Okay, mood music fades out and go. Happy to have. I think we have one more in this room. Representing American Axle, Chris May, Chief Financial Officer, Executive Vice President. Hi. Chris, good to see you. Good to see you. David Lim, Head of IR. Yep. Thanks for joining. Hope you enjoyed, hope you've had good meetings today, throughout the day. Any introductory remarks you wanna make, any, including a reiteration? I'll give you a chance to reiterate your guidance, and any other emphasis or adjustments, management of expectations you'd like to do along those lines. Sure. Happy to start that way. Thanks. First of all, thank you, Catherine, thank you, Adam, for hosting this. Of course, with Morgan Stanley, it's always, always a pleasure to come out to the West Coast and talk a little bit about the auto business. I would also direct everyone's attention to our website and our investor relation page for our forward-looking statements and disclosures. So you refer to guidance. We did announce earnings about a month ago. We did update our guidance during that timeframe. We tightened our range on sales to $6.1-$6.3 billion. We updated our EBITDA performance to a range of $705-$755 million, and also reaffirmed our cash flow guidance for the year, a range of $200-$240 million. And that guidance range was predicated upon North America production at the midpoint of our guidance at 15.8 million units, and also at the midpoint on GM full-size truck production at approximately 1.4 million units. So we've not updated our guidance since then, but that I think the measurements that we gave as it relates to production on both of those, the platform as well as the macro, sort of centers right at our midpoint, and, you know, we still feel that's appropriate at this point in time. It is appropriate at this point. So- And you can take your views on where production is on both of those platforms and how it works within our range. At the same time, we had some, I think, some interesting business announcements. We received a couple questions about them on our earnings call, but I think are interesting in terms of some of our push into some components for electrification, but also some components that were propulsion agnostic that will be featured there through our Metal Forming group. But these same components go on ICE, on hybrid and electric vehicles in terms of some shafts and some other components. And also announced a new platform for a full-size van application that will launch in the back half of this decade. That's a nice platform. So again, we didn't get a lot of questions on that one, but I think continues to support our thesis and our approach in terms of some of our longevity and support of our ICE programs for an extended period of time, and I think this was a textbook example of that application. But we stay focused as a team on sort of securing and locking in our next generation of all our existing book of business, and I think we've made great shape from that perspective. We continue to focus on building out a little bit of our electrification franchise, though we're trying to be selective and disciplined in that approach, especially in the current market environment. But of course, cash flow and strengthening the balance sheet are also top of our mind. So I think those are my opening comments, and maybe with that, I'll turn it over to both of you gentlemen and see what's on your mind. Let's dive in. Okay. I mean, look, I mean, it's a volatile second half. Absolutely. You know, I think a lot of the suppliers have talked about that already. You know, we've had a few OEMs give profit warnings. Is there any ripple effects to Axle? And I mean, like, any sort of, you know, preliminary thoughts on the back half in terms of production? Yeah, I think, in terms of if, the guidance range that I mentioned just a couple minutes ago, we were very specific in terms of what hits the midpoint. And I think about, you know, what you're starting to see that sort of trend out, and you're seeing other publications trend for the back half of the year. In terms of volatility, you know, our third quarter, very similar to what we saw in the second quarter, where we saw the second quarter, for the most part, not as volatile as previous periods. Same in the third quarter, but still some level of volatility, some unplanned downtime, but nowhere near what we experienced, in the prior years. And of course, a little bit, I don't wanna say unique to us, but we do have two significant program launches here in the back half of the year. One for the GM Delta platform, which is the Terrain and the Equinox, and that's well underway, as well as sort of right in the middle and coming up here in the back end of this quarter and next quarter is the Ram Heavy Duty platform, which is a significant platform for us. So just the nature of those type of changeovers causes some level of volatility, and we still have to work through those through the balance of the year. Any sort of leverage you can pull, you know, if things continue to deteriorate back half? Yeah. No, that's, I don't wanna call it our standard playbook. We actually published our playbook back, I think it was the second quarter of 2020, and some of these