Alex Potter

Alex Potter asked how BorgWarner's turbine generator product addresses or is exposed to permitting and data center rollout timing constraints, which have historically been industry headaches. He also inquired about BorgWarner's exposure to the recent DRAM shortage, seeking quantification or clarification on any potential impact.

Answer

Joseph F. Fadool (CEO, BorgWarner) explained that BorgWarner is working with partner Endeavour, who has extensive data center experience, and will ensure the product is UL-Certified and meets country requirements, not seeing permitting as a constraint. He stated that BorgWarner does not use DRAM in its products, is monitoring the overall market for OEM impacts, and has not identified any current impact to its production timelines or flagged risks.

Alex Potter inquired about the turbine generator's exposure to permitting and data center rollout headwinds, and asked for quantification or clarification on BorgWarner's exposure to the recent DRAM shortage.

Answer

CEO Joseph F. Fadool explained that BorgWarner is working with its partner Endeavour, who has extensive experience in the data center market, to ensure the turbine generator is UL-Certified and meets all country requirements, not seeing permitting as a constraint. Regarding DRAM, Joseph F. Fadool stated that BorgWarner does not use DRAM in its products and is monitoring the overall market for any OEM impacts, but currently sees no impact to its production timelines or any flags as a potential business risk.

Alex Potter asked how Carvana's unit economics might change as it potentially expands into lower-priced, older vehicles to achieve its long-term volume target of 3 million units.

Answer

CEO Ernie Garcia responded that the company does not necessarily need to significantly alter its vehicle mix to reach its 3 million unit goal. He explained that the current market for cars less than 10 years old is vast, and Carvana's current product distribution is already broad. He believes there is ample opportunity to grow within its existing segments across the franchise, independent, and private-party markets without a required shift down-market.

Alex Potter asked if Volkswagen's internal restructuring could impact the joint venture and whether the Connect+ subscription service is material enough for investors to model.

Answer

CEO RJ Scaringe positioned the JV as a key enabler of VW's efficiency goals, stating it provides a cost-effective path to advanced technology. Regarding Connect+, he explained it currently covers variable data costs and that the industry is still exploring the best model for monetizing future services, suggesting the value will ultimately be captured in the vehicle's price, whether upfront or via subscription.

Alex Potter asked for an update on the ACC battery joint venture's ramp for the Stellantis and Mercedes-Benz platforms, potential revenue recognition timing for these late-2025 launches, and the approximate content per vehicle for the new Mercedes award.

Answer

CFO Ricardo Rodriguez confirmed that Aspen is planning for a second-half 2025 start of production for these platforms, which hedges against potential ramp-up risks, and that revenue recognition would also begin in H2 2025. He specified that the content per vehicle for the Mercedes platform is in line with other prismatic cell programs, around the $300 per vehicle range.

Asked for clarification on whether the cash spend guidance is net of pre-delivery payments (PDPs), inquired about the expected delivery mix between private and airline customers in the initial years of service, and sought an update on the progress and clarity of certification in the United States.

Answer

The cash spend guidance is gross operational spend and does not include inflows from PDPs. The delivery mix is expected to start with a steady premium/private market of 50-150 units per year, with the shuttle edition for airlines growing tremendously over time. For U.S. certification, Lilium has its G-1 paper in place, but the FAA's operational SFAR rules are not yet finalized for the industry, placing Lilium on a similar or more advanced timeline as its U.S. competitors.

Alex Potter of Piper Jaffray requested a breakdown of the projected $100 million on-highway revenue between acquired Powertrain Integration business and organic PSI business. He also asked for an update on the consolidation of manufacturing facilities and the supply status of Perkins engine blocks from Caterpillar.

Answer

COO Eric Cohen explained that while the majority of the initial revenue is from the legacy Powertrain Integration business, the organic PSI business is the fastest-growing component. He also confirmed that all engine manufacturing would be consolidated into the Wood Dale facility. CEO Gary Winemaster acknowledged ongoing supplier challenges with Perkins but noted the company is developing new products, like a 29-liter engine, to address market needs.

Alex Potter from Piper Jaffray asked for the company's year-over-year organic growth rate, how demand from China would be serviced, and which specific engines were being sold into the Chinese market.

Answer

CEO Gary Winemaster declined to provide a specific organic growth rate. He and COO Eric Cohen explained that China's forklift demand is serviced via its joint venture, while on-road business is handled directly by PSI. The primary engines for the on-road market are the GM 6.0-liter and 4.8-liter, with opportunities to expand into other engine families like the 8.8-liter and 4.3-liter V6.

Alex Potter of Piper Jaffray inquired about the confidence level in the revised oil and gas guidance, growth prospects for the material handling business, the reasons for the heavy-duty supplier delays, and whether the expected propane engine orders from Navistar for school buses materialized in June and July.

Answer

CFO Dan Gorey stated that the new oil and gas guidance is conservative and based on customer conversations. He also highlighted that the material handling business is performing very well and aftermarket continues to be a strong, high-margin contributor. Chairman and CEO Gary Winemaster explained the heavy-duty program delay was due to an issue with a directed supplier for their Caterpillar Perkins program, pushing the anticipated $25 million in revenue to the next year. He confirmed that while the Navistar school bus orders were delayed by about a month, they are now in production.