MTOR - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the first quarter, 2021 Meritor Inc. earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. Instructions]. [Operator like Todd conference Investors. Chirillo, now your one hand today, speakers Senior to would to the of I Director of please go Sir, ahead.

Todd Chirillo

First Good welcome Earnings Michelle. everyone, Quarter Meritor's Call. you, XXXX Fiscal Thank Year morning, to and

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

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

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

call turn the over to Jay. I'll Now

Jay Craig

Thanks, Todd. Good morning, everyone.

Slide Let's turn to X.

gate, exceeds XXXX. of demonstrated for we're environment, this fiscal year, performance. to expectations, team want excellent for results As tremendous our of right thank year. out last quarter, off to the you see as the the and employees can from in Regardless this I the a Meritor start

We market, the Carl. North from it highest Our executed Chris hear America, and from December. and exceedingly in history, our orders fifth Class November as well, will rose and X you to largest months in fourth truck

in objectives, Since next are outlook our In fact, our full end some materially tailwinds we all later give significantly. the These over a that current benefits. At rising same host vehicle year, a XXXX believe solutions bringing us to closing headwinds, clear OEMS, comments. year's we're our are confidence because provide with regional this other we for to I highlights with complete as targets, back the also the come investing for almost market. technologies increased for rebound to call markets, this technologies revolutionary and the we At Chris, will we raising and volumes particularly turn quarter, commercial time, XXXX meet truck point, COX M-plans. become of reduction will will will provides of to year in optimal path and

Chris Villavarayan

revenue significantly. moment, the you XXXX. commercial give we're up just more the primary was about for We're period details will on remainder in points On Thanks, Carl vehicles that is but was same our the optimistic obviously basis our was year, last adjusted essentially -year, XX pleased Jake. year-over results the flat EBITDA that with margin demand free than higher throughout fiscal takeaway of and quarter. the this financials flow cash a

as for demand volumes and momentum, North America. goods We increases, markets, rollout in vaccine than higher expect most the gains fiscal significantly stimuli, deploy monetary the most particularly and economies

half of right On highlight the this this we business wins slide, quarter.

business as as driving awards to and said are that expected well of those talk We're target industrial we our will some of we to outperformance remember in about November, exceed going our XXX electric production powertrain. last businesses, for that new our You million. that MXXXX truck contracts

vehicle. India, whom variety rear contracts for Ashok have new additional and and we duty In to drive business have axles Leyland and axle of front We Moving standard will with for concrete few a brakes a secured Slide on position on heavy with have India, now mixers. Terex see examples X, applications. Daimler with of you we medium recently and customers

with will to of three-year applicator customer gives Deere at an We with secured supply electrification, and for we suspensions entered LTA Transitioning have its additional independent we’ve existing John Slide axles. a for front our for XXX% vehicles, X contracts you a look new recreational ePowertrain.

last into mentioned system. reflect X product, efficient we’ve The electric function to to including to solution. be powertrain one our quarter, subsystems, As for integrated new for allow flexibility as the variety electric believe we'll contracts supplier we the and transmission, designed and ePowertrain is growing application axle, motors, demand Class These of portfolio, brakes, ePowertrains a the engineered manufacture for first ends, Meritor’s an trucks. wheel

on entered have refuse to XXXe we’ve vehicle. Meritor’s secured Canadian With a signed Trucks of for will commercial electric tractor. land supply supply heavy XX-tonne a equipped with a distribution. five-year agreement AT also for city And Autocar’s in a zero-emission a the inner Electric, Lion’s We vehicle Zero, Volta vehicles, parcel powertrains XXXe for into duty freight three-year be Lion we three-year designed agreement tandem manufacturer powertrain to electric London. Meritor’s and full contract Volta our

all We contracts XXXX. to expect up ramp in revenues these from

recognition Meritor’s technology our results. provide vehicles. of Carl commercial With financial the growing received the have we powertrain on will for confident industry number more production game-changing electric contracts, product, are now that we already highly for this detail represents

