MTOR - Earnings call transcript Q1 2020

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2020 Meritor Inc. 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 call may be recorded.

to host like Mr. today’s now would introduce for your conference, I Chirillo, Relations. Investor Director Todd of Senior

You may begin.

Todd Chirillo

Jamie. welcome quarter to you, Meritor’s Thank Good first XXXX morning, earnings everyone and call.

President, we Financial for Chief and questions be Officer, Chris President call. Craig, call all President Vice Officer have Executive following Chief the Senior Vice the today, CEO On available and & Carl Villavarayan, of Anderson, and will Jay Operating whom

our Inc., refer consent without copyright accompanying this the international our today’s available to to of is participation We law property rebroadcast call consent content written the not continued this morning. discussion of We’ll of we’re recording. Meritor. be in slides U.S. The protected The recording, express which at by slides consider your Meritor are call, and be and your meritor.com. may to the conference is

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

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

the turn to I’ll over Now Jay. call

Jay Craig

had first thanks and joining Thanks morning, with today. we share Todd. you of Good everyone would quarter a highlights us a today. number for have We solid and like to

perform production X, an despite our I that overview. to end of Slide continue am in markets. provides at which pleased look being well global down most Let's we volumes year-over-year especially

we share margin earnings $X.XX. XX.X% per and EBITDA diluted adjusted was Adjusted generated of

of end XX% XX%. our and at manage lower expected range maintain have we weakened, XX% taken of markets As to steps the cost a is conversion which of to downside have

record can rapid in track We managing our markets, operational and what all business nature we excellence. the of continuing virtually of our declines end of control considering global are cyclical the effectively

finalized repurchase a several technology enhanced Chris with agreement our meaningful execute the continued Paccar, of and our fiscal to new were index, program, appointed we the portfolios to In small-cap the Officer. year, added electrification Operating product months first share XXX S&P Chief Villavarayan, and

the In various As those has for and of significant he you has positions, Meritor roles. made both in leadership the XX forth and he press Chris's MXXXX toward saw appointment, each in years been contributions we has targets release announcing in achieving XXXX. set with excelled

business low-volume for as our critical Global of and for anticipated Meritor's the production segments appropriate vehicles development forward. to operating of both business we quickly was team next step than adoption globally. more to increases for is leadership transitioning electric Meritor's electrification we move responsibility Notably, commercial Chris battery as

solutions. by today with the customers business system with technology a award Meritor including is powertrain fully is new This integrated range Paccar. providing we electric of demonstrated announced

go to look and executing many we customers blue leader that are serves with product Officer, global strategic confident direct be our Operating in market to involvement We more more a customer base. are expand refining as integrate establishing we plan personally the differentiated I and will industry. that I grow Meritor transition in our time With Chris's applications. electrification offerings as our our portfolio Chief to forward horizon TransPower development, as different having dedicating to in

of shares of a planned X.X million fiscal that we we for million a for Let's turn last our repurchased for program year purchased repurchased of time, additional two $XXX have that repurchase of as noted to thirds earnings million of completing XXXX total effectively XXXX. have the our $XXX an program. Slide shares Since update. shares call we X share million mid-November, capital allocation part On $XX

at quarter we disclosed. terminate Fabco. complete We the to transaction with now the expect in high-end aftermarket exercised year, this be of option million previously the that we to Late $XXX range to million proceeds arrangement to last fiscal our distribution $XXX anticipated with

As a of fiscal year. of in repurchases we this four months first the accelerated million $XXX result,

we primary ways we intend As have towards shareholder we objectives achieve to significant is our MXXXX. return the said, of believe under capital share one repurchases that committing

introduced plans. X portfolio quarter. we variety the Slide These to continue product that new initiated further aggressive On highlighted under cadence demonstrate of offerings expand in our products the we our new maintaining launch M

clear As in part with of class MXXXX, market share products toward leading positions and maintaining best we view have a services. our

piston type our axle single in axles. vocational in range We high-efficiency first new air of is disc of its decades. a new products are introducing including This our includes that break the

in market the bringing also tankers, for demanding suspension other and providing We XX,XXX lightest trailer industry vocational weight to the are flatbeds pound capacity applications.

