Emmanuel Rosner

Emmanuel Rosner asked about the cadence of improvements, noting signals for better margins in H2 than H1, and further improvement in 2027 for both margins and free cash flow. He sought to understand any additional factors beyond volume and market share from new products contributing to this sequential improvement. He also requested a breakdown of the cash out for realignments over the four-year period, specifically for 2026.

Answer

Antonio Filosa, Chief Executive Officer, identified major levers for profit enhancement in 2026 and beyond: significant volume improvements from new products, positive mix shifts (e.g., 100,000 more Ram pickup V8 HEMI units in 2026), and improved industrial execution through enhanced quality output and cost reduction efforts with engineering and suppliers. João Laranjo, Chief Financial Officer, detailed that of the EUR 6.5 billion total cash out for realignments, EUR 2 billion is expected in 2026, with EUR 1 billion of that in Q1 2026, and the remainder spread evenly across 2027, 2028, and 2029.

Emmanuel Rosner asked about the cadence of Stellantis's financial improvement, specifically if there are other factors besides volume/market share driving the expected better performance in H2 2026 compared to H1, and further improvement in 2027, and also inquired about the specific cash out cadence for the EUR 6.5 billion realignments.

Answer

CEO Antonio Filosa identified volume, mix (especially from Ram pickup V8 HEMI), and improved industrial execution (quality and cost) as major levers for profit enhancement in 2026 and beyond. CFO João Laranjo detailed that of the EUR 6.5 billion cash out, approximately EUR 2 billion is expected in 2026, with EUR 1 billion in Q1 2026, and the remainder spread evenly across 2027, 2028, and 2029.

Emmanuel Rosner sought clarification on the cash impact of second-half charges for turnaround actions and warranty, and whether they are included in the reiterated free cash flow guidance. He also asked about the opportunity provided by eased U.S. emissions regulations, specifically how Stellantis plans to leverage this "multi-billion dollar opportunity" through its product offerings.

Answer

CEO Antonio Filosa welcomed the pragmatic U.S. regulations, seeing them as an opportunity to explore value through a "freedom of choice" strategy, including BEVs (Jeep Recon), IZ introductions, and hybrids (Jeep Cherokee full hybrid, range-extended powertrains for pickup trucks and large SUVs). Head of Investor Relations Ed Ditmire clarified that strategic review and product plan adjustments could lead to project cancellations (like the light-duty BEV in the U.S.), resulting in write-offs of CapEx and capitalized R&D, with other program cancellation costs having limited cash impact in 2025 and more in the future.

Emmanuel Rosner sought clarification on whether the second-half charges for turnaround actions and warranty have any cash impact and if they are included in the free cash flow guidance. He also asked about the opportunity provided by the easing U.S. emissions regulations, specifically how Stellantis plans to take advantage of this "multi-billion dollar opportunity" and what kind of upside it unlocks.

Answer

CEO Antonio Filosa welcomed the pragmatic U.S. regulations, seeing them as positive for short, mid, and long term, and an opportunity to extract value through a "freedom of choice" product strategy. He highlighted continued BEV development (Jeep Recon), alongside new IZ and hybrid introductions (Jeep Cherokee full hybrid, range-extended powertrains for pickup trucks and large SUVs), and continued PHEV leadership. CFO Joao Larangeira clarified that the strategic and product plan reviews could lead to project cancellations (like the light-duty BEV in the U.S.), resulting in write-offs of CapEx and capitalized R&D, and other program cancellation costs. He noted that these other costs could have a limited cash impact in 2025, with more in the future.

Emmanuel Rosner from Wolfe Research followed up on the earnings cadence, asking for clarification on whether the anticipated T1 downtime would occur in Q1 or later quarters.

Answer

Jason Cardew, Senior Vice President and CFO, clarified that the T1 downtime related to changeovers is expected more in Q3 than in Q1. Emmanuel Rosner then asked about the potential impact of commodities, particularly copper, on Lear's financials, given the lack of mention in the prepared remarks. Jason Cardew explained that Lear has indexing and pass-through agreements for most commodities, largely insulating earnings from price changes, though revenues might see choppiness. He noted a 2026 copper assumption of $5.25 and a nominal six basis point headwind from commodities embedded in net performance.

Emmanuel Rosner from Wolfe Research followed up on the earnings cadence, specifically asking about the timing of T1 downtime. He also inquired about the potential impact of commodity prices, particularly copper, on Lear's financials, and the effectiveness of pass-through agreements for 2026.

Answer

Jason Cardew, Senior Vice President and CFO, clarified that the T1 facility changeover and associated lower volumes are expected more in the third quarter than the first half. He explained that Lear's extensive indexing and pass-through agreements for commodities, including copper (assumed at $5.25 for 2026), largely insulate earnings from price fluctuations, though revenue might see some choppiness. The overall commodity impact for 2026 is a nominal six basis points headwind to net performance.

Emmanuel Rosner of Wolfe Research focused on the first-half to second-half margin walk, noting that the decline appeared to be driven entirely by volume and mix. He questioned the magnitude of the implied decremental margin and asked if it was impacted by a mix shift away from higher-margin EU imports. He also asked for details on factors contributing to the lower free cash flow guidance beyond EBIT and tariff timing.

