MTOR - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 Meritor Incorporated Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Mr. of Director Senior Chirillo, Investor Relations. Todd may you begin. Sir,

Todd Chirillo

and Thank second Meritor's Good everyone, you, morning, welcome quarter to Daniel. XXXX earnings call.

today, the Anderson, morning. of and law to the conference U.S. call President; The property are may we’re available slides content call, is the we of in We'll Craig, call Jay On refer by without meritor.com. copyright CEO recording, It's consider your rebroadcast consent and Inc. accompanying and be be continued today's international Carl written participation recording. our Financial our of and Senior this Chief to President We slides at Vice Meritor, not Officer. The have protected and express to discussion which the this consent your Meritor.

contain statements Securities in the may Act XXXX. discussion defined forward-looking Private of as Reform Litigation Our

Slide non-GAAP you our our could a Now to any to website. the to complete me the To you'll call, GAAP that results. X let risks in of on affect the slides find disclosure measures our for reconciliation in refer the we refer more extent

I'll the Now, Jay. over turn to call

Jay Craig

Thanks, and good morning. Todd,

Adjusted performance outperformance with financials, in $XX had will from Let's excellent revenue share. to first of the production give our adjusted and combined turn the pleased detail North XX% of company revenue more year. on $X.XX half quarter a increased are first but one with drove to truck the fiscal quarter, up the increase. our was margin We you higher majority the America per we with Similar quarters revenue our Carl in to year total great another on record XX%, Slide X. ago. of EBITDA margin million strongest diluted EPS

our strong raise again Our year year. half us outlook leads results of once the our for to with full forecast for the remainder combined the first

increase turnaround have we six that we to successfully less know, months year The plan complete deliver. past As executed over several value. at expect second Meritor the than has three now the before shareholder we significantly you have we MXXXX, years

As all robust have I've applications now relationships expanded drivetrain growing not line partners we extends a developed strengthened across only we base, our aspects, our multiple solutions company customer the in before, that and also product have with into future. said the for electric long-term financial

Bauma We have sustained MXX began that On the XXXX we will to plan, a give execute have into in at announced the past the with we Slide in which Germany we highlights momentum figure a same weeks are few and we X, to want that the commitment Construction you roll off-highway our few the Show that business two. with from and excited ago.

our in we reduce At new business, blue brand. have solutions. show, our customers important material in We lead years. of purpose several applications, off-highway their handling electric highlighted the including built with business of our product the began under into made As for because of on horizon are launches. forklift business a making a we off-highway product investments said, sign axles have to the replacement, competitive demands for significant are of significant typically reentry progress innovative and We all most new our innovative, range this our Meritor’s for times, announced just to path planetary is hours specific making we're unique ability to parts two service XX within the equipment off-highway believe market. Bauma axel on-highway XXXX we our been a by differentiators scale leverage have and strategic best cadence performing the provide investments products and the The to we grow for

designed three market. off-highway the the specifically announced for breaking also of We new solutions demands

CNH of such Europe in new axles. with with and business of series Industrial displayed Company, which the as each United States in have and BAS customers Meritor Astra We vehicles Mining XXX

is work around in this Meritor the grow world. expertise, the business legacy excellent with reliability. and has Our off-highway doing quality, relationships our dependability, to service team proven product

X activities. of X customers And our Two e-axle, vehicles, customers with of which XXX Class has at Meritor’s an independent the electrification all electric we on California, industry. including we Last expect This that Daimler X update space. addition are all the many Built to Bus displays Slide have with Now five and are the Show in its XX innovation vehicle vehicles at Meritor’s the were XXX e-axles the Currently, in of with XXX turning next working let's week medium to range products for suspension illustrates Dock Expo electrification with with years Meritor’s our Class best Thomas collaboration on slide more that Peterbilt equipped solutions. electric we being Peterbilt for electric couple in providing Nikola in Spotter, Kalmar and look ACT radius the The duty result lightest Meritor’s than in visible programs, built over in the TransPower. vehicles weight