pleased look Let's targeted to Paccar begin to am selected heavy electric powertrain today X, announce for as battery Peter Slide [ph] is a were vehicles. we at XXXX. of and I supplier and first Production duty electric that take in

We opportunity customer. important are about an very excited with this such

a relationship scope and Paccar look the long-standing forward that had expanding to As collaboration. of you have with know, we

being Carolina. Meritor six Additionally, blue fleet. North one powertrains EMX Daimler America electric These also to in innovation of Trucks manufactured are it's facilities our horizon for delivered has in North

and be continue electrification industry commercial technology for capabilities. and to leader the vehicle long-term company by our the are in expanding We product success for positioning a portfolio

as duty duty will the Europe. and application of XXXE for Last development XXXE heard in week, to XXXE, announced begin heavy year we medium the And we've you primarily last in addition continue our we to that voting the EV TransPower $XX capability customers. full expanding electric offering OEM integration interest to equity systems include us to acquired our remaining complete battery in enables million, delivering for the

us Today than result in accelerating is production we of pace for awards our the next As originally XX believe than will and foresaw is growing. over in I've space this months. this expected and of said, additional opportunities $XXX quickly business more million we the book and investment greater

in production our XXXX. line We north pipeline profitable sight up fiscal of drive have to million, expect could ramps awards production potential we that be also which of to $XXX other revenue as

Overall, have tremendous we we As sure update electrification. in opportunities we are these you. of front believe pleased with in very are positioned finalizing and I'm opportunities, successful to us I we in will how be

manufacturing to our to investment Brazil. facility wanted a build On Slide highlight I X, in

region As optimize we This objective. programs largest is footprint. to is reduction MXXXX our time will continue of help see right manufacturing the project cost this and recover to achieve margin in the grow, and one for the our us us

E we with are As e-Consortium axles Brazil, vehicles. happy the which to we Volkswagen supply quarter the provides be last mentioned in part of for to us with delivery opportunity

lower As navigate end quarter, we year-over-year a performance pleased our are look with we the volumes that I'm at significantly basis. on as market

significant a financial balance We that sheet strong us have provides with flexibility.

opportunities electrification under to our flow cash free cash returning to provides share positioned we value The through flow is well repurchase core MXXXX. our growth, in robust improvement with while the to free invest continue product us deliver generation strong company and business. also increased portfolio generation and our shareholders Our plan margin

over turn I'll Carl detail that on the call the With to more financials. for

Carl Anderson

Thanks market $X.XX, the morning. achieved of financial On review Jay, reflecting per margin full-year quarter results to end our heard we Jay updated conditions. Overall, earnings an and good XX.X% adjusted you to delivered today's as from our adjusted a and across of call manage guidance. XXXX. current We I'll share diluted effectively business EBITDA and ability start first solid

shares. year, to continued achieving and XX% the on repurchased capital we of allocation outstanding in first targets. reflects our committed confidence and we This over months Additionally, remain strategy have in MXXXX the our our fiscal delivering four of

quarter our through $XXX other a million Sales year. walk This year quarter truck million $XXX by by businesses. driven your Let's production revenue to was results global see across in partially offset were ago from Slide which by acquired details AxleTech, the down where lower X fourth primarily the volumes to we the in financial turning compared XXXX. lower you'll of and quarter first from the prior

we Compared last production the anticipated America significant XX,XXX in decrease year, production As almost North down period Class units a to or was XX%. quarter. the saw first about in X same

in date changeover standards. impacted production to that almost and on quarter down vehicles XXXX or Additionally production be the April compared the new volumes this to occur sold comply X, continued XX,XXX of India, which to was were requires after by approximately which the with XX% will in first all down emission standard Europe, units XX%

