American Axle & Manufacturing Holdings, Inc.

Good morning, everyone. My name is Jamie, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the American Axle and Manufacturing second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press the star key and then the number one on your telephone keypads If you would like to withdraw your questions, you may press star and two. As a reminder, today's event is also being recorded. At this time, I'd like to turn the floor over to Mr. David Lim, head of investor relations. Please go ahead, Mr. Lim.

Thank you and good morning. I'd like to welcome everyone who is joining us on AAM's second quarter earnings call. Earlier this morning, we released our second quarter of 2023 earnings announcement. You can access this announcement on the investor relations page of our website. and do the PR Newswire services. You can also find supplemental slides for this conference call on the investor page of our website as well. To listen to a replay of this call, you can dial 1-877-344-7529, replay access code 490-7646. This replay will be available through August 11th. Before we begin, I'd like to remind everyone that the matters discussed in this call may contain comments and forward-looking statements subject to risks and uncertainties which cannot be predicted or quantified, which may cause future activities and results of operations to differ materially from those discussed. For additional information, we ask that you refer to our filings with the Securities and Exchange Commission. Also, during this call, we may refer to certain non-GAAP financial measures information regarding these non-GAAP measures as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website. With that, let me turn things over to AAM's Chairman and CEO, David Dowd. David Dowd Thank you, David, and good morning, everyone.

Thanks for joining us today to discuss AAM's financial results for the second quarter of 2023. With me on the call today is Chris May, AAM's Executive Vice President and Chief Financial Officer. To begin my comments, I'll review the highlights of our second quarter financial performance. Next, I'll touch on some incremental electrification business development news in the quarter. Our technology and our approach to the market through our components and our drive units continues to gain global momentum and is driving interest across multiple segments and applications. As the transition to electrification unfolds, AM will be at the forefront of that change with our cutting-edge electric propulsion technology that delivers robust power output, superior MVH, and compact designs. After Chris covers the details of our financial results, we'll open up the call to any questions that you may have. So let's begin. AM's second quarter of 2023 sales were $1.57 billion. AM continues to be impacted by intermittent downtime at a number of our customers. Although it has become more difficult to pinpoint the cause of this downtime, We believe it is a combination of continuing supply chain challenges, including the lack of labor availability and active inventory management by our customers. On a positive note, we have seen some improvements sequentially regarding these industry issues, but we will continue to monitor the overall macro environment and remain focused on the factors that we can control. From a profitability perspective, AM's adjusted EBITDA in the second quarter was $192 million, or 12.2% of sales. The margin performance reflects the impact of production volatility and inflation. In addition, we continue to experience elevated launch costs and inefficiencies driven in large part by labor availability. We expect these costs to improve throughout the second half of the year as we adjust our business appropriately. Chris will provide more details around our financial performance in a few moments. AM's adjusted earnings per share in the second quarter of 2023 was $0.12 per share. AM generated a strong positive cash flow in the quarter. AM's adjusted free cash flow was very strong and nearly $100 million in the second quarter. Let me talk about some business updates, which you can see on slide four of our presentation deck. Last quarter, we announced a significant E-beam axle award with Stellantis. This quarter, we're following up with another E-beam award with an undisclosed OEM. The program is for a light-duty truck application in China. Additionally, we're announcing additional wins with our electric components business. These wins were multiple global OEMs supporting programs both in North America as well as in Europe. Today's announcements reinforce AM's broad electric vehicle product portfolio, our capabilities, our technology, and our approach to the market. From a recognition standpoint, we are very excited to share that AM also made Forbes America's best employers for diversity and for new graduates. AM is focused on fostering a safe, inclusive, and accepting work environment. In addition, one of our goals is to develop the newly hired graduates to become AM's future business leaders who will not only drive future profitability and growth for the company, but also have a strong sense for community and social responsibility. To close out my comments, slide five shows our guidance, which is essentially unchanged. AIM is targeting sales in the range of $5.95 to $6.25 billion, adjusted EBITDA of approximately $725 to $800 million, and adjusted free cash flow approximately $225 to $300 million. And we're forecasting North American production of approximately 15.5 million units. However, as you all know, our sales performance is more dependent on the production of certain significant platforms with specific customers. In the continuation of the theme that started over the past several years, the operating environment remains dynamic. but we are hopeful to see additional industry stabilization in the second half of the year and starting to see signs of that. As such, we believe the industry is positioned for stable and positive trajectory in the coming years. As we've communicated before, our focus and aim is on the future, and we'll continue to drive our efforts towards securing our legacy business, generating strong free cash flow, strengthening our balance sheet, advancing our electrification portfolio, and position AM for profitable growth. The future is very bright for AM, underpinned by our award-winning electrification technology. Let me now turn the call over to our Executive Vice President and Chief Financial Officer, Chris May. Chris?