Hey, thanks, Rocco. Thank you, and good morning, everyone.

I'd like to welcome everyone who is joining us on DOWC Corporation's first quarter earnings call. Now, earlier this morning, we released our first quarter of 2026 earnings announcement.

You can access this announcement on the Investor Relations page of our website, www.dowc.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.

A replay of this call will be available through May 15th. Now, before we begin, I'd like to remind everyone that the matters discussed in 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. Also, during this call, we may refer to certain non-GAAP financial measures.

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. With that, let me turn things over to our Chairman and CEO, David Dauch.

Thank you, David, and good morning, everyone. Thank you for joining us today to discuss DOWC's financial results for the first quarter of 2026.

Joining me on the call today is Chris May, Executive Vice President and Chief Financial Officer. This quarter marks the first time our results include the Dowlais acquisition, and I'm very pleased with the performance as we begin to capture integration synergies and leverage our combined operational strengths.

The acquisition has met our expectations with the product portfolio, with customers, and very importantly, the strong personnel that came with the acquisition. The transaction brings together two great companies with size, scale, and compelling industrial logic, positioning us for long-term success.

In addition, we have had constructive discussions with our major customers about the acquisition, and feedback continues to be very positive as they appreciate our focus on quality, technology leadership, operational excellence, launch readiness, as well as continuity of supply. We are excited about the strong value and long-term strategic benefits of this transformational transaction.

As for today's agenda, I'll review the highlights of our first quarter financial performance. Next, I'll touch on some business updates, commentary on the industry, and our synergy progress, as well as an update on our guidance.

I'll then turn the call over to Chris to cover the details of our financial results, after which we will open up the call for any questions that you all may have. Let's begin with some of the details.

The company's first quarter 2026 sales were $2.4 billion, and adjusted earnings per share was 34 cents, and adjusted free cash flow was a use of $41 million. First quarter North American production was down approximately 2%, Europe was down approximately 1%, and global production was down approximately 3%.

However, our legacy sales were flat on the quarter, but on a pro forma combined sales, we were up slightly. Specifically, we experienced a mix effect on GM's heavy-duty large truck production, which was down early in the quarter as they prepare for the next model year launch, whereas GM's light-duty trucks were strong.

In general, days supply of inventory with GM large trucks appeared to be at their expected levels, and SUVs appear to be on the lighter side. The Ram heavy-duty continues to enjoy year-over-year favorable comparisons, which is positive.

In addition, we saw nice strength in both BMW and Volkswagen CUV platforms here in North America. From a profitability perspective, our adjusted EBITDA in the first quarter was $309 million, or 13% of sales.

Our results were supported by favorable mix on a number of key platforms and a solid Dowlais contribution. As always, our continued focus on operational efficiency contributed to our margin performance during the quarter.

So 2026 is off to a good start. Chris will provide more details about our overall financial performance during his prepared remarks.

Let me now talk about some business updates, which you can see on slide four of our presentation deck. In the quarter, the company received approximately $21 million in net proceeds from the completion of a sale of a Dowlais cylinder liner business.

We will continue to assess and optimize our current product portfolio to align with our core business, enhance our growth prospects, and our long-term profitability. We also want to highlight our recent award from Chery Jetour to supply PTUs and RDMs on a derivative model that we already support.

The start of production is scheduled for later this year and will run beyond the 2030 timeframe. We continue to see positive momentum on this platform as the SUV product is resonating very well with Chinese consumers.

In addition, we have been awarded a business extension for a major truck platform in Brazil with a lifetime revenue of over $750 million, which is scheduled to launch later this decade. Additionally, we received contract extension awards with multiple customers, and as OEMs evaluate their respective long-range product plans, business extensions have become a theme in the industry.

We also earned numerous side-shaft business wins, including replacement and new business with six different global OEMs. Furthermore, our metal forming business unit continues to realize wins across multiple product families, from our forging to our powder metallurgy, in part due to benefits from both onshoring and reshoring efforts to the US.

Our strategy to become a leading global driveline and metal forming supplier is unfolding as expected. Next, on slide five, I'd like to provide an update on our acquisition synergies and value capture.

After approximately three months into operating as a combined company, we have already realized $35 million of run-rate savings to date, representing excellent progress. We are benefiting from the pre-work that was completed before the deal closed.

Out of the gate, we mainly attacked overlapping corporate, SG&A, and some procurement costs. While there is much work ahead of us, we have a strong team in place and are encouraged by our momentum and the progress to date to achieve our year-end target run-rate savings of greater than $100 million.

As we have previously communicated, we expect to deliver $180 million in run-rate savings by the end of year two and the full $300 million in run-rate savings by the end of year three. Now let's talk about the industry.

Currently, global geopolitical risks remain an overhang on our industry, especially the Iran conflict, which is driving elevated oil, energy, and gas prices. However, in the first quarter, we did not see a significant impact on our operations or customer schedules.

