Commercial Vehicle Group, Inc.

Q4 2022 Earnings Conference Call


spk_0: the money ladies and gentlemen and welcome to the beach leave the fourth quarter and forget twenty point to earnings conference call during a presentation all party will be and less than only mode the presentation the conference will be open for question with instructions for follow at that time at reminder that conference is being recorded of knowledge democrat and over to mr an interim chief financial officer please go ahead
spk_1: for to operator or welcome better one job conference call joining beyond a call today in hero beatrice president and ceo of this morning we will provide a brief company update as well as commentary regarding our fourth quarter and forty eight twenty twenty two result of the ritual opened to call for pressures as a reminder is conference call is being webcast in the supplementary burning presentation is available on that website oh may contain forward looking statements including but not limited to expectations for future pumas regarding market trends for saving initiatives and new product and disturbs among others actual results may differ from anticipated result because of certain risks and uncertainties is risks and uncertainties me including but not limited to economic conditions in the market which seabeach operates graduations into production volumes of vehicles or to see bitching is a supplier financial covenants compliance and the critiquing risk associated with conducting business in foreign countries and currencies and other with as be out you know as firings i went out to call for to harold to provide a company update accuracy good morning everyone
spk_2: as is our usual presentation format will be referring to an earnings presentation which has found on our website and if you could locate that appreciate it after and presentational mind that argument why you find that dark that i wanted to say a few overview comments and three areas one area additional efforts that we got to increase short term for farmers second as show efforts to improve the economics of our long term revenue or product mix transformation and a third is gap accounting vs are operating results regarding the first point on short term performance or a performance you'll see in earnings release report here today that our vehicle businesses performed very well and overall they were up seventeen percent sales and thirty two percent profits and the same story for the full year or vehicle businesses are upper up and sales and up an operating income and fact other cb cheese revenues were up about ten million for the for here or vehicle as us as after a one hundred million dollar decline in industrial automation this weakness and industrial automation off that this year we're prove meant for the quarter in the here we now expect a weakness an industrial automation the continue and we have taken additional actions to show higher short term profit improvement at the same time as we go about our business of change hair revenue business max away from classy and customer concentration towards a wider spectrum of commercial vehicles electro asian and automation specially an electric vehicle industry for those of you have been falling cbt the last few years you know that we've been focused on combating spike cost inflation and new business start up costs what logical price increases and across our program while that has worked as evidenced by the performance for vehicle businesses it was not enough to advance profits as much as we wanted and and asked at the industrial automation demand for so we've added a few new angles to increase our improved to increase and improve our core performance first we've up size and implemented a bigger cost out cost reduction program we announced that we are targeting thirty million have crossed out during twenty twenty three one three hundred fifty plus programs this program is underway already and we began and queue for with targeted had counted and both as dna and cogs we expect to show results beginning and this quarter we have a multifaceted program that includes plan consolidations headcount gods process automation and procurement savings secondly we're curtailing our exposure to high heister startup cost a vehicle businesses expectantly the ceiling business when you peel back the onion a layer you would see that by far the most current startup cost per dollar growth as in the ceiling business seeding growth is hard to him and furthermore we have one main and growth customer in the ceiling business that the focal point of our startup cost overruns the said been a problematic growth program for see meeting and it's an electric delivery man with a start a vehicle company staying true to our word of fixing her acting business whether new or old we are mutually agreed with as customer to accept they're seeing this isn't the right an easy decision for us we are exiting the passenger seat right now as we speak and will exit the driver seat by the end of this year their production problems have been widely published in the press and i will not elaborate except to say we're accepting this particular customer and this program and were in the beginning stages of transitioning to other suppliers for them conversely we're continuing on with growing and other areas where the pain game ratio makes better sense and this is primarily primarily an electrical systems and electric vehicle grow programs and we do have some secret sauce here it it's working on carbon our best her deck and by the way we've already backfill the exiting seen program with the newly one electrical systems grow program with a new customer and well established delivery van oh we will also cover that when and or investor deck it's one of our larger wins and as even bigger than the business