Q2 2019 Earnings Call
Good day and welcome to the Superior industries second quarter 2018 earnings teleconference.
Today's conference is being recorded.
At this time I would like to turn the call over to Mr. Troy Sport. Please go ahead.
Thank you good morning, everyone and welcome to our second quarter 2019 earnings call.
During our discussion today, we will be referring to our earnings presentation, which along with the earnings release are available on the Investor Relations section of superiors website.
This morning, I'm joined by most of you know build on our President and Chief Executive Officer, and Matti Masanovich, Our executive Vice President and Chief Financial Officer.
Before I turn the call to modesty I would like to remind everyone that any forward looking statements contained in this presentation or commented on today are subject to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Please refer to slide two of this presentation for the full safe Harbor statement under the company's SEC filings, including the company's annual report.
On Form 10-K for a more complete discussion of forward looking statements and risk factors.
We also will be discussing non-GAAP measures today, including value added sales and adjusted EBITDA.
These non-GAAP measures exclude the impact of certain items, and therefore are not calculated in accordance with us GAAP.
Reconciliations of these measures to the most directly comparable us GAAP measures can be found in the appendix of this presentation.
With that I'll turn the call over to Monte.
Thanks, Thanks, Troy and good morning, everyone. Thank you for joining us today to review our second quarter results.
I look forward to working with all of you as we move forward.
Let me first start by saying how pleased I am to have joined the superior team.
Actually even before joining I was very familiar with the company.
A business with a rich history as a tier one automotive supplier.
That has clearly differentiated itself.
I appreciate the opportunity to be here and to lead this team.
Before moving onto the financials.
A few points on slide three.
I've spent 35 years in the automotive space in a variety of leadership positions and capacities around the globe.
I have seen a lot in this sector from restructuring to growth.
And I have seen this over multiple economic cycles.
My experience has been operationally focused looking at the entire value chain from manufacturing to commercial activities.
I have a proven track record of implementing successful strategies operating systems and structures that drive performance.
As I look at superior today.
I feel I have a solid understanding at this stage, where the gap SAR.
And what we need to do to close them.
I'll speak directly to these items in a moment.
Before doing that let's review the second quarter financials on slide four.
During the quarter, we continued to experience production softness in both of our regions.
Industry production in North America, and Europe was down 2.1%.
And 7.5% respectively.
Looking a layer deeper.
Actually our primary customers in North America were down 6%.
Additionally, in North America, we saw degree challenges and reduced share.
Which were only partially offset by OEM share gains in Europe .
Finally.
With respect to volume we saw overall weakness in our European aftermarket business.
This was driven by higher aftermarket inventory levels at our customers.
And lower production of vehicles.
As a result.
Our global unit volume declined 12% compared to last year.
However, despite the volume decline.
We continue to see the content growth story play out.
Actually 19 inch and larger wheels represented nearly.
30% of our business during the quarter.
In fact, this improvement in mix delivered an 11% year over year increase in value added sales per wheel excluding FX.
In terms of our overall value added sales, we saw a decline of 5.3% or just 2.1% on an FX adjusted basis.
This is compared to a 5% market decline.
This highlights the relevance of our content growth.
And the secular trends of our business.
We expect this to continue through 2019.
Net sales and value added sales for the second quarter of 2019 were 353 million and 194 million respectively.
Our revenue was impacted by lower volumes and weaker euro.
Partially offset by favorable mix.
The one I just mentioned earlier.
Adjusted EBITDA was 49 million.
This reflects lower volumes higher energy costs globally, partially offset by the favorable mix.
In line with volume declines, we have pursued cost reduction initiatives that have delivered savings in the quarter.
We have also significantly reduced our global best DNA you have today.
We're actively pursuing other initiatives to optimize production and deliver manufacturing savings.
Our overriding priority in the near term is.
Generating cash flow and reducing leverage.
During the second quarter, we generated significant cash flow and reduce debt by 26 million.
In the first half of 2019, we improved our net debt position by $37 million.
Agreed results compared to the first half of 2018.