industry-wide levels changeover. to This prior the an focus inventory is of reducing in resulting

we our North in credit which contributing also revenue the specialty finally and conditions is offset aftermarket seeing challenges Additionally, market market trailer from conditions are AxleTech America businesses. to slowing tighter and helped to

revenue. job Lower by or Looking this good volume at from the conversion lower $XX sales did right XX% to last side decreased EBITDA of earning the of On to managing decreased page, or total XX%. decline, the year. on revenue adjusted million downside XX% million $XXX limit we a cost

expense [ph] we as revenue drive Our and ability to conversion was operating to labor solid quarter resulted cost highlighted performance. manage downside lower lower on able in very material, were this which

on impacted by $XX with strengthen exchange dollar prior foreign unfavorably In as EBITDA the $X compared an adjusted to generated year-over-year. addition headwind of the Overall, slight we EBITDA million of adjusted US sales was XX.X%. million was margin Adjusted year. a EBITDA had

lower an reduced a chart, points material improvement in of by from XX the layered overall the including of left-hand was gross side came costs driven this XX.X% at margin cost. increase Looking at capacity mainly quarter This year basis ago.

now plan anticipation You was of September. experiencing. slowing market we of last the in restructuring also at the announced year end are implemented we plan The recall, a fiscal conditions

to the restructuring $X the As quarter. a result recognize we related in did million first

on table left, you'll of that see from GAAP the As we reporting million the income move $XX operations. continuing down we're net

Maremont to diluted fiscal from XXXX was gain adjusted from $X.XX continuing the of a addition did Adjusted $XX resulting per sales asbestos $XX the repeat. million year income last compared to not remeasurement liability, which lower in million in recognized In share. we operations

period cash in free last to this $XX finally the same compared negative $XX was And quarter million year. million negative

drives and may compensation XXXX. quarter result fewer we season holiday due achieve for performance revenues in you as to payments the in days recall, As which use first lower selling of generally a cash the typically incentive

adjusted to most production $XXX XX% was The in across the Slide for our revenue EBITDA our details commercial and by reporting X, decreased sales segment. lower sales first decrease segment, In our segments. move regions by driven which in to truck million. primarily Let's quarter truck

lower EBITDA capacity adjusted lower prior margin the X% by $XX X.X% partially reduced year. down year. cost, driven from $XX steel was Segment by freight in million, The margin layer adjusted truck cost. in including EBITDA last from Segment net EBITDA down was volumes, and adjusted commercial EBITDA decrease offset in primarily adjusted and came million material and at for

conversion labor sales by the also revenue to to million and on aftermarket our from in managing segment, X% driven from the cost The downside revenue segment. in $XXX across $XX trailer and volumes were sales contributed AxleTech, lower up million by decreased industrial increase partially year. the or Lower In last primarily XX% burden was segment. offset

compared full flat continues XX.X%. primarily last year. was ramp Segment expected Segment benefit The adjusted was as EBITDA to decrease which EBITDA from was basis AxleTech run to XX decreased impact up synergies to the from to adjusted points $XX rate. million margin the driven by

Next our global fiscal I'll review XXXX Slide market outlook XX. on updated year

to from not our for XX% We seeing are region, revising XXX,XXX units prior outlook. seeing uncertainty production this levels the lower levels after production to likely market may in over the we India we're between are that X now. the for it production fully on compensate down is levels XXX,XXX April Based

decrease the and lowering outlook Class production to approximately trailer our as to the XXX,XXX finally for reflecting in units to production. X,XXX we demand market slightly truck forecasting units Europe, we're truck our trailer we X market revising outlook are line US XXX,XXX with are lower In more now by

lower we the these which to our XXXX updated for to previously of our approximately next end revising provide also on adjusted revenue is margin expect EBITDA our $X.X a XX%. summary now be guidance market million based slide, provided the of We guidance. assumptions. We're at On outlook

through manage to on at the focus range of expect low-end downside our our managing We cost. conversion laser expected revenue our

year. now previous result which of now And expectations, low-end cash to lower we be generate diluted share slightly of per approximately the adjusted flow to finally, of expect this is guidance. a consistent million our As expect $XXX free we the $X.XX earnings with

control are we changes delivered market pleased adjust team's quickly we begin While markets, we to ability to the with global cannot financial results our our solid plan. MXXXX and as

Now we'll take your questions.

