MTOR - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and welcome to the Q2 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 Director host of like Todd today's now Senior Chirillo, Investor would introduce for your conference, I Relations.

You may begin.

Todd Chirillo

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

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

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

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

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

Jay. to Now the call I'll turn over

Jay Craig

challenges Thanks the thanks we Todd by we faced and dedication morning. Meritor to employees their on expressing like today. to begin and good I'd my for our as all hard take work

against workers delivery supporting want that our frontline part privilege medical, Meritor communities of to also thanks world. remain and the the the support I in the my had to to of As other an business, fight to products around essential Covid-XX. food Meritor committed express critical the for employees

providing a on second quarter spend an status in Covid-XX. the light couple the of about minutes talking just today business update now of the I'll before

first late the of was throughout and X. second world company beginning continuing into in China to pandemic the began extremely Slide in impact the to then the turn Let's rest before the in third. well production beginning performing The mid-January quarter

highlights quarter the from million year a quarter will but Carl from from of finished up associated of with same year. more up Sales was This period $XXX detail, the due income income margin, share quarter. last driven termination volumes. $XXX with the can see EBITDA million tax to We XX% same million, lower year. however distribution $XXX last of That with the were the adjusted XX.X% down WABCO. here you the in was from arrangement by $XXX million after the last

of trailing million. second Our XX% This Cash of $XXX $XXX million. balance on approximately sheet at the liquidity quarter end was was the represents our position XX-month sales. the

of million remainder be remaining to access have the $XXX in under facility revolving this the credit covenants of facility year. to We for and compliance under our the our with expect availability

forecast to we it we Although, foundation past of extent strong as the through the on advantages the several still early built the will is provide pandemic's industry, years crisis. impact accurately this work the over

X. Slide go Let's to

best have level challenge that we employees is health world, intent this As we of excellence global protecting be is highest it our comparable the we improved up of Over my with safety face as our to record time, the bring during priority. companies crisis. our world employees operations the maintain safety around the in our and the to of

special role outlines [Indiscernible] new procedures to heat that this attrition and at frequent areas protective plant, that as center whether asked a will locations operating that and best being the in that make developed protocols across implemented This in have mapping identify reality. we and it's experts safe the environment. personal entryways or and a measures manufacturing have coaches, practices global ensure are require We of company. office, wellness following practices to a include Auditor are assume our of plan locations, be Safety checks, more ensure practices These test distribution each preventative common It sharing distance with He to attention, policies includes General the and procedures equipment, cleanings, best for up audited X:XX:XX.Xof start. comprehensive Meritor's in-depth and additional social indicators that Chief of Compliance Officer. followed. to consult needed I will outside visual set

interruption Slide over our to the critical we parts global replacement two aftermarket months business ran X, on a current operations. update maintain supply the trailers. trucks provide On of Meritor's distribution past for and without

of considered lower to and and applications. the bus volumes off coach, defense, for other fire Our support terminal tractor, rescue highway vehicles at industrial critical business production operated and

North in We integration limited projects production. for have also America our tractors facility California maintained terminal electric Amazon primarily to and companies And battery to critical TransPower we for our resumed kits for work Europe operations Currently, continue vehicle our in Kalmar electric delivery majority Walmart. and from on of delivery the like of customers.

for are indefinitely. committee in XX%. up to in in This coming time expect implement executive Since swiftly current term reductions base the of that reduced salary business to actions the at April. look us and We operations allowed the including employees to will salaries remain evaluate South a also levels reduce expenditures. payer Over the most of XX% to time, X restart previously in actions we me reduction to that to in spending next to discretionary for salaried These actions longer reduction XX% last have pay early be will weeks, May to resumed lessened America beginning China to set reduction for addition series India. XX% included month. employees steps. in capital announced the operations and and XX% Other we in fact of a acted full Salary March effect XX%. took

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

Carl Anderson

good quarter debt financial related review maturity second liquidity retirement and today's results, Jay, call Thanks, On and I'll morning. our position, profile liabilities.