When our net debt increased by 15 million.
This represents a 52 million dollar improvement year over year.
Given the softer production in North America and in Europe .
We are revising our full year outlook.
Including four units and adjusted EBITDA.
Matti will walk you through the details shortly.
In light of the focus on cash we are reducing our capital expenditures.
We are maintaining our outlook for cash flow from operations.
This implies.
Increased net debt reduction, which is a positive.
We are going to continue targeting further improvements in cash.
Moving onto slide five.
I won't go through all of these points.
Overall my immediate focus after jobin joining superior in mid May.
What to undertake a thorough evaluation of the business.
To understand the key challenges.
How we need to operate in the short term and how we can position ourselves for future.
I felt it was important for me to immediately visit every one of our plants and operations.
And to meet face to face with most of our customers in North America and in Europe .
This is what I did.
After a deep dive of the 2019 plan.
The underlying assumptions volumes and actions required to deliver the plan.
I spent most of my time with onsite reviews at each of our facilities.
Underground with the team.
Quite quite a bit of time in Mexico.
Hi, I'm at our facility in the U.S. and several visits to our operations in Germany and Poland.
This with special focus on our global operational challenges and opportunities.
I also met with our engineering teams.
Reviewing our portfolio of exciting technologies and capabilities.
With a focus on our most critical development initiatives.
Recognizing that we need to be prudent with capital in our business.
I spend a lot of time, reviewing our capital investment plan.
Making adjustments where necessary.
Finally, I held regular reviews.
Of our most critical launches and reallocated resources where necessary.
Through all of this I came away with a picture of where we are today.
And when we need to go to create value for our shareholders.
Turning to slide six.
After these reviews here are my observations and reactions to what I have seen.
Superior.
He is a great company.
Differentiated on technology and customer intimacy.
We have a great portfolio of technologies to offer.
It is impressive to see what we have today.
And what we are developing.
Versus what was available five years ago.
I would also impressed with the passion. This team has for our customers and the technical depth of talent across the globe.
My customer visits confirmed the outstanding level of customer intimacy.
Superior has built over six years.
Solidifying our position as a trusted strategic supplier.
Finally, while I'm encouraged by the foundation that was built.
We have significant work ahead of us to improve our performance.
Turning to slide seven.
I have laid out our near term priorities.
Our overriding focus is on expanding profitability and growing cash flow.
Especially in the near term.
First.
And accelerated focus on operational excellence.
This includes improving our north American profitability.
Rightsizing production capacity.
And defining a clear operating system with cadence and metrics.
Included in the North America improvement plan is.
Foundry excellence.
Mold shop, Mel and casting.
This is a pillar of our entire manufacturing process.
We need to improve first time yield off the casting decks.
Here, we have an opportunity to leverage our capabilities in Europe .
We also need to improve our scrap rates.
At the time of launch cooler robust product and process design.
Second.
Strengthening our team and aligning our culture.
We are focused on quickly closing the gaps on key leadership positions.
And we have a strong pipeline of candidates.
Further.
We need to establish a culture of accountability and collaboration.
And strengthen I want to direct manufacturing team in Mexico.
We have struggled there due to high attrition rate over the past couple of years.
While attrition has come down we need to improve it further.
Sure.
We must create a profit minded organization.
Well, we deliver value throughout the chain.
Specifically, we're looking at the activities and commercial discipline to enhance the bottom line.
We also have an opportunity to expand into new customers and deepen relationships with existing customers.
We actually have several Oems in North America, where we really have no volume today.
We need to develop the capability to serve them.
We are in a production environment, where volume is declining.
So we are focused on growing our book of business across a balanced portfolio.
It can't be all premium.
Historically, the company chose to pass on base level lower content wheels in favor of moving up the value stream.
Larger diameter and premium finishes.
What we really would like to see in the numbers is.
Ongoing improvement in value added sales.
But also a solid book of base level volume business.
This translates into a balanced portfolio.
Fourth.
Strengthening our portfolio, which includes.