questions were similar during the COVID time, where we laid out sort of all the levers that we think about as a company in terms of volatility for production, and how we think about them in the context of duration of what that volatility would be. You know, 'cause your behavior is different if you view it's a short-term duration or a longer-term duration. But big picture-wise, you know, we start, we have a highly variable cost structure. You know, 60% of our build is purchased components, which, of course, you can attack immediately. We have a variable element with some level of labor, as well as some of our, let's call it, shop supplies and production components that we can pull those levers on almost immediately. All the way to, if you thought it was a significant drop in production for an extended period of time, you know, we're very familiar with rationalized facilities or idling facilities as need be. But again, it would depend on depth and duration, and your view as where you'd sit in terms of those levers. But if it's short term in nature, we're leveraging that variable cost structure of ours to try to mitigate any impact. Yep. Mm-hmm. Please. I mean, look, obviously, you're a nice company. Everyone knows that. I think investors invest in you because of, you know, the strength in ICE and trying to play the EV slowdown. But it seems like you're also really excited about the EV initiatives- you know, and the wins you've announced recently. I think you talked about it a little bit. Maybe just talk about the OEM reception, you know, the long-term value of that business, and, you know, how investors should quantify the opportunity. Yeah, I mean, I think, as it relates to our ICE business, we've talked about a fair amount. I don't think that's the spirit of your question, though we are- Yeah seeing a lot of continued activity in that space, as well as some of the derivatives that apply into the hybridization of some of these vehicles, but as it relates to electrification, this is clearly a growth pool for the industry, right? The industry is trying to transform to some level of electrification. We can debate the onset of that transition as well as the depth of that transition, but it's clearly a growth pool in terms of different components for us, and it's exciting from a technology standpoint, because some of this is derivatives of what we do today, some of it's exact product that we do today, and some of this is new technologies that are being coupled up with some of our core products that we do today. So we see this as clearly an opportunity set for us to leverage the strengths, core strengths of the company. Our engineering capabilities are very strong. We see that aptitude, especially on the electrified driveline systems, comes out in spades. Our process technologies are very strong. We see that coming out in the component side of the business for electrification. Very similar in terms of process, from a ICE gear set to an electrified gear set. In many cases, it's identical, so we can leverage those strengths as well. So I think that answers the spirit of your question. We see opportunity sets in electrification, we see opportunity sets for driveline and our Metal Forming Group inside of that book. Maybe I'll kind of flip the question on its head, you know, talk about the ICE side. You know, and I don't want you guys to front run any announcements, but any sort of, you know, indications that you're seeing OEMs, you know, extend the programs of their ICE vehicles? You know, how far are we along in the process of the EV slowdown and the ICE reset? Okay, maybe work in reverse. I think just you asked, how far are we down the path? I think there's still... I think our view is there's still a fair amount of uncertainty and lack of clarity inside the industry in terms of how far are we down in terms of the transition, right? I think November elections are gonna weigh on this to some, and where OEMs will make final moves. There's regulations being updated, so I think this will continue to play out for a period of time. So in the meantime, you know, they're reassessing their portfolio, they're thinking about their electrification launches, and you've seen deferrals and delays and let's call it modifications of size and scale of some of those. At the same time, to bolster sales and continue on with their products, they're looking to extend current pro platforms. We have seen certainly quotation activity in that type of environment and indications that they're looking to do that. We've seen requests for potential capacity uplifts in certain ICE or hybrid applications that we support. You know, as I mentioned earlier, one of our top priorities was to secure the extensions of all our programs, and we've been successful in our primary driveline programs, that is. We've been successful in accomplishing that for almost all of our main driveline programs, which I think is great news for us, a couple of which we're launching right now, as I mentioned, the Delta and the Ram, which will go for the next six to eight-plus years in terms of these type of platforms. I think it's an interesting time for us. You know, we announced the van program, which I mentioned in my opening remarks. That's