Magna International, Inc.

Greetings and welcome to the second quarter 2020 results. The presentation of participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, just press the 1, 4 by the 4 on your telephone. If at any time the conference seems to reach an operator, just press the star, 4 by the 0. As a reminder, today's call is being recorded Friday, August 7, 2020. Now, I would like to turn the conference over to Louis Tonelli, Vice President, Investor Relations. Please go ahead.

Thanks, Tommy. Hello, everyone, and welcome to our second quarter 2020 conference call. We will have formal comments today from Don Walker, Swami Kotagiri, and Vince Galiffi. Yesterday, our Board of Directors met and approved our financial results for the second quarter ended June 30, 2020. We issued a press release this morning for the quarter. You'll find the press release, today's conference call webcast, the slide presentations go along with the call, and our updated quarterly financial review, all in the investor relations section of our website at NAGSA.com. Before we get started, just as a reminder, the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. Such statements involve certain risks, assumptions, and uncertainties. which may cause the company's actual or future results and performance to be materially different from those expressed or implied in these statements. Please refer to today's press release for a complete description of our state-farber disclaimer. As we review financial information today, please note that all figures discussed are in U.S. dollars unless otherwise noted. We've included in the appendix reconciliations of certain key financial statement lines for Q220 and Q22019 John will comment on the restructuring actions we recorded in the second quarter. Please note that when we use the term organic in the context of sales movements, we mean excluding the impact of foreign exchange acquisitions and divestitures.

And now I'll pass the call over to John. Thanks, Louis. Good morning. I hope everyone is staying safe and healthy wherever you are. Before I start, I want to reiterate that the health and safety of our employees remains our top priority at Magna. We have been reintegrating employees back into our plants and offices using our protocols, assessment tools, and guidance documents. It was a monumental exercise to plan, coordinate, and implement the restarts that as a company and as an industry, I believe we have responded extremely well to the challenge caused by the pandemic, including being a leader for other industries to follow in terms of safe and successful operational restarts. During the second quarter of 2020, our most significant markets of North America and Europe experienced year-over-year declines, both in percentage and absolute volume terms that far exceeded the worst quarters that we saw during the great financial crisis more than 10 years ago and the worst decline that I've experienced in my 40 years in the auto industry. The industry environment has been improving off these lows. Vehicle sales and production levels in our key regions were better sequentially in May and June as governments around the world started to ease lockdowns and as auto sales began to recover. The vehicle sales trend continued upward in July, and we expect a significant improvement in our sales from the first half to the second half of the year. Nevertheless, the general view of the industry is that the production trend line over the next few years would be lower than previously anticipated. This prompted us to initiate and, in some cases, accelerate the timing of restructuring plans to right-size the business to align with our updated expectations for the mid-term. Across the company, we have been taking difficult but necessary actions to strengthen our business for the future. We recorded a $168 million charge in the second quarter, substantially related to this restructuring. As expected for the second quarter, our sales reflected the severe production decline, falling 58% compared to Q2 2019. As a consequence, we posted our first operating loss on a normalized basis since 2009. However, underlying the discouraging results were a few encouraging elements. Our decremental margin associated with COVID-19 was about 22%, reflecting our efforts to reduce and defer discretionary costs. We conserved additional cash by reducing capital spending. and we expect the actions we undertook in the quarter to lead to an improved cost structure and decrementals going forward. At the same time, we continue to invest to secure a future and to ensure that we can successfully execute in all upcoming launches. While we remain in relatively uncertain times, we're confident that we have the balance sheet, the leadership and the right operating structure to allow us to remain nimble and responsive to whatever the future holds in the short and long term. Lastly, I want to comment on an important recognition from our largest customer. In late June, General Motors recognized Magna with six 2019 Supplier of the Year awards, the most ever for a supplier in a single year. The Supplier of the Year awards recognize GM's best suppliers that consistently exceed expectations, creating outstanding value or introduce innovations to the company. Magna won Supplier of the Year awards across our system segments for our mirrors, driveline systems, truck frames, fascias, and seating systems, as well as an innovation award for our free-form seat trim technology. I'm very proud of these accolades as they recognize our ability to provide solutions to the many challenges faced by our customers. With that, I'll pass the call over to Swami.