Commercializing and expanding finishing capabilities in North America.
Fifth and finally.
Improving working capital and making capital investments that have clearly defined paybacks and add value to our customers.
As I mentioned before we are reducing our capital expenditures for this year by 10 million as we use is guiding principle for all of our investments.
Before I turn the Simadi.
Let me just finish by saying that I'm excited for what lies ahead for superior.
In many ways.
We have to get back to basics and managing our business.
We understand our challenges and we are tackling them head on.
We have a great team.
And a strong product offerings.
We are very well positioned to capitalize on the secular trends as our industry continues to evolve.
With that use Maddie, who will do a deeper review of the financials Mary.
Thanks Marty.
I'll now provide a more detailed overview of our financial performance for the second quarter and first half of 2019.
Starting on slide eight as Marty mentioned ongoing mix improvement from our strategic focus on higher constant wheels, partially offset unit declines with value added sales per wheel up 11%, excluding the impacts of FX.
That said, our North America shipments in the second quarter declined ahead of the overall market and were impacted by softer production levels industry production was largely supported in the region by Oems with whom superior has little or no share.
Whereas production at our key customers was down more than market year over year.
We are also impacted by reduced share base level wheels, and reduced take rates.
We continue to expect these factors to impact our North America volumes and anticipate or shipments in the region to be down more than 10% in 19 compared to 2018.
Looking at Europe , our shipments declined year over year, mainly due to softer production environment, although the European shipments for the quarter were favorable compared to the overall market as we continue to take share in the region with respect to the aftermarket we saw sizable decrease year over year. Following a strong second quarter 2018, and a record full year 2018, due to softer market conditions and excess inventory in the marketplace carried by the European aftermarket distribution network.
Altogether, our global volume for the quarter was down 12% year on year.
Despite the softer global production environment, our results continue to demonstrate our ability to capitalize on the shift towards larger premium wheels, supporting continued growth and value added sales per wheel.
As a percentage of our total wheel sold the volume of 19 inch and greater wheels improve substantially increasing nine percentage points to nearly 30%. We expect this trend to continue to continue through 2019, when compared to 2018.
Across our regions. These trends supported growth in value added sales of 5.3% essentially in line with market.
The market decline of 5%.
If you look at the change in value added sales year over year, excluding FX. It was down 2.1%, which is actually ahead of the market decline of 5%.
Moving to slide nine we have provided a breakdown of unit shipments net sales and value added sales by region for the second quarter of 2019 as compared to the prior year period.
We'll unit shipments were 4.9 million units for the second quarter.
Compared to 5.6 million for the prior year period year to date wheel shipments were 9.9 million for the first half of 2019 compared to $11.1 million in the prior year period.
I will provide a more detailed review of net sales value added sales and adjusted EBITDA for the quarter and year to date period in a moment.
We reported net income of $7.3 million or a loss of four cents per diluted share for the second quarter of 2019 compared to net income of $8.1 million or a loss of two cents of earnings per diluted share for the second quarter of 18.
We are reporting positive net income and negative vps to the impact of the accretion of the preferred and the preferred dividends as accounted for under Us GAAP.
Please see the table in the appendix for a reconciliation of net income during these per share.
From a year to date perspective net income for the first half of 2019 was $9.2 million or a loss of 27 cents per diluted share compared to $18.4 million or income of five cents per diluted share in the prior year period.
The provision for income taxes for the second quarter of 2019 was $7.5 million, resulting in an effective tax rate of approximately 51%. The tax provision amount is primarily because of U.S. taxation on foreign earnings and evaluation allowance on non deductible interest, partially offset by a benefit due to the mix of earnings amongst tax jurisdictions.
The income tax provision for the first half of 19 was $12.5 million on pre tax income of $21.7 million, representing an effective tax rate of approximately 58%.
The first half rate was due to the previously mentioned factors impacting the second quarter.
It is likely the effective tax rate for the year will remain elevated due to the same factors as mentioned regarding Q2.
