American Axle & Manufacturing Holdings, Inc.

Good morning. My name is Gary, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle and Manufacturing Second Quarter 2024 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, then the number one on your telephone keypad. If you would like to withdraw your question, press the star key, then the number 2. As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. David Lim, Head of Investor Relations. Please go ahead, Mr. Lim.

Thank you, Gary, and good morning. I'd like to welcome everyone who is joining us on AEM's second quarter earnings call. Earlier this morning, we released our second quarter of 2024 earnings announcements. You can access this announcement on the investor relations page of our website, www.aem.com, and through 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 273-3759. This replay will be available through August 16th. Now, 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 and 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 reconciliation of these non-GAAP measures to GAAP financial information, is available on our website. And with that said, let me turn things over to AM's Chairman and CEO, David Dock.

Thank you, David, and good morning, everyone. Thank you for joining us today to discuss AM's financial results for the second quarter of 2024. Joining me on the call today is Chris May, AM'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 business development news and commentary about the industry. After Chris covers the details of our financial results, we'll open up the call for any questions that you all may have. So let's begin with our financial highlights. AM's second quarter of 2024 sales were $1.63 billion. Adjusted earnings per share was 19 cents per share. Adjusted EBITDA in the second quarter was $208 million, or 12.8% of sales, and our adjusted free cash flow was approximately $98 million. These solid results reflect positive contributions from buy-in and mix and continued operational performance. Let me provide you some perspectives about our performance. Overall, buy-ins for the industry and for a number of our key platforms were higher sequentially and year-over-year according to third-party forecasters. As you all know, production consistency is very important for EBITDA flow-through. Production stability that we experienced in the first quarter continued into the beginning of the second quarter. That stated, we did experience periods of higher than anticipated downtime near the second quarter end. We will closely monitor this trend in the second half of the year. On a positive note, in some cases, customers were providing more advanced shutdown notices given the AM time to make necessary cost adjustments. From an operational standpoint, we are making good overall progress as seen by our results. The team continues to work diligently on driving positive operational performance and delivering AM's high standards of operational excellence. I'm also happy to share that we have concluded most of our commercial discussions related to inflation for the year. We do have some minor open discussions remaining, but generally, this is in the rearview mirror for us here in 2024. So overall, a good, solid, and positive quarter for Team AAM. Let me talk about some business updates, which you can see on slide four of our presentation deck. We are very pleased to announce that AAM has been awarded business to supply components for a global European OEM, OEM's modular vehicle platform that will support a multitude of propulsion systems including internal combustion, hybrid, and electric vehicle derivatives, highlighting certain of our products that are agnostic to powertrain applications. Furthermore, AM will supply a luxury European OEM with helical drive gears for electric drives for a future EV program. This is a nice incremental win for our components business and plays to our strategy of providing comprehensive approach in both components and full systems, and providing OEMs with strong optionality for their respective EV powertrain needs. We believe our strategy well positions AM to be the supplier of choice. In addition, AM was recently awarded business to provide traditional axles for a next-generation full-size van program. This is a great example illustrating an ICE for longer thesis. This program is scheduled to launch later in the decade. AM was named one of Newsweek's greatest workplaces for women in 2024. We're very pleased with this award, as it is AM's goal to support and promote a diverse, inclusive, and safe work environment. Now let's talk about the industry. The wins that I just mentioned reinforces AM's view that ICE, hybrid, and EV powertrains will coexist for a long time. Although we believe electrification technology is compelling, The adoption and consumer acceptance will take time, driven by affordability, range performance, and charging infrastructure. Meanwhile, AM will continue to manage factors under our control to facilitate this transition and drive profitable growth. This includes making selective investments and closely monitoring technology and policy shifts. In the near term, it appears to us that OEMs are still evaluating future product planning strategies, especially within the propulsion systems, which more clarity is likely to come. As such, the bidding pipeline reflects this current environment. What is clear is that the capacity being put into place for EVs has been rescoped, delayed, or in some cases, canceled. AM's view is to maintain and develop a deep and diverse product portfolio to support current and emerging powertrain trends and be agnostic to the market. We believe EV adoption by region and by segment will differ materially. On to our guidance. With two quarters now completed, we're raising our full-year sales and EBITDA guidance. AM is now targeting sales in the range of $6.1 to $6.3 billion versus our previously guided sales direction of $6.05 to $6.35 billion. Our adjusted EBITDA will be approximately $705 to $755 million, which is higher than the previously communicated $685 to $750 million. And our adjusted free cash flow will remain unchanged at approximately $200 to $240 million. Our second half of the year includes multiple significant launches, including the next-generation RAM heavy-duty program. In addition, we continue to monitor industry inventories, transaction prices, incentive spending, and overall interest rates. To conclude my remarks, and as I have communicated previously, our aim is on the future, and we will continue to drive our efforts towards securing our primary legacy business which in all honesty is substantially complete, generating strong free cash flow, strengthening our balance sheet, and we continue to pay down debt every quarter, and advancing our electrification portfolio and positioning AM for profitable growth. So let me now turn the call over to our Executive Vice President, Chief Financial Officer, Chris May. Chris?