NYSE:AXL American Axle & Manufacturing Q4 2024 Earnings Report $3.32 +0.11 (+3.26%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$3.22 -0.11 (-3.31%) As of 04/17/2025 05:41 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast American Axle & Manufacturing EPS ResultsActual EPS-$0.06Consensus EPS -$0.06Beat/MissMet ExpectationsOne Year Ago EPS-$0.09American Axle & Manufacturing Revenue ResultsActual Revenue$1.38 billionExpected Revenue$1.39 billionBeat/MissMissed by -$12.51 millionYoY Revenue Growth-5.60%American Axle & Manufacturing Announcement DetailsQuarterQ4 2024Date2/14/2025TimeBefore Market OpensConference Call DateFriday, February 14, 2025Conference Call Time10:00AM ETUpcoming EarningsAmerican Axle & Manufacturing's Q1 2025 earnings is scheduled for Friday, May 2, 2025, with a conference call scheduled at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by American Axle & Manufacturing Q4 2024 Earnings Call TranscriptProvided by QuartrFebruary 14, 2025 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good morning. My name is Rocco, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle and Manufacturing Fourth Quarter twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. Operator00:00:29As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. David Lim, Head of Investor Relations. Please go ahead, Mr. Lim. Speaker 100:00:39Thank you, and good morning. And I would like to welcome everyone who is joining us on AAM's fourth quarter earnings call. Earlier this morning, we released our fourth quarter of twenty twenty four earnings announcement. You can see this announcement on the Investor Relations page of our website, www.aem.com, and through the PR Newswire services. You can also find supplemental slides for this conference call on the Investor page of our website as well. Speaker 100:01:04To listen to a replay of this call, you can dial 704-0529, replay access code 2688905. This replay will be available through February 21. Before we begin, I'd like to remind everyone that the matters discussed on this call may contain comments and forward looking statements that are subject to risks and uncertainties, which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed. For additional information, please reference Slide two of our investor presentation or the press release that was issued today related to this earnings announcement. Also, during the call, we may refer to certain non GAAP financial measures and information regarding these non GAAP measures as well as a reconciliation of the non GAAP measures to GAAP financial information is available in the presentation. Speaker 100:02:01Today's call is not intended and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy securities of AEM or DALAZE in any jurisdiction where such offers or solicitations are not permitted by law. The subject matter of today's call will be addressed in a proxy statement that will be filed with the SEC. Investors should read the information in the proxy statement in its entirety when it becomes available. Information regarding the participants and the proxy solicitation is contained in AM's case, in AM's annual proxy materials filed with the SEC and in DAOLE's case, in DAOLE's equivalent filings and announcements made in accordance with applicable U. K. Speaker 100:02:43Law. With that, let me turn things over to AAM's Chairman and CEO, David Doug. Speaker 200:02:48Thank you, David, and good morning, everyone. Thank you for joining us today to discuss AAM's financial results for the fourth quarter and full year of calendar year 2024. Joining me on the call today are Chris May, AAM's Executive Vice President and Chief Financial Officer. To begin my comments today, I'll review the highlights of our fourth quarter and full year 2024 financial performance. Next, I'll cover our 2025 financial outlook. Speaker 200:03:14And after Chris covers the details of our financial results, I'll provide some concluding remarks about our exciting double A combination and then open up for questions that you all may have. So let's begin. AAM closed the year out strong by continuing to make good operational progress and generating solid adjusted free cash flow in the quarter. AAM's fourth quarter of twenty twenty four sales were $1,400,000,000 and for the full year, AM sales were approximately $6,100,000,000 From a profitability perspective, AM's adjusted EBITDA in the fourth quarter was $161,000,000 or 11.6 percent of sales. For the full year, AM's adjusted EBITDA was $749,000,000 or 12.2% of sales. Speaker 200:04:02AM's adjusted earnings per share in the fourth quarter of twenty twenty four was a loss of $0.06 per share. For the full year, adjusted EPS was a positive $0.51 per share. Adjusted free cash flow was $79,000,000 in the quarter and $230,000,000 for the full year in 2024. For 2024, AM delivered on the financial targets that we had outlined at the beginning of the year. We came in at the high end of our original adjusted EBITDA range and exceeded the midpoint of our adjusted free cash flow target. Speaker 200:04:35These were achieved while the industry experienced production revisions throughout the year. It was a solid performance by AM as we manage the factors that are under our control and remain focused on operational efficiency. Let's talk about a couple of recent business updates on Slide four of our presentation deck. We outlined in the past that it was our near term objective to secure our core legacy driveline business. That began with our announcement several years ago where AM secured contracts of more than $10,000,000,000 of lifetime revenues with next generation full size truck axles with multiple customers. Speaker 200:05:14Today, we announced we have secured a contract extension to supply power transfer units for the Ford Maverick and Bronco Sport vehicles. With this latest award, we have secured our next generation core business for years to come. Two weeks ago, we also announced our transformational combination with DAOLE, which will create a leading global driveline and metal forming supplier with significant size and scale. We have high conviction that this will create a significant value for our shareholders. I will talk more about this exciting deal a little bit later today. Speaker 200:05:48From a business perspective, our strategy has been consistent. We continue to strive to improve and optimize our operations, drive EBITDA and free cash flow generation and manage factors under our control. And we are going to remain disciplined and focused on these priorities. Before I hand it over to Chris on the call, let's talk about our 2025 financial outlook. From an end market perspective, we forecast North American production at approximately 15,100,000 units. Speaker 200:06:20We are also monitoring multiple factors that can swing production including interest rates, tariffs, inventory levels and the overall financial health of the consumer. Slide five illustrates AM's twenty twenty five financial outlook, where AM is targeting sales in the range of 5,800,000,000 to $6,050,000,000 adjusted EBITDA of approximately $700,000,000 to $760,000,000 and adjusted free cash flow of approximately $200,000,000 to $230,000,000 As I said earlier, after Chris' financial commentary, I'll have some additional remarks regarding our recently announced strategic combination with Dowling. Now, let me turn the call over to Chris. Chris? Speaker 300:07:04Thank you, David, and good morning, everyone. I will cover the financial details of our fourth quarter and full year 2024 results and our 2025 outlook with you today. I will also refer to the earnings slide deck as part of my prepared comments. So let's go ahead and begin with sales. In the fourth quarter of twenty twenty four, AAM sales were $1,380,000,000 compared to $1,460,000,000 in the fourth quarter of twenty twenty three. Speaker 300:07:30Slide eight shows a walk of fourth quarter twenty twenty three sales to fourth quarter twenty twenty four sales. Volume mix and other lowered sales by $61,000,000 as North American production declined by approximately 3% Speaker 200:07:43and we were impacted by the Speaker 300:07:44timing of launches of new next generation products. Pricing was $5,000,000 in the fourth quarter and metal market pass throughs and FX lowered net sales by approximately $16,000,000 as both were lower year over year. For the full year of 2024, AEM sales were $6,120,000,000 as compared to $6,080,000,000 for the full year of 2023. The primary drivers of Speaker 200:08:09the increase were volume and mix, partially offset by lower metal market pass throughs and FX. Now, let's move on to profitability. Gross profit was $154,300,000 Speaker 300:08:20in the fourth quarter of twenty twenty four as compared to $154,900,000 in the fourth quarter of twenty twenty three. Adjusted EBITDA was $160,800,000 in the fourth quarter of Speaker 200:08:31twenty twenty four versus $169,500,000 last Speaker 300:08:35year. You can see the year over year walk down of adjusted EBITDA on Slide nine. In the quarter, the decline in volume mix and other impacted adjusted EBITDA by $20,000,000 in the fourth quarter versus the prior year. R and D was slightly lower year over year and performance was $10,000,000 favorable. For the full year of 2024, AN's adjusted EBITDA was $749,200,000 and adjusted EBITDA margin was 12.2% of sales. Speaker 300:09:05For the full year, this was an 80 basis point margin improvement as we delivered favorable year over year performance every single quarter this year. Let me now cover SG and A. SG and A expense including R and D in the fourth quarter of twenty twenty four was $89,000,000 or 6.4% of sales. This compares to $95,700,000 or 6.5% of sales in the fourth quarter of twenty twenty three. AAM's R and D spending in the fourth quarter of twenty twenty four was approximately $37,700,000 a slight decline from last year. Speaker 300:09:42As we head into 2025, we will continue to focus on controlling our SG and A costs. We expect R and D expense to be down on a year over year basis by approximately $20,000,000 as we optimize our spend in this area to reflect current market requirements. Let's move on to interest and taxes. Net interest expense was $37,300,000 in the fourth quarter of twenty twenty four compared to $42,900,000 in the fourth quarter of twenty twenty three. In the fourth quarter of twenty twenty four, we recorded income tax expense of $6,800,000 compared to $5,800,000 in the fourth quarter of twenty twenty three. Speaker 300:10:20As we head into 2025, we expect our adjusted effective tax rate to be approximately 30%. Taking all these sales and cost drivers into account, our GAAP net loss was $13,700,000 or $0.12 per share in the fourth quarter of twenty twenty four compared to a net loss of $19,100,000 or $0.16 per share in the fourth quarter of twenty twenty three. Adjusted earnings per share, which excludes the impact of items noted in our earnings press release, was a loss of $0.06 per share in the fourth quarter of twenty twenty four compared to a loss of $0.09 per share in the fourth quarter of twenty twenty three. However, for the full year of 2024, AM's adjusted earnings per share was $0.51 versus a loss of $0.09 per share in 2023. Let's now move to cash flow and the balance sheet. Speaker 200:11:10Net cash provided by operating activities for Speaker 300:11:12the fourth quarter of twenty twenty four was $151,200,000 compared to $52,900,000 in the fourth quarter of twenty twenty three. Capital expenditures, net of proceeds from the sale Speaker 200:11:24of property, plant and equipment Speaker 300:11:26for the fourth quarter of twenty twenty four were $77,600,000 Cash payments for restructuring and acquisition related activity for the fourth quarter of twenty twenty four were $5,600,000 dollars Reflecting the impact of these activities, AAM generated adjusted free cash flow of $79,200,000 in the fourth quarter of twenty twenty four. For the full year of 2024, AAM generated adjusted free cash flow of $230,000,000 compared to $219,000,000 in 2023. Our increased cash flow was driven by our stronger operational performance, inventory reductions and lower interest costs. From a debt leverage perspective, we ended the year with a net debt of $2,100,000,000 and LTM adjusted EBITDA of $749,200,000 calculating a net leverage ratio of 2.8 times at December 31. This is down nearly a half a turn from a year ago at 12/31/2023. Speaker 300:12:30During 2024, we redeemed all our remaining 2026 senior notes for a total of nearly $130,000,000 including approximately $46,000,000 in the fourth quarter. AAM ended 2024 with total available liquidity of approximately $1,500,000,000 consisting of available cash and borrowing capacity on AAM's global credit facilities. Before we move to the Q and A portion of the call, let me provide some thoughts and details on our 2025 financial outlook. In our earnings slide deck, we have included walks from our '24 actual results to our 2025 financial targets and you can see those starting on Slide 11. 