Cash taxes are expected to be approximately $10 million for the full year 2019, which is included in our cash flow from operations outlook.
Slide 10 gives us a closer look at sales for the quarter, which were $352.5 million, a 36 and a half million dollars decrease from the prior year period.
Value added sales decreased $10.7 million year over year to $193.6 million. The reduction in value added sales was driven by reduced volumes, partially offset by favorable mix, which resulted in a net impact of approximately $4 million and a weaker on a weaker euro which had an impact of approximately $6 million.
Turning to slide 11, adjusted EBITDA for the second quarter of 2019 was $49.2 million compared to adjusted EBITDA of $57.2 million in the prior year.
The decrease was largely driven by lower sales and higher energy costs, partially offset by improved product mix of larger wheels, and more complex finishes SDMA reductions and procurement savings.
SGN expenses for the second quarter of 2019 or $16 million or 4.5% of net sales compared to $22.3 million in the prior year period.
The decrease is partially due to reduction in acquisition and integration expenses and the alignment of reporting for us junaid between our two regions, which shifted $3 million from SGN day to cost of goods sold during the quarter.
Excluding these impacts as you know it was down approximately 7% compared to the prior year, primarily as a result of our efforts to align cost with current industry production levels.
Slide 12 provides an overview of net sales for the first half of 2019, which were $710.2 million compared to net sales of $775 million for the same period in 2018 over the same period value added sales decreased 25.4 million year over year to $386.4 million. The reduction was driven by lower volumes, partially offset by favorable mix, which resulted in a net impact of approximately $11 million and a weaker euro which had an impact of approximately $14 million.
Moving to slide 13, adjusted EBITDA was 92.4 $92.4 million for the first half of 2019 compared to $109.4 million for the prior year period like the second quarter. The decrease in adjusted EBITDA was driven by volume and energy expense, partially offset by mix SGN today and procurement savings.
Selling expenses for the first half of 2019 were $30.4 million or 4.3% of net sales compared to 44.6 million in the prior year period.
The decrease is partially due to a reduction in acquisition integration expenses and the alignment of reporting a fresh DNA. Excluding these impacts year to date EPS DNA is down by approximately 6% compared to the prior year, primarily as result of our efforts to align cost with current industry production levels.
Let's move to slide 14, where I'll spend some time talking about cash flow and our capital structure.
During the quarter net cash from operating and investing activities available for debt reduction and dividend payments was $33.8 million, a very strong results compared to $1 million in the same period in 2018.
We generated $40.9 million of cash from operating activities in the second quarter of 2019 compared to $16.4 million in the prior year period.
The increase was mainly due to improved working capital management, including significant improvements in days inventory and days payable, which was a result of the focus initiatives that mark spoke about.
Net cash used for investing activities was $7.1 million, including capital expenditures during the quarter to support expansion enhancement of the company's portfolio of products and technologies as well as ongoing maintenance of $15.3 million.
These investments were partially offset by the sale of other assets for $8.2 million.
During the second quarter, we paid dividends of $6.8 million, which includes preferred dividends dividends to common shareholders.
And dividends to minority shareholders of our European subsidiary.
Also during the quarter superior superior Opportunistically repurchased 20 million euro face value of its 6% senior notes on the open market for 17.4 million euros.
Resulting in a net book gain of 2.4 million US dollars, which is included in other income.
Given the nonrecurring nature of this game. This has been deducted to arrive at adjusted EBITDA.
The bond repurchases and other debt payments during the quarter, resulting resulted in debt principal reduction of $26.1 million again, a very solid results.
I'd also like to add that this is the first time the company has proactively repaid incremental debt beyond the required amortization since closing the acquisition more than two years ago.
In terms of liquidity management, we continue to have a nice have significant borrowing capacity under our us and European revolvers. During the quarter, we sought and received approval from our European Bank group to upsize, our European revolving credit facility by 50 million Euro to 45 million Euro and extend the maturity to 2022, which provides even more flexibility and availability to our existing capital structure.
Our total available liquidity inclusive of cash on hand, and the unused portions of our committed revolving credit facilities was $264 million at the end of the quarter.