rise to opportunity ability take to before us. express challenges, an placed to of the how been wanted which have and I proud quickly begin, our team's mobilize I'm I Before to

to the million. $XXX let's lower conditions first financial through Sales XX% $XXX all in decrease in truck compared levels. China COVID-XX with decreased in our million, down overall revenue $XX our company from The $XX segment the our AxleTech suspension impacts Now, market XX% second including lower were by generated offset year. and business. driven demand, in decreased to production to Overall, of market and last partially $XX Trailer million year. COVID-XX and income operations in on late or saw revenue across the regions X% was contributed production walk attributable segment results Net million, from was as continuing year-over-year to Industrial same In truck compared line The in Slide Lower to then million volumes year period last commercial $XXX sales. the Europe global to also beginning segment was the prior of $XXX last mid-January sales quarter the by year. Aftermarket, were in March primarily in same X. down by million from million our sales from period due sales

with the after by income year-over-year the higher distribution tax WABCO. mentioned arrangement of associated million of $XXX termination driven net Jay income with aftermarket was As

compared million $XX revised XXXX period EBITDA in compared The align adjustment Adjusted $XXX a to Adjusted compensation a the margin the to by incentive expectations same was in of million improvement lower was ago. was with quarter XX% year. EBITDA fiscal driven $XXX largely expense to last XX.X% the year in to due million second margin performance of COVID-XX.

in $X resulting a India. the change tax law from recognized also benefit million We

year. commercial offset incentive and volumes, truck costs, commercial cash for the was The free increase driven material by EBITDA from our Aftermarket, same Free for net Trailer compensation margin basis period X.X%, and for down million compared adjusted segment was by segment Segment and lower down margin steel million other XX adjusted in $XXX $XX Segment Segment $X last driven received adjusted EBITDA was million the $XX million, to flow million Industrial year. XX.X%. to EBITDA primarily primarily quarter from at last $XX to $XX million in from $XXX decreased prior Segment by margin the costs. in decrease compared a came points XX% decrease truck second of EBITDA were of in cost, flow last EBITDA in adjusted adjusted WABCO. the EBITDA million, year. cash lower year. of the The in quarter was lower partially cash

a EBITDA included review subset the outstanding I'll XX-month It than cannot more $XXX to WABCO income trailing we debt important by trailing is covenant of pretax exceed note, debt the XX-month credit is is total EBITDA. The compliance priority on priority sole the in Slide the recorded associated X. with Next, compliance governs million termination facility as our X.XXx. of calculation credit which debt based states The debt. on revolving financial facility

in you detail. calculation walk me let Now through the

priority loan funding, under is US quarter lien plus as term second outstanding of any $XXX the any of inclusive balances secured comprised total, any consists the our US outstanding for debt capital any factoring securitization First, of us In leases. priority and debt borrowings of revolver was million.

to compared interest XX taxes. months compliance depreciation, then as which consolidated with debt amortization, starts our net and trailing priority Secondly, in back added EBITDA income

the X.Xx compliance on is the million. to the is of EBITDA last of total the achieved, quarter covenant XX quarter. limit priority compliance results are met the the is covenant If second compared day Including minor adjustments, in under of debt for trailing significantly X.XXx. $XXX other end ratio entire at measured months the was quarter. Furthermore, The following compliance EBITDA being each the only

included fiscal expect to forward, with going the full in termination is in four As the calculation compliance WABCO quarter our priority time, facility. and be income access credit from throughout year maintain at debt will to for be this the the our covenant we

our to move profile liabilities. retirement Let's which X, Slide debt and details maturity extended

the As you significant the XXXX. on maturities chart until have see left, on we debt can no

year have coming $X of this debt In for million total XXXX. million only $XX in fact, maturities debt year fiscal of we remainder and the in due

typically You will which year this facility year. facility. do the an later for for expect note this year, maturity in securitization US additional we We extend would again to annually fiscal saw our we XXXX,

very the higher liability Based March The asset have expect have required estimated discount funding have XX% which XXXX. with runway bottom we we we from has translated improved maturities cash are rates net widened. been markets manageable as in to million, status. contributions our through returns that $XXX the At the a combination seen pension our years. with this, strong while end of of This XXXX. obviously end quarter, US through XX% actually the spreads a has financial and we corporate which over challenging up And plan, clear ended debt by as cause over status a couple next was second driven a funded significant on line XXXX, on overall of of no our the is

plans While in susceptible as our changes will returns the move to and of the asset rates year. remainder discount we to continue be through

hedging income Our asset allocation liability are more performance the is fixed with given skewed we pleased strategy. Overall, to towards date. our

to this end of well-funded cash pension any have the years reduce plan, $XX the Turning we have discussed Overall near-term. we maturity and these taken previously OPEB we our significant was an liability, this to extended steps significantly have profile with from in recent At cost liabilities in obligation. and million. as XXXX, liability only debt don't

navigate the with environment. balance well-positioned over executed several liquidity to we us current sheet position have current years makes summary, our the In actions last along the