20 20 five will bring about many exciting opportunities for AAM to grow and drive value creation. Speaker 300:13:17The guidance figures we are providing today are on an AAM stand alone pre combination basis and do not reflect any cost or expenses related to the announced combination with DALLE. For sales, we are targeting the range of $5,800,000,000 to $6,050,000,000 for 2025. To begin, the sales target is based upon a North America production of approximately 15,100,000 units at the midpoint and certain assumptions for our key programs such as we anticipate GM's full size pickup truck and SUV production in the range of 1,300,000 to 1,400,000 units. In addition, we are assuming the pending sale of our commercial vehicle axle business in India will be completed by the end of the first half of twenty twenty five and our financial guidance reflects that timing as you can see on our walk. Speaker 200:14:07From an EBITDA perspective, Speaker 300:14:08we are expecting adjusted EBITDA in the range of $700,000,000 to $760,000,000 Let me provide some color on the key elements of our year over year EBITDA walk that is on Page 12. We expect decremental margins for our volume and mix change to be slightly lower than our average of 25% to 30% as our India commercial vehicle margins are lower than our overall average. As mentioned earlier, our focus on optimizing our spend in R and D should yield a year over year improvement of $20,000,000 and AAM expects to deliver continued cost reductions, operational productivity and deliver year over year efficiency gains. And you can see that year over year performance improvements is a net favorable $15,000,000 on our walk. On Page 10, from an adjusted free cash flow perspective, we are targeting approximately $200,000,000 to $230,000,000 in 2025. Speaker 300:15:04The main factors driving our cash flow changes are as follows: We have higher capital expenditures stemming from investments for our largest truck platform's next generation products. These are the cornerstone for AAM's revenues and profitability for a long time to come. Even with the scale of these programs, we've been leveraging our installed capital base, driving purchasing efficiency and operational effectiveness, and we are targeting CapEx as a percent of sales in 2025 of approximately 5%. Lower outstanding debt also means lower cash interest of approximately $10,000,000 We do see higher cash taxes in 2025 in the range of $60,000,000 to $70,000,000 in total, which is approximately $15,000,000 higher than 2024. As for working capital, we believe we have continued opportunities across all areas of our working capital in 2025 and expect good performance in this area. Speaker 300:16:00And lastly, while not included in our adjusted free cash flow figures, we estimate our restructuring payments to be in the range of $20,000,000 to $30,000,000 for 2025 as we look to further optimize our business and further reduce fixed costs. Speaker 200:16:14While we do not provide quarterly guidance, we do want to provide some perspective on timing in Speaker 300:16:192025. As it relates to revenue cadence for the year due to early January downtime with key customers and continued ramp curve of a key next generation program launch in North America, we anticipate the first quarter sales per production day to be lower relative to the remainder of the year. In addition, we expect a normal seasonal cash flow use in the first quarter of Speaker 200:16:43the year. So taking all that in, what Speaker 300:16:46does it mean? It means on a standalone basis, AEM is driving increased margins, delivering strong and steady cash flow and positioning its portfolio to support arguably one of the best automotive product franchises around that being North America Light Trucks. And when we combine with Dowling and its complementary product set and performance capabilities, this will be an even more exciting company. Thank you for your time and participation on the call today. Am going to stop here and turn the call back over to David Dow for his closing remarks regarding our upcoming combination. Speaker 300:17:19David? Speaker 200:17:20Thanks, Chris. And before we go into the Q and A session, I wanted to discuss our transformational combination with DAOLE that we announced on January 29. This compelling strategic combination brings together two complementary global Tier one suppliers to create a leading global driveline and metal forming company in the world. Simply, AM plus DALLE creates a more balanced and more resilient company with revenues on a non adjusted combined basis of approximately $12,000,000,000 Combined adjusted EBITDA margin including $300,000,000 of run rate synergies of approximately 14% and we anticipate day one net leverage after the impact of the transaction financing of approximately 2.5 times including synergies. Following the close of the transaction, we expect strong earnings accretion in the first full year. Speaker 200:18:15Upon closing, AM will become a top 10 North American and top 25 global supplier. From a diversification standpoint, the combined business benefits greatly from a more balanced customer mix and geographic presence. We anticipate our GM concentricity to reduce to 25% post close from approximately 40% today. As to our geographic presence, our North American dependence reduces to 54% from 73% today, while our European and Asian exposure grows. This improved geographic balance allows us to better serve our customers where their operations are located, which positions us to grow the business that we already have and importantly gain new customers. Speaker 200:19:04In summary, this strategic combination provides a more robust business model positioned to deliver higher earnings and cash flow. Dalloy is a market leading high technology engineering group, which is comprised of two operating business units, GKN Automotive and GKN Powder Metallurgy. GKN Automotive is a leader in the development and production of side shafts, prop shafts, all wheel drive systems, e drive systems and e powertrain components. GCAN Powder Metallurgy is a global leader of high performance and precision powder metal products for the automotive and industrial markets. This transaction brings together a complementary product portfolio with DALLE strengths and side shafts coupled with AM strength and axles. Speaker 200:19:55On Slide 18, you will see that DALLE is a pioneer of automotive CV joints and is the number one global supplier of sidechasts in the world. Sidechasts deliver power to the wheels for ICE, hybrid and electric vehicles. Dall E possesses industry leading technology and strong vertical integration, which complements and expands AM's existing capabilities. As industry transitions to electrification, the content per vehicle opportunity for SlideStash increases. This is another great benefit of this powertrain agnostic product line. Speaker 200:20:35This strategic combination is expected to deliver approximately $300,000,000 of synergies. We expect run rate savings to be approximately 60% achieved after year two and the remainder substantially achieved by the third year after the deal closes. The transaction positions AMs for high margin potential, strong earnings accretion, strong cash flow and a strong balance sheet. We are already making plans to integrate our two businesses so that when we close, we will confidently hit the ground running to achieve these synergies, which we have a solid track record of delivering with other deals that we have completed over the years. Furthermore, our confidence to achieve these synergies is very high based on the robust process that we were required to undertake in order to announce our $300,000,000 synergy number. Speaker 200:21:29This process included detailed in person diligent sessions for 10 work streams which were conducted over multiple weeks between AM and Dowley's management teams with the support of our respective global consulting firms. This process ultimately resulted in both a quantified synergy report and a supporting opinion being issued by an outside accounting firm. Our process is to identify greater opportunities or what we call a market basket well in excess of our targets. This supports our ability and our high confidence level to deliver these synergy opportunities. As such, on Slide 21, you can see the cash flow generation potential is very strong. Speaker 200:22:15Based on reported figures plus the realization of full synergies or 5% of revenues based on the implied combined market cap of the company, this implies a very attractive 50% let me tell you again, 50% free cash flow yield. Now, let's transition to financing the balance sheet and capital allocation. We have fully committed financing in place to support this transaction and we expect to raise approximately $2,200,000,000 of new debt financing to refinance Dallas' existing debt and fund the cash purchase price of the deal. At closing, this deal is anticipated to be approximately net leverage neutral before synergies and we expect to have ample liquidity available to us. Regarding capital allocation, historically, AIM is focused on organic growth and debt pay down. Speaker 200:23:10That will remain true in the near term. However, as a combined organization with greater size and scale and higher free cash flow generating capability, we can now target a more balanced capital allocation policy once we are below 2.5 times net leverage, including a strong consideration of recurring capital to our shareholders. Finally, on the regulatory front, Aim and Dollar have already done a significant amount of analysis and preparatory work and have already actioned a number of items. On February 7, AM submitted its U. S. Speaker 200:23:47Regulatory filing. Additionally, AM is progressing with other country filings and engaging with appropriate regulators. We expect regulatory approval and closing in the fourth quarter of this year and we are happy to share that initial customer feedback has been supportive given the complementary nature of the product and the customer portfolios. We are extremely excited about the strategic combination as it will create an organization with meaningful size and scale and synergy opportunities, a more robust business model based on compelling strategic rationale and industrial logic a powertrain agnostic product portfolio while realizing enhanced diversification a strong experienced and blended management team with a proven track record for success significant margin and earnings accretion while accelerating opportunities for growth, and finally, strong value creation for all stakeholders including an enhanced capital allocation