Meritor, Inc.

Good day, and thank you for standing by, and welcome to the Q2 2021 Merita, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Todd Sherillo, the Senior Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Felicia. Good morning, everyone, and welcome to Meritor's second quarter fiscal year 2021 earnings call. On the call today, we have Chris Villavarayan, CEO and President, and Carl Anderson, Senior Vice President and Chief Financial Officer. The slides accompanying today's call are available at Meritor.com. We'll refer to the slides in our discussion this morning. The content of this conference call which we're recording, is the property of Meritor, Inc. It's protected by U.S. and international copyright law and may not be rebroadcast without the express written consent of Meritor. We consider your continued participation to be your consent to our recording. Our discussion may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Let me now refer you to slide two for a more complete disclosure of the risks that could affect our results. To the extent we refer to any non-GAAP measures in our call, you'll find the reconciliation to GAAP in the slides on our website. Now, I'll turn the call over to Chris.

Thanks, Todd. Good morning, everyone, and thank you for joining us today. Let's turn to slide three. We had strong results this quarter with $983 million in sales and adjusted EBITDA margin of 11.3%. Total company sales were up 13%, year over year, as truck demand increased in all our global markets. Free cash flow performance was excellent this quarter, coming in at $47 million. This was one of our highest second quarter cash flows since we began the end plans in 2013. Once again, the Meritor team demonstrated its ability to successfully respond to markets. Even with the sharp increase in volumes and supply chain challenges, we maintain excellent delivery and quality performance for our customers while converting increased sales to profits at expected levels. Looking at the full fiscal year, we're holding our sales, margin, and cash flow guidance despite indications that we will have one of the largest unfavorable steel impacts we've seen. In addition to higher expense in electric power train development as we ramp up production capabilities to meet the increasing demand. Carl will provide more detail, but our ability to offset these headwinds reflects the consistent strong execution you expect from us. We have a brand new electrification program to announce this quarter, in addition to an exciting new opportunity to accelerate development of our 17XE electric powertrain in Europe. And in our core business, we have recently finalized long-term agreements with two global OE customers. Please move to slide four. In the second quarter, we extended our agreement with Navistar through 2026. We're pleased to continue our longstanding relationship with Navistar as it becomes part of the Trayton family. This agreement extends our current relationship while providing opportunity for future growth in our major product categories of axles, brakes, and drivelines. We also completed a new agreement with Iveco in Europe through 2024. This includes the supply of single reduction axles and strengthens our successful business relationship between our companies. It also provides the opportunity for future growth on other product lines. With Navistar and Iveco complete, most of our long-term agreements with major customers have been renewed well past the 2022 timeframe. Moving to electrification on slide five, we are pleased to announce a new collaboration with Hexagon Purist Systems, a global leader in zero-emission e-mobility. Hexagon will integrate Meritor's 14Xe powertrain into its Class 6, Class 7 box trucks, and Class 8 6x4 vehicles starting 2021. Customers including PACCAR, AutoCar, Line Electric, Volta Trucks, and Hexagon have chosen Meritor's 14XE integrated electric powertrain. We believe this is market validation of its industry-leading performance. In early 2020, we announced an agreement with PACCAR to be the initial launch partner and supplier for the integration of the fully functional battery electric systems on the Kenworth T680 and Peterbilt 579 and 520 electric vehicles. We have begun prototype production and PACCAR is performing validation testing on its test tracks. It's very exciting for us to see these fully electric vehicles being assembled. Soon, these and many others with Meritor's preferred electric powertrain solutions will be fully operational on roads and highways. Please take a minute to view a video of this truck in motion on Meritor.com. This footage was shot last week at our Escondido, California facility. With market adoption growing for our 14XE, we're now shifting the focus to the development of the 17XE platform in Europe. Last month, we learned we were a grant recipient of the Advanced Propulsion Center in the United Kingdom. This grant will partially fund the development of Meritor 17XE. After a comprehensive, months-long nomination and consideration process, we were thrilled to be selected, along with our consortium partners, Danfoss Editron, and Electra Commercial Vehicles. This grant, totaling almost 16 million pounds, will rapidly accelerate development of this product that is designed for multiple vehicle platforms and extend our ability to offer Meritor's e-powertrain solutions for the European market. We believe demand for this product will grow because of the EU 2025 CO2 reduction targets. Stricter targets will start applying in 2030 And by 2040, all new trucks sold in Europe will need to be fossil-free to reach carbon neutrality by 2050. The 17XE is another significant step towards completing our electric powertrain portfolio. Carl will now provide more detail on our financial results.