That stated, over the long term, elevated fuel prices could impact us through higher energy, logistic, and transportation expenses, as well as certain petroleum-based input costs such as lubricants. Clearly, we are closely monitoring these developments and will look to mitigate any impact over time.

In the near term, our customer schedules remain stable and consumers appear to be resilient. As always, we will remain focused on the matters that we can control and will proactively make necessary adjustments to market fluctuations.

Now let's talk about our full-year guidance. We've revised our outlook by raising our sales and adjusted EBITDA, reflecting a combination of factors, including our strong first quarter performance while balancing the macro risks that I just mentioned.

The company is now targeting sales of $10.3 to $10.8 billion, adjusted EBITDA range of approximately $1.3 to $1.425 billion, and adjusted free cash flow of approximately $235 to $325 million. Our guidance ranges are underpinned by the following production assumptions: North America production at 15 million units, Europe at approximately 16.7 million units, China at 32.3 million units, and overall global production at 91.4 million units.

As we use multiple data sources to derive our outlook, including forecasts for certain programs that are significant to our performance. We also note GM is transitioning to its next-generation full-size truck program and appears to be bullish on overall volumes, as demonstrated by the planned opening of their Lake Orion assembly plant.

In summary, we had a good first quarter. The integration of Dowlais is off to a strong start, our synergy achievement is on track, we raised our guidance, although we are monitoring geopolitical and macro trends, and we're excited about our future and we are built to perform.

Now let me turn the call over to our Executive Vice President and Chief Financial Officer, Chris May, for the first quarter financial details. Chris?

Thank you, David, and good morning, everyone. I will cover the financial details of our first quarter 2026 results and our updated guidance with you today.

I will also refer to the earnings slide deck as part of my prepared comments. Before I begin the financial discussion, I wanted to provide a few housekeeping items for you all.

We've included several reference items in the appendix of our earnings deck. First, we included the full-year 2025 and LTM first quarter 2026 pro forma financial metrics for our newly combined company.

We have also provided some supplemental walks and data points related to that information. Also, we have updated our definition of adjusted EBITDA and adjusted earnings per share to better reflect our new company's operating performance in geographically diverse business.

These changes were also based on feedback from various stakeholders. The definitions include updates to adjust for the amortization of acquisition-related intangible assets, certain financial instruments assumed from Dowlais as part of the acquisition, and one-time purchase accounting items, all of which are non-cash and non-operational in nature.

In the appendix, we provided a comparison to our prior disclosures for comparability purposes. As it relates to adjusted EBITDA, there is almost no change to prior amounts.

None of these updates have an impact on our guidance or previous planning for our Dowlais acquisition. With that said, let's begin.

In the first quarter of 2026, our sales were $2.38 billion, compared to $1.41 billion in the first quarter of 2025. Slide seven shows a walk of first quarter 2025 sales to first quarter 2026 sales.

For legacy DOWC, volume, mix, and other was lower by $9 million, or relatively flat. While our primary North American market had overall lower volumes of 2%, our full-size truck products were higher and offset most declines in other vehicle types.

The divestiture of our India commercial vehicle axle business had a $35 million impact in the quarter, and metal market pass-throughs and FX increased sales by approximately $44 million. About two-thirds of this related to FX and was primarily driven by the strength in Europe.

Dowlais contributed $983 million in gross sales for the first quarter, and that figure reflects only February and March activity, as we closed the transaction on February 3rd. On a year-over-year basis, the Dowlais portion of our business experienced the same trends as it relates to sales.

The details are noted on our slide. Now let's move on to adjusted EBITDA.

For the first quarter of 2026, adjusted EBITDA was $308.5 million and adjusted EBITDA margin was 13%, versus $177.7 million and 12.6% last year. You can see the year-over-year walk-down of adjusted EBITDA on slide eight.

In the quarter, adjusted EBITDA for legacy DOWC was higher due to favorable mix and volume, continued performance, and net favorable metal markets and FX. We continue to be excited by our positive performance trends that we've experienced in our business over the last several quarters.

Dowlais contributed approximately $122 million in the adjusted EBITDA for the quarter. Similar to sales, on a year-over-year basis, the Dowlais portion of our business experienced the same trends as it relates to adjusted EBITDA, and those details are also noted on our slide.

In the first quarter, we realized $5 million in synergy benefits. As David highlighted, we achieved a $35 million run-rate as of today, and we expect this to continue to grow.

We have a nice market basket of potential savings that we continue to drive to completion, and have a visible path to the targeted $100 million-plus of run-rate synergy savings by year-end. Most importantly, our synergy realization journey has only just begun.

Let's move on to interest and taxes. Net interest expense was $77.5 million in the first quarter of 2026, compared to $37.3 million in the first quarter of 2025.

The increase in interest expense year-over-year primarily reflects the issuance of new and assumed debt in connection with the combination. The weighted average interest rate of our outstanding long-term debt was approximately 7% at the end of the quarter.

