PHINIA Inc.

Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the FINIA second quarter 2023 earnings conference call. Today's conference is being recorded and 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 that time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you, and I will now turn the conference over to Mike Heifler, Vice President of Investor Relations. You may begin.

Thank you, Abby, and good morning, everyone. We appreciate you joining us. FINIA completed its separation from BorgWarner on July 3rd and started trading on the New York Stock Exchange on July 5th. Prior to the separation, FINIA was a wholly owned subsidiary of Fort Warner, comprised of the company's fuel systems and aftermarket segments. FINIA's historical GAAP financial information is presented on a carve-out basis. In addition, we present certain adjusted non-GAAP financial measures on today's call and in supporting materials. Our conference call materials were issued this morning and are available on FINIA's Investor Relations website. We are also broadcasting this call via webcast. Joining us today is Brady Ericson, CEO, and Chris Gropp, CFO. During this call, we will make forward-looking statements which are based on management's current expectations and are subject to risks and uncertainties. Actual results may differ materially from these statements due to a variety of factors, including those described in our SEC filings. And with that, It's my pleasure to turn the call over to Brady.

Thanks, Mike, and thank you all for joining FINIA's first earnings call. As Mike mentioned, on July 3rd, we completed the spinoff from BorgWarner, and we're honored to ring the opening bell on July 5th prior to our stock trading for the first time as an independent company. Our entire leadership team, family members, and key supporters were present to celebrate this key milestone. It was a great event. but it would not have been possible without the dedication and commitment of nearly 13,000 employees. And for that, our leadership team and board of directors want to say thank you. In the weeks after, our leadership team scattered around the world to share our excitement and to celebrate the milestone with as many of our employees as possible. The celebrations were great and the level of excitement and commitment shown was extremely high. While our journey is just beginning, we are confident in our future given how our team came together to meet extraordinarily tight deadlines related to separation and not missing a beat in servicing our customers and executing on our day-to-day business. We've assembled a strong team, bringing together the right talent and experience to deliver on our strategies. We have a balance of legacy BorgWarner and Delphi as well as top outside talent. As we built the team, one thing became very clear. We all chose to be here because we believe in the long-term potential of the business. We all support our focus on product leadership and our drive to achieve carbon neutrality by 2035. We have long-term relationships with many of the top OEMs in the world and their feedback around the spinoff has been highly supportive. The last few years have challenged the supply chain and have demonstrated the importance of strong, reliable suppliers that have the technology that brings value, a global footprint, and Solid Financial Footing. With their increasingly limited resources, they will rely on us more and more to provide complete systems as well as software and calibration services, increasing our share of wallet and further integrating us into their business. With this backdrop, we're confident we will have multiple avenues for growth as an ideal supplier partner. Now I want to take a few minutes to talk about our strategy. Over the last few months, I've met with many of you and appreciate your feedback. We've heard a few things that really stand out about our story. First, this is not a pure light vehicle OE ice business. Today, more than 50% of our sales come from commercial vehicle and industrial applications, original equipment service, and the independent aftermarket channels. Second, we have both a desire and clear path to profitably grow the business for the long term. We believe that we can accomplish this without sacrificing our margins or cash generating ability. We will leverage our core technologies, competencies, brands, footprint, and distribution to add synergistic products and to enter adjacent markets. And finally, there was an acknowledgment that BEV will not be the only solution needed to achieve carbon neutrality. For many applications, a carbon neutral and carbon free fuel Liquefied or gaseous will provide the optimal overall performance and utility for many applications, especially those requiring high power, high loads, traveling long distances, operating off highway, and with high uptime requirements. These applications require the energy density, the portability, and the practicality of these fuels. There are also some regions focusing on carbon neutral fuels as their pathway to carbon neutrality rather than bad. Reasons include availability of renewable energy, infrastructure challenges, national security, and energy independence. In the mid-term, we still see opportunities in the light vehicle market with secular growth in gasoline direct injection, or GDI, where our GDI technology is key for full hybrid and plug-in hybrid applications. Next, I'd like to touch on our capital allocation. In the coming weeks, we'll be meeting with our board of directors to align on our overall capital allocation strategy. We already communicated our intentions for an appropriate dividend at our investor day and expect to provide more color around our entire capital allocation strategy in due course. We remain confident in our business's strong earnings and cash generation ability over the long term. As we previously articulated, our focus will be to maintain our strong balance sheet and maximizing total shareholder returns. This will include one, dividends, two, optimizing our debt structure, three, strategic and rapidly accretive and high ROIC acquisitions to grow our commercial and industrial and aftermarket businesses, and four, opportunistically re-purchasing shares. Many of you have also asked about our key metrics for tracking the performance of the business. We strongly believe that an economic value and ROIC framework along with cash generation will provide appropriate alignment between the incentives for our employees and the interests of our shareholders. We will look to roll this out for 2024. Now moving to Q2. I'm proud of the team's execution in Q2. Our results demonstrate positive momentum on a sequential basis as well as a year over year. Versus the same period in 2022, We expanded our adjusted operating margins by 180 basis points to 10.6% and our adjusted EBITDA margins by 140 basis points to 14.7%. As we shared our expectations in June on a Q1 to Q2 2023 basis, we've also improved our adjusted operating and adjusted EBITDA margins from the first quarter by 80 basis points each. It's important to note that the portion of this improvement We had an easy comparison with Q2 of last year and Q1 of this year, when both periods were incurring costs from our supply base but not yet receiving reimbursement from our customers. In Q3 of last year, we received retroactive reimbursement as well, creating more difficult margin comparison coming up in our next Q3. We expect our underlying positive operational performance to continue in the second half of this year, but will be offset by increasing corporate costs as a standalone company. Our support for our sustainable, profitable growth objective. Let me walk you through some of the existing recent new business wins. FINIA secured a major business award to supply injectors to a European OEM for a heavy-duty commercial vehicle that is complying with Euro 70 emission standards. We've been selected as the main partner to a U.S. Department of Energy project announced on May 19, 2023 and funded by the DOE to advance research, development, and implementation of technologies to reduce greenhouse gas emissions. The project will feature FINIA's new hydrogen medium pressure direct injection fuel system technology. We also secured a contract to supply powertrain to main control units, or PDCUs, to a leading Asian OEM. and finally, Finian secured a contract to supply starter motors for a medium duty application for a large U.S. OEM. These last two were conquests and will support our continued profitable growth. With that, I'd like to hand it over to Chris who will walk us through in more detail our Q2 results and the outlook for the rest of the year. Chris?