are in Leyland other and India others. in OEMs America, programs on South we major electrification working Ashok America, North Beyond their with including MAN

wide electric and operate regions that the no efficiency two TransPower storage with a flexible vehicle million applications before eventually these the Long detailed and quarter XX shippers system, of series that transport These more of vehicles from operate terminal to customer's and up subsystems packaging $XX and to In technology Carl call investment. uptime with system development to financials. designed robust that this like handling Oakland. the The Meritor that energy battery production. And later accelerate tractors the across Over it, to our and success last will for to for have and provides while between and many Beach second TransPower couple developed of know They a past of on volume In tractors cycle and year. remain the has hours Port in and key low now, range terminal contract vehicle and and being hauled a prototype day of is a range are collaboration I'm pleased just DINA controls. will a begin of are the we in a XXX,XXX pounds and design require conjunction our bend same the I'll supply be all challenge range, quarter. a of of electric the equipped will cargo. a integration battery over factor fleets, been years, OEMs, expectations. to powertrains ride developing delivers review turn optimize production with return maximizes duty XX cycles closing, We performance a the a electric scalable that wide Delivery systems partner that will TransPower, drive focused providing rate, that a with performance awarded

Carl Anderson

results good today's XXXX quarter our review our financial and morning. On and I'll guidance. second call, Jay, Thanks, updated

heard objective expectations MXXXX EBITDA, another a diluted EBITDA results expect As per and on Jay, months six share outperform saw to revenue, adjusted $X.XX. of strong XXXX forward, strong margin going of year-over-year the performance. in first and we Building had you from earnings for financial our adjusted adjusted per we increases quarter adjusted diluted our the of We earnings significantly share.

revenue continue X% to X remainder year compared billion outperformance of Sales EBITDA to in North driven by the net through a sales our on up were markets segments, these the margin fiscal XX% walk strong, production you'll revenue, seeing levels year. generated which We both production. And of $XXX higher will of across the our Driven by a of conversion results higher also for we’re increased we primarily quarter. expect Slide one-half contributed the our approximately benefit $X.XXX EBITDA turning financial adjusted details while now America X, end prior in continued million quarter, the from where by this an increase of the resulting adjusted quarter of are Class the year. primarily overall Let's XX%. in ago, see that second truck

U.S. can major chart see million dollar the to foreign million year. you on from This exchange were revenue most and the against by strengthen the partially prior the by offset currencies. $XX sales EBIDTA $X right, from headwinds by adjusted earnings impacted As as compared stronger

year performance EBITDA up $XX was million to a which liability recall was to helped environmental a site, higher Overall related you quarter. which in in we $X the adjusted our second $XX last drive revenue accrued year. of an Additionally, million, quarter headwind legacy may to last of million the

of On diluted the Adjusted increase hand left GAAP net that reporting you’ll last of million share, continuing of an continuing million last per over year. resulting XX% million $XX in $XX from increase $XX year. income was $X.X operations income operations, see the from from were adjusted a chart, side

was in now same have $X.XX. we quarter, the finally, share six million $XX And months diluted cash free year, the last the of earnings For adjusted to compared flow per $XX million of year. first this period generated

We in the working margins expanded have moderately demand higher these investments earnings. strong Both higher to capital global in impact and quarter. from support capital offset higher and have a the invested of overall

realignment our which an week, with regarding move reporting management we announced segments. of this for March. Let’s adjusted This details second filed Earlier quarter the to aligns reporting the X, and EBITDA both X-K changes Slide our sales our segments. in of

