MTOR - Earnings call transcript Q4 2021

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Operator

Good day, and thank you for standing by. Welcome to the Meritor Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now Todd hand Investor Chirillo, would to conference Relations. I speaker, your Senior Instructions] like the to over [Operator Director of Please go ahead.

Todd Chirillo

fourth Good welcome year Shannon. everyone, earnings quarter Meritor's XXXX you, fiscal and Thank call. full morning, to and

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

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

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

the turn to I'll over Now Chris. call

Chris Villavarayan

EPS team partners and fourth during full for working adjusted supply the issues EBITDA the want joining today customers in Good delivery. you simultaneously by our our the outlook to I expanding year into labor solid production achieved guidance morning. diluted full and and $X.XX, optimize we for Thank while chain United for financial margin year Once disruption accomplished supply delivered reach exceeded to quarter discuss again, with We Meritor significant call results. our Meritor's and XXXX performance. closely adjusted We to and electrification. States. this thank

had things we're the input the with we but extremely higher our the all result. demand back. global snapped obviously X, revenue Slide considered, costs year, for quarter Extraordinarily on good and high conversion as on impacted shown As margin pleased

Slide Let's turn to X.

and goals. delivery. metrics us our With remained While I were did MXXXX to in we incidents a year, circumstances teams strong environment. the challenging the a recordable ended they demanding, a achieve give for these We on zero quality the safe path our the to XX% of commend maintain year safety, having facilities culture with intently work working focused in that

venture including We Quality performance. to for quality of year excellent have this Quality Masters rate XX. and in XX% facilities We're the that over of Daimler industry, proud say earned scores for XX the outstanding believe the this PPM delivery, the year. with which cost Daimler our Award, Our this technology from joint and Four suppliers customer operations resulted three quality, our quality of of differentiates years. received us of our of in of year, as does level we delivery Awards Masters recognizes

as a experiencing. typical we not labor industry and accomplishment as considering an prolonged XX%, the disruption supply high we consistently view While as run is this the year where

Every to and of and a expand contract partnership customers solution electric commercial an finalize as opportunity. market view agreements lead every is architecture as advances for new one vehicle vehicles, agreement, collaboration production their As the a our we and we could important towards electrification. to this base validation industry our strategies Each prototype that year, announced choices. technology quarter customer

turn no to Slide is quarter Please exception. X. This

of future with less company day. production medium- miles back-to-base than designs routes Meritor's commercial is it electric taking and test platforms. prototype evaluate a and of to per last the and that Axos that mobility agreement, heavy-duty in on XXX travel First, trucks Under ePowertrain Axos mile intention manufactures will

Meritor's commercial Meritor's vehicles powertrain. to conversion replace electric sweep electric drive Electra with powertrain surface application Electra centers, We an integrating Electra test in and road to a to into with more shift. will technical Meritor Europe vehicles. also collaboration electrified road commercial efficient the IVECO-based Electra have a batteries, vehicles bring and will work remote city sweeper new single more allow compact a its solution can architecture, will the for maximize which With allow space to

goal to the to we're a program in proud heavy-duty Finally, trucks. zero-emission with be Department of Super PACCAR. is program of collaboration Truck develop part Energy U.S. medium-and X this The of

electrification program. announced Slide awards to for fiscal to XXXX, relationships. a we XXXX. announced wins customer electrification value EV in number We're and base. From growing the more compared our medium customer agreements the opportunities our further in XXXX, space. significant through than X diverse growing we've at new prototypes, duty fiscal have go look Volkswagen Let's existing the and to also PACCAR heavy, the application as new In we're medium-duty diversified of production of production we and This to year, fiscal tripled

Here, had we share. large not have historically a

almost the and $X.X and new electrification new growth core base the business Slide to growth the the On X, grow. We're States. our on the core recap the continues IVECO business MXXXX I portfolio financial and extended of fund we activity secured for will by our business to Carl to turn wanted electrification exceed product year. our as in during business Keep with of United truck customer industrial the and million. with India approximately important in booked target of in now and Navistar billion. track have it business win over We to We contracts mind, details. expect to now $XXX sustained business we customers our