Answer

CFO Jason Cardew clarified that the volume-driven sales decline converts at a normal rate of about 19.8%. He attributed the lower second-half volume assumption to normal seasonality and specific caution around tariff-impacted EU imports like the Mercedes GLC. Regarding cash flow, he confirmed the main drivers were lower earnings and a $30 million tariff recovery timing lag, with a $40 million increase in restructuring cash spend being mostly offset by a $35 million reduction in CapEx.

Emmanuel Rosner of Wolfe Research asked about the impressive cost performance and whether the accelerated restructuring could further boost benefits this year to offset potential volume weakness from tariffs. He also followed up on risks to the sales backlog and the status of the share buyback program.

Answer

CFO Jason Cardew confirmed they are increasing restructuring investment by $30-$40 million, which should yield immediate benefits and positive outperformance this year, while slightly reducing CapEx. CEO Raymond Scott emphasized a focus on operational excellence and balance sheet discipline. Cardew also stated that the share repurchase program is being paused temporarily until production visibility improves, and that it's too early to update the 2-year backlog, though recent E-Systems wins are positive for long-term growth.

Emmanuel Rosner asked for clarification on the commercial settlements, specifically if their magnitude was unusual or merely a timing/cadence impact, and whether any extra recoveries expected this year should be capitalized or are part of the normal course of business. He also inquired about the timing of cash receipts from Adient's joint ventures in Asia.

Answer

EVP and CFO Mark Oswald clarified that commercial settlements were more about timing and cadence, with some planned actions pulled forward into Q1, but nothing extraordinary compared to the original fiscal year 2026 plan. He confirmed that any extra recoveries are considered normal course of business. Regarding JV cash, he explained that dividend cadences vary by joint venture, with the largest, Keiper, typically paying in the back half of the year.

Emmanuel Rosner inquired about the Asia business, specifically the positive trend in joint venture income, and when Adient typically receives cash from its joint ventures.

Answer

Mark Oswald, Executive Vice President and Chief Financial Officer, explained that cash from joint ventures varies by JV, with some cadenced throughout the year and the largest (Keiper) typically being back-half weighted.

Emmanuel Rosner of Wolfe Research, LLC sought to quantify the competitive advantage of Adient's U.S. footprint amid onshoring trends and asked for an update on the company's margin performance relative to its long-term improvement goals.

Answer

Jerome Dorlak, President, CEO & Director, explained the competitive advantage extends beyond the $20-30 million cost of a new JIT plant to include deep customer intimacy, a proven delivery track record, and high switching costs for OEMs. Mark Oswald, EVP & CFO, reiterated the long-term goal of an 8% company-wide EBITDA margin, which would require continued growth in the Americas, sustained double-digit margins in APAC, and Europe improving from its current trough to the 5-6% range.

Emmanuel Rosner from Wolfe Research, LLC asked for clarification on Adient's direct tariff exposure, specifically regarding its USMCA compliance and non-Annex-1 parts, and inquired about the long-term margin outlook and self-help opportunities.

Answer

President and CEO Jerome Dorlack detailed that high USMCA compliance shields most Mexico/Canada parts, while the main exposure is a 145% 'stacking' tariff on non-Annex-1 parts from China. EVP and CFO Mark Oswald reiterated a long-term margin target of 7.5-8%, driven by operational improvements, European restructuring, and a better business mix.

Emmanuel Rosner of Wolfe Research inquired whether fiscal 2025 customer mix headwinds are temporary or secular and requested a breakdown of the drivers behind the $100 million business performance target for the upcoming year.

Answer

Mark Oswald, EVP and CFO, described the headwinds as a mix of temporary destocking and specific program sunsets, like the Ram Classic, offset by new program growth. Jerome Dorlack, President and CEO, added that Adient is purposefully winding down $300-$400 million of lower-margin third-party metals business in the Americas by 2028. Regarding the $100 million target, Mark Oswald listed drivers like freight, continuous improvement, and ops waste, but declined to provide a specific breakdown, noting it's a continuation of 2024's successful efforts.

Emmanuel Rosner asked for a breakdown of the puts and takes influencing New Aptiv's 2026 EBITDA outlook, particularly regarding stable margins despite decent organic growth.

Answer

Varun Laroyia, Aptiv's CFO, outlined the key elements for New Aptiv's 2026 EBITDA: volume flow-through (over 1 point positive), commodities (50 basis points negative), net price downs (1-1.5 points negative), investments in non-auto growth and engineering, and stranded costs (40 basis points or $50 million). These negatives are expected to be offset by performance improvements in manufacturing, material, and labor economics, leading to margin expansion on a performance basis, excluding stranded costs. Rosner also requested a similar framework for VersaGen (SpinCo). Laroyia explained that VersaGen's 2026 margins are expected to be up about 40 basis points, driven by volume growth and manufacturing/material performance improvements (130 basis points positive), offsetting headwinds from commodities (50 basis points negative), net price downs (60 basis points negative), and standalone costs ($15 million).

Emmanuel Rosner asked for a detailed breakdown of the puts and takes influencing New Aptiv's 2026 EBITDA outlook, particularly how margins are expected to remain stable despite organic growth, one-time costs, and inflation. He then requested a similar financial framework for the SpinCo, VersaGen.

Answer

CFO Varun Laroyia outlined New Aptiv's 2026 EBITDA drivers: volume flow-through adding over a point, a 50 basis point negative impact from commodities, 1-1.5 points from net price downs, and 40 basis points ($50 million) from stranded costs, alongside investments in non-auto growth. These headwinds are expected to be offset by performance improvements in manufacturing, material, and labor economics, leading to margin expansion excluding stranded costs. For VersaGen, Varun Laroyia projected a 40 basis point margin expansion, driven by volume growth and manufacturing/material performance, offsetting 50 basis points from commodities, 60 basis points from net price downs, and $15 million in standalone costs.

