve the problem tomorrow, innovate that -- take the data that we're getting back, continue that innovation cycle and continue to align with our customers' needs as they evolve. You look at a data center, it's 100 kilowatts now for an NVIDIA stack. That's a megawatt hour per stack. So just imagine 10x the amount of backup power required for that and what that means in terms of space and data center planning. So as great as Nar is today, 3 years from now, it's going to have twice the capability it does today to be able to solve the problem and stay ahead of our team. Look at John's business in PPS. We know that the amount of power that was just used in the Ukraine was more than the entire U.S. Army uses in any of its previous conflicts or any of the previous planning. So that world is changing so quickly, and we have to be on top of that to solve the FDOC compliant problem and everything that goes with that. So this cycle is really critical to us. It seems very simple and intuitive, but it creates the focus that we need to get the products out quickly. The other thing we've done to go faster is take advantage of the COEs to Shawn's point, in our partner network. We have gone to a make-and-buy decision framework on our products. We are not looking at it as we need to develop every piece of our products from the ground up. We understand where our products are differentiated, why our customers see the value in us. We do invest in that. That's our core technology. A great example of the make and buy is chemistry agnostic. So John and his team, the U.S. Department of Defense or U.S. Department of War says, I have to have an FDIC compliant cell. I am willing to pay a premium for you to make it in the U.S. Chad motive power customers are like, I really like your data. I love your power conversion. I'm happy with an LFP cell as long as you tell me it's the best-in-class LFP cell we'll put it in place. So we are making those decisions at the beginning of every new product cycle to say, which of this do we have to own? We got to own cybersecurity, we've got to own software. Is power electronics something we need to know in Keith's business, maybe not in Chad's business. So we make those decisions upfront, and that helps us to go quicker. So instead of being in these multiyear cycles of developing everything we need to develop, now we're able to create a data product from conception to release last -- I guess, Tuesday, last week, it seems fast Tuesday in under a year. So we did not conceive what this product was until we exit the energized strategy, which was in the probably August time frame where we were sitting in a room saying, we need to have this by the end of the year. [indiscernible] thought Keith and I were crazy. And the teams worked incredibly well together to make that a reality. And I think that's a really exciting product for us. Same thing with the next-generation lithium batteries for Chad. We had a cost issue on our lithium-ion batteries. We weren't as competitive as we need to be. We scoped the whole lithium-ion strategy around the LFP cell that allowed us to choose a cell and move quickly. And now we're able to release those products to Chad, which are then really part of the entire network. We talked Fortix, as Shawn mentioned, the battery, the charger and now the Fortix system all work together. So this change of kind of mindset is one of the reasons we're moving a lot faster, and we can continue to get better here as we go forward. The last piece of the energized strategy that really stuck out to us is when we did the customer interviews, and we've always been very much a product company. Like in my mind, I'm a product guy. I love products. And we've always known that we do, as Shawn mentioned, storage, power electronics and software. The service piece was one where we were underutilizing from a design standpoint and understanding our customers. Our customers really value our service capability and the ability to keep that uptime and critical. And so what we intuitively thought out of that is, if that's the case, we need to be designing our products with services in mind. So you'll see these new products, Fortix, our Hyper system and certainly the war product are designed with service in mind, meaning that the software, the hooks that we're putting in there allows us to integrate that into a knock we're going to talk about, so we can proactively decide when these products are going to go -- how these products are going to work, when we need the replacement cycle. And you're going to hear Keith talk a lot about what he's done with the service team, which is almost its own COE at this point. We don't say that, but it's really servicing the entire company around what that looks like. That whole process now has gotten better, and it's going to be something that allows us to drive margin for our business because it is a huge differentiator in the field. So now we get to talk about some specific products. I don't want to steal all the thunder from these guys, but I still some of it, so I can go first. So as we talk about Chad's business or our IMS business with the logistics electrification, what's happening there around energy security and starvation, and that's what the Fortix [indiscernible] is going to talk to, the energy resilience in data center with the AI, the amount of power they need in the UPS for our NIS business and certainly electrification. As we mentioned, as you look through these products, just see the commonality in what we're doing because they are very similar in terms of the overall architecture of those products. They may have a little different cyber overlay from a defense versus an NIS application. It might be a different power profile, different voltage. But fundamentally, the core pieces of where we're good at and where we differentiate are similar, and we can take advantage of that as we go forward. So the first one, I'm so excited about this product. When we talked about this coming out of EnerGize, we started to see our customers talk about it. And at the sales meeting, I was ready to talk about power -- peak shaving and demand response and all these things, are we going to get value with this. And our sales guys kind of stopped me and they're like, that's all great. It's fine that we can do all these things. Our customers want control their build back. They're having 5% energy increases a year. They can't convert and run their business so they don't run it because they can't get power to their systems. They can't continue to convert to electrification of trucks because they just can't get the power. That's what they want. The return on investment and the value that, that creates, yes, that makes sense so they can get someone like Andy to sign off on it. But at the end of the day, if somebody want to say, "I want to control my own business," so what this product does, and you'll see this in Chad's presentation, it takes all the data we talked about. But now you have a new charger releasing that he's going to talk to the new batteries releasing. And then you have this energy storage that acts as a full platform that allows you to control the customers -- the customer bill and energy supply within a warehouse. Very unique solution, very specific to our logistics customers. And we developed this product. We focused on how do we get this out as quickly as possible and also accomplish what we need to from a TCO. It enables services long term and enables up to 17 chargers for Fort system additionally [indiscernible] we're going to sell -- as these become reality, it allows us to, one, help electrify a customer. We sell more chargers, sell more batteries and manage the bill. That's what this does. And Chad will walk you through it. But we're really excited about this product. And you see out there, we don't want to bring a full big system in here. I don't think they would let us, we would like to, but it's a really amazing product. We're out with our first trials that Chad is going to mention, and it's -- I think this is a great example of how Energize worked to develop something quickly that really focuses on solving our customers' needs. We move on to data center. This is -- obviously, this is -- we talk about this all the time. This is such an exciting market for us. But we look at it in 2 ways. So we talk about the technology road map. We know and knew we needed a lithium product today. And how do we design something a product that's going to give you the high-power data center, hyperscale data center, large data center UPS system. This is high power. So this is 10 minutes of backup to get the spinning reserve going so you can bring the generators online, a real need for our customer with the increasing power demands. We also know and we hear from our customers that in 3 to 5 years, you're going to start to see more distributed data center networks, inference nodes that are going to be looking a little different. They're going to want high energy. I mean they want to run 10 hours. They want to get rid of that generator. So we've kind of looked at this in 2 ways. We're tackling the first product first, which is the war product will cover all these. We got the high-power product first, which is focused on that short duration backup. The team and the COEs did a great job of pushing this through quickly. We have a very unique solution here in that we have a cell that is purpose designed to solve this power problem. So it is not a cell that we would ever use to power a fork truck, but it is perfect to give you 10 minutes of UPS backup. So we've designed with our -- this is where being chemistry agnostic really enables us because we could go to find the right solution, the right cell to solve this power moving forward. We know as inference nodes and edge data networks become a reality, you're going to see that high energy piece start to be needed. And we have -- that's where the product we have in Fortix right now will be able to be expanded and expanded that portfolio to a 2, 4-megawatt hour solution to solve those inference nodes in a very different type of application. So we see this as such an evolving market, and Keith will talk about it. But from a product perspective, our new strategy enables us to really focus in on where our customers need us to be, and we're going to continue to deliver on that with those cells. All right. So then all this brings up kind of our next issue, not an issue, it's our next focal point, that's probably the right way to say it, is that we are going to be successful in selling a lot of Fort systems and data center systems. I'm sure of that. And now it becomes how do we get good at managing that and aggregating that for the future. So we started to look at -- we have been looking at as we design these, the ability not only to do the product and do the installation service and maintenance, but how do we start to look at monetizing this in the future how do we look at this to start to say, yes, we want to be able to get out in front of proactive and predictive maintenance. We want to get larger hooks into our customers in terms of the service element of this. So we're now looking at expanding our NOC capability, our network operating center capabilities to be able to manage large fleets of batteries in the future. So we have thousands of these out there. Sean talked about 85 gigawatts a day how do we have a knock-in that manages that? And then how do we utilize that to drive value to our customers with demand response and utility initiatives. We need to figure how to aggregate that better and move forward. So as we move forward, we're not saying we're moving to Energy as a Service today. I know that's a different model, but we, as an engineering team and a technology group need to be putting the ability now for our LOBs to say, at some point, I want to continue to monetize those assets we have in the field. How do we look at that? So we're putting the knock in place now. We're working to develop that network and that control center to be able to manage these products going forward. That's a big deal for us as part of revolution. We're -- we've come a long way in the last year. We've got a long way to go to be really, really good at this. But this is on our road maps, the ability to manage not only the service side, but the value of those assets we have field is going to become more and more critical, and we're thinking about that now. And you'll hear more about our network operating center over the next year, okay? All right. Now I could really go a long time, Eddie, I don't want to steal your thunder here. But I love the PPS business. It's the most exciting time we've ever had in aerospace and defense for sure. And one of the reasons why Shawn hit on it is the world has changed that for 30 years of my career, 25 years of my career, it was about providing the most accurate, high-technology performance. It was fewer systems. It was lower volume, but we could do things really well that no one else could do. And we powered that. Now what's happening is we still need to do all that, but you got to make a lot of them. Like the volume in aerospace and defense for power is increasing at such a rapid rate because drones have just changed the entire landscape of what's important. And so what's happened is we see the government looking to us, will be at the Pentagon. They're coming to us saying, it's important that we partner with people that know what scale is. right? So when we talk about the lithium plant, they wanted a partner that's going to want to be able to make those investments, but also know what it is to get to an 85 gigawatt hour a day management. So our value has always been very much appreciated by the Department of War and our NATO and allied countries are going to hear about, but now they're looking at us and saying, we want you to be even more to us. We want somebody that can scale it the right way. And so that's one of the reason PPS is -- we're talking about it beforehand. One of the reasons it's on the division now is we see this growth coming. We're leaning into that growth and making sure we take advantage of it. For example, you look at that, the tactical vehicle here on the bottom left-hand corner, we traditionally would have just had 2 Hawker batteries that started that engine, right? That was a great business for us. Now there's 4 or 5 more -- not only the 2 Hawker batteries that are TPPL lead acid batteries. We now have lithium-ion batteries there because the amount of power's being drawn. We also have a hyper system that's going to be screwed into the back of that vehicle to help power the drones. And then John is going to tell you, we're also making the chargers to power the drones. So as you start to look at this, we are now touching so many electrification points in the battlefield, and that's really what the lithium plan is to support that going forward. So what does it do for us? It creates that secure supply chain of lithium cells for the U.S. allows us from a defense to be really specific about the power solutions. They are different than you can just buy commercial cells. There's unique things we need to do, and John will talk about some of that. And it really deepens us as a provider of batteries to the defense department. We're going to have fully vertically integrated supply. Not only do we make the cells, but we'll also make the batteries, the chargers and then the systems and then we want to get into software and service going forward for the defense department. So this becomes a whole power infrastructure with the DoD and DOW and our allied countries, and we can leverage not only the U.S. piece, but also the European piece as we go forward. You hear that from John. So exciting times. It's a new world where manufacturing scale matters, and we're well positioned to take advantage of that. Okay. All right. So I'm wrapping up here in my last couple of minutes. Just wanted to kind of touch base. You're going to hear a lot of what we're doing across the board for our LOBs. I just want -- as I said, we are a service organization in technology to service our customers and to service our LOBs to get them the products they need. We are focused on doing it faster. We're focused on very customer-centric and aligned conversations around what is right, what is wrong. And when we see we're making the wrong bet, let's get out of it and make another bet. And those are all part of our strategy. We're really leveraging the great expertise we have in our markets and the knowledge we have with our customer bases to create these technology road maps and develop the core products that are going to differentiate us going forward. And then ultimately, it's about that we do something that no one else can do. We can do the battery, the power, the software and the service. And that is what differentiates Intersys from everybody else. We want to keep that always in our gun sights. This is why we're good, don't lose sight of what we're valued at and then how do we develop products and services to be able to support that. So with that, I'm wrapping up. I get the pleasure to introduce -- so Keith Fisher is a great person, but we've got to know each other and we have the same musical taste. So as quite as it is, it's good, so we get along there. But Keith's been -- joined the team a couple of years ago. He's been a great addition to the team, brought a lot of experience and knowledge that I think we're all learning from. So it's my honor to bring Keith Fisher up to the stage and introduce him. Thanks, Keith.