Carl Anderson

Thanks, $XX and call, cash flow. XXXX upturn was an year we our of delivered we provide from review EBITDA today's outlook. as Chris, generated heard the strong you the in markets, free global good fiscal our of morning. are performance margin in financial we financial Adjusted first will our million Overall, XX.X%, most update to I quarter and Chris, discuss On seeing and results, quarter.

costs provide million the $XX last $XXX operations was the results, first from compared half the income fiscal of our of of prior the last financial compared offset same by million, year Beginning quarter actions Slide at executed primarily partially result with of $X was flat me income Net higher incurred to interest net details period on debt X. in included the which million, of roughly This Lower year. revenue year. was let year results from in Now, in year. second prior the company reduction the came expense, $XX in XXXX. cost extinguishment total million to continuing

joint $X.XX was ago. in a to which relating EBITDA Additionally, drove EBITDA credit. driven primarily a of earnings an year gain translates from Brazil venture increased first quarter margin of This fiscal value to million from tax had improved from added from venture in adjusted joint by the of free And XXXX, $XXX a $X programs, adjusted one-time the $X was Overall, this from tailwind million recognized our ago, million a lower a year. as flow $XX in share a basis diluted we in year. quarter. our from per $X.XX, compensation cash year million earnings prior million and Adjusted XX.X%, the $XX point XX incentive slightly increase stream payments from we down saw back last

driven and was results was compared year. look adjusted last $XXX and up increase quarter, $XX margin first to let's slightly segment the XX year, last $XXX second the higher million. primarily offset was driven year. the primarily higher Sales the EBITDA EBITDA on in points million venture distribution our a at was decrease down for period The This the executed compared of EBITDA by by The cost of $X premiums, actions year $XX million the prior prior the quarter in higher fiscal increase increase to an WABCO, year. conversion margin X.X%, driven were truck arrangement and occurred adjusted market year. X% in with $X commercial higher million by revenue, adjusted and joint The year. Segment compared industrial primarily termination EBITDA Now, basis segment Segment truck India. earnings. sales million last in in increase commercial spend, of increased Aftermarket over which last from was million, bounds electrification sales same reduction as Europe freight partially by to revenue by XXXX. increased in in to to in

current by saw last with last cost revenue, XX%. impact levels Class our the a midpoint XXX,XXX between we lower America production EBITDA which from The I'll on XX at increase global increased X. executed prior from our XX% North projecting driven we actions reduction units, nearly basis market, even offset points the year, the than revenue. outlook segment quarter, increase to review lower In adjusted X more As market XXX,XXX was to now margin are Slide outlook.

preliminary have strong pointing production than last order aligns orders forecast We strong production intakes, customers, in units. And night, a came our from full at just XXXX. we orders of including seen over to recovery of are quarter the significant January XX,XXX seeing all with a months This two in units. greater XX,XXX

will production XXX,XXX the be we're now increase Europe, in of steady to We also XXX,XXX Turning units. market. forecast this a range seeing to in

a market South where rebound. strong experiencing America is another are we

this of of since year in forecast almost XX% are volumes at We to an units, levels, the be XXX,XXX in And in from previous approximately forecasting a we units. are XXX,XXX historically the maintaining XXX,XXX represents these to from India, our production low now still be strongest XX% outlook. it to Keep XXXX. of Class year-over At prior in increase the XXXX. our production mind, increase X -year would range mid-point XXX,XXX

update Let’s an to fiscal to year for turn outlook. Slide our XXXX X

to X.XX basis of X.X in guidance. the market billion. EBITDA to of XXX just to the assumptions we our is points previous to be expected compared range increase we Adjusted now to be XX.X% as in the of XX.X%, reviewed, Given are margin the forecasting of sales range billion an midpoint

will encountering material headwinds economy XXXX. the increases demand across largest move steel, With are which is upturn, through earnings as we in several conversions significant driving impact our the Increasing cost. we global

a cost month generally have three six our with in we are on of OE customers, recovery While most they to place lag. mechanisms