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

Jay Craig

our turn X Slide for quarter Please Carl. outlook. to third Thanks,

have it I continued earlier Let our of segments me operations to said run. our highlight as assumptions,

We uncertainty our XX% running is is our and restart most $XXX million. in while early of businesses be and is of May, we around third a between expect revenue of during there ramp outlook contribute $XXX commercial plants To expect as our the volume, quarter. these up million on range world of driving business revenue not to clear, truck of XX% which our the large will to to timing

$XXX factoring the of cash These range our be programs. from flow million includes of unwind to the $XXX the impact cash Negative allow $XX impact million we flow third to programs factoring, million they to is quarter. receivables to This generated. during from in after operations quickly operations expected of $XX us one-time of million. expect are the the monetize of our negative Removing

to to to new able investment includes expect the in emphasize the this aggressive we running we were in quarter We range required This protocols. already margins, detrimentals in of XX% XX%. to want cost taken. third that measures operational sequential the to implement term. to focus containment achieve to the the additional Turning safety cash and hold due quick flow near on to have are we I business

move Let's XX. Slide to

year and necessary protocol fiscal providing the the place, PPE. of production, that As in second-half restart sure safety we we every enter the including are making is

cleaning and obtaining it disinfectants. existing of quantities With the challenges, supplies masks, large gloves,

sure We start labs has supplies plants, our that global will quantities hand testing on and before we offices. make the first distribution of each centers administrative these necessary to allocating

have the work with salaried from I notice. With pleased made our our have in mind, adjustments to that remotely. employees employees further been will home that until working salaried

have to of impact see initiatives. cost begun reduction We the our favorable aggressive

believe operating the minimize necessary near negative these we the outflow stability to mentioned, I As in will initiatives term. cash provide

We are working production with run schedules. their to our to needed closely as customers meet

term. operating assumptions Our on of level XXXX cost near will of and we include minimizing actions decrease remainder flow a focus evaluate additional significant production the a and with the implement for in cash

planned evaluating to demand with weak our strategies the term turn we outlook attention many for fiscal our XXXX outlook for We we be may plan global now to environment where our the the modeling set provide MXXXX quarters. the longer the for a term expect are outlook products our include from actions is you a for benefits purposes. and for see in the appropriate term longer As company, planning call of This earnings longer executing. on will we're if phase quarter performance there forecasts third we summation with comfortable of for we a are of a to that market

want best long thank any in created crisis. are in during have the we we situation Meritor will the I to unlike the unprecedented term. for for full with yet company employees While repercussions unknown, the their the a actions as past pandemic believe focus the taking we the this put position faced

dedication employees' and been has responsiveness and each to other Our customers to overwhelming.

Now, your we'll questions. take

Operator

Instructions] [Operator

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

You may question. proceed your with

JosephSpak

to good is ex the decrementals all all is I you benefit, know and quarter there or everyone, decrementals into is it between the gap you step we at like sort next else of quarter. driven just performance? know incentive down Is there's I sort seems bigger if the guess the first hope hear everyone voices. that this help that as feeling clients of morning, some Good on even your the in volume Thanks. the sort still of look question anything of okay. of sort could that bridge the a

CarlAnderson

the Yes. relative to quarter. Yes, we next to Good sequential to well. One I talk this, what you look morning, quarter. was Joe. Good provided as second as we a look think at the

impact I look basis little you the range. for as quarter, it through in the year-over-year actuals, as ran And it's our well of as as we out kind you running - a think the math tax - lower cut one-time second did when of in gets EBITDA. benefit from in on as we the that through bit kind comps a specifically pointed XX% the low far incentive

JosephSpak

sort temporary. Okay mentioned sort sort viewed in as I of out and Obviously, be some world, maybe reevaluate new as of But to while the yes make permanent an of more actually those cost that you somewhat Is there to you a mid bunch temporary just, cost as guess the related. as term and reevaluate maybe I guess new in opportunity of of era. short-term the savings structure? can long some taking of you

JayCraig

term be to successful back short allow XX% is actions including actions We take what a of what potentially to what salary the term question. longer downturn. additional time that to this this order Thanks, to should to a is we was can us aggressive crisis and us in throughout we could Obviously, look like Meritor. what the be to sit reductions say Joe, XX% the longer impact And I Jay. was comments. in think good my took that referring XX% very very allowed

on strategies So we and as in year my We for for we'll structure set I the our are to looking comments to right would we think beyond. mentioned what and them that. expect fiscal basis at beginning see XXXX execute cost