Well, I'll give Shawn a little bit of credit for putting a CTO in place that not only speaks passionately about chemistry and he's a great business guy. But he also talks about design for service, not a lot of CTOs think about service when they're doing product design, and it's really fortunate for me as a business leader. He clicked a little bit on the customer-centric design model. And I can tell you as one of the lines of business leaders, we really feel that change happened in the business. So other than as musical taste, I'll give them some credit for that, too. Like you said, my name is Keith Fisher. I've been with EnerSys for about 18 months now. Look forward to what's in front of us with network and infrastructure solutions. If you don't know my background, I spent 28 years, almost 28 years with an industrial company, Honeywell. I started my career in operations and supply chain. And then I had the privilege of running multiple business units, whether it was across aerospace businesses, Building Solution businesses and more recently, inside warehouse automation. And I can really say I picked a great time to join EnerSys. What really attracted me to this was the markets in which we competed in and the positions that we hold in these industries. So it's absolutely a core business for us. Today, I want to walk you through how we're leveraging our market leadership, expanding into high-growth areas like data centers, while also keeping our eye on the ball on operational discipline and long-term value creation. So the 3 key messages, you see a little bit of a recurring theme around customer centricity. As the integrator in the business, we really want to thank customer back and develop these solution-led innovation that takes advantage of the vast network that's out there in the supply chain through partnerships to help us do that. It's more of an asset-light model for the NIS business. There's a lot of competent people out there, especially as we're dealing with solution-led more chemistry agnostic battery solutions. So it's a really good opportunity for us to improve our margins, at the same time, deliver the innovation that our customers look forward to. Being service-led is really key. And we've already started to see some signs of just the virtuous cycle of doing a great job for our customers every day, leading to new business and leading with Service First is a core part of our business strategy. We are going to continue to optimize fixed costs, whether it's the more recent Tijuana announcement that allows us to continually operate our franchise profitably as lead continues to be an important part of our business. We've flattened our organizational construct because we want to be designed. We want to have a leadership team designed to work with speed. And then, of course, the COE model that we've put in place that really takes the markets, the engineering intelligence, the supplier capacity brings us the ability to leverage that and scale and obviously, some really exciting and fast-growing spaces. And then it's awesome to be able to announce the DataSafe NOR product this week. We're placing that bet in our business. We have lithium across the business, as Mark talked about, as Shawn introduced, but this is our launch into the data center space with a lithium offering. And I'll talk more about how we think the growth rates in that space look going forward, but it's a really exciting time to be here in the business. So if I boil down kind of who we are, what we do, we spend a lot of time on the statement there that says powering the connected world with trusted reserve and critical infrastructure solutions. When I got here, I heard us being talked a lot about as reserve power. But I think what both Shawn and Mark did very well in their introduction is the networks are evolving to the point where our products are not just sitting there waiting for something to happen. They're a very important part of the ecosystem to ensure that, that stability or that -- those energy challenges are being dealt with. So we really like that and critical infrastructure solutions part of the business. It's been a really good rallying craft for the team. Our customer base is vast. If you look at the communication space. We deal with all the largest network operators, North America and globally. From a data center standpoint, we actually operate a little bit more across the customer stack. We have rich relationships with the hyperscalers and the end users. We have deep partnerships with the OEMs. And then, of course, we have a large channel network that helps bring the EnerSys brand to market with us every single day. So operate across the whole stack and data center, and I think that's an important part of our differentiation going forward. And then whether it's the industrial power and utility space, this is another great opportunity for growth for us as the infrastructure evolves to support the growing power needs, we're there to grow with them. So we operate there across all the local regional utility providers, and it's actually a nice growing business for us. Globally, we're dominant in North America, but we actually have a strong foundation, and we've seen some green shoots of growth happening in Europe. We've recently recaptured some share with some of the largest telecom operators over in Europe. And then, of course, we operate in the rest of Asia as well. So good global business, service capability and breadth across the board. So I click a little bit deeper. Our focus really is where uptime is nonnegotiable. And if you think of these critical infrastructure networks, whether I start with communications on the left, the statistic you see on the page is 750,000 broadband and power supplies. And I knew I arrived at EnerSys when I was hooking my Internet up and I talked to somebody pretty high up at my Internet provider, and you said, well, the box is right outside your front driveway. You can look at that alpha box every day, you drive in and drive home from work. And we have 750,000 of those out there in the marketplace and about 40% of those are approaching an upgrade cycle. And that's probably been a little bit conservative given some of the power constraints that the industry is facing. So when you hear me talk about XM later and you get to talk to John or Grant in the organization here about [indiscernible] that's a solution we have to continue to meet future needs for our customers. The data center space, we're not new to data centers. We have over 10 million batteries that we've sold just in the last 5 years, depending on the usage case, about 20% of those recycle annually. And then that's on top of the existing installed base that's growing through new data center builds. So we continue to see lead acid sales in both spaces, but this lithium launch that we're introducing here this week is a really good catalyst for growth for us. And then similarly, across Industrial Power and Utilities, over 2 million batteries, maybe a little bit of a less -- you should cycle on that depending on how they're used, but still more floor for continued stability within the business is 10% of those are replaced across the board. Shawn talked a lot about the products. The point you see there across the enclosures, you'll see enclosures in everything we do. They're a key integration point for our technology. So it's a core part of our portfolio. But I think I really want to point out the point on the bottom here. So we're looking to be there from the beginning of the engineering design solution for our customers all the way through monitoring and software. So as we look forward in the NIS business, that stack that we're creating and that capability we're creating to really truly be service-led service at the start of the process, service at the end of the process. That will be the virtuous cycle that continues to feed innovation for us. But the takeaway here is that as power and labor become more integral to sustaining our customers' operation, we can clearly provide solutions across the board. There's a lot of common needs across our industries. Across CDI, customers need connectivity. They need operational resilience. And they also need increasing reliable power in an age where AI acceleration is continuing to stress the networks. So while the actual specific recipe might look a little different depending on the market that we create, the needs are actually very common, and that gives us competitive advantage as we deliver more efficient new products to the market. We're actually in talks today with a lot of large customers about refreshing their networks. So if you look across the telecom network space, they've grown through acquisition. They've had various focus on new builds and 5G cycles. And that has put some stress on some of their older product lines. So as they continue to deal with these power [indiscernible] environments, the network needs to be refreshed. So it's a good opportunity for us. The data center story is also clearly unfolding right in front of us, large hyperscale enterprise data centers, they continue to need more power, and this is where our innovation is really focused. These trends that we see really create those common needs around resiliency, uptime, energy availability and is going to be core to our value propositions as we go forward. So I characterize the SAM here in this business at about $15 billion of the total that Sean showed earlier. To break that down a little bit more, still see about $9 million of that in sort of the communications and broadband space. We see about 1.8, 1.9 in the data center space, another $1.5 billion in the industrial power and utility. And then depending on that industry and the service tail associated with that, we kind of have somewhere between a 15% and 30% attach per product sale for the rest of it makes up service. The key that I want to point out here, though, is that the data center piece, while like $1.8 billion for us today, not the biggest chunk is the one that's clearly growing the fastest. I mean we're going to see somewhere between 15%, 20% over a 3- to 5-year period growth within that data center [indiscernible]. And the other thing I'm excited about is I haven't even really captured Fortix into these models yet. So as we're launching in Chad's business around warehouse solutions, but that offering that Mark described and Chad is going to go more deeply also is applicable and clearly in our space. And as we continue to evolve our focus, I only see that Sam growing. So our competitive advantage. Why do people pick NIS? Well, I think Sean did a really great job of honing in on these, but I'll click just a little bit deeper. First and foremost, we have reliable integrated solutions. Point Shawn made, I'll reemphasize. You don't just pick a new person off the street and plug their solution into a data center. They want someone who's been there. They've been through the cycles. They've been able to deploy them, and they really want to know that the product is going to work. They can't take a bad bet on a supplier. Second, and again, I point out, Shawn -- Mark mentioned the five 9s for those statistic majors, where people have taken a lot of statistics or Six Sigma stuff, five 9s basically means you get about 5 minutes of downtime a year. in a data center. So for an AI edge or AI inference data center, the people, the process, the technology, they all have to be humming in order for that to work, that some value that we believe we bring to the table. You have three 9s, you get a full day to deal with downtime events for what it's worth. We do have trusted long-term partnerships. We've got customers today that rely on us exclusively for their power solutions providers as their power solution provider, we have a lab in Bellingham, Washington, that can actually simulate a broadband network so that as customers introduce new products or they're dealing with troubleshooting challenges, we're literally on the phone call with them, helping them introduce those new products or working on those systems. Third, our application experience. whether it's regulatory, whether it's interoperability challenges, these are fast-growing markets, and we can't be slow. We have to understand what it takes to not only develop the product, but get it certified for use in a safe manner. As lithium becomes more and more popular, they're reliant on the supply chain and the network to really understand what the safety constraints are there, and that's something that we bring to the table. We extend beyond the contract from a dependability standpoint. So our service network is across the globe, frankly, and when there's a problem, we get out there. We don't ask why we get out there. We fix the problem. We do it in critical situations. We do it in floods and hurricanes. We don't ask why we get out there and we support our customers. And that's something that builds a lot of credibility over time. And then I think global scale. They don't want somebody who's not going to be continuing to reinvest in the business. And he's going to talk about our balance sheet position. We have the ability to continue to reinvest in this business and differentiate for customers. So what does EnerGize mean to me? EnerGize means a few key point of things to me. One, we are going to focus on targeted end markets, but we're not just going to treat every market the same. There are actually places within each market where we can segment and be even more specific about how we compete and why we win. Second, we're going to make sure that we've got our footprint really optimized to deliver on these, whether it's our footprint or whether it's through our partners' footprints we're going to make sure that we've got the right value stream in place to be responsive and differentiate from a service standpoint. When I look at invigorating our operating model, Mark did a great job of talking about new product innovation, bringing new products to market as a core part of our growth strategy. But our service piece is another piece where we can really look across not just product innovation, but business model innovation. I'll show you in a minute that within NIS, we have a projects business. We have a products business, we have a service business, and we have software revenue streams. We can operate across all those to have a compounding fact on growth as we bring more installed base to light, we then monetize it through the life cycle. Accelerating growth. I'm just going to focus on the data center for today. There's a lot we're doing within the business to try to grow. But the data center space is clearly an opportunity for us it's staring us right now. It's a fast-growth market, and we're going to have the right products and solutions to deliver there. So I want to click through a couple of case studies to just give some representative examples of how we're doing this. First, this is really to illustrate how we're changing the way commercially, we go to market. Not that what we ever did was wrong, but in a solution-based environment, we actually had a customer, a large network operator come to us with a challenge they were facing with tariffs, and they needed a domestic partner to help them get through that and manage their cost. Our commercial team in that discussion led by John [indiscernible] in the room was able to take that opportunity and say, "Okay, but how do we look larger across your whole network and what do we do?" And not only did we solve their tariff problem, but we actually were able to provide a 48-volt lithium battery with a retrofit kit remote monitoring and installation services that gave them a more energy-efficient solution that they were going after. So the commercial team saw problem, expanded the problem. And then as a result of that as we grew our market share or our share of wallet with that customer by over 5x. That's not -- that's a very scalable process for us. If we do that consistently across our customer base and our markets and we operate with a commercial first mindset consistently, we've got that opportunity in all of our businesses. You're going to see XM Edge when you go out there. I alluded to it a little earlier in my presentation. I talked about how we're a core partner within the broadband space. That didn't happen overnight. And what we see now is whether there are customers looking for efficiency from a cost standpoint, where they're just looking to keep up with the demands of all the traffic and the massive growth in data traffic, they need more efficient solutions. And so we have a solution we're -- it's still in development right now, but we're in customer trials. It's going to be certified within the next 12 months. We have the opportunity to go take those 750,000 power supplies and continue to extend the brand and franchise that the XM product line has given to us for a long time. Super excited about the innovation processes here. This is right in our core, it's what we're good at. We're introducing new features, and we're going to give the customer more access to be able to see what's going on across their network. So bringing connected power-efficient solutions should afford us the ability to expand our value creation for the customer in this case. Third, I'm going to go back to service a little bit more. If you look at sort of the left side of the page, I want to just emphasize a couple of pieces First, we do have the business models, all the capability, even though we've been largely a product-first company within NIS for a period of time, we've built some really, really talented pieces of people and pieces of capability around service, managing service contracts, retrofits and upgrade installations and doing more general contractor like projects. This is a good split that we can scale. We can continue to create installed base for our customers, and then we can figure out how to monetize that over the life cycle of the program. You can also see, just frankly and transparently, we're a little concentrated with our largest customers. That's a great opportunity for us and a focus area of how we bring these services and solutions to more customers when we know labor scarcity is going to be a continued challenge that they face. So I think there's a lot of runway in here. for us as we get better and better at scaling our service model. There's some cool stats on this page. The strong foundation that we have today, 750 service techs across mine Chad's business service professionals across mine on Chad's business. 43 gigawatts of power that we support. We actually have a continuity monitoring platform that's looking at over 500,000 sites regularly to see how it's operating and where we might see problems. We have opportunities to be more predictive and preventative as we get better at software over time, but we have that infrastructure in place. And then from a lithium-ion standpoint, we talk about that being a launch on the data center space, but the reality is we're already installing data center lithium on the competitor's products today. So there's no real technical hurdle for us to overcome as we continue to bring our own products to market. So super excited. I think that where we're going, I hit on a lot of these points, but the graphic at the bottom, Mark kind of joked about a service center of excellence. Well, we don't need to create this capability across 3 different business units. We need to create really good capability and then deploy it across 3 different business units. So whether it's Nir, whether it's Fortix, this is a great opportunity for us to build and scale once right and then tailor that application through back office and great tech in order to solve service challenges for our customer. So I will finish my last case study with one of the more exciting launches that I've had in my career. That box out there, there's a lot of hard work in that from a lot of people in this room but it is really exciting. A point I want to emphasize on this page and back to segmentation, data centers aren't all data centers aren't all data centers. I'm sure you all know that, right? The needs actually vary within the data center. So if you look at something that has a short run through time, our lead acid solution could still very well be very well positioned to win in that space. from a total cost standpoint. But we know that the growth is really coming from lithium and new installs going forward. And whether it's edge and inference or hyperscale or training models, the data safe or product line that you're going to see out there is purpose built for those applications, talked about the competitive advantage. Well, here's a picture of it. If you look at the blue tape batteries on the left part. That's a traditional VRLA TPPL like solution. That's how much space it takes up to deliver a power requirement. If you look at the far right, that's what our competitor offering is right now, if you look at the data Safe New product line, we can do that in a lot less space. That's more space for the end users to do what they need to do to get the compute power to everybody who needs a data center outputs. So this is really exciting. And I think you're going to see some really good -- we are early days in the commercialization process. We have to absolutely get through the OEM certification part of it. But the runway here is really exciting. So I'm going to close with the same 3 points that I started with, customer-centric solution led that is becoming the rallying cry. We use a process of strategy deployment. And the thing we put closest to our heart was being customer-centric and solution-led. We can design cool stuff, but we need to design cool stuff that people really want to buy and that only comes from talking to our customers. And that's become a real do different within the NIS business and something that I'm excited to continue to build upon. We certainly aren't going to take our eyes off the ball from a fixed cost standpoint. We have the opportunity to continue to expand our margins in our business, and we're going to do that. And then lithium, lithium. This is a really cool time to be running this business, and there's a lot of runway ahead. So I want to thank you all for your time and attention today. I appreciate you listening to the NIS story. And I'm going to turn it over to Chad Uplinger who leads our Industrial Mobility Solutions business. Chad?