Operator

comes from Thank Longbow you. Research. Our first question with [Operator Sabeiha Faheem instructions]

line now is Your open.

Faheem Sabeiha

guide Jay does guys the opportunity what baked taking morning, the congrats for Chris, and promotion. $XXX Good your I the was next revenue this the and thanks but I wondering mentioned portfolio, ramp Hi. on EV and my years. like questions million year what's into the over you look few for guess

Jay Craig

year. begins As the comments, mentioned production I my next in of Paccar the work

to TransPower rate our up wrapping capabilities the side we're particularly them So production reach those we vehicles we call XXXX at full what during XXXX. deliver in would then manufacturing and on beginning see

Faheem Sabeiha

these on on to these on the engine. the what talk the content Okay. just plus contents like understanding Paccar EV of And can trucks go a expect platforms diesel revenue about want your live projects. to you on the looks you I other systems profitability versus

Jay Craig

right low-volume We're is not but production. that it way and now is disclosing think specifics could you on this prototype somewhere between about the

So would expect bit than higher we when the reaches prices are a production. quite full it

stage production though even we we our So than a of prototype we're that Day these of quite the levels volumes. at particular X still these to range somewhat to content because higher mode Analyst when times full the gave XX last the content got are at bit

Faheem Sabeiha

would EV that and customer at proposition that Okay. are portfolio left offerings the there EV Meritor the any services the is this there or portfolio space other eyeing or And increase value point? maybe of is white in

Jay Craig

Absolutely.

in As TransPower. different mentioned thrilled refuse, a integration white have comments, we're buses, growth. with of of medium applications, the significant types them us equity our school twofold, capabilities think be for space We so remaining heavy-duty, of I lot the that really in all duty growth purchase opportunities at

just XXXe XXXe the importantly, two XXXe discussed different into I offerings launch those intent just and segments. and actual as our us market other running exile. we're to now Right But bring our will with electric

Operator

our Picariello from next KeyBanc. and with you comes Thank question James

is now line Your open.

James Picariello

Europe, that India the at delivering additional we're you're in the just high that markets across and the mid-teens trailers, a just generalization regarding seeing? on weakening still a US guidance, So modest that weakening some you're seeing level here is

Carl Anderson

Carl. James, it's

think I that's right.

I we we're the your and we just think end that conversion really cost America look what XX% that's capabilities lower at the markets if previously and referenced. still the seeing what and the thought ability in the with to that us manage our of you are guidance, at take structure North did of what relatively to We're for that managing come downside company to. around levels down it's be consistent -- really

James Picariello

are Got actions with talk cost-our then your internal completely and other finalized the just it. commodities restructuring the margin respect to, support just is how status the plan And that then you initiatives trending? are what the resilience about for year also now of can maybe help some and

Jay Craig

structure XX%. operating that company at convert looking cyclical provide environments and would target XX% we that at do. really to we that constantly the end with in the You can we if try expect deeply James to We're of our cost lower guidance conversion of

first in Obviously downs we're resolve our rapid ramp doing this production. being successful in that spite this of quarter in of quarter a

manage looking While at very potentially take volatile that we we're that to could volume environment. actions continuously

James Picariello

you status the some the completely of is or have to work more still restructuring And is do plan do? Okay. that finalized

Jay Craig

established further if are complete, previous structure dozen is reacting we our have we additional track but very we last Again very, are very take monitor -- we the being continue years to see to cost will we've record the we cost half I expectations, virtually good over still believe and announced in declines that a actions at that of but market there of to restructuring plan our again quickly.