Emmanuel Rosner of Wolfe Research asked about the forward revenue trajectory for the Advanced Safety & User Experience (ASUX) segment and the reasons for margin contraction in the Engineered Components Group (ECG).

Answer

CEO Kevin P. Clark explained ASUX growth is temporarily held back by a legacy program roll-off, which acts as a 200-300 basis point headwind that will conclude in Q4, allowing for a return to mid-single-digit growth in 2026. Both Clark and CFO Varun Laroyia identified unfavorable foreign exchange, mainly the Mexican peso, as the primary driver of ECG margin pressure, and they expect a recovery in the second half.

Emmanuel Rosner questioned the flat revenue outlook for the Electrical Distribution Systems (EDS) business in 2025 and what will drive its future acceleration, and also asked about the appetite for more structural cost reductions.

Answer

CEO Kevin P. Clark attributed the flat 2025 EDS outlook to a recovery from a significant 2024 decline in high-voltage revenue, with growth drivers being EV platforms and commercial vehicles. He stated that long-term growth to mid-single digits will come from EV adoption and strong prior-year bookings. Regarding costs, he confirmed an ongoing focus on payroll reduction and footprint rotation but noted that recent engineering productivity gains were from operational efficiency, not cuts to advanced R&D.

Emmanuel Rosner questioned the confidence in the Q4 outlook given the severe production volatility in Q3 and asked about Aptiv's preparedness for potential U.S. tariff changes on goods imported from Mexico.

Answer

CFO Joe Massaro noted that while the full-year outlook is reduced, Q4 benefits from ongoing program launches and strong secular growth in areas like active safety. CEO Kevin P. Clark added that Aptiv is well-prepared for tariff risks, having regionalized its supply chain since 2016, with 90% of products manufactured in-region for the region.

Emmanuel Rosner from Wolfe Research sought additional clarification on Autoliv's 2026 margin improvement drivers, specifically inquiring about the expected impact of currency fluctuations, including the peso, and the quantified contributions from operational efficiency and call-off benefits. He also requested more specific details on the raw material headwind, identifying the most impactful materials and their recent cost trends.

Answer

EVP of Finance and CFO Fredrik Westin explained that while transactional FX (including peso) might be negative, positive translational effects are expected to result in a slightly positive overall FX impact for 2026. He reiterated $20 million in structural cost savings and anticipated further gains from operational improvements like automation and digitalization. Regarding raw materials, Fredrik Westin specified that gold accounts for nearly two-thirds of the projected $30 million gross headwind, with steel and copper also contributing, while yarn is expected to be a tailwind.

Emmanuel Rosner asked for further details on the 2026 margin improvement, specifically regarding the FX impact (especially the peso), and the contributions from operational efficiency and call-off benefits. He also sought more information on the raw material piece, asking which specific materials are most impactful and how input costs have been evolving.

Answer

CFO Fredrik Westin explained that for FX, a negative transactional effect (including peso) is expected to be offset by a positive translational effect, resulting in a slightly positive overall impact similar to 2025. He reiterated $20 million in structural cost savings and noted further improvements from operational programs like automation and digitalization. For raw materials, Fredrik Westin detailed a gross headwind of nearly $30 million, with gold accounting for close to two-thirds, followed by steel and copper, while yarn is expected to be a tailwind.

Emmanuel Rosner followed up on the unchanged organic growth outlook despite improved LVP, asking for clarification on the factors driving this discrepancy, and sought an update on the drivers for Autoliv's midterm margin targets and coil-off accuracy.

Answer

Fredrik Westin, EVP Finance and CFO, reiterated the reasons for the organic growth outlook: a negative market mix, negative customer mix in North America and Europe, and delays in new launches in China. He confirmed the midterm margin framework remains unchanged, with progress on indirect headcount reduction, coil-off normalization (94% accuracy), and contributions from growth, automation, and digitalization.

Emmanuel Rosner of Wolfe Research sought clarification on tariff recovery dynamics, asking if Q3 would 'over-recover' or if a lag would persist quarterly. He also inquired about the balance between internal controls and market stability needed to achieve the long-term 12% margin target.

Answer

CEO Mikael Bratt clarified that a 'calendar effect' or lag in tariff recovery is expected at the end of each quarter, so an over-recovery is not anticipated. Regarding the margin target, he reiterated that while a stable market is an important assumption, the company is focused on and delivering well on the operational levers within its own control.

Emmanuel Rosner questioned the decision to reiterate full-year guidance amidst market uncertainty, asking if it reflected confidence or caution. He also asked about the capital allocation strategy, particularly regarding shareholder returns.

Answer

CEO Mikael Bratt expressed comfort with the guidance, citing a strong Q1, healthy Q2 call-offs, and progress on internal cost controls, noting the guidance range can absorb some volatility. He stated that S&P's revised LVP forecast is now closer to Autoliv's initial, more conservative assumption. Bratt also reaffirmed the company's commitment to being shareholder-friendly and continuing its buyback program.

Emmanuel Rosner questioned the decision to reiterate full-year guidance amidst market uncertainty and asked if the current environment would cause a change in the company's capital allocation strategy, particularly regarding shareholder returns.