policy in the near future. In conclusion, AM delivered strong 2024 financial results. Speaker 200:24:59We are positioned to have a solid year in 2025 as a standalone company and we are excited about the future strategic combination with DAOLE. So, thank you for your participation today. Before I turn it over to David Lim to start the Q and A portion of the call, we also want to let you know that we are planning to do investor meetings in New York and Boston for current and prospective shareholders who have shown interest in AAM. These meetings will be held on February 24 and February 25, respectively. Please feel free to e mail david. Speaker 200:25:34Limaam dot com to register your interest. I will now turn it back over to David Lim to start the Q and A portion of our call. David? Speaker 100:25:47Thank you. So, operator, can you start with a question and answer session, please? Operator00:25:54Absolutely. Today's first question comes from John Murphy of Bank of America. Please go ahead. Speaker 400:26:09Good morning, guys. Just a couple here. David, when you were mentioning or Chris, maybe when you're going through the walk on the outlook, you mentioned mix and volume. I'm just curious if you could talk about sort of that in the context of GM trucks and then also the Ram HD, what your expectations are on those two specific programs for mix? Speaker 300:26:34Yes. So the underpinning at the macro level, John, fifteen point one million North American units overall. From the T1 perspective or the GM full size truck, I should say, think about the range of our revenue mix, anywhere from 1,300,000 units to 1,400,000 units for the full year. And then some of our other top platforms, like for example, the upcoming RAM HD platform, as you know, has been transitioning model years at the end of last year, beginning of this year. Big picture, we would see that relatively flattish year over year because there was declines in the fourth quarter. Speaker 300:27:09We expect lower volumes in the first quarter, but then picking back up the production run rates in the second quarter and beyond. Speaker 400:27:19Just maybe in the T1, is there something going on with mix in that platform where you think it might be less rich, maybe less 4x4s or is it has that mix relatively flat? Speaker 300:27:30It's relatively flat. We continue from that perspective, we continue to see strong robust demand on the HD, the heavy duty side in terms of, let's call it, platform mix inside of that and obviously strong mix still on the SUV. But from a four wheel drive perspective, relatively flat. Speaker 400:27:48Got it. And then just a follow-up on DLA. The R and D, it's down $20,000,000 and the CapEx is down $50,000,000 in your outlook for 2025. Is that organic or is there some kind of precursor of understanding that you might be able to use some of the capital at DLA, particularly on the capacity side and some of the R and D from some of their products to overlay and save even before you get to the close? Or is this really stuff that you're doing purely on an organic basis? Speaker 300:28:19Yes. This is purely organic, John. The guidance is our stand alone company guidance perspective. Speaker 400:28:27Got it. And then just lastly, Dele, you mentioned the customer reception was pretty good or actually very good, I should say. But can you talk about the customer reception outside of the D3 and the incumbent European companies? I mean, has there been any commentary from the Asian brands or the Chinese brands that might lead you to believe that you might have a real revenue synergy above and beyond what you're talking about so far? Speaker 200:28:52Yes, John, this is David. Again, on the Detroit Three, everything was very positive in regards to the initial discussions we had with them. Outside of the Detroit Three to your question, again, people are excited about two complementary businesses coming together. The product portfolio becomes more expansive. Therefore, we'll be able to cross sell and have greater customers around the world. Speaker 200:29:19They like the stability and the technology and the innovation that both companies bring to the table. So that's important. At the same time, remember, Dowling has a very important joint venture in China. There's obviously a relationship that we want to maintain and continue there and grow that. There will be meetings that will be upcoming with respect to the leadership of that joint venture and the ultimate customers. Speaker 200:29:44But it's been overall positively received in Europe, in Asia and here in North America. So, we're very happy with the initial feedback from the customers. Speaker 400:29:53That's great. Thank you very much guys. Speaker 200:29:55Thank you. Operator00:29:58Thank you. And our next question today comes from James Picariello with BNP. Please go ahead. Speaker 500:30:04Hey guys. This is Jake on for James. So I think we all appreciate the level of detail you've given us on some of these cost synergies and how that flows through to pro form a free cash flow. But can you just talk a little bit about maybe any top line synergies you see, especially given the kind of complementary nature of the portfolios? Speaker 100:30:27Thank you. Speaker 200:30:29Well, as I just mentioned, I mean, you're bringing together two very complementary businesses whose product portfolios support and are complementary and expansive to one another. So, there is going to be cross selling opportunities. We think with multiple customers globally around the world, so we definitely see opportunity for revenue growth that way. We also recognize and understand that they are innovative and technology leading based company. We have done similar things. Speaker 200:31:03We both have positioned ourselves very well on the electrification front. When the markets take off there and obviously that's going to vary by region of the world where China is already leading and active. Europe is moving along because the CO2 requirements changing meaning getting tougher. And then in North America, we know that it's slowing down a little bit here under the Trump administration. But regardless of the administration, we're putting ourselves in a position of be of a product a powertrain agnostic product portfolio that can support the consumer requirements and the market requirements on a go forward basis. Speaker 200:31:36And we see tremendous opportunity and flexibility and optionality with our portfolio, especially as we bring these two dynamic and positive companies together. Speaker 500:31:48Thanks, David. And could you guys also just kind of help me with the free cash flow bridge? So at the midpoint, your EBITDA was down about $30,000,000 CapEx up about $50,000,000 and you've managed to hold free cash flow more or less flat year over year. So is there any working capital benefit that's driving that? And should we think about some sort of potential unwind in 2026? Speaker 500:32:19Or is this number that could potentially continue to move higher once we get through the next generation GM on-site launch? Thank you. Speaker 300:32:27Yes. Jake, this is Chris. I'll take that. You can see our free cash flow bridge on Page 13 of our earnings deck, another contributor to favorable cash flow is we do expect some favorability as it relates to lower interest expenses as we've been paying down our debt. But from a working capital perspective, that's going to be a key driver for us here in 2025. Speaker 300:32:48From an inventory perspective, we see still continued opportunity there. From a turns basis, we've been relatively flat year over year, which means we have opportunity to continue to reduce that down to levels we ran pre COVID as things are stabilizing across the industry. In addition from our payables and receivables or let's call it the traditional type of working capital elements, we see some additional opportunity inside those sets as well. So we're excited to get at that working capital and I would not really envision any unwind of inventory or others as we clear through 'twenty five on these structural changes for Morgan Capital. Speaker 600:33:23Very helpful. Thanks, Chris. Speaker 200:33:25Thank you. Operator00:33:27And our next question today comes from Edison Liu with Deutsche Bank. Please go ahead. Speaker 500:33:33Hi. Thank you for taking our questions and good morning. Operator00:33:36First, I wanted Speaker 500:33:39to ask on the transaction and maybe more of a strategic or higher level point of view. It seems that we've seen a lot of suppliers kind of go the opposite way where they're getting smaller, kind of the approach of getting bigger and expanding. So I'm curious, you look down whatever three, four, five years, what do you think the supplier landscape looks like? Is it going to kind of be more your direction that more people are going to consolidate? Or do you think that actually this other kind of counter trend that's been happening over the last couple of years actually is the way it goes? Speaker 200:34:19So, Edison, this is David Dowd. I've been saying for years that I feel that the automotive market needs to consolidate both at the OEM level as well as and especially at the supplier level. I'm still true to my convictions that way and my beliefs and our thought process. Our team feels very strongly about that. That's why we've done a lot of the acquisitions that we've done. Speaker 200:34:40The biggest one doing what we did was MPG back in 2017, but now this is even bigger here with DALA here in 2025. We think the markets are very uncertain, very dynamic, and you need size and scale to be able to weather the storm and be in a position that you can balance the requirements that are out there. And there's new challenges every day that the market brings or countries or regions bring and we need to be in a position to leverage those global resources, those expansive resources that we have. But most importantly, when it's all said and done, we've got to bring solutions to our customers that meet their needs and ultimately meet the market needs, meaning the consumer and what they want. And we think bringing together two complementary companies with an expansive product portfolio that's very complementary to one another with very little overlap, we're doing just what the market and what our customers need. Speaker 200:35:42And we're very pleased with the strength that they have with their leadership team. Combined with our leadership team will blend that together. We'll have a leading and proven management team that has tremendous experience and we'll be able to manage that effectively going forward. Yes, there are some people that are taking actions to reduce their concentricity in different regions or actually not of certain businesses. What we're trying to do is make sure that we have a powertrain agnostic portfolio that can meet the requirements no matter what the market conditions are on a global basis. Speaker 200:36:18And we're still true to that. At the same time, we recognize that each region requires a different strategy. But holistically, there's a way that we can balance that out and be efficient from an operation standpoint and from a product development and from a cash management standpoint going forward. So long answer to your question, but the short answer to it is we feel very strongly that the markets will continue to consolidate going forward. That's the whole premise of our strategic rationale and industrial logic. Speaker 200:36:49Not only do we feel that way, the Dalloy board and management team feels that way as well and others that I've talked to in the industry also feel that way. Speaker 500:37:00Appreciate the insights. Follow-up on the DAI side. For those of us maybe not as close, you've got quite a bit of time to do work. The Chinese business, the China business on there is