MTOR - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 and Full Year 2020 Meritor, Inc. Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference to your speaker today, Todd Chirillo, Senior Director of Investor Relations. Please go ahead, sir.

Todd Chirillo

Jewel. you, Thank and Fiscal everyone, Meritor's Quarter Fourth Good XXXX welcome Earnings Full Year Call. and morning, to

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

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

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

Now call I'll over turn the to Jay.

Jay Craig

morning, Thanks, good Todd, and everyone.

I next President. the that Chief Officer, we to we our Operating last CEO, After Executive to announced transition as plan succeed selected role of our CEO address week. Villavarayan, would as At results, leadership like time, has Chris of and Chairman I the XX. to Meritor's on Board the X been Before February me transition review will to take a moment nearly years

execution of Since our Chairman, MXXXX, and Newlin, through lead our the assumed CEO the now MXXXX strides made our the Bill become will we have position, MXXXX Additionally, of plans. Board. great I current Director

is is well touch product we COVID-XX, later. of our our has for diverse impact innovation He had of know more been to seeing set Meritor In On execute are is decades that has onset on tenure, I member me, a underway than our for MXXXX signs step. advanced Many next company said, in note, and and his collaborative more the and and been upon we plans. team. transition. will prepare smooth represents Chris and X financial with during integral the work our and recovery which a of That Chris portfolio, a significant organization leadership ahead, industry created fosters plan. a this has and our the our a personal our transition who to natural succession we partner true and as successful growth. have lit strengthened now in helping We foundation you since of a months long-term I'll Chris, ideal and time continue to motion business to lead believe Meritor an closely

year impacted Slide let's to volumes due were pandemic. the by on Now our to lower X. results fourth results our quarter full and unfavorably Obviously, turn

COVID-XX. we results, are to of is the extent takeaway the the the considering the offset give for our and year, impact we the but the significance on for cost-reduction financial on partly important the However, headwind to with will you our the the we detail in were more able Carl half. to here which implemented stability, margin able second by preserve actions quarter created

company actions to financially, exceptionally immediate the sales importantly, protect sequentially employees protect we're As it XX% from increase of you see third an slide, the the execute in to of We the the well. fourth, with recovered in to aggressive conversion XX%. considered, while steps our we we worked. All crisis things most from and the took to quarter on well a center rate approximate able took

certain have and at states globally we time. remain with no countries we case limitations fully this operational are While rising experiencing operations counts, where

X. turn Let's Slide to

deal the all great required While of pandemic still had attention achievements aspects many of a MXXXX. management in we that support XXXX,

quality most With XXX,XXX the recordables safety, excellent. volumes than regard one and to facilities was X.XX team's reporting of our and with one the case manufacturers during recordable is rate world. safest I certainly proud other this worked global delivery us the makes tenure. metrics hours safety, the We my year. Our to our XX% accomplishments for were per the each for of in commitment This more am of X of total believe speaks

Supplier drive lines, coveted million to more and axles, are providing parts quality market. excellent than We Global peak Daimler's rates XXXX X honored the North million during with Award for year this American and receive brakes per

are X in the United repurchase announced XXXX, Europe. in million addition, fiscal XX.X S&P able we and X actions, shares In to to the Index XXX added were X in SmallCap and footprint States

to of confidence XX% expect added objectives. is our leader. industry XXX annual approximately Meritor July, remanufactured brake our give million brake nearly remanufactured celebrated generate of We With us $XX production the shoe. actions In shoe America, and savings these North run production achieving millionth we of MXXXX rate to in

and X, through Daimler. put the million against you to more continue on win with a applications long-term target. our detail And the on with we for $XX disc for Board received will the and we to approval for important additional Cascadia standard will us MXXXX ePowertrain our Carl Meritor and agreement see We position air later Slide brakes contract related our signed will review Freightliner now extends is heavy industrialize business XXXX. the to expected new in customers finally, new an through important for with medium that in incremental This that in Daimler our On discussion, an XXXX from moment. outperformance business portfolio, relationship