Answer

CEO Mikael Bratt affirmed the company's comfort with its guidance, citing a strong Q1 performance, healthy Q2 call-offs, and a guidance range that can absorb some volatility. He also stated that Autoliv's commitment to shareholder returns remains firm, highlighting the continuation of share buybacks in the first quarter and the intention to maintain its shareholder-friendly strategy.

Emmanuel Rosner from Wolfe Research inquired about Tesla's significant CapEx increase to over $20 billion for 2026, seeking clarification on the allocation across product lines and technologies, whether this level of spending is a one-time event or an ongoing trend, and the company's strategy for financing these investments, including potential impacts on cash balance.

Answer

CFO Vaibhav Taneja detailed that investments are primarily for six new factories, increased AI compute for Optimus training, and expanding existing facilities, emphasizing that this is an ongoing investment phase for infrastructure projects like solar and semiconductor fabs. He stated initial funding would come from Tesla's $44 billion cash reserves, with future financing for the Robotaxi fleet potentially through debt, and other means for larger infrastructure plays. CEO Elon Musk clarified the compute spend is specifically for training, and Director of Autopilot Software Ashok Elluswamy also contributed.

Emmanuel Rosner from Wolfe Research inquired about Tesla's significant CapEx increase to over $20 billion for 2026, seeking clarification on the primary investment areas across product lines and technologies. He also asked whether this high spending level is a one-time event or an ongoing trend for several years, and how Tesla plans to finance this, considering potential cash burn and its cash balance.

Answer

CFO Vaibhav Taneja detailed that the investments are primarily for six new factories, increased compute for Optimus training, and expanding existing factory capacity, noting that solar or semiconductor fabs are not yet included. He indicated this is an ongoing investment phase for infrastructure plays. Elon Musk, Co-Founder and CEO, added that the compute is for training. Taneja explained funding would initially come from Tesla's $44 billion cash reserves, with future financing potentially involving debt against Robotaxi fleet cash flow and other means for infrastructure projects.

Emmanuel Rosner inquired about Tesla's strategy for expanding vehicle production, specifically asking how the company plans to reach its 3 million unit capacity target, the associated timeline, potential needs for demand incentives, and whether this expansion would prioritize volume over near-term profitability given the long-term opportunity.

Answer

Elon Musk, CEO, stated that Tesla's capacity isn't quite 3 million yet but could reach an annualized rate of 3 million within 24 months, contingent on supply chain alignment. He emphasized that the biggest expansion would come from the Cybercab, optimized for full autonomy and cost per mile, starting production in Q2 next year. Musk believes demand will be "nutty" due to unsupervised Full Self-Driving (FSD) allowing texting while driving, which he sees as a "killer app" dramatically improving safety. He expressed 100% confidence in solving unsupervised FSD at a safety level much greater than human, highlighting the amazing technology roadmap including reasoning and a powerful world simulator. He also mentioned the AI5 chip, which will be significantly more powerful than AI4.

Emmanuel Rosner asked about Tesla's vehicle production expansion plans, specifically regarding the timeline to reach 3 million units, potential demand incentives, and whether prioritizing volume would impact near-term profitability given the confidence in unsupervised autonomy.

Answer

Elon Musk, CEO, stated that while capacity isn't quite 3 million, an annualized rate of 3 million could be hit within 24 months, depending on supplier capabilities. He emphasized that the Cybercab, optimized for full autonomy and without a steering wheel or pedals, will be the biggest production expansion starting Q2 next year. Musk believes demand will be "nutty" and doesn't foresee sacrificing margins, highlighting the "killer app" of texting while driving with FSD. He expressed 100% confidence in solving unsupervised FSD at a safety level much greater than human, mentioning the 14.1 release, reasoning capabilities, and the "Tesla reality simulator." He also discussed the potential for AI5 to be 10x better than AI4, and the idea of using bored cars as a distributed inference fleet.

Emmanuel Rosner asked for key performance indicators (KPIs) for the robotaxi business, such as the number of vehicles in operation and miles driven, and inquired about the key milestones required to achieve the long-term cost-per-mile targets.

Answer

Ashok Elluswamy, VP of AI Software, shared that the service has operated for over 7,000 miles in Austin with a handful of vehicles and no notable safety incidents. CEO Elon Musk added that the purpose-built CyberCab could achieve a sub-30-cent per mile cost and predicted the robotaxi business would have a material financial impact by the end of the following year.

Emmanuel Rosner inquired about the remaining software and system requirements needed to achieve unsupervised Full Self-Driving (FSD) ahead of the planned June launch in Austin, and asked about the potential use of remote operators.

Answer

Executive Ashok Elluswamy explained the team is focused on resolving a list of known intervention causes in Austin, improving system redundancies, and adding functionalities like audio input for emergency vehicles. He clarified that remote support would be for availability, not safety. CEO Elon Musk added that the process involves solving a long tail of rare edge cases and the launch is imminent.

Emmanuel Rosner inquired about the mixed benefits assumed in GM's 2026 outlook, specifically from lower EV losses, optimizing ICE mix due to emissions deregulation, or rebuilding inventories. He also asked about the drivers and confidence behind the $1 billion warranty cost benefit, especially considering the V8 engine investigation.