As $XX of due cost impact recovery in million timing $XX are steel seeing currently higher we million to in to fiscal costs a these the mechanisms. result, XXXX,

at market we compensation costs million. of are levels, significantly incentive $XX approximately Additionally, anticipating higher the higher

conversion two XX%, be XX to revenue With in line expectations. of items, our to these to earnings last anticipate revenue, adjust were incremental these conversion approximately you for our if headwinds, compared Overall, more with on we XX% on year. now incremental would around the

to X, update to XXXX $XXX target margin cash to Moving earnings of achieving we million now the of to Slide to is generate diluted free million an for And $X.XX for path our finally, provide XX.X%. adjusted $XXX MXXXX the expect company's On outlook share, of want I our flow. per and $X.XX. range

able steps achieving but our we exception. our M-plans, are targets. seen XX.X% target and the we typically change, on The targets current margin have prior may As for deliver in to environment adjust to the is no operating

costs XXXX. As steel we incentive and are previous we in to related both increased on slide, the seeing discussed compensation

to to these do a costs tailwind. point providing year, normalize, expect we Next XX XX basis

XX%. than converting incremental We on business new anticipate wins greater and also volume at

quarter, of as additional from approximately last margin savings basis an points $XX realized. clear. announced revenue we are million we provide will result additional as footprint the conversion behind process XX achieving of $XX to to million incremental of target expected of existing facilities. million, path consolidation the to in the are the of tailwind million in $X margin consolidation the $X Overall, smaller optimization our and will footprint us, provide a will next XXX to into footprint, increased plan, and XX.X% $XX Additionally, on be which optimization, of This remains locations to million execute cost XXXX, be the executing an four in will year. The to

a deepest and take he's wish new all at through many professional the role. to turn both my and him back look leadership years for working in to express to with his extraordinary Meritor. to best, I Jay, Jay the call Before personal a shown moment want appreciation his forward I On over his level, I

Now, will call the Jay final for over to I turn remarks.

Jay Craig

Thanks, Carl.

go to being make the call first Slide running I missed a XXXX, except in was My the earnings with second wanted XXXX, I XX. we and comments to not for ‘XX, my one. before I turn Meritor this when With of in and was with you, call a have last few quarter few business, questions. Let’s to quarters

to close somewhere I calls. that guess So, me XX puts

all say, always I and I forward CEOs honestly in them, can charge CFOs While and to look did.

challenged analysts, us and a drove perspectives. us investors Our the of look us whom long time, better, at and business have to from many with to been always be different

insight, past over contributed successful to years. the Your several the company of and comments, transformation the questions,

focused be a the performance, time maintain shareholders. on Executive I As of have Chris's expanding our that performance confidence long I we team, returning role we business, Chairman, in to to and his to transition and Growing of have levels demonstrated capabilities, our highest now. high ability the maintaining as for base value electrification remain continue of trajectory quite priority, full that leadership of will the excellent operating to

discipline our the As recognize we and with that we'll today, third completion and the we same M-plan, the proceed near become execution we diligence. are it successful to company took of the

For set I for the team. of talented globe to day also all want thank working our employees have guidance. our a helped targets will driven to and support this, us their that we Board with I miss to such the enormous and day Directors achieve thank ourselves. want around have for diverse, stretch I

the questions. journey. We have a you Executive with continuing wish played will look important role forward has that, Chairman. a of the in all that your I board to I strong And future. to set best take company's diverse with strengths, them an with we work in my as of

Operator

Picariello Capital. come first question James with [Operator Instructions] from KeyBanc of the line Our does

Your line Please ahead. go is open.

James Picariello

might Jay, again the retirement. additional Carl, here, framework? just talk color then, that for And be? to that targeted within on your spend EV you Within I FY’XX. guys. been those get Thanks. you you related your And just the morning about we incrementals mean, XX.X% are, talk guidance did It's how about to what on good congratulations FY’XX incrementals, pleasure. can Hey, what can a incrementals FY’XX implied mention

Carl Anderson

Good as conversion in, expect to do seeing. ’XX, that it Yes, I we morning, to XX% as referenced, about all on have revenue fiscal incremental the we're James. relates

quarter, to did faced at a We but spend year headwinds, In and the referenced million I both relates to of it couple and - with steel incentive electrification ago. of we electrification. $X higher compensation, are as a compared with and

We are as the $XX ‘XX tracking of million also to probably expense fiscal within closer year electrification well.

more laid on to very deliver confident ‘XX So kind we're and overall, but it - we're our continue in of to importantly, definitely fiscal forward, out, ability XX, target. I for as we close margins deliver really is look incremental get XX% to our to track that on as

James Picariello

spend, electrification Got That it. be that would so, XX The or like $XX is right? million incremental an that's cumulative, million right?