slide EE operation. picture Let's taken for electrification. is be assembly XXXX. at this was our takeaway Slide at in update on we on look with our will in the X powertrain that here Essentially, an recently production electric The powertrain

for already from this that secured excited Achievement we Diesel will and production in vehicles, you acclaim. News first the away Honoree XXXe Horizon XXXX production, receiving to electric industry production of by we we the electric months we delivering And told electrification We Blue anticipate PACEpilot year, trucks. only as powertrains of begin the contract XXXX. the Automotive we electric the our be we advance received Application Progress additional awards. PACCAR contracts under recognized Year a Earlier are Meritor is In believe solutions. Class of with were Electric its for and heavy-duty for the recently, X Year are very We supplier of

next slide. Let's go to the

drivetrain to consider. numerous electric As you have solutions know, customers

about transmission the versus and Meritor's motor powertrain. carrier. powertrain integrating often into asked the the remote taking a We multi-speed that electric are architecture mount electric them and and are we an electric revolutionary is

to OEMs same existing the customer based mounting on since exceed partnering just and not targets. locations performance, hardware. on and By space and meet efficiency, from utilization. designed motor. design it motor weight in electric expectations chassis maximize XXX the are We have technology This is a design integrate the And bolting to we performance and Meritor's easier, companies using the into this manufacturing savings axle can the ground fully up traditional leading and designed is and with motor integrated world, technology is

our vehicle believe product class-leading Although powertrain where turn integrated to developed medium solutions, We of to electric we On this shows differences it we e-optimized provided slide, axles be the the over in the advanced the meritor.com, I the Carl. in commercial plants a and at within commercial look deliver the inside hotlink architecture industry are I'll production to architectures and have to for be call is will at video choice you between industry. powertrain most prepared the that, the powertrain to the heavy-duty remote Meritor's addition for we've With get an game-changing. can beginning described. that that mount vehicles e

Carl Anderson

call, Jay, our fourth I and On today's financial financial results, XXXX MXXXX goals. review year good our update outlook Thanks, an provide full year on will provide and and fiscal quarter morning.

X. results let's year the through financial Slide walk to Now on our compared prior

year-over-year. fourth to decrease primarily lower quarter to same revenue compared First, markets I our commercial period the results million volumes last for was truck by driven due segment Sales year. by $XXX COVID-XX. The will most review in in over decreased just in the

were basis segment Segment adjusted adjusted year. see market we production Segment year. as from did to last quarter segment throughout in volumes. $XX adjusted we year adjusted and truck for earlier The year-over-year, primarily was down EBITDA EBITDA began from lower volumes driven the margin commercial the increase in shutdowns EBITDA was EBITDA down recover $XX margin While a decrease in at from X.X%, million by ago. down the came XXX points million,

which sales year. by due in impacted the in volumes to by offset were second million the the distribution compared the incentive WABCO, operational of electrification America also quarter $XX fiscal the compared year spend occurred in The to our In prior XXXX, compensation were our last was second addition, specialty executed by Aftermarket we and lower was $XXX Aftermarket with actions the defense year. to quarter primarily businesses. half lower million partially XXXX. termination aftermarket in XX% This sales fiscal driven fourth industrial decrease $X North negatively by arrangement year down performance. of the sales primarily of of year, and million in increased cost-reduction

was XX.X% offset prior and While cost-reduction compensation by than more to year. volume. revenues lower actions, incentive which operational in driven from margin were lower, segment increased adjusted The increase EBITDA margin XX% the lower performance,

year, billion, lower earnings just north by million $XXX the revenue last full the the same the offset from was XX% was The restructuring distribution headcount adjusted compared the volumes the million executed prior with Adjusted in revenue income continuing across Net in COVID-XX. expense from incur came down of due of the down EBITDA driven $XXX For million EBITDA $XXX our million in by reduction share year. in to company associated $X segments year to X.X%. to year. in was was of primarily fiscal was $XX termination due an XXXX. $XXX in decrease $X.XX year of did partially the market XXXX, per $X.XX, of year. diluted programs We million attributable arrangement XXXX company's year. This after-tax the operations income from Adjusted fiscal margin to prior to throughout translating period

