Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2015 Meritor Earnings Conference Call. My name is Matthew and I'll be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. As a reminder, this call is being recorded for replay purposes. And now, I would like to turn the call over to Mr. Carl Anderson. Please go ahead, sir.

Thank you, Matthew. Good morning, everyone, and welcome to Meritor's fourth quarter and full year 2015 earnings call. On the call today, we have Jay Craig, CEO and President; and Kevin Nowlan, our Chief Financial Officer. The slides that are accompanying today's call are available at meritor.com. We'll refer to the slides in our discussion this morning. The content of this conference call, which we are 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'll find the reconciliation to GAAP in the slides on our website. Now I'll turn the call over to Jay. Jeffrey A. Craig - President & Chief Executive Officer: Thanks, Carl. Good morning, everyone, and thanks for joining the call. Let's turn to slide three. With the second full year of M2016 now complete, we are on track to achieve the financial targets for our three-year plan. When we launched M2016, we were a different company than we are today. Margin is up, debt is down, and we have established important new relationships with customers around the world like PACCAR in North America, Scania in Europe, Daimler in India, and DAF in South America, among others. We've also dramatically improved our execution. We've converted on up-cycles in Europe and North America through excellent management of our operating and product costs. In fact, several times during…

Thank you, sir. And your first question comes from the line of Brian Johnson of Barclays. Please go ahead.

Good morning. Two questions. We were surprised pleasantly by the strong margin in Aftermarket. It looks like your highest quarterly margin ever and close to 200 basis points above last year, which is also a strong close for you. Can you help us understand the drivers of that, the seasonality around that, if any? Were there any sort of one-time cost saves in it? And maybe just kind of, is Aftermarket – or on the other hand, is Aftermarket seeing some of the fruits of M2016 perhaps later than CB, where your margins have held up despite the volume headwinds? Kevin Nowlan - Chief Financial Officer & Senior Vice President: Hey, Brian. This is Kevin Nowlan. I'll take that question. But you're right, we had a really strong quarter for the Aftermarket & Trailer segment at 16%, and a portion of it was driven by some things that are unique to the fourth quarter. We normally have some year-end accrual adjustments and that might have contributed a couple million dollars for things like ICP. But the bulk of the performance or the results were driven by performance. Material, labor and burden performance and pricing actions is really what drove the 16%. And so, as I think about margins for that segment going forward, as we look ahead to 2016, I think you should expect it to be more in the 14% to 15% range as we look forward at these types of revenue levels. Now, having said that, you had asked a question about seasonality. Keep in mind, Q1 is typically the low point for the business given fewer selling days in the quarter. So we would expect it to be a little lower in the first quarter. But for a full year 2016 basis, we're expecting 14% to 15% margin, which is a little higher than what we've guided to in the past.

Just a follow up to that. Material, is that supply reengineering or is it just these are made of steel and steel prices have fallen? You don't necessarily have to pass that through like you do with OEMs and fleet customers. Kevin Nowlan - Chief Financial Officer & Senior Vice President: It's less to do with the first piece that you mentioned, reengineering, and more to do with material performance initiative, which is improving our cost structure overall, as well as there is a little bit of a tailwind we get from steel index improvement on a year-over-year basis. But I'd say it's a healthy mix of both, as well as labor and burden performance initiatives and pricing actions. It's a combination of all those things.

Okay. Second question, back in commercial vehicle, two maybe kind of offsetting issues or kind of questions just around market position within North America and Class 8. On the one hand, one of your – so first subquestion is, one of your competitors ran into supplier issues with Class 8 and blamed that for their loss of market share. Did you benefit from that competitor's loss of market share in North America? And then, second question, one of your major customers, Daimler, is producing more axles in-house. How should we think about them using that capacity in light of the Class 8 build decline that you're forecasting? And are they going to try to keep that full perhaps by incenting some of their fleet customers to choose the in-house axle and how would that affect Meritor? So two issues, kind of gain of share on the competitive supplier issue and then kind of in-house competitor at Daimler. Jeffrey A. Craig - President & Chief Executive Officer: Sure. Hey, Brian. This is Jay. Good morning. Yeah. On your first question, certainly, as I mentioned in my comments, we had an excellent year of execution. I think, most importantly, our customers would say we executed virtually flawlessly. So, we did see some opportunities to fill in some gaps in the market from various suppliers, but I think it still is a longer-term trend of us winning business. And so, I guess, to answer an unasked question, do we see a step back, because certain suppliers will be coming back online, not of any meaningful amount. We think these revenue gains have been – market share gains have been of a more permanent nature. And I really give credit to our team, especially from the supply chain and manufacturing side, for just doing an excellent job. On the second question on Daimler, this resurrection issue that was earlier in the year, we've seen our penetration stabilize, as we spoken to earlier, and we expect that environment to continue with stable penetrations going forward and have that understanding with our customer. We are still the majority supplier of Class 8 drive axles to Freightliner and other Daimler products, and we expect to continue that position for the long term.