Answer

Paul Jacobson, EVP and CFO, stated that EV volumes are expected to be down, and ICE volumes are hampered by the truck transition, so a huge volume push isn't banked on. He noted that the recent weather impacted production. Regarding warranty costs, he explained that confidence stems from flattening monthly cash flows, progress with V8 engine fixes, and ongoing efforts to address all accrual causes and dealership charges, expecting savings in 2026 and beyond.

Emmanuel Rosner inquired about the mixed benefits implied in General Motors' 2026 outlook beyond lower EV losses, such as optimizing ICE mix or rebuilding inventories. He also asked about the $1B warranty cost benefit for 2026, its drivers, provisioning, and confidence given the V8 engine investigation.

Answer

Paul Jacobson, EVP and CFO, noted that EV volumes are likely down, and ICE volumes are hampered by the truck transition, so a huge volume push isn't banked on. Regarding warranty costs, he explained that the benefit stems from flattening monthly cash flows, progress on V8 engine fixes, and an 'all-hands-on-deck' effort across all accrual causes, including inflationary pressures.

Emmanuel Rosner asked for a deeper understanding of the impact of GM's recent Q3 and Q4 actions, such as EV asset write-downs and capacity shifts, on improving structural EV costs. He also inquired about the opportunity or appetite to reduce overall company CapEx, or if funds would be reallocated elsewhere.

Answer

Paul Jacobson, GM's Executive Vice President and CFO, explained that right-sizing the EV capacity footprint helps avoid absorbing fixed costs from production step-downs, representing a quick adjustment to the changing regulatory environment. He noted that Q3 charges contribute to this, with more expected in Q4, which will provide a clearer view for 2026. Regarding CapEx, Mr. Jacobson stated that inflation-adjusted capital expenditures are in line with prior decades, with strong affordability. He indicated that future CapEx would focus on lowering EV costs, structural improvements, and incremental ICE investments, maintaining the $10 billion-$12 billion range.

Emmanuel Rosner asked for a better understanding of the impact of recent Q3/Q4 actions (EV asset write-downs, capacity shifts) on improving EV structural costs. He also inquired if there's an opportunity to reduce overall company CapEx, or if it needs to be reallocated elsewhere.

Answer

Paul Jacobson, GM's Executive Vice President and CFO, explained that right-sizing EV capacity addresses the havoc caused by sequential production step-downs, supply chain disruptions, and supplier ramp-up costs, quickly adjusting to slower EV demand growth. He noted Q3 charges help, with more expected in Q4, which will provide a clearer view for 2026. He stated that CapEx, while higher in absolute terms, is in line with inflation-adjusted numbers from a decade ago, with strong affordability. Future CapEx will focus on lowering EV costs and structural improvements, plus incremental ICE investments, staying within the $10-$12 billion range.

Emmanuel Rosner from Wolfe Research asked for details on the planned pace of the share buyback program for the second half of the year and questioned if there was an appetite to reduce overall capital intensity given the changing EV landscape.

Answer

EVP & CFO Paul Jacobson confirmed the resumption of open market repurchases in July but declined to specify the amount, noting the company has $4.3 billion remaining on its authorization and expects strong second-half cash flow. He stated that capital spending guidance remains firm, with the composition of investment shifting from EV portfolio expansion towards improving cost and performance through new battery tech and vehicle architecture.

Emmanuel Rosner of Wolfe Research asked for more detail on the 30% 'self-help' tariff offsets for 2025. He also inquired if the $4-5 billion tariff impact would be larger on a full-year basis and if GM is considering larger future offsets, such as reducing EV fixed costs in response to a potentially relaxed regulatory environment.

Answer

Chair and CEO Mary Barra explained that self-help includes actions like increasing U.S. truck production, building more U.S. battery modules, working with suppliers on U.S. content, and enforcing internal discretionary spending discipline. Regarding future EV spend, Barra noted that while they are monitoring regulatory changes, they must remain compliant with current rules. She stated that capital will be deployed smartly within the existing $10-11 billion guidance to enhance U.S. production and EV efficiency. EVP and CFO Paul Jacobson confirmed the $4-5 billion is the 2025 impact before the 30% offset and declined to provide 2026 color.

Emmanuel Rosner questioned the Q4 2024 North American margin exit rate, which seemed lower than expected, and asked for a bridge to the 8-10% target in 2025. He also asked about the next steps for capital allocation, given the strong free cash flow and the likely completion of the current share buyback authorization.

Answer

EVP and CFO Paul Jacobson explained the Q4 margin was impacted by over 130 basis points from one-time items, including a legal settlement and warranty reserves, as well as normal seasonality. Chair and CEO Mary Barra confirmed GM expects another year of strong free cash flow and will continue to follow its capital allocation framework, working with the Board on future shareholder returns.

Emmanuel Rosner of Wolfe Research asked if the impressive 2024 free cash flow outlook is sustainable for 2025, given potential one-time benefits. He also inquired about the pace of share buybacks required to reach the target of 1 billion shares by early 2025.

Answer

EVP and CFO Paul Jacobson acknowledged that some 2024 cash flow tailwinds, like warranty accruals and inventory builds, may not repeat, but affirmed the company's commitment to strong free cash flow performance. He confirmed the math for the share count reduction but did not comment on the specific velocity of future buybacks.

Emmanuel Rosner inquired about the U.S. demand environment following the removal of the consumer tax credit, noting a drop in industry EV sales from September to October, and asked about Rivian's comfort level regarding future demand. He also asked for expectations on regulatory credit demand for 2026.

