Good day ladies and gentlemen and welcome to the first quarter 2013 Meritor earnings conference call. My name is Taheisha and I’ll be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session (Operator Instructions). I would now like to turn the conference over to your host for today, Ms. Christy Daehnert, Director of Investor Relations. Please proceed.

Thank you Taheisha. Good morning everyone and welcome to Meritor’s first quarter of fiscal year 2013 earnings call. On the call today we have Chip McClure, our Chairman, CEO and President; and Jay Craig, our CFO. The slides accompanying today’s call are available at www.meritor.com. We’ll refer to the slides in our discussion this morning. The content of this conference call which we’re recording is the property of Meritor Inc. It’s protected by U.S. and international copyright law and may not be rebroadcast without the expressed written consent of Meritor. We consider your continued participation to be your consent to our recording. Our discussion may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Let me now refer you to slide two for a more complete disclosure of the risks that could affect our results. To the extent we refer to any non-GAAP measures in our call, you will find the reconciliation to GAAP in the slides on our website. Before we begin, I’ll point out that today’s presentation will be slightly abbreviated due to our scheduled analyst event in New York on Tuesday, February 5. We are looking forward to providing you with more detail at that time. Now, I’ll turn the call over to Chip.

Thank you Christy and good morning everyone. Let’s turn to slide three. I’ll start our call today by announcing three key executive appointments. I’m pleased to tell you that Jay Craig has been appointed Senior Vice President and President of Meritor’s Commercial Truck & Industrial segment. Most recently Jay was our Chief Financial Officer with additional responsibility for Treasury, Tax, Purchasing, Information Systems, Investor Relations and Communications. Jay’s experience and success in leading each of these disciplines, as well as his operations background at GMAC and at Meritor will play an instrumental role in the turnaround of the Body Systems business prior to its sale, makes him the perfect candidate for this position. Tim Bowes, who formerly held this position has accepted a CEO position with Transtar Industries. We wish Tim all the best in his new opportunity. Replacing Jay in his role of Chief Financial Officer is Kevin Nowlan, Meritor’s current Vice President and Controller, and he has been in that position since 2010. Prior to that Kevin also held the positions of Treasurer and Vice President of Shared Services. Prior to joining Meritor he was the Director of Capital Planning at GMAC. I’m also pleased to tell you that Brett Penzkofer, who many of you know, will become our new Controller. Brett has held a number of financial roles since joining us in 2006. Before that he served in various finance positions at DaimlerChrysler. We have been diligent in building the bench strength of our management team and are confident these moves will continue to enhance the company’s performance. Turning to slide flour, our financial performance in the first quarter of fiscal year 2013 was slightly below our expectations, due primarily to greater than expected weakness in our major global markets. As we told you last quarter, the…

Thanks Chip and good morning everyone. On today’s call I’ll review our first-quarter financial results and provide an update on our 2013 guidance. On slide 10 you will see our first-quarter income statement from continuing operations compared to the prior year. Sales of $891 million in the quarter were down significantly year-over-year by $268 million or 23%. The decrease was due primarily to lower commercial truck production in all regions and a production step down in our China off-highway business. On our last call we indicated that our revenue and EBITDA would be the lowest in our first quarter, but this level of production was still lower than our internal projections, particularly in Europe and Brazil. Gross margin was down $23 million due to the steep decline in sales; however, gross margin as a percent of sales was slightly higher in the first quarter of 2013. The improvement is a direct result of our lower material costs and the margin enhancing actions completed last year, most notably pricing and the shrinking of our European manufacturing footprint. SG&A was $62 million in the first quarter of 2013, almost 5% lower than the prior year, as we continue to reduce the fixed cost structure of the business. Restructuring costs were $6 million this quarter, primarily related to two items; the announced consolidation of our remanufacturing facilities Chip mentioned earlier and the variable labor headcount reductions in the Commercial Truck & Industrial segment, in response to weaker market conditions in certain regions. This quarter’s restructuring costs were $18 million lower than the first quarter of 2012, which included costs associated with selling our French assembly operation back to Renault. Restructuring charges are excluded from adjusted EBITDA. Other income in the current period was zero versus $4 million earned last year when we recognized…