Net debt at quarter end was $601 million down from $638 million at year end.
We also had significant additional availability to sell receivables under our accounts receivable program as of June Thirtyth.
With respect to covenants on our debt we have a 4.5 times net debt to adjusted adjusted EBITDA leverage test on our US revolver that is that is tested if we are more than 35% drawn which represents $56 million on our U.S. revolver.
As of the quarter end, we had no borrowings under the revolver and therefore were not required to test in terms of net debt to adjusted EBITDA. We currently sit at approximately 3.6 times net debt to trailing 12 month adjusted EBITDA.
Now let me provide a review of our 2019 outlook on slide 15, which has some revisions.
For full year 2019, we now expect unit shipments to be in the range of $19.5 million to 19.9 million units with net sales in the range of $1.39 billion to 1.44 billion.
The decrease in net sales is a combination of volume and lower aluminum prices compared to the prior outlook.
Well mix has improved even from the last time, we provided guidance, we're revising down our outlook for value added sales to the range of $755 million to $795 million due to lower volumes, partially offset by further improvement in our mix.
We're also revising down our adjusted EBITDA outlook to the range of $165 million to $180 million commensurate with a lower volumes.
Cash flow from operations is still expected to be in the range of 125 million to $145 million.
And as Monte said, we're going to continue to look for ways to improve this target but are not changing this range at this point in time, given we still have improvements built into this number is do we need that we need to achieve including additional working capital actions in Europe .
Finally, we are lowering our capex.
Capital expenditures guidance to approximately $75 million from $85 million due to the focus on paybacks and rightsizing the spend relative to our volume outlook for the year.
And with that I'd now like to turn the call back to the operator and open up for questions.
Thank you Sir.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad.
If you are using a speakerphone. Please make sure your mute function is turned off.
Again press Star one to ask a question, we'll pause for just a moment to allow everyone an opportunity to signal.
And our first question comes from Vahid Quicksand of Bmws financial Please go ahead.
Good morning, Thanks for taking my call marshy welcome to superior.
Bank said my name is saying.
Hi, My first question is I like a lot of the things you're saying it goes in line with what some of the things we brought up on previous calls.
But I have a question for you on.
Your focus to bring in more of the baseline business does that mean you or.
You believe that.
Dean.
Bringing 19 inch wheels, lower than 30% is the future of superior.
Well, that's a great question vein you know actually.
If you think of this strategy and moving up the value chain to premium.
Two premium end to content and is a good strategy look for us and it served us well.
What I think needs to happen is we need to continue the focus on premium we need to continue to focus on.
On content and this is this is really a competitive advantage for us we just cannot walk away from the rest of the portfolio, we need a balanced portfolio and what that does for us. The heat is is basically allows us to to respond as you know.
The market is volatile and all of the Bucks fluctuations in our schedules.
Okay, along the same lines there were lot of reports that Chinese auto sales were going down and I know, there's tariffs on Chinese wheels, but is there some type of any level of sheer or threat. The Chinese wheel manufactures will just start dumping wheels in the United States.
Listen I mean, Chinese and the competitive environment in our industry has been there.
For for for many years, and we've been able to respond and respond well.
The current tariff the current tariff situation did present, an opportunity for US. We we won some short term wins.
But frankly it remains to be seen how it plays out and how long. The current situation remains we remain focused on our customers and and our overriding priority as I mentioned is.
Growing our profitability and and to grow our cash flow.
Okay, and then to Matty I see you got the overall EBITDA margin back up to 25% is that something that we should expect to continue for Q3, and Q4 or will it just level out at 22%.
Yeah, I think I think we had some great performance I mentioned, some procurement savings et cetera.
Look we're going to try to hold hold the line on margin coming off of Q2, clearly that's going to be our goal. If you look at our guidance range, though you'd see that it's going to be a cautious it's a cautious guidance range down we have a lot of launches in the second half clearly.
And just historically, we've underperformed in the second half of the company, so taking a bit of a prudent approach as we give guidance here.
