Ryan Brinkman

Ryan Brinkman followed up on the more sophisticated approach to rental pricing, asking if it involves new or refined software systems, and the key drivers of progress and catalysts for further improvement.

Answer

CMO Sandeep Dube explained that the pricing sophistication is a combination of improved systems, which is a longer-term journey, and a continuous re-evaluation of pricing structures and approaches. He noted that new talent in the revenue management team has applied different theories, leading to immediate positive RPD results in Q4 2025. Dube emphasized that this is still in the early stages, and continuous improvement is expected.

Ryan Brinkman asked about Hertz Car Sales strategy, specifically the expected percentage of vehicles disposed of via retail channels in 2026 versus 2025, and its assumed impact on depreciation and EBITDA targets.

Answer

Gil West (CEO) clarified that Hertz Car Sales is not assumed to materially impact the $1 billion EBITDA target for 2027 or current year. The goal is to shift from roughly one-third of cars sold through retail channels to 80%, leveraging physical and digital footprints, Rent2Buy, and partnerships. Key focus areas include driving qualified leads, improving conversion rates, and increasing net margin per sale through reconditioning cost management and F&I capture.

Ryan Brinkman from JPMorgan Chase & Co. asked about the impact of vehicle recalls on Q2 utilization and the forward outlook, and sought to understand the drivers of the strong depreciation per unit (DPU), specifically the contribution from retail channel sales versus general disposition levels.

Answer

CEO Gil West explained that recalls had minimal impact in Q2 but are expected to be a 2% headwind in Q3. He credited the tech ops team and the younger fleet for mitigating exposure. Regarding DPU, West attributed the strong performance to the 'buy right, hold right, sell right' strategy, including analytical buying, optimizing retention value, and leaning into accretive retail sales channels, which was amplified by a strong used vehicle market.

Ryan Brinkman asked if the impairment charge would impact ABS fleet equity, benefit future adjusted EBITDA through lower depreciation, and what the rationale would be for choosing debt versus equity in a potential capital raise.

Answer

CFO Scott Haralson clarified the impairment is a noncash charge that is neutral to the ABS facility and will not require capital top-ups. He explained that while it reduces future excess depreciation, the path to sub-$300 DPU is a gradual process through 2025. Haralson also stated the current focus for a capital raise would be on debt, not equity.

Ryan Brinkman from JPMorgan Chase & Co. asked for a comparison of the growth, margin, and competitive advantages between supplying industrial turbochargers for stationary power generation and participating in data center cooling. He also inquired about the consistency of new light vehicle turbo awards and their implications for Garrett's future market share.

Answer

Olivier Rabiller (President and CEO) indicated that both power generation and cooling markets are experiencing rapid growth, driven by global energy demand and the need for energy-efficient solutions, with Garrett's cooling offering up to 10% energy savings. He confirmed consistent light vehicle turbo win rates above 60%, leading to increased market share due to technology leadership and industry consolidation.

Ryan Brinkman asked for a comparison of the growth opportunities and competitive advantages between supplying industrial turbochargers for stationary power generation in data centers and participating in the data center cooling market itself. He also questioned the consistency of new light vehicle turbo awards and their implications for Garrett's future market share.

Answer

Olivier Rabiller (President and CEO) explained that both power generation and cooling markets are growing fast, driven by global energy needs and demand for energy-efficient cooling, with Garrett's solution offering up to 10% energy savings. For light vehicle turbos, Mr. Rabiller confirmed consistent win rates (above 60% over the last 5-6 years), indicating increasing share of demand due to technology leadership and industry consolidation.

Ryan Brinkman asked for clarification on the $2 billion full-year 2025 tariff costs, which were higher than previously communicated, inquiring about the specific regulatory change and if the headwind would continue into 2026. He also asked about Ford's performance in Europe, including the strength and profitability of its passenger and commercial vehicle businesses, and the impact of recent EV portfolio changes and the Renault agreement.