JosephSpak

of to I guess of, as over potential you hope, obviously versus know depressed some the customers at best I normally timing levels made I to sort one, market much it of sort you what and of even and would even ability the pretty but next typical brand be you tough seems of Yes. look growth peak maybe little to pick the very industry, year have there trough Jay, the, healthy it return steeper, your XXXX. mentality, could what obviously don't wanted a cycle but a veterinary maybe come probably plan the you're for otherwise because the end of sort COVID like of if sort of your could the later. snapback sort if replacement some from end guess, hope year, the around And thought a the it even to calendar of hearing sometime you be maybe -

do level So – high thoughts what are you have any on that?

JayCraig

as snapback and expertise we're value quarters volumes. to certain retain up the likely most will and aggressive to for capabilities hope that in what time it's who reticent to snapback for that you to as is is, I it it's, project what company to they think is so the to the going the we worst very the for far, that I and be looks best future. comments customers does is – on And – have as setting as our calls, to successful goes those occur like long been sure well. I we Well, mentioned What they've ultimately in and us the on plan and think us their in believe for as capturing make our And outlook you working in it team we the difficult from make that retain the always heard respond near-term. say have been the and

Operator

Thank you.

with Sandler. comes Potter Piper from next Alex Your question

with You question. may proceed your

AlexPotter

Yes. is Hope Thanks well. very much. doing everybody

that are reducing things mentioned are to discretionary on sort just get you back you not you continue maybe in macro? initiative trying on of give cutting think to important and a a on spending idea the You examples this can that of of CapEx even sufficiently better spending, that are few just investing in

ChrisVillavarayan

morning, Good Alex. Sure.

you me, think this is Villavarayan. Chris I know

example you in or making we new investment. we building launching where If were at looking Brazil talked quarter a significant about for it, a facility at last look our

really and that on slowing that. As at we market, see we like the decisions making then for current snapback we see just look market might the out down and investment where example modeling

We very the long-term in markets we short-term with down investment. when you we decisions what our for on where might that proceeding about investments are short through term, our almost we definitely XX% prospects slowing could XX% the in sustaining forecast, and make but do. Brazil, facility you look for the Also we're running to at imagine look think from

mentioned term However, in strategy I we the of as terms that, electrification, process thing driving think in is as long electrification into not we that we well slowing our systems down the in we or on of one the as are delivering Jay, TransPower next think as that investments are and for investment quarter. he are how the proportion running facilities also the and continuing

AlexPotter

you smaller know balance That's for was up could sheet guys suppliers. I you companies end of comment potentially I'm risks the good. have. risk, chain you sort see also on Very this if not of having helpful. particularly upstream that thinking supply that Okay. you all wondering

any to the this of that solvency issue, on. is concerns risk suppliers you an you know going You rely for be have

JayCraig

together place do manufacturing put question, balance same have we the put provide multi-discipline playbook And the team XXXX-XXXX immediately time in to that we who that period. may think Good enough purchasing, active do those we're a suppliers, sheets recession more chain, through of where not this including Alex. expertise supply monitoring using up finance, liquidity them we much the particularly during

are we're So in challenges that extremely necessary. successful XXXX-XXXX have financial but execute in into operational if not that send engagement we locked and same far, they and that we the very Included is for did seen monitoring them we've can assist was agreements those to of we already that closely suppliers disruptions, outside experts any that it to us. with experts playbook in

AlexPotter

Interesting.

to relationship is – was WABCO, now the you good That's forward Okay. obviously all me if ongoing this I historical the what well or thing, severed one hear. forward? you was, relationships two essentially update relationship the us with infusion think – on any going Have companies I timed. between this, there is WABCO going not? Can

JayCraig

Yes.

it, it, are much certain for revenues misrepresent want embedded here I, a have smaller a as in And distributor the was products. for a fraction We outlook through relationship don't it, those business previously. our of aftermarket business our the expected what it's quarter. I But third to

AlexPotter

at gearing That good. mom type you aftermarket Very that interesting some I had historically I Okay. machine off these guess two an don't smaller support me sorts maybe looked of of always business. pop know of sort shop and Last machine, struck as I operation question. and to highway. know questions.