So good morning. My name is Chad Uplinger, and I'm the person that's standing between you and a cup of coffee in a minute. So I'm the President of Industrial Mobility Solutions, which formerly was motive power. And as Shawn mentioned, we merged with transportation. So a quick background on myself. I've been with the company for 27 years, all within the motive power unit. So if I call a motive power today, it's like changing your spouse's name after 27 years, it's hard to do. So you might catch me. But what excited the most about our business is in 27 years, I've seen most of the products that we sell in motive power get introduced and get launched. I think there's a handful of a few legacy products from the 80s that we still sell. But when I look at today and I look at fiscal '27 and beyond, our product road map is the most exciting thing for us. And we just had, as Mark mentioned, the sales meeting, sat down with our sellers, and we see more products coming out more next-generation products coming out this year than any year I've seen in my tenure with the business. So it allows us to advance as customers transition and electrified fleets but it also allows a great opportunity for energy management. And that's key for us because that's not -- that's a great growth opportunity for us. And that's something we've not been able to do before. And I think that's going to provide some real value to our customers and to our shareholders. So I'm going to touch on 3 key items. One, advancing our next generation of maintenance-free solutions. We've been doing that for a long time, right? That's been part of our heritage for the last 6 or 7 years. We continue to see that. I'm going to talk about the road map advances that we're doing. But we're going to continue to invest in TPPL and lithium-ion, and we can see that continuing for the future. The next is the organizational alignment. I'm going to talk a little bit about why material handling and transportation, why they fit together, Shawn mentioned it briefly in his introduction, owners and operators of lift trucks they use a lift truck. And unless you're in a manufacturing facility, if you're in a distribution or logistics hub, you're using that lift truck to do what load a trailer, right? And so most of those operators own their own fleets, or they work through fleet leasing companies. But we have an extremely intimate knowledge of material handling being the market leader in North America and a predominant leader in Europe. So this gives us a great opportunity to pivot slightly from what we've been selling and to be able to target the Class 8 trucks. And then finally, energy management because this is what gives us above-market growth, right? We can take a Forex battery system and we can just not be a battery and charger supplier but we can take a Fortix system, and we can go into a customer and provide them a full, complete energy management system within their warehouse. So that's the exciting thing for us and where we see the big growth opportunities. So just quickly, again, on what we do. So we power goods in services, essential goods and services, whether it be in the warehouse or in the lift truck. We serve 2 primary markets, warehousing, logistics and transportation is mainly focused on that Class 8 trucking market. As Shawn mentioned, in North America, we are the #1 market share position holder. And in Europe, we're 1 of the top providers for material handling. So we have a long lineage history going back 70, 80 years until the advent of the lift truck. So we've had a long history of material handling. We know that space extremely well. And then in transportation, we have a growing footprint globally, both in EMEA and here in the U.S. in Class 8 trucks in both OEM installed Class 8 trucks and also the replacement business. And that is a key -- a key aspect of our business is the replacement cycle. So they're both replacement-driven businesses. We sell in the new trucks, but we also sell in the replacement trucks. And given our large market share and wallet size, we're able to leverage our leading positions and transition customers into our newer technologies from our older technologies. And we do that all the time in the marketplace. So as we restructure IMS, again, we think we get a lot of greater alignment across shared customers. And a big target for us is our large material handling key accounts. These are large accounts, again, that operate their own fleet of Class 8 trucks. And so at a very, very high level, our goal is to just better serve a common customer. If it's a large common food distribution company, we're also going to service their Class 8 trucks. We want to capture more wallet share within our existing customers. And then there's obviously -- we're going to drive some operational synergies just naturally been the businesses. So there are areas like customer service or marketing or other OpEx type expenses that we can do. But it's not just a structural change. It's a focused go-to-market change for us, and a transformation within the transportation business. So I'm going to talk a little bit about our product set. And in warehousing and logistics, if you look at the slide, we have over 700,000 chargers in the system globally that charge lift trucks each and every day. We power over 1.9 million lift trucks around the planet every day, somebody is plugging them in. What's key to that is on these, we have almost 350,000, I'd probably call it 350 now because we probably have installed 5,000 in the last month. So we have about 350,000 YQ devices. These are devices battery collection devices that are gathering data on the battery on the lift truck, on the application it's used in. Is it used in a freezer, is it used in a warehouse, so it's gathering all of this information. So these are little small nodes that we have out throughout the industry. And we gather this data. We've as a seller in our business, we use this data that feeds into our software systems and our application modeling systems. So we help customers when it's time for them to change their batteries we can pull that data off and we can say, "Hey, you have 20 trucks but maybe you only need 18 trucks to do that work or we can change you to this chemistry or change you to this charging solution and save you money." And this data collection that we have and the software program insight that we use allows us to do that type of thing. In the future, this same software system will also tie to Fortix. So not only will I say, okay, here's how I operate the lift truck and here's how often I plug it in and here's the power draw, but we're building the front end of the system to be able to say -- what's your electric bill, what's your peak demand charge? How do you use at what time of the day is your utility rate. And the system will go through and say, okay, based on that, customer, you need a 344-kilowatt Fortix system I can operate reducing the draw on the building during peak times or peak shave and save you money and here's how much I can save. That's the beauty of the system. And we're trying to make it that simple that every one of our sellers can go back into our existing customer base and offer that type of solution. In transportation, let's just review a little bit about transportation. So we power about 900,000 Class 8 trucks today. Now remember, a Class 8 truck could have 4 batteries, it could have 8 batteries. It depends on the configuration, if there's a sleeper cab, an air conditioner or lift gate, but that gives you a scope of how many trucks we have out in the field today. And over half of those have an ACE embedded chip in them. Now what that chip does is it monitors over voltage. It monitors heat. It gives recommendations if the battery is reaching end of life. And so if I'm a maintenance mechanic in a fleet, I don't need to go in and open up all the battery compartments and check all the batteries say, the fleet maintenance intervals every 90 days. All I do is pull out my phone, I stand next to the truck and I tap on it and the system goes out and touches all the batteries and gather that data. And people use that a lot. 4,000 time -- we have 4,000 active users every month that do that exact same thing. But the best part about us is all of this data comes back into our system. So we have a vast database of how our customers use our equipment. And this allows us to do some unique things. So we can monetize assets, we can develop predictive maintenance programs for our customers or we can optimize fleet sizes for customers. But the most important thing it does is create a stickiness relationship with our customers. They value our service as a long-term solution provider because we are so embedded within their products. So let's talk a little bit about the market. I know Shawn showed the overall picture of the market. Our market is just over $8 billion. It continues to grow. There's a lot of good market tailwinds that will continue to grow. There's conversions from internal combustion to electric lift trucks. That trend continues to happen. A lot of customers are pushed that way because of regulations in the states in which they operate. Also, some companies, maybe they have a sustainability goal to reduce Scope 1 and 2 emissions, just like what we do as a business. So they may look to convert their internal combustion trucks to electric so that -- so we see the market potential continuing to grow. Electric trucks do have a lower cost of ownership, and there are a lot of advantages to go that way. And then on the transportation side, fleet operators their requirements have changed. There's more electrical components on a Class 8 truck that puts demand on the battery. And then also there's anti-idling laws no longer in a lot of like large public spaces. Can you just leave your tractor trailer run while you're unloading your goods on the street corners in New York, but you have to shut that off. That turning on, turning off, turning on, turning off is a cyclability issue, and it's a lot of strain on the battery. And then as Shawn mentioned, just the overall increase in electrification and the drive for energy security, it really gives us that we're an expert to solve a lot of these common challenges for our customers. So if I look at just a few points about why we win. So we are a recognized leader in forklift power systems. We know that we produce lead acid, which we have for 100 years, we produced TPPL, and we also produce lithium ion. So we sell all chemistries. We're chemistry agnostic when moving to customers. We sell up to 5 different type of charging systems. Chargers when I started, we had one charger. That's it. You had a charger, you plugged it in. Now we have fast chargers, opportunity chargers, wireless chargers, outdoor chargers. We have all different types of charger solutions. So we continue to invest in that type of product development. We're a customer-centric solution. You've heard that several times. Keith mentioned it, Mark mentioned it, our knowledge of our customers, we can help our customers with operational challenges they face because we've seen other customers in the same industries. And we have that knowledge base from all the data devices and all of that. Many times, we can go into a customer who's operating in a cold storage application and we can bring to them solutions that we've seen work in other cold storage applications. So it allows us to tailor our solutions for our customers, which is a really unique a differentiator for us. And then we have an industry-leading team Keith talked about it, our service organization, wherever you are in the world of we have customers in Germany, and they ship products to Phoenix, Arizona, they typically look to EnerSys as the company that's going to provide them turnkey coverage anywhere in the world. So we are extremely unique in that. So again, this is just a few of the items. Again, our deep installed base and our leading market positions and then some of these are really why we have a right to win. So if I talk about energize and how it affects IMS, optimizing our core but first and foremost, we're going to continue to drive next-generation TPPL and lithium-ion, right? So that is a key for us. We also have a new charger line. You can see it out here in the display area, that's going to be a game changer for us. So we're going to continue to invest in our core business which is material handling and Class 8 trucking. So we have all a new array of products just in our core base that we're