But where we are today about it we are going to Airbus.
EBITDA. Thanks.
Perfect. Thank you.
Next thing.
And were there.
Sunil comments before we move onto our next question.
Hi, Thank you all we will next go to Gary Prestopino Barrington Research. Please go ahead.
Good morning, everyone.
Couple of quick things here.
Hello, and welcome energy.
Thanks, Gary.
Just a thought just the thought that came to my mind I mean.
Obviously, you're still having issues in Mexico right with.
Producing more of the higher end product do you see a scenario margin. If you start going into more of the lower end wheels would you be able to switch some of that higher end production to the planting Fayetteville, Arkansas in the United States, and then have Mexico do more of the.
Yeah, you know basic wheels.
Yeah listen I, I think very focused on on the entire portfolio.
From a wheel size and content standpoint, my view and I've been through the plans for days and it doesn't really present.
A challenge for US is I view it as an opportunity as you look at our footprint and what our teams have been able to do in North America to flex and adjust for market fluctuations and product changes they've done just a fantastic job Fayetteville for US is is an absolutely outstanding capability and that.
That helps us to absorb complexity it helps us absorb volatility and as you specific to your question switching from.
Higher contented wheels to two more lower end lower end wheels.
The manufacturing process is flexible I have no concerns there.
Just just to add a little bit of color on that Gary.
Not all of the wells, we generate in Mexico, our nitrogen bigger we have dedicated lines casting decks.
Machining cells et cetera that are focused on lower end as well I think what we need to do is balance the portfolio maximize capacity to the extent, we can in all product lines enough. This balanced portfolio the modules that speaking about so.
We're not walking away from the strategy at all quite frankly, we'd love to continue to penetrate all like we have in the grid of the 19 inch wheels, and we are in our in our forecast looks like we are going to continue to penetrate not tonnage wheels, so that should be improving as we go throughout this year and into next but but just from a capacity standpoint and not all of our capacity is designed to build 90 nature bigger quite frankly, you've got capacity by wheel size. If you will we don't share that with the without with outsiders, but we do have capacity by wheel side. So we need to maximize all of our capacity to generate as many possible wheels as we can I think thats, what margie margie getting it.
Okay, and then Glenn just to your capital expenditures.
Coming down this year versus your prior guidance I mean, what is what would be.
If you could share those with us maybe a minimal amount of capital expenditures that you would have to make every year by such as maintenance Capex or is there such a thing they're considering you've got to.
By molds things like that.
Yes, so Gary I think we've talked about this in the past it's matti, but.
Essentially it costs us about between four and $5 million per facility for repairs and maintenance Capex that's to keep the machines and good in good working condition in good working order and extend the useful lives. So I think.
That's a good number to use as you look at our footprint.
Okay. So in theory, if you had a cut if you had to cut all cost and I think I'll just say if that if the market was that dramatically declined we've talked about this before as well the markwest a dramatically recline decline, we went up the spend that repairs maintenance capex, thats, where kind of assess standard capacity and utilization rates I will tell you that if there was a massive shift like going back to over eight or nine weeks. If you looked at the capital. The Capex history of this company you see it was de Minimis in those years.
Okay.
And then Maggie as you look at what you have to do here at the company.
How can you kind of give us a timeframe of where you think you will you will get superior firing on all eight cylinders.
Is that a two three year process.
Listen I am what I, what I will tell you having been here for 90 days.
It's actually a tremendous opportunity we have not said, we've not laid out the timeline of them I'll walk you through through what we're looking at we do have operating challenges and we have operating challenges in Mexico, but we have operating challenges in opportunity and across the entire nicely now all of them are really under the umbrella of again the entire team is totally focused on profitability and improving cash and as you look at you know what we're trying to do focusing on North America. Their volume is our biggest challenge optimizing our footprint when I talk about the comp there the entire value stream, Gary I'm talking about outside of operations and manufacturing.
The commercial discipline working with our customers on the east.