Answer

RJ Scaringe, CEO, explained that a pull-forward of demand into September was expected due to the end of the IRA program, leading to softer October demand across the industry. He expressed confidence in R2's market opportunity, citing R1's success as the best-selling premium EV SUV in the U.S. and California. Claire McDonough, CFO, stated that Rivian does not expect meaningful revenues from regulatory credits and has removed them from forecasts due to policy uncertainty, adopting a conservative view.

Emmanuel Rosner asked about the U.S. demand environment following the removal of consumer tax credits, noting a drop in industry EV sales from September to October, and sought management's comfort level regarding future demand. He also inquired about expectations for regulatory credit sales in 2025 and 2026.

Answer

CEO RJ Scaringe acknowledged a pull-forward of demand into September due to the IRA program's end, leading to a softer October across the industry. He emphasized Rivian's long-term focus on building best-in-class vehicles like the R2, which targets the largest market opportunity at a $45,000 price point. CFO Claire McDonough stated that Rivian does not expect meaningful revenues from regulatory credits and has removed them from forecasts due to policy uncertainty.

Emmanuel Rosner inquired about the sharp growth in non-JV Software and Services revenue, its future trajectory and profitability, and its role in the 2027 EBITDA target. He also asked for the gross breakeven volume for the R2 vehicle.

Answer

CFO Claire McDonough attributed the services growth to remarketing, service infrastructure, and charging, confirming it's a meaningful contributor to the 2027 EBITDA goal. Regarding R2, McDonough and CEO RJ Scaringe explained it has a much faster path to positive gross profit due to its lower material cost and the shared fixed-cost absorption at the Normal plant. They expect R2 can reach that level as it exits 2026.

Emmanuel Rosner inquired about the drivers behind the Q4 gross profit improvement, the sustainability of this progress into 2025, and the outlook for regulatory credits next year.

Answer

CFO Claire McDonough explained that Q4 gross profit is driven by increased revenue per unit from approximately $300 million in 2024 regulatory credits and higher R1 average selling prices (ASPs) due to a better sales mix. For 2025, she stated the goal is to achieve full-year positive gross profit, supported by the launch of the Quad-Motor variant, continued material cost reductions, and lower depreciation. She anticipates 2025 regulatory credits will be in line with 2024 levels.

Emmanuel Rosner asked for clarification on the strong implied Q4 2025 outlook, particularly the 200 basis point margin improvement on lower revenue, and the sequential drivers including Ford schedules and potential impacts from the Novellus fire. He also sought more color on the improving mix and specific Ford schedule assumptions.

Answer

Senior Vice President and CFO Timothy Kraus attributed the Q4 strength to continued cost-saving initiatives, improving mix, and the tail end of restructuring actions that were headwinds in Q3. Chairman and CEO Bruce McDonald added that a resolution to magnet supply constraints would allow for catch-up on high-margin frustrated orders. Mr. Kraus noted that Dana's Ford schedule assumptions are in line with public statements, and mix improvement stems from product rationalization and better contribution margins from certain products.

Emmanuel Rosner from Wolfe Research asked for clarification on the strong implied fourth-quarter outlook, particularly the sequential drivers for a 200 basis point margin improvement despite lower revenue. He also sought details on specific exogenous events like Ford schedules and the potential impact from the Novelis fire.

Answer

Timothy Kraus (Senior Vice President and CFO, Dana Incorporated) attributed the improvement to continued cost-saving initiatives, improving mix, and the tail end of restructuring actions that were headwinds in Q3. He noted that assumptions for customer impacts from events like the Novelis fire are in line with public statements. Bruce McDonald (Chairman and CEO, Dana Incorporated) added that overcoming magnet supply constraints in Q3 would lead to substantial catch-up on high-margin frustrated orders in Q4.

Emmanuel Rosner of Wolfe Research asked for the assumptions behind the new business margin contribution for 2026, the drivers of the three-year sales backlog, and whether the year-end tariff headwind was a timing issue.

Answer

Senior VP & CFO Timothy Kraus confirmed the previously disclosed $300 million backlog for next year is still a reasonable figure, driven by ICE and EV programs, including the next-generation Wrangler. He affirmed that the tariff headwind is largely a timing issue due to recovery lags, and the majority of the impact is expected to be recovered next year.

Emmanuel Rosner of Wolfe Research asked for insight into the expected cadence of revenue and earnings for the remainder of the year, particularly the assumptions driving the anticipated recovery in the second half.

Answer

SVP and CFO Timothy Kraus confirmed the outlook for a weaker first half, with Q1 being the lowest point, followed by a back-half recovery, consistent with prior guidance. Chairman and CEO R. McDonald added that the year-over-year revenue headwind is expected to decrease sequentially as the company laps easier comparisons from the prior year, which had strong post-strike recovery volumes in early 2024.

Emmanuel Rosner asked for more detail on the mix optimization opportunity for next year due to lower compliance hurdles, specifically regarding off-road offerings like Raptor and Tremor, and the size of this opportunity. He also questioned if the current guidance, adjusted for Novelis and tariffs, implies an unchanged outlook despite better industry SAR and pricing, asking about any less favorable factors.

Answer

Andrew Frick, President of Ford Blue and Model e, confirmed that Ford had to restrain the mix of compliance-negative off-road vehicles like Tremor and Raptor, and the opportunity now is to match production to customer demand without overproducing. Jim Farley, President and CEO, added that hybrid mix, especially for the F-150, is a big opportunity. Sherry House, CFO, emphasized that the likely EPA changes remove a compliance headwind for next year. House reiterated that the underlying business was performing at the high end of original guidance ($8 billion+), and the updated guidance reflects the Novelis impact, offset by tariff improvements, material cost improvements, strong credit business, and solid pricing/volume.