launching. Invigorating our operating model. So I'm responsible for the lead COE. That is within the IMS business. IMS is probably the biggest consumer and seller of lead. So it sits within our business. But we operate the lead COE and we make the engineering development decisions. We do the manufacturing, the distribution, all of that, as Shawn mentioned, the procurement, it makes logical sense. We've seen a lot of synergies between our European factories and our American factories, all operating under that same umbrella. I mean it's allowed us to do things like the closure of the Tijuana plant. What does that do? It allows us to ramp up the investments we've made in Missouri in our TPPL factories to maximize those and to drive cost out of those operations. Same thing in Monterrey, Mexico. We closed that factory. It ramped up our factory in Kentucky and it's going to offload some of our volume in Poland. It's going to make us a much more leaner, more profitable manufacturing business. And then Shawn mentioned when he talked about accelerating our growth, the biggest growth acceleration I see in our business. I mean, it's going to come from conversions and maintenance free and things like that. But we follow GDP and forklift sales, we track forklift sales. the biggest revenue generator for me is the Fortix opportunity because now I can go back into the exact same customer I'm talking to today. I don't have to meet a new customer or I can just talk to the exact same person solve another problem for them that they have. So we really see that as the driver for above-market growth, and that's where we really want to see -- we're excited about that in the future. A few of the additions and you'll see these in the back and we can talk after the venue, but TPPL, so we've extended the range. If you think about thin-plate pure-lead it was a product that fit about 65% of the applications. If you got into a really heavy-duty application, we would tell you a [indiscernible], not for you, you probably have to stick for flooded, but we've done a redesign of the product. So now we can cover almost the entire product portfolio. So why are we confident in growth in TPPL because now I can sell it everywhere, right? I can sell it in a lot more applications. I'm giving people a lot more power than the old system, the ODYSSEY battery. I talked about the no idling laws, the actual more times to cycle developed the ODYSSEY evolution. It's up to 2,000 cycles. That's about 33% more than the industry is in terms of trucking batteries. So that gives us a great opportunity to provide customers the ability to turn their truck on and off a lot and still get the long life they expect. Mark talked a little bit about our lithium-ion chemistry. We're moving to a generation 2 in LFP chemistry type. So that is -- that's providing us a lower cost per kilowatt but we also have done a refresh on the power electronics to improve performance and safety. And then overall, the design is really designed for manufacturability and scale, so we can drive margin expansion and support our volume growth with our Gen 2 products. All of these are tied together with our Sunova charger. This is the first time we've changed the charger design in about 9 years. I'm really excited about it. It's going to give us an extremely high efficient charger, one of the most high efficient chargers in the market. It has very strong data capabilities. the charger, we can connect to it no matter where it sits. I can pull data from the charger. If a customer has an application that maybe they're not charging at the exact time, I can remotely go in and change their charge profile or how they're using their charger. I don't have to send a technician to it. And in the future, what the really cool thing is it will work bidirectionally back with Fortix. So I can take power from the Ford system, put it in the lift truck but I can also take battery power energy at the lift truck, put it back into the Fortix system. So we'll be able to use the lift truck battery as a distributed energy storage asset that can generate revenue from the grid, like vehicle to grid or just back into the warehouse. So that's a game changer for us. And this charge really is it's the foundation for our integrated energy ecosystem. The Fortix system does it, but the Sonova charger allow it's the mechanism to allow us to do that. So that's very exciting. Quick -- I just want to do one quick case study. And this is on a large grocery retailer, right? This is what we do. This is bread and butter for us every day. We go into customers. They're operating traditional lead acid batteries we convert them over to -- in this case, we converted this customer over to lithium-ion and TPL, put lithium ion in their reach trucks. We put TPPL in their walkie riders. And so you say, okay, well, Chad, how isn't any different than what you've been doing for the last 3 or 4 years? It isn't. We've saved this customer 40% on their battery purchasing and operating costs. So this is what we've been -- this is how we convert customers over to maintenance-free today. But the beauty of this now moving forward, what our sales team would do is go in and say, oh, by the way, can you give me a copy of your electric bill, let me look at your peak demand charges. Let me look at what your utility rates are. Hey, on top of the 40% I'm going to save you, I can save you another 40% to 50% on your energy cost by deploying a Fortix. And that's what we're going to be able to do as we launch the system. Leveraging our operating -- so invigorating our operating model. So particularly, this is around transportation. We really are trying to -- we've done a significant work with we've identified 60 key target accounts within the material handling space. And we've said, okay, these 60 accounts of them are fleet operators. I need my motive power sales specialist to connect up with my transportation specialists and let's get in and meet with these customers. And we're starting to see some really early seeds of opportunity doing that. We have teams that meet weekly. We're out talking with customers about ODYSSEY. We've launched about 8 different application studies in these customers, and we expect to start to see that pull-through selling happening. But what we also did is we took -- we said, hey, we needed a tool. We look back to Kerri Phillips and the team that developed insight and we said, hey, how do you take the power of Insight and the application modeling and the data we collect from the ODYSSEY ACE chip and put that together, help us build a tool to shorten our sales cycle. So what we did is we created a power fleet program. I can put batteries in a tractor trailer. I can send it out to be used for 90 days. Our salespeople can go back, download the data. They can do a quick customer assessment they can do a recommendation on what the long-term effects will be, how long they can expect the battery life that last. And really, what it does is it enables a faster selling cycle for us in transportation. So it's just one example of how we've been able to leverage both teams to be able to enhance the selling experience. So the last thing I want to talk about is our Fortix system. I know it's been covered a couple of times here today, but it's our key area for accelerated growth. And as Mark mentioned, it's our next step in our evolution in energy management as a company. So within warehouses, we know we have a deep installed base, over 50% of warehouses have our products in them. These are customers that we know. We know they have energy challenges. We're actually -- as we talk to customers, they're actually surprised at what they do pay on electric bills. We've met with one in Chicago, and they were like, "Oh my God, I can't believe I paid like a 50% premium my utility cost." So we're actually opening their eyes in some cases by asking the question. But for example, we can cut demand charges could be 30% to 50%. That 15-minute window when you're running at that high demand, that's your utility rate for the entire month. If we can cut that down, we can save a significant amount of savings to our customers. And then as Shawn mentioned on the flip side, people just can't get power. If I'm operating a facility and I cannot get more electrical infrastructure into my building, Fortix allows you to deploy a system and charge up to, well, it's 6 to 12, depending on the size of the charger, let's just call it, 15 chargers. You could charge up the 15 chargers on the same charging port, right? That is huge because if I'm moving into a light industrial warehouse, and I'm going to operate 10 lift trucks and the last person there only operated 4 lift trucks. Odds are, there's not enough power in that building. that all they'd have to do is buy a Fortix system. And now I can level load the draw on that line and operate more lift trucks. So that's a huge opportunity or for 3PL, if I'm a 3PL and I'm moving into a building for a 3-year contract, I don't want to go pay for electrical infrastructure that has no value that I have to then try to recover my cost, if I could deploy a Fortix system and take it with me when I leave. So there's a lot of opportunities for us in this business. But now that you've seen the benefits of the Fortix. I just want to spend just a few minutes talking about the early traction on what we're seeing. We don't have a product yet that's fully approved. Mark's team is working on the UL approvals what we have gone out with customers. We have 5 active sites that we have running today. We've had 15 pipeline discussions with customers. that are excited about it. That we actually said, "Hey, we're going to do our 5 pilot sites." These 15 other people would do pilots with us tomorrow, but we kind of stopped and said, we need to get through the approval process and get all of our UL before we launch any further. But if you looked at just those customers, there's over 475 targeted locations that we could go after with these are customers. these are trucking customers, these are logistics customers, cold storage customers. And these are all people that we know that know us that have known us for 20 years, right? So that's the beauty of this product is I don't have to go find a new customer. I don't have to establish a relationship. I can walk into all of our customers today find ones that benefit from Fortix because there'll be certain regions of the country that do in certain regions don't depending on utility cost. So that's really the excitement. And that's why we see a huge opportunity for this. Again, strong relationships. As Keith discussed, we're going to be using his service network to service this, this is not anything new. He's installed over 5,000 lithium sites. We're confident. We have the support system for this. And we -- and for our customers, we're the proven expert in high cyclability, high reliable energy applications, and that's why customers look to us. And that's why we're confident that this product will give us above-market growth. So just to summarize, item 1, I said next-generation solutions. Three years ago, in this stage, Shawn O'Connell was the President of Motive Power at the time. Our maintenance-free overall sales mix of our global sales was about 19%. This past year, it was 29%. So it grew at a 50% rate. I'm confident that in 3 years from now, would easily be at 50%. I mean we've seen it grow with the products we have coming, we know that trajectory is going to continue. I'm highly confident of that. And these are high-margin products, higher margin than our traditional flooded products. Secondly, we're leveraging the organizational alignment between transportation and motive power I've explained to you today about it, it's the same customer base. So there's a lot of commonality, and we see a lot of opportunities in the short term that we're going to get from that. And then thirdly, the most exciting one is the energy management system. It's totally new for our business, our sales team loves selling new stuff. We try to hold them back a little bit because they'll just keep selling and selling. So especially, they love to sell the new stuff, but I'm highly confident that as we fully launch the product and we get into the end of fiscal '27 into fiscal '28, you'll see more and more Fortix becoming a larger portion of our business. So thank you very much. I would say that during the break, again, check out all the products back in the hall. And at this time, I'd like to pass it back over to Charlotte. Thank you.

