Magna International, Inc.

Good morning and welcome to the Magna International INC second quarter 2024 results webcast 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 session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Luis Tonelli, Vice President, Investor Relations. Please go ahead.

Thanks, operator. Hello, everyone, and welcome to our conference call covering our second quarter of 2024. Joining me today are Swami Kodagiri and Pat McCann. Yesterday, our board of directors met and approved our financial results for the second quarter of 2024 and updated outlooks for 24 and 26. 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. 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. Please also refer to our reminder slide included in our presentation that relates to our commentary today. And with that, I'll pass it over to Swami.

Thank you, Louis. Good morning, everyone. I appreciate you joining our call today. Let's jump right in. Before getting into some of the details from the second quarter, let me highlight a few key takeaways. Our Q2 operating performance was largely in line with our expectations, with sales of $11 billion and adjusted EBIT margin of 5.3%. We are executing to our margin outlook from the start of 2024. Operational excellence activities remain on track to collectively contribute about 75 basis points to margin expansion during 2024 and 2025. We have reduced our planned gross megatrend engineering spend for 2024 by another $40 million. bringing reductions for the full year to 90 million relative to our outlook in February. And our adjusted EBIT margin range has been tightened. Our range for 2024 is now 5.4% to 5.8%. We remain focused on capital discipline and strong pre-cash flow generation. We have further lowered our expected CapEx range by another $100 million for a reduction of up to $200 million for 2024 compared to our February outlook. We are maintaining our free cash flow outlook range at $600 to $800 million, and we remain on track to be in our target leverage range of 1 to 1.5 times in 2025. We are updating our 2026 outlook to reflect market changes impacting the automotive industry, including issues we already discussed in prior quarter calls. We continue to execute our strategy despite current market dynamics. We are winning business on key programs across our portfolio. For instance, we were recently awarded a hot stamp door ring with a Japan-based global OEM. We are having success in commercializing our innovations. As an example, we were awarded reconfigurable seating systems with a China-based OEM. And as we have highlighted in the past, our operational initiatives across the company are delivering results. We remain focused on continuous improvement, efficiency, and launches. This year alone, We are taking actions at more than 40 divisions to restructure, consolidate, or wind down operations. We are right-sizing our complete vehicle operations, and we are driving profitability through smart automation and factory of the future initiatives. As part of ongoing efforts to optimize our footprint and portfolio, Early last month, we closed a transaction for the sale of an 85% controlling interest in our metal forming operations in India. With sales less than 200 million in 2023, we considered this business to be non-core. Proceeds were about $90 million. And we are making progress on vertical integration of critical subsystems to strengthen our product offering. We acquired HE Systems, a power module business, for $52 million. The acquisition accelerates our in-house development of power modules and allows us to leverage our combined technical and manufacturing competencies. The transaction secures supply of a key product. With that, I'll pass the call over to Pat.