Dauch Corporation

Good morning. My name is Jamie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Dow Corporation fourth 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 keypads. If you would like to withdraw your questions, you may press the star key and then the number two. As a reminder, today's event is being recorded. I would now 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 Dow Corporation's fourth quarter earnings call. Earlier this morning, we released our fourth quarter of 2025 earnings announcement. You can access this announcement on the Investor Relations page of our website, www.dow.com, and through the PR Newswire services. investor page of our website as well. To listen to the replay of this call, you can dial 855-669-9658, replay access code 577-1070. This replay will be available through February 20th. As for upcoming investor conferences, we'll be at the JPMorgan 2026 Global Leverage Finance Conference on March 3rd. and will also attend the Bank of America 2026 Global Automotive Summit on March 17th. We look forward to seeing you there. Now, before we begin, I'd like to remind everyone that the matters discussed in this call today 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 reconciliation of the non-GAAP measures to GAAP financial information is available in the presentation. With that, let me turn things over to our Chairman and CEO, David Dowk.

Thank you, David, and good morning, everyone. Thank you for joining us today for our first earnings call at the new Dow Corporation. As a newly combined company, we warmly welcome our new Dowley associates to the team. Together, the future is even brighter as we join together the strengths of two great companies into one robust global automotive supplier. And again, welcome to the Dowley and GCN team members. On this call, we will discuss our financial results for the fourth quarter of 2025 and our full year of 2025, and our guidance for 2026. Joining me on the call today is Chris May, our Executive Vice President and Chief Financial Officer. To begin my comments today, I'll review the highlights of our fourth quarter and full year 2025 financial performance. Next, I will also cover a number of our achievements in 2025. Then I'll discuss the completion of our transformational Dolly acquisition and the benefits that these two companies bring together. After Chris covers the details of our financial results, we will open up the call for any questions that you all may have. So let's begin. We concluded 2025 on a positive note with good momentum. We delivered strong fourth quarter and full year adjusted EBITDA margin growth, reflecting solid performance as we made positive operational progress throughout the year, generating over $200 million in adjusted free cash flow in 2025. Our 2025 fourth quarter sales were approximately 1.4 billion. For the full year, sales were approximately 5.8 billion. From a profitability perspective, adjusted EBITDA in the fourth quarter was 169 million, or 12.2% of sales. For the full year, adjusted EBITDA was 743 million, or 12.7% of sales, up from 12.2% last year. We experienced margin improvement in both our metal forming and our driveline business units as we remain focused on operational efficiency. Our adjusted earnings per share in the fourth quarter of 2025 was $0.07 per share. For the full year, adjusted earnings per share was $0.53 per share. Adjusted free cash flow was $70 million in the quarter and $213 million for the full year in 2025. For 2025, we delivered on the financial targets that were outlined last February while navigating a very volatile macro environment. It was a solid performance by our team as we managed factors under our control and remained focused on the fundamental pillars of our company, technology leadership, operational excellence, and quality. Now let's talk about some exciting business news, and please refer to slide four in our investor deck. We're very happy to announce that we will supply our innovative smart bar product to Scout Motors. This is in addition to the front electric drive units and the electric rear beam axles that we announced last year. These wins significantly not only our advanced technology capabilities, but also demonstrate that OEMs can come to us for a variety of products to enhance their vehicle's drive characteristics. In addition, our Asia team received Cherries, Cherry Automotives, Best Supplier Award of the Year for 2025. This is a very prestigious award as it recognizes suppliers for outstanding quality and reliable delivery. We are very honored to receive this recognition from Cherry. Finally, we earned several GM Supplier Quality Excellence Awards as we continue to meet or see GM's rigorous quality performance criteria. Our focus is to operate at a high level to satisfy customer expectations globally. As we manage our day-to-day business, we simultaneously complete a transformational and historical acquisition for our company. The acquisition of the Dowley Group PLC and its subsidiaries, GKN Automotive and GKN Powder Metallurgy. This transaction officially closed on February 3rd of this year, 2026. This acquisition creates a leading global driveline and metal forming supplier, and we now have significant size and scale. a comprehensive powertrain agnostic product portfolio from beam axles supporting North American and global light trucks, side shafts on substantially all global automotive product segments, electric drives for future growth, and metal forming components serving the automotive and industrial markets. These products can support electric, hybrid, and ICE powertrains. We diversified our customer base and balanced our geographic presence across the globe anchored by our strong truck franchise here in North America, and a significant global presence in side shafts. We have compelling industrial logic with an estimated $300 million in synergies associated with the deal, with an expected full run rate achievement by the end of year three. We expect high margins, earnings, and cash flow potential as a result of this strategic combination. From a business perspective, our strategy has been consistent. We continue to strive to improve and optimize our operations, drive profitability and free cash flow generation, and manage factors under our control. With the acquisition, our focus is achieving efficient integration, delivering the full value capture potential of the transaction, and achieving our financial and operational targets. Synergy realization is a core priority. We established a dedicated integration office early, led by senior leaders from both legacy organizations to drive accountability and execution. The teams are filling market basket of ideals and making fantastic progress across numerous cost savings verticals. The approximately 300 million of identified synergy opportunities span SG&A, purchasing, and operations. We expect to achieve a 60% annual run rate by the end of the second full year, with the majority of them realized by the end of the year three. Importantly, we anticipate exceeding 100 million in run rate savings by the end of the first year, positioning us well to drive value. Before I hand the call over to Chris, let's talk about our 2026 financial outlook. 2026 will be no less interesting than 2025. In our view, trade policy discussions will continue as USMCA becomes finalized later in the year, And once finalized, OEMs can then fine tune their respective product planning and plant loading decisions. We want to clearly underscore that it is very important and very difficult to speculate the outcome of these discussions. Hence, we will manage our business accordingly. As such, from an end market perspective, we assume 2026 North American production at approximately 15 million units, Europe at approximately 17 million units, China at approximately 33 million units, and global production at approximately 93 million units. Slide seven illustrates the company's 2026 financial outlook. Our outlook takes into consideration a partial year contribution from Daole. And recall, we just closed the transaction on February 3rd of this year. We are targeting sales of 10.3 to 10.7 billion, adjusted EBITDA of approximately 1.3 to 1.4 billion, and adjusted free cash flow in the range of 235 to 325 million. In the longer term, our priorities are to realize strong synergies from our Dolly acquisition and combination, generate solid adjusted free cash flow, strengthen our balance sheet, advance our agnostic product portfolio, position the Dow Corporation for sustained profitable growth, and return of capital to our shareholders. In addition to mark this transformational moment for our company and its shareholders, we recently announced we changed our name from American Axial Manufacturing Holdings Inc. to the Dow Corporation, or DowP. The name isn't just my family name, it's a brand that stands for clarity, confidence, and a commitment to performance, with a legacy of leadership that has helped shape engineering and manufacturing. It represents a responsibility to our stakeholders, a dedication to operational excellence, and a willingness to take bold steps as we strive to exceed today's standards and capitalize on tomorrow's potential. Our new brand honors the strength and shared entrepreneurial spirit of both AEM and GKN, while signaling our commitment to performance with staying power. Under the Unifi brand, we are a premier driveline and metal forming supplier serving the global automotive industry, built on the same foundational pillars of technology leadership, operational excellence, and quality that my father built AAM on. These remain the brand foundation of who we are today, and as our brand platform states, our company is built to perform. I'm proud of the team, what we've accomplished, and I'm looking forward to a positive and productive 2026. That concludes my formal remarks. Let me turn the call over to our Executive Vice President and Chief Financial Officer, Chris May. Chris?