Carl Anderson

delivered and review provide basis financial outlook performance in to adjusted adjusted Despite earnings and of to $X.XX share cash flow. million significant generated We call, our at XX.X%, year fiscal and chain XXXX. EBITDA by revenue fiscal our converted today's we on points for On incremental per expanded XXX year. an headwinds supply will morning. the margin by in solid operating free $XXX XX%, increased and results environment, XXX% good and quarter fourth financial Chris, full year Thanks, I

X. Slide to turn let's Now

results XX% all quarter in truck increase same fourth was ago. to sales Truck were I the sales year basis North compared million freight recover million, the increase year production points by markets. and Commercial from to to we was segment quarter in adjusted the & last majority review driven last The a for was year EBITDA on for prior and was Segment was $XX million, order This in First, period from an $XX steel XXX higher rose offset Sales EBITDA by fiscal EBITDA $XXX increase of by aftermarket global driven Industrial EBITDA XXXX, were conversion year-over-year. up Segment time, pandemic-related of from shutdowns. margin year. higher an this adjusted revenue. at Aftermarket of just year. our up increase adjusted in $XXX ago were Truck will over A segment partially margin driven costs. compared Commercial X.X%, adjusted in starting our higher to in the of was fourth the flat year-over-year. primarily activity business. America The higher million this by XX% year. The Segment

XXX point higher However, decrease. freight margins were impacted costs, resulting basis in by a

India doubled. production to Production than XX% over year, demand rose full higher in the truck global year to For $X.X in strong from all more billion, up due our of and last sales markets.

income South $XXX prior million operations million compared XX%. Class North from up was continuing XX%, year. to and was X in in the production America America $XXX Net increased by

our the year, more of in the termination last value-added $XXX arrangement of credits will of This of tax WABCO. million entity $XX You year fiscal net recognized associated the second tax by was tax, distribution during recall we partially of with recognition wholly-owned XXXX. million of net than of income, company's the with quarter offset Brazilian

margin of we basis year. primarily points. higher in was EBITDA driven Adjusted in The fourth an from partially freight, sales, tax initiatives adjusted fiscal increased increase EBITDA XXX recognized of In and steel $XX costs. XXXX, and in of electrification on an steel this costs XX.X%, adjusted in total, higher freight tax net Additionally, certain EBITDA conversion in was million $XXX offset $XX were were quarter year resulting that implemented margin an headwind in XXXX. the benefits and million by million increase by year-over-year

scrap nearly faced XXX% EBITDA not is quadrupled, adjusted freight, have During in performing. in significantly higher, business and steel ocean would hot-rolled the and our we margin Had steel costs XXXX double. container the increased been costs underlying demonstrating costs well year, these increased over how

million This incurred arrangement flow included had we diluted higher $XX mentioned approximately in million flow XXXX. Adjusted And our last volumes Additionally, XXXX termination $XX year. in also from electrification we per earnings secured we in the WABCO. the to an the our the XXXX, tax finally, year. credits working Brazil exclude million continue cash increase million for the customer of $XX as In an expense $X.XX, million tax does was Keep cash the earlier. from for another for cash our from I $XXX had million in and also increase we initiatives free as free mind, needs of distribution capital prior supply in and with we million in prepare requirements increase benefit $XXX received to $XX the $XXX compared was future. of $X.XX in share invest

Now let's Slide review outlook our production X. global on

demand see our strong global We continue across to markets.