Answer

Jim Farley (CEO, Ford Motor Company) and Steve Croley (Chief Policy Officer and General Counsel, Ford Motor Company) explained that a tariff credit became effective later than expected, causing a one-time $1 billion impact in Q4 2025, but it would not continue as a headwind. Sherry House (CFO, Ford Motor Company) noted stronger Q4 performance due to cost improvements. Jim Farley (CEO, Ford Motor Company) discussed the profitability of Ford Pro in Europe, concerns about the passenger car profit pool, leveraging Renault's platform for EV cost reduction, and the influence of EU/UK policies.

Ryan Brinkman inquired about the $2 billion full-year 2025 tariff costs, which were higher than the $1 billion communicated in Q3, due to a late-year change in tariff credits. He asked for clarification on the regulatory change, what contributed to the materially better Q4 performance, and if the tariff credit headwind is one-time. He also asked about Ford's performance in Europe, specifically the strength and profitability of its passenger and commercial vehicle businesses, and how the outlook is impacted by recent EV portfolio changes and the Renault agreement.

Answer

Jim Farley, CEO, emphasized Ford's American footprint. Steve Croley, Chief Policy Officer and General Counsel, explained that a credit against tariff liabilities became effective later than expected, causing a one-time $1 billion hiccup in December. Sherry House, CFO, added that Q4 was stronger due to $1.5 billion in cost improvements and some pricing. Jim Farley, CEO, stated that Ford Pro's European business remains profitable, benefiting from VW scale. He acknowledged concerns about passenger car profitability, noting plans to use Renault's platform for cost reduction and focusing on specific segments, with overall profitability dependent on EU/UK policies.

Ryan Brinkman questioned the expected impact of the Novelis disruption on Ford's retail sales and customer experience, particularly given the F-Series' 88-day supply at the end of September.

Answer

President of Ford Blue and Model e Andrew Frick stated that Ford believes it has enough F-Series stock to insulate retail sales from the Novelis impact in the fourth quarter, given inventory levels at the start of the quarter.

Ryan Brinkman asked about the expected impact of Novelis on retail sales and the customer experience, specifically how Ford plans to manage the F-series day supply to insulate retail sales.

Answer

Andrew Frick, President of Ford Blue and Model e, stated that Ford believes it has enough F-series stock to insulate retail sales from the Novelis impact in the fourth quarter, given the inventory levels at the start of the quarter.

Ryan Brinkman asked for a deeper analysis of how tariffs could impact Ford Credit's business and for an update on the European business, including Model e traction and restructuring progress.

Answer

CEO of Ford Credit, Cathy O'Callaghan, noted that while higher new vehicle prices could support auction values, a slowing economy could be an offset, resulting in a balanced outlook. President of Ford Blue and Model e, Andrew Frick, reported that new EVs in Europe are off to a good start and commercial vehicle share is up, with the overall business running at a better rate despite headwinds.

Ryan Brinkman inquired about the breakdown of the $300 million Goodyear Forward savings, internal ambitions for further cost cutting, and the implications of the European tire tariff pushout, including potential magnitudes and retroactive nature.

Answer

EVP and CFO Christina Zamarro confirmed the run-rate vs. new savings for Goodyear Forward and stated the intention to build on savings incrementally, with a multi-year view to be shared later. CEO Mark Stewart detailed the EU anti-dumping investigation (expected July 2026, 41-104% duties) and anti-subsidy investigation (expected end of 2026), noting the potential for retroactive duties.

Ryan Brinkman questioned the incremental nature of the $300 million Goodyear Forward savings for 2026 and the company's long-term cost-cutting ambitions. He also asked about the implications of the delayed European tire tariffs, including potential pre-buy activity and the magnitude of anticipated duties.

Answer

CFO Christina Zamarro confirmed that roughly $250 million of the $300 million Goodyear Forward savings for 2026 is run-rate flow-through, with the remainder being new actions. She stated that while no major restructurings are planned, there's still potential for efficiencies in SAG and manufacturing, with a multi-year view to be shared later. CEO Mark Stewart explained that EU anti-dumping tariffs (expected July 2026) could range from 41% to 104%, and anti-subsidy investigations (expected end of 2026) could lead to retroactive duties, both aiming to boost local competitiveness.

Ryan Brinkman of JPMorgan Chase & Co. asked about the surprising surge in low-cost tire imports into the U.S. and Europe despite new tariffs, questioning the effective dates and potential for pre-buys. He also inquired about the relative contribution of price versus mix to financial results and the future outlook for mix, considering consumer behavior and the impact of tariffs on lower-tier tires.