a perfect textbook example of where you're seeing this now, this thesis of our ICE business playing out for longer, new programs, extensions, uplifts. We're seeing these type of activity. But I think you're still in a zone of uncertainty that's gonna take a while to play out. Yeah. So. I mean, that's fair color. I mean, let's kind of shift topic. You know, capital allocation, top of mind for investors, anything auto, you know, honestly, anything industrial. Obviously, you know, most of your free cash flow is going to paying down debt. Mm-hmm. You know, what should we think in terms of voluntary debt reductions in the back half of the year, you know, into 2025? And I think when we think about the 2025, 2026 capital plan, you know, how should investors in general think about that? Yeah, we've, I think, been very clear on our articulation for our capital allocation priorities. Yeah. First and foremost, we're gonna continue to support the business, what's needed from a capital investment standpoint, meaning CapEx, or R&D investment to continue to support the business, though we're trying to be very selective and manage those, both of those very tightly in the current environment, as well as the transitional environment to electrification and the environments associated with that today. But as it relates to our ability to prepay debt, we obviously have inside of our debt stack, if you will, we have optionality across the board to prepay most of our debt. We have been doing so. We've paid down $30 million in the second quarter. We also have paid down an additional $50 million here inside the third quarter on our 2026 notes. So that allocation of capital to continuing to strengthen that balance sheet by paying debt down has been priority one after supporting the business. We have been doing so really every year since 2017. I would expect that to continue. We still have a little bit left on our 2026s to go, and then we've got some debt stacks in 2027, and we got a Term Loan B. But we've been supporting that capital allocation to strengthen the balance sheet, and I would expect we'll continue to put our dollars towards that. M&A, you know, how should investors think about M&A, and when you think about the capital plan, where does it fit? If it's in terms of our, you know, I'll call it base level capital allocation strategy, our view would be there are opportunities from time to time that we can do inside of our free cash flow generating power of the company, and still also reduce our outstanding indebtedness. If you look over the last couple of years, we've done a couple of tactical acquisitions. In terms of the acquisition of Tekfor about two years ago, we had some very small ones also through the last couple of years. You know, first and foremost, we think about do we like this product set, how it fits in our portfolio? We think about can we add value to this acquisition, either through synergies or otherwise, or leveraging our operating system? And then, of course, does it make financial sense in terms of our hurdles and payback, et cetera? But we've been trying to accomplish this inside of our free cash flow-generating ability, to do so, in terms of small bolt-on tactical acquisitions. Anything on Metal Forming? You know, obviously, it's been a drag, you know, most of this year. Anything new? Any update you'd like to share? You know, really, it's sort of, it's had pockets of challenge here, really over the last two years- Yeah in large part stemming from some labor availability and some plant loading inside of that, those operations, in particular in North America. So we have been very actively trying to reload, products that inside the facilities to ones that have capacity, maybe take some burden off where it's maybe stretched for labor. In certain facilities, we can relocate some of the product to other facilities, but also working very hard to try to stabilize the labor workforce. From a performance standpoint, I would say you can look at our segment margins there that we disclosed. It, in our opinion, had bottomed out in the third quarter of last year. The progress we've been making in terms of operationally, in terms of the labor availability, the plant reloading, the optimization, you're seeing traction, and we've now had segment margin improvement each quarter since the third quarter of last year. I would expect we still have some work to do there, so we have some upside yet to kind of continue to capture in terms of our operational capabilities, and performance. Chris? Yes. Stellantis. Yes. Continue. In terms of which? Just what the hell is going on? For our- Production. Production. Okay. Look, our exposure into Stellantis, we see it through the eyes of our two main platforms, is the Ram Heavy Duty, which is by and large, you know, 80%-90% of our relationship with Stellantis. I would tell you, it's going through a model year changeover right now. Yeah. but absent that, it's generally strong, steady demand for that platform. That heavy duty segment- Mm-hmm. -in the truck is sort of its own unique animal. We supply them a little bit. Our second largest driveline would be on the all-wheel drive applications on the minivan. Mm-hmm. And that's been sort of up and down