We have now replaced all of Dowlais's acquired debt, with the exception of $349 million of the US private placement notes. These remaining notes have a good maturity profile, with the furthest maturity in 2036, and fit into our overall capital structure quite nicely.

With these notes remaining in place, we've begun to redeem and extinguish a portion of our 2028 senior notes in the second quarter. This action will provide additional runway, with minimal debt maturities now through 2029.

As for taxes, in the first quarter of 2026, we recorded an income tax benefit of $20 million, compared to an expense of $14 million in the first quarter of 2025. This includes a benefit for a valuation allowance release of approximately $20 million in a non-US jurisdiction.

Due to all the acquisition-related activity this year, our taxes and impacts are quite involved in 2026. However, once you remove all that activity, we expect our adjusted effective tax rate to be approximately 35%.

This somewhat elevated rate in '26 is due to valuation allowances and partial interest deduction limitations in the US. As for cash taxes, we expect approximately $160 to $170 million this year.

Taking all these sales and cost drivers into account, our GAAP net loss was $100 million, or a loss of 52 cents per share in the first quarter of 2026, compared to a net income of $7.1 million, or 6 cents per share in the first quarter of 2025. Earnings per share, which excludes the impact of items noted in our earnings press release, was 34 cents per share in the first quarter 2026, compared to earnings per share of 22 cents in the first quarter of 2025.

Let's now move on to cash flow and the balance sheet. Net cash used in operating activities for the first quarter 2026 was $64.4 million, compared to net cash provided by operating activities of $55.9 million in the first quarter 2025, driven by working capital timing and cash payments for restructuring and acquisitions.

Capital expenditures, net of the proceeds from the sale of property, plant, and equipment for the first quarter 2026, were $102.7 million. Reflecting the impact of these activities, our adjusted free cash flow was a seasonal use of $40.8 million in the first quarter 2026, as compared to a use of $3.9 million in the first quarter 2025.

From a debt leverage perspective, we ended the quarter with net debt of approximately $4.1 billion and a net leverage ratio of 2.7 times at March 31st, 2026. In the near term, we continue to focus on reducing our outstanding debt and strengthening our balance sheet.

As you will recall, a sustained 2.5 times or below net leverage mark, we will consider additional capital allocation avenues, including returning capital to shareholders. We ended the quarter with total available liquidity of approximately $2.6 billion, consisting of available cash and borrowing capacity on our global credit facilities.

Now let's talk about our updated financial guidance on slide six. Our updated targets are as follows: For sales, our new range is $10.3 to $10.5 billion, versus $10.3 to $10.7 billion previously.

This new sales target is based upon current global production assumptions and also certain assumptions for our key programs. For example, we continue to anticipate GM's full-size truck and pickup and SUV production in the range of 1.3 to 1.4 million units this year.

From an EBITDA perspective, we anticipate a range of $1.3 to $1.425 billion, versus $1.3 to $1.4 billion previously. However, if we included the Dowlais results for a full year, or in other words, pro forma as if we owned them since January 1st of this year, our range would be approaching the $1.4 to $1.5 billion range.

Included in our adjusted EBITDA is the proportionate share of income from our joint venture in China with HASCO, called SDS. We expect our JV share, which is already included in adjusted EBITDA, to be in the range of $65 to $75 million this year, and this is unchanged from our previous guidance.

Overall, we increased the top end of our range, but maintained our low end. Our new range was driven by our solid first quarter performance and potential for continued good truck production.

However, our overall guidance is mitigated some by potential increase in costs, in particular related to fuel and energy prices that we are starting to experience, driven by macro world events and whose path through the rest of the year is still uncertain. We continue to anticipate adjusted free cash flow in the range of $235 to $325 million.

While we do not provide quarterly guidance, here are some thoughts around the second quarter. Our schedules appear okay, with no major changes at this point.

However, we are experiencing some additional costs related to energy, and we would expect some tariff recovery timing spread throughout the year, similar to our experiences last year. Our CapEx assumption is unchanged at 4.5% to 5% of sales as we ready the organization for important upcoming launches, especially for one of our major truck programs.

Lastly, for our quarters going forward, we would expect a fully diluted share count of approximately 245 million shares. We remain focused on a strong integration between legacy DOWC and Dowlais, realizing synergies, strengthening the balance sheet, and navigating geopolitical and industry uncertainty.

As we progress further into 2026, 2027 comes into view and the very exciting potential ahead of us. We are building around the benefits of our synergy activity, focusing on delivering cash performance opportunities by not only converting on our profitability, but also reducing acquisition costs, reducing restructuring costs, driving interest lower, and optimizing working capital.

Thank you for your time and participation on the call today. I am going to stop here and turn the call back over to David so we can start the Q&A.

David?

Operator, can you go ahead and start the Q&A, please?

Thanks. Good morning, everyone.