potentially First, acquisition do you do of continue opportunities business part building will think is, you companies? that? present want little these number the COVID-XX of to do that the with through And to you two question

JayCraig

good That's a question, very Alex.

it who to think as this the broader this the are financial time, as there opportunities will well around for successfully make in growth wherewithal see focused maybe burning like be operates At like bolt-on have we like withstand downturn. operate company gets of didn't I present or themselves time. a M&A And question at our don't that of AxleTech, prospects add in point certain obviously acquisition people it's to electrification, recent through crisis we configured. so as we our the need this the company to areas that currently highway acquisitions off the

revenues our of that at out period come during crisis, the revisit we as on we and if opportunity incredible may we time. the landscape is time growing that just there Now see some

Operator

Thank you.

Johnson question from Brian next Our comes with Barclays.

your with question. proceed may You

JasonStuhldreher

sort labor we've the is talked Stuhldreher Truck. Commercial in you the And variations footprint This capacity sort maybe first flex of to in with footprint first layered Brian. the good the past debt, the on the on question and margins given direct of Jay, Jason about giving ability just that for Hi, Commercial In Truck morning. space.

curious frankly thought quarter. bottom we pretty thinking layer acquisition of mean Just those that Aftermarket, from this in I quarter on be which benefits capacity quarter, margins offloading Trailer. were AxleTech margins much pretty the I little layer then was any Did this sort impressed dilutive capacity saw case hit that last already or good. and the is And did similarly of that by the would was the I a Industrial also bit now? by not that

CarlAnderson

questions. is Good Carl This Anderson.

mode but your look the running we next question as of little quarter. over coming capacity as Just much ramp eliminated kind point. some the on the in bit of have that first at incremental in with chains, first relates to kind carried near the that of little second those back in could at part some go in kind of quarter. some supply did forward the those depending Commercial most were on truck quarter. cost couple Truck, you as much up we for bit that We a have high last quarters, And nowhere eliminated we're the in We markets year we see pretty layered been a pretty where as maybe a been second have cost did

question. And relates then aftermarket your as to

initial able is plan for of One we've the overall think to relates revenue that's synergies business. just thing the achieve we're it that. with to AxleTech been amount softer running I than as think; business, that pleased a little I bit very

currently, aren't revenue where as them hopefully time at we with be want going think to begins margins to pick position we're but in exactly acquisition you I know I in point as some an business. And that think up, so the be over good

JayCraig

got think layered I not coming associated premium with from Carl's of benefit to adding just seeing a is capacity with all costs benefits freight that. of the down also And we one also comment, the costs the

that benefit think the from as as we also So seeing layered terms in premium the I there's freight. cost from internal as components overall versus well of we're both our the the purchase of capacity And cost that benefit own some well. seen have

JasonStuhldreher

Got right. it. All

pivotal electrification shaping think to very Okay, And we're pipeline activity broadly the color. just mentioned about going next think coming was out XXXX we I opportunity, guess I how helpful of then the be the here few more quarters. has mentioned, that you've to year terms a Jay, awards team in be as the in of

Just XX current the is basically full to if curious that months if – industry or deal is out situation? push as the X we still is that that with pipeline if

JayCraig

Yes. team we're It's a of Obviously, to the the schedule. PACCAR very where spend technical good a be all remains with But question, question deferred program, with the that Jason. will it's I preserve something so far this PACCAR be industry had as capital. particularly updates it on recently. the think associated viewed largest can on the programs program, I've

spend. in expense from and Our performing to products the and are not his one mentioned Chris dissimilar on one reductions not too extremely no that well both area with we've this as all so CapEx prioritize continuing And we comments, made us cost see are is sign that our of the customers side.

at in big and this continue investments very code year a to year be look electrification We are retaining we our respond still opportunities us. to to active for and continually

Operator

you. Thank

Ryan comes next Our question from JPMorgan. Brinkman with

proceed may your with You question.

RyanBrinkman

how their taking for half my year question. low, expect there Is calendar back and anything relate are books sure about Thanks can morning. across various visibility there lifted? and I'm are the customer good after also bounce end off-highway, of lockdowns notable that Hi, is in specialty look presumably to trailer you back highway, your et your or differences hold commercial customers you up. you markets end these markets and various cetera, know order you when the but

ChrisVillavarayan

see holding much of last that quarter. short-term high customers truck. in as well We a you dramatic maybe it aftermarket it's you use seeing very but But strong. nothing is seeing can know think just what XX% know we've our maybe weakening we through about this let's that The I'll from aftermarket just at in well. to quarter And obviously break travel the And slight we as well the holding you seems least guidance perspective take the products Again, not think that that's next into from window, at beyond a you as we're to areas. by the you one looked when future. you see down near about Ryan, as are be and the giving level, know we're if the three aftermarket

highway of defense specialty the to Moving space.