Okay. Thank you. Jeffrey A. Craig - President & Chief Executive Officer: Thank you.

Thank you for your question. Your next question comes from the line of Patrick Archambault of Goldman Sachs. Please go ahead. Patrick K. Archambault - Goldman Sachs & Co.: Yeah. Thank you. Good morning and congrats on the good results. A couple from me. I guess, maybe just more detail on the self-help. I think one of the things that pleasantly surprised us is how you've been able to maintain the margin guidance for M2016 of 10% under significantly more difficult volume scenarios than you had initially envisioned. And so, just as we think about bridging the final piece to that 10%, where is the lowest hanging fruit? I think you had outlined the plan which had some restructuring, labor and burden benefits as well as I think redesign and maybe even price downs for some of your own suppliers. How should we think about the stuff that's – the biggest levers that are left to pull? Kevin Nowlan - Chief Financial Officer & Senior Vice President: Sure. Good morning, Patrick, this is Jay. Good question. As we look at it, I would say it's just more the same. I mean, as we look at the pillars of the margin improvement, you can look at purchasing cost reductions, labor and burden cost performance improvements, pricing improvements. As we look at this last year at the M2016 program, I would say, those are the three main pillars again. And as you would expect, we have 12 to 24-month pipelines on the cost reduction efforts and the pricing initiatives that we review and make certain we have all the steps to ensure that we have execution on those. And that's why you're hearing us going out with confidence today. We'll achieve those targets even in what most people would call a very…

Thank you for your question. Your next question comes from the line of Colin Langan of UBS. Please go ahead.

Oh, great. Thanks for taking my question. Can you give any color on the Commercial Truck margins? They're down a bit, looked like almost like a 24% decremental in the quarter. And your comments about Aftermarket, does that – any color on how we should think about the Commercial margins into next year? Kevin Nowlan - Chief Financial Officer & Senior Vice President: Yeah. I mean, the real driver of the Commercial Truck margins has been revenue. And so, if you think about that on a decremental basis, I think on a year-over-year basis, it's actually more like 10%. And again, our typical contribution is more in the 15% to 20% range. And so, as we've seen revenue come down for the reasons we talked about, FX being the primary driver, we've been able to mitigate some of that impact through our performance initiatives. So, it's just been a bigger revenue decline in the Truck segment, which has had a bigger impact on the margin, but performance is still mitigating that.

And I mean, in terms of, you've indicated Aftermarket will be up – I got them and I have a hard time to do the math. Does that imply that there should – do we still need to see Commercial Truck margins to be up or can it be flat next year and you can hit your overall 10% target? Kevin Nowlan - Chief Financial Officer & Senior Vice President: I think I would just say that, overall, we're driving toward 10% from a full company basis and I know there's a lot of focus on the Aftermarket & Trailer in the performance that it delivered. And I would tell you that if you look at the full year performance of that business at 14%, we're expecting to see even a little bit of improvement into 2016 on that. But you should expect for the whole company to be up 50 basis points, we need some contribution coming from really both segments.

And can you give color on the tax guidance? It's holding at 15%, but you did have some reversals of the valuation allowance, thus, you expect more to come? Wouldn't that imply that your effective GAAP tax rate would start going up? Kevin Nowlan - Chief Financial Officer & Senior Vice President: It would and that effective tax rate actually already contemplates the fact that there are some non-cash tax expenses in that number. So, if I look ahead to 2016, and we expect those jurisdictions where we just reversed the valuation allowances to generate income tax expense in the upcoming year north of $10 million, that's part of our effective tax rate guidance of 15%. If you were to strip out the fact that that $10 million or so is actually non-cash, an equivalent tax rate on more of that cash basis would be more like 10%. So, we are seeing that headwind in the 15% guidance number that we're providing you. And the cash basis is actually something lower.