$XX these The America, segment capacity million. from driven the compared Industrial Segment second truck margin truck unfavorable the conversion financial new by and driven prior and margin in adjusted came down have $XXX at EBITDA to segments in adjusted The was XX%, are, XXXX, recast by on The higher revenue million freight the prior revenue. in by net production by and commercial X% commercial for commercial was to fiscal North adjusted partially exchange. XXX year. company’s sales segment, million changes. increase the points to was primarily In EBITDA of offset basis truck increased EBITDA down for our higher Aftermarket, year quarter higher layered Segment and As costs foreign year in truck year. EBITDA been results decrease of steel, offset $X partially Trailer. by last primarily

actions fiscal higher higher from within months. on these by sales year. $XXX In trailer our operational were pricing past were Aftermarket, sales in up aftermarket and expect The XX% business. driven XX% the basis several higher North margin aftermarket conversion our an within XXX the increased growth a aftermarket was and with pricing EBITDA driven executed was our almost points begin Trailer actions our costs volumes. million, in decelerating We segment, costs fourth adjusted Industrial based commodity, on to Segment industrial, volumes $XX compared over increase $XX executed, from and along and America quarter last million this to year. business, recover of by to tariff XX.X%, America adjusted freight last North primarily Segment grew EBITDA or actions, million,

on outlook X. market I’ll review global Slide our fiscal Next updated year XXXX

we’ve that some strong, The Although calendar gives America orders of year. X rest to our approximately units. backlog a this build we ratio of months. year. the are our of XXX,XXX backlog North production production seen increasing This truck us driving to confidence softening continues Class eight the elevated fiscal to remain for Therefore, is approximately should level estimate be which

Our trailer industry orders XX,XXX increased has higher forecasts by market the backlogs. by driven strong and for U.S. units,

to Additionally, market range million. China we adjusted have to $XXX million approximately our revenue of $XXX for the forecast a

revenue service our While by we operations. European our now unchanged, this in are export be keeping are production will our a for production was Europe, some which from shift expectations of relatively primarily market In driven forecast China unchanged. directly change

begin see some from to well to signs, surrounding the beginning are soften Brexit. may later uncertainty as as this market we the year, However,

assumptions, billion, the for a $XXX Our outlook now X. solid prior market markets year for see to same. expect XXXX. million our Based guidance end can the XXXX remained we Slide Overall, on for positive updated from We guidance. are approximately remainder to $X.X be you global the on our again support our raising forecast revenue these of continued strong fiscal up

$X.XX, This are earnings top expect we raising basis guidance. adjusted diluted our increase operations. largely generate we expected adjusted to in income points an we working $X.XX are maintaining from margin strong by our line approximately to continuing expected By to investment. an increase $XXX million. from to And share million increase our The growth Additionally, per income XX.X%, on adjusted drive XX EBITDA prior in from is approximately free increase be of cash from to is capital outlook cash guidance. flow to higher offset for a corresponding revenue, $XXX finally, prior at revenue converting up flow in outlook our

year. the to are reduction the outlook some expenditures next planning We a now in slight capital as are projects of into from move now previous expected

year, the about first half to excited strong are the conclusion the to we continue a focused of MXXXX. and be delivering We on start to successful

Jay. like call back the to to over Now, turn I’d

Jay Craig

Carl. Thanks,

turn Slide Let’s XX. to

As Each track and of finish no on begin MXXXX MXXXX strong builds our to and I is earlier, it, plants one on said we’re before the MXXXX. exception.

primary One defense, of objectives which growth in drove that diversified trailer and revenue focuses This margin components. of we’ve and be MXXXX. was growth, our achieved focus will off-highway, the a profitable continued of expansion MXXXX was in specialty,

We last revenue is more from three in have the grown than roughly billion of half revenue $X which outperformance. years,

flows. end industrial are We year generating diluted EPS while the early. which We us believe strong plan since comparatives and and chapter, for set declining drive achieved delivering markets earnings credit will cash long-term next target expand adjusted have gains this MXXXX. tracking more significant growth we XXX% up towards also of These a and to XXXX, achievements our margins is

demonstrated we’ve be the us in our our of top companies proud that actions performing the alignment and have objectives space. the one positioned We’re we’ve to taken to

question. Now, your let’s take

Operator

comes Neil [Operator Instructions] Frohnapple with Research. Our first question from Buckingham

Your line now open. is

Neil Frohnapple

good quarter. a Hi, on Congrats morning. great

JayCraig

lot a Neil. Thanks

Carl Anderson

Thanks, Neil.