Right. Well, great. We're just going to take a quick break here. So let's see, it's 10:21 now. Let's take a 10-minute break, and we'll turn back at 10:31, and we'll see you then both online and in-person. [Break]

The next time we do this, we'll have to find a different place to let you guys take a break instead of out with all of our great products. But yes, thank you for -- welcome back, everybody. Thanks for coming back in room. Thanks to those that are on webcast having a break there just now. We're excited to get started again. So I'll just give a couple of more seconds here to get some final seated places, and I would love to welcome John Benetti on stage to talk to you about Precision Power Solutions.

So good morning. My name is John Benetti. I'm the Vice President of Precision Power Solutions. Before we get started, just a little bit about myself. So prior to taking this role, I served as the Senior Director of our operation of our A&D business for the past 8 years. I've got over 25 years of experience in aerospace and defense industry with a strong focus on battery technologies and operational leadership. The majority of this time, as Mark said, the last 25 years, I've been partnered with him as we brought new technologies to market and ramping and scaling of that. A lot of that is me trying to cash the checks that he writes, right? The reason I bring up my background is to -- the first one, I'll be the driest presentation today. So I hope everybody got coffee during the break. And I don't want that to take away from how excited we are as far as the opportunities we've got within Precision Power. But the real reason I bring it up is, right now, the focus for our segment is on execution and delivery. Demand in aerospace and defense right now is immense within each of our PPS end markets. And our ability to scale and match that demand is the main driver for our growth. Demand is there. It's ours to capture through our execution. So this is an exciting time. In my 25 years, this is in the defense industry, especially around batteries. This is an exciting time. The only thing I can relate it to is in the second Iraq war, we were at a different battery company. And those supply lines got stopped and a lot of it was based on batteries. And we are able to develop a lithium manganese dioxide chemistry that was -- had 55 more capacity, right, to help alleviate those supply issues. We're facing the same thing right now with drones, right? They've hit out of nowhere. And it is hit everywhere across the battlefield. We'll talk about it today. Where do the batteries come from, how to charge and where do the cells come from. It's been a huge impact. And we have all the solutions to be able to resolve those problems, right? So the next 20 minutes or so, we talk through how we're leveraging our technology leadership and customer relationships to capture growth in the increasingly electrified battlefield. So 3 key messages I want to take away today. First, we are positioning our portfolio to support the increased electrification of battlefield applications. Customers have the same needs that Chad and Keith spoke about earlier. Energy security, how and when best to use energy and the different needs for power and energy solutions. Within PPS, this is driven by the need for drones, computing power at the technical edge of the battlefield. Second, we are providing turnkey solutions in region. We're taking advantage of our other net facilities to keep up with the demand, not only in the U.S. but globally as customers are demanding in reaching capabilities. And third, we are extending our capabilities into adjacent markets to capture incremental growth opportunities. At a high level, PPS powers reliable high-performance solutions for applications across 3 core areas: manned platforms, advanced Lithium systems, and Soldier Power and Autonomous Systems. Our customers include best defense, prime contractors and allied defense organizations globally. We have a leading position within the U.S. defense, including portable rechargeable diaries, missile defense batteries and the largest provider of vehicle batteries. We've delivered a CAGR of 20% in the past 3 years, representing 16% of the company's earnings power only 10% of the total revenue. We are strongly positioned in our markets supported by robust demand signals and a secure backlog. So as Shawn and Mark talked about earlier, battery supply chains are emerging as geopolitical choke points, especially for lithium and A&D programs. This has created a need for a trusted partner with an established manufacturing base with global size and scale. EnerSys is a partner for decades, and we believe we are best positioned to support this increase in demand and further address it on a global scale. To do so, we have solution offerings in 3 key areas: first, manned platforms. We're delivering highly reliable battery systems for land, sea and air vehicles as electronic loads continue to increase. Second, advanced Lithium systems, where our proprietary chemistry support specialized applications like missile defense, counter drone and space systems where performance requirements are extremely high. And third, Soldier Power and autonomous systems, providing scalable, integrated energy solutions for mobile and distributed battlefield applications, such as drones, robotics, wearables and UAVs. Across all 3, we are focused on custom engineered, high-performance solutions. I'll take a moment just to go through some key solutions in each of the markets. First, looking at Manned Platform Group. EnerSys is the largest supplier of vehicle-based platforms to the U.S. government. The core of our Manned Solution, our Power Platform Solutions is our Hawker Armor safe lead acid batteries. These batteries are supplied to land, sea and air and platforms across the U.S. and allied defense organizations. This past year, Pentronic launched a lithium version of the Hawker battery that is used on vehicles to help manage the additional power needs that are required within the electrification of the battlefield. That was the vehicle that Mark pointed out earlier. We are working closely with key vehicle OEMs to have both the lead acid and lithium versions of the 60 designed into the new vehicle platforms. This will allow the vehicle to have the benefits of both the lead acid and the lithium chemistries on board. We are also extremely proud of our Hawker submarine lead acid batteries that are on 50% of the U.S. fleet. Our advanced lithium systems are program-based custom engineered solutions in missile defense, counter drone and space applications. We typically provide bespoke solutions, leveraging our proprietary chemistry and engineering for those mission-critical can't fail applications. Our lithium cobalt thermal batteries are in every platform of the U.S. missile defense system and in the development of next-generation enhancements. Importantly, our lithium cobalt chemistry leads the industry and energy density and makes it ideal in hypersonic applications. As Shawn mentioned earlier, in the rapid changing counter drone market, our liquid reserve batteries are being used to power cost-effective countermeasures for small UAVs. These are small primary batteries up the size of an eraser head that are used to create smart 30-millimeter rounds to shoot down small drones in a cost-effective manner. In the space market, EnerSys BSL batteries have 11 billion-plus sell hours in space operations without failure, and we are used to power systems on the [indiscernible] telescope as well as [indiscernible] Soldier Power and Autonomous Systems is an exciting market that EnerSys has grown in the past 3 years with the acquisition of Bren-Tronics and Rebel systems. Specifically with the acquisition of Bren-Tronics, we have further deepened our supply of rechargeable batteries to the defense industry by adding the largest supplier of lithium-ion batteries and charging solutions. Importantly, Bren-Tronics also has a solid presence in EMEA markets, an area where we're seeing significant growth with the need of in-region, for region content. The addition of Revel Systems has expanded our footprint in the operational power market as the need for distributed power on the battlefield has increased. The Revel Systems solution uses a Bren-Tronics lithium battery as the energy storage of its core intelligent portable power solution. These solutions offer resilient, intelligent power distribution, managing the power needs brought about by drones, AI and computing on the battlefield, which all represent a significant opportunity for us to capture moving forward. So looking at the market, the PPS segment operates in a growing aerospace and defense market. As many of you know, this is rapidly changing market right now with a sale of about $3 billion and growing. Growth is being driven by first, increase in global spending. We've already seen that with our Ben-Tronics backlog doubling in the past year. Second, rapid adoption of drones and missile defense systems. This includes batteries, chargers and operational power. And it's also being driven from the U.S. from a sales standpoint in the U.S. to be able to use FOC compliant lithium solutions that we'll be able to supply out of our lithium plant. All this is tied into the broader electrification across all military platforms. These trends are increasing demand for high-performance, reliable and domestically produced energy solutions exactly where we are positioned. So when we look at our competitive advantage, it's built on 4 pillars. First, we are a recognized battery technology leader with over 5 decades of experience and proven performance. And with the Rebel acquisition, we are positioned to provide leading hybrid power energy management solutions at the technical of the battlefield. Second, we are a customer-focused solutions provider with agile development that enables rapid response to evolving program needs, ultimately delivering repeat awards and strong customer loyalty. To me, this is what our engineering team does, right? As they are completely linked to our customers, and they are the ones that are winning us those awards and keeping up our customer loyalty. Third, as I mentioned earlier, this is a clear need from a defense customer for a trusted partner with established manufacturing base with clear size and scale. This is exactly what EnerSys offers. Importantly, with our hacker lead acid batteries, we are the only U.S. company combining commercial and defense battery production at scale, which is a meaningful differentiator. And fourth, we are a proven co-developed partner actively participating in 75-plus development programs funded by government agencies, U.S. primes via grants and awards. So when we talk about Energize and what it means to the PPS group, we are executing the energized framework across PPS with a focus on 3 priorities: optimizing our core by strengthening our positioning in existing defense markets, including the ramp of our thermal and liquid reserve offerings as well as stabling production of our lithium 60 batteries in [indiscernible] France to meet the needs of our EMEA customers. Second, invigorating our operating model by increasing speed and execution, like leveraging our Rebel acquisition to drive further differentiation and operational power systems. And third, accelerating by expanding into areas like drones where we are well positioned to capture near-term opportunities and future opportunities for our Greenville plant. Over these next few slides, we'll discuss each of these initiatives a little bit further. So one of the key growth areas is our thermal and liquid reserve batteries that are used in missile defense and counter drones. These are primary batteries, long shelf lives often exceeding 20 years and must be produced domestically within the U.S. We've quadrupled our backlog over the past few years with multiyear purchase agreements in place and we see demand continuing to rise further as our liquid reserve offerings is powering a crucial element of cost effective counter drone defense, as I mentioned earlier. To adjust the increased demand, we're [indiscernible] customer federal and self-funding to increase our capacity within our facilities. Looking ahead, we see significant opportunity to scale production and capture increased demand in missile defense and counter drone with tangible impacts in late FY '27 and into FY '28. So the Bren-Tronics and especially the Rebel acquisition this past year has given PPS to technology differentiation that extends beyond chemistry. Today, Battlefield remains heavily dependent on generator-based power, which drives a critical reliance on fuel resupply operations and making those supply lines high value and value -- high-value and vulnerable targets. The increasing need for resilient distributed low-signature power solutions is driven by the power demand and computing needs at the technical edge of the battlefield. The Rebel hyper system can address this need by using the Bren-Tronics Lithium 6 as the energy storage component of its intelligent power management system. It can gather power inputs from tactical generators, vehicle power and renewable inputs such as wind and solar. The Rebel Hyper system will then intelligently optimize power flows, store energy and reduce generator run time distributing power to where it is needed to a resilient secure micro grid. The Rebel system is able to add hyper nodes and storage modules to scale power up to 15 kilowatts and energy up to 60 kilowatts. The results are continuous, efficient, low-signature power that is able to be used anywhere, any time and reducing the need for generator fuel. The Rebel systems are currently being evaluated on mounted and dismounted solutions in the Army, and we anticipate tangible impact starting in late FY '27 and into 28. So as we think about accelerating growth, a key focus of ours is capturing opportunities in drones. Within the A&D market, the differentiation starts at the cell level, and we have a deep expertise in lithium cells that can power these drones. While we're in the early stages of this opportunity, we see clear path for both growth in the near term and the medium term. For the near term, we are focused on smaller handheld drones requiring individual battery packs, some of which you see outside with Kyle. These packs are currently in development, and we've recently delivered prototypes to the Army for evaluation. Additionally, in the short term, we've won an award to develop a drone battery charger adapter using the Bren-Tronics ABC charger. This need came about in the Army to have Universal charger to handle the variety of drone packs that are being used in the field today. As we think about the medium term, the focus turns to larger fixed wind drones requiring multiple battery packs. We have 10 years of experience in designing and building these type packs. And with the addition of Bren-Tronics design and manufacturing expertise, it furthers our position to win in this segment. The largest opportunity that we have, though, is in cell production for the drone batteries. The government is transitioning requirements that these cells be U.S. made using compliant lithium technologies. We have clear support from top customers and proven leadership as a trusted partner of VOC compliant lithium cell technologies and this makes our proposed lithium manufacturing facility in Greenville, South Carolina, well positioned to capture this opportunity. So when we talk about drones, the biggest takeaway that I do want to say here is once we start to add the -- once we add the Greenville facility, we are completely vertically integrated, as Shawn alluded to earlier. Greenville, South Carolina will supply a compliant cells. Bren-Tronics will supply battery and charging solutions, and Rebel will be able to supply operational power solutions to be able to power the charges from Bren-Tronics. So to summarize, we are positioning our portfolio for Battlefield electrification brought or bought by the increased needs from drones. We are delivering turnkey in region, for region, leveraging our global size and manufacturing scale, and we are expanding into adjacent opportunities to drive incremental growth. Overall, PPS is well positioned to capitalize on strong defense market tailwinds and deliver long-term value. So thank you. And it is now my pleasure to hand over things to someone who has provided our team with strong leadership and guidance. And it was not only a great teammate but a great friend, Andy Funk.