As as see could The significance was probably side XX% is board to the nothing April plays we back going have but we order to where consistent see out. see boards and that did and late we're Carl getting say demand think order know, on obviously we of notice of come early noticed, truck got pointed the one market weaker, in. that's the I XX%, up or what out, end real we April maybe in you the at that customers coming we big obviously how May, about that

all we we be So, X. up as see – most up up customers know be of May you the will will as

think good of under by based we've that all and way how still is I'll you seen breaking so on whether tell then it see hard come V perspective. are would you will are hold will up. will And now So and and markets know down region two all pretty know you America markets that up then a India South stimulus. just those I be time back up But address China, a that quick time as to maybe probably a a in as, shut

customers have markets, the in you as see the other those just to addressed inventories know And previously, at. FX. were low with we two come have think I back our where two markets But

RyanBrinkman

Thanks. Okay.

You know helpful are those rundown.

Can various are current Volvo bolster March help I'm P&C mentioned covenant factoring lastly your would it seem us, I the something prior was like liquidity that that unwinding looks something? US missing you me, release? the previously might Just mention facilities remind K in planned relate your a or one in facilities or I Thanks. does And the the just the because of environment maintaining think has asking know you was to attached. facilities. that am with in it why some from it you XX that to

CarlAnderson

question. Good Carl. It's Ryan. morning, Good Yes.

think unwind lower in a program. – where are chain is I really the the especially utilizers sales Europe factoring a function supply of that really having lot it's we financing of know - really You that's

a because new So - have far perspective. need in real you course more because a working we're capital because payables to sales not off to kind are receivables unwind sell the of as more, timing is receivables. the unable it's the lower. if lot are is mismatch And run just the just normal impact natural as you The sell in it's obviously able to

back XX, March provided consistent we So yes, out put X-K XXth well. the in that of as March kind it is we with what

Operator

from comes Our next with James Picariello question KeyBanc.

You may proceed with your questions.

JamesPicariello

guys. morning, Good Hey.

on safe on can encouraging environment, Just to challenged breach clearly point? include covenant the just And change regarding your is gain that the any the next this and Thanks, now that And over based assume the Jay covenant, sale outlook been is debt it EBITDA right? mean clarify calculated; quarter trailing most EBITDA, over, Meritor very any on there total Is be third seems Carl. the over how the that aftermarket just XX-months? it WABCO then, avoid then I that the priority your you to outlook has now.

CarlAnderson

from the you're I is Yes. Yes. seeing the trailing mean in WABCO Thanks, XX-month yes, think calculation. what included I it income, James.

really that look we I the well of And the we're carry as so EBITDA. for as as four next to compliance to kind quarters was overall calculate highlighting through

our feel not look and we expectation year, is the the not at of have in our only the quarter company. this we as but rest debt overall with issues us third that front liquidity So will for we coupled with covenant what's of any of

in able manage amount on we're good to environment. to the think spot pretty with be So a of current the I hand cash

JamesPicariello

That's on to Yes. fourth hear. Okay. just And factor partially early as quarter? by question, the previous then that that great receivable as the reverse can

CarlAnderson

Yes. exactly right. That's

if a is that's time. at characterizing see kind There is, cash will impact fourth at you so some one-time pick sales up call significantly how benefits in And the back, on quarter, point But a of dropped comes there we'll volume. lower that it. production as we're it based levels the production and the

JamesPicariello

a is for Got maybe terms year- your EV just terms it. sales you CapEx But for not off this and a sounds of of good in point investment percentage accelerator guys this were of as a And then of of in the year. similar it assumption starting though as future level stepping CapEx

CarlAnderson

think early I - that's

JamesPicariello

to early Or be?