actually quite strong, I think maybe to many people's surprise. Can you maybe from your perspective maybe describe why that is given just the level of competition there? Speaker 500:37:24I think we're kind of from The U. S. Perspective on the impression that the local suppliers would be doing much better. So curious as to why maybe you think they're actually holding up quite well or they're doing quite well there? Speaker 200:37:36Well, I mean, I think you have to recognize first and foremost the two joint venture partners, that being ASCO and that being GKN and the management teams and the strategy that they put together for that JV, that JV is thirty five years old. There's been a lot of experience there. They're tailored and designed China for China as far as support the local market. They've got an effective product portfolio heavily weighted towards half shafts, but also supporting outflow drive and electrification and e powertrain components for that market, which is what's in demand. They've got a competitive cost structure and a supportive management team that is growing both with the domestic Chinese manufacturers or OEMs as well as with the international or Western OEMs that are doing business in China. Speaker 200:38:27So credit to those two organizations. We had nothing to do with that. However, what we want to do is make sure that we not only maintain the relationship, but build on that relationship, especially as our product portfolio expands as a combined business. And then we'll look to bring other operational excellence and support to that joint venture going forward. But don't mess with something as you said is performing very well. Speaker 200:38:54So we just got to meet that management team that's over there and that new partner going forward. And appropriate meetings will take place first and foremost between DAOLE and their existing partner. And then we'll follow-up with the appropriate meetings with myself and others to meet their leadership team and position ourselves and talk about what the future holds. Operator00:39:19And our next question comes from Doug Carson of Bank of America. Please go ahead. Speaker 700:39:31Yes, I'm kind of excited about the scale getting bigger. In my career, I think reading agencies kind of like bigger auto suppliers, which help give you some mass relative to the market pressures. And you're actually emerging with a company that had lower leverage than AAM. And the combined entity, I think, out of the gate, you said to be about 2.5 turns of leverage. I think you made some comments that maybe going forward, you'll be able to harvest some of the cash flow to get back to equity rather than the delevering that we've seen in the last few years. Speaker 700:40:11So one way to just kind of explore that a little bit and then separately, I know the agency has kind of commented, but do you think longer term you could safely get the combined entity more into the mid BB range rather than the BB range for ratings given the scale almost double? Speaker 300:40:35Yes, Doug, a few questions in there. This is Chris. I'll take a crack at a few of those. First of all, we agree with your enthusiasm about the size and scale. But as it relates to delevering, if you listen to some of our comments, we talked about at 2.5 times, we would open up to some additional capital allocation priorities. Speaker 300:40:57But before that happens, we will continue to reduce and strengthen our balance sheet down into the 2.5 times. So we'll continue to prioritize the organic growth. We'll continue to prioritize debt repayment and drive a stronger and stronger balance sheet through that process. So I think that's a key point to keep in mind. And then we would have a balanced portfolio or balanced capital allocation going forward, which would still include an element of debt reduction as well. Speaker 300:41:21It wouldn't be solely over week one versus the other. Speaker 700:41:24Right. Speaker 300:41:26But longer term, obviously, driving higher ratings is critical to cost of capital. But so we're focused on the elements of those whether the agencies rerate us or not, that's up to them. But we're focused on strengthening the balance sheet, reducing our leverage, the size and scale, free cash flow to debt ratios, things of that nature, elements of our business that are good for the business will ultimately drive to a stronger company and hopefully will reflect in the ratings over time. Speaker 700:41:55That's helpful. And then maybe as a quick follow-up, there's obviously lots of headlines around tariffs and steel prices, and I know that you've got some pretty good pass through capabilities in steel. Can you just kind of refresh us on how you're looking at some of those commodity risks out there in the market broadly? Speaker 200:42:14Yes, Doug, this is David. I'll take the first shot at it and Chris can comment on it. But I think you know and others know and we've been very forthright that our longest standing policy has been to buy and build local in the regions that we support and that we serve and that's proved very effective to us in mitigating tariff risk that we're experiencing in the past, but also potentially experience here in the future. We'll obviously look to mitigate any other impact that may happen once they get announced in regards to what's going on between The U. S. Speaker 200:42:46With Canada and Mexico, and we'll see where that goes in March. With respect to steel and the aluminum side right now, we have very minimal exposure as our U. S. Steel and our aluminum is sourced here locally. So we feel very good about where we are that way. Speaker 200:43:05We just got to understand what the details are going to be with respect to the tariff strategy or policies between The U. S, Mexico and Canada, as well as any other countries that may be involved in a longer term. But the overall, like I said, our strategy is to buy and build local and that benefits us when you have tariff issues or trade war issues that are taking place. So Chris, any other comments Speaker 300:43:29at all? Yes. And you referred to some of the pass through mechanisms. If this activity brings more volatility to the input costs, not tariff related, but that are driving the commodity costs that go into our product, as you know, we pass around 80% plus up and down to the customer by contract on this. So we are insulated and protected from some of that side, not tariffs, but the market inputs that impact our purchases through our supply base. Speaker 300:43:55So that's a nice protection mechanism for the company. Speaker 700:43:58Yes, that is good. Well, thanks guys. That's it from me. Speaker 200:44:02Yes. Thanks Doug. Appreciate it. Operator00:44:07Thank you. And gentlemen, your last question today comes from Dan Levy with Barclays. Please go ahead. Speaker 600:44:14Hi, Josh on for Dan today. Thanks for taking my question. I had a question on just backlog and bidding dynamics. I know you've said in the past couple of quarters that there's a bit of air pocket while the OEMs consider the EV plans. And I saw today that there's an extension on the Ford program, which I guess would not be included in backlog. Speaker 600:44:30Just wanted to see how exactly things are going with bidding and if you're seeing a greater ICE extension interest right now? Speaker 200:44:37Yes. So this is David and I'll let Chris talk from there. As we've said all along with the OEMs reevaluating their product portfolios right now, it is creating a bit of an air pocket in regards to some of the sourcing here in the initial years, meaning that let's say over the next three years. But at the same time, we've been very forthright in regards to what our backlog has been over the last three years and there's not a meaningful change there for '20 '5, slightly lower just based on some of the re timing and re volumes of some of the programs that the customers put forward. I think the most important thing for us and the big swing that we're seeing right now is that we're still actively quoting about $1,500,000,000 of new and incremental opportunities. Speaker 200:45:24And again, our backlog is only new and incremental. We don't count any replacement business in that. But on that new and incremental business that we're quoting, in the past couple of years, that was heavily weighted towards electrification, like 75% to 80%. Today, that has swung the other way, where we still have some electrification in it, but it's more heavily weighted towards ICE and hybrid applications going forward. So what we're very excited about is the fact that, one, we've got our next generation business essentially and substantially secured, which I covered in my earlier remarks. Speaker 200:46:03Two, we're actively quoting on $1,500,000,000 of new and incremental business. And it's right in our wheelhouse of our ICE and hybrid business today. But at the same time, three, we have already have an existing portfolio and that portfolio will expand with Vale that better positions us with the powertrain agnostic portfolio to quote on more electrification requirements as they evolve based in the different markets globally around the world. And then we'll also be able to leverage the global footprint of the two organizations to better position ourselves from a cost effectiveness standpoint so that we improve our hit rate of trying to win that new business going forward. But overall, we feel good about the market basket of opportunities. Speaker 200:46:51There is an air pocket going through the industry, not only for AM, but many suppliers. But most importantly, a lot of the programs are being extended, which is a positive because that allows us to continue to drive operational efficiency and financial performance, which we delivered in 'twenty four and we're positioned to deliver as a standalone company in 'twenty five. '5. And obviously, we've conveyed what we think the synergies are and the incremental opportunities when we bring Dolly and American Axle together. Speaker 600:47:26As a quick follow-up on that, of the R and D decline year over year, would you say a lot of that is within EV spending given the slowdown? And assuming there's an uptick in hybrid over the next couple of years, would that require any incremental spending beyond your current IS and ED portfolio? Or is that kind of already included in what you already have? Speaker 300:47:46Yes, I would say, Ingest, this is Chris. The R and D decline is to align really with current market requirements, demands of our customers. Part of our elevated spend over the past year or two has been to build out our eDrive portfolio, which we now have in place. It's gained a lot of traction in China and other markets as well. So that's sort of done and behind us. Speaker 300:48:09So we can now start to reap the cost benefits of sort of repositioning with the current market dynamics and harvest those savings this year and we would expect going forward. The nice thing about the hybrid applications for us in many cases uses the exact same product as our ICE vehicle products. So there's not a lot of R and D associated with that. So that's a perfect alignment of some of that powertrain applications between ICE and a hybrid perspective.