where actioning we design a prototype that electoral architecture to twenty twenty and began to production in this year and will run for approximately eight years and we believe this program will generate around fifty three million a year for creative margins and for ramp up it's worth a traditional delivery van company not a startup company thirdly we expect the softness and a dash automation business to persist as well evidenced by comments made by industry bellwether amazon the business is just much smaller now and we face this reality and stricken our business because the plant we right size or team right size or him and torn profile this work was completed and you for and we believe that we have right side business now you want we don't need much out of this business segment twenty twenty three to hit our enterprise improvement lamps and it has moved her upside category now you might be asking yourself what do i do with this announcement thirty nine of caused out on what happen where does it go where's and be in appeared in l as a logical questions for now we're doing this to underpants daddy and improving quarterly profit performance and offset industrial automation so don't add this to your models on tv she just yeah where we will be accountable for this cost out program deep and our team and we intend to report out our progress against our goals this program a success man away right now and we intend take actions during twenty three for additional long lead time items for the twenty four cost our program might also ask yourself i wonder how twenty three starting out for cbt another good logical questions going quite well he or started out with truck bills that a high rate which is additive to the performance where vehicle businesses above external forecast above our and iran right expectations the north american industry dump trucks so far this year and three hundred fifty thousand and pace as day before the industry backlogs due to a couple years of on production and a man history can get parts they need to be fair to build build build drugs so right now we have higher vehicle crash and expected corrected prices a larger costs our program has already underway and we believe it we expect it to offset industrial automation weakness and a wins his new business once program focus on lowers costs startup program type of vehicle electrification and automation we are specifically moderating in narrowing or new sitting road programs given the high startup cost exposure is will blend down over the next reporters as we finish what we have and house and culminate with cbt exiting the problematic seating customer that events and already to increase focus on making money and the vehicle solutions business we've also hard and industry veteran named russell coming kettering ham from boss automotive nice new our new leader of this business you know for north america and europe money's on board right now and an announcement will come out as we we believe that twenty three will be significantly better than twenty two with a viable solution sec man for cbd overall and we've added from actions and industry bedroom suite way we're not expecting a big come out come back and industrial automation segment minutes that we expect continued modest contribution at a low level my last prologue topic is with regards to gap accounting vs operating results for those of you that are a fan of reading warren buffett send a letter like i am berkshire hathaway posted a week ago he took his usual sand that underlying operating results from kastler better to follow them gap accounting he would be shocked in right now he saw the same dynamic alive and well seem easier and results and of course cvd follows gap precisely and always will but it led to a few big year and gap accounting provisions and tax and some closure and image a profile the deserve some explanation and and he will do that but to be clear none of these gap items impacted packet or business plans are short term performance or long term performance nor free cash flow there we believe that the us tax provision firstly set up your and twenty two will likely reverse itself a year and twenty three and regarding damage or a provision were active him at or recovery negotiations with discuss were and have certainly gone commercial rights and annual elaborate later so wanted to say those things up try and give you a little bit of an overview to the deck and and united presentations and i want to turn your attention to the investor presentation right now takes three turning to the quarter thirteen delivered get operating performance during the quarter heading our target volume levels driving offering margins in line with expectations makes effort significant progress are transformation strategy we delivered net sales of two hundred thirty five million two point six percent your rear again driven by target volume levels increased price realization during the quarter we deliver to just leave again thirteen point three million adjusted opry and top of a point four million a free cash flow of twenty eight million all with no contribution from our industrial automation segment our fourth quarter results included the previously mentioned sitting program startup costs which works best in the quarter in the vehicle solution segment we had a busy future growth quarter as well and achieved additional multiple new program awards and are selected areas especially electable less patient furthermore we negotiated meaningful additional price corrections during the fourth quarter which have begun already on january twenty january first twenty twenty three and we launched an expanded cost our program as mentioned earlier to more than offset continued modest performance and industrial automation looking at the full year of twenty two one inflation