Maybe just a quick clarification, Chris, on some of the I guess definitional changes. One, to clarify, the definition of EBITDA to include minority interest when you gave EBITDA guidance last time, that was already in that assumption, even if it wasn't maybe explicitly called out.

Then two, with this definitional change, and I understand those are non-cash items that you're backing out and I don't think they were in anyone's models, I think it doesn't really matter for comparability this quarter. Just to be clear, is that change the reason why the high end of the range went up and you're not forecasting further changes on those non-cash adjustments going forward?

No, we're not forecasting any changes on those non-cash items going forward. Obviously, if you look at some of these, Joe, you'll find some of them relate to initial purchase price accounting, such as our inventory item or our intangible asset amortizations with our joint venture, or overall intangible asset amortization.

Then a couple relate, I would say, more on technical accounting matters for FX and mark-to-market on some acquired debt and derivatives. None have anything to do with the operations of the company, and none had no influence on the change of our guidance.

Okay. Then equity income, when you initially gave that 1.3 to 1.4, that was already inclusive of that China JV equity income?

Correct. That's correct.

Okay. Then, David, maybe just great to hear you're off to a good start on the synergies.

Now that you've actually owned this business here for at least a couple months, was wondering if you could sort of give us just a little bit more color on sort of what's going well, what's maybe going a little bit faster, or where you see some additional challenges. Then as you sort of dive deeper in, a level of comfort you have with those targets, and maybe even if you're starting to sort of search for additional levers to pull here on the cost side.

Joe. I'll say we acquired some outstanding talent from Dowlais GKN at various levels, from senior management leadership all the way down to the plant floor.

I've been very pleased in regards to how our teams have assimilated together and are working together as we try to bring, as I said, two strong companies together with independent cultures, but we're trying to blend into one culture going forward, and that's going exceedingly well. I've been very pleased as I've got out now with our senior leadership team to visit a number of the factories here.

There's a good engineering aptitude, strong manufacturing and operational aptitude there as well, and a focus on safety and quality, which, as are critical and paramount historically to the DOWC Corporation. That's been positive.

There have been some areas where maybe some capital investment or some other things made have been neglected a little bit at some of the facilities when it comes to just general stores and just facility maintenance and all, but nothing that's material or extraordinary that we can't deal with and address over a period of time. I'm pleased with that.

I think we've made great progress in regards to addressing the corporate costs right up front. Chris led that workstream for us, along with Roberto Fioroni on the GKN side.

That's gone well. SG&A, as I said, is going well, and we made really good progress in regards to our run rate for this year, and we'll continue to grow that as we go forward.

I'd say, with the economic conditions in the marketplace right now, especially with the Iran war conflict, we're keeping a watchful eye on some of the purchasing activity. At the same time, we got multiple years to address that, but I think there's some initial challenges here in the first year just because of what's taking place.

Don't read too deep into that, because I still think that we can confidently deliver that number. Then from an operational performance standpoint, again, we're still getting around to the 100-plus facilities that we took over.

We're very encouraged with the opportunities that exist there and are hopeful that there's incremental opportunities going forward. Hopefully that addresses your question.

Overall, I'm very pleased with the acquisition, the integration, the planning that went into that integration, but also our first quarter start here.

Great. Thanks.

I'll pass it on. Thank you.

Yeah. Thank you.

Hi, thanks for taking my questions here and congrats on a strong quarter. I just wanted to walk through the guide a little bit more, particularly on the top line, and so you took the sales guide up a bit.

You actually took the global production forecasts down. Can you sort of walk through what allowed you to do that?

Are you actually seeing better than expected production on some of your key platforms, even though the global production environment maybe is a bit softer? Thanks.

Good morning, Alex. This is Chris.

I'll take that. We took the top end a little bit.

We saw inside the first quarter obviously some strength on the light-duty truck, full-size truck here in North America, and some other platforms that we supply a lot of side-shafts into. A nice positive start to the year from a volume perspective.

Our overall macro assumption versus our last guidance, North America relatively flat, Europe down just a tick, but I would say holistically, some beneficial mix played into our thought process at the higher end of that range, as well as a little bit of benefit from FX translations. The euro has strengthened a little bit, as well as some other currencies, but primarily, just a nice benefit of some mix that we've seen at the higher end of the range.

Perfect. Really helpful.

Then I just wanted to walk through, you called out additional energy costs. Could you maybe just walk us through exactly what you're seeing there?

Then just on the overall commodity exposure there, is there anything that we should be paying attention to? It doesn't seem, as of right now, like a significant impact for the year, but just remind us on some of the commodity exposure.

Thanks.

I'll start with the commodity question, then we can talk a little bit about what we're seeing in the macro from I'll call it near-term inflation pressure related to macro events. From a commodity perspective, you may recall many of our commodity-based costs, we have direct pass-throughs to our customer for which we retain pass-through about 90%, 80% to 90% of those costs.

Key commodities that we would track in that bucket would things such as aluminum, scrap steel, nickel, moly, and a whole host of other variety of products. I would say they surprisingly have been relatively stable.