the America, the Class production constraints year. for the impact X into at X% expect an range XXX,XXX of midpoint we next XXXX. in expect almost to supply and global to production chain from which industry However, to increase customers our continue units, XXX,XXX North be continue to In we of

have X since has to begun order While activity moderate, Class January. XXX,XXX trucks over ordered been there

was the outlook the in be expect by Overall, backlog XXX,XXX Brazil, constraints production Class units September levels stable this Additionally, see only expect of set chain. continent. is Europe, in on range previous demand region truck we In we since supply to as continue production in highest the the approximately high XXX,XXX XXXX. approaching as in the which the product in In XXXX production units, our XXXX. limited XXX,XXX all-time is continue was X October to strong to to we

of the in slight the in region year we project in XXX,XXX India, next prior as from year a units. to range production expect We production XXX,XXX And rebound. to continues the increase

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

sales projecting range We our full to billion. year to are $X.X in the $X.X of be billion

MXXXX to the we million wins discussed, as part revenue approximately I in forecast to of In growth based on production plan. related business expect addition incremental sales new $XXX

continue $XXX also pass-through year. to in last revenue million will steel of the from $XXX million increase compared our We range mechanisms, which we recovery costs expect recoup to to

Moving margin to our outlook.

EBITDA XX.X% our of margin be expect range adjusted in We the to to XX.X%.

range in overall is than operating continued the environment. due normal to wider guidance uncertainty the Our

to incremental compared as million headwind to We from XXXX. freight costs headwinds be continue to and to of steel and $XXX anticipate million significant see an these $XX

In total, on for some We currently of starting be recovery are of cost executing which million are in we our to seeing. planning we $XX actions offset to second actions, help realized and are million quarter. the fully pressures $XX will more pricing

fiscal we expect in XXXX. addition, In tailwinds year several

in million will year-over-year continue quarter, will previously consolidation we business, announced to drive to providing operational million a $XX performance the complete initiative $XX and our First, in first the footprint improvement. we

diluted the income range second from final flow adjusted superior continuing finally, adjusted XXXX, benefit million to announced our XXXX to is quarter in on cash the for convert Moving incremental noncash share we to share, our working year XXXX. in delivering $X.XX. our per reporting we stabilizes $XXX $X.XX adjustments based November be is tax MXXXX remain in operations approximately million this team of and outlook had changed And expect focused included to the back the earnings earnings $XXX adjusted capital our Keep as continues revised we diluted plan excludes performance previously and on to financial we of per which that of mind, of the on Overall, outlook sales. when free plan. the we in MXXXX in now of

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

Chris Villavarayan

usual the As Carl quarters. wider stated, year due have in past guidance grown the fiscal to this our to we for are ranges few accustomed than volatility

to and we growth Meritor on particularly business financial advanced results. Slide delivering and We're focused plan in provides technology. are highlights. the our core achieve future excited we about However, XX see recognizes the is excellent electric. MXXXX

us XXXX our of position the well on world. in will growing the in adoption success the Our legacy vehicles and to around commercial and electric capitalize vehicle brake business

and as Strategy growth share Slide content exciting expect XXXX. next we to XX. expectations the you time, we join per us hope towards the X. heading rate electric of As Meritor's Meritor's dimension to at to our significantly. We we At the turn wins dramatically market decade, December will will look to grow we increase And for Please with will Day transforms shifts powertrains, as Virtual new adoption industry electrification you. that on vehicle believe the business

live event, Q&A. Following have a we will that

So calendars. your please mark that on

We will now your take questions.

Operator

first comes Brian Instructions] [Operator question Our with Barclays. from Johnson

open. is line Your

Jason Stuhldreher

and factors low would XX-ish could of sort benefits incremental than percent in fiscal one-off to other steel imply, And the of And is sort in your of this range, was exclude finishing just the on year? and Jason dimensionalize you I Congrats outlook of be next you Brian. that margins what margins past. which of that for on mentioned kind Stuhldreher expected standalone incremental maybe factors, we've then outlook the seems the The freight consolidation hoping of kind year looks getting first. Team, is for to if additional the kind on higher what recoveries seen then of you're sort finishing but it the some be? of footprint the we kind cost, the and 'XX. hoping