James Picariello

about and it. Got in so it. AxleTech and the the are the I in the apologies, that you for just AxleTech this quarter thinking And then and the missed should be year? how on was my of Appreciate terms but contribution for maybe what AxleTech this, realized revenue full-year synergies

Carl Anderson

it’s Yes, Carl. James,

from If million the revenue, about AxleTech. at of you $XX had AxleTech revenue look we

planning on. we’re as our I that of expectations it kind internal we to actually expectation delivering -- the an from seeing, we're what above think relates what we're synergies

seeing itself, of which whether in some business of the you're seeing similar rest it's aftermarket and seeing Highway, general just of business think like softness we're the I business. the to defense is we're kind areas the with Meritor’s what

of But would the say company. with continue the acquisition we and be overall, to the I pleased with very strategy

to on a we’re plan just is revenue point. softer but originally this what if I had stand the we're than pleased synergy six months team's very the really think overall, with ability where at ago, we discussion execute and we the little planning, is what bit

James Picariello

thanks guys. Got it,

Operator

you. Thank

Our Piper with Alex Sandler. comes next from question Potter

Your line is now open.

Alex Potter

maybe production, electrified to in Thanks. products? rate chassis going are or I with guess run in trying you be what them primarily in, digging providing little I bit drivetrain fully guys. once Hi, is opportunity PACCAR. guess is that this more to EV understand a this Interested to TransPower, I'm these on with it components going eAxles, through something flows type be is

Carl Anderson

answer question, good is short The both. Okay, Alex.

equals the felt TransPower’s provide the full two relationships be beauty of they're in customer capabilities two added three and we integration truly that TransPower that is the in in the products investment could able electric them or So, an that's on plus the vehicle. for to four brought Meritor we with

be including wholly TransPower will providing where on our some fully integrated vehicles. vehicles for eAxles composed have on components owned Meritor also we can So we have will they electric working the be of And now PACCAR. with subsidiary of

Alex Potter

in the And view space for. to of some know on do I and the but not that line that of don't sort I prototype at some that's content chain you internally. differently? think Maybe Okay, point, thanks, decide case your and think view a penetration vehicle as maybe what what asked themselves that. to threshold, I is I the have presumably guess are going the they're may they I reason agree the to core certain or truck I electric question said it manufacturers supply on when you not, going reaches the OEMs on But mean to that once quasi take got believe they'll rely eventually the with what's

Carl Anderson

couldn't mentioned we're as doing expect integrate example, of capabilities primarily But fine. we labeled TransPower, sourcing an they we've you now. very work right looking that what forward the to We've them greater and No, open what before that with those. teams management I development will battery work scale OE’s will towards actually purchasing where sourcing And in-source. our architecture want time with they and agree of more, we battery they on to We're an systems. for out eventually model we that's that as with specifically, work we've closely taken think because our as have in we've them spoken over

vehicles which getting other offsetting But production on will in that which And on more to axle. that rate more be on full run content segment execute market will placed to were a the items and eAxles all with will up be a that traditional the begin developing two significantly won't decline revenue will one to be than secondarily, then have end coming the are of services. side, different there the integration able that is be scale

will our those we is be technology So proven. providing as

Alex Potter

Interesting.

That slightly couple on But gearing, based that thinking things about good omitting plan here brakes, some some that just below maybe sure recent your good. then of you very of disc that those near-term sense. I a expectations? plan opportunities spoken performing more the I'm rank order are growth in ones more off-highway well. recently, other with like maybe pretty line share Okay, truck maybe if about duty more better makes wondering are medium doing was could maybe electrification, outside initiatives as experience, you've which than and precision

Jay Craig

opportunity wanted during they take to on sure off-highway we the this synergies, significant, obviously side. to about we breaking disc him planning AxleTech the the Chris to successful the through we have What But because and there. I costs those I integration and I'm all is, braking opportunities garner is opportunities, this of military Chris, period focus like XXXX particularly revenue speak as about are do would making also of speak we is biggest going but