CarlAnderson

to That's a way about. good think

I think we the CapEx. had about guided a of last million quarter that $XXX

probably the full the $XX $XX for it's we as million, think this closer in So point million range at the – for year. remainder

about of probably it. the X% to is kind right that around So think way

JamesPicariello

mention through. how environment and my that this, delay synergy maybe does the contribution missed apologies just point are did in so the AxleTech the or wondering then pull you synergies I the And quarter, current on if the accelerate it. then trending, Got

CarlAnderson

plan very acquired all No. I that with able in actually looking and on feel the synergy actions last coming we're we would year. take to the we're and say good been we AxleTech, have the in side right on since company we

aftermarket. obviously, overall there levels, just as off-highway well know some is are we in revenue the You in seeing a specifically market, in reference, softness as

margin to a but So now that any want side lot cost that the to revenue where to of actions is opposed the overall the driven we've performance is probably of it we as date. not more still taken be, on

JamesPicariello

And the quarter. what the contribution in revenue just the about

CarlAnderson

first Yes, well. quarter saw very consistent in so as it was $XX we what with about million, the

Operator

Thank you.

Our from next comes Faheem Sabeiha Longbow with question Research.

your with may You proceed question.

FaheemSabeiha

can provide Hi, XQ appreciate the in most Thanks are I of I I breakdown additional you Trailer around three regarding question. revenue know the parts and mean, the Aftermarket, Trailer, a and all just talk then for to first morning. little of and but FY about imply that's wondering able color good that aftermarket my the guidance Industrial, or across equally more coming you provide for hit, sizable business. a taking little, if down color

CarlAnderson

Good morning, Faheem.

things impact and of I probably prior from so of the agreement in the a know $XXX was a that's one terminated about is You that book there distribution agreement million. a crisis to think the our being, business WABCO, being the

quarter will well that we're and go as of seeing in in this a headwind are you that So forward. now kind continue on we as

particular significant of relates really that a to business. So piece that

FaheemSabeiha

you from Okay. And how in XQ? much acquisition in AxleTech are baking

CarlAnderson

the kind just probably I of on this a don't quarters a expect north would revenue, would further Well, say, that little the for business. but would line we've little - we've seen softness running bit million year say period been guidance two some given I revenue. AxleTech again And I line has in $XX expect of not by of first we bit that time for of

FaheemSabeiha

back restarts the year, as just far mean, but there the guys a band as the provided production Okay the in some later in commented I orders be little thus wide I'm you if of solely on a if on or and pretty then that's received as you curious half XQ, upside truck visibility could and far based quarter?

JayCraig

lack almost on really think side. OE it's on based I manufacturing the the entirely visibility of

take roughly So if expected that the were questions, business aftermarket guidance. you represents just discussing you that that the your business and in Carl, of XX% revenue a our Industrial

from So if - and they've what very this customers revenue, and what we're you've hearing range quarter. It's now think discussions remaining we business. private publicly their our truck in OE consistent a XX% the right aftermath with both released earnings. after a I you it's And our visibility on just very opaque window discussed as them took have the almost of that's heard

it that's operating why which understand be objectives the limited us to put of achieve manage estimate the have a us markers this wide cash we very for as having on outflow business we was we internally our as did. on But And amount. the important revenue so to as revenue gave range well because

FaheemSabeiha

Yes.

far little as commercial look is will and XX% weaker? to And in going one to to downside the earnings as those mean, a sequential aftermarket, that industrial XX% convergence, between truck trailer be balanced Okay. I of segments

JayCraig

given make is But to need shields, I that cleaning. of the is volatility, materials products, guidance on masks, included I production note outlook. sanitary incremental that don't think where face the what would ramp downside I mentioned safety we're sequential providing such of providing the cost of guidance revenue in just as that up positional the level we our

some incurred is there our incremental norms So now that's in right that's cost the running outside being business.

Operator

any any showing like time. at now Todd to And the questions further to I Chirillo this turn I'm for you. remarks. Thank further not call back over would

Todd Chirillo

joining directly with for XXXX you call. any Please our Thank out questions. second to quarter me you. conference Thank reach

Operator

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

You may great disconnect. have Everyone, all day. a

Todd Chirillo	Senior Director of Investor Relations
Jay Craig	Chief Executive Officer and President
Carl Anderson	Senior Vice President and Chief Financial Officer
Chris Villavarayan	Executive Vice President and Chief Operating Officer
Joseph Spak	RBC Capital Markets
Alex Potter	Piper Sandler
Jason Stuhldreher	Barclays
Ryan Brinkman	JPMorgan
James Picariello	KeyBanc
Faheem Sabeiha	Longbow Research

Meritor (MTOR) 30 Apr 202020 Q2 Earnings call transcript