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Edited Transcript of 1316.HK earnings conference call or presentation 15-Oct-19 12:00pm GMT

Q3 2019 Nexteer Automotive Group Ltd Earnings Call

SAGINAW Oct 28, 2019 (Thomson StreetEvents) -- Edited Transcript of Nexteer Automotive Group Ltd earnings conference call or presentation Tuesday, October 15, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Cameron Wang

Nexteer Automotive Group Limited - IR Director

* Dennis Steven Hoeg

Nexteer Automotive Group Limited - VP & North America Division President

* Michael Paul Richardson

Nexteer Automotive Group Limited - President & Executive Director

* Robin Milavec

Nexteer Automotive Group Limited - Senior VP, CTO & Chief Strategy Officer

* William G. Quigley

Nexteer Automotive Group Limited - Senior VP & CFO

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Conference Call Participants

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* Rebecca Y. Wen

JP Morgan Chase & Co, Research Division - Analyst

* Tim Hsiao

Morgan Stanley, Research Division - VP

* Yizhe Wang

UBS Investment Bank, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Nexteer Automotive 2019 Third Quarter Investor Communication. (Operator Instructions)

I'd now like to turn the conference over to Investor Relations Director, Mr. Cameron Wang. Please go ahead.

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Cameron Wang, Nexteer Automotive Group Limited - IR Director [2]

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Thanks, Keith. Good day. Welcome everyone to Nexteer Automotive's 2019 Third Quarter Global Investor Conference Call. You can download the presentation slides for today's call from the Investor Relations for the -- of our company's website. Joining us and presenting today are our Executive Board Director, President, Mike Richardson; Senior Vice President and Global COO, Tao Liu; Senior Vice President and CFO, Bill Quigley; Senior Vice President, CTO and Chief Strategy Officer, Robin Milavec; and Vice President and North America Division President, Dennis Hoeg.

First, Mike will give us the business update for the quarter and Robin will spend some time with us on the company's latest developments in technology field. Lastly, before we start Q&A, Bill will provide us with the company's perspective of how the ongoing General Motors UAW strike has currently impacted our North America operations. As a brief update, today's meeting will take around 40 minutes.

Before I turn it over to Mike, I'd remind you of the safe harbor statement for today's communication. Welcome, Mike.

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Michael Paul Richardson, Nexteer Automotive Group Limited - President & Executive Director [3]

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Thank you, Cam, and thanks to everybody for joining us today. We're gathered in our Saginaw, Michigan manufacturing site preparing for operating reviews for the 3 divisions next week as we reflect on our own performance year-to-date and look ahead to 2020.

We spoke with you about 60 days ago at the release of first half results. We'll use the next few minutes to provide context for current status and direction, including our assessment of the GM North America strike with several weeks into this now.

As always, Q1 and Q3 updates are brief and generally qualitative. My primary intent today is to share a few highlights on the future and year-to-date.

We maintain our 6 strategies for profitable growth. Today, we'll spend a few minutes on just the first 3 elements: expand and diversify our revenue base with an update on backlog, Q3 product launches; second, strengthen technology leadership, Robin will provide an update and assessment of IP-enabling ADAS Level 3 to 5; and third, capitalize on EPS as an enabler for ADAS, we'll share our perspective on automatic emergency braking and its link to steering.

The backlog stands at USD 25.4 billion at the close of Q3 or down about 1% from the $25.4 billion recorded at the close of the first half. EPS holds at 70% of all secured business by product line. North America had 52% of backlog by division. GM remains our largest customer exposure at 34% of the current backlog followed, as you can see, by Ford, FCA and BMW.

Last time, we also shared backlog exposure to ADAS Level 3 and higher, and also new energy vehicles. This should not change significantly quarter-to-quarter, but we'll plan to share an update for full year '19 when we speak to you in March.

Let me characterize the backlog a couple of different ways. The bottom line is Q3 was a solid booking period for new business wins and we've added a premium breakthrough customer that we'll be able to disclose with their approval in a future session. Q3 booking success also included expansion of our REPS or Rack-based EPS position to Europe. This is our first regional win for the REPS product line and that will be produced in Poland. I would add, in this past quarter, we surpassed Bosch in units produced to become the world leader in unit production of Rack-based EPS. We've been focused on this milestone for some time, and I can finally confirm achievement of this market position.