Answer

EVP & CFO Christina Zamarro explained that instead of imports being redirected, a surge occurred in both the U.S. and Europe simultaneously, driven by speculation around tariff timing. She clarified that the tariff narrative is now settling, with expectations for U.S. imports to decline in Q3. Regarding price/mix, Zamarro confirmed that announced price increases are effective but were offset by a significant downdraft in commercial truck mix and a demand shift to lower-priced products ahead of the increases. CEO Mark Stewart added that the company is driving a richer mix with over 500 new SKUs focused on 18-inch and larger tires.

Ryan Brinkman of JPMorgan Chase & Co. asked about the timeline for the industry to work through pre-buy inventory, the potential for pricing gains to exceed tariff costs, and the status of the Chemicals business asset sale, including how market conditions might affect the process.

Answer

CEO Mark Stewart and CFO Christina Zamarro addressed the questions. Zamarro stated that the pre-buy inventory could take through Q3 to clear and that the company will balance price/mix and volume opportunities, particularly for its Cooper brand. Regarding the Chemicals business, Zamarro noted the process is ongoing with multiple interested parties and that the current tariff environment makes the U.S.-based asset inherently more valuable, though the business remains non-core.

Ryan Brinkman from JPMorgan Chase & Co. questioned the implications of channel inventory dynamics on the 2025 pricing backdrop, the company's approach to its remaining asset sales, and the strategy behind using retail stores for fleet customers at night.

Answer

CEO and President Mark Stewart addressed pricing by highlighting the focus on adding premium SKUs and profitably managing Tier 2 brands. On retail, he emphasized the growth in fleet services and improved store KPIs as a key strategic initiative. Executive Vice President and CFO Christina Zamarro stated the asset sales process is on track with a focus on maximizing shareholder value, and noted the retail strategy delivered a $20 million year-over-year sales lift, making it more attractive to retain and grow.

Ryan Brinkman inquired about the reasons for softer sales in China due to high tariff rates, asking whether customers are foregoing electrochromic mirrors or turning to domestic alternatives, and the potential for revenue rebound if tariffs normalize. He also asked about the completeness and timing of customer compensation for higher DRAM costs and requested an update on dimmable sun visors, including their launch timing relative to large area dimmable glass.

Answer

Steve Downing, President and CEO, explained that if tariff rates drop significantly, Gentex would be competitive again in China. He estimated that two-thirds of the time, domestic Chinese OEMs drop the technology, while one-third use local suppliers. Neil Boehm, COO and CTO, stated that DRAM costs are a negotiation point with customers, similar to tariffs, as the supply base cannot absorb the significant price increases alone. He confirmed that dimmable visors have a first customer launch targeted for late 2027, preceding large area devices, and provided an update on in-house wet coat equipment installation for large area films, expected to be operational by late Q1/early Q2.

Ryan Brinkman questioned the impact of high tariff rates on Gentex's China sales, specifically whether customers are foregoing electrochromic mirrors or opting for domestically produced alternatives, and what revenue rebound Gentex anticipates if tariffs normalize. He also asked about the higher costs associated with the DRAM issue, whether these are being passed on to Gentex, and the expectation for customer compensation completeness and timing. Lastly, Brinkman requested an update on the dimmable sun visors and large area dimmable glass products, including their progress and expected launch timelines.

Answer

Steve Downing, President and CEO, explained that if tariff rates drop significantly, Gentex would be well-positioned to compete again in China. He estimated that two-thirds of the time, domestic Chinese OEMs drop the technology, while one-third use local suppliers for replication. Neil Boehm, COO and CTO, confirmed that DRAM cost increases are significant (multiples of previous prices) and will require negotiations with customers for compensation, similar to past supply shortages. Downing added that OEMs typically help determine if they are willing to pay premiums to guarantee production. Boehm reiterated that dimmable visors have their first customer for late 2027 production. For large area devices, the in-house wet coat capability equipment is being installed and expected to be operational by late Q1/early Q2 to produce films for customer demonstrations.