a little, but it's not big volumes. And then we supply a host of different components. So their inventory and situation, and their actions that they might need to take is not something that you're calling out at this point as providing material risk to the second half of the year for you? Yeah, look, when they talk about some of their inventory challenges, a lot of it is on not. It's generally not associated with that heavy-duty platform. Okay. That's very important. It's on some other ones. Yeah. If they take inventory actions, you know, if they curtail production or modify production, at the fringes, we would be impacted a little bit on the component side. We sell engine components, transmission components into them. To the extent that it trickles down into some of that, we would have some impact, but it wouldn't be significant. Thanks. Brian? I'll ask an open-ended question. You know, long term, you know, do you think there's an opportunity to diversify away from the light vehicle market? You either go more into CVs or industrial, anything that's away from the Big 3 light vehicle market right now. Yeah, no, that's a great question. It's one we have often discussed internally for many, many, many years. You know, our, I'll call it, non-light vehicle application is 5% or less in our sales. Our primary exposure there is in India, in terms of some commercial vehicles, a very small amount in Europe, and a very small amount in China, and we do some, I would call it, non-auto, industrial, Harley-Davidson, other inside of our Metal Forming operation. But we're, we are first and foremost, primarily a light vehicle manufacturer. Mm-hmm. I do not see us trying to double down or expand into some of those segments. Sometimes there's some really nice fits on our Metal Forming operations where we can build components for those, and if it's a nice fit over the capacity that we have today or open capacity, it would certainly make sense for us to do, but our focus is on light duty. Chris, remind us your Mexico exposure. We get a fair amount of questions from clients on some of the tariff risk there, contingent upon some political outcomes as well. Yeah, so our single largest manufacturing site is in Mexico. It's our primary driveline facility for the company, and the second one would be in Three Rivers, Michigan. Saleswise, inside of Mexico, you know, it supports clearly all the assembly plants in Mexico for Stellantis and for General Motors and Ford, but also ships back into the U.S.. So their product that we build in Mexico ultimately and generally ends up back in the U.S.- Mm-hmm. Either through imports, meaning assembled vehicles from our customers, or we're sending supply to a variety of assembly plants inside the U.S. It's roughly 40-50%, you know, in terms of the company's revenue. Mm-hmm. is generated out of our Mexico. Does this topic come up much with investors or? We get asked about it from time to time. Mm-hmm. You know, we have a fair amount of disclosures in our 10-K and 10-Qs associated with our Mexico operations. Mm-hmm. in terms of size and scale. Mm-hmm. So I think, you know, it's out there in the information, so they understand that. But it's clearly a topic of discussion. We've been asked a couple times today about that. Okay. You know, this is a hot topic when we went from NAFTA to the USMCA- Yeah. When they had the back taxes and, you know, closer cycles. Yeah. And how's the labor situation in Mexico now? Inflation, labor inflation now versus, you know, prior and kind of, yeah, the agreements that you've made with the local? Yeah, it's a very active labor market. It's one you have to absolutely be competitive in, in terms of to secure a workforce and train your workforce. Mm-hmm. And more, as you know, more and more OEMs, more and more suppliers, more and more non-auto continue to locate factories- Yeah down in the Mexico area to obviously leverage an expanding workforce that it is very skilled and talented, and you have to remain on the competitive edge of that curve. You cannot take that for granted. What is labor inflation in Mexico now running for in your? Yeah, I mean, it's generally been kind of mid-single digits, right, in terms of labor inflation, on a constant currency basis. Mm-hmm. Mm-hmm. You know, we, from time to time, have to modify that, but that's sort of where it's been recently. But it's something you have to pay very close attention to and continue to monitor. We're one of the largest employers in the area that we're in. You know, we compete with some of the other large auto OEMs as well. Mm-hmm. But it's an area we've got to stay on top of. Thanks. Brian? I'm trying to think. Anything you think investors, you know, are underappreciating in terms of risks, you know, back half of 2025? 