seems to have peaked and cooling off in certain areas and temporarily suppressor quarter results in our vehicle businesses during here and when a price recovering and cut costs are said these areas are teams negotiating cut costs almost continuously during twenty two and achieved meaningful profit recovery in the vehicle businesses throughout the year old way up to including your and twenty two at the same time we're very focused on improving are locked revenue max for offer profile and continued executing our long term growth strategy of attaining new business which is primarily focus on long term agreements to produce electrical systems are electric an autonomous commercial vehicles primarily in the middle mama last mile markets a secondary mix change focuses on have to on campus we are great you're accomplishing improvements against these objectives and our team and secured an additional set of new growth programs during the for your valued at approximately hundred and fifty million dollars of new revenue and production as and for ram regarding flow we were able to find all of our activities internally and also paid out at for the full year we paid our forty three million dollars of debt which exceeded the twenty five to forty million range that we communicating during twenty two or that that was reduced to a hundred and twenty one million by year and twenty two and maintaining a low doubt level remains a key focus area for cpg and twenty three turning to paid for for few more comments on twenty two well we did say several significant hurdles during year including a warrant is stop and shit are one thousand and six her employer ukraine's plant a temporary covered they shut down and one of our most profitable facilities and china i level of inflation and a rapid ram down an industrial automation we overcame his there shoes and we were able to execute code around and make progress on short term results business transformation along the way we delivered and record annual revenue results and nine hundred ninety two million and with a growing proportion of revenue tied to financially three of and markets such as electric vehicles as that already alluded to we deliver strongly business when you're in you're on a multitude of product platforms and we've institutionalizes with the five year goal of securing approximately one hundred million dollars per year and him once going for we one business we have one business on three hundred new programs across one hundred and seventeen new and existing customers and vehicle platforms and twenty twenty three has started out well also multiple know once this year already additionally as part of our transformation we continue to improve or accent under performing segments of our business the right size industrial automation business we were able to offset several profits in this segment with increases in the vehicle businesses during the air we also made significant progress and setting up our to ecommerce after hard to business which is nearing launch we now have a dedicated plant focus on aftermarket product lines of place and software platform ready to support the electronic store from for this new business for us as we europe for growth and expansion and twenty three turning to gauge five or demand outlook is very promising and is supported by forecasts across are key and vehicle markets commentary from are large public customers for north america class a truck builds ok city and fdr predicting a full year that would be a slight increase your rear and a city research is also focus forecasting slider me are rumors for north american media duty trucks it's a new focus area for us especially for kitchen the backlog to build ratio and a serious sitting and eight months and three times as or flowers commercial vehicle aftermarket is continuing to grow at a modest four percent wrote and twenty three and beyond and we're growing and investing in our lectern why harness business in the global commercial an automotive were on his business is growing around for to have percent cage or through twenty thirty with regard to specific selected segments within that the global electric truck market is expected road approximate thirty percent cater for twenty three to twenty thirty and cvt is currently winning the business to this very attractive market segment the earth moving an agricultural vehicle market isn't also expected to grow around four percent from twenty twenty three to and beyond and a marked is expected to continue growing and we expect our legacy growth rates in this area to be in line with long term outlook so collectively across our markets we expect to see strong growth across intellectual seasons in lexical systems are moving and the aftermarket business with relatively stable truck markets and twenty three turning the page six our top probably try traded customers are seeing hard man across key and markets and many have already issued pas the market outlets for the year and in line with what the third parties are predicting these trends are expected to deliver a third consecutive record third consecutive record revenue year for cbt and twenty three or well positioned to participate in the growing demand with our customers and the industry as well as ramping up a record level of business once or existing
spk_3: customers
spk_2: a burger when fifty percent or concentrate electoral systems and they're approaching a healthy balance between ice in the navy power trains and diversified across multiple in prague platforms additionally and most importantly profitability measured by a bit a margins on the new ones is a creative and for production rates
spk_4: starting a paid seven
