Garrett Motion (GTX) 27 Feb 202019 Q4 Earnings call transcript

Good day and welcome to the fourth quarter 2019 Garrett Motion earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. to conference like Blalock. to now would turn over the Paul I go Please ahead.

day for call. and Motion’s you. everyone Thank Good thanks and year fourth full listening XXXX conference quarter Garrett to

that Before I’d information with are on to you’ll Garrett we the other our about where and website garrettmotion.com, find like mention important available at begin, Motion also press today’s to SEC release presentation Garrett. links along filings

the risk the goals, on regarding strategies, any we manage note that presentation our Turning those and measures the reporting Slide related to business. by vehicle business and gasoline and been way to of statements using our Honeywell we the in uncertainties financial XXXX. only. only to litigation should and related not indemnification reported weakness and and of which taken today of non-GAAP and filings, for ongoing XX, of reconcile each in terms We financial financial as company in nature describe in I’ll turn our of basis numerous update of and to now of XXXX. additional as of on obligation We sometimes financial which prospects, future We financial them. refer as encouraged and to information, light appendix estimates of to CFO. disclaimers will to internal operate to risks presentation and you our today’s of GAAP be forward-looking anticipated is statements note the examine X, financial vehicle today those uses presentation. Slide our you interim to Also reconciliations disclaims presentation, measures documentation, Bracke, today. liability only the carve-out on weakness slide also Honeywell, such. anticipated Olivier. Peter this as the factors expect the Today’s contains place has remediated of to it provide most X, comparable material purpose supporting this Please the both the directly to and our presentation our are information, gasoline we to under payments we historical comments, now business, the slide that measure, us the diesel our expectations performance, and I’ll to the impact a in impact forward-looking control controls that post-spin December the in over encourage President release our December found are call. and to press X, and are the in read diesel over represent today’s the main activities commenced lack the CEO, do to remediation the with and also agreement remediation the result Olivier material our statements Rabiller, products management’s results business. light evidence become standalone Honeywell, performance aware contained coronavirus With On The understand of forward-looking this and our our hand our

higher year XXX company, Garrett full outperforming year long-term full everyone welcome first conference an our performance totaling by guidance most up strong and our Beginning and Garrett’s in fourth delivered performance year Slide on auto points. global target. currency than quarter $X.XX sales with XXXX approximately to in call. the basis Paul, net X, is and as production recently for and original our Thanks constant billion, at independent slightly a stated This line

increased our reaffirms one product In transformation global the last auto industry. drivers XXXX, Garrett’s in industry products currency, outperformance Based in XXXX significant those new Notably, of gains growth, our in Although gasoline auto outperformance in constant from our original XXXX the a production gasoline now this product from diesel and portfolio. decade, undergoing year the considerable on sales product well was while the demand sales achieved XX% favorable disruptions gasoline decline driven category. and of at in was the net ahead in by platforms. is share largest product for of secular the our largest exceeded target launches products, our

constant growth will gasoline even Peter QX sales our shortly, at higher at in discuss was currency. As XX%

strong light During commercial marked financial XXXX, the in deceleration our vehicle and position despite we also both production. maintained

in cash EBITDA million In flow our XX% Garrett in balance XXX% our our results generated macro fact, a pleased team free to free conversion. business in adjusted flow, approach in auto flow adjusted representing margin Garrett’s XXXX, model. vehicles, this the of without any of cash am In growth production performance I adjusted and or delivered in by believe global $XXX XXXX, a about $XXX commercial that deleverage solid also in I million resulting sheet. challenging cash utilizing flexible environment, underscores resilient and true our stayed to in our we and

by million in XXXX XXXX. October debt our total and since net $XXX a million spin-off reduced in we by Specifically, of $XXX