Thank you Jay. Let’s turn to slide 19. As highlighted this year, we are challenged with significant volume pressures. As such, we are closely managing and taking actions associated with each of the priorities we identified this fiscal year. We are adjusting our global work force as needed to align with market demands in each region. Earlier in the call we noted several restructuring actions that we executed in the first quarter and early in the second quarter of this fiscal year. As we see our markets start to rebound like in South America, we remain focused on execution. This includes managing capacity, pricing for value, investing intelligently and maintaining high levels of quality, safety and delivery. We will remain focused on rigorous cost management and will take necessary actions to ensure we are managing the business at an optimal level. We continue to implement appropriate balance sheet strategies such as the successful convertible transaction we completed in the first quarter of this fiscal year. We’ll hear more about these strategies from our Treasurer, Carl Anderson, next week in New York, and we are working hard to maintain our leading market share positions in all regions of the world. We are committed to developing new technologies and products, specifically in the areas of safety, fuel economy and environmental, and we will prioritize those that provide high value to our customers, including drivers, owner operators, fleets and OE’s that work in global applications and enhance our margin. We look forward to seeing you at our analyst event in New York on February 5. Now, we’ll take your questions.

Thank you. (Operator Instructions). Your first question comes from the line of Brian Johnson from Barclays. Please proceed.

Yes. Just want to go through and just sort of at a higher level, it sounds like when you talk through the sequential decline and just where you landed this quarter, that FMTV and military was roughly where you expect. I wanted to just -- one, was FMTV and military roughly where you can expect it and is the miss versus consensus, anything just maybe us getting the cadence wrong? Two, was vis-à-vis your expectations, was this mainly a volume gain impact in the quarter? And then three, where do you stand on rolling through contractual adjustments, price increases and other reengineering efforts and their ability to offset some of these volume pressures?

Sure. Thanks Brian, this is Jay Craig. I will answer the questions sequentially. You are correct and as far as our expectations for revenue, I think FMTV as I mentioned in my comments, came in where we expected. I think the markets that came in a bit shorter than we expected were primarily in Europe, North American aftermarket and in India. So those markets came in weaker than we expected. I think particularly in Europe and India, those markets have been very difficult to call for us, as well as I believe everyone in our industry as I have interacted with them and read their comments publicly. So I think that’s where as we looked at it sequentially from Q4 to Q1, where the adjustments were. As far as volume and how we react to that, obviously there is a big impact from our equity earnings and JVs. Also those come through pretty heavily as we see volumes movements in North America and Brazil, and then as we look at the contractual price downs, we usually see the largest impact of those in our first quarter. Some of our contracts, particularly outside the U.S. still have some annual provisions in them, so they tend to be heaviest, the adjustments for those in our first fiscal quarter and we expect it to abate somewhat as the year goes on. As far as how we react to it, we had a very good quarter operationally in terms of the reducing material costs where we can control that. We actually are on our expectations, which were quite aggressive for that for the year. And also in our labor and burden improvements in our plants, are actually on are very, what we thought were aggressive planning assumptions. And then as both Chip and I mentioned in our comments, the actions taken on January 8 should help us significantly in reducing SG&A and fixed costs, so we do see our ability to expand margins sequentially benefiting quite significantly from those actions.

Okay, and in terms of the equity income, can you just maybe recap if we kind of compare the $9 million this quarter to the $15 million a year ago, sort of what the major sources of change were?

Yes, the major sources of change would be as you would expect in Brazil and the U.S. So they would be our two JV’s with the Randons in the Brazilian market, one in the breaking area and one in trailers, and then obviously the Meritor Wabco JV and our Mexican JV, Sisamex. So those are the big JV’s with probably a lesser extent of an impact from our Indian JV, AAL and our Chinese JV was roughly flat.