spk_2: we continue to take advantage of sector drug trends and electrification automation and treat vehicle parked tiffany our success has a new participate in this market has allowed us to suffer new designs as well as a creative revenue make shift towards electrical systems are combination of fast and accurate product and sharing coupled with plants that are fast and accurate is our secret sauce were selectively targeting our participation on too low to medium volumes which is a sweet spot for are targeting and as good margin we are for conductivity solutions for both high voltage and low voltage and as previously mentioned we're adding new plan in europe right now and it's located in morocco cbd targets customers with large toll available market or tam and it covers both luxury vehicles and eyes foreign systems in a variety of markets focus on commercial vehicles an example of our strategy in action as on page eight this is this is an example of one of our three hundred plus when saw be a one of our larger wins and as and as are most recent cbd began targeting the lectern delivery that market and about twenty twenty we began designing low and high voltage product lines for these vehicles and twenty twenty one that same year with quipped our factories to achieve necessary certifications and make these products and we became and approved better and supplier many customers in this example we won the electric design and development program we were awarded and we design architecture for the vehicle and the physical conductivity layouts we then participated in the bidding for the production and one a portion of the program here and early twenty three with this new businesses targeted to be produced and our new plan mexico we believe this business has a lifetime by have over three hundred million dollars and we've added new well established customer and is very attractive market to drive future growth is is a good example of the type of business once that we're winning along the way highlighted on faced nine and based on our current outlook and the momentum of our new neutral programs we secured from our new business we believe our sales with an electrical system segment will continue to grow to nearly forty percent of our revenues and twenty twenty seven and significantly outpaced growth in the overall commercial vehicle market this would make laptop systems the largest business segment within cbt electrification automation not only support strong growth outlook for years to come but they bring a creative margin for cpg which we expect will positively impact are operating more and return on investment capital furthermore as we drove electric systems switch back to see the waiting of classic truck exposure within our revenue next decline and half from his current thirty percent to approximately fifteen percent by twenty twenty seven we expect this reduction will be driven apart by new and and electric systems modestly went and other areas and is part of a focused effort to shift or mix towards less sick of for more profitable business turning to fight can see tv to avoid you meditate increasing shareholder value short term and long term and we're committed to improving the profitability of are ongoing business and exiting unprofitable or risky business despite a difficult man backdrop we believe our industrial automation segment performance of bottomed out as i mentioned earlier we have renamed warehouse automation segment to does for automation as we'd love to win business in new areas of automation outside of warehousing our approach and industrial automation where we bright side no roof op's are people are inventory lol broadening our markets to water duster markets shows or commitment to improving or exiting unprofitable or nasr t business we will control our power structure your tightly and allocate our capital resources to support focus growth opportunities we can tell you to position ourselves to capture of the secular journal exploration and automation and attach yourself to strong brokers diverse fire hazard maseratis in the signal county where business the resulting cash flows expected fun growth drive dreamt up a down and allow for strategic acquisitions expect when the conductivity space for likes the case and and automation and before i turn the fall over and i just want to highlight on a road map again on page eleven we actually twenty two and a strong position and our vehicle businesses and a revamp the downsize industrial automation business we believe that were set up to win and make money and twenty three and deliver your record revenue higher even the a continued free cash flow and don't pay down we'll continue to target a least one hundred million dollars of and you'll agree to business concentrated with electrical systems which will divert our product portfolio or customer base and improve our growth and profitability exposure the resulting cash flow combined with are disciplined approach working capital will be prioritized for additional that paid oh and potentially find both on him and a we believe we're on track with our grow transformation and in assad position to deliver one point five billion in revenue at a nine percent adjusted even the a margin and twenty twenty seven we are convicted to cut costs and a not for areas and improve our costs position at the same time now i'd like to turn the ball back over to handy for more detailed review of our financial results and it