We've seen some small upticks in those I would say over the last month. Again, those are pass-through and generally protected.

When they do go up, you carry a little bit of a residual negative; when they go down, you get a little bit of a residual benefit. Those are the primary from a commodity standpoint.

Then in terms of some of the macro inflation, primarily due to the Iran conflict, we have seen some elevated energy prices. We have seen some elevated fuel prices.

Those translate into things such as fuel surcharges for logistics, etc. I would say inside of the second quarter, we'd be pacing towards, I call it, $5 to $10 million impact associated with that.

We'll see how this plays out for the balance of the year, still quite uncertain at this point in time, as you know.

Perfect. That's incredibly helpful.

Best of luck going forward. Thanks.

Thanks for taking the question. Chris, this one's for you.

On slide 15, thank you for whoever put this together. I know looks like a lot of work went into this.

On that slide 15, if I just take the LTM EBITDA, the 1573, and I do all adjustments, the one-time commercial settlements, business that were sold, take out the Q1 synergies, January Dowlais contribution, and then I compare it to your guide for '26, take out the synergy, it looks like there's a slight downshift, implied by the guidance at the midpoint at least. I'm just wondering if there is a downshift in '26 versus '25 contemplated, or perhaps the guidance may be a tad conservative, or maybe I'm just splitting hairs?

No, I think it sounds like the analysis that you have done pretty quickly here this morning, taking a look at this data is pretty close accurate. In terms of you have to remove the Dowlais January,

we do have to remove

the commercial items, those also impact revenues and profit when you take out the commercial settlement items as well as the businesses that were sold. If you sort of kind of adjust for those items, you would then find you would need to gross that up obviously for our synergy capture opportunity here inside of our guide.

We've said $50 to $75 million, midpoint 62. Holistically, if you think in this LTM period to our, call it, '26 year, at the macro, our volumes are down almost 2%, right?

North America is down almost 2%, Europe is down 2%. Now this gets into mix and different things we'll experience each quarter.

That's a main driver of that. That would translate at a 25% to 30% contribution margin in terms of that variance.

That's your main driver. Then if you peel that out, you'll find we actually have positive performance embedded inside of that.

Got it. That helps.

That's taking you to the midpoint, of course,

so. It's just a slight downshift.

It's not much. Then the second one, this has been a hot topic with this past earnings season is Chinese domestic OEM capture in order books.

I know you have what you've disclosed so far from last quarter, etc. Just would love to hear, especially on the Dowlais side, how you're doing in terms of acquisition on the Chinese domestics.

Thanks.

Tom, this is David. As Dowlais GKN enjoyed a very strong relationship with HASCO, and they have a JV called SDS, which is now ours.

That business does a tremendous job with both the domestic as well as Western OEMs, but it's really shifted a lot of its business to the domestic Chinese OEMs. They've been able to not only protect their business, but grow their business.

As that volume increases both in China, within that company as well as their export initiatives into Europe and Southeast Asia and Latin and South America, they're positioned and poised to benefit from that. We're already starting to see some of that.

At the same time, historical DOWC had our own wholly in China that had done a similar thing as we picked up a lot of domestic Chinese business. We referenced again today the expanded relationship with Chery Jetour in regards to an incremental derivative program off of something we're already supporting.

Again, we continue to see plenty of opportunities with the Chinese OEMs, and we're winning our fair share of business with them as they expand their capability on a global scale. So.

Got it. Thanks a lot.

Turn it over.

Yeah. Thank you.

Thanks, Tom. Thank you.

James, are you there?

Sorry about that. Talking to myself on mute.

Good morning, guys. Thanks for taking my questions.

If we look at the walks for the quarter, it seems like Dowlais was pretty material contributor to strong profitability, even more so than I would say legacy DOWC, if my reading's right. Is there something in there in its mix or programs that helped drive that results?

Performance and other was pretty strong as well. Any color that you can provide there would be great.

Thank you.

We look at the year-over-year walks, you can see the sales and walks on seven and eight. The legacy DOWC performance was 12.9% margins, and the legacy Dowlais extra plot was 12.4% margin.

I'd say both sides of the equation contributed quite equally with a little bit larger on the DOWC side. Then your margin ticked up with some of the synergy flow-through.

Our view is both businesses had positive performance in the quarter on a year-over-year basis. Both had a nice mix from a revenue perspective, and obviously the contribution from the synergy piece helped the overall company.

Great. That's helpful.

Thank you. Then looking out at the rest of the year, it looks like GM's added another shift for its T1 heavy-duty, I think later this year, starting at the Flint assembly, even though it's setting up for the new model.

Does the new guide anticipate some benefits from that, or would that be incremental on top of what you might already have in there?

Our guidance as it relates to the full-size truck program for GM is 1.3 to 1.4 million units. Any planned announcements or schedule adjustments that they have articulated that have been provided to us have been included inside of that guidance range already.