million $XXX cash the of XXXX. termination Finally, free million of distribution the does is cash include from flow the received in in $XXX benefit arrangement. This

impact, revenue. flow in free year. our $XX from million this the for primarily the lower was that from down were includes programs mind, European impact factoring due cash this million negative full Keep year $XX Excluding this

to for free we move markets will this as begin recover, forward. a flow cash As be tailwind

year. metrics over strong liquidity up Slide which a fiscal with our $XXX on review million from of balance Next, last X. is I'll position year billion, key sheet the ended We $X almost

million, typically $XXX is hand which is on we cash more Our than hold.

Given run the at it higher believe cash time. to prudent we balances this current is environment,

Our funded on and plans any note in to status global the improved, are years. cash It is milestone and net significantly our several plans. we status also important our without past over we pension this that contributions achieved a overfunding now

and returns Our increase asset strategy drove funding long-term strong the status. liability the driven investment in

our to profile. debt Moving maturity

We flexibility remaining significant currently next further $XX debt bonds no upon both managing instrument. We X.XXX% million provides of are debt X completion outstanding the the for XXXX called convertible maturities the which profile. our be have in associated with our which callable, recently our share years. dilution opportunistic its will debt and to reduce Furthermore, convertible

the expect in to second down in our range leverage XXXX. do expected begin the deploy be we to half term, Additionally, above is while pay near target to debt of to capital our

Next, outlook on market Slide I'll our current review global XX.

will guidance. typical ranges giving we than market wider You our are notice

for In between variety point markets planning units. XXX,XXX to to a Class market, in we America are XXXX, scenarios. X the global recovery production levels most we of are While projecting North XXX,XXX prudently

could upper We in the some activity the prove virus. orders the of At range. changing end the of conditions which to over associated several seen the have months, with could the recent this increase same be last transitory time, an to point given

our in range markets, XXX,XXX at to Europe anticipate XXX,XXX other As look units. of be will we we the

in imposed XXXX. throughout are being monitoring currently we European move also restrictions countries, we new as Brexit the certain to addition In closely

are not approximately last will of standard. year-over-year market, XX% market as range from we India, by India severely South units, reflecting year, midpoint the also expect transition For to was projecting in increase impacted relatively at the year. BS-VI historically the low we pandemic the volumes to the only by XXXX. but XXX,XXX stable last a emission In the production American XX,XXX to levels compared in from

XX Let's XXXX turn outlook. our to Slide for fiscal

range forecasting Given assumptions billion to the in reviewed, of $X.X to just $X.XX the be we billion. market we are sales

million $XX approximately include does distribution in guidance lower arrangement revenue aftermarket WABCO. termination Our the our of with revenue from

more be the of $XXX will offset by business However, over P&L to this that million than expect be we year. wins new is to expected this in

range converting year. margin EBITDA XXXX, expected to increased and this and X.X% net is on of adjusted a new offset reductions more performance compensation XX.X%. Our volumes cost in due in than greater wins the business to expected incentive be XX% will We than which to anticipate we higher executed continued

expect in to which in at even what invest we We which while continue anticipate we higher to at convert to levels is million, we $XX these spent than million $XX XXXX. electrification,

free by share, our in earnings in for over generate executed to of the consistent flow, our expected MXXXX $X.XX $X.XX resulting target. rate outlook Moving June. to negatively $XX to we mind, share actions is liquidity to in finally, adjusted to adjusted the expect a of about range diluted of XX%, result $X.XX. a due XXXX our as earnings per XXXX with we million in million is And expected per impacted cash of $XXX higher expense conversion Keep interest

Next, provide an I towards update new will Slide MXXXX targets with on beginning our business our XX. on wins you progress

developments is year wins business $XXX for key our we more by than of outperformance. are expectation fiscal $XXX million. current target XXXX new exceed of this Our driving million will Several