Carl Anderson

It's Sure. of with incremental into all look on that to of Yes, I on the several base the years expectation is over revenue. that question. keep just our would north incrementals be can at we've things XX% that the we a last of revenue, I XXXX, of Carl. address couple we conversion say actions in kind executed will now as mind. going

consolidation million in million to well. addition to footprint $XX business to also continued the drive operational tailwind, of as significant we In expect the performance $XX

expense and in additional So planning we that operational an compensation less be $XX for of incentive to would million XXXX. also are up improvement, plus

all So box the absolute you will higher in an sense. margin to that

Jason Stuhldreher

on uses in free Understood. you're get cash mean numbers next kind XX% of of off going maybe range, of of the to the conversion, sort guess rolling -- some of And -- of kind to on you that pretty maybe the that and forward? of maybe period. restructuring for flow capital, a XX% next kind in then can in cash the of to strong it for are update generate But maybe sort just kind working we're as set higher. going cash I even your about And think guiding is an XXXX planning we little I guys what normalization a fair north of of hope

Carl Anderson

Yes.

assumption balance a obviously Day in bit obviously, we're the north think expectation, we XX% number and year weeks sheet capital, an But that update overall should driving just couple given it our from be for would we achieve of as the detail. working I to And provide what the of think expect at little improved will more forward. we I this in Strategy we in be XXXX. a XX% go driving fair a

Jason Stuhldreher

Understood.

for on that lots to Then front, I'll about next electrification talk month. save the Okay. but

So thanks, team.

Operator

of next America. Sherif Our with from question Bank comes El-Sabbahy

Your line is open.

Sherif El-Sabbahy

And more roll an when industrial. then to a ask point you outsized having impact like basis So maybe the aftermarket It on wanted impact off? just expect that color? provide to that freight bit freight is Could you segment. I about XXX and impact on seems would

Carl Anderson

of seeing we're kind since alone. as the -- index as look we global quarter just -- fourth Yes, in freight just at

talked back So we is back when now, we seen period. July since where time -- freight you to this costs if we to increase go and that I XX% have in last are

with are there be in go So in aftermarket quarter. pricing the we that second I into as the -- in call, expect short-term think go continues headwind the a around actions the forward, But business. kind addressed we our effect to we of near-term to that business that especially

further this that of seeing get bit a we So you should quarter. first as start normalize little out

Sherif El-Sabbahy

Commercial pass-throughs be something regards or nature would that level? similar that has that Understood. a more Or Truck seen there segment, there aftermarket? it And with bit present of is a isn't the offsetting to then in

Carl Anderson

our are No, Obviously, it have we on is steel, we that affecting have seeing not freight. in we that. both segments, pass-through do mechanisms

So we for discussions -- pricing. that on something with that to further is customers have our have

Operator

Capital. RBC Spak Joseph from comes question next Our with

Your line is open.

Joseph Spak

Carl, and what I the and volume margins $XX showing, half the And actions of operational in some million performance. more in where the use of the operational walk historical performance. from $XX and of from of for know 'XX like normal is taken, be are sort at X.X the you're if revenue called you some that to areas on sort revenue operating of conversion there If I would would just out to other million can seem of incremental sort X.X sort it margin maybe I half but factors drive further the look 'XX? other of you performance

Carl Anderson

would Joe, expecting couple earlier, addition yes, are compensation. in I we a areas as there to lower mentioned be footprint, of other I think incentive

-- a on million year-over-year. $XX we that type additionally, then business of was that into material to that continue basis. performance will drive the So is around year-over-year in And a expectation call significant so range our

for of that bridge. I think kind are So those us for drivers the key to --

Joseph Spak

just guess actions. sort I there, on this like pricing in Okay. a little staying recovery bit the you and touched of

table it to to your of contractual you and much there So understand just guys that the stuff what that's a pricing split of contractual And owed us of the like in of at to sort get just and you? the sort so of far? sort and of negotiation, me mix you can those trying sort reaction of sounds sort is have rolling what terms conversations back how help up to some is sleeves been more