XXXX for beginning relationships close product ability to our against well software our cyber in companies, intend new continues leverage achieve solutions we were of security deploy innovative intrusion in consistent automotive was play detection one Garrett, the deliver technologies. cyber security a heritage with pure to our new This in industry our Garrett solutions electrification we of extend we where important where our customer traditional Lastly, to validating portfolio. software successfully production. to progress awarded In contracts win and that competed developing beyond milestone products first pioneering XXXX,

element results edge strong our begin initial and our discuss in current positive unforeseen later and in believe new summary, we year to Also market cell off first will fuel technology first cutting also for an In later we year, previously this the Garrett-based as fuel financial increased has we across we dimensioning which with unique cell market technology solutions. year initiatives using our key expect the mass intend hydrogen our production our and provide are as we cell to and and in start build fuel expect Last this to for XXXX. full of announced, vehicles, traction is fuel Obviously year E-Turbo to compressor be a we accomplishments strategic call. products hydrogen in year many seeing We our company. XXXX. We for independent launch technology the for as cell fuel preparation received for compressor China in first this solutions. with started upon the China cell in [indiscernible] momentum to XXXX have our award outlook challenges, production

and of We of continue we the world. has local our and China no and vigilant our health infected employee epidemic. to virus overcome is paramount knowledge, their to to coronavirus to ensure taking elsewhere supporting Currently, employees the monitor their the rapidly by remain evolving officials and the this the been in active safety. outbreak to health we around Safeguarding remain of committed Garrett measures organizations in all in efforts

total to growth Now light Slide turning to global growth X--sorry, industry and to sales Slide vehicle production. X, sales we highlight auto relative turning Garrett’s

XX global outperformed by see, our constant net percentage approximately sales vehicle points. currency total can you in production light at growth As QX

production year, we percentage For X auto about outperformed the points. global full by

a the for see fourth by rate double-digit sales driven advantage by Excluding customer business, products. products. Garrett engines in strong of In full we the or more total was technology quarter as win commercial from On hybrid to as content we production XX highlight offset vehicles power percentage the our year, being by CAGR trains. is we points the year of in X of grow and points than technology that gasoline increase last the strategy. growth combustion approximately light growth to at in gasoline diesel throughout their these vehicle we and the outperformed technology-centric growth they execution positioned With aftermarket [indiscernible] percentage well [indiscernible] XX% only emission X% internal engines, light of industry whether X, pushing take sales, volume global and positive are the decline a increasingly approximately communicated growth fundamentals. Slide requirements vehicle expected used part XXXX, of remain to our earlier averaging OEMs stronger stringent Globally, XXXX,

we higher content drive to by reach globally technology and vehicles of believe long nozzle in our we variable XXXX example, light systems will XX% which for the expect XX% For in Europe, run.

Next, next our electrification our generation solutions demonstrate technology and software automotive leadership.

pre-development their for programs As offerings, technology OEMs to of OEMs. increase our their expanded continue the electrification e-boosting seven to number have different we of vehicle

fuel we fuel accelerating For the compressors. cell are development cells, for

production On developing are the for software side, and security awards [indiscernible] business IVHM, for maintenance cyber executing final which is our we algorithm.

the unmet provide technologies needs our future of global to our Lastly, address OEMs. advanced ability

our final pipeline come production to have they development calls. as More of stage to the to remains forefront evaluation. solutions an periods of Peter at are proud We to are Garrett this full-scale Overall, next into results. the innovation one moving provide most that, in for color close at is decades. value added regarding going our transformative through it that in over industry will the financial of to I hand in With additional on

the my fourth currency. begin reported X. net basis on Slide Thanks constant reported X.X% sales I In growth and of everyone. and welcome quarter, on X.X% remarks Garrett at Olivier, will a strong

lower product quarter turbocharger penetration were of lower volumes, diesel the XX.X%. launches, X% gasoline from product aftermarkets. and for Our vehicles, $XXX million a reflects by increased for quarter down engines for the commercial higher performance and was volumes for offset EBITDA stemming new Adjusted gasoline for to which margin sales partially in