Neil Frohnapple

granularity Just at in would the if first, as XXX And year, just you’re quarter, should quantify headwind you you could curious there to you that few that the that about capacity. you and X the last the think of all moderate be you anymore margins guys related those performance from the commercial some the helpful? point from steel, talk the talk freight if truck moderation provide. months actions prior about the basis then in but And quarter, over EBITDA more able I Carl, said layered I to could fourth implemented costs guess follow-up, can margin

Jay Craig

a about thanks of to take cost. There Great ask Neil. a it terms supplement any Carl additional think lot in really I’d Sure, I’ll question. start details. at three with are and that things

share North we’ve but period. that know, in addition obviously large in end America, that, a market markets over you the in we’ve same as gained time a to So increase seen particularly significant

as would from a internal higher revenues. of with kind double we periods And – a capacity. using So our caused impact say components and some from some But some electrification we've previously, we our at. has capacity – from well. that and we build make additional against successful team market really deliver focus to on because has as cost performed, company should was and and to bringing also that we which haven't internal we – to done sure increase has in has negative the costs Brazil layered prudent increased third suppliers I gains should issue that those been very the period company didn't as the layered are incur where commercial the can also we that the on build truck the such some is of Europe the matching current previous shipping it flows inventory And share, which to to been including that’s in capacity then freight outside the investments us through think determined

making against all capacity team the we I talked some to choices fourth in the call, say long-term about we're And his in very particularly overall company short-term as and initiatives during the and expect to we've margins, activity converting Carl abate, that believe I with conversion our to begin quarter. position. is such as seen the as as freight we to get great market with XX% balance XX% layered mentioned But those area at the would So pleased I costs the right electrification. profitability comments, into strategic

Neil Frohnapple

and have and anyone expected. significantly then think than industrial aftermarket were margins better okay, would Absolutely, trailer I

the year? back help that into mean anything just of year? there you on I sustainability can really question for the carry the just won't outlook of margins. here remainder QX the was half in with of the So a those So

Carl Anderson

It’s Neil. Thanks, Sure. Carl.

Just in actions the we've certain on it you look pricing I was at if executed America update – business. quarter, that we if by aftermarket get second North – driven really our primarily

some as well last in As in current did back you January recall, year. July of of actions we year may the as

expenses several quarters, really higher the of associated specialty quarter will for seeing we with in off-highway look and businesses investment kind next are we of third some that our and the fourth forward As do the quarter. really kick

will of through, pricing there of while kind you kind should So an based investments off would actions carry see of – the making. offset additional these they be some we're

Neil Frohnapple

guys. very helpful Thanks, Okay, again.

Jay Craig

Thanks, Neil.

Carl Anderson

Thank you.

Operator

you. Thank question comes next Sabeiha And our Longbow Research. Faheem from with

Your is open. now line

Faheem Sabeiha

the on congrats and congrats All Carl, right, on quarter. And morning, good great promotion. a

Carl Anderson

Thanks, Faheem.

Faheem Sabeiha

got of guys – EV like revenue the can And the couple year on guess $XX increased a update But year? you Just questions on looks million this front. guys from like I there. with you us opportunity a next and sounds it from programs trucks. the It then EV revenues guys investments terminal you

Jay Craig

Faheem. Jay. revenue about Thanks lot million about before. I think area This revenue still upwards this is with Sure. are expectations what in $XX year. our Yeah, a potentially spoken consistent that relatively of of We talked we’ve

as with that. as look I beyond And period see think to MXXXX that feel contract get to period, we but in we of our upside. far that to will significant said a we in comfortable time I've then as tend still the meaningful updating if during as obviously that we be revenue the that significantly we estimate and before, out production it time, a don't part time

So and about Expo. spent pleased and week update what I – but ACT most the I given time the last feel the at

I OEs. vehicles share being of our the the represented among think fair test are than platform we more all

first we once winner I good think the being of again, comes, So that production in contract have odds when very that arena.