Okay. Great.

Thank you very much, guys.

Thank you.

Great. Thanks.

Good morning, everybody, and congrats on the quarter. Just hoping to kind of follow up on prior questions, if we could just do a little bit of a walk from the kind of Q1 margin of 13.3% pro forma to kind of what's implied the rest of the year.

It sounds like there's some incremental commodity freight baked in there, but also some acceleration in synergies. Just hoping we could kind of go through some of the puts and takes there.

I think your puts and takes is moving into the second quarter, or are we thinking about the full year, Itay?

Which was your It's the full year, kind of what's implied from the Q2 to Q4 margin based on the latest guidance.

Yeah. Some of the puts and takes, as we think about it from here, obviously, we'll transition in at the rest of the year, call it a full month of Dowlais results, right, that would come in at sort of their blended rate at a full cost basis at 12%, 12.5% range, so that will start to weather itself in.

I would expect to have synergy step up through the course of the year as we transition and continue to put in the bag continued success on our synergy transition to get to that $50 to $75 million run rate by the end of the year. As I mentioned on one of the previous questions, we do see a little bit of drag as it relates to inflation, in particular in the second quarter, on fuel and some of those type of related costs.

We'll see how those play out for the rest of the year. I would say that's plus or minus for Q3 and Q4, depending on how macro events unfold.

Then we have some core performance inside of our company as well. As we transition through the year, we've seen nice traction on our metal forming side of the business from a margin perspective.

Some of the challenges that we've articulated in the legacy DOWC plants over the last couple of years, we're seeing some positive trends from that perspective as well. Those are some of the pieces, as I think on a go-forward basis.

Then you have tariff, plus or minus, as we go through the year, timing of when we bill or collect, etc. That can change quarter to quarter.

Great. That's helpful.

Thanks, Chris. Then just as a follow-up, I know it's still early since the closing of the deal, but any observations from customer conversations, sourcing opportunities, and kind of how those have gone the last few months?

Itay, this is David. Great question.

We've had nothing but cooperative, successful, and positive communication from the customer. They obviously historically know our performance from a historical DOWC standpoint.

At the same time, Dowlais GKN had good performance as well. We're maintaining that good performance.

That was a priority to us is to protect continuity of supply and the quality and product integrity going into our customers. They're actually pleased in the fact that we'll have more size and scale to help weather the challenges that exist in the marketplace today.

Clearly, there's a lot of distressed suppliers that are in the marketplace and have been since COVID. I think that's only going to amp up as we go forward.

The communication and the feedback from the customers has been very positive. Obviously, we're going to look to continue to maintain those strong relationships that we have and look to try to expand from a cross-selling capability to those loyal and valued customers.

Terrific. That's all very helpful.

Thank you.

Yeah. Thanks, Itay.

Hey, guys. Pro forma net leverage finished at about 2.65 times, and just based on my math and the guide, it sounds like it'll finish the year around 2.

2.8 or so. How should we think about the timeline to get to the targeted 2.5?

Thank you.

Yeah. Understand your math.

We'll probably be somewhat level or so through the course of this year based on our guide. If you think about some of the points we've articulated previously as it relates to our leverage, really one of the main drivers of delevering the company, of course, will be our operational performance through the achievement of our synergies.

As we transition into next year, and we take in the next leg going from the $100 million run rate up to $180 million run rate, obviously, that will drive both profitability and cash flow. Sort of taking down the net debt, if you will, and also driving EBITDA up through that transition period, we'll then start to see some traction taking down our leverage even further from where we end the year.

That's kind of a timeline of how I would think about it.

All right. Thank you.

Then as we think about the next generation of GM's full-size truck platform, can you share if you guys expect to have the same participation rate as you do on the T1, and have there been any shifts in GM's in-sourcing mix, especially between light-duty and heavy-duty? Thank you.

This is David. With respect to the model changes that are taking place in the next-generation product with General Motors, obviously, we've secured that business.

We're in the process of getting ready to launch that business on a staggered cadence based on GM's program timing. Obviously, there's interesting engineering changes as they've addressed some horsepower, torque, and other requirements for the business that we've factored into our business.

That will impact favorably some of the content per vehicle and the overall margin performance. We've secured everything that we've had.

As they look to the next generation beyond that, which will be out in that mid-2030 period of time, our expectation would be to secure our replacement business and continue to try to demonstrate to GM that we are a valued and strategic partner to them. So.

Got it. For the next-generation program, you'll be on at least as many of the vehicles as you are on the current generation?

Absolutely.

Got it. Thank you.

Morning. This is Edison De Mello on for Nathan Jones.

Thanks for taking my questions. In the beginning of the presentation, you discussed the rationale for Dowlais's subsidiary you mentioned that you sold.

How does this optimize the portfolio? Maybe just trying to get a better picture of your priorities in terms of the overall portfolio.

Yeah.