Carl Anderson

X higher did million Yes. than a It's to X million ago. we about year

James Picariello

that talk what can is in a just process. is Got I terms that update an - you about pipeline the awards, that what has the - at I on potential, are latest then number missed two but it. XXX just the and - And just what can last maybe of provide then booked, you this, is the the mean, awards changed competitive million, Thanks. And two what all? maybe highly EV

Chris Villavarayan

Chris James, it's Villavarayan. I'll take that question.

up total out announced earlier. And Lion booked provided that three had we of today of talked $XXX total. Volta, made about million, line business and for in with with Electric a So year. that $XXX we've then have breaking what about of we is booked for we the talking Autocar, of still sight accounts sight targets the And a that that the by not $XXX million agreements line we with We're our announcements $XXX to for last million. today the million which, business to of

James Picariello

Thanks guys. Understood.

Operator

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

Please Your open. line go is ahead.

Ryan Brinkman

Hi, questions. my hear me? thanks taking Can you for

Jay Craig

Yes, can. we

Ryan Brinkman

Okay, great. Thanks.

RV be Given seeing. record to industry what association that space, recreational in of in revenue you And exposure the RV mention been relative Are very might heard potential new coming December. of earnings, with of announcements on which Meritor you Lordstown first you X suspensions market World reported Motors to thoughts Do that exposure benefiting increase growth have from and to market wanted via volumes, your wholesale just the any since primarily could Camping et that the from you shipment what the is market role the on industry Slide in numbers electrification area, targeting incrementally in are think for have to cetera? out this in and what I front kind corner also about the came this the play? and ask also I products, you way electrification we lately, last any of potentially vehicle the or the

Chris Villavarayan

some the Sure. of just a Ryan, the has been very maybe question it the this I'll it’s quickly, with to market. financials. AxleTech, to provide Chris Villavarayan. over very start obviously hand of Carl acquisition then important and But

we as market. had part also in strategy MXXXX, to this so, of a And grow

is what on new of is and growth executing a strategy associated so, doing growth. strategy. win we're the And with The part exactly that is not current market

a turn with Carl. to it further. we're call we looking that With had independent Motors, this to we're plan Specific something it that's exploring little So is at, I'm to are and a business, grow to electrification, but suspensions what bit Wieland going that, we let's exactly that doing.

Carl Anderson

our that in especially look year-over-year a in at business total, we're at entering if industrial into on resides what Ryan, I seeing high percent that, kind now industrial do up a we business this digit see in single on segment. And of our ‘XX basis point.

Ryan Brinkman

the then if too, Thank And with grown. new into able side. of provide. what good. might thoughts the Also, vehicle has generally interested last you're maybe in GM's Very you're on in vehicle components and not Slide curious And you. vertical BrightDrop the insource I'm to pipeline seeing or manufacturers’ or if plans, relative electrification plans commercial outsource whether Okay. vehicle integration of types I'd either just question, components line electrification might regard of translate any similar side, to the to potential that were the vertical on just latest automaker’s light X, the commercial electrified integration developments terms that identified that have opportunities to drive on greater relatively you be