Chris Villavarayan

Thanks, Alex. Jay and good morning,

the you $XXX the when products, piston the look single our MXX in I you revenue. presentation, we’re our is talked right about and think disc million our think disc one as brake, of target middle new launching. we And brake that seven about is at and

one the year-ago, take the over a we're future, And on we a as announced this brakes grow Daimler. have globally we looking disc to and we're agreement as we growing customer disc in with and plan here air brakes. standard As

So is strategy our business forward. the going brake disc considerable growth a part of

Alex Potter

a thanks guys. Great, very good, lot

Chris Villavarayan

Thank you.

Operator

you. Thank

with comes Johnson question next from Barclays. Our Brian

Your line is now open.

Brian Johnson

outlook a both I kind question housekeeping of then more kind Great, strategic have and of question.

but detrimentals know XX%. was terms have I I downside just particularly margins In and commercial in you commodity how managing in by strong the a of was truck seem tailwind the would particular OpEx SG&A to you very was before, which there? about in get struck with talk gross you're maybe hit side. or held the better, conversion this at gross imply that on margin there that perhaps the Could

Carl Anderson

we in think some we is kind in Brian from the as you're what back the margin, about Yes, did November quarter, for what Carl, full-year. I see we right talked far gross line it’s on see the in as of steel similar did outlook benefit

would I steel digit say the quarter. So for in was mid us probably million single a tailwind

had well in in significant a as expenses pretty quarter well. our relates the improvement also cost managing freight kind of We and to really labor it as as burden

it's improvement combination type items drive us. really, magnitude gross a the helped all which for which the it in of for the same in margin we really those was around saw of which quarter all were of of kind So

Brian Johnson

seeing Okay, confidence how some both second it's North then market America you to over year? that coming up greater and the what held of kind gives the in in going question it’s are around how mid in you truck look

Carl Anderson

we're from closely. the coming seeing line the I top of boxing we're And we external in in those between all actually in then as customers, of think on call right our it FTR market, three I the ACT I and to are Well, terms see, that, look where very XXX. now believe line rates agencies with let's XXX at in that rating

see what with quite we're So going we forward. comfortable

we've got two electrification the far the in more efficient. to last years as and on see. with and even we of see that with new obviously, the over path trucks more respect to going get future, diesels And trucks I Maybe efficient are your we seen question becoming where think

we've one that's place play strongly. So think I where really

important talked on will think so we launched as the And XXX,XXX efficiency we if think have about Jay it's I our axles know, that to it high it's the efficiency you the equally coming, as you about well recently really because gain we've I axles believe one axle, just to also XXX,XXX. forecast, drive want vocational the that clarify new point that and

Brian Johnson

the you motors Okay, the how control, software? is prototype made, finally you're electronics, the obviously in whether things through actual the some software, but flow talked the early something providing are about OEM management, and acquisitions writing that then power are thinking across the from you like about and the and span then the hardware to partners the PACCAR battery, the you then the battery you're managing its look some days you the software would itself, the that of basically doing it's or where flow

Carl Anderson

that provides equity the Very other of supervisory makes critical, to that controls the the good the remaining on investment system controls. all including was TransPower software why now run in TransPower question, instrumentation the the breaking vehicle, so mean, and Brian. I acquisition area, supervisory the that's whole

determine battery rate energy. energy flow the of provide the energy also They controls management that utilization and of the

and engineers at we TransPower. software do So software have

obviously In a because cooling up software components the of capability lot ramped in within engineering motor requires manage eAxle addition, that just we've software the components, system intellectual our eAxle features Meritor, properties. containing to

our as the here that's software team focused on research in software center well. have eAxle we an Troy the So on entire

Brian Johnson

that close that, algorithms loop data refine out getting of part are algorithms? to the the of allow you you and control vehicles would as And road on

Carl Anderson

they Diego vehicles ride me test and any of our the Yes, or can visit you in come we investors to welcome with and analysts how on see San TransPower operate.

and on these miles right of now. vehicles have We test thousands thousands

Brian Johnson

And continue any the to data, here the night and? I’m on road of last those plan get thinking once to harvest

Carl Anderson

Yes, continuously.

yes, misunderstanding true. But it’s your for Sorry question.