Ryan Brinkman from JPMorgan Chase & Co. requested an update on the retail consumer fire protection business, specifically early feedback from its placement in Home Depot stores. He also asked for details on the VOXX consolidation opportunity, including specific targets for savings from integrating people, systems, and public company costs, the cadence of these savings, and what has been achieved so far.

Answer

President and CEO Steve Downing reported positive consumer feedback on the fire protection product regarding ease of installation, app integration, and use. He noted that while DIY sales volume wasn't expected to be a 'home run,' future growth will focus on direct-to-builders and additional channels, leveraging VOXX's direct-to-consumer marketing experience. Mr. Downing reiterated the overall target of $40 million in annual free cash flow from VOXX within 18 months post-acquisition. VP of Finance and CFO Kevin Nash specified that over $10 million in annualized savings have been achieved to date from audit costs, insurance, and executive team overlap.

Ryan Brinkman requested an update on the retail consumer fire protection business, specifically early feedback from its launch in Home Depot stores. He also asked for a reminder of the synergy targets for the VOXX International Corporation acquisition, the cadence of achieving them, and what has been accomplished so far, noting that early retirement announcements seemed to be primarily on the Gentex side.

Answer

President and CEO Steve Downing reported positive consumer feedback on the fire protection product's ease of install, app integration, and ease of use. He emphasized that future growth will focus on direct-to-builders and additional channels beyond big box retail, leveraging VOXX International Corporation's marketing expertise. Regarding VOXX synergies, Steve Downing reiterated the goal of achieving approximately $40 million in free cash flow annually from the business within 18 months post-acquisition. Director of Investor Relations Josh O'Berski stated that over $10 million in annualized savings have already been achieved from reduced audit and insurance costs and executive team overlap, with continued progress each quarter.

Ryan Brinkman inquired about the resilience of Gentex's export-focused business model amid retaliatory tariffs, asking if the company has flexibility for final assembly in China as it did in 2017. He also sought clarification on the decision to halt production for the China market and whether some high-end customers might still be willing to pay the higher prices.

Answer

President and CEO Steve Downing stated that unlike in the past, the current extreme tariff levels make a simple localization plan for final assembly insufficient to remain competitive long-term. He clarified that production for China was halted to secure payment confirmation from OEMs at the new tariff-adjusted prices before expending resources. Inventory is available in China and in transit, and production can restart immediately once agreements are reached.

Ryan Brinkman asked if the Q4 FDM weakness was due to specific customer underperformance or a broader market shift to more affordable vehicles. He also inquired about the impact of this trend on the 2025 FDM forecast and the company's capital allocation strategy post-VOXX acquisition.

Answer

CEO Steve Downing confirmed both factors were at play: underperformance in higher-end vehicle segments and a consumer trend toward lower-cost vehicles. He stated the 300,000-unit FDM growth forecast for 2025 is achievable but would be hurt if the affordability trend continues. Regarding capital allocation, he noted the VOXX deal will have a short-term impact, but buybacks are not expected to slow for long.

Ryan Brinkman asked about the operational impact of unexpected customer downtime in Q3 and sought details on the significant 'Other Income' contribution, including the nature of the investment and its strategic rationale.

Answer

President and CEO Steve Downing estimated that customer production volatility, particularly from Stellantis, created a 30-50 basis point margin headwind. VP of Finance and CFO Kevin Nash clarified the 'Other Income' was a mark-to-market gain on its public investment in VOXX, a strategic holding related to biometrics and aftermarket distribution.

Ryan Brinkman asked about General Motors' emissions regulation assumption of $500M-$750M in savings, questioning why it's less than the estimated $1B annual spending and if it accounts for state-level purchases. He also inquired about improvements in international operations outside China and pressure from Chinese automakers in Latin America.

Answer

Paul Jacobson, EVP and CFO, explained that compliance requirements are complex, with CAFE penalties zeroed out (resulting in Q3 2025 charge and 2026 savings), while GHG is still pending. Mary Barra, Chair and CEO, highlighted improvements in South America, specifically Brazil, despite stiff Chinese competition, attributing it to strong GM brands and vehicles.

