Versigent PLC 2026 Q2 Earnings Call

Please proceed. Thank you. Welcome to everyone joining us.

I'm joined today by Joseph Liotine, our Chief Executive Officer, and Doug Ostermann, our Chief Financial Officer. Before we begin today's call, I would like to direct you to the cautionary statement regarding forward-looking statements on page two of our presentation and in our earnings release issued earlier today, which are both available under the investor relations section of our website. Today's call includes forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks are described in our filings with the Securities and Exchange Commission, including the Risk Factors section of our amended Form 10-12B registration statement filed on March 6, 2026. As is customary, the content of today's call and presentation will be governed by this language.

Our guidance reflects management's current expectations and should not be relied upon as a guarantee of future performance. We undertake no obligation to update these statements except as required by law. In addition, during today's call, we will be discussing non-GAAP financial measures. Please refer to our earnings release and presentation materials for additional information regarding these non-GAAP financial measures and their reconciliations to the most directly comparable GAAP measure. With that, I will now turn the call over to our CEO, Joseph Liotine.

Thank you, Erin. Thank you all on the call for joining us today. Versigent delivered a solid quarter, driven by the unique value we create for our customers, the agility of our global team, and a firm commitment to disciplined execution at every level. Today, I'm joined by Doug Ostermann, our Chief Financial Officer. Together, we're eager to walk through the financials and share our reflections on the first quarter as an independent company. When we stepped forward as Versigent, we did so with clear priorities: strengthen our market-leading position by leveraging our full-service engineering capabilities, continue optimizing our cost structure through automation and footprint discipline, deliver consistent financial results through execution, and allocate capital in a disciplined manner to ultimately drive long-term shareholder value.

These priorities guide how our entire global team shows up every day: focused, accountable, execution-driven, and ready to deliver the mission-critical power and data solutions our partners depend on. The proof is in our performance. Customers trust our ability to turn complexity into clarity, empowering them to act with certainty. This is reflected in another strong quarter, featuring double-digit net sales growth and consistent performance over market, evidenced by our expanded bookings totaling over $2.8 billion in new awards in the second quarter and earned every day in our deep commitment to disciplined execution. With more launches planned this year than in our history, our global team launched 39 large-scale global programs supporting 22 new and existing customers in the second quarter, all with more than 99% quality and 99% on-time delivery while navigating a dynamic market.

Many of the programs launched this quarter reflect our unique market position, featuring trusted engineering expertise, working in close partnership with customers to solve their highly complex, incredibly challenging data and power needs, including new premium and high-content vehicle programs requiring advanced electrical architectures and seamless alignment between our engineering experts and OEM partners. A great example is a recent win from a leading European OEM who, following the successful award of another program, also awarded Versigent their high-voltage, high-complexity architecture, one exhibiting innovative characteristics related to compactness and modularity. This mid-production shift reflects their confidence in our ability to execute complex programs and ensure a seamless transition. Strategic investments in advanced engineering, operational excellence, and our inherently resilient in-region, for-region supply chain fortifies our long-term competitive position as a proven innovator, giving our customers the competitive edge they need in automotive and beyond.

Adjacent markets face many of the same pressures we already solve for: more content and features, greater reliability, and tighter tolerances. Complexity is compounding and accelerating faster than capability, which increases demand for Versigent's differentiated solutions, requiring a selective and disciplined approach to high-value additive growth. In the second quarter, we extended our proven engineering and manufacturing capabilities into new product wins, as well as launched important programs within the commercial vehicle and agricultural markets, all without changing our operating model, our execution discipline, resource intensity, or risk profile. For example, by translating our capabilities in advanced power and data distribution from our automotive and commercial truck solutions, we're actively applying that specific expertise in other markets with similar requirements, including battery energy storage Redeploying our proven engineering and manufacturing strengths attracts new business and amplifies long-term growth.