$XXX over flow, define rate, free flow cash cash free adjusted adjusted XXX net million, income. adjusted which adjusted Our excludes a indemnity-related cash was flow to payments as representing Honeywell, which free we conversion

quarter strong positively conversion experienced to in seasonality robust the similar Our fourth impacted QX capital, XXXX. cash was in we what by working

XX% results strong tax as the Honeywell $X.XX share adjusted in compared and $X.XX indemnity conditions. expenses EPS, was such to QX amidst our fees, which Lastly, as challenging in tax reform, special delivered related per matters Swiss excludes as obligation XXXX. XXXX, Overall to financial market up well Garrett litigation from

percentage In declined percentage sales three launches, and net net product seven grew respectively. total new and in to of Turning illustrated over points net same America points as our gasoline Slide X, QX, we Europe while to four sales the mainly Asia sales our our product North a in last due by by we and by year, sales region period line.

On product to QX percentage percentage side, diesel from basis, we by gasoline grew products XXXX. quarter, up in our XX% of net from than XXXX. [indiscernible] On sales XX% fourth in exceeded a the QX the sales product points XX gasoline more

previously, a with the the industry when greater sluggish. expected acceleration revenue Garrett for time remains positive than is provides at trend faster it As as towards term we a stated long us gasoline resilience

this of slide, from in XXXX, shift higher although quarter, two of the continued expect declined a We a each margin points pace. in to on businesses our aftermarket gasoline softness in these and the as for continue by diesel each Also vehicles global fourth markets. at sales end slower commercial percentage reflecting net to

$XX turbo Turning currency million XX% is certain therefore sales at the products significant and XX% of of runoff for was at the extent million, period vehicles XX% commercial to to sales FX overall primarily Slide at in to the million softer to $X currency. softness due primarily market sales net despite the year, or sales global related There provide driven aftermarket of net bridge Overall by we downturn X, $XX the auto currency, of diesel penetration representing by part higher grew CV. overall our products currency constant gasoline fourth $XXX aftermarket by or at $X while constant increased an quarter. million is constant quarter. increase currency, Gasoline an last aftermarket our last constant versus totaling vehicles declined over volumes A the the same in comprised applications. declined constant X% increased or and at some in and year, Commercial million impact and production. X% decreased decline

compared XXXX Turning now QX to XXXX. Slide as X, from QX walk adjusted to you EBITDA see our

our headwinds in largely products. continue compared was this portfolio down EBITDA This shift sales spinoff year higher to expenses was to productivity. of The versus $XXX our challenging what $XXX with offset benefit $XX shift offset in mix FX in accelerated million. QX with a Overall, as believe flat $X the were increased prior adjusted adjusted XXXX. $X XXXX, XXXX year QX, SG&A mix. we despite diesel for to mix volumes down in was QX impact to by EBITDA product was by Garrett’s slower gasoline the line conditions saw although ongoing transformational decline X% and million the shift QX million; in related R&D we for at in year the with higher EBITDA by we quarter, the however, related million. the adjusted expenses was The this from of on will towards XXXX. product trend consistent R&D X% full was million in pace is expect For market combined only

provide $XX flow as in of payments indemnity-related other XX, we the in cash impact $XX billion free on million in $XX in and million Turning we There was quarter. FX capex, which $XXX to cash cash million, the of working $XXX the of reduction by In for offset $XX liabilities, our of walk $XX adjusted net taxes, totaled result $XXX assets partially Slide also QX, flow debt our a million. cash reduced million and our million million a by related our net $X.XXX million, capital in fourth $XX mainly strong quarter to debt million debt adjusted million for EBITDA free in $XX Including $XX to interest. million. quarter and of other, negative consists in