Faheem Sabeiha

called out. guys the I guess XXX And you vehicles Okay. with

of is than XX the I them of are content? you of But previously five your content. think can breakdown percent What the at you XXX I guess XX times vehicles? say times that guys guys times more What maybe traditional content? the percent those to content X said

Jay Craig

that they're vehicles multiple Those actually prototypes. of be would multiples because

those just are and we quite expect in integrated the bit production environment. a of solutions. electrification So vehicles cost a fully those price But than what higher

at would the spectrum moves they us, So if production. end for content be ultimately the of what that's higher into

Faheem Sabeiha

thanks. Okay,

Jay Craig

you. Thank

Carl Anderson

Thank you.

Operator

question our Markets. you. Picariello with Thank KeyBanc from And next James comes Capital

is open. Your line now

James Picariello

guys. morning good Hey,

Jay Craig

Good morning.

James Picariello

if industrial the commercial you order in what interested the for the we question freight and strong in steel half already in assume even but year the some half capacity this aftermarket had a to back in truck would profitability margins So the there I'm the the remain is because full that implication guide the up segment costs, consolidated second when truck get require trailer margins to then step quarter. truck there's quarter implied resilience in in think. that builds in down, come final I sequential commercial do And see likely we on upcoming

context just your and I there So what am curious thoughts. the is

Carl Anderson

Yeah, sure, James.

kind we a we've of into of will we at As look you that. things steel is look had year-over-year the be basis we a that us of on couple most especially out behind the One, – first at as get throughout there's half of this headwinds believing kind of the driving year, if that that quarter. are fourth

So to that I as think costs begin I will referenced that's mitigate of the one you earlier.

alluded capacity component far really kind Jay as second in starting costs quarter. to the is those come fourth as to of down The really layered as was

very the what we've So as the similar quarter. to to second Class of experienced it you really in those. X at of a look if both it's relates year in been truck it's And combination second production, the mind half do of keep

expect So be market fiscal continue to we going the quarter, even is to robust. our fourth that

Jay Craig

is turns remember as James, strategy – we’ll markets. market normalized gain in share can more at I that we – Yeah, these the add, during thing believe up a as we one level stick our higher if just would

normalized continue past as these our have advantage that well for come that We I long to levels. as to with by approached what reasonable hit two exactly profitability bodes take that value more you've do as think we can system that quarters of could our will is And take we we through And back determined to end we long-term levels. OEMs on profit objectives. additional where And production. that we've phenomenon franchise been think markets seen

James Picariello

then off-highway, Got growth first the it, And half. in clearly piece, helpful. that's the the on focusing industrial strong is

the heavy your Aftermarket in the of Trailers But growth larger just showing your what's OEMs Some giving segment? come growth, guide are down sense year of deceleration that high the makes rest and a the for of seeing. in we've expectation the the Within trailer machinery Industrial half. level builds been which for back

you've resilience that business so industrial new won yeah, some the side, but your there, have for what's maybe do particularly expectation? trailers, within You some

Jay Craig

first it's really we James, second half embedded guidance. off relatively in Yeah, expectations our stable flat. It's look – versus pretty at half, that as based it's our

James Picariello

for regarding WABCO I could more acquisition ZF any If just Okay. ZF, WABCO the you business? will one what by the slip do by or of aftermarket expectations decide have on

Jay Craig

It in really reached the that on WABCO. hasn't both We the terms agreement. options call We’ve put of still changed with have business.

us So, in we see the change, we the particularly of by to that where during really program MXXXX that period. one modeling be given assumption time put we no exercised option expected

James Picariello

guys. Thanks Thanks.

Jay Craig

Thank you.

