PHINIA Inc.

Thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the FINIA Q2 2024 earnings call. All lines will be 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, again, press star 1. Thank you. I will now hand the call over to Kellen Ferris, Vice President of Investor Relations. Kellen, you may begin your conference.

Thank you. Good morning, everyone. We appreciate you joining us. Our conference call materials were issued this morning and are available on Finneas Investor Relations website, including a slide deck we'll be referencing in our remarks. We are also broadcasting this call via webcast. Joining us today are Brady Erickson, 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 is my pleasure to turn the call over to Brady.

Thank you, Callan, and thank you, everyone, for joining us this morning. I will start with some overall comments on what we've accomplished during our first year as a standalone entity and then discuss our second quarter performance and outlook. Chris will provide additional detail in our financial review before we'll open up the call for questions. This month, we celebrate our first anniversary as a standalone publicly traded entity. Throughout the past year, we rigorously applied financial discipline in everything we did from day-to-day operations to business development to capital allocations. In turn, we successfully executed our financial, operational, and capital allocation strategies, many of these ahead of plan. Some highlights include consistent operational performance, strong cash flow generation, successful refinancing of high-cost debt, and returning over $180 million to shareholders via dividends and share repurchases. Coupled with a long list of new business wins, a pipeline of new product launches, You can understand why we are confident in our long-term future. We have also been active on the corporate governance front, having appointed a new independent member of the board of directors, adding investor perspective, financial expertise, and diversity. Additionally, we're wrapping up our first sustainability report with an expected release date in August. From an overall market perspective, we see both the commercial and light vehicle markets globally coming in softer than our expectations. This is partially offset by the slowing growth rate of EVs, as they are clearly not for every application, market, or region. The softer OE markets are mitigated by a complementary OES and independent aftermarket business. There's still a large market for internal combustion engines, or ICE, as it appears that they will play a key role in our road to carbon neutrality. first by driving efficiency improvements for today, and then moving to carbon neutral and carbon-free fuels of tomorrow. Solutions such as ethanol, biofuels, e-fuels, and hydrogen will become important growth drivers for us over time. We are prudently investing in a wide range of alternative fuel products, including hydrogen, by leveraging our core technologies and resources. Our performance this past year clearly validates our long-term strategic plan and demonstrates the progress we continue to make in executing that plan. Additionally, accomplishments from the past year are being recognized as evidenced by Finney's recent addition to the Russell 2000 Index. I want to congratulate and say a special thank you to all of our colleagues across the business, many of whom listened in to this call. It's their passion and dedication along with our strong brands that contributed to and will continue to contribute to our long-term success. Now moving on to our second quarter results, starting on slide four. One note before we dive in is this will be the last time we are comparing standalone quarterly financials with pre-spend carve-out quarterly financials. Performance highlights our leadership team's commitment to the execution of our long-term strategic plan with the operational and financial discipline we expect. Our top line reflects the resilient and consistent performance of our aftermarket business, particularly in Europe. Our fuel system segment adapted to weaker than expected CV sales in Europe and lower light vehicle sales in China. Adjusted sales in the quarter were $863 million, down slightly from the same period of the prior year. We reported adjusted EBITDA of $117 million and an adjusted EBITDA margin of 13.6%. Decreases of 13 million and 110 basis points due to an increase in standalone company costs, transactional currency losses, and lower sales. Margins were strong in our two business segments. Aftermarket and fuel systems at 15.1% and 10.1% respectively. Total segment adjusted operating margins of 12.2%. This was 30 basis points lower than the previous year as the Q2 2023 fuel systems margins benefited from some retroactive customer recoveries. We continue to make good progress on the transition from our former parent and have exited all transition service agreements, or TSAs, and all material contract manufacturing agreements, or CMAs. We're now operating completely independent of our former parent, including all IT systems. Furthermore, our balance sheet remains strong with $339 million of cash on hand That was supported by adjusted free cash flow of $108 million in the quarter, and we've returned $101 million to shareholders during this quarter as well. Now let's move on to slide five. On the product and market share fronts, we continue our efforts to identify both near-term and long-term organic growth opportunities that leverage our engineering expertise and reputation for high-quality products. This is, once again, evidenced by our recent wins across product lines and geographies. First, a contract extension for gasoline fuel delivery modules for a two-wheeler with a leading global OEM supporting the customer, mostly in the Indian market. A conquest business win to supply fuel delivery modules to a leading luxury global OEM for three of its light vehicle platforms in the Asian, North American, and European markets. And an ECU conquest win that augments the previously awarded GDI fuel system. A major win as this is the first full system package utilizing Finneas complete hardware, software, and calibration. This is a great example of the increasing content for vehicle opportunities that we have moving forward. This is for a leading domestic Chinese OEM in the light vehicle segment, supporting both the Chinese and export markets. We look to differentiate ourselves when we can through value, quality of service, efficiency, and innovation. These recent business wins, particularly the conquest wins, are further proof that we are successfully diversifying and growing by leveraging our product leadership, global footprint, and proven capabilities. Now let's move to slide six. Strengthening our financial position post-spin has been a priority. As previously disclosed, In early April, we paid off our term loan fee and the drawn balance on a revolving line of credit with the issuance of new senior secured notes. This transaction significantly reduced our run rate interest expense, rebalanced the majority of our long-term debt to fixed rate, and improved our overall liquidity position by restoring undrawn capacity on a revolver. We also amended our credit agreement to modify numerous restrictive covenants, which provides more flexibility to execute on our strategic priorities. Given the stability and lower rates, we feel it's prudent to increase our target net leverage from one time to 1.5 times. If we increase our leverage to 1.5 times, we expect our interest and debt service costs to be similar to what they were prior to the refinancing. we will only add new debt if the cash is utilized to enhance shareholder value. During the quarter, we opportunistically repurchased over $90 million of our outstanding shares and have nearly completed the $150 million authorized by the board. With only 13 million remaining, we plan to review This most recent share repurchase further demonstrates the company's commitment to returning value to shareholders and our confidence in our long-term growth potential. Our healthy cash generation coupled with our solid balance sheet provides us with the flexibility to support our growth initiatives, both organic and inorganic, as well as continue to return capital to shareholders via dividends and opportunistic share buybacks. In summary, we remain confident in our strategies and the long-term growth of our business despite the current market conditions. We are well positioned today and for the future as we have many opportunities to leverage our globally recognized brands, our capabilities, and our scale. With that, I'd like to hand it over to Chris who will walk us through our Q2 results and discuss our outlook for the year. Chris?