AxleTech, linehaul of $XXX provide million to our acquisition which markets expected Our diversification is between to from million revenue $XXX XXXX. in of provides

been both truck to aftermarket business Additionally, commercial our industrial able new we have win in segments. and

drivelines in axles growing across market off-highway this powertrain in and with will for in for disc production We as we we and defense. including and continue new portfolio, are And specialty expect our business business product brakes, winning go into air we us. in XXXe every to serve electric expand our revenue XXXX,

let's financial page. next turn Now the to targets remaining on the

business converting in from We at by XX%. for greater XX.X% our on wins path global EBITDA a incremental markets achieving revenue margin are new confident than adjusted and

costs, and We deliver structural drive cost expect automation footprint performance strong savings, to efficiency. operational to and optimization reduced investments from material further

driven on We focused are flow by disciplined also conversion track meet cash XX%, of free our to and capital management. target working

free is pandemic. cash to assumptions plan original than the for generation coming lower, cumulative Our however, due X-year our flow the in MXXXX

and impacting this the amount activity ability As deliver target. a is future the to of result, share EPS repurchase $X our

However, track headwinds. we our of achieve earnings the or to Overall, targets. even share $X.XX with exceed these per still financial we are of on out of expect MXXXX achieve to to $X.XX, X X

over Now I Jay to back will turn remarks. some the for closing call

Jay Craig

Thanks, Carl.

let's to Slide Now turn XX.

aggressively As execution. have you the from heard strong to a of today, in We journey new we earned our preparing maintained manage step with We fiscal we forward to balance exceptional costs next sheet begin our XXXX. look production the And prototype important continued in business, relationships to powertrain. now transition extended and customers. next-generation and are

take we'll questions. Now your

Operator

[Operator from Instructions] comes with Picariello Capital. Our first question KeyBanc James

James Picariello

as on Chris, to you congrats well. congrats Jay, the decision. course, of And

Jay Craig

Thanks lot, a Jim.

James Picariello

expect year? past And to temporary Just this what savings you year's on headwind extent bridge present offset? does of the an are EBITDA, actions or this 'XX achieve to to permanent key incremental unwind FY the the cost what a items upcoming

Carl Anderson

Yes. it's Carl. James,

year, quarter the reductions of just executed On to took the from million salary we the $XX the had that to look $XX also of savings we And about the the $XX associated about impact run temporary in achieve kind headcount rate the it's reductions. some we expect And we a if we we that with had from benefit had of XXXX, million you in million. at year. actions last last

we as $XX rate, million go run So forward.

discretion about which some planning have million. $XX that also are we is reductions more year, this as temporary for cost other addition, well, we In

James Picariello

that part, separate? this is you Or last announced is the aftermarket that tied to industrial something morning? that And restructuring that Okay.

Carl Anderson

would No, be that separate.

think and that because So as will have we XXXX. Jay about little -- as, a of actions. it's incur really in to run rate far year, that to, will if do then as have as result do expense expect a headwind you begin of alluded for this a those we some But which 'XX, bit we in savings,

James Picariello

Got it.

$XXX new greater probably Okay. business versus $XXX to That's know the on million. helpful. I target, the takes to than And raised the care see million right, AxleTech encouraging wins, original expect most of year original in 'XX as million I $XXX million. realize And you new the to in FY did to $XXX that this business of hear P&L? wins correctly incremental

Carl Anderson

the on point, correct yes. is last That

James Picariello

Okay.

And pipeline, EV the you was pipeline, the have changed all? and the in million the So Are last at pipeline backlog million. I bookings those numbers? think right quarter, maybe $XXX had $XXX they

Carl Anderson

still point. directionally numbers right you as we this have at that's think I electrification think for about the what

Jay Craig

incremental XXXX, approximately of estimating electrification. And for million for I we're think, we revenue should James, $XXX have

James Picariello

Right.

Okay.