And recoveries were necessary launched discipline, we deliver product to our customers and we do we do okay. We have some challenges in launches, we do okay, but launching right with the right level of scrap you can launch a program at 50% scrap and see it in Florida for one year, so getting the right product design process design.
To do it right.
The operating efficiency and everything in our in our manufacturing Gary It happens actually at the foundry.
At the mouth and at the casting and then we have we know I'm not I'm not a wheel guy, but I am an engineer and I've been through our plans and I would tell you that we know how to make wheels better than anybody and I'm not talking about machines and processes I'm talking about new Holland people. So we need to bring that more to our foundry in Mexico, we need to help them with managing and.
Attrition, but that has more to do there and there is opportunity across the balance of ice cream procurement. Just for one example is where we also see opportunity. There. So we're looking at it holistically and now.
We have clarity and we have a plan.
Thank you so much.
Thank you we'll go to our next question coming from Chris Van Horn with B. Riley FBR. Please go ahead.
Good morning, Thanks for taking my call and welcome RG.
Thanks, Chris.
So I guess I just have a question on the on the guidance.
For value added sales what gets you to that 70 795 number is it more dependent on underlying volume is there.
A mix benefit that that gets you to the high end and just any clarity there.
Yes, it's really just volume when we look at the second half there's less production in the second half versus first half Chris. There is also just what also volume weakness production weakness.
Right now what we have we have.
Really good visibility for 16 weeks that leaves us through the end of Q3, and a little bit into Q4, but.
Q4 back at the back of the Q4, I think there's going to be a weak quarter in general based on what we're seeing and what we're hearing so I think it's just it's really on the back of volume.
Okay got it and then would you be able to disclose your passenger car exposure, maybe today and then and then any sort of idea of what your passenger car exposure looks like from a program launch perspective.
Give me a moment.
So right now 2019, our passenger car exposure on a global basis is 35%.
Okay got it.
And if you look out in the launch schedule is there any does it look kind of similar to that or is it.
I imagine, it's probably a little bit less just given the Oems are shifting more towards truck and SCB. Yes. It's it's certainly is last I'd say Europe is a europe's probably pretty pretty much even even keeled I think it's more of a north America phenomenon, where that where the Cvs crossovers and pickups are for continuing to penetrate but as you know our business is heavily skewed in North America to ask these crossovers and pickups are passenger car exposure in North America is about 20%.
Got it perfect. Thank you for that and then Marty I guess lastly from me.
I imagine you had a perception of.
Yes idea of what to expect when you came in.
I'm just curious is is what maybe surprised you. After your first 90 days that you weren't really thinking about as you came at all or that was different than than your first impression.
Actually Chris No no big surprises I came in with them with a rather clear view.
The positive light.
No I had we had the same customers in my prior.
In my prior life so.
I knew that superior had just an outstanding at.
Reputation with customers the customer intimacy I knew the technology was good and pleasant unpleasant finding is reaffirmed.
Those things, but also pleasantly EM.
I just covered that we are very much differentiated on technology and as you know.
To win in a top tier one automotive business you really have to have two things going in.
Customer intimacy is one and you got to be differentiated on technology and this is really our our foundation further.
I have I would say its been 75% of my time with the team on site in the plan.
And I would tell you just at a fantastic at level of commitment to customers and passion for floor for the business very very pleasant. The operating challenges you know I came in I.
I will listen to some of the calls and the operating challenges we're facing in North America and a specific focus on.
On manufacturing you know that that was reaffirmed but I also learned that.
We needed a holistic approach, we have challenges and opportunities outside of manufacturing operations and I talked about those.
The entire value stream and on the commercial side on that on the launch side on the product portfolio side. So it's across the board and I think we have the critically understanding of them and we're tackling each each of them head on.
Okay, great. Thank you so much for the time guys.
Great. Thanks.
Thank you and with no further questions I would like to turn the conference back to Mr. Ford.
Thank you everyone at the end for our conference today.
Thank you Sir and thank you all for your attention. This concludes today's conference all participants may now disconnect.