Chris Villavarayan

take up, steel So just mostly if And that it break I'll is one. contractual. you

Carl as as with the the freight when most that on that covered. of between -- are have associated something average to the that are obviously is somewhere XX% So is recovery. mentioned, on we side, have not conversations Most passed that XX% lag we through. There's

when our about could numbers difficult, XXX% region are gone has obviously imagine, of but up to you freight. XXX% especially where understand which the it, And think those freight on depending as customers so and type you negotiations,

those We've difficult. customers those had What healthy. us at the we've started continued have early. need conversations though I -- we've conversations, end would the to So is of Joe, our day, those say,

into see been with to able And we continue rise. work going 'XX, we've to as So costs them. those

continue So conversations. we will have have to those to

Joseph Spak

And than side, on correct? take on been aftermarket the pricing to right, historically, easier the it's

Chris Villavarayan

Yes, and usually... year we've correct. the We twice

Joseph Spak

Yes.

there let what and me. newer which stuff, million Okay. names? which truck Last let's wins, for EV call were think, one targeting. hear way like you're on Is in split $XXX the you over? is Like great is, I frame also for these And what us to the already, million makers some between, $XXX the them, be of that to legacy recognized know what's time to a

Chris Villavarayan

don't So Joe. provide our doing full customer, is the take and we see. basket let have the me usually What revenue from all that's the customers one. taking adjusting, granularity that you or risk We that by we're essentially full what and

that something terms call when in call X. However, that's on it, let's will provide December we of, you timing, in

Operator

Chan from question Stifel. Our next comes Bruce with

Matthew Milask

if Administration's maybe The Biden vaccine to on This provide on and the fiscal on perhaps how how line the thoughts outlook, might you wages 'XX. feel into production, on as ultimately labor solid margins if staffing and good 'XX assumptions to what forth is benefit regulations? the inflation Matt a you have color you line year? for on and could some comment the cost in any next about your the sight so With that key impact might the around market, experiencing the that, Bruce. could Congratulations more from fiscal regards now on labor be of hiring you're you impact challenges guys And salary, follow-up

Carl Anderson

and over Thanks, the Chris Matt. it first question I'll for turn to second. the take

embedded inflation for seeing, to right is our now. As the the that we're in guidance it workforce relates it

we're an would and obviously perspective. increasing on depending I I operating guidance we're what think assumption definitely is from it's in where say in, it but our fully reflected what is

I'll it So over to turn Chris.

Chris Villavarayan

one really line you quarters the impact our the about view QX impacts And I shortages. as us the obviously, it, as Delta most to Matt, rates good variant of of challenging of coming labor get so on the -- would thinking if a of inability was with the the semiconductor second half, for think because probably the the of about well say

seeing were that shutdowns sporadic of we normalizing So a QX. QX. quite bit in do through see We

us OEs appropriately rates our of staff. have line from them, provided more that's based they the adjusted So ahead then the ability and have to visibility

and respond, One And of is a employees it's we Meritor by the in some plants. elements folks to the able true the of next other the at deploy. of of the to call testament we things our some of have were that some Meritor through stabilizing as are continue moving many into done cases, our salaried respond the, think least it, we we let's quarter, the through strategies those to of

Matthew Milask

some around lastly, maybe any Could And one I be could color customers book line, in. more order production existing product time great. customer planned Blue would updates sneak the platform? or if the you portfolio, with activity the any provide on Horizon new Perhaps

Chris Villavarayan

Yes, I'd love to.

So perfect.

So our into year. -- is Horizon ePowertrain I Horizon, launching ePowertrain, battery as captured system let's of well we're PACCAR, aligned end the system go as at full all we're full with call the which under the which to system, as, with the the well where we as both provide it, production PACCAR, this think Blue we the Blue

is XXXe, announced ePowertrain, we -- shape announcements there. then is the prototype which in today. with obviously the we're which And So great two the

to stream about continues look the build, on it Day talking forward X. that we to more our Strategy on So and

Operator

comes question next from Brinkman with Ryan Our JPMorgan.