spk_1: think a hero and good morning everyone if you're following along the presentation please turn to fly for being fourth quarter twenty twenty two revenues was two hundred forty four point nine billion dollars as compared to two hundred and twenty eight or nine million border from the pie your pick video of with you both i married lady attributable to increase pricing to offset materials greece's foreign currency translation unfavorably impact of twenty twenty two news by six months three million dollars or by two point seven percent the company reported consolidated operating loss of four million dollars for the fourth quarter of trying to turn into appeared to income of six point five million dollars in the past year period his was primary due to special items which been cruising restructuring cause infantry right on youtube chris be man in the industrial automation sentiment additionally foreign currency translation unfavorable be impacted operating loss by she will pull nine million dollars adjusted be a was stepping on three billion dollars for the fourth quarter of year over year compared to trope on nine million dollar into play you and just a he be a margins with five on seven percent as compared to just he became modules of five one six percent in the fourth quarter of to be twenty one interest expense was to on nine million dollars as compared to one point seven million dollars in the fourth quarter of twenty twenty one the increase in interest expense what timezone related to a higher base interest rate in a higher average that's balance june fourth quarter of twenty twenty two compared to the fourth quarter of twenty twenty one net loss for the cora was thirty two million dollars more negative ninety cents per adapting to soon as compared to net income of to on six million dollars more it things like into shares in the ice cream despite sort of operating performance during the quarter will be part of financial results would negatively impacted by some henry's using through the continue in face and the he pressures particularly skilled pricing as model as parable with you mentioned we have to comprising actions to have said these high costs and expect some of the creation in that near term coming to be the second results you close to losing segments fourth quarter revenues increased searching for sent two hundred and forty two point eight million dollars compared to the ago quarter hi meredith do too much he will cause pass food and higher volume operating income for the fourth quarter degrees to sweep on seven million dollars compared to operating income of five million dollars kinda pricey approved i married into that ice recovery process cause friction and hi again plans not because fourth quarter twenty twenty two and just of operating income which acts crew special calls decreased twenty four percent to four point two million dollars i get a trickle system second achieved retinue smoke forty seven on one billion dollars an increase of twenty three percent as compared to the yeah go for daughter resulting from but you will cause pass through and contributions from new business weeks operating income was five point four million dollars an increase of three point seven million dollars compared to the fourth quarter of twenty twenty one due to the previously mentioned material will pass through and favorable for him and things and just a operating income was five point five million dollars an increase of one hundred and four percent yeah go for i'll hop the market and accessory segment revenues increased trendy big percent to thirty four on one million dollars compared to the year ago quarter primary resulting from pre sales podium and increase pricing to offset material cost operating income was three point two million dollars an increase compared to operating income of one point nine million dollars in he appealing the increase is primarily a treatable do the increasing pricing adjusted operating income was three point seven million dollars an increase of ninety five percent compared to one point nine million dollars in india ago fourth quarter so much like turkey and you can see the performance of upstream people pilatus segments on the combined basis the combined revenues increased seventeen percent to two hundred and twenty four million dollars compared to one hundred and ninety one million dollars in the jungle potent combined adjusted operating income was so keen on three million dollars an increase of thirty two percent compared to tampon one million dollar in applied the a period the growth in the just of operating profit demonstrate to powerful impact the group in electrical systems and after market segments as monopoly oh industrial automation someone's previews fourth quarter weapons of eleven million dollars a decrease of over seventy percent as compared to thirty seven point five million dollars in the fourth quarter of twenty twenty one due to lower demand levels operating loss was eleven point nine million dollars or decrease computer operating income mostly on one billion dollars in the year ago and nobody untreatable to be peace he mentioned lower sales volumes and an infantry charge of ten four million dollars and just operating loss was zero point five million dollars compared to encompass sheeple six million dollars in the party year period for a long in the presentation slide fortune highlight some finance financial transport a corner the fourth quarter revenue can be enough to under thirty five million dollar slightly below the pieces column on fuel production things the quality justin you could be a margin to meet at five point seven percent in mind with piece cotto despite the global weapons he was in the koran additionally the quality free castro has shown improvements chewing gum last few corners and was trending eight million dollars for the fourth quarter which and of get paid on turning to five fifteen i would like to highlight a few items on the just be a free which include some special items first as a result of evaluating of for attacks essence took a nap on case charge of fortune on seven be honest or forty five cents per share second we completed the restructuring of the industrial automation business and recognize and on cash in front of my done with temple four million dollars or twenty nine cents per share of text finally we we called a charge of a point one million dollars or twenty four cents per share after tax related to the termination of the companies us magazine pension plan in addition we also he could hire stop expenses in a close to support our do business with foreign exchange was also have when asked us not a string friend again simple currencies adjusting for these items as well as restructuring of gps would have been fourteen cents mission