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAmerican Axle & Manufacturing Q4 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) American Axle & Manufacturing Earnings HeadlinesAmerican Axle & Manufacturing's (AXL) "Sector Perform" Rating Reiterated at Royal Bank of CanadaApril 19 at 3:47 AM | americanbankingnews.comCurtiss-Wright Corporation Page Form 8.3 - American Axle & Manufacturing Holdings, Inc.April 16, 2025 | finance.yahoo.comTrump’s Top Secret $9 Trillion AI SuperweaponJeff Brown spotted Nvidia at $1. Now he’s revealing a new AI superweapon — and the Musk-connected stocks that could benefit.April 20, 2025 | Brownstone Research (Ad)UBS Group Cuts American Axle & Manufacturing (NYSE:AXL) Price Target to $3.50April 13, 2025 | americanbankingnews.comAmerican Axle price target lowered to $5 from $6 at RBC CapitalApril 12, 2025 | markets.businessinsider.comAAM to Present at the BofA Securities 2025 Global Automotive Summit on April 15April 11, 2025 | prnewswire.comSee More American Axle & Manufacturing Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like American Axle & Manufacturing? Sign up for Earnings360's daily newsletter to receive timely earnings updates on American Axle & Manufacturing and other key companies, straight to your email. Email Address About American Axle & ManufacturingAmerican Axle & Manufacturing (NYSE:AXL) engages in the manufacture, engineering, design, and validation of driveline systems and related components. It operates through the Driveline and Metal Forming segments. The Driveline segment consists of axles, drive shafts, power transfer units, rear drive modules, and electric and hybrid driveline products and systems for light trucks, service utility vehicles, crossover vehicles, passenger cars, and commercial vehicles. The Metal Forming segment manufactures axle shafts, ring and pinion gears, differential gears, transmission gears, and shafts and suspension components for original equipment manufacturers (OEMs), and Tier 1 automotive suppliers. The company was founded by Richard E. Dauch on March 1, 1994, and is headquartered in Detroit, MI.View American Axle & Manufacturing ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 8 speakers on the call. Operator00:00:00Good morning. My name is Rocco, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle and Manufacturing Fourth Quarter twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. Operator00:00:29As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. David Lim, Head of Investor Relations. Please go ahead, Mr. Lim. Speaker 100:00:39Thank you, and good morning. And I would like to welcome everyone who is joining us on AAM's fourth quarter earnings call. Earlier this morning, we released our fourth quarter of twenty twenty four earnings announcement. You can see this announcement on the Investor Relations page of our website, www.aem.com, and through the PR Newswire services. You can also find supplemental slides for this conference call on the Investor page of our website as well. Speaker 100:01:04To listen to a replay of this call, you can dial 704-0529, replay access code 2688905. This replay will be available through February 21. Before we begin, I'd like to remind everyone that the matters discussed on this call may contain comments and forward looking statements that are subject to risks and uncertainties, which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed. For additional information, please reference Slide two of our investor presentation or the press release that was issued today related to this earnings announcement. Also, during the call, we may refer to certain non GAAP financial measures and information regarding these non GAAP measures as well as a reconciliation of the non GAAP measures to GAAP financial information is available in the presentation. Speaker 100:02:01Today's call is not intended and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy securities of AEM or DALAZE in any jurisdiction where such offers or solicitations are not permitted by law. The subject matter of today's call will be addressed in a proxy statement that will be filed with the SEC. Investors should read the information in the proxy statement in its entirety when it becomes available. Information regarding the participants and the proxy solicitation is contained in AM's case, in AM's annual proxy materials filed with the SEC and in DAOLE's case, in DAOLE's equivalent filings and announcements made in accordance with applicable U. K. Speaker 100:02:43Law. With that, let me turn things over to AAM's Chairman and CEO, David Doug. Speaker 200:02:48Thank you, David, and good morning, everyone. Thank you for joining us today to discuss AAM's financial results for the fourth quarter and full year of calendar year 2024. Joining me on the call today are Chris May, AAM's Executive Vice President and Chief Financial Officer. To begin my comments today, I'll review the highlights of our fourth quarter and full year 2024 financial performance. Next, I'll cover our 2025 financial outlook. Speaker 200:03:14And after Chris covers the details of our financial results, I'll provide some concluding remarks about our exciting double A combination and then open up for questions that you all may have. So let's begin. AAM closed the year out strong by continuing to make good operational progress and generating solid adjusted free cash flow in the quarter. AAM's fourth quarter of twenty twenty four sales were $1,400,000,000 and for the full year, AM sales were approximately $6,100,000,000 From a profitability perspective, AM's adjusted EBITDA in the fourth quarter was $161,000,000 or 11.6 percent of sales. For the full year, AM's adjusted EBITDA was $749,000,000 or 12.2% of sales. Speaker 200:04:02AM's adjusted earnings per share in the fourth quarter of twenty twenty four was a loss of $0.06 per share. For the full year, adjusted EPS was a positive $0.51 per share. Adjusted free cash flow was $79,000,000 in the quarter and $230,000,000 for the full year in 2024. For 2024, AM delivered on the financial targets that we had outlined at the beginning of the year. We came in at the high end of our original adjusted EBITDA range and exceeded the midpoint of our adjusted free cash flow target. Speaker 200:04:35These were achieved while the industry experienced production revisions throughout the year. It was a solid performance by AM as we manage the factors that are under our control and remain focused on operational efficiency. Let's talk about a couple of recent business updates on Slide four of our presentation deck. We outlined in the past that it was our near term objective to secure our core legacy driveline business. That began with our announcement several years ago where AM secured contracts of more than $10,000,000,000 of lifetime revenues with next generation full size truck axles with multiple customers. Speaker 200:05:14Today, we announced we have secured a contract extension to supply power transfer units for the Ford Maverick and Bronco Sport vehicles. With this latest award, we have secured our next generation core business for years to come. Two weeks ago, we also announced our transformational combination with DAOLE, which will create a leading global driveline and metal forming supplier with significant size and scale. We have high conviction that this will create a significant value for our shareholders. I will talk more about this exciting deal a little bit later today. Speaker 200:05:48From a business perspective, our strategy has been consistent. We continue to strive to improve and optimize our operations, drive EBITDA and free cash flow generation and manage factors under our control. And we are going to remain disciplined and focused on these priorities. Before I hand it over to Chris on the call, let's talk about our 2025 financial outlook. From an end market perspective, we forecast North American production at approximately 15,100,000 units. Speaker 200:06:20We are also monitoring multiple factors that can swing production including interest rates, tariffs, inventory levels and the overall financial health of the consumer. Slide five illustrates AM's twenty twenty five financial outlook, where AM is targeting sales in the range of 5,800,000,000 to $6,050,000,000 adjusted EBITDA of approximately $700,000,000 to $760,000,000 and adjusted free cash flow of approximately $200,000,000 to $230,000,000 As I said earlier, after Chris' financial commentary, I'll have some additional remarks regarding our recently announced strategic combination with Dowling. Now, let me turn the call over to Chris. Chris? Speaker 300:07:04Thank you, David, and good morning, everyone. I will cover the financial details of our fourth quarter and full year 2024 results and our 2025 outlook with you today. I will also refer to the earnings slide deck as part of my prepared comments. So let's go ahead and begin with sales. In the fourth quarter of twenty twenty four, AAM sales were $1,380,000,000 compared to $1,460,000,000 in the fourth quarter of twenty twenty three. Speaker 300:07:30Slide eight shows a walk of fourth quarter twenty twenty three sales to fourth quarter twenty twenty four sales. Volume mix and other lowered sales by $61,000,000 as North American production declined by approximately 3% Speaker 200:07:43and we were impacted by the Speaker 300:07:44timing of launches of new next generation products. Pricing was $5,000,000 in the fourth quarter and metal market pass throughs and FX lowered net sales by approximately $16,000,000 as both were lower year over year. For the full year of 2024, AEM sales were $6,120,000,000 as compared to $6,080,000,000 for the full year of 2023. The primary drivers of Speaker 200:08:09the increase were volume and mix, partially offset by lower metal market pass throughs and FX. Now, let's move on to profitability. Gross profit was $154,300,000 Speaker 300:08:20in the fourth quarter of twenty twenty four as compared to $154,900,000 in the fourth quarter of twenty twenty three. Adjusted EBITDA was $160,800,000 in the fourth quarter of Speaker 200:08:31twenty twenty four versus $169,500,000 last Speaker 300:08:35year. You can see the year over year walk down of adjusted EBITDA on Slide nine. In the quarter, the decline in volume mix and other impacted adjusted EBITDA by $20,000,000 in the fourth quarter versus the prior year. R and D was slightly lower year over year and performance was $10,000,000 favorable. For the full year of 2024, AN's adjusted EBITDA was $749,200,000 and adjusted EBITDA margin was 12.2% of sales. Speaker 300:09:05For the full year, this was an 80 basis point margin improvement as we delivered favorable year over year performance every single quarter this year. Let me now cover SG and A. SG and A expense including R and D in the fourth quarter of twenty twenty four was $89,000,000 or 6.4% of sales. This compares to $95,700,000 or 6.5% of sales in the fourth quarter of twenty twenty three. AAM's R and D spending in the fourth quarter of twenty twenty four was approximately $37,700,000 a slight decline from last year. Speaker 300:09:42As we head into 2025, we will continue to focus on controlling our SG and A costs. We expect R and D expense to be down on a year over year basis by approximately $20,000,000 as we optimize our spend in this area to reflect current market requirements. Let's move on to interest and taxes. Net interest expense was $37,300,000 in the fourth quarter of twenty twenty four compared to $42,900,000 in the fourth quarter of twenty twenty three. In the fourth quarter of twenty twenty four, we recorded income tax expense of $6,800,000 compared to $5,800,000 in the fourth quarter of twenty twenty three. Speaker 300:10:20As we head into 2025, we expect our adjusted effective tax rate to be approximately 30%. Taking all these sales and cost drivers into account, our GAAP net loss was $13,700,000 or $0.12 per share in the fourth quarter of twenty twenty four compared to a net loss of $19,100,000 or $0.16 per share in the fourth quarter of twenty twenty three. Adjusted earnings per share, which excludes the impact of items noted in our earnings press release, was a loss of $0.06 per share in the fourth quarter of twenty twenty four compared to a loss of $0.09 per share in the fourth quarter of twenty twenty three. However, for the full year of 2024, AM's adjusted earnings per share was $0.51 versus a loss of $0.09 per share in 2023. Let's now move to cash