Brian Johnson

know, for the has Yes, its advantage Tesla and the of in of BMS I thinking getting I'm control systems? terms

Carl Anderson

will OEs to management I although and question, that of the is some enable with do as in with they And that very a our data to take large start open we Correct, of them it we're that. heard control well. as expectation them previous to working of think

Brian Johnson

thank Okay, you.

Carl Anderson

Thank you, Brian.

Operator

Thank with comes Ryan Brinkman JPMorgan. you. question from our And next

is now line Your

open.

Ryan Brinkman

Hi, as wider provides you those thanks which repurchases what curious for taking macro authorization million your intend plans current before, remains flexibility after another targets pursue mentioned authorization toward be you or the that variety to $XXX have only is completed? scenarios. meeting you've of though, whether my share here, longer-term in might just question. accelerated given Clearly I'm a the

Carl Anderson

to over of shares. XXX signal to free have that we of first months another couple generating Good I think opportunity million been us an we're million you're which in quarter It's last aggressive to morning, We related in And front Ryan. next us. we is have potentially right, authorized we've of years the what the repurchases. has the left $XXX Carl, go board absolutely the to in did four cash flow pretty repurchase in share up

think I fully we'd be will like our the execute so existing And program. to approach complete and

especially to a where believe would I currently be position we'll stock that, that is trading. But seek we authorization, once in do further the

Ryan Brinkman

all able mix within about running full EBITDA, And category? a that investment of disaggregate volume range, the lower how performance, fiscal you know that which are for year? within investment I or of category. is just this bit, But then Okay, it what bucket are impact catch to you the track that the performance X maybe performance call electrification electrification little thinking Thanks. you'd And other driver category of out Slide indicates great. decremental regarding end on for your just solid targeted your

Carl Anderson

look of And continue from year-ago. to a least for about I in to probably think Yes, first I specifically, that what think million so electrification on really the about, year. Ryan fiscal ramp-up the quarter, year-over-year we this basis talking were quarter we at as do at was or a roughly we up flat the $XX expect rest

with item So PACCAR go acquisition. overall when about as as success the downside components see forward, do as is and itself, new the especially well as up we that it in we this you the ramp do line math win with electrification kind pickup the the but XX% had with of all relates spend TransPower with we've about conversion

Ryan Brinkman

great. Okay,

about it case I Just that invest lastly to on you're localization, light was little in Is a reticence bit? some capacity new vehicle excited regarding maybe region been savings significant facility to which offset increased it also, from me in a helps talk you say just cost the more currency that capital suppliers. heard risk? a Why Brazil, you Or of move. of Can that in there's part this?

about replacing thanks. to it's some that expensive helpful, maybe would be So older, more think anymore capacity how

Chris Villavarayan

excellent, Ryan. I'll This Yes, that Villavarayan. take one. is Chris

I think several that XX two market, is points unable landlocked, over Brazil years, you through Meritor. as And So seen the many hit site. a could very Brazilian quarters you in been and for is and our to our of we've you important have we're And grow that imagine, on location from years. current market actually for

and we And years. been many decision to a long-term we've the so XX years make working over ago for here made commitment facility a here deciding on new

local facility over It the and facility, and cost. it thoughts we’ll need best-in-class continues position. new us to strengthened provides four to the cost another modernized have a more are our we to point five your seen drive also bring add to yet customers market we've capacity so then more build also our and And opportunity, us drive years closer last to the that's to drive our content with strengthen are new continuing a and

as largest the pointed of opportunities MXX cost one plan. in is Jay it reduction out, our So

Ryan Brinkman

helpful. Great, very a lot. Thanks it’s

Chris Villavarayan

Thank you.