I don't know. He said he was going to be dry, but I think he's a tough act to follow, a little hard to follow all those cool things that we do in our PPS line of business. So thank you, John. So I hope you're having as much fun this morning as I am hearing our story. I'll tell you, I couldn't be more proud of the team that we have here or the company in front of us or excited about the opportunities that we're going to share with you. For those of you that I have not met, my name is Andy Funk, and it is my honor to serve as EnerSys' EVP and CFO for the past 4.5 years. I've been with the company over 7 years now and previously served as the CEO and before that, CFO and Treasurer of Cambridge Ley Industries. I also sit on the Board of Directors of Crown Holdings. And today, I'm going to walk you through how we've been driving greater financial focus and discipline across the organization, how that translates into improved profitability, strong cash generation long-term growth opportunities and compounding value creation opportunities for our shareholders. Three key messages that I want to leave with you today. First, we are executing on our energized strategic framework to become faster, more agile and more customer focused in order to drive accelerated growth. As you've heard today, we are in a variety of exciting diverse end markets that collectively are growing faster than GDP. We have a right to win in those end markets because of our leading #1 and #2 market share positions deep customer relationships and strong technology stack. And we're doubling down on those focused growth opportunities that you heard about today that leverage those leading market positions our differentiated tech platforms to make us uniquely positioned to expand our share of wallet with our existing valued customers. Second, we have enhanced our cost discipline across the company, which has driven margin expansion. Going forward, our disciplined approach will further compound that margin acceleration from the positive operating leverage that we expect to gain on our accelerated growth. And finally, we have a flexible balance sheet, and we generate strong free cash flow. Coupled with our disciplined approach to capital allocation, this will give us optionality for investment decisions. and also enable us to continue to return excess capital to our shareholders. Let's take a look now at our financial results over the last 3 years, which reflect the benefit of our increased organizational focus and discipline and begins to foreshadow our future financial trajectory. We've driven meaningful improvements across key metrics. While net sales has been relatively stable, our focus on managing costs and making disciplined investment decisions has resulted in our adjusted operating earnings growing faster than sales, and our adjusted EPS growing even faster than our adjusted operating earnings. This progress is supported by a focus on product price and mix, OpEx discipline, footprint and manufacturing optimization, contributions from recent acquisitions and the benefits of our stock buyback program. The key point. Our disciplined operating performance has driven increased cash flow, which we are strategically reinvesting in targeted customer-focused growth areas where we have a right to win that will drive accelerated growth in the future. And going forward, we expect that acceleration in top line growth will have a compounding impact on earnings through positive operating leverage that the additional volume will bring. We've made significant progress while also intentionally positioning ourselves for future compounding shareholder value creation opportunities. From a portfolio standpoint, our successful acquisitions like Bren-Tronics and Rebel are synergistically expanding our capabilities and unlocking more growth opportunities in our strategic areas of focus. We're also streamlining our manufacturing footprint. We're leveraging our lead acid center of excellence that Chad talked about, to further take out fixed costs by closing 2 of our manufacturing plants in Mexico and intentionally increasing our 45x benefits by transferring that volume to our U.S. factories. On the operational side, we have fundamentally changed this company through our energized strategic framework and Shawn kicked off about a year ago, which are now operating with more discipline and financial rigor. As one example, in fiscal year '26, we took out $80 million of annualized costs through strategic organization realignment, optimization and efficiency gains. So it's not a onetime action, but it's really a change in the way we're running this business. At the same time, Mark enhanced the focus of our engineering teams to execute faster on new product introductions through a more customer-focused approach, we removed redundant layers of management, which has enabled us to move faster with greater alignment across the company. And as is evidence, when you have a moment to look further at the product showcase we have in the back. And importantly, we have delivered a TSR of 150% over the past 3 years with strong operating performance, $620 million of buybacks and a 50% increase in dividends. And as a reminder, we still have $875 million outstanding from our previously announced $1 billion stock buyback program. All of this supports our strong shareholder returns and strengthens both our margin profile and long-term ROIC. One of the strongest attributes that EnerSys has is our ability to generate significant free cash flow. We've delivered $1 billion of cumulative free cash flow over the last 3 years, driven by strong operational performance, disciplined capital spending and improved working capital management. Looking ahead, given investments we've made over the past few years in our manufacturing footprint, we expect to deliver significant revenue growth without the need to increase capital expenditures proportionately. We expect normalized CapEx to be in the range of $70 million to $80 million per year, which is below our current level of annual depreciation and also before the impact of our planned lithium plant. Additionally, the continued focus by our COEs and working capital will drive further cash flow generation. This will give us flexibility to both invest for growth and continue to return capital to our shareholders. We have this flexibility because we are committed to maintaining a strong balance sheet. We have low net leverage at 1.1x EBITDA, we have ample headroom below our 2x to 3x target ratio to provide optionality. We enjoy ample liquidity. We have no significant near-term maturities, and our commitment to a strong balance sheet has afforded us solid credit ratings, which just reinforces our financial strength. Collectively, this gives us the flexibility to navigate different macro scenarios, invest in growth, pursue strategic opportunities and continue to return capital to our shareholders. We have demonstrated our very disciplined and balanced approach to capital allocation. Our priorities are clear and consistent. First, we invest in organic growth, particularly high-return investments like our lithium-ion plant facility. The enhanced financial rigor we have put in place ensures that the organic growth investments meet our financial objectives. Second, we maintain a dividend that grows with earnings, excluding 45X benefits. Third, we pursue strategic M&A that aligns with our growth priorities. Fourth, continue to maintain a strong balance sheet. And finally, we return excess capital to our shareholders. Over the past three years, we have repurchased 15% of our shares outstanding with, as I just mentioned, approximately $875 million remaining on our buyback authorization. This framework ensures that we are allocating capital to the highest return opportunities, investing in our future growth, returning capital to shareholders while also maintaining optionality. M&A has been a key part of our growth history, and we will continue to be disciplined and strategic. We have a long history of utilizing M&A to strengthen our portfolio. These acquisitions have expanded our capabilities, enhanced our technology base and deepened our customer relationships. Importantly, M&A to us is not simply opportunistic. It is highly strategic and aligned with our long-term objectives. Our recent acquisitions demonstrate the disciplined approach we take to M&A. We evaluate opportunities through both a strategic and financial lens, including alignment with growth priorities, expansion of technology and capabilities, accretive revenue and earnings growth potential and delivering returns above our cost of capital. The Bren-Tronics acquisition is a really strong example, expanding our presence in critical defense applications like John shared with you, while meeting other strategic filters and financial criteria. Strategically, Bren-Tronics has expanded our lithium product capabilities across the entire company. It opened the door to the REBEL acquisition, which enables us to pursue the opportunities in drones. While simultaneously, it has deepened our trusted relationship with the U.S. military and bolstered our geographic reach. And ultimately, it has increased our share of wallet with global customers in high-growth markets. Financially, it has been accretive to both revenue and margins, delivering a return that exceeds our weighted average cost of capital in a high-growth market. As everyone in the room may be aware, we are operating in a very dynamic policy environment. And I am very pleased to say that we have positioned ourselves well to benefit from these changes. Key benefits to our shareholders include favorable tax policies as well as significant value from 45x benefits, which are reported as a reduction to cost of sales and not subject to taxation. In fiscal year '26, we recognized $159 million of 45x benefits. All of the benefits here have been optimized by our proactive actions to take advantage of opportunities and mitigate exposure from the policy changes, such as optimizing our manufacturing footprint, on-shoring production, diversifying our supply chain and insulating our shareholders from any remaining cost of tariffs through pass-through pricing. The result of our strong execution is a more resilient and regionally aligned operating model. As you've heard us discuss today, our planned lithium ion facility is a very important strategic long-term growth investment. This project expands our domestic manufacturing capabilities, strengthens our supply chain resiliency and positions us to meet the growing customer demand. To be clear, the Department of War is asking us to make this investment. From a financial perspective, this investment will be phased over multiple years. It will be supported by external grants and incentives, and it can be funded through our own existing cash flow. This is a high-return investment aligned to structural market demand. And importantly, the revised scope, which Shawn shared with you of our lithium plant significantly derisks this investment and is a great illustration to me of the new targeted customer-focused approach that we're making, investing where we have a right to win in high-growth areas while maintaining flexibility to adapt technological advancements that best meet our customers' evolving needs. You've begun to see our earnings growth potential this past year. And as I mentioned earlier, going forward, accelerated top line growth will have a compounding effect on our bottom line results. This slide is what it is all about and what I'm most excited about, the compounding top line growth in front of us. At first glance, our business can seem a little complex, but really, it's not. You've heard common themes today from all of our segments and presenters. Our customers are struggling with the same challenges, and we're helping to solve those issues with transferable technical and service offerings. Our growth outlook is supported by market growth with very clear focused initiatives to drive incremental growth across each of our segments. So as Keith highlighted for NIS, growth in our communications, data center and industrial power and utility markets are being driven in large part by the build-out of artificial intelligence and network infrastructure fortification. Simultaneously, labor scarcity is driving the need for intelligence to support energy solutions. These drivers provide a strong market growth base. But as we look ahead, we expect our data center to lithium-ion data center offering, our services expansion and our XM Edge launch to provide incremental growth over and above the market. And in IMS, as Chad discussed, our material handling and transportation markets are expected to see continuous growth as they naturally recover this year and are bolstered by material handling and transportation synergies that Chad talked about as long as well as ongoing ICE to electric conversion and forklift. We expect additional growth in IMS to come from our customers' ongoing enthusiasm for our maintenance-free solutions, including our next-gen lithium and chargers. And we're also excited to be able to expand our market share with our -- expand our share of wallet with these existing IMS customers through our BES solution, which we are launching this year. Then in PPS, as John shared with you, there's significant growth across our manned platforms, advanced lithium systems and soldier power and autonomous markets, primarily driven by the increased defense investment and the electrification of the battlefield. We're seeing incremental growth opportunities with the ramp-up of our thermal and liquid reserve offerings, operational power systems growth and the lithium cell offerings for drones and UAVs. Our planned lithium plant enables us to meet this rapidly growing demand with the highly valued FEOC-compliant lithium batteries that our customers need. So now this slide is going to pull together everything you've heard from our team today, how our long-term financial framework provides a clear path to shareholder value creation. First, most important, top line growth. We anticipate 4% to 8% annual growth revenue driven by both market growth inherent in our diverse end markets as well as targeted incremental growth initiatives. We believe that our diversified end markets will grow above GDP at approximately 3% to 5% in the aggregate. On top of that, we plan to leverage our leading market positions to expand our share of wallet with our existing customers in which we expect to deliver an incremental 1% to 3% of growth on average per year. As you've heard today, we believe, we are uniquely positioned to offer our customers integrated solutions in Fortive BES, lithium data center and FEOC-comliant A&D offerings. Our revenue outlook takes into consideration that fiscal year '26 reflects very early wins of growing faster than our end markets. I'd like to note that we recognize not every one of our markets will grow at the same rate every year, but it's our diversification and resilient business model will enable us in the aggregate to absorb market-specific nuances. I'd also like to point out that our targeted new growth initiatives will still be in early innings over the next few years, enabling our growth rate to expand as these offerings take off. With profitable growth and disciplined cost management execution comes the compounding impact of operating leverage. Coupled with efficiencies generated by our centers of excellence and higher-margin offerings such as our maintenance-free conversions and our new targeted growth initiatives, we expect to deliver 50 to 100 bps of margin expansion per year. With this earnings growth, we will leverage our strong free cash flow conversion and disciplined capital allocation to reinvest in M&A and stock buybacks, further optimizing shareholder return. This framework is dynamic and both achievable and sustainable over the long term. In the near term, you'll see higher return coming from margin expansion with the full year impact of the fiscal year '26 strategic organizational realignment costs taken out and also the savings from our Monterrey and TJ plant closures kicking in. Market growth should accelerate over the second half of the fiscal year as we have the recovery in the IMS markets in forklifts and Class 8. And then it will be amplified by the targeted growth initiatives we shared with you that will have a more material impact beginning in fiscal year '28. As volume picks up, our margin and earnings growth will be compounded by enhanced fixed cost absorption in our factories, coupled with our disciplined approach to OpEx. And finally, our enhanced earnings will lead to incremental free cash flow generation, which we will continue to reinvest to further accelerate growth and optimize our shareholder returns. So to summarize, we believe, we are uniquely positioned to execute our strategy and become faster, more agile and more customer-focused. This will drive accelerated growth. Our accelerated growth will create positive operating leverage that will enable us to further expand our margins and compound our earnings growth. And finally, our strong free cash flow generation and disciplined approach to capital allocation will unlock incremental shareholder value creation. So with that, I'd like to thank you for your time, and I'll now turn it back over to Shawn.