flow and the balance sheet. Speaker 200:11:10Net cash provided by operating activities for Speaker 300:11:12the fourth quarter of twenty twenty four was $151,200,000 compared to $52,900,000 in the fourth quarter of twenty twenty three. Capital expenditures, net of proceeds from the sale Speaker 200:11:24of property, plant and equipment Speaker 300:11:26for the fourth quarter of twenty twenty four were $77,600,000 Cash payments for restructuring and acquisition related activity for the fourth quarter of twenty twenty four were $5,600,000 dollars Reflecting the impact of these activities, AAM generated adjusted free cash flow of $79,200,000 in the fourth quarter of twenty twenty four. For the full year of 2024, AAM generated adjusted free cash flow of $230,000,000 compared to $219,000,000 in 2023. Our increased cash flow was driven by our stronger operational performance, inventory reductions and lower interest costs. From a debt leverage perspective, we ended the year with a net debt of $2,100,000,000 and LTM adjusted EBITDA of $749,200,000 calculating a net leverage ratio of 2.8 times at December 31. This is down nearly a half a turn from a year ago at 12/31/2023. Speaker 300:12:30During 2024, we redeemed all our remaining 2026 senior notes for a total of nearly $130,000,000 including approximately $46,000,000 in the fourth quarter. AAM ended 2024 with total available liquidity of approximately $1,500,000,000 consisting of available cash and borrowing capacity on AAM's global credit facilities. Before we move to the Q and A portion of the call, let me provide some thoughts and details on our 2025 financial outlook. In our earnings slide deck, we have included walks from our '24 actual results to our 2025 financial targets and you can see those starting on Slide 11. 20 20 five will bring about many exciting opportunities for AAM to grow and drive value creation. Speaker 300:13:17The guidance figures we are providing today are on an AAM stand alone pre combination basis and do not reflect any cost or expenses related to the announced combination with DALLE. For sales, we are targeting the range of $5,800,000,000 to $6,050,000,000 for 2025. To begin, the sales target is based upon a North America production of approximately 15,100,000 units at the midpoint and certain assumptions for our key programs such as we anticipate GM's full size pickup truck and SUV production in the range of 1,300,000 to 1,400,000 units. In addition, we are assuming the pending sale of our commercial vehicle axle business in India will be completed by the end of the first half of twenty twenty five and our financial guidance reflects that timing as you can see on our walk. Speaker 200:14:07From an EBITDA perspective, Speaker 300:14:08we are expecting adjusted EBITDA in the range of $700,000,000 to $760,000,000 Let me provide some color on the key elements of our year over year EBITDA walk that is on Page 12. We expect decremental margins for our volume and mix change to be slightly lower than our average of 25% to 30% as our India commercial vehicle margins are lower than our overall average. As mentioned earlier, our focus on optimizing our spend in R and D should yield a year over year improvement of $20,000,000 and AAM expects to deliver continued cost reductions, operational productivity and deliver year over year efficiency gains. And you can see that year over year performance improvements is a net favorable $15,000,000 on our walk. On Page 10, from an adjusted free cash flow perspective, we are targeting approximately $200,000,000 to $230,000,000 in 2025. Speaker 300:15:04The main factors driving our cash flow changes are as follows: We have higher capital expenditures stemming from investments for our largest truck platform's next generation products. These are the cornerstone for AAM's revenues and profitability for a long time to come. Even with the scale of these programs, we've been leveraging our installed capital base, driving purchasing efficiency and operational effectiveness, and we are targeting CapEx as a percent of sales in 2025 of approximately 5%. Lower outstanding debt also means lower cash interest of approximately $10,000,000 We do see higher cash taxes in 2025 in the range of $60,000,000 to $70,000,000 in total, which is approximately $15,000,000 higher than 2024. As for working capital, we believe we have continued opportunities across all areas of our working capital in 2025 and expect good performance in this area. Speaker 300:16:00And lastly, while not included in our adjusted free cash flow figures, we estimate our restructuring payments to be in the range of $20,000,000 to $30,000,000 for 2025 as we look to further optimize our business and further reduce fixed costs. Speaker 200:16:14While we do not provide quarterly guidance, we do want to provide some perspective on timing in Speaker 300:16:192025. As it relates to revenue cadence for the year due to early January downtime with key customers and continued ramp curve of a key next generation program launch in North America, we anticipate the first quarter sales per production day to be lower relative to the remainder of the year. In addition, we expect a normal seasonal cash flow use in the first quarter of Speaker 200:16:43the year. So taking all that in, what Speaker 300:16:46does it mean? It means on a standalone basis, AEM is driving increased margins, delivering strong and steady cash flow and positioning its portfolio to support arguably one of the best automotive product franchises around that being North America Light Trucks. And when we combine with Dowling and its complementary product set and performance capabilities, this will be an even more exciting company. Thank you for your time and participation on the call today. Am going to stop here and turn the call back over to David Dow for his closing remarks regarding our upcoming combination. Speaker 300:17:19David? Speaker 200:17:20Thanks, Chris. And before we go into the Q and A session, I wanted to discuss our transformational combination with DAOLE that we announced on January 29. This compelling strategic combination brings together two complementary global Tier one suppliers to create a leading global driveline and metal forming company in the world. Simply, AM plus DALLE creates a more balanced and more resilient company with revenues on a non adjusted combined basis of approximately $12,000,000,000 Combined adjusted EBITDA margin including $300,000,000 of run rate synergies of approximately 14% and we anticipate day one net leverage after the impact of the transaction financing of approximately 2.5 times including synergies. Following the close of the transaction, we expect strong earnings accretion in the first full year. Speaker 200:18:15Upon closing, AM will become a top 10 North American and top 25 global supplier. From a diversification standpoint, the combined business benefits greatly from a more balanced customer mix and geographic presence. We anticipate our GM concentricity to reduce to 25% post close from approximately 40% today. As to our geographic presence, our North American dependence reduces to 54% from 73% today, while our European and Asian exposure grows. This improved geographic balance allows us to better serve our customers where their operations are located, which positions us to grow the business that we already have and importantly gain new customers. Speaker 200:19:04In summary, this strategic combination provides a more robust business model positioned to deliver higher earnings and cash flow. Dalloy is a market leading high technology engineering group, which is comprised of two operating business units, GKN Automotive and GKN Powder Metallurgy. GKN Automotive is a leader in the development and production of side shafts, prop shafts, all wheel drive systems, e drive systems and e powertrain components. GCAN Powder Metallurgy is a global leader of high performance and precision powder metal products for the automotive and industrial markets. This transaction brings together a complementary product portfolio with DALLE strengths and side shafts coupled with AM strength and axles. Speaker 200:19:55On Slide 18, you will see that DALLE is a pioneer of automotive CV joints and is the number one global supplier of sidechasts in the world. Sidechasts deliver power to the wheels for ICE, hybrid and electric vehicles. Dall E possesses industry leading technology and strong vertical integration, which complements and expands AM's existing capabilities. As industry transitions to electrification, the content per vehicle opportunity for SlideStash increases. This is another great benefit of this powertrain agnostic product line. Speaker 200:20:35This strategic combination is expected to deliver approximately $300,000,000 of synergies. We expect run rate savings to be approximately 60% achieved after year two and the remainder substantially achieved by the third year after the deal closes. The transaction positions AMs for high margin potential, strong earnings accretion, strong cash flow and a strong balance sheet. We are already making plans to integrate our two businesses so that when we close, we will confidently hit the ground running to achieve these synergies, which we have a solid track record of delivering with other deals that we have completed over the years. Furthermore, our confidence to achieve these synergies is very high based on the robust process that we were required to undertake in order to announce our $300,000,000 synergy number. Speaker 200:21:29This process included detailed in person diligent sessions for 10 work streams which were conducted over multiple weeks between AM and Dowley's management teams with the support of our respective global consulting firms. This process ultimately resulted in both a quantified synergy report and a supporting opinion being issued by an outside accounting firm. Our process is to identify greater opportunities or what we call a market basket well in excess of our targets. This supports our ability and our high confidence level to deliver these synergy opportunities. As such, on Slide 21, you can see the cash flow generation potential is very strong. Speaker 200:22:15Based on reported figures plus the realization of full synergies or 5% of revenues based on the implied combined market cap of the company, this implies a very attractive 50% let me tell you again, 50% free cash flow yield. Now, let's transition to financing the balance sheet and capital allocation. We have fully committed financing in place to support this transaction and we expect to raise approximately $2,200,000,000 of new debt financing to refinance Dallas' existing debt and fund the cash purchase price of the deal. At closing, this deal is anticipated to be approximately net leverage neutral before synergies and we expect to have ample liquidity available to us. Regarding capital allocation, historically, AIM is focused on organic growth and debt pay down. Speaker 200:23:10That will remain true in the near term. However, as a combined organization with greater size and scale and higher free cash flow generating capability, we can now target a more balanced capital allocation policy once we are below 2.5 times net leverage, including a strong consideration of recurring capital to our shareholders. Finally, on the regulatory front, Aim and Dollar have already done a significant amount of analysis and preparatory work and have already actioned a number of items. On February 7, AM submitted its U. S. Speaker 200:23:47Regulatory filing. Additionally, AM is progressing with other country filings and engaging with appropriate regulators. We expect regulatory approval and closing in the fourth quarter of this year and we are happy to share that initial customer feedback has been supportive given the complementary nature of the product and the customer