This was something that we evaluated as part of the overall product assessments, and we continue to assess our product portfolio, and we do that consistently throughout the year. This was something that stood out to us that wasn't really a core program to us, and we had an interested buyer, and ultimately, we came to the appropriate commercial agreement on that to be able to sell that asset.

As Chris covered earlier, we also divested of our commercial vehicle business, which was a legacy DOWC business. Again, things have changed now that we've been able to acquire Dowlais.

Our portfolio is different. We're assessing what's core and what's non-core to our business today.

Those assets or businesses that we deem to be non-core, obviously, we'll try to sell it for the appropriate value. At the same time, we're not going to give anything away.

What we want to do is make sure we can pare our portfolio down to the critical products that show growth and also show profitability, and just strengthen the overall company and provide for that robust business model that we've communicated to you all. It was just a small step in regards to just assessing the portfolio.

I'm sure there'll be others that we'll evaluate, and anything that we do there, obviously, will continue to help us in regards to accelerating paying down our debt and strengthening our leverage situation.

Thank you for that. Appreciate the context.

Just something you mentioned earlier, I know you've mentioned the direct pass-through, 80%, 90% of the costs. Can you maybe talk about the lag to make recoveries?

Yes, it can be anywhere from a month to a quarter, depending on the customer. So 30 to 90 days.

Perfect. Thank you.

Appreciate that.

Yep.

Hi, good morning. Thanks for taking the questions.

Wanted to just go back on the commodity question here, and you talked about you have sort of a basket of commodities that you're getting direct pass-throughs on. Just can you give us a sense of today pro forma organization now how the inflation dynamics may be differ versus the prior AAM, and to what extent do you have increased costs that maybe now have to be recovered outside of formal pass-through mechanisms?

To what extent should we be thinking differently about things like energy costs, etc.?

Dan, this is Chris. I'll take that.

For our, I'll call it, more pure commodity-type costs you've heard us articulate for many years, bringing in the Dowlais side into the business in total, you'll find our view, I would say, very similar. Many of the same type of commodity inputs that we have, not really a lot of change from that perspective, either types of commodities or, call it, pass-through mechanisms.

Things such as when you sort of get outside of those core type of commodities like steel and scrap and nickel and aluminum and things that we talked about, like energy and stuff like that, I would say both sides also those aren't typically automatic pass-throughs. You have to have some discussion with the customers, and both sides of the legacy businesses had the same type of dynamics from that perspective.

Great. Then second question is on, you've outlined the cost synergies here.

You've talked about potential as well for revenue synergies. Just on the customer front, and I know you addressed sort of a while ago sort of the initial discussions with customers, but some of the customers where you've been underrepresented up until now, the Toyota, VW-type customers, just what the dialogue has been with some of these customers, and how much more there is opportunity to expand that relationship now that you have inroads into some of these different customers?

Great question. What I would say is this: our first conversations with the customers is just to inform them of the combination, to inform them of the capability, and also to make sure that we're protecting continuity of supply and not disrupting them.

As I said in my previous comments, that's gone very favorably. Many of the European and the Asian OEMs, although historical DOWC had had relationship with them, we will benefit greatly from the strength that Dowlais GKN has shared for decades with many of those customers.

It's still early in regards to the discussion phase, but our customers clearly want to better understand our full complements and capabilities. There'll be technology days that we'll share with each of these customers on a go-forward basis.

They clearly can see the benefits of an expanded portfolio, and they clearly see the performance capability that we collectively bring to the table. Just the general dialogue, without getting specific, has been positive in regards to potential consideration for cross-selling-type opportunities and new business growth opportunities.

I'll leave it at that.

Great. Thank you.

Yep. Thank you.

Thanks, Dan.

Hello. Thank you for taking my question, and congrats on the results.

Just to build on what's gone well and what hasn't, you've owned the Dowlais powder metallurgy business for a couple months now. It'd be really interesting to hear your thoughts on the kind of different strategic and diversification initiatives that it's been pursuing over the last few years, and if that's the direction you'll continue with, on kind of the auto and non-auto side.

Then secondly, just wanted to ask about the kind of EV commercial cancellation settlement payments. Is there any more of those to go over the next couple months, just given the hit that Dowlais's ePowertrain business took over the last couple years?

Thank you.

This is David. I'll take these questions.

Chris, you can chime in as you feel fit. Clearly, historical DOWC was in the powder metal business, and clearly, was Dowlais GKN.

By putting the two together, we have a very strong industry-leading powder metal capability that is also vertically integrated now with the supply of raw powder. As under Melrose, this business was really and even Dowlais was up under strategic review.

We clearly see this in our wheelhouse in regards to our metal forming business. We think there's opportunity to enhance its performance on a go-forward basis, and we're working on those initiatives right now.

Like any piece of business, we'll always keep optionality in our business, but we consider that a critical part of our strategic thesis, as we want to be this global leading driveline and metal forming supplier. There's a great strategic fit of our powder metal business with their powder metal business, although there's some rationalization that needs to be done, especially on footprint in North America.