Operator

comes Thank question RBC Joseph our with next Capital Spak you. And Markets. from

now line Your open. is

Joseph Spak

end on you to Thanks. everyone I going think to congrats just and the these the but abate a year. Class year, you said I that strong during capacity little back the thought role keep hate still Good the layered to you also costs, as I well. bit costs but you the new thought morning by X remain Carl would mentioned, expect capacity of

– understand saying level you're plan, at – I I picture layered really because company just and your that look environment. So to efficient expanding that's capacity at MXXXX a volume I as lower if a mean, more think lower headwind, level. could want important really to And out you're actually calling you're the is I margins just And you call for what this really abate? think bigger was do you that what in

appreciated. you could So us with that'd if be that, help

Jay Craig

can your the levels. we that of – last think lower expectation expand downturn. I latter in And No, with exactly we've margins is volume proven you're Joe. question right, did the half we at that that To the start

at chase So our have good we them record invest of that. efficient use see, as time overall. certainly these a profit an What we're are point this we're it's but I – margins don't which track as in to as peak necessarily to long objectives, believe I've we we exceeding mentioned, achieving – at we capital

layered can capacity and a be in at so has I costs shipping times North the measurable plants those measurable. mean, internally example, our compared components, them Brazil impact. of And negative to Europe for cost in America from producing

Now actions a we're putting we as the quarter. you will benefit some some in would the into And expect cause a that's over that we’ll months in see place costs. expect three reduction that those in why fourth come next to

Joseph Spak

the think and maybe just increase a is – release sales, truck. know, the if was in as But you there playing share Maybe perspective. sort Okay. your – that's bit, a us gains. prepared of And X% what sort well maybe little maybe FX with comment industry look the it the of did looks commercial remarks in I and a and about in I had seems like like outperformance don't on build I is but a this to from this

do how quarter? versus of in So sort your the measure you industry the outperformance

Jay Craig

really as of about reference, in outperformance we’d overall we Yeah, totaled half about in by a revenue was that so quarter. $XX I – revenue and the had million think Joe a driven increase

Joseph Spak

seems it And nice you're some Okay, electrification like if you. here. on progress slip thank one making finally, could where I in

volume of then what prototypes about to reimbursement as Like through progress serial that do low especially you of production. how you walk talked How of cost earlier and like Is out? and does expect going laid with that or sort sort work You it – we stages? work almost your – them you those customers, – should the most for incur R&D? try your maybe should like from shared

Jay Craig

portion of by R&D shared, us. but there's that's pure obviously it is A absorbed

our So people vehicles of it's that of product actually really for design, cost spectrum the throughout the because the line, we're have our seeing gravitated example, development development to accelerated axle and for demand we've it. electric

be costs is you launch vehicles, So But these tends of that reimbursed. absorbed. cost those as to prototype see

Joseph Spak

Okay.

So there the those run R&D be should we somewhat – at in an where sort are rate of now the are right costs acceleration? or of numbers

Jay Craig

I we bit our meeting run expected when think from rate to saw expectations more earnings the took XXXX the outperforming We decided we into as perspective. up development. a step we're lean we an forward

So rate. we're at that run

Joseph Spak

much. again. very Congrats Okay, thanks

Jay Craig

Joe. Thanks,

Carl Anderson

Thanks.

Operator

with Thank comes our Colin Langan you. next UBS. from And question

Your now open. is line

Colin Langan

taking and as Oh, I on great. the congrats Thanks promotion. for Carl my questions well

Just part? that to that follow for the this as sustainable core I up up of kind is and missed business. XX% is much strong growing on I part. sure and aftermarket, an are that mean I quite I'm if aftermarket seems – Or not the Sales aftermarket that trailer [indiscernible]?