We are intentionally focusing our efforts to aggressively pursue the right adjacent opportunities, ones that play directly into our strengths. From an engineering and technical capability perspective, we have the right solutions. What we are actively building is the go-to-market muscle required to execute with the level of discipline and excellence Versigent is known for. Given the early stage of our adjacent market commercialization efforts in some of these new sectors, I want to reiterate that our previously communicated 2028 outlook does not rely on a meaningful contribution from these opportunities. We view them instead as a source of potential upside beyond our previously provided outlook. In the meantime, we remain focused on executing our go-to-market strategy, expanding customer relationships, and positioning Versigent for long-term success in every market we pursue. Operational excellence generated strong commercial momentum throughout the quarter.

I had the honor of receiving the Podio Ferrari Excellence Award on behalf of the entire Versigent team in June. The award, the first of its kind, recognized Versigent for three decades of outstanding partnership and customer service. This, in addition to important quality recognitions from VW and Mahindra, illustrates Versigent's global reputation as a valuable partner, particularly on highly complex global platforms where reliability and performance are critical. Together, these execution outcomes supported the volume growth achieved in the quarter and demonstrate how our priorities are translating into real results. As we look ahead to the second half of the year, we do so with confidence and purpose, guided by our commitment to create long-term value for our stakeholders. Our disciplined approach to capital allocation prioritizes both investing in our business and generating attractive shareholder returns.

Underpinned by the strength of our business and the durability of our cash flow generation, I'm proud to announce an important milestone for Versigent, the initiation of a quarterly dividend, which Doug will go into greater detail in his remarks. Together, with our previously announced $250 million share repurchase authorization, these measures reinforce our confidence in our long-term outlook and fortify Versigent's ability to meaningfully impact our customers, employees, and shareholders alike. Guided by our strategic priorities, strong execution capabilities, and disciplined capital allocation, we are leading our industry as a highly engineered, globally scaled, and cash-generative company, ready to unlock even greater value. With that, I'll turn the call over to Doug to walk through the financials of the quarter and our updated full year 2026 guidance.

Thank you, Joe. Let's turn to our second quarter financial highlights on Slide Six. We delivered a strong set of results in our first full quarter as an independent company. Set against a backdrop of lower global automotive production, our double-digit net sales growth, underpinned by strong adjusted EBITDA margins and cash generation, reflects the resiliency of our business, as well as the deep value customers place on our differentiated capabilities. Our second quarter net sales were $2.4 billion, up 11% versus the second quarter of 2025. Excluding the impact of FX and commodity movements, adjusted net sales growth was approximately 5%. This was driven primarily by higher volumes in both North America and Asia-Pacific, which were partially offset by softer volumes in EMEA. Adjusted EBITDA was $272 million, up 25% year-over-year.

Adjusted EBITDA margin expanded 120 basis points to 11.1%, reflecting both our disciplined operating execution as well as higher volumes. Net income attributable to Versigent was $118 million, up 10% year-over-year, reflecting higher net sales and strong operating performance, despite $35 million of incremental interest expense primarily related to the debt financing completed in the first quarter of 2026. Adjusted net income was $138 million, and adjusted diluted EPS was $1.92, reflecting the strong operating performance delivered during the quarter. For the year-over-year EPS comparison, note that the Q2 2025 adjusted diluted EPS was calculated using 70.89 million Versigent ordinary shares that were outstanding immediately following the April 1st spin-off. Our adjusted effective tax rate was 27% in the quarter, compared to 16% in the second quarter of 2025.

The higher tax rate in 2026 primarily reflects the year-over-year impact of discrete tax items, which were favorable in the second quarter of 2025 and unfavorable in the second quarter of 2026. While these items impacted the quarterly rate, our full year expectations remain unchanged. We continue to expect our full year 2026 adjusted effective tax rate to be approximately 23%, with a similar cash tax rate. Free cash flow was $107 million in the second quarter and was essentially in line with the prior year quarter, despite higher capital expenditures and separation-related costs, which I'll discuss in more detail in a moment. Moving now to slide seven, we see the primary drivers of the $238 million, or 11% year-over-year increase in second quarter net sales.