We'll do that appropriately and time it appropriately, and make sure that we're not incurring too much cost that way. We also see tremendous growth opportunities with it.

It just hadn't received a lot of investment over the years from its previous owner. We're encouraged and excited.

We have a really good leadership team that's running the powder metal group, and then we're introducing some of the AAM operating systems into that business, which that we also think will bode favorably from a margin and cash generation performance over time. On the EV front, as we talked before, yeah, EV, there's different strategies, different approaches globally around the world.

We continue to see significant opportunities in regards to Asia, especially China, and we're mainly doing a lot of that through the JV that we have there. We'll continue to monitor Europe and see what happens there with regulatory and policy change, as we're seeing some of that take place right now, but we do expect extra growth there.

In North America, you see here what's happened with the regulatory and policy change where EV penetration was under 5% the last month, from a high of 10% or 11% earlier now that all the incentives are gone. We'll continue to make appropriate and balanced and selective investments in EV.

At the same time, there's some cancellation costs, many of which have been dealt with and addressed, but there's still some open issues that are out there with customers that we need to bring resolution to, to wrap up commitments that they made to us and we made, but unfortunately the market didn't materialize. Those are all ongoing commercial dialogues with us and our customers, but we hope to bring those to resolution this year and get that behind us completely.

Chris, I don't know if there's anything you want to add.

On the resolution front and any of those EV matters, as if you look at the results historically, Dowlais had a very strong year last year and kind of closing out a lot of their issues. We had a few small issues that we closed out last year.

Dowlais closed I think one of their last remnant ones from their side of the house in January of this year, which are not in our reported results. Going forward, as David mentioned, there's a few yet to wrap up, but I would say nothing of significance at this point in time.

Thank you. By the way, I appreciate that you broke out the payments in the presentation, just given some of your peers haven't, thanks.

Yep.

Thank you.

Good morning, guys. You raised the guidance at the high end, and I think you mentioned that part of the reason was because mix is better.

I was wondering why didn't you increase the guidance at the high end for the free cash flow? I would have assumed that that incremental business would have helped cash flow as well.

Great question, Federico. If you think we also raised the top end of our sales as well, obviously when you do that, you'll have some working capital used to finance a little bit of the higher end of the sales.

That would be your primary driver for holding the cash flow as is.

Got it. Thank you.

In terms of cadence for European results, how should we think about it going through the years, and is there any change from the historical seasonality of American Axle?

From a seasonality perspective, I would say our entire business combined, both legacy American Axle and legacy Dowlais, we operate in the same identical seasonal pattern with our customers, whether they're in Europe, late August, in North America, July and around the holiday time in December, which is also common in Europe. Very seasonality almost identical, production days per quarter almost identical on a seasonality perspective is how I would think about it.

As you think about the year, clearly, some of the key points we talked about in my prepared remarks, a little inflation pressure in Q2 for macro events, but our synergy will build through the year, right? That will come on in Q3 and Q4 to get that exit run rate.

Those would have some of the, I would say, operational elements. From a revenue perspective, and we got a lot of questions today about the GM full-size truck, we had some downtime in January for heavy-duty, as one of their larger end points, large facilities, Silao.

They'll go through their next-generation change, that'll impact, I'll call it mid-second half of the year as they finalize when they're going to take that facility down for a little bit. That is a primary end point for us as one of our customers as well.

Thank you, guys.

Yep. Thank you.

Hey, guys, thanks for slipping me in. I wanted to ask a little bit about kind of like the EPA changes.

We met with a big OEM this week and they were pretty happy with some of the EPA changes that perhaps are relaxing some limitations to like eight-cylinder gasolene engines, and they thought maybe it could perhaps help their mix for heavier pickup trucks and SUVs. Is that something that you're seeing in your kind of production forecasts, that that mix is happening elsewhere in North America?

Just trying to get a little smarter on that. It could be a big benefit to some of the OEM's price points.

Anything that the government's doing to relax regulatory and policy is clearly a benefit to the OEMs, especially the domestic OEMs, and then certainly a benefit to us as well, as we said before. As ICE is extended out and even hybridization, that's clearly a strong benefit to us as a company, and we've got an installed capacity and product portfolio that's already solidly in place.

As we alluded, our financial performance was impacted favorably in regards to the truck platform, on the light-duty GM, very strong, Ram heavy-duty, very strong, GM down in the first quarter as they're transitioning, but we expect to be very strong throughout the year. We're clearly seeing the benefits of that.

We're starting to see also some of the long-range product plan adjustments with the customers as some of those EPA adjustments and regulatory adjustments have been reduced. There's no doubt about it.

That's good. Good for the sector.

All right. Thanks so much.

That's it for me.

Yeah. Thanks, Doug.

Thanks, Doug. Now we want to thank all of you who have participated on this call and appreciate your interest in DOWC.

We certainly look forward to talking with you in the future. Thank you.