Going free flow strong net cash our to continue our debt balance to sheet. reduce deleverage utilize to and forward, we plan generation

offset to million, $XXX and XX, our of ended excluding reduced debt we driven FX. $XXX end credit to ample by available at billion quarter equivalents $XXX million revolving voluntary Slide the cash gross and partially cash QX under of repayment at from and a $XXX cash adverse with was in equivalents billion million Turning of $X.XXX The end the liquidity of million debt facility. the cash QX, including by $X.XXX

ours. like October have $XXX reduced by debt to also of net $XXX For since in we significantly XXXX, we out of million. the I our total million, XXXX, full point a by year total net debt spinoff key a would that of a reduced focus

no EBITDA our Honeywell. XXXX, obligation to our In due debt to mandatory near maturities $XXX we our net we Honeywell term. net XXXX, the million billion, XX, in Our lowering balance note success to million significant items debt XX, our to and we payments transition in as have $XXX improved due December of related $X.XXX X.XX consolidated ratio indemnity of by Slide On reduced tax payments and $XX sheet to of primarily liabilities million. debt

is is Honeywell per or payments billion at As as a $XXX of cap rate. reminder, the exchange of paid at at stands The December XXXX to indemnity the in a $XX XX, XXXX, an for million to improved $XXX obligation, $X.XX which million Honeywell considerably annual with has payment cash capped euros outlook fixed million. year and estimated of approximately of $XXX below million

include by we based Honeywell, by payments to in million on Honeywell--by addition, In the payments overpayments. information received indemnity made made related payments the made XXXX Garrett $XX the the by approximately indemnifiable

annual estimated approximately $XX We of lower of with On our to payments from total in we on XXXX the from will would Slide the million This overage of $XX provide deducted million. accordance XXXX expect million or million $XX the payment financials indemnity impact be the in an and the the $XXX agreement. and reimbursement indemnification deduction QX business stemming million $XXX current below cap million estimated overview coronavirus. our XX, $XXX for

mentioned of Olivier safeguarding customers our is As our before, priority. health global the

health this We efforts supporting are their local in China organizations officials epidemic. in committed to and overcome to also

turbochargers the produce for stages to authorities the early coronavirus of outbreak. local with collaborated we example, an As ambulances during

wanted these uncertainties. the issues impact outbreak possible, earlier our current are a the to understanding an situation. monitor and estimates complex evolving as to actively however, of on mentioned as As the transparent call, effort, with with that many continue be provide In to remains fluid which this we we

of a time terms to two impact incur the operations we direct shutdowns loss and in Wuhan, our to normal will China plants, on production take especially operations, our after of in our the of expect given in duration First, it resume facilities. amount reopening the

in approximately two projections back factory XX and facility labor our gradually Chinese restarted XXX% since New expect coming after Year. February plant is of end at closing XX% of for on have before the we March, weeks the of close current factory two the XX% weeks We observance output above following the almost the based running currently be the in to Shanghai our and scheduled This production to availability.

plant to currently Our March. restart of in middle beginning scheduled is gradually Wuhan production

we experiencing addition, through global are industry. are automotive In disruptions coming supply chain that in the

reminder, only China to middle suppliers our XX% We we supply More be freight components a the by than date for approximately will suppliers restarted worldwide the in suppliers demand Hubei exported of have chain expect As premium highlight to suppliers high shortage China. global and shortage costs most Europe from and mitigated need production want with of XX% industry, now XXX partner impact disruptions order China. of overall will leading America. significant approximately outputs we over three North be a customer growth to by the regions, production in worldwide have meet including province; that back with This in however, XX% March. at to we to in by in to

freight volumes result shortages most restored, the China of most fully a we premium continue customers as of likely adjust coming through suppliers. component from from will to demand supply QX is expect We before other chain lower because expect and long

industry’s the North that approximately extends impact this I and America. Europe the EBITDA pronounced be million. coronavirus to remaining to but and QX XXXX. know as in we the of disruption Now at we uncertain just a quarter, be believe Based at month for $XX least the current factors second highly global remains we point The first supply of expect the from quarter chain approximately adjusted currently combined perspective, mentioned what financial will on significant effects by with the the half one through more reduce could

suppliers reduction very the working anticipate ranging $XX has agile remain between them with we management. a part to supply Garrett history and currently our $XX a as million a advanced closely adjusted As EBITDA in of developing second result, long million. base for of quarter and flexible and