spk_2: thank you i will now trying to call back to harold final months thank you i like to conclude by comments by reiterating that we've had a resilient year and twenty twenty two weekend good recovery efforts although some of them lackner profit basis and the pace of the progress we've been able to even our strategic plan has been better than we thought and fueled by a strong focus on our transformation strategy an actor prioritization of our initiatives and are large and vibrant growing customer base where much stronger company and twenty three and we're ready to capitalize on secular growth and higher price office and the trend towards electrification and we look forward to sharing the successes with you and future call so now turn the call over tour operator open up the line for questions thank you
spk_0: thank you ladies and gentlemen we will now begin the question and answer session he have any questions please post i followed by the one on your touchstone phone if you are using a because on please let the have thought before pressing any teeth
spk_5: question comes from some friends that i've said billion company is gone
spk_2: c'mon how many index taken the questions
spk_5: and i'm john harold
spk_2: how that sounds like you're getting a modestly or up for is it more positive about the commercial truck market beat five to seven or eight are used on a seat or bookings into the second half it give you may be some sort of improve kaufman that you might not have had said we months ago yes we're definitely have improved outlook and we have basically confirmation from our top customers making public remarks
spk_6: and the here as started out stronger than our expectations and we can we have that visibility are visibility extent and to the second half and yes we're santa stronger outlook for our core business that we have and were saying attempts for start startups on our new business as well so they're strong demand for the vehicles that we have and that were
spk_5: had it onto
spk_7: good that's good news
spk_5: and gandhi and new industrial automation dismissed it sounds like you want to extend new and markets to which the pathway to
spk_2: get access to those markets and generate revenue there right so were mainly leveraging are smaller positions at that business had
spk_8: are we are not addressing a lot of time or effort distractions and to brand new areas per se
spk_2: we had legacy businesses that we're leveraging would put a new leader into that business last year menus are xsara whole bunch and that he came with a broader and is your background than warehouse automation the the whole warehouse automation thing was a spike event in retrospect now helped us a little that well i went through are almost like a crazy brother but it's back to the business that it was all about it and so we have a smaller warehouse automation business we still have it as a small and our outlook is that it'll stay small for period of time and is following gap accounting that would suggest that provision that we talk
spk_5: ah and so it's it's really odd in a small and of system builds and contract manufacturing town mechanics and just on your market initiative
spk_9: kid brings up to speed on on on how that's proceeding
spk_2: that be helpful thank you yes word we are virtually completed with argument or profiles now we're gonna ship from to start after market seats and at once your wipers and we are we put in place or shop five software and is primarily a profit for profit grab primarily john the business is not a highgrove this has it's for five percent and we're gonna be shipping from stock vs building to order with a weekly time and we haven't experienced later we brought in there that understands daily pricing and man based pricing from his experience and amazon shepherd
spk_5: and we will be monitoring our we will run out of him and hard because will raise our prices before that happened so we're gonna be running and commerce business is called aftermarket truck parts com common it and it's gonna last year and a couple weeks
spk_0: okay thanks how on the package que
spk_2: john
spk_10: thank you next question comes from matchup gel comments and novel capital please go ahead
spk_11: good more to yeah thanks for taking my questions even though
spk_2: part of me so in the last quarter when he talked about you know you're in negotiations for about twenty percent the revenue to improve the contract bears talked about some low price increase beginning of this year the you're kind of where do you stand on the of those enjoy the price increases that you made in january are they sufficient the offset know all the remaining inflationary pressures already think there's going to be more necessary now we're now i had our our price for donations ahead of our costs
spk_12: and we fully recover and being negotiated that i needed to that can afford core that took effect on january first were
spk_10: as we're at expected and were fully benefiting from from that additional price increase in this corner
spk_2: okay great when you offer had talked about you know eliminating fifty percent of the ocean pray in early twenty twenty three have you stand there yes we've done that too with implemented that program and are in region production is fully underway and we have offset half of our ocean freight were benefiting from that causes proven as well in his corner so on that pricing cause i've we've had a big improvement