Okay, so when you think about sequential or year-over-year incremental margins, because that’s a significant driver, how should we think about kind of teasing that out when we think about the volume effect on EBITDA?

The earnings tend to move pretty well correspondently to the movement in markets. So our expectation as you can see from our guidance is that for example the Brazilian market strengthened sequentially throughout the year. So I think we expect and you should expect that the two JV’s in Brazil and performance should improve throughout the year as well. That is also our assumption in North America Truck, the strengthening in the back half of the year, so you should expect our JV’s there to perform more strongly as the year progresses.

Okay, thanks.

Thank you.

Your next question comes from the line of Brett Hoselton from KeyBanc Capital Markets. Please proceed.

Good morning.

Good morning Brett.

Let’s see here. Yes, just kind of tailing onto Brian’s question, maybe kind of taking it from a little bit different tact, I guess my first question is cadence of sales through the remainder of the year. If I take $3.8 billion divided by 4, I get $950 million. Obviously you are at $890 million for this quarter and so the expectation seems to be that your sales are going to improve as you move through the year. So can you talk a little bit about the cadence of production and the cadence of sales as you move through the year?

Brett, this is Jay again and good morning. I think if you recall in our fourth quarter, we showed a four-panel chart that showed for the key markets what our volume expectations were by quarter, represented by lines in those charts. We will be updating that for our Analyst Day on Tuesday and showing that to the audience on that day. But just as a preview for that, I think we expect that as we move to the second quarter, the revenue should be fairly similar to this quarter and then a recovery in the third and fourth quarter, driven primarily by three main markets, North America, South America and the aftermarket. We expect that China and India will roughly be flat for the year and I would add, that’s really the biggest change to our guidance from what we are speaking about today as compared to November. As you may recall, we expected a recovery particularly in China in the back half of our fiscal year, but we have kind of now flat-lined our expectations for the rest of the year and I think you are seeing out in the marketplace people having great difficulty forecasting how the Chinese construction market will perform for the rest of the year and so we thought it best to drive the business on the assumption that it’s just flat for the rest of the year and push the business internally based on those assumptions.

Thank you. And then from a margin standpoint, similar question. Obviously reporting adjusted EBITDA margins of 5.2% in the first quarter to get to 7% for the year, you have to track out the remainder of the year at 7.6 % and so how should we think about the cadence of margins? It sounds like restructuring is going to play a fairly large role. That is going to have a partial impact on the second quarter and then it sounds like your sales are going to be higher in the third and the fourth quarters. So it sounds like maybe we see kind of a sequential increase in margins as we move from the first to the second to the third and into the fourth quarter.

Yes, I think there’s a couple of big things and we’ll walk you through in detail that next week, actually. It will be Kevin Nolan walking through that and you will see really two big impacts; the one you mentioned being the restructuring. It was very, very significant, that restructuring. As you may recall, we expect it to offset the entire margin loss for the difference between our margin on FMTV and our Commercial Truck products, so a very significant restructuring. We’ll walk through the details of that on Tuesday and the expected quarterization of that. We’ll give a rough idea of how that plays out. The other big move unrelated to volume as we have previewed earlier is we implemented fairly significant pricing actions in our aftermarket business on January 1. Those have a little bit of a lag effect, as you would expect. Our customers react to knowing that and tend to pre-buy a little and then we tend to see the benefit of that begin towards the end of January and then carry on through the year. So those are two of the biggest movers of our margin, independent of volume.

Thank you very much.

Thank you Brett.

Your next question comes from the line of Tim Denoyer from Wolfe Trahan. Please proceed. Timothy Denoyer - Wolfe Trahan & Co.: Hi. If I could just actually start with a quick follow-up on the aftermarket comment on pricing. So would you expect aftermarket sales to take a little bit of a hit sequentially going from 1Q to 2Q?