with and deployed on ground we As monitor suppliers their the work them such, operations. our people have restore to to

are we leverage We global customers whenever advantage processes and with ensure standardized unmatched having our footprint opportunities possible worldwide, our to daily taking alternatives. capitalize on of to conversations

half slight recovery we of further our upside EBITDA from and of preliminary are result when provide a expect potential million estimate as customers. conservative QX the May. a and our intend We adjusted early currently report in to XXXX estimates $XX These approximately to higher of second demand we following update for QX results a

on slide, to highlight we help mitigate the are the Finally some these trends. actions of downward we taking

rely on structure our approximately through to our cycle. variable continue of We highly to cost the support XX% business

the Our quickly model fluctuations epidemics to unique ability and provides coronavirus. from such market business unpredictable the events as to stemming adapt

spending In sacrificing for hiring. and ensure addition, free global around especially the resulting health company. strict We actions, year. the implemented measures the review our targets of maximize we costs goal cash we control discretionary on remain The our the flow across of is actively managing our without from a have focused cost organization, cash to capex new including long term

coronavirus. to for the current outlook provide current XX, effects of the XXXX, Turning the year which includes we expected our Slide full

as be industry vehicle Global and down the production to between commercial minus-X% we XX% In year, We follows. and production discussed, expected compared the coronavirus to currently coronavirus addition expect XXXX X% impact. as to is pre-coronavirus. between minus-X% global for to the the X% well vehicle has X% auto altered light or for outlook decrease impacts just before our

between outperform annual to to our XXX $XXX basis and of estimated XXXX. to EBITDA to vehicle currency. auto expect by we million global minus-X% $XX between for million impact the from to $XXX range sales Adjusted with XXX minus-X% the points an net we constant expected on approximately from today, production is of included net to at sales The As $XXX to year impact is minus-X%. coronavirus million. in the approximately million light minus-X% Nevertheless, expect be down XXXX coronavirus

$XX payments anticipate adjusted $XXX flow cash cash million, is million and flow $XXX free and We also after expected million $XXX expected to to million. between our be Honeywell between free and

continue provide trends call turn We along I quarterly annual the basis. back will our Olivier. carefully global to to track to industry with on will now events and updates forecasts a

summarize well Thanks On of our global XXXX. for launches. again priorities production remain positioned schedule XX, Peter. to Slide outperform product We new given we auto once our

even from diesel Our our outgrowth XXXX, expected slower will pace. to in though albeit persist to is continue at gasoline shift a

leverage Next, software. our the initial year. we for in electrification mass a year an have market E-Turbo We launch next finalize big industrialization front in developments us of to of technology our to intend and

volume be fuel develop cells, in to plan have security ready For for and high our we XXXX [indiscernible] clear production technology in start cyber to deliveries Chinese qualification sample XXXX. we start a award and to gen-X although to customers to bids,

advantage We also flexible business take full our will model. resilient and of

structure This to in addition us provides fluctuations variable. in ensure are from reactive production manage to In about supply and levels of will is our impact customer XX% requirements, to help base capex any continue and cost our demand. short-term the with low our underlying our we extensive to environment, the line mitigate macro significant flexibility with

million will targets million as term preserving our flow. the are lower to business thorough over year steps our Honeywell We are and while term, cap. and than year taking integrity to working estimated expected a payments capital short cash This our the this which of below the earlier, discussed benefit both review of includes for conducting from the free long indemnity obligation $XXX active approximately capex to the and we $XX be maximize

As on our to to we earlier reduce continue plan utilize generation cash mentioned strong the Peter our debt. to call,

did XXXX, in total at as much For to intend XXXX. we our we debt by least lower as

shared add margin and shift this the get the more the achieved improve back, I excess first gas as diesel adjusted from over become EBITDA normalized in an achievable will signposts achieving come is commercial launches we you, and smaller, committed will growth production more previously remain of is [indiscernible] stated which run. in rebound, will nature the in and We mix of being products through with the sales higher and valuable cyclical smaller be some industry of our target impact scale one vehicle mass the and our to as of formal XX% and greater This concludes we rates, will drive will want profile. that and today, hand solution our to to readily back with content macro remarks believe to E-boosting will long Paul. combined I Finally, terms that be to margin will now environment the technology accretive it our gasoline

