Dauch Corporation J.P. Morgan Automotive Conference

Yeah. First of all, good morning, everyone. It's an honor and a pleasure for us to be here today and talk about the transformation taking place within the Dauch Corporation. We're certainly excited about the combination of the previous legacy AAM and the legacy Dowlais coming together to form the Dauch Corporation. The big thing for those that didn't know the history is the legacy AAM or Dauch Corporation was approximately $6 billion in sales. With the acquisition of Dowlais, this year we've guided the street close to $11 billion, but for the full year, we'll be in that $11 billion-$12 billion range. We've essentially doubled the size of the company. At the same time, we wanted to make sure that we had a product portfolio that was agnostic to the market, whether it be ICE-related, hybrid-related, or EV-related going forward. That's been achieved with respect to this.

In addition to that, we wanted to introduce diversification to our business from a geographical standpoint. We were heavily concentrated in North America at 75% with legacy AAM. We're now approximately 60% with the combined business. General Motors was about 40%-45% of our business. Today, they're approximately 25%-30% of our business. So you can see the power of the diversification on the geographic, the customer, and the product portfolio standpoint. In addition to that, there's tremendous synergistic opportunity of bringing these two great companies together. We're in the process of realizing that. We've already realized $70 million on a run rate basis for this year against the goal of $100 million for this year.

At the same time, we now have a more robust business model as a combined business that is going to bode well for us from a margin accretion and cash generation standpoint, going forward as well.

Yeah. This is Chris. I will take that as it relates to the quarter. No, very pleased with our performance in the quarter. A couple of elements as we thought about the quarter. Sales came in stronger than our expectations, really on the back of several platforms. General Motors' light duty truck was very strong inside the quarter. We had some strong sales and revenue on the Legacy Dowlais product that supported BMW and a few other customers, also very strong. So pleased from a top-line perspective. From a performance perspective, I think what you saw happen inside that quarter is severalfold. First and foremost, from a synergy perspective, we put $15 million on a P&L flow-through inside the quarter, so tracking towards the run rates that David just mentioned. So very pleased with that performance. You can see how that adds to the margin profile of the company.

Both legacy businesses also performed quite strongly. Legacy American Axle, and especially in its metal forming side of the business, continued to have improvements quarter after quarter. And then Legacy Dowlais business that has been invested in over the past several years from a restructuring standpoint, continued to have performance inside the quarter as well. So you put those together, and ends up with a pretty strong quarter overall for the company. In terms of some maybe puts and takes inside the quarter, we started to feel a little bit of, I would call it some energy type inflation, that we are experiencing on a macro, but not significant, but a little bit. That will obviously continue in the back half.

We also had, I would call a one-timer associated with our Three Rivers facility, UAW work stoppage, which cost us about $8 million inside the quarter, and we spiked that over on our year-over-year walks. But big picture, synergies and performance at both of the underlying businesses inside the quarter.

Yeah. Maybe I'll talk a little bit about maybe the cadence of the back half. We articulated on our earnings call last Friday, inside of the third quarter, you have some, I would say, normal seasonality, in particular in Europe, which is generally a little weaker in August. But also, as you mentioned, as it related to the full size truck for General Motors, will start to be impacted as we supply into their Mexico facility in Silao. That's one of our largest customer endpoints for that vehicle, and they're going to start to go down, in early September for about a month. So that'll impact our production and, of course, corresponding sales and profits associated with that. In the fourth quarter, you'll have typical seasonality, generally wrapped around the holidays near the tail end of the year.

So those would be the seasonal cadence items that I would call out as it relates to first half versus second half.

Yeah, it is clear we have not provided any 2027 guidance, to be clear. But if you think about some of those puts and takes, obviously macro volumes in our two primary regions of North America and Europe, obviously we will track very close to that. But you are coming into now General Motors launching these new trucks. Our experience has been that is generally very well-received inside the marketplace, so we are very excited about that launch and the benefits that will yield in the next couple of years to come. We will continue to advance our synergy objectives from a profitability standpoint. Obviously, we would look to continue to advance our productivity initiatives at the core level of the company to offset any inflation that we may experience. Those are probably some of, from a P&L standpoint, some of the higher level puts and takes for 2027.

But still a little early to be into 2027.