Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Phinia Third Quarter 2024 Earnings Call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] At this time, I would like to turn the conference over to Kellen Ferris, Vice President of Investor Relations. Please proceed.

Thank you. Good morning, everyone. We appreciate you joining us. Our conference call materials were issued this morning and are available on Phinia's Investor Relations website, including a slide deck we'll be referencing in our remarks. We are also broadcasting this call via webcast. Joining us today are Brady Ericson, CEO; and Chris Gropp, CFO. During this call, we will make forward-looking statements, which are based on management's current expectations and are subject to risks and uncertainties. Actual results may differ materially from these statements due to a variety of factors, including those described in our SEC filings. And with that, it's my pleasure to turn the call over to Brady.

Thank you, Kellen, and thank you to everyone for joining us this morning. I will start with some overall comments on some key accomplishments in the quarter and provide a brief discussion of our third quarter financial performance. Chris will provide additional detail in our financial review before we'll open up the call for questions. Our performance during the most recent quarter reflects the ongoing successful execution of our long-term strategy, the resilience of our business in challenging environments, and the strong operational performance of our team. This includes launching exciting new products, expanding our business in growing markets and developing partnerships in our Aftermarket segment. With respect to our P&L, I'm pleased to share another quarter of consistent results driven by the strength of our Aftermarket segment, which accounts for about 42% of our sales and the resiliency of our Fuel Systems segment. This led to another strong quarter of adjusted free cash flow. Finally, we strengthened our balance sheet by replacing high-cost debt with new unsecured long-term notes. We have exited all material contract manufacturing agreements or CMA with our former parent and have published our first sustainability report. Now moving on to the third quarter results, starting on Slide 4. Before I begin, one other note, this is the first time we are comparing standalone quarterly financials on a like for like basis post spin. During the third quarter, the macro environment remained dynamic as inflation, geopolitical tensions and currency volatility persisted. Despite these range of factors, our third quarter financial results were in line with our expectations and reflect resilience and strong execution within our business segments. Lower Fuel System sales were partially offset by strong Aftermarket segment sales. In turn, net sales in the quarter were $839 million, down 6.4% from the same period of…

Thanks, Brady, and thank you all for joining us this morning. As a reminder, reconciliations of all non-GAAP financial measures that I will discuss can be found in today's press release and in the presentation, both of which are on our website. Moving to Page 9 in the deck, revenue in the quarter reflects similar market trends as the prior two quarters as we generated $839 million in sales, down 6.4% versus a year ago. Excluding the effect of contract manufacturing, the reduction in sales is 3.7% versus a year ago. As Brady noted, we have effectively completed all material contract manufacturing agreements with our former parent, as of the end of this quarter. Our Aftermarket segment benefited from higher pricing and volume for a year-over-year increase of 6%. Sales continue to benefit from higher volumes in Europe with a mild increase in revenue in the Americas during the quarter. The Fuel Systems segment sales, by contrast, were down 13.7% or 9.7% excluding the effects of contract manufacturing. Our Fuel Systems group was impacted by lower commercial vehicle sales or CV revenue in Europe and China offset by increased pricing as we continue to work with customers to correct some lagging commodity and non-commodity pricing issues within Europe and the Americas. Our adjusted diluted earnings per share was $1.17. We earned $87 million 10.4% in adjusted operating income and margin, which represents a year over year increase of $5 million and 100 basis points. Adjusted EBITDA was $120 million and a margin of 14.3%, representing a year over year increase of $3 million and 90 basis points. Margins benefited from positive pricing for both the Fuel Systems and Aftermarket segments and positive supplier savings and recoveries that offset all inflation and employee cost increases. Year over year conversions were affected…

Thank you. [Operator Instructions] We'll take our first question from Jake Scholl at BNP Paribas.

Hi, guys. Congrats on another strong quarter. So, my first question is, can you just provide a little bit of color on how you're thinking about the outlook to markets in the fourth quarter and how we should really think about sales and earnings by segment?

Yes. I think first on the outlook, our expectation is that, things are going to continue to remain soft. I think in Q4, we saw some softness in Q3. I think it's kind of a tale of two halves. The first half was still relatively strong. Second half is being a little bit weak. I think that will continue a little bit into '25 before recovering.

It's mainly CV.

CV, light vehicle, I think, is going be kind of consistent. I think it may have a little bit of an uptick kind of next year. But again, I still think it's going to be relatively flat. From a margin expectation standpoint, we expect, as we've said, we continue to expect our Aftermarket teams to have a good performance around 15% operating income and won our Fuel Systems group north of 10% and managing that on the downside from a revenue perspective. So, kind of I think if you take a look at the numbers, I think it's a little bit softer in Q4 versus what we saw in Q3 from a revenue perspective and just trying to hold our margins.

Thank you. And then, so as you said there was kind of a market step down from the first half to the second half, just at the midpoint. Your guide implies a step down from about $248 million EBITDA in the half to $232 million in the second half. So, how should we think about maybe that the second half of this year is a run rate in to 2025? Or is there something else we should keep in mind?

Yes. I think as I mentioned, I think things are -- our Fuel Systems is the one that's primarily affected. Our Aftermarket continues to see solid year over year growth. I think the Fuel Systems segment will continue to have soft sales similar to Q3 into Q4. And then, I think it's just I think in 2025, what we're expecting is that CV will remain soft in the first half. And whether it's Q2 or Q3, we're starting to hear indications that recovery will then start on the CV side, whether that's pre-buy for the North America, EPA27 or other applications. And we also have some additional launches coming in the next year as well. So, I think it's just it's going to probably be similar to two halves this year. First half was stronger, softer in the second, and I think next year will be softer in the first half and stronger in the second.

[Operator Instructions] And at this time, we have no further questions. I would like to turn the conference back over to Brady Ericson for closing remarks.

Great. Thanks, everybody, for joining. I know there's a lot of earnings coming out today. So, I know we have a lot of follow-up already kind of lined up with a lot of folks, but do appreciate you all joining. Looking forward to kind of continue our journey of delivering kind of consistent results and continuing to be financially disciplined in how we allocate our capital. And hopefully, everybody has a happy Halloween, so stay safe. Thank you.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.