Ryan Brinkman asked for clarification on the $500 million-$750 million savings from emissions regulation (no longer purchasing compliance credits), questioning why it's less than the estimated $1 billion annual spending and if some purchases are outside the U.S. or at the state level. He also inquired about competitive pressures from Chinese automakers in GM's international operations, particularly in Latin America.

Answer

Paul Jacobson, EVP and CFO, explained that compliance requirements are complex (state, federal, international). CAFE penalties are zeroed out, leading to savings, but GHG resolution is pending, and credit purchases are amortized, causing a P&L vs. cash disconnect. He noted improvements in international operations, especially South America (e.g., Brazil), despite stiff competition from subsidized Chinese OEMs, attributing success to strong GM vehicles and brands.

Ryan Brinkman asked about GM Financial's consumer auto loan performance, particularly for prime customers, and what performance investors could expect in a U.S. downturn. He also inquired if a $14.5 billion EBIT for 2026 is reasonably possible, considering potential tailwinds from lower Korea tariffs and elimination of GHG/CAFE credits.

Answer

Paul Jacobson, GM's Executive Vice President and CFO, praised GM Financial's strong performance. Susan Sheffield, President and CEO of GM Financial, stated that portfolio performance for predominantly prime customers has been resilient, with credit performance as expected and normal seasonal trends. She affirmed a strong balance sheet to weather changes. Paul Jacobson declined to comment on specific 2026 EBIT figures but reiterated that 2026 is expected to be better than 2025, assuming a similar macro backdrop, due to articulated internal levers.

Ryan Brinkman asked about the performance of GM Financial, specifically regarding consumer auto loan performance for prime versus subprime borrowers, and what investors could expect from the portfolio in a potential economic downturn. He also inquired if a 2026 EBIT of $14.5 billion was a reasonable possibility, considering potential tailwinds from lower Korea tariffs and the elimination of GHG/CAFE credits.

Answer

Paul Jacobson, GM's Executive Vice President and CFO, praised GM Financial's strong execution. Susan Sheffield, President and CEO of GM Financial, stated that the portfolio's predominantly prime consumer base has been resilient, with credit performance and charge-offs (1.2% year-over-year flat) consistent with expectations. She affirmed GM Financial's strong balance sheet to weather changes. Regarding the 2026 EBIT outlook, Mr. Jacobson declined to comment on specific model numbers but reiterated expectations for 2026 to be better than 2025, assuming a similar macro backdrop.

Ryan Brinkman from JPMorgan Chase & Co. asked about the expected net tariff costs beyond 2025, factoring in the recently announced U.S. manufacturing investments and potential mitigation beyond the 30% target for this year.

Answer

EVP & CFO Paul Jacobson noted that the future tariff impact depends heavily on trade deals with key partners like Korea, Mexico, and Canada. He explained that the new U.S. capacity will address a large part of the remaining tariffs, but it's too soon to extrapolate a future run rate. He clarified that the current 30% mitigation efforts are operational shifts that will likely persist regardless of tariff levels, providing a long-term benefit.

Ryan Brinkman asked about the profitability of high-volume, low-priced EVs in China and how GM can capitalize on their sales traction. He also questioned if regulatory uncertainty around tariffs might cause GM to alter its capital allocation strategy, such as holding more cash or changing its buyback cadence.

Answer

Chair and CEO Mary Barra noted that the Wuling JV is an incredibly efficient, low-cost producer but did not comment on specific product profitability. EVP and CFO Paul Jacobson stated that GM's liquidity targets already account for various risks and the company does not anticipate needing to build extra cash, planning to continue its capital allocation strategy as usual.

Ryan Brinkman from JPMorgan Chase & Co. asked about GM's pricing assumptions for 2025 and inquired where the company would find offsets to achieve its targets if the pricing environment were to soften.

Answer

EVP and CFO Paul Jacobson deferred specific 2025 guidance but emphasized the management team's demonstrated ability to remain resilient. He stated that if faced with pricing pressure, the company would look for offsets across the business, including fixed cost reductions and revenue-side actions, to drive performance and adapt to changing market conditions.

Ryan Brinkman asked about Dana's confidence in achieving the 10-10.5% EBITDA margin and 4% free cash flow targets for 2026, and if additional levers are needed. He also inquired if Dana's commercial vehicle market exposure differs from competitors, given the softening in North America and Brazil.