A suitable conquest, finally, despite complexities in the current operating environment, our business bookings secured through Q3 represent 66% conquest, 2 out of 3 new business wins are the business that we took from our competitors. While we never control the number of vehicles produced, we pay close attention to our market performance on a relative scale. Let me add while we're on that topic. Our year-to-date conquest in 2019 through 3 quarters is 60%. So, 4 very positive achievements that I'm pleased to share with you today.

That said, let's talk about the rest of the story. We reduced our global backlog in Q3 at our own initiative to specifically comprehend the current turmoil in the China automotive market. If you paid attention to monthly IHS forecasts, you've seen an unprecedented reduction in forecast demand in China over the past year. This is not, however, a moment where I would point to customer sourcing delays. Their timing remains generally unchanged. Equally important, no 1 programs have been lost. However, to ensure that the backlog remains a valuable tool, for both our internal and your external reference, we've elected to make this adjustment in Q3. As things may resolve on the trade front and so forth, we'll revisit this assessment.

During Q3, we launched 15 major customer programs. All regions and vehicle segments A through full-size trucks are, again, represented in this quarter, along with both global and local nameplates. We've experienced a fairly orderly cadence through the year, but I'd highlight Asia Pacific division as they continue to participate heavy in launches this year. They'll be launching 62% of all new product launches in 2019. In Q4, APAC will be launching an additional 10 programs.

On the topic of product launches, I'd also mention that during Q3, we launched our first-ever Brush EPS out of India for the Renault Triber. This is our first-ever EPS launch in India and puts us on the board.

We launched 9 new conquest programs across halfshaft column and EPS. We launched 5 halfshaft programs in India and China.

In past calls, we've talked about the Changan joint venture in Chongqing and I'll just briefly mention that JV has now moved to produce 3 product lines beginning with Brush EPS a few years ago. But today, I'd like to briefly highlight progress at our JV with the Dongfeng Group. This joint venture with the Dongfeng Motor Parts and Components Group has now begun serial production on schedule and represents our second regional JV with a China domestic OEM. Their initial product launch went live in August to provide steering systems for the PSA CMP platform. We're specifically producing single pinion EPS for Dongfeng PSA, along with the same product for domestic Dongfeng-badged vehicle variant. That's also launched. It's called the D53 program. It's an XUV, and again, both applications are part of the PSA global CMP platform.

So different than our original launch in Chongqing. We're starting here with a global platform, not a domestic.

We intend to expand the product portfolio produced at this JV as we secure our place on the Renault-Nissan-Mitsubishi supplier panel through our excellent performance, applying the same global bill of design and bill of process that we employ in all of our global manufacturing sites.

This Wuhan-based production site will be one of 5 global Nexteer sites producing product for this global customer. Other Nexteer production sites for this platform are Brazil, Poland, Morocco and India. I mentioned this at the time of formation, but will highlight that this joint ventures under the Nissan and the Dongfeng Nissan entity, along with the balance of Dongfeng component manufacturing groups, we follow the same basic construct of our Changan JV that preceded by about 30 months, and will similarly use this unique connection to maintain a favorite status, all things equal, for securing future business.

We're also proud to highlight the continued growth maturity of our -- in the software center. Robin Milavec, CTO, CSO, is with us today. I'm going to ask him to provide an update, in fact, on several topics.

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Robin Milavec, Nexteer Automotive Group Limited - Senior VP, CTO & Chief Strategy Officer [4]

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Thank you, Mike. In January of this year, we held the grand opening of our expanded software facility in Bengaluru, India. Then in September, we recognized the completion of a new lab facility to support critical software development, test and validation in alignment with A-SPICE standards.

A-SPICE certification has become increasingly important as it is a must for doing business with German automakers and is widely becoming recognized as the standard process to improve software development and ensure compliance to customer requirements industry-wide. We recognize the importance of technical capability to drive continued expansion with current and future customers. Software skills have been key to driving success in Conquest opportunities over the past few years.

This facility represents an important milestone for Nexteer, enabling us to increase our technical bandwidth and capacity to meet industry needs for high-performance, safety-critical, system-level steering performance.

I'm sharing the following information today during our qualitative call to give an indication of where we're spending our time in advanced development. We continue to focus technology and intellectual property protection on advanced driver-assist systems and autonomous driving. This is nothing new for us, as our earliest record of invention for Level 3 and above ADAS was submitted in 2001.