$XXX the maybe million is Or million? $XXX could... So like we more

Jay Craig

pipeline, million. realized in XXXX be of $XXX will No, about what will that be

James Picariello

me. Understood. volume what recover, correct receivable me it. How that would Got from needed Understood. that? Europe, we And The fully have amount? mean left I be standpoint fact Last if million think it one XXX,XXX number? I'm is you a I wrong. recover that about $XX to for just should to think unit industry might in an

Carl Anderson

It's a good question.

I XXX,XXX recovery, closer probably a type production of to think order in it pull be would range. the to

Operator

Next Barclays. question Brian comes from Johnson with

Brian Johnson

Yes. first business of brake And integrated into takes regen landscape business. and competitive going all? that air the are change want that what commercial relevant talk WABCO are puts And Congratulations about the of index? does that with forward then What at you finally, trucks, now for Carl, ZF, is brakes? part breaks? to active kind regen again. I electric truck the Is the to disc is

Chris Villavarayan

this is question. take Brian, that Chris Villavarayan. I'll

obviously, it, an integral even so air of of about brakes it to is think if and our XX% of And needed, it business. business. brake X/X portion somewhere So with integral. our are is portfolio, our about disc our is in business you terms And electrification,

as we very it. is win significant see the So

regen will brakes with secondary the provide. do always need brakes you braking, you form even and disc forward, that's what of protection, need a disc Going

Brian Johnson

WABCO? change remember in terms in you had Okay. competitive at with it does I the of the Because the distant JV all And think Roadranger I together. landscape, past,

competitive on in Just your changes maybe anything terms that of brakes? in update us how position

Chris Villavarayan

the change competitive of market. this No, specific any position. it terms the doesn't American to in And it's North of win, specific

we having And as that impact. any so see don't

Brian Johnson

the your in Okay. a think I comes higher AxleTech same it's okay MXX, target, X market. bit Class terms also, new in, but And than of XXX,XXX targeted in original revenue

about think are based at up So we starting be there our where and Or end markets? on and takes we work start should kind -- should billion way revenue we other should and down $X.X thinking of about? puts

Carl Anderson

Yes. Brian, good our I to we what Analyst of Day had question. a Yes, relative originally think XXXX, back it's out laid billion in about $X.XX we in revenue.

you coming as that are on relative $XXX FX in lower assumptions, business have some wins, out if China. But especially million, ahead about outlined. associated we we in market headwinds we We some as as well have that, think, the with do India new to also and

still the all So I item, $X.X what for, that think which we billion, range. line around $X.XX revenue is originally in planned billion around is

Brian Johnson

a long-term you final light them more just -- a just contract? -- Okay. But Class vehicles expect with the example. Daimler technology with Or of supply recap were X Detroit players more to manufacture component on and one it? somehow of the potential integrated Do have this expect transition to for to very Daimler. to obsessed do all activities. you this And diesel, question, be e-driveline in-source then the you on slide great OEMs Can is for

Chris Villavarayan

So Brian, that me again. It's let Chris take question Villavarayan.

well the it, that think up through market has cycles And managed we've strategy existed you strategy past XX that when down, we've had with we've growth have the maintain relationship long over about think a and and companies had share. even very through that. with both through if Daimler. that And you the or to think worked years, I

anything, And this so If I brings don't together see closer. this I and us agreement dynamic changing. think both

standpoint we with off great XXXX. done capping And what on we respect about how X delivery have to so And last through over we it Jay years. as a that and do on can win build see the the the quality talked

Brian Johnson

again. congratulations And Okay.

Operator

Our next with Spak comes from question Capital. Joseph RBC

Joseph Spak

with incremental as again follow I'm I'll extend seems to and question, the puts It well. for my along maybe takes mentioned and to portion restructuring roughly that underlying XX%. coming just costs a the color. in investment and first on and here. step-up volume all terms Is thanks you different in like in that still correct? XX% the back is just Carl, of that of all incrementals at sort trying congrats electrification home the

Carl Anderson

think, in drives optimization, I from correct. of as the to that of you upper point, range, conversions obviously, north that the as that's the we forward. closer cost well probably now go that but savings if directionally more And are is footprint Joe, that what incremental layer then end it's XX% the permanent,as

Joseph Spak

Okay.

outlook, the think typical on On is you're just or something third-party 'XX Is there the Meritor that recent were industry below you're that revised forecasts management guide, just I some higher. just some prudence seeing...