Thank line. you Olivier, and we are you the now ready may for questions. open Operator,

[Operator Eileen instructions] America ahead. of The first Lynch. question today Smith of Merrill Please go Bank comes from

Good morning everyone.

for mix to of million on range EBITDA based to margins up adjusting million revenue coronavirus versus think in for XX% stack starting meaning is on to growth you you number about point an gasoline question, margin. your $XXX First more a from $XX forma XX.X% to versus the that implied sales get XX.X% that level your good EBITDA applying impact to excluding EBITDA could does the a coronavirus, pro from How posted XX% with outlook, product hit margin to the attributable and quarter, the organic EBITDA diesel? to fourth of

here. with XX% excluding to you the on math. it’s coronavirus. Peter completely not Yes, impact the same XX% I’m from did the the We

million, backwards approximately everything think calculate the take million we $XXX you the we you of do If calculate $XX would you quarter will it the midpoint guidance to estimate and that you math really coronavirus, our reconciliation. exit our million if be in impact. would of and If you based you make and dots on revenue XX%, currently $XXX that range are million maybe XXXX. this to probably I aligned in estimate from fourth want, XX% $XXX between $XX want sure upon a offline million be the if if line between we to of cross we the point fully for which with can take number, But

we just are In point, that difference a QX. we gasoline leads said the in of and question what me Eileen, we because also you in would increasing line said you QX, seeing results, seen will we QX, said at we XXXX. noting in are time see to is follow-up mix add you our impact said from have that which is let in one later which on, fully in QX, continue in what it with what obviously and that the any this what

you As right numbers the just are that. now are giving see, confirming that Peter

on the up addition that’s the Then in the adjusted to have that XX, Absolutely, that some should a that’s half of half a greater as helpful. of on million EBITDA, commentary or first in you $XX we recovery, HX is inflection estimated Slide see than second coronavirus disruption? following much recovery non-repeat is bridge versus second just production

It’s not really It’s production half. second half basically recovery pre-coronavirus versus estimates. versus first

vehicle earlier were for this down Okay. is quarter. and in decline IHS to X% that in your question, to X% light XXXX Last looking outlook for X% below obviously global companies to X% well current production other production projections even below

expectations to X% decline, versus Europe region, X% can America? versus what specifically are outline the Within China you your by North

let ranges North and impact an are yet first. talk significant, really opinion expressed to think think. is By pretty I nobody region, me but Europe China America, be going the to the for Yes, for I what on

much we a another but decline of to an as X% China, think between not before impact approximately be decline, I had in for China. the estimate that as trying possible industry. are and the with minus-XX% trying but all be I do as and to could is the the just as are the the estimate think XXXX, we what something and significant much do coronavirus. between to Obviously believe we place, minus-XX% impact Currently X% going bets could of over

really, comes really out. said, I and point really Europe, For this nothing difficult estimates for North America are at because as

would decline. working were we that For XXXX, Europe, decline under in assumption X% and that an would a to be drop there a that X%

the working of For also X% were coronavirus. America, a impact before North the we with decline

there two specifically. half a modeled lose for lot currently will about points about is so China that have how modeled the the and has out that There percentage of one are We impact we so that’s the in in of to strong a roughly America, rebound talk estimates North be year. second a recovery far of Most would there been we it.

optimistic We that expect in necessarily are not China. overall a true, significant why reduction and come that’s that would we

difficult but modeling. overall what currently regions, probably to we percentage versus other the For estimates initial say, is point a two are reduction