As we close the third quarter of 2019, 20% of pending patent applications are focused on ADAS Levels 3, 4 and 5. And within our total patent backlog, level 3-plus patents account for 7%, more than doubled from a year ago when the percentage was close to 3%.

Fully 22% of all new patents granted to Nexteer in 2019 are related to Level 3 through 5 ADAS technologies.

The next topic to briefly discuss is AES. Let's start with the definition. AES stands for automatic emergency steering, and is a vehicle-level feature within the suite of ADAS technologies. When a vehicle detects an upcoming obstacle and the driver does not effectively react within a defined window of opportunity, AES can either assist or direct the steering system to avoid the obstacle. This reduces the chance or the severity of the most common types of collisions and delivers improved levels of safety.

AES can be implemented in different ways. Within the context of steering and for our purposes today, I'll simply highlight 2 cases. Case 1: With conventional electric power steering, AES assists the driver-initiated steering maneuver to avoid an object. The handwheel and roadwheels remain in alignment due to the mechanical connection. This implementation typically results in minor vehicle path deviations within the current lane of vehicle operation.

The second case is with Steer-by-Wire. AES can initiate steering action independent of the driver to provide increased responsiveness and greater level path deviations to further enhance collision avoidance. With Steer-by-Wire, the handwheel and roadwheels are not required to remain in alignment so the driver will not be impacted by a rapidly moving steering wheel. This implementation typically results in a more significant vehicle path deviation, including maneuvers outside of the current range of vehicle operation.

In our view, AES will follow a similar trajectory as AEB or automatic emergency braking, and will find increasing vehicle adoption in the years to come.

As referenced, 20 automakers have already pledged to voluntarily equip virtually all new passenger vehicles by September 2022 with the low speed automatic emergency braking technology.

At the moment, AES is referenced in the Euro NCAP 2025 road map. And beginning in 2020, Euro NCAP plans to include driver-initiated within-lane steering support technology in their overall vehicle ratings.

After 2022, Euro NCAP projects testing systems that may carry out more radical avoidance by steering and braking interventions. This is where we believe we will begin to see market pull for Steer-by-Wire as the enabling technology for advanced AES and AEB integration.

We believe that Steer-by-Wire will become the preferred AES implementation method and that AES has the potential to drive broad adoption of Steer-by-Wire technology. There are also other industry trends that will drive Steer-by-Wire adoption, including autonomous-to-manual driving transition management and customizable variable ratio of steering just to name a few. With our advanced software and algorithm development within Steer-by-Wire, Nexteer is able to seamlessly manage or eliminate steering wheel rotation during automated emergency steering maneuvers, bringing added confidence, security and comfort to the driver.

We've been coding premium steering feel and functionality for many years and with Steer-by-Wire, even though there's no mechanical link between the handwheel and steering gear, our innovative industry-leading software and algorithms ensure that drivers feel connected to the road surface and experience all the road feedback, driving safety, comfort and control of the finest steering system available.

Steer-by-Wire technology increases Nexteer's CPV or content per vehicle because Steer-by-Wire systems require both a handwheel actuator as well as a roadwheel actuator, each with its own motor, controller and software. These vehicles will effectively have twice the steering content as current vehicles.

My final topic to announce is that Nexteer is hosting a ride and drive technology event just outside of Paris, France starting today through Thursday, October 17 of this week. As we speak, current and potential new customers are experiencing our advanced technologies in an immersive way. We are conducting ride and drive demonstrations set up in AES-based scenarios and interactive product displays, while brainstorming with our technical experts.

We are demonstrating our steering and driveline solutions on 2 fronts: the technology of today, which includes products already in production; and technology of tomorrow, which includes advanced prototypes, demonstration vehicles and opportunities to partner with OEMs on R&D projects. These events are part of Nexteer's overall strategy to strategically protect and conquest market share as well as answer the demand for OEMs seeking Nexteer's latest innovation in the quickly evolving world of motion control.

With that, I'll turn it over to Bill Quigley, our CFO, to provide an update on the GM strike.