Chris Villavarayan

Well, that Ryan. question, I'll take

that nameplate at around then awards years. been it's Autocar, customer XX and perspective, And brand XXX first new entrant, you look the presented look Lion’s Volta, the a broad for we been about a spectrum, XXX maybe in from that's market for - if we years. a three at Just when today,

spectrum great in it's product. from that a the they So to customers, see value of broad Meritor’s see

we with right where we’re to point, And the we're that focused OEs we now on see is to completing obviously - testing do growth, this globe. see pipeline. specific the of Now, multitude our that a thing around first

at what wins So have, about. our of is let's skateboard, us, the out space, about any think business competition, any content best just targeting you in is, us grow think terms I sense, we hopefully look speed drives will we're faster part sense, as the it of it at and to means - as look happens. $XXX for when closing that part us. we energy. the - it book as can this in integrating at million what And sense, in targeted I in is, talk we're more we on it right it we call but electrification talk and is matter long does perspective real GM, that estate the you in this, And it towards here, Specific of will this look whether about continue that more on best no for the now, OEs our to sustainable

Jay Craig

say, One vehicle the I’d vertical a - comment. last difference level Jay. this is OEs Ryan and the And light the components. Yes. between There’s integration and of significant always vehicle of commercial been

industry, we train electrification. had having expect obviously So drive the that far market a that discussions so the moving future, we're of across to on into based we've the and the to continue significant share EV

Ryan Brinkman

helpful. Very you. Thank

Operator

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

open. go ahead. is Your Please line

Joseph Spak

obviously Thank and here. much, wanted to a couple team. then the echo of my questions electrification, to on and Back Jay you congratulations rest very of the again,

can to incremental, the little seen more obviously, to maybe bunch a to opportunity? market the sort but guys bit all how little bit you it some mentioned exact a of you they’re just of does path and resources approach talk and this of commit on is you unclear. come of Because require than a startups. ventures Like page. us how these obviously There’s a lot capital about to You - these we've trying

opportunity to you startups? almost So right? of have of a bit how some So - of sort in do think respect, you with how do about VC you these a that think be the approaching little

Chris Villavarayan

take we and that. perspective the medium electrification, that, I we with believe capacitize, call X, percentage we look and approaching of essence, is work it in overall heavy let's - Joe, is OE electrification product. looking be share percentage Class that a duty what there in aim every So, fair X what a we if provide or roles the the I'll at will the a think we market, question. of that the our that overall the what in the market. for look And that of use, at, and of as percentage space model be But how at we Class will And and in we're

Joseph Spak

Okay.

bet of it necessarily sort don't So is necessarily because individual one of fungible any it's not view the like them? companies, - you on these somewhat as a product between

Chris Villavarayan

Yes.

is to Joe, OE us existing - believe think the a all will of think, do path about product of large testing point, I that all focus. startups how development, it’s differentiator, we think, I is and with And whether that that think all in the our about of these kind I - the done have kind the fits that the kind And we for do to a of that of as is more obviously for and opportunities. couple market customers far we have as customers potential stands. and that today, across how product it’s we of as us, the with really the

Joseph Spak

Okay.

might of or quick So, just can range and follow on talk one, like the vary like from e-axles - that. electrification, you either Like, how to I to need maybe activities sort whole potential to new EV to seems move if or bit that higher, on two continue it little then ups up, components on about but the touched the continue also, like might we customers? spend, different a especially wins with higher. guess And move of that follow

to and of a level or the get of investment, when on breakeven, self-funding get to some that thoughts sort wanted might you sort So, on

Jay Craig

And just three look off. the Carl's start following they're me today, the powertrain. on comments, you if XXXe announcements at all based let off Well,

of So product fungible you same called it's the using OEs. it, - the perfect the as across three example and making

that's for battery that the PACCAR, it we made well the EV a the PCARs, as with we electric to as last XXXe powertrain, using. turn top full one the system, that, So or - that, Carl. kit, tandem. the over includes On I'll of perspective we're when announcement one the With that

Carl Anderson

Yes, Joe, as we're various we all it, at chasing not look the startups.

focused just product really portfolio. fitting our on We’re what's

of to first look that we our XXXe now, that's as that is, seeing of as flips Chris time. can as in XXXX, it have it ‘XX we the but we're time that profitability, probably of kit the as lens as So come forward, depending and we discussed, future. when outside it’s kind on horizon, what expectation kind one the the market in the potentially that the see early axle we look just as at we in the through. as - and And side, both well And are XXXe side,