Thanks Great, taking my that’s helpful. questions. very for

today of The Jefferies. David Please from go next comes ahead. Kelley question

walk Hey, quarter, by, you questions. you us my I or a any exceeded targeting basis. sales with in through XX% taking is relative in good an your acceleration shift drivers Starting launches the Was on morning. there I you Could believe, dollar mix the diesel gasoline mix XX%, previously this the pull-forward Thanks expectations? upside? in know shift referenced were just that to for and of

to projected year. been of China, I think turbochargers, higher, the of overall America, in gasoline launches contribution launches, from it’s through, we The going QX expected gasoline basically the in growth because with the and by of it really America. OEMs talked a it’s at we in about these driven and if significant strength but China, China. that Europe applies, selling from the vehicles North all Yes, depends from the of has same coming We second from coming to and of Europe, on strong from look really, the before, and than that success specifically what the we that you uplift the year very, revenue earlier organic half success in into believe, the their very North

a with the do the do really in, launches to to sell-through new penetration of gasoline the turbochargers say, necessarily with the and products. rates hasn’t has It on. the change vehicles that success of the it turbo for vehicles let’s for are So

at to add and to [indiscernible]. which performance the that, the end auto industry, into the what basically versus translates outgrowth Just is

of Okay, high do you. follow XX% in up now of on mix lots gas that sales choppy think Maybe thinking do we’re very is again could XXXX, about How just great. some go sales. and fluidity and production, it’s guesstimation some year? discussion, basis, Thank have to macro the gas we comparable a that of recognizing sort of perceive by in you you how end but this how just of

I’m year XXXX. year, sales We AOP year for Yes, but talk have sales were in in believe drop Diesel going for XX% XX% We XX%, included we Is gasoline XXXX. believe for have QX were that XXXX. believe sales XX% would a not to gasoline there. between to obviously for it now, range We helpful? between XX% of we will total the full XX% an up total XX% for go the and the of it the XXXX.

That’s perfect, questions. appreciate you my thank taking you. I

a press Capital go from please Markets. question, RBC star The of have you next question Please Joseph ahead. comes if then one. Spak today Again

Thanks everyone.

said cash guidance, and just I to that’s First, your free something else $XXX it you million, included on free $XX then the with adjusted I so refund, like cash million not overpayment can and pay like in expect million; think clarification Honeywell I the there million at the there looks guess, what’s is so if $XXX I you or the, MTT, get repayment in because in $XXX flow guidance, look in but flow it’s another guidance? is and

are indemnity million guidance $X the year. payments, is payments, per or then else of litigation million the $X for basically and another included in related the expenses what million for environmental think couple I

overpayment refund in the so cash free is the flow on the Okay, guidance?

Yes, is. yes it

Okay.

suggest the margin really versus in gas on fourth were just about, going It that Second XX% would level unless margin, also to on than narrowing experienced question, there’s quarter. maybe diesel the vehicle fourth what some margin I XX% that we to you can’t else bigger talking in this in something quarter guiding also to got that commercial decline a just but you XXXX there’s you’re back ex-virus, the extrapolate.

margin I No, extrapolate. have guidance seen you something assumption, the from expect the including the coronavirus. there impact as commercial is from be don’t you the definitely to can that vehicles in our fourth We quarter in worse, think

to between minus-X% We mostly believe ramp-up really overall XXXX. to of VNT is that currently come It’s contributions is gap, a and XXXX, be it in we said going to we going to the expect gasoline that before but minus-XX% change think from significant XXXX are the before - to beyond. or a clearly referred I reduce we in and QX. is technology have between in and be gasoline that to factor that there, the diesel going only but trend that what in differential versus is going minus-X% consistent not with There dramatically

as difference next say. I overall be mix the really year--or driver not year, that think should this a is I different of expected to

get except diesel, obviously, is productivity and the from expect an gasoline, and be be on to of work up absorption moving pushing that way and we would costs. control, a the a outgrowing on costs, because reduce be hard you time, Joseph, is of a that there would company the do lot would very revenue the we tanking, of we same obviously is have in that margin if company on would we can we gap. strong very expect which the what gasoline help variable the even would the and you us overall cost and like not growing, industry fixed that’s At

