Magna International, Inc.

Greetings and a welcome to the Magna International Incorporated Second Quarter 2021 results. During the presentation, all participants will be in the listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you would like to register, please press the 1 followed by the 4 on your telephone. If you require operating distance, simply press star 0. As a reminder, this conference is being recorded today, Friday, August 6, 2021. It is now my pleasure to turn the conference over to Louis Tonelli, Vice President, Investor Relations. Please go ahead, sir.

Thanks, France. Hello, everyone, and welcome to our second quarter 2021 results conference call. Joining me today are Swami Kodagiri and Vince Galissi. Yesterday, our board of directors met and approved our financial results for the second quarter of 21. We issued a press release this morning outlining our results. To find the press release, today's conference call webcast the slide presentation to go along with the call, and our updated quarterly financial review, all in the investor relations section of our website at magna.com. Just 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 safe harbor disclaimer. As we review financial information today, please note that all figures discussed are on U.S. dollars. We've included in the appendix a reconciliation of certain key financial statement lines for Q221 and Q220 between reported results and results excluding unusual items. Our quarterly earnings discussion today excludes the impact of unusual items. 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 with that, I'll pass it over to Swami.

Thanks, Luis, and good morning, everyone. We are happy to be here to provide you with an update on Magna. Overall, we were pleased with our Q2 performance, considering the day-to-day production disruptions caused by the semiconductor chip shortage that continues to make for a challenging industry environment in the short term. As a result of much lower production than we had anticipated back in early May, particularly in North America and Europe, our sales came in well below our expectations for the quarter. Naturally, this impacted our Q2 earnings. And as Vince will discuss later, it is also impacting our outlook for 2021. We continue to have a sharp focus on managing our costs through the volatile production period. This includes ongoing activities to enhance operational excellence as well as realizing savings from restructuring initiatives announced last year. Our focus and costs helped mitigate the impact of lower sales in the quarter. Longer term, our portfolio positions us to continue driving sales growth over market as well as strong free cash flow generation. Two weeks ago, we signed a definitive agreement to acquire VNEAR. I'm sure by now many of you have heard about Qualcomm's unsolicited offer for VNEAR yesterday. We learned of the news likely at the same time as you did about 24 hours ago. We are evaluating our options and considering next steps in light of Qualcomm's announcement. We will be disciplined in our approach and remain committed to earning appropriate returns on our investments. We are excited about Magna's future, particularly given our systems and complete vehicle know-how and approach. We recently highlighted Magna activities that reflect our improved positioning in key megatrend areas. Next year, we will be launching the industry's first application of digital radar technology with our icon radar on the Fisker Ocean. The technology developed together with our partner UNDER dramatically improves radar performance with a number of unique attributes compared to current radar systems. And in the area of electrification, we closed our joint venture agreement with LG. This JV, which enhances our e-motor and inverter building blocks, is an important vertical integration step that strengthens our overall eDrive systems capability. At the same time, it allows us to participate in the fast-growing eMachine and inverter markets for OEMs who choose to do some system integration work in-house. We recently profiled our new surface element lighting technology, with which we were forced to market on the Volkswagen ID.4 This technology offers many key features with respect to LED, which provides opportunities for future growth for us in lighting. Lastly, we won six Supplier of the Year awards from General Motors. The annual awards honors suppliers that consistently exceed GM's expectations. Magna is the only supplier to receive six awards in a single year, and we just did it for a second consecutive year. We are very proud of this, and we would like to thank our customer for this recognition. Let me turn to some of the market dynamics that are affecting our business right now. It is clear that the global semiconductor chip shortage has been and will be more impactful to 2021 than most in the industry anticipated earlier this year. Significant chip shortages continue to impact OEM production into the second half of 2021. Commodity costs, while modestly better for 21 than what we expected a quarter ago, remain higher than what we expected at the beginning of the year. And wage pressures in certain markets, together with new labor laws in Mexico, have led to increases in labor costs. In terms of tailwinds, the industry continues to experience robust auto demand following the COVID-19 induced industry challenges of 2020. Strong auto demand coupled with OEM production disruptions this year have led to historically low dealer inventory levels, particularly in North America. These two factors together with indications from OEMs that they intend to run strong production once additional chip capacity comes on stream points to a positive midterm production environment for auto suppliers. Overall, we continued our solid performance in Q2 despite facing a difficult operating environment. Consolidated sales increased to $9 billion. EBIT margins increased to 6.2%. Our adjusted EPS was $1.40, and free cash flow increased to $178 million in the quarter, bringing our year-to-date level to almost $600 million. Despite reducing our 2021 outlook as a result of the semiconductor chip shortage, we maintained our expectations for 21 free cash flow. We returned $226 million to shareholders. And lastly, we reached an agreement to dispose of three loss-making exteriors facilities in Germany. The transaction which closed on July 3rd improves our exteriors manufacturing footprint in Europe and better positions us for the future. All considered, a good quarter for Magna. With that, I'll hand it over to Vince to take you through the specifics.