We think any negative impact from that pricing will be more than offset in the traditional spring selling season we see for brake replacement. So we think that impact will overwhelm any negative impact from pricing. In addition, you should remember there’s obviously more selling days in our second fiscal quarter, the first calendar quarter, than in our first quarter, because of the Christmas holiday and those time periods. So I think those two impacts should more than over compensate for any negative reduction in volumes due to the pricing change. Timothy Denoyer - Wolfe Trahan & Co.: Okay, thanks. And a couple of just questions around -- I guess related questions around cash flow materials in Brazil. With the inventory ending the quarter a little bit ahead of where it seems like you’d like, do you expect that to become a tailwind to cash flow over the next couple of quarters, a little bit more than normal, and then I guess on a related note…

I’m sorry, Tim. I guess I would say this phrase, it’s better. We are driving the organization very hard and the team is working very hard at getting the inventory out. In their defense, when you get this enormous volatility of customers pulling weeks of production very late in the planning process, inventory can get backed up, particularly as you come through a holiday period, because we tend to build inventory in anticipating of ramping production backup beginning in January. And so in defense of our material handling team, it is a very challenging environment for them when it hit. Now, and there were also the two major impacts that I mentioned, that I don’t want to underestimate. We did take some defensive actions, knowing that there could have been a dock strike and a large part of our raw materials and our semi-finished materials come from overseas, with long supply lines and we wanted to make sure those weren’t disrupted if there was a dock strike, and we did purposefully build some inventory in Brazil in anticipation of the ramp-up we are seeing, so we are happy we did that. So we are very focused on that. We do expect that the inventory reduction throughout the year should become a net benefit to our working capital sequentially throughout the remainder of the year. Timothy Denoyer - Wolfe Trahan & Co.: Thanks, and then a couple of sort of related follow-ups on that. Will materials costs become a little bit of a tailwind to margins, I mean in terms of relative to what materials costs are in that inventory and with the fuel costs that you are seeing or does the backup of inventory sort of mute the benefit from raw materials?

We will walk you through in detail the purchasing and the expected material cost benefits on Tuesday as well. We continue to have some contractual price refund mechanisms in subsequent quarters, although somewhat more muted than we see in the first quarter as I mentioned earlier. But we are really making very, very good progress on our aggressive material cost reduction efforts and we’ll be walking people through that on Tuesday. So I think we could see it as a tailwind for the rest of the year. Timothy Denoyer - Wolfe Trahan & Co.: And if I could sneak one more in for Chip, I mean do you see any impact from the announcement recently with Volvo taking a stake in Dongfang? Does that have any opportunities or risks to your business?

I think it’s just an indication of what I’ll call more the globalization of the market in China. Obviously you continue to look at it. There’s consolidation and there’s also globalization, both of which is taking place in China and I think Volvo and Dongfang are doing that. Volvo has been and will continue to be and we are looking forward to continuing to be an important customer to us on a global basis. We currently support Volvo in many markets around the world, both here in North America, Europe and in parts of Asia that way. So we are following like the others. But I think so to answer your question, I don’t see an impact that way. What I do see it is, more in a macro level, but it’s just an indication of the globalization of the truck market in China and what I would envision over time is similar to what we saw in automotive is, will there be some consolidation within the production capacity there at some point in the future? So just more of a step on a macro level. On a micro sense Volvo continues to be an important customer to us and just, we’ll continue to support them. Timothy Denoyer - Wolfe Trahan & Co.: Great, thanks very much.

Great, thank you.

Ladies and gentlemen, that concludes the Q&A portion of the conference. I would now like to turn the conference back over to Christy Daehnert for closing remarks.

Thank you for your attention on today’s call. For any follow-up questions, please reach out to me directly, and that concludes today’s call.

Ladies and gentlemen, thank you for your participation. You may now disconnect. Have a great day.