portfolios. We are extremely excited about the strategic combination as it will create an organization with meaningful size and scale and synergy opportunities, a more robust business model based on compelling strategic rationale and industrial logic a powertrain agnostic product portfolio while realizing enhanced diversification a strong experienced and blended management team with a proven track record for success significant margin and earnings accretion while accelerating opportunities for growth, and finally, strong value creation for all stakeholders including an enhanced capital allocation policy in the near future. In conclusion, AM delivered strong 2024 financial results. Speaker 200:24:59We are positioned to have a solid year in 2025 as a standalone company and we are excited about the future strategic combination with DAOLE. So, thank you for your participation today. Before I turn it over to David Lim to start the Q and A portion of the call, we also want to let you know that we are planning to do investor meetings in New York and Boston for current and prospective shareholders who have shown interest in AAM. These meetings will be held on February 24 and February 25, respectively. Please feel free to e mail david. Speaker 200:25:34Limaam dot com to register your interest. I will now turn it back over to David Lim to start the Q and A portion of our call. David? Speaker 100:25:47Thank you. So, operator, can you start with a question and answer session, please? Operator00:25:54Absolutely. Today's first question comes from John Murphy of Bank of America. Please go ahead. Speaker 400:26:09Good morning, guys. Just a couple here. David, when you were mentioning or Chris, maybe when you're going through the walk on the outlook, you mentioned mix and volume. I'm just curious if you could talk about sort of that in the context of GM trucks and then also the Ram HD, what your expectations are on those two specific programs for mix? Speaker 300:26:34Yes. So the underpinning at the macro level, John, fifteen point one million North American units overall. From the T1 perspective or the GM full size truck, I should say, think about the range of our revenue mix, anywhere from 1,300,000 units to 1,400,000 units for the full year. And then some of our other top platforms, like for example, the upcoming RAM HD platform, as you know, has been transitioning model years at the end of last year, beginning of this year. Big picture, we would see that relatively flattish year over year because there was declines in the fourth quarter. Speaker 300:27:09We expect lower volumes in the first quarter, but then picking back up the production run rates in the second quarter and beyond. Speaker 400:27:19Just maybe in the T1, is there something going on with mix in that platform where you think it might be less rich, maybe less 4x4s or is it has that mix relatively flat? Speaker 300:27:30It's relatively flat. We continue from that perspective, we continue to see strong robust demand on the HD, the heavy duty side in terms of, let's call it, platform mix inside of that and obviously strong mix still on the SUV. But from a four wheel drive perspective, relatively flat. Speaker 400:27:48Got it. And then just a follow-up on DLA. The R and D, it's down $20,000,000 and the CapEx is down $50,000,000 in your outlook for 2025. Is that organic or is there some kind of precursor of understanding that you might be able to use some of the capital at DLA, particularly on the capacity side and some of the R and D from some of their products to overlay and save even before you get to the close? Or is this really stuff that you're doing purely on an organic basis? Speaker 300:28:19Yes. This is purely organic, John. The guidance is our stand alone company guidance perspective. Speaker 400:28:27Got it. And then just lastly, Dele, you mentioned the customer reception was pretty good or actually very good, I should say. But can you talk about the customer reception outside of the D3 and the incumbent European companies? I mean, has there been any commentary from the Asian brands or the Chinese brands that might lead you to believe that you might have a real revenue synergy above and beyond what you're talking about so far? Speaker 200:28:52Yes, John, this is David. Again, on the Detroit Three, everything was very positive in regards to the initial discussions we had with them. Outside of the Detroit Three to your question, again, people are excited about two complementary businesses coming together. The product portfolio becomes more expansive. Therefore, we'll be able to cross sell and have greater customers around the world. Speaker 200:29:19They like the stability and the technology and the innovation that both companies bring to the table. So that's important. At the same time, remember, Dowling has a very important joint venture in China. There's obviously a relationship that we want to maintain and continue there and grow that. There will be meetings that will be upcoming with respect to the leadership of that joint venture and the ultimate customers. Speaker 200:29:44But it's been overall positively received in Europe, in Asia and here in North America. So, we're very happy with the initial feedback from the customers. Speaker 400:29:53That's great. Thank you very much guys. Speaker 200:29:55Thank you. Operator00:29:58Thank you. And our next question today comes from James Picariello with BNP. Please go ahead. Speaker 500:30:04Hey guys. This is Jake on for James. So I think we all appreciate the level of detail you've given us on some of these cost synergies and how that flows through to pro form a free cash flow. But can you just talk a little bit about maybe any top line synergies you see, especially given the kind of complementary nature of the portfolios? Speaker 100:30:27Thank you. Speaker 200:30:29Well, as I just mentioned, I mean, you're bringing together two very complementary businesses whose product portfolios support and are complementary and expansive to one another. So, there is going to be cross selling opportunities. We think with multiple customers globally around the world, so we definitely see opportunity for revenue growth that way. We also recognize and understand that they are innovative and technology leading based company. We have done similar things. Speaker 200:31:03We both have positioned ourselves very well on the electrification front. When the markets take off there and obviously that's going to vary by region of the world where China is already leading and active. Europe is moving along because the CO2 requirements changing meaning getting tougher. And then in North America, we know that it's slowing down a little bit here under the Trump administration. But regardless of the administration, we're putting ourselves in a position of be of a product a powertrain agnostic product portfolio that can support the consumer requirements and the market requirements on a go forward basis. Speaker 200:31:36And we see tremendous opportunity and flexibility and optionality with our portfolio, especially as we bring these two dynamic and positive companies together. Speaker 500:31:48Thanks, David. And could you guys also just kind of help me with the free cash flow bridge? So at the midpoint, your EBITDA was down about $30,000,000 CapEx up about $50,000,000 and you've managed to hold free cash flow more or less flat year over year. So is there any working capital benefit that's driving that? And should we think about some sort of potential unwind in 2026? Speaker 500:32:19Or is this number that could potentially continue to move higher once we get through the next generation GM on-site launch? Thank you. Speaker 300:32:27Yes. Jake, this is Chris. I'll take that. You can see our free cash flow bridge on Page 13 of our earnings deck, another contributor to favorable cash flow is we do expect some favorability as it relates to lower interest expenses as we've been paying down our debt. But from a working capital perspective, that's going to be a key driver for us here in 2025. Speaker 300:32:48From an inventory perspective, we see still continued opportunity there. From a turns basis, we've been relatively flat year over year, which means we have opportunity to continue to reduce that down to levels we ran pre COVID as things are stabilizing across the industry. In addition from our payables and receivables or let's call it the traditional type of working capital elements, we see some additional opportunity inside those sets as well. So we're excited to get at that working capital and I would not really envision any unwind of inventory or others as we clear through 'twenty five on these structural changes for Morgan Capital. Speaker 600:33:23Very helpful. Thanks, Chris. Speaker 200:33:25Thank you. Operator00:33:27And our next question today comes from Edison Liu with Deutsche Bank. Please go ahead. Speaker 500:33:33Hi. Thank you for taking our questions and good morning. Operator00:33:36First, I wanted Speaker 500:33:39to ask on the transaction and maybe more of a strategic or higher level point of view. It seems that we've seen a lot of suppliers kind of go the opposite way where they're getting smaller, kind of the approach of getting bigger and expanding. So I'm curious, you look down whatever three, four, five years, what do you think the supplier landscape looks like? Is it going to kind of be more your direction that more people are going to consolidate? Or do you think that actually this other kind of counter trend that's been happening over the last couple of years actually is the way it goes? Speaker 200:34:19So, Edison, this is David Dowd. I've been saying for years that I feel that the automotive market needs to consolidate both at the OEM level as well as and especially at the supplier level. I'm still true to my convictions that way and my beliefs and our thought process. Our team feels very strongly about that. That's why we've done a lot of the acquisitions that we've done. Speaker 200:34:40The biggest one doing what we did was MPG back in 2017, but now this is even bigger here with DALA here in 2025. We think the markets are very uncertain, very dynamic, and you need size and scale to be able to weather the storm and be in a position that you can balance the requirements that are out there. And there's new challenges every day that the market brings or countries or regions bring and we need to be in a position to leverage those global resources, those expansive resources that we have. But most importantly, when it's all said and done, we've got to bring solutions to our customers that meet their needs and ultimately meet the market needs, meaning the consumer and what they want. And we think bringing together two complementary companies with an expansive product portfolio that's very complementary to one another with very little overlap, we're doing just what the market and what our customers need. Speaker 200:35:42And we're very pleased with the strength that they have with their leadership team. Combined with our leadership team will blend that together. We'll have a leading and proven management team that has tremendous experience and we'll be able to manage that effectively going forward. Yes, there are some people that are taking actions to reduce their concentricity in different regions or actually not of certain businesses. What we're trying to do is make sure that we have a powertrain agnostic portfolio that can meet the requirements no matter what the market conditions are on a global basis. Speaker 200:36:18And we're still true to that. At the same time, we recognize that each region requires a different strategy. But holistically, there's a way that we can balance that out and be efficient from an operation standpoint and from a product development and from a cash management standpoint going forward. So