Your line is open.

Ryan Brinkman

to ocean extent we shipping they recover commercial freight should to would suppliers through think diesel, with quarter of If To how cost you that you do freight, gas, handle in consideration about to agreements unusual along partially those would that that pass customers? cost these to example, this costs, the recoveries steel think do offset these expect sense costs in to intend timing certainly natural with And you're extent the number and process ask what of costs electricity, questions and savings? higher being non-commodity out rates agreements, the heard of the with least I the times. other contracts I customers. as of cost lower or on even I customer at needing on on versus in via have tended A to their including some to protected supply suggesting et cetera. thought shipping, but Given and ocean more more labor, margin, not pass them are productivity to you've into I process regard be ocean differences to that past what be costs, that these make that negotiations inflation chain to what mention potentially number mean supply commodities of to for seek it began XXXXs? a light mostly in does formalize labor, there, optics guys costs. chain in they non-commodity maybe future these like? timing look called shipping, the way vehicle that formalized mostly Is and biggest you

Chris Villavarayan

a Ryan. question, it's great Well,

about business. and size the we it isn't about mean truly absorb it we point time. to you the think a that something where becomes think over detrimental can you when I scale when think I come

will conceptually, you of other looking labor, identified some it's look the power had, significant the but and at our discussing freight started the We've on was certainly we've started because had customers. we've us, other of for these be to we baskets discussion most pass well, we with them have customers. and our that with So portions -- you've to whether when elements certainly

for be looking a you As just out this of all significant last that next we moved year know reacting We into and portion adjusting preparing as our headcount year, the early costs. the the business. the needs pandemic nondiscretionary at started as coming well look to by at -- by of

internal quite have certainly a will done customers. we've it have looking where it, be conversations a comes to when to work. let's you But point XXX% to we with call our XXX%, of So of, bit increases

Ryan Brinkman

And is front. then last on my question labor the

that industry I are a ask so in get You a at mostly downturns, relatively the there a question I'll from already, different think or bit try past, workers you were angle. have of that the In or curious needed, higher the of your So the did implication temporary looks workers percent I'm more it mix to your temporary highlighted the of being like permanent be let which today. there could what the when is time opposite right? situation go not of with easily the effectively just maybe cost versus today, temporary seemingly

permanent about being any greater moment, with of in experienced temporary If question upturns. versus at costs going you're continuity retention meet temporary get how And thinking the But benefit labor have much you downturns the like generally, as the sort quality maybe as goals, did might that of your differently of than you about forward. looks sufficient to track of productivity just ensuring et how employees and what cetera.

Chris Villavarayan

that that is And years Rockwell to heritage. facilities, call XXX And that the, it's through Ryan, our part we break in have on it comes of been quite the the retention when it -- still into parts. somewhere say So time. so I'll XX of look employees it, our two good. years Meritor's -- full are legacy question to would When average, let's comes to of I full-time has it, when I employees, XX

very So worked imagine, brand the the on done the in have retaining that and job employees fact of we've team been seen the loyalty, in employees, those a same we've with -- we've based great and company and that the and could provided on same is -- that the to lower that level those have there. that is, the had than they've experiencing the as we're side side, little is you pressures issues And previously. temp the experiencing. Specific industry ratio retention what we temp same

been we've running ratio, the full we've down by, our bringing XX%. way retention are that temp let's we obviously, addressed time, -- to of north call our that's that. up attempting fix So is Overall, it, is how and

Ryan Brinkman

these where to capacity done you does And incremental electrification in a business. all whatnot, it with these like you've employees add awards do the on might how to when or or time square need know that that? the seem couple be new they if last might stand of that intensive capacity awards? electrification in just don't of I sneak been on capacity, but more Do you've capacity number footage to are of like or securing was sufficient existing have some you you wins terms something