Jay Craig

No.

I volatile. the think, by firms been industry Joe, have extremely estimates those analytic

or a to end. end make people how uptick to expect, guidance seen And said, internally, sure want as would changing prepared, to Carl the and be to successfully and light North range volumes shutdowns, of weekly required lower America, almost them is unfortunately, that if operate that the as from basis. is we end particularly at down the we prepared the company Europe higher pandemic midpoint there's range. want of that running the in You've wide in could see on we're come the towards we And those company you in

company. our estimates terms told most with the is last seen I've in uncertain probably I As ever my market this in week, time Board the of tenure

we So make trying to open sure we're company. the all keep the for just optionality running

Joseph Spak

Okay.

ePowertrain $XXX Slide of it And how much of And go? the has been on that to more does is also, us is business much that much million $XXX the additional expect million Can million how electrification? you X? you achieved? already higher. target, On incremental new include tell you $XXX awards How indicated

Carl Anderson

Yes.

about If in have signaled of anticipating we total last up bit wins new last you to ended north in wasn't my million think, kind look a we think $XXX I little we little the coming up of that a Joe, we P&L if at 'XX, on million. of into prepared remarks, year. basis, than ended year, $XXX net -- I bit where are less just just as on

come of implies 'XX kind some really us we're north for $XXX even all we those date, it in This we others into if will achieve incremental. targets be to of that at order that the of have So adding the successful laid million least some in electrification of -- inclusive obviously, awards, out. that is to near future with will

Joseph Spak

And one last... then

Chris Villavarayan

way that Joe, a electrification good And out, think XXXX. last be as million portion, about in $XXX to part, that is pointed the about would Jay

Joseph Spak

me, Last bridge. Okay. for margin the just on one 'XX

is of portion least a normalized. 'XX say, I And appreciate But your comment ever. you're Jay, normalized North America, even talking is which from uncertain still more to think global what seems million, close it than that I seems pretty it really $XXX at markets. like You that's for

to excess it bridge normalized that say really margin America international dependent So in markets? fair is North is of goes that, unless on

Carl Anderson

expecting, in it's are for think I we're yes, -- we mean, what looking I you at look increases if Brazil, Joe, India.

for planning -- additional well in wins are we're as well. what as Europe new also We the as business

generate is outside America of really in expect incremental really that the it So revenue to we 'XX. North

Operator

with comes from Ryan JPMorgan. Our Brinkman next question

Ryan Brinkman

the costs electrification what And I -- just 'XX taking et you value-add electrification an headwind to does to XX% you that, providing level in maybe million get and either overall conversion? that a technology, step recall the the the basis to revenue incrementals guide? expect then think to cetera, those accretive on extent do saying compare and And then the become higher I imagine sort in into are margin? et what year costs for as associated of tracking back past a et to cetera. to able business which relative those you the too. cetera, year-over-year $X be XQ electrification incrementals the that XXXX, ultimately, it they factored the accretive because Should ultimately, normal-ish investments, more are the truck in EBITDA time ePowertrain margin, you we to you're including you from or from initiatives, more about at commercial what is the to electrification absolute think quantify Just point all-in launches, after above

Carl Anderson

questions. the for thanks Ryan,

We As it into P&L you basis. think actions $XX on us. it's in really did have it, cost just that relates third X/X it to think cost a about the million actions cost probably about quarter came 'XX. on salary of affected and the to if I fiscal about X/X and late actions, back would best along the more say with was of we being in the reductions, in actions that executed that of permanent temporary for year-over-year

we expect 'XX, if As $XX result, rate you do we reduction about run into cost all a million kind of actions a flip executed. on basis, of savings from of headcount those