Jay Craig

as a Yeah, on Colin, business in higher really as both it's industrial performance combination our well of trailer.

well. look has you if So as in at that segment now both industrial trailer and

revenue. kind businesses drove higher that primary that are of those two So the

Colin Langan

aftermarket. underlying the So

Jay Craig

just up also other well. the But slightly would the to at as as say – the tailwinds other of we I well, kind performance the where the quarter. looked was Aftermarket as businesses

Colin Langan

China just can staying remind just you And to it. Got over there? and exposure us what you're your

Jay Craig

heavy business. construction China, Well, off-highway the exposed think in primarily I to we're remember

seeing on-highway we're people see that in market than reporting business. truck stability So on the you more

bit So that look a more but at XXXX. out had exposure that's we this a to why for lot lower. consistent as time has our truck finishing remained Certainly, that is volatility, market outlook our period the has

Colin Langan

factors improved back Got the are heavy has other outlook it. there and is I driving America just mean increasing truck the overall guidance. we and And improvement? step trailer North is basically it that or at look

Jay Craig

think other – about XX,XXX we of left Class units. the unchanged. market $XXX I market the took of are Colin, we primary Yes, markets Most X XX,XXX out end driving million units those markets – and so kind increase, we but really trailer the

Colin Langan

mean [indiscernible] running And lower, lastly, that I is it they just mean, that tax, is – seems like I Okay. at on were bit

Jay Craig

it's Yeah, timing. really more just

we – think is to as did think rate, of think still us. bit a the I revenue, effective U.S. can rate rate, forward, help way right the we about kind about drive as the lower tax we effective the we little think tax more going see effective XX% model which tax profitability but that in more

Colin Langan

my Thanks question. great. taking Okay, for

Jay Craig

Thanks, Colin

Operator

you. Thank Mike comes next Stifel. from our And question Baudendistel with

is line open. now Your

Mike Baudendistel

off-highway wanted few Thank you in just in you. the that opportunity years? the ask us next the of objective can what's how I revenue business, sort multiyear you business and to your over on big just is remind

Carl Anderson

Yes, as pretty as trailers keep think of part as And in done industrial it's to America kind $XXX in aftermarket Mike, business, Jay well. it see – $XXX industrial, segment. China, far far that as have is I there it’s as it's think and a not you kind our mind, North And you we of revenue, is to only million. in alluded of about what million to, China kind also we've as of significant which

us. that the business think but think number, would pretty it's I I industrial, actually significant out say, absolute part a overall don't of we've I put for segment.

Mike Baudendistel

Got can you if aftermarket or see sort in room forward? little more business. detail on are the that – more do bit board it. in sort provide think the markets across certain and was going in there's And also certain the they wanted concentrated a that action pricing of to you Was of as

Carl Anderson

the last it given and in in Yes, you if costs. America it additional year, really steel, a North run of specific, recall up design really – freight was was kind

some those But recoveries. the focused time of execute January. did across was it's as products, certain we it was in really as So targeted July same but well on at pricing in kind – going it

Mike Baudendistel

Got then your beyond know the fiscal give peers. it. don't of some year, just, current but year, I And fiscal the guidance you

fourth calendar mean, I expectations? starting So to do you quarter expect similar inside said slowing. some, that some have I any the

Carl Anderson

through our time about period. behind of You're correct. specific because we of We those very few don't expect in plans, the think announcement year, I three companies guidance our the fiscal what other year one than give guidance

I and So that obviously, if the takeaway, plan throughout in to reduced we last announcement normalize showed significant think from a is, expectations flow. markets and generation world, expansion cash still of the meaningful market earnings

Mike Baudendistel

had. That's I right. That's Thank that. the you. Thanks reminder for all on

Carl Anderson

Thank you.

Operator

Thank you.

Potter Piper Alex Our next Jaffray. question comes from with

Your line is now open.

