Jairam Nathan

Jairam Nathan asked for an expansion on Deere's expectations for biofuels in the medium term and sought comments on competitive incentives observed in the construction market.

Answer

Director of Investor Relations Josh Beal discussed the positive impact of increased biofuel consumption globally, citing Brazil as an example. He mentioned near-term opportunities around the RVO for 2026-2027 and longer-term potential from E15 legislation to increase corn consumption. Regarding construction, he acknowledged a competitive market over the past 12-18 months, noting that while competitors have signaled price increases, a lag exists due to field inventory, creating some pressure. However, Deere feels confident in its own price increases and realization.

Jairam Nathan inquired about the company's medium-term expectations for biofuels and addressed competitive incentives observed in the construction market.

Answer

Josh Beal, Director of Investor Relations, highlighted the positive impact of increased biofuel consumption, citing Brazil's corn-to-ethanol production. He mentioned near-term opportunities around the RVO and longer-term potential from E15 legislation. Regarding construction, he acknowledged a competitive market over the past 12-18 months, noting that while competitors have signaled price increases, a lag exists due to field inventory. Deere remains confident in its price increases and ability to drive realization.

Jairam Nathan asked for the key puts and takes for operating margins in fiscal 2026, given that production will align with retail sales.

Answer

Josh Beal, Director of Investor Relations, highlighted tailwinds from lapping the 2025 underproduction in Small Ag and C&F. He also pointed to model year 2026 list price increases of 2-4% as a positive factor to help offset tariffs. CFO Joshua Jepsen added that the company will maintain its focus on driving product and production cost reductions.

Jairam Nathan of Daiwa asked about Cognex's opportunities in physical AI, specifically in sensing and vision for emerging areas like AMRs and humanoid robots. He also inquired if the divestment of the Moritex trading business, typically a low gross margin segment, could lead to a bump in gross margins in the second half of the year.

Answer

CEO Matt Moschner highlighted Cognex's long history in physical AI, providing vision for robots for 44 years, and emphasized prioritizing growth in existing verticals where they aim to be market leaders. He mentioned exploring new markets like automation in data centers, defense/aerospace, and industrial robotics (excluding humanoids) where Cognex has a strong right to win. CFO Dennis Fehr confirmed that the divestment of the Moritex trading business, which had lower gross margins, would indeed help improve the overall gross margin in the second half of 2026.

Jairam Nathan asked for an update on the progress of the Moritex acquisition objectives and inquired about the impact of a potential trend in logistics from 'scanning to sensing'.

Answer

CEO Robert Willett expressed that they are very pleased with the Moritex integration, highlighting progress in selling its technology to existing Cognex customers, globalizing its business, and integrating its optics into core products. Regarding 'scanning to sensing,' he noted that while barcodes remain key, there is a growing opportunity to use machine vision for package recognition, a journey Cognex is exploring with its customers.

Jairam Nathan from Daiwa Capital Markets America asked if the changing regional mix, particularly towards lower content regions, presents new opportunities for Autoliv to pursue structural efficiencies or footprint rationalizations. He also questioned if the 85 million light vehicle production (LVP) target, previously associated with the 12% medium-term margin goal, needs to be updated given the evolving market mix.

Answer

President and CEO Mikael Bratt stated that Autoliv remains highly focused on driving efficiency and productivity, and the current temporary mix composition does not significantly alter these ongoing efforts. Regarding the 12% margin target, Mikael Bratt reaffirmed the company's commitment, acknowledging that the 85 million LVP figure has been influenced by regional mix shifts and market changes, but expressed confidence in achieving the margin goal through internal, controllable activities.

Jairam Nathan asked if the changing regional mix offers more opportunities for structural efficiencies or footprint rationalizations. He also questioned whether the medium-term margin goal of 12%, initially based on over 85 million LVP, would need to be updated given the current mix of lower content regions.

Answer

President and CEO Mikael Bratt and Managing Director Agnieszka Vilela (acting as a company spokesperson) stated that the company remains focused on driving efficiency and productivity, and the temporary mix changes do not significantly impact these needs. Mikael Bratt and Agnieszka Vilela affirmed their firm commitment to the 12% margin target, acknowledging the LVP mix effect and market changes (e.g., disappeared regions, captive solutions) but expressing confidence in achieving the goal through controllable activities.

Jairam Nathan asked about the timing of Autoliv's recent China announcements (JV, CATARC partnership, Adient zero-gravity product) and their relation to new business wins, as well as whether the lower CapEx as a percentage of sales can be maintained in the future.

Answer

Mikael Bratt, President and CEO, clarified that the China announcements are not directly connected but all relate to safety products. He stated that the lower CapEx is a result of completing a heavy investment cycle in global facilities and expects a more normalized phase, with no anticipated jump in CapEx in the near term.

Jairam Nathan asked about the company's flexibility to increase cost reductions if market conditions worsen. He also inquired about the potential margin and capacity implications of Japanese OEMs shifting production to the U.S.

Answer

CEO Mikael Bratt affirmed that Autoliv has additional levers to pull for cost reduction if a dramatic market shift occurs, beyond the current strategic initiatives. Regarding production shifts by Japanese OEMs, he noted that Autoliv has well-defined procedures for platform relocations, which would involve a program reset and new calculations. He sees Autoliv's global footprint as an advantage in supporting these customer moves.

Jairam Nathan asked about Autoliv's flexibility to increase its cost reduction efforts if market conditions worsen and inquired about the potential margin and capacity impacts from Japanese OEMs shifting production back to the U.S.

Answer

CEO Mikael Bratt affirmed that the company has high flexibility and 'more levers to pull' for cost reduction if a dramatic market shift occurs. Regarding production shifts by Japanese OEMs, he described it as 'not very dramatic' for Autoliv, citing the company's well-defined processes for platform moves and its supportive global footprint. He added that any meaningful volume impact would take time to materialize.

Jairam Nathan asked about the long-term trend for safety content per vehicle among Chinese local OEMs and questioned if the higher engineering income in Q3 was a pull-forward from Q4.

Answer

CEO Mikael Bratt confirmed a clear upward trend in safety content in China, noting that premium Chinese OEM models now have content levels equal to global OEMs. CFO Fredrik Westin clarified that the Q3 engineering income was not extraordinary and that normal seasonality is still expected for Q4.

Jairam Nathan of Daiwa asked how the company would manage its capital return plan, particularly share repurchases, if an economic downturn becomes more severe or prolonged.

Answer

CFO Jennifer Hamann highlighted the strong start to the year's buyback program, having completed nearly half of the annual $4.0B to $4.5B target in Q1. She reiterated confidence in the full-year range but emphasized that share repurchases are the 'flexible lever' in their capital plan and can be scaled back if the economic environment changes dramatically.

Jairam Nathan requested an update on Caterpillar's market position and product freshness in China, especially in the context of potential government stimulus.

Answer

Chairman and CEO Jim Umpleby reiterated that China represents less than 5% of the company's total sales and that the market, primarily for excavators above 10-tons, remains very weak. While Caterpillar maintains a significant operational footprint in the country, he stated it is too early to see any impact from recent stimulus measures.