spk_13: come into this year job as we had expected and in the vehicle systems business industrial automation business is still very low level when we would disrupt the cost out of it and right sized and as we should but our vehicle businesses are still doing quite well
spk_11: and further rebounding from where we were in the fourth quarter
spk_14: excellent
spk_2: i'm in our last quarter you talked about a five billion dollar pipeline i'm and did put up the same slide and in this presentation just wondering words words that pipeline today yeah so ah mess waste of any and i both alluded to we'd we definitely stared at our start up costs that that increase six million and twenty two vs twenty one
spk_15: and we could see a pattern that they were tied heavily into noose bespoke seats
spk_6: tom we stopped doing bespoke bespoke see programs and were using a common platform that we have an hour or unity
spk_2: and ah that truck a bunch of the pipeline out
spk_11: and we also further focus the industrial automation business and removed enforcer pipeline so the pipeline now is very dominated by electrification automation electric vehicles okay exec clarification or than one last one and get back into you tried again and i'm looking at your the long term road map put out today a talk about
spk_1: revenue of one point five billion twenty twenty seven out adjusted ebitda margin of about nine percent and i compare that to the same road map that you put out last quarter that road map showed revenue one point nine billion do just that operating margin a half percent i just wondered you how to clarify were rid of changes come in the to
spk_2: that's a lot to let me out and he picked that one soul i'm the key things between the last version of the one on my and and one on five why not yet clear the effect of our strategy of focus group says hero of he the to buy the a mob signing away from sitting alone uncomfortable be this and were executing that and give me a lot more slapped him in terms of cleaning business so he believes that job and sped up holcim for the overall bad you have the and to place so be allowed creating of new strategy pan or lying to them new target and definitely yeah that will give us people confidence and more executable road map to get to the improvements have over three hundred basis points in terms of our bottom line so that's the real thinking is aligned with live briefing have will just mention thing is lot more focus and more execution of we ended so that's why we put it out there is our me who are financial pagans wearing it too so they areas that non electrical areas interviewed or business where we have curtailed or or modern modified our growth plans going forward
spk_16: are we have cut costs in those areas him and their job and a portfolio and said to deliver additional cash
spk_11: and even the a girl so we will clarify the mission of each person the portfolio
spk_2: and basically remove some of the growth aspirations and on an industrial automation and and non electrical or vehicle businesses and it is a type plan and it will generate get free cash flow and improved operating margin and were underway with
spk_0: daimler manningham
spk_5: great thanks god
spk_2: like joe a job he looks question is how what i'm john said that's the only company is going on a great thanks cause i am that person in the presentation on how but what are your thoughts but debt repayment twenty twenty three yeah it's probably not going to be a strong as last year we had some low hanging fruit coming out a covert and all those and freight stuff but we do have a free cash flow plan yeah you should targeted modestly right now twenty to twenty five million dollars is what we're aiming we do have upside plans right now the growth that were occurring we we do we are contemplating a grow your hair and and and we do use would you can some work capital so we're we're going to have a use of cashier back and or capital someone but net that we will be generating cash and similar to last year the first quarter we use cash because of the truck building starts out hot have been into an this year to sorry or goes up and if you look at the source of our cash last year
spk_1: i'm in the components of it was a are it was a are so we got really good about managing accounts receivable gone after customers that we're overdue
spk_17: and we had a big customer an industrial automation that had extend the terms plus them pay on time i pointed out of the profile as well we haven't of this was an improvement plan is here
spk_5: an and i think it's gonna be in that range of as wife jon landau will be looking at a steady paid on knob for the next couple just got poaching ah a a that level that we started to feel comfortable with so that's where we are way now and have a mention so the company will
spk_2: go from the next couple years and be our funding or the schools and bomb castles odessa or we're thinking at this point got it and the cause he got to thirty million dollars this year how much cash as been be quite close to go in and it's a pretty quickly you you calling it a neutral impact to operating income why is that the case i'm just suggesting let's not add to the that the a outlook for the year we're trying to underpin are steady growth it's out there with expectations of us and we we want to increase our ability to deliver and the flange are underway now and and from first quarter we're on track we initiated a
spk_15: pretty significant headcount person and europe that underway
spk_2: with regards to the cash use
spk_18: of the programs or severance