Emmanuel Rosner asked for more detail on the mix optimization opportunity for next year due to lower compliance hurdles, specifically if off-road offerings like Raptor were previously supply-constrained and the potential size of this opportunity. He also questioned if the essentially unchanged guidance (adjusted for Novelis and tariffs) despite better industry SAR and pricing implied less favorable underlying factors.

Answer

President of Ford Blue and Model e Andrew Frick confirmed that Ford had to restrain the mix of compliance-negative off-road vehicles like Tremor and Raptor due to regulatory policy, and next year's optimization will match customer demand without overproducing. President and CEO Jim Farley added that hybrid mix presents a significant opportunity to adjust hybrid pricing and maximize company results, especially for the F-150 hybrid. CFO Sherry House emphasized that the likely EPA changes remove a compliance headwind that would have impacted next year, which is a crucial benefit. Regarding guidance, Sherry House reiterated that the underlying business was performing at the higher end of original guidance ($7 billion-$8.5 billion) and would have guided $8 billion+ without Novelis, indicating strong performance from credit, material costs, pricing, and volume.

Emmanuel Rosner asked for details on the drivers of Ford's updated guidance, questioning how the company is absorbing a $2 billion tariff headwind and what specific underlying performance improvements are offsetting it. He also inquired about Ford's appetite to reduce EV spending given the more relaxed U.S. regulatory environment.

Answer

CFO Sherry House attributed the strong underlying performance to cost improvements, with a $1 billion net target. CEO James Farley specified that accelerated savings in manufacturing efficiency and negotiated parts costs were key drivers. Farley also confirmed a significant shift in EV capital allocation towards Ford Pro, delaying some EV launches and focusing more on hybrids and ICE vehicles, which he sees as a multi-billion dollar opportunity.

Emmanuel Rosner asked for a detailed breakdown of the $2.5 billion gross tariff headwind, the components of the $1 billion net offset, and why a strong Q1 didn't raise the full-year ex-tariff guidance.

Answer

CFO Sherry House detailed that the $2.5B gross impact is roughly half parts and half imported vehicles, with the $1B offset coming from market optimization and cost actions. CEO James Farley noted that while Q1 was a solid start, the company is not updating its full-year guidance range at this time, focusing instead on continued execution.

Emmanuel Rosner requested more detail on the drivers of the $1 billion net cost savings target for 2025 and asked about the risk of a significant pricing downturn in the pickup truck market given high industry-wide inventories.

Answer

CFO Sherry House explained the confidence in cost savings comes from a granular focus on material costs and warranty, with 90% of design cost ideas already in the pipeline, causing the savings to be back-half loaded. CEO Jim Farley addressed pricing by emphasizing that inventory discipline is critical, and Ford plans to reduce its dealer supply to below 60 days to protect brand pricing, though he acknowledged the risk from competitor actions.

Emmanuel Rosner inquired about the timing of the $2 billion in cost reductions for the year and pressed for the scale of the cost-saving opportunity heading into 2025.

Answer

CFO John Lawler explained that most of the $2 billion in efficiencies were realized in the first three quarters. While acknowledging a tremendous opportunity remains, Lawler declined to provide a specific 2025 target until Q4 earnings. CEO Jim Farley added that future efforts will focus on material costs, software warranty, manufacturing, and supplier negotiations.

Emmanuel Rosner of Wolfe Research LLC asked for clarity on the full-year outlook for Segment Operating Income (SOI) and free cash flow, given the near-term challenges. He also questioned the drivers behind management's long-term confidence that performance will recover once market turbulence subsides, especially as import issues seem to shift between regions.

Answer

EVP & CFO Christina Zamarro detailed the known factors for Q4 SOI but stated that volume remains the key uncertainty, preventing a precise full-year forecast. She updated the free cash flow outlook, noting it would be lower due to earnings but would include a new $265 million add-back from supply agreements. Both Zamarro and CEO Mark Stewart reiterated their confidence, citing Goodyear's strong U.S. manufacturing footprint, the potential for punitive tariffs on imports into Europe, and the strategic push into premium products, which positions them to capitalize once the market stabilizes.

Emmanuel Rosner of Wolfe Research requested a sequential bridge from Q2 to the targeted double-digit SOI margin in Q4, an updated free cash flow bridge, and more detail on the strategy to leverage Goodyear's tariff-related competitive advantage.

Answer

CFO Christina Zamarro provided the bridge, highlighting that significant earnings growth in H2 will come from higher volume and a substantial improvement in price/mix relative to raw materials. She also updated the free cash flow walk, noting a reduction in the working capital inflow assumption due to tariffs. CEO Mark Stewart added that the company is taking a multi-angled approach to its tariff advantage, optimizing pricing and product positioning while monitoring inventory levels.

Emmanuel Rosner asked for details on the drivers of the expected improvement in volume and price/mix in the second half of 2025. He also requested a free cash flow walk for the year, including restructuring costs, and asked if the total restructuring spend was now lower than initially planned.

