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 First Quarter 2025 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, Heaven Investor Relations. Please go ahead, Mr. Lim.

Thank you, and good morning. I'd like to welcome everyone who is joining us on AEM's first quarter earnings call. Earlier this morning, we released our first quarter of 2025 earnings announcement. You can access this announcement on the investor relations page of our website, www.aam.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 877-344-7529, replay access code 349-2897. This replay will be available through May 9th. Before we begin, I'd like to remind everyone that the matters discussed in this call may contain comments and forward-looking statements that are 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, please reference slide two of our investor presentation or the press release that was issued today. 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 the non-GAAP measures to GAAP financial information is available in the presentation. Today's call is not intended and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy securities of AEM or DALAs in any jurisdiction where are not permitted by law. The subject matter of today's call will be addressed in a proxy statement that will be filed with the SEC. Investors should read the information in the proxy statement in its entirety when it becomes available. Information regarding the participants and the proxy solicitation is contained in AAM's case, in AAM's annual proxy materials filed with the SEC, and in DALY's case, in DALY's equivalent filings, and announcements made in accordance with applicable UK law. With that, let me turn things over to AAM's Chairman and CEO, David Dowek.

Thank you, David, and good morning, everyone. Thank you for joining us today to discuss AAM's financial results for the first quarter of 2025. Joining 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 first quarter financial performance. Next, I'll touch on some AM business updates, commentary about the industry, and guidance. After Chris covers the details of our financial results, we will open up the call for any questions that you may have. So let's begin. AM's first quarter of 2025 sales were $1.41 billion. AM's adjusted earnings per share was $0.09 per share. Operating cash flow was $55.9 million. and adjusted free cash flow was a use of $3.9 million. North American production was down approximately 5% year over year. From a profitability perspective, AM's adjusted EBITDA in the first quarter was $177 million, or 12.6% of sales. On a sequential basis, adjusted EBITDA margin improved approximately 100 basis points based on our trend of a positive operational performance and continued cost controls. Let me talk about some business updates, which you can see on slide four. In the quarter, we exited our Hefei AM Automotive and Luochou AM Automotive joint ventures in China. As a result, we collected approximately $30 million in cash. These exits were a result of a comprehensive analysis of our product portfolio plan, which balances numerous factors, including the focus on our core businesses and capital allocation. In addition, we also received approval from the Competition Commission of India, otherwise known as CCI, to proceed forward with our previously announced sale of our AM commercial vehicle axle business to Bharat Forge Limited. Our expectation is that this deal will close in the second quarter of 2025. Next, I'd like to give you a progress report on our transformational transaction with Dowlay to combine the GCAN automotive and powder metal businesses with AM. As previously announced, this strong combination is anticipated to yield significant size and scale to better weather operating cycles, such as the one that we're experiencing today, deliver strong synergy potential for approximately $300 million in synergies, generate significant cash flow to support our focus on deleveraging, and institute a more balanced capital allocation policy in the future. This strategic combination will unlock significant shareholder value, and the teams are making great strides and working diligently together. On the financing side, the bridge syndication is completed. Our core credit agreement amendments have also been completed. And on the regulatory front, USHSR antitrust clearance was received in March. Additionally, we have now completed all other initial antitrust submissions with the required jurisdiction jurisdictions listed in the January announcement. Both AM and DALI shareholders' votes are expected to take place in the third quarter. We are very excited about this transformational acquisition and the value it brings to our stakeholders. Our teams are working well together on the integration planning process, as I mentioned earlier. And we are on track to close this transaction in the fourth quarter of 2025. Now let's talk about the audit industry as a whole. There's been plenty of macro uncertainty driven by new trade policies. But for AM, our operating policy is to buy and build local. Approximately 90% of the products that we produce in North America are USMCA compliant, and we are evaluating other actions required to improve this percentage. Nearly all of our steel and aluminum buy is from the US sources for North American production. What we produce in Mexico is predominantly delivered to our customers in Mexico, and we do have some open capacity to relocate manufacturing to the U.S. if needed. This will require close coordination with our OEM customers as they finalize their plant loading and respective production plans. Specifically on tariffs, we are working diligently to mitigate what tariff impact we can What we can, as far as the remainder, our intent is to pass those tariff costs on to our customers since they have the end market pricing power, which the supply base does not. Even in this world of tariff uncertainty, there are positives that leverage AM strength. For example, we are receiving inquiries about our U.S. metal forming operations that will leverage our installed capacity as our customers are weighing on-shoring options to address the tariff concerns that are out there. Furthermore, as we combine with DALE, this combination and capability will be expanded and enhanced. And as communicated before, the AM management team will stay focused on the matters that we can control and make necessary adjustments to our businesses based on market conditions. Now let's talk about our guidance. Recognizing we have a lot of data points, estimates, and uncertainty, we have updated our 2025 guidance ranges. AM is now targeting sales in the range of 5.65 billion to 5.95 billion, adjusted EBITDA in the range of approximately 665 million to 745 million, and adjusted free cash flow of approximately 165 million to 215 million. And our guidance ranges are supported by an assumed North American production volume of 14.0 million units on the bottom side 15.1 million units on the top side. Chris will provide additional details on the assumptions underpinning our guidance. To say we are busy may be an understatement, but to say that we are excited about our future can't be overstated. Our core operations are gaining performance momentum that you can see in our results. Our combination with Dolly is on track in gaining speed. and our experience of the past are guiding the AM team to deal with the uncertainty of today in a positive and a constructive manner. And to conclude my remarks, our aim is on the future, and we're going to continue to drive our efforts towards, first and foremost, closing and integrating the DALE transaction, generating strong free cash flow, strengthening our balance sheet, advancing our ICE hybrid and EV portfolio to be more agnostic, and positioning AM for future profitable growth. So now let me turn the call over to our Executive Vice President and Chief Financial Officer, Chris May, for his first quarter financial details. Chris.