Jake Slagle

Jake Slagle, on behalf of James Picariello from BNP, inquired about the pathway to achieving the previously targeted $600 million in free cash flow, given that the 2026 adjusted free cash flow guidance (excluding acquisition costs) is only up about $70 million versus standalone American Axle in 2025. He also asked how Dowlais's equity income would be accounted for in Dauch Corporation's P&L.

Answer

Chris May, EVP and CFO, outlined several drivers for future cash flow growth beyond 2026, including an additional $250 million+ in synergies, declining interest expense, moderating CapEx (currently at the higher end of 4-5% due to launches), potential income tax opportunities, working capital optimization, and a significant step-down in restructuring costs into 2027. Regarding Dowlais's equity income, May stated it would be reported as equity income within Dauch Corporation's P&L and included in Adjusted EBITDA, estimating it to be in the range of $65 million-$75 million for their 50% share.

Jake Slagle asked for a detailed explanation of how Dauch Corporation plans to achieve its targeted $600 million in free cash flow, starting from the 2026 adjusted free cash flow midpoint (excluding acquisition costs). He also sought clarification on how Dowlais's equity income would be accounted for in the company's P&L.

Answer

Chris May, EVP and CFO, outlined several drivers for future cash flow growth beyond 2026, including an additional $250+ million in synergies, a decline in interest expense, moderation of capital expenditures (currently at the higher end of the 4-5% range), potential income tax optimization, and working capital improvements. He also highlighted a significant reduction in restructuring costs into 2027. Regarding Dowlais's equity income, Mr. May stated it would be reported as equity income within the P&L and included in Adjusted EBITDA, estimating it to be in the range of $65 million-$75 million for Dauch's 50% share.