Winnie Dong

to relates the mimicking, the There's through this landscape context, intend electric the on it's companies development. as drivetrain? how a axels this does strategy Dong or is And for Winnie electrification. to be send My evolving? M&A question Alex Meritor who was Potter. role growing truck organic Thanks. Meritor whether first introduce competitive leadership how to Hi, through product your in it seem number Meritor wondering I is and

Jay Craig

quick something very our for here we and of market Obviously, so are closely. very in housing a the critical follow-up viewed provide we marketplace individuals expertise pleased acquired technology. where other to customers. XXX good our to with on is is the of with, watch Obviously field question. to we're just prototype There North have positioning which And technology. have critical in bring as very particularly sales force example, we the addition Winnie, XXX execution, continuing. gearing Again, very by has it's America in our momentum Thanks, capabilities we years and far

should drivetrain, market So Axles Drive we we're see position. ways copy, But the of defensible from and like. expertise embedded long we in our some to people looks us interested some think our in allow have advantages what a strategy

Winnie Dong

about Thanks. just Thus Thanks many back? more updated the so And any in years of does Thanks. – share the year for I share for half color. guidance buy buy or back still it one not the follow-up.

Carl Anderson

for further It the not any year. assume repurchases share does

Winnie Dong

thanks. Okay,

Carl Anderson

Winnie. Thanks,

Operator

Thank you.

Our comes Brian Barclays. with next question Johnson from

line now is open. Your

Brian Johnson

now want so of Carl. to mentoring – it's congratulations larger think Yes. about the Good a, kind morning. ask And Jay a also I company. Congratulations for CFO, validation. far I

– is I versus of Just building where customers WABCO just And have a – off-highway three or pulled think think you In I terms did I a of basic/recap in? last, about this in to to regenerative decide on something – questions. a, breaks kind and you on off-highway. doing bit uses, especially e-systems, you're truck wanted with where what good think, of Two, with going WABCO three, A) of you're relationship relationship and enter the the understand that of because in the question as stop-and-go you about for clarifying braking. little highway kind maybe

into you area. It's full the braking. breaking going solutions sort it's So including of do to regenerative to allow getting

Jay Craig

And Brian. the Kevin's Sure. we best luck this Thanks new a obviously of wish lot role. in

far me As into three it break as pieces. let break,

the as those And migrated investment from America an brakes also specifically of drivetrain, transition of us, overall axles that's our been area at on in win value leverage with drum high market disc – the for brakes the designed disc has and are breaking directed put then get North So we in from disc, market electric that significant position a And our smarter as smart transition acquisition leverages brings positions it our That market. position have brakes off-highway that little ago, application. that to scale, specifically the helps provide on applications lastly over and off-highway Cascadia us and us EV, breaking well standard markets. potentially also for disc into to into business shown for well the WABCO, a year and us the particularly off-highway off-highway extremely is of which because

correctly breaking and hand So of and of it's power. used regeneration as the of different has performance itself lighter, notice, it's the motor expectations you is for that's more

on effort those think I and several concerted years. a over So extremely we're the based pleased, areas in but very focused last investment

Brian Johnson

MXXXX projection how is think be – And have in could of we particular in break – overall there Okay. any do or… about or a for segments period kind to a big

Jay Craig

opportunities those budget. expectation we the individual zero base we've we've externally, a haircut but as disclose well competitive think a Just would that Brian, opportunities I externally. XX% she revenue closed reasons investments from certainly brakes, our an in we so have not us do internal those we gross program take on And and but returns the on rocked of up know made, one for

Brian Johnson

big contribution cyclical Okay. But contribution of brakes. of earlier, within to, mentioned you volumes MXXXX the XX% of the – normalizing, expected grow would growth include part as contact and

Jay Craig

Yes. correct. That's

Brian Johnson

Thank Okay. you.

Jay Craig

Thanks, Brain

Operator

for question-and-answer and turn call now Ladies to this remarks. for concludes session Chirillo over further you. like any our today's back Thank Todd to I’d call. the gentlemen,

Todd Chirillo

Great. Thank call. you. quarter And thank concludes you earnings everyone second Meritor’s participation. for your XXXX This

any Thank please to out questions, free reach feel to me you. have follow-up you directly. If

Operator

conference. today's for Ladies today's participating program. and conclude gentlemen, you thank This in does

disconnect. wonderful day. Everyone have all may You a

Meritor (MTOR) 1 May 192019 Q2 Earnings call transcript