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [5]

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Thanks, Robin, and good day to everyone. As Mike mentioned in his opening comments, we wanted to provide you a brief update on the GM strike. As you are all aware, the GM UAW strike has now entered its 30th day since commencing on September 15. The strike impacts about 46,000 U.S. GM UAW-represented hourly workers. All of GM's U.S. manufacturing assembly operations are in shutdown as well as certain operations in Canada and Mexico, which we understand is affecting an additional plus 10,000 non-U. S. GM hourly employees.

Certainly, GM is an important Nexteer customer and as we disclosed in our 2019 interim report, revenue derived from GM globally was approximately $779 million or 43% of Nexteer's total consolidated revenue from the first 6 months of this year. Of this profile, 86% of GM revenue was derived from our North America division with our Saginaw, Michigan operation being the largest contributor.

Certainly, the strike has had an impact on Nexteer, and we've been working with GM on their day-to-day production requirements during this temporary interruption. And based on GM's production requirements, we have also been taking the necessary steps to mitigate the cost impact to Nexteer of the strike, which unfortunately has included the layoff of both direct and indirect colleagues directly associated with our GM component production as well as other coordinated actions with our supply base. We, like you, are continuing to closely monitor any developments from external communications by both GM and the UAW as well as other third-party media sources and certainly hope for a near-term resolution.

So with that, I'll now hand the call over to Keith for any questions, and we appreciate your time today.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first question comes from Rebecca Wen with JP Morgan.

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Rebecca Y. Wen, JP Morgan Chase & Co, Research Division - Analyst [2]

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So a few questions from me. First of all, what is your latest thoughts on the industry production in the fourth quarter and 2020 in the major regions like China, North America and Europe? And are these forecasts already incorporated in our backlog?

And the second question is on the new program launch, given we have a record high of new program launches this year, are we expecting a higher launch compared to historical levels?

And third, on the U.S. driveline transformation, we didn't touch base on this during the call today. If there is any update that you can share with us, for instance, the latest arrangement of the tax rate and changes in number of workers, et cetera.

And lastly, you mentioned about the AES. So is it possible if you could elaborate a bit more on how this AES could help the automakers with the Euro NCAP? And do you see it become one of the mandatory criteria? That's all.

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [3]

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Great. Thanks, Rebecca. This is Bill. I'll try to take a couple of the first questions and then I'll hand it off to a number of my colleagues. With respect to industry production, as you know, we closely monitor IHS as one forecast source, if you will, as well as others. And as we've looked even from July moving forward, IHS has continued to kind of downgrade their near-term expectations, in particular for China.

So with respect to your first question on the backlog, that was one of the drivers, if you will, of our lowered expectations for the backlog over the next several years, both taking into account a downslope in IHS estimates as well as our own work with our customer base, which as you know has been really underperforming the market in general. So full year to-date for the next several years comprehended by our backlog as of the end of September.

With respect to launch costs, certainly, we work very hard to seamlessly execute all program launches. But as Mike highlighted in his opening comments, we have a number of launches still ahead of us into the fourth quarter, heavily weighted towards Asia Pac, but I'm also happy to announce we'll start to see some revenue, if you will, from our Morocco operation within our EMEA-SA division. That will come online slowly in the fourth quarter with further ramp-up into 2020 moving forward.

So overall, from a perspective of OEM production, we're looking at an environment I think as probably somewhat stable, if you will, or maybe slightly down 2020 versus 2019. And as we've spoken to all of you before, how that affects our revenue is in the near term, we're going to proxy very close to OEM production. So that, obviously, will have an impact on our revenue expectations for 2020. But at the same time, we're still in the process of finalizing that look, but there certainly is a lot of volatility in the market with respect to what production may be in 2020, let alone 2025 or so.

With respect to the driveline transformation, I'll hand it over to Dennis Hoeg, who obviously is in charge of our North America division.

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Dennis Steven Hoeg, Nexteer Automotive Group Limited - VP & North America Division President [4]

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Rebecca, this is Dennis. I'll give you a quick update on driveline transformation. We've been working very diligently on this large project, focused on changing our manufacturing process as well as reducing our internal costs and our people. We've been -- we're on schedule, and in fact, we're working very hard to pull ourselves ahead of schedule and we've been using some of this downtime with the strike to do other projects to try and help facilitate this transformation a little bit quicker. But we feel good about our progress, and we have great expectations for the results.

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Michael Paul Richardson, Nexteer Automotive Group Limited - President & Executive Director [5]

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Robin, can you comment on AES and Euro NCAP?

