Meritor, Inc.

Good day, and thank you for standing by. Welcome to Meritorious Incorporator third quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 on your telephone. If you require any further assistance, please press star zero. It is my pleasure to hand the conference over to the Senior Director of Investor Relations, Todd Cirillo. Please go ahead.

Thank you, Carmen. Good morning, everyone, and welcome to Meritor's third 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 is 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.

Good morning, and thank you for joining the call today. We had a very good quarter. Before we get into the results, I want to recognize the dedication and commitment of our employees around the world and extend my appreciation to them. The labor shortage in North America, as well as the global supply chain constraints, have created a demanding environment, especially considering that revenue has increased over $500 million year over year on significantly higher volumes. Despite these dynamics, Meritor's safety, quality, and delivery have remained excellent, and I'm very proud of the team. This strong performance has allowed us to gain market share in some of our major product lines in North America. Please turn to slide three. Revenue in our third fiscal quarter was just over $1 billion due to increased volumes in all global end markets. Even with close to a $30 million freight and steel headwind in the quarter, we converted at 20%. Adjusted EBITDA margin was 10.5%, and adjusted EPS was 62 cents on higher earnings. Third quarter results are obviously a difficult comparable on a year-over-year basis due to the COVID impact in fiscal 2020. Carl will give you a sequential look that provides you a more relevant comparison. Overall, Rapid cost increases in freight and steel have impacted our results throughout the year, and a price correction does not seem imminent. As a result, we're driving additional efficiencies in our operational performance, and we're working with our customers to recover costs due to these high inflationary pressures. We're also excited to announce important electrification programs and a strategic investment which diversify our mix of vehicle class, configuration, and energy source and demonstrate the flexibility of the products we provide. We now have more than 1 million miles logged on 180 battery electric vehicles. These real-world miles are validating our products in the marketplace and creating opportunities like the ones we will highlight today. Let's go to slide four. Given the strong truck market outlook and our confidence in generating significant free cash flow, we opportunistically began to repurchase shares again. Fiscal year to date, we repurchased a total of $59 million, or nearly 2.5 million shares. This completes our prior authorization that we announced in 2019. With that program complete, Meritor's Board of Directors has authorized a new $250 million program. As in the past, we will allocate capital to repurchase shares while maintaining sufficient liquidity and a strong BB credit metric. This plan for capital allocation is consistent with our commitment to deploy cash to drive shareholder value. Let's discuss electrification on slide five. In the first quarter of this year, we announced we would supply Meritor's electric powertrain to AutoCar for its refuse vehicle and to Volta trucks for the Volta Zero, designed for inner-city medium-duty applications. We also added Line Electric as a customer for our heavy-duty tandem electric powertrains. These wins demonstrate the adaptability we've designed into our electric powertrain portfolio. Today, we're excited to announce a five-year agreement with Hyliion. Meritor will provide electric subsystems for its HyperTruck ERX. Hyliion's powertrain system will feature Meritor's 14XE integrated drive axles as the standard position propulsion on its vehicle up fits that use natural gas. Next, we're working with Hino Motors, who will be evaluating Meritor's e-powertrain for its development path to zero emission vehicles. Meritor has been a long-term key supplier to Hino in our traditional business, where we provide 100% of the axles for their medium-duty business in North America. In addition, we announced an equity investment in Sea Electric, a global leader in commercial electric vehicles for urban delivery and logistics. Sea Electric partners with commercial vehicle OEMs, dealers, operators, and upfitters to deliver a range of zero-emission trucks with remote-mount solutions to the medium-duty commercial vehicle market. We will be working together on electric-powered chassis opportunities for the Indian and North American markets in the near term. This collaboration provides yet another path to apply our expertise and grow in the medium-duty market. On slide six, we're highlighting the strategic relationships we have established that provide paths to market across multiple medium- and heavy-duty segments. As you know, adoption rates for electric vehicles are expected to occur in different timeframes over the next decade. We're actively engaging in medium-duty electrification programs. With our current limited market share, we see this as a significant opportunity to grow. Whether with traditional axles or our e-powertrain, we're focused on expanding growth opportunities in electrification. And remember, Meritor breaks are an integral part of every e-powertrain. Carl will now provide you more detail on the financial results, and then we will take your questions.