Answer

Senior Vice President and CFO Timothy Kraus expressed supreme confidence in delivering 2026 targets, citing Q4 2025 performance as indicative, and sees additional upside opportunities. Chairman and CEO Bruce McDonald reiterated confidence, noting aggressive stock buybacks reflect undervaluation. Mr. Kraus explained that Dana had built more conservatism into its commercial vehicle forecasts earlier, and while the market is low, it's not expected to go much lower due to aging fleets. Mr. McDonald added that Dana has gained market share at key North American customers due to a cost-advantaged model, offsetting some market deterioration.

Ryan Brinkman from JPMorgan Chase & Co. asked about additional opportunities to improve margin and cash flow beyond the 2026 targets of 10-10.5% EBITDA margin and 4% free cash flow, expressing confidence in achieving these targets despite lower consensus. He also inquired if Dana's exposure to commercial vehicle markets (North America and Brazil) differs from competitors, potentially explaining their earlier recognition of headwinds.

Answer

Timothy Kraus (Senior Vice President and CFO, Dana Incorporated) expressed supreme confidence in delivering 2026 targets, with potential upside, and noted that the Q4 run rate would help cement this. Bruce McDonald (Chairman and CEO, Dana Incorporated) reiterated confidence, citing aggressive stock buybacks due to undervaluation. Regarding commercial vehicles, Kraus stated that while Dana has aftermarket exposure, they had built more conservatism into their CV build forecast three months prior, and despite current low run rates, they don't expect significant further deterioration. McDonald added that Dana has gained market share in CV due to refootprinting and a cost-advantaged model, offsetting some market decline.

Ryan Brinkman of JPMorgan Chase & Co. asked about the drivers behind the improved working capital outlook and sought a more detailed explanation of the 'variable cost' component within the stranded costs.

Answer

Senior VP & CFO Timothy Kraus explained that the working capital improvement stems from unwinding inventory in the CV and Off-Highway businesses, which have long supply lines and have seen softening demand. He clarified that 'variable' stranded costs are items like audit fees, insurance, and IT licenses that are centrally procured but will naturally decrease in size and cost once the business shrinks post-divestiture.

Ryan Brinkman of JPMorgan Chase & Co. asked about management's confidence in achieving the accelerated $225 million in cost savings, their sustainability, and the rationale for the timing. He also inquired about the strategic thinking behind absorbing the Power Technologies segment into other business units.

Answer

SVP and CFO Timothy Kraus expressed absolute confidence in delivering the savings, noting that 70% comes from headcount and engineering reductions tied to rightsizing the EV business strategy. Chairman and CEO R. McDonald explained that integrating Power Technologies definitively closes the door on a sale, generates $30-35 million in synergies, and creates opportunities for further operational improvements by leveraging best practices from other segments.

Ryan Brinkman of JPMorgan Chase & Co. asked about Dana's strategy for potential tariffs, the portion of cost savings tied to its revised EV strategy, and any potential dis-synergies resulting from the off-highway business sale.

Answer

CFO Timothy Kraus stated Dana has formally notified customers of its intent to pass through 100% of any tariff costs. He confirmed a 'sizable piece' of the cost savings program is linked to the new EV strategy. CEO R. McDonald acknowledged dis-synergies from stranded corporate costs (around $40M) post-divestiture but stressed the primary driver is the significant value unlock from the sale, with any dis-synergies already factored into future margin targets.

Ryan Brinkman questioned how Avis Budget Group managed to maintain utilization despite a significant increase in recall vehicles, asking what the utilization rate would have been without the elevated recalls. He also sought confirmation on the full-year EBITDA impact of recalls and any line of sight on when elevated recall levels might normalize.

Answer

CFO Daniel Cunha credited the operations team's effective fleet repositioning for maximizing utilization, noting that the 5% of grounded Americas fleet had a 2.8-point utilization impact in Q3. CEO Brian Choi added that investments in field operating systems were contributing. Daniel Cunha confirmed the estimated $90-100 million full-year cost impact from recalls, stating that while parts are slowly arriving, a significant portion of vehicles are still awaiting repairs, with some impact potentially lingering into Q1.