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Robin Milavec, Nexteer Automotive Group Limited - Senior VP, CTO & Chief Strategy Officer [6]

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Sure. Rebecca, this is Robin. So in terms of Euro NCAP, what we've seen historically is that once agencies like Euro NCAP begin evaluating and ranking vehicles' safety performance based on technologies, for example, like automatic emergency braking, that tends to drive more of a rapid adoption of that technology. We've seen that with the braking technologies and we also would expect the same thing to happen with automatic emergency steering technologies.

So they will begin assessing and ranking vehicles in 2020 based on this technology and they stated in the NCAP 2025 road map that beyond 2022, they will begin looking at the more advanced steering and braking integration as a safety maneuver, which we believe will drive Steer-by-Wire implementation sometime after that point. So I think, to answer your question, once agencies like Euro NCAP begin assessing vehicles, it tends to drive rapid adoption. In some cases, it actually mandates that technology in the marketplace.

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Operator [7]

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And the next question comes from Tim Hsiao with Morgan Stanley.

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Tim Hsiao, Morgan Stanley, Research Division - VP [8]

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Just 2 quick follow-up question. The first question is about the strike. In light of what happened to GM and the potential change to the carmaker's hiring and production strategy changes, how would Nexteer consider hedging the risk into 2020 ahead of our negotiation with UAW? And over time, will the company speed up the pace of streamlining the workforce located in North America? And could we have a rough idea about the current head count in the U.S.? And what could be the long-term target?

And my second question is about China. As we saw several new program launch in third quarter are EV models for China market. As EV sales were relatively weak in China in third quarter, could the internal scale risk the profitability in second half, especially the project just launched? Or actually, all those products should assume platform, so the aggregate scale is still doing okay? So just 2 question for me.

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [9]

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Sure, Tim. It's Bill Quigley. I'll take a first shot at your first question and Denny, obviously, will follow up with any other commentary that he might have. I think with respect to our production strategy moving into March of 2020, which obviously is our negotiation or union contract expiration with the UAW, we're separated from the international side of the house. So that's one important element.

And I think the second element here is we've been working very hard with our workforce not only the last several months but obviously the last several years with respect to what we're trying to accomplish in Saginaw, notably, as one example, being the driveline transformation. We think it resonates with all of our employees that we have to continue to improve the business moving forward. That provides us opportunity actually in the marketplace. And I think we've been fairly transparent with our union folks on the potential impacts of such an initiative over the next several years.

So I think there's going to be more to come on this, but certainly, we're very focused on what may ultimately come from resolution on the international side of the house with General Motors, and we'll continue to monitor that. But we're continuing steady progress with respect to not only that transformation of the driveline side of the house, but continuing to work with our colleagues from an hourly perspective on how do we continue to become more efficient in the plants' productivity, certainly with a number of launches coming forth with respect to the North American business in general. So we're going to continue to move that.

Maybe one other data point I'd give you, you asked the question, I'd say, Denny, you can correct me if I'm wrong, there's currently in Saginaw about 3,700 or so UAW hourly employees on-site.

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Dennis Steven Hoeg, Nexteer Automotive Group Limited - VP & North America Division President [10]

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2,700.

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [11]

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I'm sorry, 2,700.

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Dennis Steven Hoeg, Nexteer Automotive Group Limited - VP & North America Division President [12]

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Yes.

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [13]

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So it just kind of gives you the magnitude of that -- of the workforce. And we're certainly very sympathetic with respect to the actions that we've had to take with respect to kind of rightsizing our cost structure in light of the GM strike.

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Tim Hsiao, Morgan Stanley, Research Division - VP [14]

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EV sales weakened?

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [15]

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They have. I would suggest to you and I look to my colleagues for maybe some color on that, is we'll see, as we move forward, especially from a China perspective on how the government may incentivize and continue to incentivize growth in that particular market or that particular platform if you will. Certainly, there are a lot of OEMs around the world forming traditional relationships on natural relationships. And I think electrification is here to stay. Maybe what is a question is the timing of adoption. And I think that's been a question that we've always had, Tim, even in discussions with you, how does this ultimately unfold over the next several periods of time from a consumer demand perspective and certainly, the necessary infrastructure improvements that will be required on a global basis.