Carl Anderson

So elements. we've -- broken break that into up I'll actually two

build there, full through and that powertrain we PACCAR, in the axle, -- the acquisition the our we TransPower. the is system battery So have where

constantly doing integrated the it just we're and to between We expanding it we Carolina the ePowertrain manufacturing see that Forest City. have into integrate in -- axle are axle, two buildings, growing. and When as North there at been here, -- able Asheville have comes to our capacity we our business we sites looking what our

here, enough we the see feel respond we to years. able we to capacity the to few it So as next that over be have market

Ryan Brinkman

then drop excitement just about think the To there's much to Ford about transit X What's that considered vans, X right van finally, in bright or extent your what of space? delivery how competitors. leverage are e-commerce, of and now And the be in Class light you commercial to interest through are the vehicles? aren't in to last-mile so or sprinter commercial positioned portion you compete or vehicle some their

Carl Anderson

that answer that's question. love one. to a Well, great I'd

we when you think when take heavy you it, been the on So -- side. out about have so historically

we the XXXe. started off so And with

Autocar, And the on you Lion so it, the medium-duty the call into [indiscernible] the been XXXe. our, best side. PACCAR, highly on wins let's think electrification is about if But about that's part

had XX% about and guys And been share here, we winning know, so historically, we've here. as have you

product see about which So this X, testament and the that's as been true significant Class market to is Hexagon, growth. right brought is X, Class Volta, just think that a it's And we've the now. to where we we

the end Class So XXXe bottom or to medium top end X that -- end bottom of duty of the the or heavy. comes the have we

Volta what that X, using. get X both XXXe that's us helps so with are agreement X. beyond well we the in call which 'XX And top that, it, as Class into, let's as and to end Class have Hexagon the our Electric, market bring plan and And us the to we of

that side, we're sequential So winning. great parallel it's that a let's it, strategy. on We with see decided came we it's the not medium call strategies to and up on,

Operator

Itay next Instructions] comes [Operator Citi. question Our Michaeli with from

Your line is open.

Itay Michaeli

financial Just two questions me. follow-up for

second, in upon that a, you actions, fiscal a rate for you just And discussions the what those freight assuming sort of that uncertain of might XXXX? R&D a you're how kind First, go? noncontractual how portion, given touch or percent to do Is be that? particularly bit may and you're recovery of go an recovery terms success of the can just in about modeling for back going then there assuming, nature guess, there pricing I

Chris Villavarayan

as well and do we recover in what's the assumptions because in I seeing that -- we is still always up. steel, sales R&D, of what's happening of is certain don't build to guidance. some currently I there. change, run X% it as our assuming those the embedded relates whether think I of then are Yes, Sure. in But just modeling cases freight, XXX%, we kind And just we're forecast discussions, percent R&D a it's on the pricing it's think and say about kind to continues would as in

us. discussions those critical just for so And are extremely

And this pricing be so forward. had to date. of run. in it we go actions especially from we on driving environment, point, some deliver we And customers need to they relates to at But these the this some as costs, continue we've achieve to rising success will inflationary on that to all as everything

to discussions So have. there's more we need work and

Itay Michaeli

Maybe Carl. a follow-up, quick

that's a obviously beyond be some Or 'XX? you supply recovery chain. for capital I drag with a full the still additional there recoveries the mentioned been working all Are you 'XX in in volatility? on think fiscal just going assuming will recent all

Carl Anderson

Yes.

we at $XX had the if we'll know we way but mentioned, claw back, as we should working -- definitely basis. improvement don't XXXX a $XX see about to headwind a capital in expectations. As say I 'XX on year-over-year would we million all it, I compared a look million-plus I in

Operator

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

Todd Chirillo

Thank you for joining our call today.

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

Operator

for today's concludes This call. conference you Thank participating.

now disconnect. may You

Meritor (MTOR) 17 Nov 212021 Q4 Earnings call transcript