Ryan Brinkman, Lead Automotive Equity Research Analyst at JPMorgan Chase & Co., questioned Avis Budget Group's fleet management and utilization, specifically how the company managed only a 20 basis point year-over-year fall in Americas utilization despite a significant increase in recall vehicles. He also asked what utilization would have been without the elevated recalls and for an update on the full-year EBITDA impact of recalls, seeking insight into when these elevated recall levels might normalize.

Answer

CFO Daniel Cunha credited the operations team's repositioning of fleets for maximizing utilization, noting that the 5% of Americas fleet out of service had a 2.8 percentage point utilization impact in Q3, largely offset by strong execution. CEO Brian Choi added that investments in field operating systems were contributing. Daniel Cunha confirmed the full-year recall impact estimate of $90 million-$100 million in costs, with no estimate for lost profits. He stated that over two-thirds of vehicles are still awaiting parts, anticipating a bleed-down through Q4, but potentially some lingering into Q1.

Ryan Brinkman inquired about the company's evolving capital allocation strategy, particularly the balance between share repurchases and fleet investment, and the potential business impact of the election in Q4.

Answer

CFO Izilda Martins emphasized that the strategy remains flexible, with priorities on fleet investment and funding operational efficiencies, while keeping buybacks as an option. CEO Joseph Ferraro characterized the election's impact as a typical, short-term travel pause, expressing greater optimism for Q4 due to a favorable holiday calendar which he expects to boost demand and rental length.

Ryan Brinkman asked for an update on the strategic footprint alignment plan, specifically the cadence of savings and associated spending through and beyond 2026, and the strategic priorities for Gentherm's M&A pipeline given its capital-light non-automotive expansion.

Answer

Jon Douyard, CFO, explained that the footprint alignment's impact in the current year would be slightly higher than 50 basis points, with legacy costs falling off in 2026, but real savings primarily materializing in late 2026 and 2027. Bill Presley, President and CEO, outlined a threefold M&A strategy: building a more resilient company by gaining access to new markets, aligning with core technology platforms, and broadening the product portfolio while maintaining appropriate margin profiles.

Ryan Brinkman inquired about the strategic footprint alignment plan, asking for the anticipated cadence of margin progression throughout and beyond 2026, and questioned whether M&A would prioritize product expansion over channel diversification, given capital-light expansion into non-automotive markets.

Answer

CFO Jon Douyard stated that the current year's impact would be slightly higher than 50 basis points, with real savings from footprint transitions expected in late 2026, primarily materializing in 2027. President and CEO Bill Presley outlined a threefold M&A strategy: building a more resilient company by gaining access to new markets, aligning with core strategy for product expansion, and broadening the product portfolio while maintaining appropriate margin profiles.

Ryan Brinkman of JPMorgan Chase & Co. asked for details on the expansion into non-automotive markets, including powersports, commercial vehicles, and motion furniture, questioning the specific products supplied. He also inquired about the drivers for the revised full-year EBITDA margin guidance and the specific impact of tariffs.

Answer

President & CEO Bill Presley detailed the adjacency wins, specifying thermal solutions for a Class A truck and a delivery van, and separate valve awards for powersports. He confirmed these initiatives leverage existing technologies and assets. CFO Jonathan Douyard explained that tariffs created a 15 basis point headwind in Q2 due to recovery timing and that improved clarity on this impact contributed to the narrowed EBITDA guidance.

Ryan Brinkman from JPMorgan asked if Gentherm saw any evidence of automakers stockpiling components to mitigate tariff impacts. He also requested more detail on the tariff exemptions, seeking a breakdown between non-tariffed categories and USMCA-compliant parts, and asked if the guidance assumes the continuation of a temporary USMCA exemption.

Answer

President and CEO William Presley confirmed they have not seen any meaningful component stockpiling by customers, with order variances remaining within standard ranges. CFO Jonathan Douyard declined to speculate on future tariff policies but emphasized that Gentherm has mechanisms to pass through costs to customers. He noted that while more tariffs would increase margin dilution, the company feels its updated guidance range already accounts for this potential pressure.