2025 or 2024? Let's do both. Okay. Let's do back half 2024, and then 2025. Okay, yeah. Look, you know, I think we covered some of the key inputs as it relates to 2024, but we do have these couple of these large launches coming at us here through the back half of 2024, and just by their nature, they can be volatile. Right. It's not unusual or extra risk, but they can be volatile and can have an impact on the operations of the company in those discrete periods. The nice thing is, once they're done and behind us, you know, you generally get much stronger run rates for the next multiple years after those new programs launch, which is great. As it relates to, you know, 2025, as we step into 2025, my expectation is we'll maybe less on the risk side, but we'll continue to perform on our Metal Forming operations, which, as I mentioned, has work to do in terms of their operational performance. Some of these launches will be in the rearview mirror, and then in terms of plus or minus at the macro, I think it's too early to make the call on 2025, but, you know, that's certainly where the risk discussions would sit. Talk to us about hybrids. If some of your clients start moving more into hybrids, and I know Ford's been fairly heavy there, and they talk about how the growing portion of F-150 volume, that's hybrid, but if you saw Stellantis and General Motors move the same way, is there any material, you know, change in content per vehicle for those programs, whether it's a hybrid version or not? I didn't know if there was any augmentation to the, you know, the transfer case or the, you know, axle? It ultimately depends on how the vehicle is hybridized, for a lack of way to say that. In many cases, it's the exact same components- Okay we supply on an ICE vehicle as- All right We would supply into a hybrid. So just broadly neutral? Neutral impact on- Can be neutral. We do pick up, if it's, you know, they put smaller engines in, we do have our vibration control. Okay products that we sell. Mm-hmm. Balance shaft systems, dampers, those are generally additive- Yeah on those smaller engines. Yeah. So that's how we think about hybrids. Okay. Question? Yeah. I guess margins in the first half were much improved around. Yes. The guide for the back half, we saw that maybe you called out the launches as one thing. I guess two questions. One, you mentioned there would be volatility with the launches that made this guide. And then I think about 2025, at that point, is there any reason that can't be... What is the reason... Any sort of stop? Yeah. If you think about. Let's talk 2024, first half and second half, and it's always. I would always caution to not extrapolate either a single quarter, especially in our industry, a single quarter or just two quarters into a full year, because there is a fair amount of seasonality associated with our business, especially the second half. You are clearly overweight. Even under just a normal, everything equal, you are overweight in the second half of the year with extended Christmas downtime, July shutdowns, Thanksgiving week in the U.S., right? That causes generally less production days in the second half versus the first half. So you have, by its nature, some different fixed cost absorption elements associated with that. The second piece is, you know, in terms of this year, you know, we were at the benefit. You've heard one of our largest customers talk about that they pulled some production ahead on their full-size truck applications into the first half of the year, which we clearly benefited from a volume and converted on that volume very nicely, so that was sort of a little bit unique to this year, and as we step into the second half, you know, the launches will certainly be a piece of that story, and volatility shows up in one of two ways in these launches. It shows up in terms of you know, potential volume volatility, as they maybe start at one shift, go to two shifts, and then full to three shifts. Maybe they extend that, and then, of course, start, stop inefficiencies inside your factory, excessive scrap as you get these runoff parts up and going. Some of that is clearly embedded in our guide. That's why we have a range. If it, you know, got moved outside of, let's call it a normal range of launch activity, you know, that's where it could be a little more pronounced. But those are some of the things I think about. So I think about when you step into next year, and we're not providing guidance for next year, just to be clear, is you have to look at the whole year in totality and then say: Okay, how will American Axle transition from 2024 into 2025, and what are the things driving that? Some of the things, as we were just discussing in terms of, you know, improvements in our Metal Forming operation, you know, these some of these launches will be behind you. Some of those should accrete to our benefit. But on the flip side, the... I mean, if you're talking quarter-to-quarter nuances. I'm saying if you're thinking about 2024 to 2025, I would look at the entire year of 2024 as a margin profile, and how do you think about 2025? If you're talking quarter-to-quarter nuances, first quarter of next year to first quarter of this year, it would depend on the production cadence of first quarter of 2025. Cool. Anything else? I think I'm set. Any other comments you wanna make? Anything we didn't hit you wanna- I think you hit a lot of the key topics. We got a couple questions from the audience. You're very efficient. Happy to take what's on anyone's mind or- Cool. Chris and David, we'll wind it there. I appreciate it. Thanks for joining us for the conversation. All right. You got it. Appreciate it. You got it. Thank you.