Operator

Thank you.

Joseph with Capital comes Markets. question Spak RBC next from Our

line Your open. is now

Joseph Spak

first the guess just industrial down. Thanks, margins everyone. are trailer segment, so on aftermarket I

You out of in called integration. some the

whole for we then the start sort we margins given should that the fired? but now year Like outlook to they for down incremental the some now in ran do can the year, be trailer segment through them Or headwinds? like, your year. what be lowered You of modeling the expect of synergies

Carl Anderson

business take trailers, The Yes, in. I the softness Joe the see we general aftermarket year in the as We're think, specifically the this seeing the seeing, margin increasing rate year. general we account that a know, definitely we're progressing expectations, that and just from thing we're itself but is throughout softness, quarter by we you don't also of overall we run across with some finished seeing of see we just but first one the we just number in increase that industrial the segment, and but here off-highway segment, current give the definitely obviously, to what our talked North margin seeing parts into America. are a kind for

Joseph Spak

Driven by synergies ramping the on?

Carl Anderson

Yes.

Joseph Spak

not Okay, to-date. also very could a of been you've I think surprise, But sort them TransPower hinted or be working closely acquisition, this Jay full indicated possible. with the you've

now do full So does to weren't before? specifically like, that of to you what allow just do you sort able the ownership

Jay Craig

Well, base I how statement employee it's Meritor. of to there the just to overall are think the importantly

stage bring different production to skill vehicle of sets. over originally I TransPower think greater TransPower history we've period can we than even And this Obviously the as for moving Meritor low And XXX each has industry. an we're assist in are the year had stage. for that those prototype commercial they're volume investment in them. from production what we estimated. we perfect the found And we've home is benefits

we expertise us for months floor. actually that brings now. a an integrator. in have the many of jump running us Meritor as this particular development a executive has in the Production Diego San resides and to starts of production TransPower area and that full That's And Head vehicle And is

perfect think part thrilled just are at I the meet Meritor. TransPower of marriage, that overall, employees So to it's I been be a

progression. So natural I just think it's a

Joseph Spak

Chris's like look comments you've appointment at Okay, time. level and all then sort I forward exciting with operating high very story to and of lastly very and him. me, for and a operating some talking from been of the COO, Chris, also an more But Chris appreciate to with

guess now as to see that any And that the planning role? you the right have this mean of way respectful is believe you that did in specifically is time in well? to led I there what I but succession So possible, most element decision this

Jay Craig

side. really remarks, everything foreseeable elements my the future, to honest, stepping to of It's product see the that through in really operating away promoted. of I has side on planning saying was been reading prepared side. I Chris anybody in my twofold. there's whenever operating Well, from time almost the partner any related company. in the gets I'm be not the always succession time But

or jointly has say would Chris led we've I led. either

directly importance electrification time decision the those decisions involved would of So anticipated. aligned I of is critical for I secondarily to all lot my capital desk around than we And the those think think other with encountered. a make us as that more to happened sure just as it's ended business. much Chris’s mentioned, of and we're more have quickly the the business expect, get on it of that and business also, has points much ramp-up rate recognition the we of decisions and But have to been I've me flowing really right different you any up allocation

Joseph Spak

Thank Great, that color. really you. I appreciate

Jay Craig

thank Okay, you.

Carl Anderson

Thanks Joe.

Operator

showing the at Thank to no like I'm I'd back this queue to for time. the call remarks. questions Chirillo turn in any you. further Todd And closing

Todd Chirillo

joining have to Thank today. a any out directly, our Please call you you have questions. and Thank reach me good you for if day.

Operator

great in program thank conference. gentlemen, disconnect. participation for Everyone have you you and may a today’s and Ladies today’s your day. This all concludes

Meritor (MTOR) 30 Jan 202020 Q1 Earnings call transcript