Ryan Brinkman asked about the strategy for balancing footprint and supply chain optimization with risks like potential tariffs from Mexico, and also inquired about the new management's approach to capital allocation, particularly M&A versus share buybacks.

Answer

CEO William Presley stated that the primary tariff risk is from Mexico and that Gentherm is proactively communicating with customers about the potential cost pass-through. CFO Jon Douyard noted the global footprint is strategic and the focus is on accelerating consolidation to drive efficiency. Regarding capital allocation, Mr. Douyard affirmed the priority remains funding organic growth, followed by opportunistic M&A and share repurchases, emphasizing the company's strong organic growth story means M&A is not a necessity.

Ryan Brinkman asked for a comparison between the ComfortScale and ClimateSense opportunities regarding content per vehicle and market adoption, and also inquired about the potential impact of a slowdown in global luxury vehicle demand.

Answer

Phillip Eyler, President and CEO, described ComfortScale as a highly integrated and scalable system combining thermal and pneumatic products, which increases Gentherm's content while reducing complexity and cost for OEMs. Regarding luxury demand, Eyler noted that Gentherm is diversified across luxury, mass-market, and entry-level vehicles. While acknowledging headwinds from production cuts on high-content vehicles like the Ram and Grand Cherokee, he stated the company is not seeing significant shifts in technology take-rates across the industry.

Ryan Brinkman from JPMorgan asked to what extent the new RV pricing trend was driven by like-for-like price reductions versus a consumer mix-shift to more affordable models. He also questioned the durability of their affordable RV assortment as a competitive advantage and the implications for used RV pricing.

Answer

Chairman & CEO Marcus Lemonis explained that rising new RV prices are a net positive for their used strategy, as it increases the value of their used inventory. He reiterated that their significant market share gains are a result of a unique, data-driven inventory and pricing strategy across all product types, not just from being promotional on entry-level units. He anticipates gaining further momentum in other RV categories in the coming year.

Ryan Brinkman of JPMorgan Chase & Co. asked about the drivers of the new RV pricing trend, specifically the split between lower prices versus a downshift in mix. He also questioned the role of their affordable assortment in market share gains and the implications for used RV prices.

Answer

Chairman & CEO Marcus Lemonis explained that rising new RV prices benefit their used strategy by creating margin expansion opportunities. He reiterated that market share gains are driven by their unique inventory and pricing strategy across all product types, not just promotional pricing on entry-level units. He stated their focus is on understanding and capitalizing on pricing "white space" across the entire product spectrum, from travel trailers to Class A motorhomes.

Ryan Brinkman inquired about the M&A strategy's impact on leverage, the timeline for improving acquired stores' performance, and the potential impact of tariffs on the RV industry.

Answer

CEO Marcus Lemonis asserted that all 2025 acquisitions are expected to be accretive and deliver positive EBITDA. Regarding tariffs, Executive Thomas Kirn noted that while suppliers may pass on costs, the timing is uncertain. Lemonis added that Camping World operates with a competitive advantage due to its scale and purchasing power, which allows it to secure better pricing. He concluded that a rigorous environment with tariffs ultimately works to their advantage, especially by increasing the value proposition of their used inventory.

Ryan Brinkman asked about the volume of products manufactured in Mexico that are exported to the U.S. and the nature of discussions with automakers about passing on potential tariff costs.

Answer

CFO Craig Aaron disclosed that in 2024, BorgWarner imported approximately $875 million in value to the U.S., with about half originating from Mexico. He emphasized that if tariffs are imposed, the company would need to share the financial impact with both its customers and suppliers.

Ryan Brinkman inquired about potential downside risk to AAM's North American production outlook, given inventory corrections and caution from other suppliers. He also asked for details on the divestiture of the India commercial vehicle axle business, including what operations remain and if this signals further portfolio actions.

Answer

CFO Chris May stated that the company's forecast accounts for current customer schedules, including launch ramp-ups and intermittent downtime. CEO David Dauch clarified that the India transaction involves selling two of three facilities, strategically shifting focus to light vehicles while retaining a presence. He noted the sale enhances financial flexibility and allows AAM to concentrate resources on its core passenger car, truck, SUV, and van business.