Answer

CFO Christina Zamarro provided a detailed 2025 Segment Operating Income (SOI) bridge, projecting a full-year result comparable to 2024's $1.3B level, implying ~10% underlying growth. She confirmed that free cash flow is expected to be positive even after accounting for $400M in restructuring costs, driven by ~$2.1B in EBITDA and lower CapEx. She also confirmed the total restructuring spend is now projected to be around $800M, below the initial $1B budget, due to efficient execution.

Emmanuel Rosner of Wolfe Research asked about the drivers of the Q3 free cash flow use, the outlook for 2025 free cash flow, the remaining restructuring spend, and when unit volume would stop being a major headwind that offsets cost savings.

Answer

Executive Vice President and CFO Christina Zamarro explained that Q3 cash use was driven by higher rationalization payments and working capital timing, but she expects a strong Q4 and positive free cash flow in 2025, aided by working capital recovery and lower CapEx. CEO and President Mark Stewart addressed the volume issue by detailing a phased rollout of new, higher-coverage product lines, estimating it's a roughly 1.5-year process to fully address market gaps and stabilize volume performance.

Emmanuel Rosner of Wolfe Research sought quantification of the H1 to H2 margin improvement drivers beyond tariffs, such as commercial recoveries and lower engineering spend. He also asked for clarification on the math behind the operational excellence opportunity mentioned for 2025 and 2026.

Answer

VP of Investor Relations Louis Tonelli stated that while the company would not quantify each driver, the items mentioned are all impactful and the implied H2 margin range is consistent with what was achieved in 2023 and 2024. CEO Seetarama Swamy Kotagiri elaborated that the operational excellence gains (40 bps in 2025) come from a mix of initiatives including material savings, purchasing, and automation, and confirmed a similar magnitude of improvement is on the roadmap for 2026.

Emmanuel Rosner from Wolfe Research LLC asked about BorgWarner's long-term target for growth over market, the expected duration of headwinds from the battery business, and whether the high number of hybrid-related new business wins reflects a market shift or a specific company strength.

Answer

CEO Joseph Fadool acknowledged the 100 basis point headwind from the battery business but expressed long-term bullishness on its value. He noted that while the company doesn't provide a long-term target, the goal is to outgrow the market across the portfolio. He confirmed a significant increase in RFQ activity for advanced hybrids, which plays to BorgWarner's strength across both combustion and e-product portfolios.

Emmanuel Rosner requested a more detailed breakdown of the $200 million-plus tariff costs and asked about the progress of customer recovery negotiations. He also sought an update on the eProduct growth assumptions embedded in the revised guidance.

Answer

Executive Craig Aaron clarified that the tariff exposure is about 1.6% of sales, with roughly half related to IEEPA/232 tariffs and the other half to China retaliatory tariffs. CEO Joseph Fadool added that negotiations are well underway, with line of sight on recovering about 50% of the non-compliant USMCA-related costs from Mexico already. While not providing detailed eProduct guidance, Fadool confirmed over 20 launches are ongoing, and Craig Aaron noted Q1 eProduct sales were approximately $640 million, up from $500 million year-over-year.

Emmanuel Rosner asked for context on the lower CapEx budget, the potential use of free cash flow for buybacks, and the growth outlook for EV products in China amid a competitive market.

Answer

CFO Craig Aaron explained that CapEx is guided to be around 5% of sales, down from previous levels. He stated that while no share repurchases are included in the 2025 guidance, it remains a potential lever for capital allocation. He also reiterated the company's strong position in China, where 75% of its business is with local OEMs.

Emmanuel Rosner requested quantification of the structural cost reductions, their annualization into next year, and the remaining savings to be achieved. He also asked about the competitive advantages and operating leverage of the commercial vehicle battery business, questioning the expected drop from a high Q3 incremental margin to a mid-teens level going forward.

Answer

Executive Craig Aaron detailed the PDS restructuring savings: $20-30M this year, annualizing to $40-60M, with a $100M target by 2026. He noted that while Q3 battery business incrementals were high, 'one quarter doesn't make a trend,' and the sustainable target remains in the mid-teens. Executive Frederic Lissalde outlined competitive advantages including a CV focus, cell chemistry agnosticism, and unique software and testing capabilities.

Emmanuel Rosner from Wolfe Research sought clarification on whether the $25 million in first-half non-recurring items were the primary driver of the full-year EBITDA guidance increase. He also asked about the future sales cadence for the Battery Management Systems (BMS) business, given tough comparisons and potential EV demand headwinds in the U.S.

Answer

SVP and CFO Jerome Rouquet clarified that about $15-20 million of the $25 million in non-recurring items were incremental to the original guidance. President and CEO Sachin Lawande explained that current BMS demand now reflects actual vehicle production, unlike last year's inventory build-up. He expressed cautious optimism, noting that while short-term uncertainty exists due to the EV tax credit phase-out, the introduction of more affordable EV models should support stable, long-term demand. Jerome Rouquet added that Q3 and Q4 BMS sales are assumed to be similar to Q2 levels.

Emmanuel Rosner questioned Visteon's strategy and timeline for improving its performance in China and asked for details on its cash preservation initiatives.

Answer

CEO Sachin Lawande outlined a strategy to partner with select domestic OEMs with global ambitions, like Chery, and strong global OEMs like Toyota. He projects 2025 as a transition year, with a goal to recover lost sales by 2027-2028. CFO Jerome Rouquet explained the cash strategy involves ongoing cost controls and scenario planning, ranging from discretionary spending cuts to more structural changes, without harming strategic investments.