Make no doubt about it, China would appear to be in the best position to really take the baton on this and move that platform, if you will, forward. I think a 1 month's setback, is just a 1 month's setback. But I don't think that is going to necessarily change the game, but I think the game is a longer game than people have been maybe projecting in the news, if you will, with respect to adoption.

I don't know if you guys have any comments?

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Michael Paul Richardson, Nexteer Automotive Group Limited - President & Executive Director [16]

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I might add just one thing. This is a historical moment for the industry to see this conversion from ICE to EV and NEV, and we're right in the middle of things. For us, there's not so much difference between a steering system -- an electric steering system that gets applied to an ICE application versus EV. In fact, we purposed to make them as similar as we can because the only cost-effective way that the OEMs can launch this is to make it either a subset of a current platform or to develop something with scale. But for our product application, we're agnostic what kind of powertrain there is and hope to build to scale on EV just as we've done with conventional.

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Operator [17]

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And due to the limited time, we will take one last question, which comes from Yizhe Wang from UBS.

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Yizhe Wang, UBS Investment Bank, Research Division - Analyst [18]

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I have 3 questions. The first is regarding the Dongfeng JV. So I understand that we have been in business with the Dongfeng PSA and probably a little bit Dongfeng own brand. And are we seeing any possibility to enter the supply chain of the other joint ventures of Dongfeng, namely the Dongfeng Nissan and Honda?

And the second question is on the NEV, but in the North American market. Can you give me an update of the current electric pickup, the product ramp up, like the general color and what -- can we remain the dominant market share as we are with the current in combustion pickup market?

And the third question is on the AES-enabled steering system. What's the incremental content per vehicle could this bring? And what's the margin profile of these products?

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Michael Paul Richardson, Nexteer Automotive Group Limited - President & Executive Director [19]

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Thank you. Maybe just to comment on Dongfeng JV. We are following a very similar path that's proven to be effective in the Chongqing JV. So what you've seen them do moving from base level product, Brush EPS, to brushless, now to other components that they will ship to global customers, that's the kind of path that we intend to follow in Dongfeng.

The biggest difference at the point of launch was we've worked exclusively to date in Chongqing with domestic customers. We've launched in Dongfeng with a global customer first because that's where the first opportunity came. We're very conscious of their other OEM level partners. In the Chongqing JV, all of their global partners were current customers of ours at the time. Dongfeng presents opportunity to branch into new people with this favored relationship that allows them to test us and us to prove ourself hopefully with greater commercial opportunity.

NEV North America market, electric pickups in particular, the Big 3 all have their own individual plans for EV. And from what I would observe, they're largely derivatives of the current production platforms where we have incumbency. So I think, we're very well positioned to remain part of that. We've got the scale. We've got a very competitive price point. And we see this NEV progression in North America as an opportunity for next year.

Robin, you want to comment on AES content per vehicle? How should we view that?

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Robin Milavec, Nexteer Automotive Group Limited - Senior VP, CTO & Chief Strategy Officer [20]

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Sure. So I kind of laid out there's 2 different scenarios that AES could be implemented. The first being with current electric power steering. And in that situation, the steering gear that the EPS system that we provide would remain relatively unchanged. We would just be executing the command at the vehicle level the main controller would provide. So the margin profile for that implementation would be relatively the same as we see today.

Looking forward to the second case, where there's more extreme AES implementation combined with braking, we see that moving into a Steer-by-Wire product where the content per vehicle is close to double and we would expect the margin profiles to be enhanced with the Steer-by-Wire technology because it is an innovative new technology and not everybody has the capability of doing that technology like Nexteer has proven to be capable of.

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Michael Paul Richardson, Nexteer Automotive Group Limited - President & Executive Director [21]

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And the field of selection for an OEM is greatly reduced when you come to Steer-by-Wire.

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Operator [22]

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And at this time, I would like to return the floor over to Cameron Wang for any closing comments.

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Cameron Wang, Nexteer Automotive Group Limited - IR Director [23]

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Thank you, everyone, on the call. Thanks for your participation. And if you have any questions, please reach out to Tony Wang and/or myself, Cameron, at investors@nexteer.com. And thanks, again, for participating.

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Operator [24]

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Thank you so much for attending today's presentation. The conference is now over. You may now disconnect your lines.

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William G. Quigley, Nexteer Automotive Group Limited - Senior VP & CFO [25]

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Thank you, Keith.