So before I go on to closing remarks and we get into Q&A, just a note from my team, I'm proud of you. I thought you did a great job today. It's clear to me from 12 months ago to today, just a little over 12 months on a job, but we're operating a different company. So kudos to you. And John, you can be -- if you deliver all those batteries, you can be as dry as you want. Well, you can use AI to do the next one. Just get them batteries built and key. I learned something today. The things that most attracted you to EnerSys, I know it was working with me the whole time. Anyway, listen, it's very important for me that you walk away today understanding the difference in the markets we serve, just how different. So in this large universe of battery and some very large capacities in the world and American automotive companies making deals with some of those companies and purporting to do large energy storage, they can do all that. It has nothing to do with what we're going to do. And our markets are truly unique, very specialized and for some of them, but the volumes they have to put out for us, while these are attractive SAMs for them, the juice isn't worth the squeeze. And so that's the biggest takeaway. And EnerSys is focused in those markets where we have that right to win. We have those leading positions. And frankly, we have our customers asking us to solve these problems. It's a very, very good position for us to be in. Those problems are only getting worse, this energy issue and the labor issue. And we're right in the middle of being able to solve that. We do stand alone in our space in providing the end-to-end solution. Many of our competitors provide a piece of this. There is a data center lithium competitor today in this area where our customers are afforded at 5 9s of reliability. Keith talked a little bit about this. They're afforded 5 minutes of downtime a year. One of our competitors gives you an e-mail account. And if you have a problem, you send an e-mail, and you're guaranteed a response in 72 hours. It just cannot be. And EnerSys is a company that's there all the time and walking the journey with the customer, and we really stand alone in that regard. And finally, this team, I hope what came through to you today is the unity in this team. I told you it wasn't just a group of people working together. It's a group of people who truly like and trust each other, and we are focused on delivering on our initiatives. We've accomplished a lot in 12 months. We have a lot to do. We're not perfect as we leave here today, but we know what those things are. We have a much better framework to execute. So again, I think we're a very compelling, a very interesting investment proposition. I know the stock has done some interesting things this year. We've got a lot of growth ahead of us. So I want to thank you again for joining us. Charlotte is going to come back up and get us ready for Q&A. We're going to have my colleagues join me on the stage. But thank you for hearing our story today.

Thank you, Shawn. So we're just going to take a moment to pause here and get ready for Q&A, bring some seats on stage for our speakers, and then we'll jump right into it. Just a few quick reminders before we get started. Those of you in the room, we're going to have two mic runners. We'll have Molly on this side. We'll have on this side. And please wait for them to bring a mic so we can hear you very clearly here in the room, and they can also hear you joining virtually as well. If you're joining virtually, and you have a question for us, please feel free to use the portal, and I can read that for you here in the room. So with that, just give us a moment to get the stage set up, and we'll get started. Thanks so much for waiting, everybody. Yes, let's get started here with Noah.

The growth strategy that you've laid out is quite focused and the value creation framework provides a lot of flexibility over a period of time. But I wonder just sort of conceptually how to think about the contributions or at least how you think about the contributions from the different pieces of that above-market growth strategy. If you take 2% at the midpoint and take that out 5 years, you're saying, okay, maybe there's $400 million of potential revenue generation from these growth initiatives. So I guess, conceptually, how would we think about that breaking out among the different strategies that you've laid out?

I mean the important part, so thank you. It's great to have you here, is that we wanted an algorithm that could live. So there's going to be periods of time that it will be more on the earlier side as we're ramping these new initiatives up and that will grow. So with all of these, there's going to be that acceleration. I mean you look at, for example, data center NR, you know how much that we are selling of our lead acid business. And right now, I'd say lithium and lead acid are probably about the same, but higher growth rate within lithium. So earlier, it's going to be a smaller percentage and then it will start to accelerate over time as an example. So we're not giving specific guide for each one of these initiatives, but collectively, that's how they'll come together.

It makes sense. And maybe one follow-up before I pass it on. The 50 to 100 bps margin expansion per year, you've obviously exceeded that over the past year. I think you commented that margin expansion would be a little bit ahead of that target as we look out in fiscal '27. But it was also interesting going through your re-segmentation to see that you have a really nice margin profile in the A&D, the PPS segment, for example. And so if we think about just how mix might play a role in margin expansion? How would you frame that for us?

I'll take that one, too, if anyone else wants to contribute. But what you can see is the new growth initiatives that we have are all in higher margin accretive portions of the business. So that adds value. You also see that our CapEx for our base business is below our depreciation. That's going to add value. The margin expansion figures that we gave are excluding 45x. So you'll also see some benefits this year and next year, exaggerated benefits coming from the Monterrey and TJ closure. So we intentionally manage that, but we also look at that as not as a long-term focus because there's going to be an end to that portion. So we try to maximize that benefit, but that's why we called out the margin expansion, excluding 45x. But you'll get some more of that in early years as well.

Noah, I'd just like to add back to your first question. One of the reasons for the model, the way that we set it up is we're putting -- I've made these folks' jobs tougher than they've ever been, but I've asked them to be partners in being strong operators. And so I want them -- and we know that our businesses -- these end markets move in different cycles. So we'll have some that are performing well, some that slow down as we saw with Motive Power over the last year. I'm tremendously proud of the team because it's never been the case before we could set earnings records in a down year of motive power. So this is a first in our history, and it just shows the discipline, but I'm requiring this team to be partners in all aspects. So all of those levers, they have to be mining at the control station and to make sure that we're delivering on our EPS targets. So it's kind of the framework is sort of set up to put them on the hook for all of them.

I was hoping we could talk a little bit more about the drone industry. Clearly, this is something I think the team thinks is a great opportunity. I was hoping you could kind of frame how we should be thinking about that over the next kind of 2, 3, 4, 5 years. Obviously, I would imagine bringing on South Carolina cells is going to be critical in kind of helping that ramp. But just given the timing of building out that facility, how should we be thinking about the opportunity in kind of the next 1 to 2 years and longer term? And then is this something that really is critical just in the U.S., or is this something that NATO, we could be is an opportunity, just kind of broad strokes around that opportunity.

Yes. I can take a first shot at that. So when we think about drones, think we talk -- I think John and I talked about the ecosystem of drones, right? So there's obviously just powering drones, but there's also the charging element, all that. So what we've seen in our group is the first element of what we're seeing now is expansion in counter drone activity. So that's when we talk about the lightweight 30, and we talk about the missile defense piece. And then ultimately, the REBEL systems, we're seeing that ramp up. We do are starting to see our sourcing of packs and building of packs with [indiscernible], we're strategically looking at using that same electrochemistry that would then flow into our plant. So as we start to see the drone demand increase for us to support those drones, we're looking at a strategy of not only doing those packs, but those cells will then be converted to our cells over time. So as we have that ramp of the plant, we should be capturing some of that drone demand now and then we can convert it over to FEOC compliant cells going forward. At the same time, we're ramping the counter drone activity now. So we are very excited about what this means to us. We're very excited about what that FEOC compliant means. But it doesn't mean in the short term, we're waiting three years to get those solutions out there. So our focus with our team at Bren-Tronics and REBEL is to get all aspects of that. And we've almost created an internal infrastructure or almost not only a COE, but a focus on making sure that we're aligned with that from the integration of chemistry up, but also from all the other elements supporting that, which is where we're starting to see the initial growth is even more the external side of the drones versus drone itself. Is that -- I don't know, John, if you have anything else you want to add there?

Yes. I think you hit it on the short term, right, is that we're building packs long term. So whether we build the pack or not, being able to say it's an FEOC-compliant cell that we're making, whether we're using them or whether we're selling to other folks, that's very -- that mimics what we do with our thermal and liquid reserve batteries, right? It has to be a domestic supply because it is critical. And having that capability, I think, is significant. We're obviously excited to talk about the lithium plant. Hopefully, soon we can give more details, but it is -- we feel like we put together a plan that really addresses what the DoW needs. And then your other -- the other question I didn't answer was around we see the same needs in Europe. We see the same needs with our allied countries. We're learning as an industry, it's learning what happened in the Ukraine and how that impacts the battlefield. We're seeing those same kind of learnings. And I think that's where John's point around taking advantage of the facilities we have in Europe to expand that capability because it needs to be in continent for continent. And I think we're seeing a lot of more excitement around that than we've ever seen before in terms of the investment into those -- in the European countries.

I would just add one thing that we find very interesting, very compelling. For the lion's share of most of our careers, the DoD or the Pentagon would release a 5-year or a longer-term road map for battery energy storage. They are refreshing that quarterly now in a way they've never done because they are only now beginning to dimension through all the permutations of defense, the enormity of what they need. And so it's -- some of the numbers are showing us now are just a bit mind-boggling, but it's -- they're only -- we put our SAM up there a bit tongue in cheek because they're already telling us, guys, that's wrong, and we're going to continue to update you. So we know it's a very robust growth expected there.

Okay. Great. And then as we think about aftermarket, I mean, clearly, this seems to be a growing opportunity across all segments. Somebody mentioned the 750,000 Alpha boxes in telecom. Just kind of curious like how we should think about that aftermarket and replacement cycle and really what that opportunity is.

Yes. I mean for the -- for my business in NIS, I think the build-out and extension of the communication networks continues to provide fuel for growth, right? But on top of that now, we'll have a solution that will enable certain parts of the network to upgrade and deal with where they're most power constrained. So we should see an amplifier from the continued build-out with the new technology that we assume will have more of a value price aspect to it. But on top of that, there will be spots where the network is constrained today that we'll be able to see a bigger upgrade piece. On the battery side, I think data centers from that standpoint, I showed you the replacement ratios earlier. That's a consistent drumbeat of business for us. What's exciting about the data center space is that you've got the increase in new builds on top of those. And some of the build cycles are starting to come to their first refresh cycle. So we do see a continued fuel, if you will, for growth in that space.

Next question. Take one from online then. So let's see. I think [ Chip ] had a question over here. No, Chip. I'm so sorry.

For data center NR, the lithium product, maybe expand on the OEM certifications. What does that process entail? Where are you in some of those conversations? And then supply chain and capacity? And how should we think about ramp up?

Yes. The things that I'd ask you to kind of look at to determine success as we go forward are our announcements around OEM certifications, service capacity and obviously, early wins. We're trying to be pretty intentional about creating a pull from the end users. If you notice the architecture differentiation that we have, there's a reason to use that product for future builds. But we're also being very intentional about getting the OEM certifications. So we've already seed planted this. We just kind of announced it or come to market here this past Tuesday. But our early dialogue with the OEMs has been very good. We've done some initial testing and trials in the field to demonstrate field reliability. I think as I think about the OEM certification and field reliability, those are going to be the two biggest hurdles that we have to get across so that when they spec it into the design, it's already proven technology. So I'd ask you to kind of keep an eye on those three things as we move forward, but we're already well down the path of having those conversations with OEMs and end users.

Maybe a follow-up. A lot of -- we get a lot of questions around 800-volt DC and implications for centralized UPS. Just give us your thoughts around that.

Well, I can start because I got to talk about it a little bit at your conference and they go. If you look at why they're going to 800 volt, it's just a -- if you know Ohm's law, it's just to reduce resistance and in so doing, reduce the amount of copper because I don't know if you've looked at copper as a commodity was expensive, and it's getting harder to get. So if you raised 800 volts, you reduce that resistant picture. For us, it's immaterial. Most data center batteries today are floating somewhere above 500 volts. And as you see from our full technology stack, we can go down to a couple of volts in the defense application up to 48-volt telecom applications, 120-volt utility applications. For us, it's just a -- it's the same architecture with slightly different settings. And if they want to take the battery to 800 volts, if you look at a battery in series for us, it just means more cells and higher volume. But every one of those systems will still be deployed in a centralized UPS. So the architecture doesn't go away because of 800 volts, just the -- how the architecture is can drive is slightly different. Shawn has been in the industry a lot longer than me, so he speaks really eloquently about that. But from my perspective, quite simply, we want to be in mission-critical spaces, and they're still going to need backup power. So whether it's distributed differently or not, we're still going to have to be there with our solutions in order to keep them running. And any time we get Shawn talking about Ohm's law, I'm always happy.

Great. Next question.

Tackle a couple of online, if that's okay, guys. So let's see here. I have a question come in about acquisitions. So where do we think we're going to see focus going forward?