long answer to your question, but the short answer to it is we feel very strongly that the markets will continue to consolidate going forward. That's the whole premise of our strategic rationale and industrial logic. Speaker 200:36:49Not only do we feel that way, the Dalloy board and management team feels that way as well and others that I've talked to in the industry also feel that way. Speaker 500:37:00Appreciate the insights. Follow-up on the DAI side. For those of us maybe not as close, you've got quite a bit of time to do work. The Chinese business, the China business on there is actually quite strong, I think maybe to many people's surprise. Can you maybe from your perspective maybe describe why that is given just the level of competition there? Speaker 500:37:24I think we're kind of from The U. S. Perspective on the impression that the local suppliers would be doing much better. So curious as to why maybe you think they're actually holding up quite well or they're doing quite well there? Speaker 200:37:36Well, I mean, I think you have to recognize first and foremost the two joint venture partners, that being ASCO and that being GKN and the management teams and the strategy that they put together for that JV, that JV is thirty five years old. There's been a lot of experience there. They're tailored and designed China for China as far as support the local market. They've got an effective product portfolio heavily weighted towards half shafts, but also supporting outflow drive and electrification and e powertrain components for that market, which is what's in demand. They've got a competitive cost structure and a supportive management team that is growing both with the domestic Chinese manufacturers or OEMs as well as with the international or Western OEMs that are doing business in China. Speaker 200:38:27So credit to those two organizations. We had nothing to do with that. However, what we want to do is make sure that we not only maintain the relationship, but build on that relationship, especially as our product portfolio expands as a combined business. And then we'll look to bring other operational excellence and support to that joint venture going forward. But don't mess with something as you said is performing very well. Speaker 200:38:54So we just got to meet that management team that's over there and that new partner going forward. And appropriate meetings will take place first and foremost between DAOLE and their existing partner. And then we'll follow-up with the appropriate meetings with myself and others to meet their leadership team and position ourselves and talk about what the future holds. Operator00:39:19And our next question comes from Doug Carson of Bank of America. Please go ahead. Speaker 700:39:31Yes, I'm kind of excited about the scale getting bigger. In my career, I think reading agencies kind of like bigger auto suppliers, which help give you some mass relative to the market pressures. And you're actually emerging with a company that had lower leverage than AAM. And the combined entity, I think, out of the gate, you said to be about 2.5 turns of leverage. I think you made some comments that maybe going forward, you'll be able to harvest some of the cash flow to get back to equity rather than the delevering that we've seen in the last few years. Speaker 700:40:11So one way to just kind of explore that a little bit and then separately, I know the agency has kind of commented, but do you think longer term you could safely get the combined entity more into the mid BB range rather than the BB range for ratings given the scale almost double? Speaker 300:40:35Yes, Doug, a few questions in there. This is Chris. I'll take a crack at a few of those. First of all, we agree with your enthusiasm about the size and scale. But as it relates to delevering, if you listen to some of our comments, we talked about at 2.5 times, we would open up to some additional capital allocation priorities. Speaker 300:40:57But before that happens, we will continue to reduce and strengthen our balance sheet down into the 2.5 times. So we'll continue to prioritize the organic growth. We'll continue to prioritize debt repayment and drive a stronger and stronger balance sheet through that process. So I think that's a key point to keep in mind. And then we would have a balanced portfolio or balanced capital allocation going forward, which would still include an element of debt reduction as well. Speaker 300:41:21It wouldn't be solely over week one versus the other. Speaker 700:41:24Right. Speaker 300:41:26But longer term, obviously, driving higher ratings is critical to cost of capital. But so we're focused on the elements of those whether the agencies rerate us or not, that's up to them. But we're focused on strengthening the balance sheet, reducing our leverage, the size and scale, free cash flow to debt ratios, things of that nature, elements of our business that are good for the business will ultimately drive to a stronger company and hopefully will reflect in the ratings over time. Speaker 700:41:55That's helpful. And then maybe as a quick follow-up, there's obviously lots of headlines around tariffs and steel prices, and I know that you've got some pretty good pass through capabilities in steel. Can you just kind of refresh us on how you're looking at some of those commodity risks out there in the market broadly? Speaker 200:42:14Yes, Doug, this is David. I'll take the first shot at it and Chris can comment on it. But I think you know and others know and we've been very forthright that our longest standing policy has been to buy and build local in the regions that we support and that we serve and that's proved very effective to us in mitigating tariff risk that we're experiencing in the past, but also potentially experience here in the future. We'll obviously look to mitigate any other impact that may happen once they get announced in regards to what's going on between The U. S. Speaker 200:42:46With Canada and Mexico, and we'll see where that goes in March. With respect to steel and the aluminum side right now, we have very minimal exposure as our U. S. Steel and our aluminum is sourced here locally. So we feel very good about where we are that way. Speaker 200:43:05We just got to understand what the details are going to be with respect to the tariff strategy or policies between The U. S, Mexico and Canada, as well as any other countries that may be involved in a longer term. But the overall, like I said, our strategy is to buy and build local and that benefits us when you have tariff issues or trade war issues that are taking place. So Chris, any other comments Speaker 300:43:29at all? Yes. And you referred to some of the pass through mechanisms. If this activity brings more volatility to the input costs, not tariff related, but that are driving the commodity costs that go into our product, as you know, we pass around 80% plus up and down to the customer by contract on this. So we are insulated and protected from some of that side, not tariffs, but the market inputs that impact our purchases through our supply base. Speaker 300:43:55So that's a nice protection mechanism for the company. Speaker 700:43:58Yes, that is good. Well, thanks guys. That's it from me. Speaker 200:44:02Yes. Thanks Doug. Appreciate it. Operator00:44:07Thank you. And gentlemen, your last question today comes from Dan Levy with Barclays. Please go ahead. Speaker 600:44:14Hi, Josh on for Dan today. Thanks for taking my question. I had a question on just backlog and bidding dynamics. I know you've said in the past couple of quarters that there's a bit of air pocket while the OEMs consider the EV plans. And I saw today that there's an extension on the Ford program, which I guess would not be included in backlog. Speaker 600:44:30Just wanted to see how exactly things are going with bidding and if you're seeing a greater ICE extension interest right now? Speaker 200:44:37Yes. So this is David and I'll let Chris talk from there. As we've said all along with the OEMs reevaluating their product portfolios right now, it is creating a bit of an air pocket in regards to some of the sourcing here in the initial years, meaning that let's say over the next three years. But at the same time, we've been very forthright in regards to what our backlog has been over the last three years and there's not a meaningful change there for '20 '5, slightly lower just based on some of the re timing and re volumes of some of the programs that the customers put forward. I think the most important thing for us and the big swing that we're seeing right now is that we're still actively quoting about $1,500,000,000 of new and incremental opportunities. Speaker 200:45:24And again, our backlog is only new and incremental. We don't count any replacement business in that. But on that new and incremental business that we're quoting, in the past couple of years, that was heavily weighted towards electrification, like 75% to 80%. Today, that has swung the other way, where we still have some electrification in it, but it's more heavily weighted towards ICE and hybrid applications going forward. So what we're very excited about is the fact that, one, we've got our next generation business essentially and substantially secured, which I covered in my earlier remarks. Speaker 200:46:03Two, we're actively quoting on $1,500,000,000 of new and incremental business. And it's right in our wheelhouse of our ICE and hybrid business today. But at the same time, three, we have already have an existing portfolio and that portfolio will expand with Vale that better positions us with the powertrain agnostic portfolio to quote on more electrification requirements as they evolve based in the different markets globally around the world. And then we'll also be able to leverage the global footprint of the two organizations to better position ourselves from a cost effectiveness standpoint so that we improve our hit rate of trying to win that new business going forward. But overall, we feel good about the market basket of opportunities. Speaker 200:46:51There is an air pocket going through the industry, not only for AM, but many suppliers. But most importantly, a lot of the programs are being extended, which is a positive because that allows us to continue to drive operational efficiency and financial performance, which we delivered in 'twenty four and we're positioned to deliver as a standalone company in 'twenty five. '5. And obviously, we've conveyed what we think the synergies are and the incremental opportunities when we bring Dolly and American Axle together. Speaker 600:47:26As a quick follow-up on that, of the R and D decline year over year, would you say a lot of that is within EV spending given the slowdown? And assuming there's an uptick in hybrid over the next couple of years, would that require any incremental spending beyond your current IS and ED portfolio? Or is that kind of already included in what you already have? Speaker 300:47:46Yes, I would say, Ingest, this is Chris. The R and D decline is to align really with current market requirements, demands of our customers. Part of our elevated spend over the past year or two has been to build out our eDrive portfolio, which we now have in place. It's gained a lot of traction in China and other markets as well. So that's sort of done and behind us. Speaker 300:48:09So we can now start to reap the cost benefits of sort of repositioning with the current market dynamics and harvest those savings this year and we would expect going forward. The nice thing about the hybrid applications for us in many cases uses the exact same product as our ICE vehicle products. So there's not a lot of R and D associated with that. So that's a perfect alignment of some of that powertrain applications between ICE and a hybrid perspective.Read morePowered by