spk_1: our never to the shower continuation of there's no additional use of cash payments on down the payroll today there are several tomorrow and blend off we do have some cataracts associated with the costs are programs that are kept x this year will be similar to last year so no no that incremental use of cash john to accomplish and it's more of a business focus where we're not going to try to know everything with the same gusto around repaired focus from a girl and and other areas where we're cutting costs down and optimizing are ongoing profits and he would you add about del sole source a short answer is well it would be nancy cash positive
spk_2: loss the amount of combat required to execute the reductions more high and back to the
spk_5: cause production and be a good margin comment or john you go look at this year as and he had dad will continue to optimize our calls belongings is big business does what it was purple about at the same time we are building to new factors such as a little bit of a grandma curve there with productivity the new businesses so net net i think why not looking at pretty stable slightly positive have been diving as we went for those new factories or see our benefit about the bathroom how of will will modify our comments john as we get through a couple quarters of performance
spk_1: but for now we just wanted to break dyson let everyone know that were gone after a car structure with gusto in areas that were not gonna be growing as much okay got it and just to cookies a guest on the pension settlement is already impact from then on the piano and in got into the to tax what is the tax rate have a look like for the year a nuke i think you so you expect reversal gonna be in the beard is easily would be to those yeah so the couple things he a one is we we've completely finished the settlement of the independent so now that you ask me no longer have a pencil i became with a good thing for the company i'm so you can see in a fireman record of the a settlement charge for the polar you can see also of filing text case
spk_19: none of them and the other topic the doing you mentioned here is the tax way i think all right now we have pushed through a lot of the yard the barge adjustments at the at the special items so the biggest one is of a bad way to power before tax message on the moon
spk_20: and not based on the graduation be made a determination that is why things to do to provide a graduation allowance just
spk_21: the size of about fourteen fifteen million dollars how we believe that as we are going to the future my birthday puppet ability that allowance may not be necessary in the near future
spk_0: ah my then you asked about the gop actually i think at this point out of fact if tax rate the the trendiest as what we are looking at seoul but i know that job as a few a big items here but that is all items all about cast and them i will mention has no impact operating results on on on on towns of feel comfortable with those
spk_22: great great thank you very much indeed
spk_23: thank you go back and give
spk_24: thank you john
spk_22: thank you next question comes from a steep amazon and and investment group go ahead congratulations on a x or quarter in the top and bottom
spk_2: thank you steve
spk_1: on what proportion
spk_2: in terms of pure gold year twenty seven and twenty two were he be related what are you say what proportion of our new ones where he be related and twenty two know lightyear billion five objective in tornado seven how much of that is easy related ah
spk_22: it's going to be good question
spk_2: good question i'm gonna say it's gonna be around the electric systems going to be forty percent electric vehicle portion of that is gonna be around half twenty percent so twenty percent of the business and have a similar number for twenty two or twenty three it's very small the the the big picture on what we started and twenty twenty we had only ever been on off road ice vehicles and electrical systems we use job started and on road vehicle program and went straight after electric vehicle start ups it has and and ice but primarily focus on electric vehicles and that a majority of our new business wins
spk_8: have been on on electric commercial vehicles and secondarily on on road
spk_2: and secondarily ice on road vehicles and we're continuing and that manner with with no modification so we ever programs working and were have kind of an evergreens always set up so far to continue growing in that area example that we put on the deck with the electric vehicle
spk_22: electric fan an example is exactly the type of programs or persona pursuing multiple delivery vans and multiple or trucks and when we get in there and we're going to be in a pro supplier and we went an electric vehicle program were immediately and food supplier to bet on i can opener in there as well so if you look at fedex amazon u p s
spk_1: about bakery and a the delivery van throughout their their eyes and they all have ambitions to switch to a v and were right in there a pro supplier or electric systems on the low voltage side don't care what happened powertrain it is there's only a high voltage opportunity mom when it's an electric vehicle so we have solution for both them were gone for both of them steve equally equally hard
spk_25: excellent and i assume by your comments that this year's gonna be quite back and loaded in terms of their but that you've got them to plan starting up
spk_26: and ah start up blood say on t v then program
spk_27: for fifa i'll say this year i think we're looking at pretty even caught a full of the year guess we see continue you want you to first john production as have already mentioned
spk_2: clearly there is a little bit of trouble risk on the march second half
spk_15: and but we have improvement program in place aussies of putting even is not an extreme
spk_0: exxon thank you

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