Magna International, Inc.

Hello, everyone. Thank you for joining us and welcome to Magna International Third Quarter Fiscal Year 2026 Financial Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Louis Tonelli, Vice President of Investor Relations. Please go ahead.

Thanks, operator. Hello, everyone, and welcome to our conference call covering our Q3 2026 results. Joining me today are Swami Kotagiri and Philip Fracassa. Yesterday, our board of directors met and approved our financial results for the third quarter of 2026 and our updated outlook. We issued a press release this morning outlining both of these. You'll find today's press release, conference call webcast, the slide presentation that 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 the reminders slide included in our presentation that relates to our commentary today. With that, I'll pass it over to Swami.

Thank you, Louis. Good morning, everyone, and thank you for joining us today. We appreciate your time and interest. Let's get started. I am pleased with our performance this quarter. We delivered another strong quarter with continued margin expansion reflecting discipline execution and progress across a number of areas. In the quarter, sales were down 4% reflecting lower light vehicle production and our previously announced dispositions. However, weighted organic growth over market was positive. Adjusted EBIT was up 11% while adjusted EBIT margin expanded 90 basis points to 6.8%. And adjusted EPS rose 38% to $1.83. These results reflect continued progress in our operational excellence initiatives and success in resolving commercial items, including some pulled forward from Q4. Most notably, we continue to see improvement in the underlying operating performance of the business. Our strong free cash flow is further evidence of the continued improvement in our operating performance and the cash generating capability of the business. During the quarter, we generated $950 million in operating cash flow and $584 million in free cash flows. And we ended the quarter with leverage and many more. In the last two years, we have seen a growth of $1.4 billion in cash on hand, which provides continued financial flexibility. Supported by our strong year-to-date performance, we updated our full-year 2026 outlook. We lowered our sales expectations to reflect reduced vehicle production in China, an unfavorable program mix, and narrowed our range for adjusted EBIT margin. However, we maintain the midpoint of our outlook range for adjusted EPS. In addition, we raised our outlook range for free cash flow, again, reflecting our year-to-date momentum and confidence in our cash flow trajectory. Together, these updates demonstrate our ability to absorb lower production and still deliver improved profitability and cash generation. We remain steadfast in executing our proven capital allocation framework. We continue to invest in our business to support further profitable organic growth while returning significant capital to shareholders. During the quarter, we returned $658 million to shareholders including $529 million through share repurchases. We completed our existing buyback authorization in October, repurchasing the remaining 1.3 million shares and our board approved a new NCIB for 25.8 million shares. And lastly, we closed on the sales of our rooftop and North American lighting businesses in Q3. and expect to complete the remaining divestitures in the fourth quarter. I would like to take a moment to highlight our complete vehicle segment, which is ramping up business globally and demonstrating the value of our flexible vehicle manufacturing model. In Mesa, Arizona, we are launching and ramping up two new vehicle programs for Waymo in our existing upfitting facility. In Graz, Austria, We assembled six vehicles in total for Xiaopeng and GSE. We are launching the G9L, our fourth model in Graz, supporting Xiaopeng's European localization strategy. We also produced two GSE models, including the Aeon UT, launched earlier this year. And in China, our joint venture is ramping up production of all-new Alpha T7, the fifth ARPFOX model produced by the joint venture. These programs demonstrate our ability to support new and established customers across regions through flexible, state-of-the-art manufacturing. They are also generating discussions with additional customers and creating opportunities to bring more Magna Systems content to new vehicle programs. We also continue to win new business across our core product areas. We were awarded a transfer case, rear drive module, and front drive unit for a North American-based global OEM. This new program, which launches in 2028, adds to our leading market position in four-wheel drive. We were also awarded Thank you very much. Our commitment to innovation continues to be recognized by the industry. Three of our technologies are finalists for Automotive News PACE Awards and two are finalists for PACE Pilot Awards. Winners will be announced in November. These finalists span a number of our capabilities, demonstrating our strong position across our portfolio. With that, I'll turn the call over to Phil.