the all not of us at against more the So that of and of all in ones commercial obviously now, will hands, point macro, additional shift [indiscernible] a in impact the there that [indiscernible]. are little all are are marginal bit right much playing some mix obviously with are the our and hands get the cyclicality, them with that’s not vehicles the mix of favorable and our

final actually million question, for in unit, guiding into may That light you’re which is some as level. the somewhere normalized seems Olivier, Yes more plays mid-XX which interpret production, thanks my a that. it vehicle effectively

environment, seem XX%, history help at scenario doesn’t you’re so, don’t have of is there we unfortunately so in XXXX curious know that sort correct aside or global drives to and I It were like seems recently what your I am putting we because as a that margin on there region as think really get how back. level you what far basis think we you the premium planning? bit that of year be of level like this it but things because like a right would for with of the mentioned, margins of factor, some seem that to volume XX% you it little either us the guiding doesn’t just Can XX%. because some like freight, also, but it,

scenarios It’s fluid, of QX, strong look The which our growth margin the we time QX decreasing. when said and shift, the that that commercial QX it’s be accelerating the showing the guidance is is Peter when very Obviously drives are into cost. that would puts it obviously you is we that our were why that restated that Peter the earlier numbers, us which the at cannot if look if you we we this would where you all that way still would things off exactly that that and point obviously in are are saying, of mix point vehicles, the a said - to as XXXX, XX%. what had corridor one for in we Why? crisis, that into difficult you than the has we had a you going, face Because rest environment, to and at in the that you’re when XX%, repeat in exactly is XX% obviously between XX% we terms XX% we reduce higher predict been compute Eileen but but mentioned. these be to comes is also let me at there

it as crisis when such than much there the your like same us. the at company into on margin know need in You paying mentioned China to a is so the you factory, obviously furlough, cost, therefore keep time, yourself should that is decremental and employees, not for thing the higher close but a we the premium be you what current

XX% So to to the a to still gave, that long back we XX% the XX% get and ellipsistic long XX%. obviously discussion term hitting guidance to

Okay, thank much. you very

James go question today Maxwell comes Henderson. Please last from of ahead. The Janus

Hi, good afternoon.

impact one, really, the quick you’re guiding what of a and Just coronavirus on to.

$XX perhaps a shouldn’t Could impact you, because revenue that $XXX around give million appreciate variable cost to so to it terms frame lost at what what’s XX%, million. EBITDA. level and on in that in million there’s variable I that view revenue got context walking decline highly some of highly of other and lead your about of but as that, of structure implies more earlier to that freight light You could that you you mentioned have through you’ve $XXX talked to that driving $XXX costs your million EBITDA impact cost structure. you of

Sure.

math, come coronavirus, you approximately I than to when is expected. higher the you margins on loss think revenue decremental obviously which from do the the XX%

premium probably we down our so impact, it. are the the you slightly costs, the incur range think the between of estimated about I to margin is and That’s you you take then midpoint $XX it, business. conversion of $XX significant and overall to that said $XX a them rate costs if premium way above XX%, negative of freight the just you of is million, and will we below million answer exclude which think overall midpoint variable to million

fact need the And this producing to as you even into not is employees on the keep taking specifically not said account China, that I’ve to paying before, anything. you’re if

that Yes, not true, structure I yes? variable claim get highly cost is but a entirely then to there’s that,

events we country-related the factories and that Well, XX% crisis, current had anticipate The on variable that we way, some country cost. is to number deal else, it quarantine not no entirely that we our the coronavirus down you absolutely variable getting very into and premium is different crisis face shut are into where with and what which Peter is that’s way, us point we were which environment, sudden, so obviously about if was crisis. have we one, said saying, normal a are our crisis, and about if get specific leverage into that the costs freight would in forecast, want we in true everything [indiscernible] to point point, we highly a a so a not because you that in a adjusting the to would by not

Okay, you. Thank understood.

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