Joseph Spak

more a thought more. of on heard going in and on, one Okay. like up - you mentioned favor, if could are than just guys bit mentioned markets restructuring. curious right, Maybe sneak more I sort provide it of could you the just you sort optimization I because, additional details that seems I’m down. early little team the your I some moving

that. just I to wanted better So understand

Chris Villavarayan

Yes.

well. as So was last talk This new. this was we just nothing - quarter didn't about

‘XX optimization to from just these see result impact a helped the plans. as we what try to will So frame we in

we as are it's $XX to we total, we're closures. once somewhere about expecting, fully kind complete as compare about million we if these probably are ‘XX, you So ’XX, ‘XX think enter facility tailwind, of in - of million $XX to EBITDA

Joseph Spak

Thank you Okay. much. very

Operator

our And from you. of Johnson line come with instructions]. the Thank [Operator Barclays. Brian question does next

line ahead. go open. Please Your is

Brian Johnson

want be Good to who and on the Jay, direction. morning, will helpful strategic echo I'm still to congratulations sure

of been since calls at then. I've probably think I XX% those

your is, in you the of when and But wins, things. One, if electric I XXXe if like you can have. I an not one. of versus So OEMs, find another company and one just out you obviously about, did the your just just truck talking electric thought one there, might remind axle us you few the the terms of remind about truck - bus with opportunity, content But the interesting list. is type price Volta knew urban of XXXe traditional content question think you every a these for

Jay Craig

of of Sure. And terms vehicle times Brian, of our content in all, about five Brian, I'll first it's platform. take traditional that.

Brian Johnson

certainly also is, of then, the Allison, how suppliers, space, focus get what you bus important from of Class A X into do on medium to - and aware Cummins, are well though we’re X competitor Class And Dana, electric do then X truck very sort we powertrain in the duty. your EDEN, more given and see over coming those that they question buyers marketplace?

Jay Craig

the first spectrum. be the summer to production specific make us whole towards better better year. that the obviously going think thing is something to Well, will I to competition all look think, the mentioned I products drive drive one and one our thing to But is, as I electrification great across the products, be is, that at it, and in I as and this of and we're here

We the the on think sense, best in our about vehicles fully over part that you if path. fact XXX have product, And integrated. look I that it at is it's

You with together, sense heavier putting wheel axle. the that’s motor about what only than pounds standard integrated XXX end, the to we're with of that's a have integrated - an and axle, a XXX

into space. and So - then if that an it transmission that removing shrink shrinking you're in a perspective, put and engine you

Brian Johnson

fair margin, seen think bringing content that Is engine the given and and and it margins in to we've generalization? space, both And over a transmission taking the high about one transmission Right. way to Meritor. basically is you're

Chris Villavarayan

that, maybe is Well, that’s - … way we best said, Brian, as the to answer you

Carl Anderson

higher products cost I side. be products that six from margin. are no We’ll think taken electric move would new the not I expectations and traditional over Yes, introducing but our products have only we've say, reductions, introduced, think, for years, the seen the more the would we've different. last we I margin Brian, concepts out up, all And say,

Brian Johnson

as with of entrants, with positioned it's the And of on one - manufacturers, which earlier, then larger player new I you go specs this them how with - and second sort doesn't someone that operator, of And look Okay. at answered there? X know how get is a I of, of larger actually of if and kind do kind the you these a startup question question, are to how you kind time? fleet provider, Class your the worth most are but would wants truck follow go a you you How comfortable do you pre-revenue. is, some guess

Jay Craig

again, we're class. it product, let's think the weight the Well, and I on focused call

taking come we does XXXe across, at been the go a cover? in, looking medium many that's when X we're a a and top to about a it the it company years. end just And product as of many, line whether Class powertrain can space, X a to think space. And Class of it or duty, well we the hall to we're a as, it So down what new it's and for Meritor entrant, positioning or where customer entrenched

Lion PACCAR last even of - perfect on side. examples in there's and that other Volta the one So it's or in and of ends on quarters, whether our side, the Autocar two and spectrum, announcements both