I other then on of, well mode. also in cost year. as we kind are still planning say, for question, I electrification think $XX items your of about would for In million next And the ramp-up addition, we're

later beginning up articulated, through of be in production 'XX, and Jay this beyond. bit we to obviously, ramping then are And then months. in As going a little couple we're 'XX a

headwind think over be say, the this a expectation but couple I next will we're and a at little accretive So our for is I of mode will be some still would of in point, bit kind us. ramp-up going of years, be to

Ryan Brinkman

half weigh then should that trending And helpful. of next to in et recent light EBITDA, been too? you'd think in That's back recent bit capital in then how is in And we less think versus about years? allocation, you've shares that heard investments how to little of I capital expenditure repay impacting debt the also I of paydown back right outlook? debt in that be the terms buying than years And And just year? starting Okay. do cetera? very on Is just you electrification comments say, relative it a priority, you

Carl Anderson

Yes.

obviously it about we BB As leverage, credit -- relates to inflated you this to metrics. maintain we ensure are it's think absolute to as dollars. our just we the committed the EBITDA in think about And as drop due year capital allocation, strong current

kind anticipate type back, and have to that sheet back into of grow the those go metrics we As as BB able forward. credit to we of balance comes be

about though, far And of path. then looking planning, year year. will on, we that debt it's are something we're share order get $XX as We'll in buybacks. questions, in allocating some percent We between the capital accelerate we'll look that. tend the X% of to to comfortable in last as that And we somewhere But That's of as be that have to point. X.X% CapEx expenditures take your very as second kind capital know, at continue half and did on the very at to as again a to million, a be what 'XX, into we revenue, the to, range, we assessing we that year ensure similar then as you to repay at. goes

Operator

Our next from Michaeli comes question Citi. with Itay

Itay Michaeli

just Carl, $XXX outlook Jay, just still you XXXX? to the fiscal with originally follow-on Chris, million that you original free to kind both. cash 'XX congrats translate the in just plus of to conversion to the does over to prior today, question, clarify, guided

Carl Anderson

but points do million, the that right It's think I When to range. to Itay. around you quick yes, $XXX math it it's pretty close that, on that, about

Itay Michaeli

the just forward? to business about new think Great. we normalizing. about margins, beyond And a What's incremental how maybe and kind specifically think we markets think then progress good going way as business new on margins of about

Jay Craig

see and depends, resides through Certainly, to or business margin in comes segment the that in it at acquisition with that higher AxleTech on it aftermarket. through. of the the which new off-highway, in relative coming Itay, think specialty we as I be end segment that would our profile it

truck other at what over the far is. track last you've pretty think business record the the striving we're revenue, so current new or to have As seen be or X been always incremental to above strong. business, years that business that, has I And new as the

of that and a So wins we that on are it in really business. the And do depends few off-highway areas. specialty have quite the mix

So we wins. business a share get could new see that of disproportionate the segment

Itay Michaeli

wants of kind I was lastly, -- maybe want sheet, a missed with And I helpful. to think apologize back I now it just a about maybe how as we or mentioned with target sort run that could XX terms Carl, of next minimum in in you you Any this. higher very leverage earlier, the that the the crisis. XX bit months? to That's you just little cash even balance company thoughts Jay balances and of given run the if to to liquidity think

Jay Craig

us served and last start to over crisis. our it credit our and months this as in a think first did remember, that's we've I Carl Carl But We well BB to has is critical maintain. just belief ask X extremely to mention believe been a priority previous us to And capital maintain the validated benchmark investors for X on fill that that, off metrics. it through question. allocation I'll strong our has in.

excess but cash the be first and we'll deploy we will shareholder-friendly with ways. not that So historically any that as let sit us, our in and the seen do allocation on beyond sheet, goal capital idly balance cash in foremost you've then

Operator

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

Todd Chirillo

call you joining our today. Thank for

have Have you day. please me questions, any feel great free directly. If to out reach to a

Operator

and today's participating. gentlemen, Thank this call. for conference Ladies you concludes

disconnect. now may You

Meritor (MTOR) 12 Nov 202020 Q4 Earnings call transcript