I can start with that. We have some very attractive -- it's interesting. I got mentioned today with the mass we've achieved with Bren-Tronics and REBEL in the A&D space. We are -- when I tell you, we're in the middle of every conversation with the U.S. Defense apparatus, and what they're trying to achieve. It is in a way that -- and Mark and John have got a lot more pedigree in this space than I do. It's in a way that we've never seen in our career. These are primary conversations. They're direct conversations. And what we're seeing in this administration and with this Secretary of Defense, these folks are willing to move fast and forgo the normal procurement cycles that they've seen in the past. In fact, they're encouraging it. And they like us because we're not out there waiting for a handout to solve a problem. We proactively solve the problem. Mark and John both talked about it, we developed a drone battery, put it in the hands of the Army and said, is this what you're looking for with no program. And they said, that's exactly it. So as you see us lean into M&A, there are further ways and targets out there where we can consolidate even more mass and in some cases, chemistry and technology and move even faster and more meaningfully. And again, where we might have had concerns in the past about regulatory considerations here. We have an administration. We actually have the customer, the defense apparatus somewhat prospecting M&A for us, which is a unique situation. So you're going to see M&A in that lane. We also know, as we have the [indiscernible] conversation and services conversation that we can accelerate through M&A. We have some targets in those lanes that we're looking at. So you could see us -- Andy talked a lot about our filter. It's got to be accretive. It's got to be strategic. It's got to check enough of those blocks for us that it fits our thesis. But there's a lot of ways that we can develop those capabilities quickly through M&A. And so if those situations present themselves, we're going to lean in. And as she mentioned, we have a lot of dry powder. Our leverage ratio is very low. Our borrowing base is very high in addition to our cash generation. So we want to put it to work.

That's great. If we kind of stick with A&D then, how would we want to dimension the opportunity across the drone ecosystem? How do we want to dimension the opportunity across the drone ecosystem?

I can't. What do you say?

Dimension the drone opportunity.

Sorry, sorry, sorry. I struggled with that. So in the short -- from a financial standpoint, I think our immediate impact is with our lightweight 30 liquid reserve product that we'll start to see those impacts starting midyear this year and rolling into next year. That's all built into our 9% to 11% from a growth standpoint. And then I think in the future, where we're headed with Bren-Tronics, chargers with the packs that we're building, we'll start to see additional growth probably later into this year.

I think, Shawan, it's important for that question to point out that we -- the reason the anti-drones hitting first because that was the first need generated, and that's where the government worked with us to help expand our capacity. So that capacity is actually coming online with those investments that we've been working on to automate that in our facility over the last year. So you're starting to see those other signs in that business where we're seeing those investments and those needs identified, and we're just how do we accelerate that. And the lithium plant being one of those pieces of that, that we're looking at. So yes, I think you're going to -- as John said, you're definitely going to see it there first because that's -- the defensive piece is the first one. And there's such a different -- in the world of drones, offense versus defense is so out of whack in terms of cost because we were using a $100,000 device to shoot down a $500 device, right? And so what's great about the solution with lightweight 30 is you now have starting to even that up it's great for us because it's a lot of volume and all those type of things, but it does -- it's one of the first opportunities to really get that balance back in. And that's why there's been such a focus on the anti-drone piece for us. And it's REBEL and our hyper system, right?

That -- when we talk in the short term, we'll have the biggest impact over what I believe is the next year is that it uses the Bren-Tronics 6T battery, and that is what is then being able to use to be deployed and be able to charge remotely. And we're seeing the interest level there is significant. Those are all in testing, and that will be the one that will move the needle for us soon.

Great. Just want to check in with our analysts in the room if anybody wants the opportunity to hop back in queue. We'll take [indiscernible].

With the complexity of digital Lowes kind of changing how your customers view energy, power and a variety of ancillary services, I want to hone in on Fortex a bit and kind of the value creation potential you see there and like how that interfaces with your customer relationships. And so is this -- maybe getting ahead of myself, but do you see this as a solution where it's kind of you drop off the hardware and you're just selling the software sort of platform solution to your customers, or is it something kind of they don't want to deal with it, it kind of sits outside of them, you guys manage it or something else or all of the above? Just curious how you're viewing this in terms of value creation potential because I see immense opportunity. I know Mark was touching on all these other technological solutions you can kind of embed in this, but I think it's a good touch point that has a lot of different opportunities outside of even purely energy and power.

Yes. So I'll take the first part of that. When we look at Fortex is, we go into a warehouse, that warehouse has a cost structure. They've kind of felt that they have no control over their energy costs, right? They just pay what the utility charges. If they plug in all their lift trucks in the middle of the day, they get a peak demand charge. They've had no ability to offset that and control that. We look at customers. This is not a sell, drop off a unit and walk away because they don't have the ability to manage that. We would be managing that for them. So as we look at the revenue stream for us, there is a hardware component, but there's also a software component and a services component that would continue, and that would stack over time as more and more of these systems are deployed.

[indiscernible]

No, that's it.

No, I was just saying because we -- in the product itself, we've integrated machine learning and AI to be able to make that decision for the customer. We know we see value in that. That's also why I'm hitting around the conversation, we're on the same page as you are is once we get these assets out there, the aggregation of assets that value. So we're going to have -- as we talk about having 1,000 systems out there in ERCOT, I can then aggregate those into demand response initiatives. So we like the idea of using the software now and then ultimately continuing to evolve that as our space grows there to get additional value out of those units. So I think the idea that we always want to kind of have our hooks into that software to get value for us and our customers is essential because we see the payback is great now, the payback with distributed systems and aggregated systems even gets better, right?

Yes. No, I completely agree. And that's exactly what I was trying to touch on.

So FEOC concerns are rightfully something that DoW is focused on. Regulation has also made that a concern in the commercial space. Given that the DoW is utilizing your capacity in South Carolina, curious what you're hearing from customers on the commercial side, if this is something they're interested in? And are there -- is there an opportunity to meet those concerns given your capital plan for the next year, the medium, long term that Andrea laid out?

I'll start with that one. So it's a great question. What we're seeing, and it really depends upon the market, for sure, across the board, every user we have in a Western country, be it EMEA or the U.S. has asked us to ensure regardless of where the constituent elements of the system come from, the controls, the software, the cybersecurity are all domestic and Western controlled. So in other words, some customers are perfectly fine with a supply chain on the battery cell that originates in other places, but they don't want anything on their network that isn't a Western-controlled software that hasn't been thoroughly vetted and tested to ensure there's no back door to access, their system because of their cyber concerns. Other customers, they want the entire thing. The way we've conceived of Greenville, and the way that we're looking at it, that property sits on 140 acres. The initial plant doesn't consume 140 acres. But we've designed it to be highly scalable. I can't do it today, but I can't wait to tell you about how we're going to achieve that plant, and how it's going to be outlaid and designed because there are certainly applications we can serve out of that plant into those commercial markets where customers are willing to pay for that domestication. And we've talked to the automotives as a potential partner. Again, the volumes are so high. We had a meeting with one of them that you would know in Detroit recently. They're starting at 5 megawatt. It just isn't purpose-built for our markets. So we see a lot of opportunity there, but we want to get this Department of Work piece done first. We are designing it to be scalable.

Another question check. I'm happy to take one online. So what should we look for in the next 12 to 36 months to assess the success of your current strategy?

I wouldn't mind if all the business unit leaders talk specifically to their space about what that looks like. Yes. So I'll start with PPS. We start with technology and the PPS, that's right. So technology, it's to continue to release the product. So we have UL certifications that Chad talked about. It's to make sure we get through that with -- we're releasing the MODI Power lithium battery in Europe now. We need to release in the U.S. later this summer. So it's staying on track with the product releases and then they're going to track the revenue growth. So that is a focus of us is not losing sight of how quickly can we make through those things happen. From a PPS perspective, it's execution to John's point. We -- our backlogs are the highest they've ever been. And you should be seeing month -- quarter-on-quarter growth in that business, particularly as you get to the back half of this year and you start to see it ramp. So we know that -- and I think John, you and I would agree on this. We know that business. As we are able to execute, we're able to get more orders. So the biggest concern is can we handle the volumes? That's why they like us. So our focus there is really about execution and seeing that top line growth and the bottom line growth will follow with that as we go forward.

For me, I'd put it in two dimensions. I'd put it in the core business, which from a core business standpoint, with strength in the markets currently that we're competing in, we should continue to see growth and margin expansion sequentially. We are a bit project dependent. So we do have big lumpy project orders that come in. Somebody is building a couple of data centers. We supply a lot of batteries. So there's usually a little bit noise period to period. But given the tailwind that we face in the core business, we still see strength in our lead products. So that's an indicator there. I'd say on the growth initiatives, I mentioned a little bit earlier, but on the data center side, clearly, it's those three things I said before. One is we've got to work ourselves through the OEM certifications. Two, we've got to continue to put points on the board in terms of longer-term reliability and durability. And then the manufacturing and operational supply chain needs to continue to come forward. I mean our service business is probably the second catalyst there from a growth standpoint. We are watching closely new customer acquisition and service, and that's something else that we'll look for to prove success as we go forward.

So in IMS, as I spoke, the first one is continued conversion to maintenance-free products. The products we have actually already launched and are launching this year will drive that conversion growth. I personally believe in three years, it's at least 50% of our business is in maintenance-free conversion. Later this year, we launched our new charger line. That will tie in nicely to Fortex as we launch that. So I envision the next 2 to 3 years, we have really transitioned to an energy management consultant to our end material handling customers. So obviously, this year is a developmental year with pilot sites and things like that. But as we get into '28 and '29, we start to get our feet under ourselves, and we start to go out to our existing customer base and solve their energy needs. On the transportation side, we are on several OEM platforms now. There are several other OEMs that we are not on their platforms. We're going to pursue that. But we're also going to pursue a pull-through effect with all of our relationships with the large customers and large fleets that we know today. So -- and that process is just starting because we've just really merged these teams in the last few months.

Thank you. Last call, we'll take another question if anybody -- Molly?

So a question on culture here. As a business, you're now facing expectations for customers which have accelerated, whether it be on defense, data centers, your people, your processes, these sorts of things. What have you changed to meet that moment?

Yes. When I came in, one of the first things I made very clear in our careers for all of us at EnerSys, it was always a very hierarchical structure and decisions were retained at the very top of the company. And from day 1, I've done everything in my power to design myself out of the end decision-making process, except for the most impactful decisions. And I think [indiscernible] Nadella said something about what ties are you breaking, right? And they should be the only significant ones in the company. That has been the biggest cultural shift. And in fact, at the sales conference that Mark mentioned, we were in Scottsdale earlier in the month, we brought in 50 of our leaders from around the world. And even the construct of the leadership meeting, they decided what the topics would be. They decided what we would learn, what we would do, what our homework would be and what the takeaway would be, junior leaders. And something that Marshall McLuhan said about the medium is the message. And that was the message that our employees are in charge because the CEO can do what. It give you the what we need to do and maybe the why. I'm invoking [indiscernible] here a little bit. But the [indiscernible] got to come from the people. The [indiscernible] got to come from our employees. So I've been very mindful that we want -- we have 9,500 employees. We want 9,500 teammates, problem solvers, empowered people that are empowered to make decisions. And that's not words. We're even putting into expense allocation and things like that, where if they see what needs to be done, they don't have to ask permission. They're not coming to somebody for money. They're executing as owners of a company with a proprietary interest to move forward and solve problems, and we're already seeing it. So at our sales meeting, we released -- I wish I could do all of them. I was able to, in my town hall, really double-click into four key areas where by grassroots, people have begun to transform the company. So we're seeing this organic groundswell of this happening. We have work to do. But in 12 months, I'm very, very proud of what's been accomplished there. And that's really, I think, at its essence, how we're going to solve these problems because we have -- you're talking to a guy with an English literature degree that runs an energy storage company. If we're all looking for O'Connell to solve every problem, we're wholly and truly screwed. We need all of our people, and we have really bright people in the company. We have -- in the space business, we have astrophysicists. I am I going to tell them about deploying a battery in outer space. So we need those people applying that creativity across the board. And I think the team would agree, we've really been able to start to unlock the power of those phenomenal associates. And we're just starting to see it happen. It's pretty cool.

All right. If there's no further questions, I would like to take those of us here in-house. We'll go ahead and make our way into the product showcase area to learn more about the products and meet with our management team and have a bit of lunch. For those of you that joined us on the webcast, thank you for being here this morning. And yes, we hope you have a good rest of your day.