Brian Johnson

Okay. And question. final

or so trademark the starts well analyst of the successor your hotel axles, we You kind important an year e-products, as again, Meritor have some be kicking Do products ‘XX, that event the on to your tires things about both didn't are a this But later to thoughts up the to any interesting. have at you coming to as day year. those in two on would bring speak, together? going is - of

Chris Villavarayan

with of you Brian. in year I release experienced as started always we've have advance. think, in done Jay, - preparing it And the for a just essence, do, We

goal the like call And so, case, we'd the we're worst developing of end of at with strategy. year. in of for let's probably drive in-person, this that's year. And process at it year end our the MXXXX have to the But beginning next you now, of the all our of right ideally, is or to it

Brian Johnson

to Okay. Look Thank you. forward that.

Operator

Michaeli the Itay Thank line our with you. next from question And of Citi. comes

go Please ahead. open. is Your line

Itay Michaeli

Good morning, everyone. Thanks. Great.

revenue financial Hoping original us, still the the Just MXXXX assumptions market follow-up about the conversion, us update think you quarter, end can of you target secondly, then target. $X on to particularly first two assumptions, that remind last the latest I expect And exceed. free were market just of questions, relative cash you flow just XX%. end billion behind on talking to revenue

curious Just outlook. next conversion free there's to if any change cash year's

Carl Anderson

morning, Good Itay. Okay.

flow for first, it conversion. I’ll relates free in XX% planning and change to As drive the - to answer free cash yes, our We still flow assumptions maybe expect cash achieve the ’XX. no

- by term, the the million, cash year ‘XX, that. think cutting is I this bit about XX% about drivers CapEx our short is expanding I we a think of high just little $XX one every to of in spend XX% are a flow in which as

And we Europe, it's assumptions, were As we're primarily the seeing we in that relating replacement further based get we in to off the end be get a strength November, market in at as closer of XXXX. this kind that, for provide we update will planning ‘XX. did North today, market later market we're but of that we a not kind in something of them into taking and as say once out still again look year America what here and the updating just back levels demand ’XX,

Itay Michaeli

Thank Great. That's you. very helpful.

Operator

from next line Bruce Chan of with our Stifel. Thank comes you. question the And

Please Your line is go open. ahead.

Bruce Chan

here good and a Maybe for wax Gents, more morning, want to little second. a congratulations. bit philosophical

the which of going cycle cycle And great with commercial been wavelength you freight customers is investors I'm on are natural, how maybe a your your around then And we bit wondering, very do terms inning-wise. obviously been I in of as your the in has think time little a EV cyclicality compressed. the in is side, what especially except talk continued to where vehicle the that cycle, lot have forward? with about comparisons growth just think broadly, opportunity, the this this last in you perception drawing maybe more the business

Chris Villavarayan

Sure.

I'll that question. Bruce, take - me Let

of So have this return. - too predicted terms fall in going not of probably when obviously back us the last many market, year, of could

at are at essence customers three all on and as things. our them cautiously However, primarily we're and up, order of line what is, focused the with supplies, seeing truck December, we XX,XXX, then January looked is from One November, raising last XXs rates in intakes, COVID.

And final impact The be also the able of the supply to is staff is the finding shifts. mindful second then up looking one at chains. folks being one of the to

with with that, - of but the this come backend starting of or most So is, what is, are rates to we're right to seeing our customers. now back the mid line up backend

electrification, question. to I one So perspective. it's very And think fair that's a specific

is more out - I think a think should about the cyclicality you of think you growth through. the about that growth come as much muted when electrification, goes because

less I see cyclicality. think far we'll

So I helpful. hope that's

Bruce Chan

appreciate is. time. It Great. I the

Operator

over this Thank questions Mr. no further would like you. to for And remarks. the And at back turn I to any I'm Chirillo further conference time. showing

Todd Chirillo

for you earnings quarter first joining Meritor’s Thank call.

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

Operator

may Everyone, for participating you conference. conclude have thank gentlemen, and today's the and day. in disconnect. This all does you Ladies program, great a

Meritor (MTOR) 3 Feb 212021 Q1 Earnings call transcript