Okay. But I mean, if you have further allowances next year which are – could that – there's risk to the rate going up next year if you have further ones again. Is that right? Kevin Nowlan - Chief Financial Officer & Senior Vice President: Absolutely. So, if that happens, we would have a – let's say, for instance, we had a jurisdiction like the U.S. where we have a lot of deferred tax assets and large valuation allowances. If we reverse those valuation allowances, we would generate a substantial one-time book income tax benefit. And then we would start booking tax expense through the EPS line on a going-forward basis on future earnings. But we would continue to recognize the cash benefit associated with monetizing those deferred tax assets, we think into the early part of next decade. So, we think there's a real substantial benefit for us to continue to realize whether those valuation allowances are reversed or not.

Okay. All right. Thank you very much for taking my question. Kevin Nowlan - Chief Financial Officer & Senior Vice President: Yeah. Thanks, Colin.

Thank you very much. Your next question comes from the line of Irina Hodakovsky of KeyBanc Capital Markets. Please proceed.

Good morning, everyone. This is Irina on for Brett Hoselton. I had a couple of questions. Today's 2016 EBITDA margin guidance, 10%, how does that relate to your longer-term anticipated margin targets which you were going to introduce in December? Should we view this kind of as a directional sign of what we can expect going forward, or is this just 2016 guidance, the same as before, 10%, and you are not ready to provide longer-term targets yet? Jeffrey A. Craig - President & Chief Executive Officer: Good morning, Irina. This is Jay. Good question. Again, we're extremely proud and confident that we will achieve that 10% margin guidance. As I've said earlier, we feel confident we have the programs in place to achieve that. As far as for the outlook beyond that, that's what we'll be addressing in a month from now in December, so about four weeks from now, and be talking through that in some detail. I think, as we've said earlier, we think there's still opportunities but we're not ready to, specifically, to mention how much those are, but we think there's still opportunities to increase margin in the years to come.

Thank you. That's helpful. And then your North American Class 8 outlook appears a little conservative relative to the latest update from the industry. How do you view your initial guidance? Would you say you're on the conservative side, right in line with what you're seeing or hard to imagine, but perhaps maybe you've been optimistic? Jeffrey A. Craig - President & Chief Executive Officer: I think we feel we're shooting it pretty straight at some broader range than we typically give just because of the recent volatility in the market. So we've given a little broader range. Obviously, the most important thing is it supports our revenue guidance. So we feel that range is appropriate for what we've guided for the total revenue for 2016. As we look at that and look at the market factors, there are obviously, a lot of positive market factors. The fleets are still extremely profitable. The utilization rates are very high. Some of the negatives are the fleet age is coming down to more historic norms, and the used truck prices have also declined. I think the main thing we look at, like everybody is, the order data. And if we continue, if there's a trend that continues that occurred in October, where the orders for October were below the five-year average, it would put us towards the lower end of that range or put pressure on that. And if the orders over the next few months come in at or above that five-year average, it would put us towards the upper end of the range or above it. So that's what we're watching closely over the next few months. But I think we feel we're shooting it pretty straight, as we said today.

Thank you very much for that detail. Very helpful. One last follow-on question on that. In terms of your capacity utilization, I know prior to the restructuring efforts a few years back, we discussed that at 275,000 units for the industry, 270,000 units, you would still be able to utilize your capacity quite effectively. Now that you are looking for a calendar year outlook that is a little bit below that 260,000 units, 270,000 units, how do you feel, with, of course, the latest actions taken internally, how do you feel in terms of your capacity utilization at these lower production rates? Jeffrey A. Craig - President & Chief Executive Officer: I think we feel good about it. I think if you look at one of the charts Kevin covered on slide 13, you can see we have new business wins of almost $175 million coming in that we feel go a long way towards offsetting the expected market decline here in North America. So we think that utilization could still run quite high through 2016 as we bring on that new business.

Thank you very much. Congratulations on an excellent quarter. Very well-executed year, guys. Congratulations. Jeffrey A. Craig - President & Chief Executive Officer: Thank you very much. Kevin Nowlan - Chief Financial Officer & Senior Vice President: Thanks, Irina. Jeffrey A. Craig - President & Chief Executive Officer: Thanks.

Thank you for your question. The next question comes from the line of Neil Frohnapple of Longbow Research. Please go ahead.

Hi. Good morning, guys. And congrats on a great quarter. Kevin Nowlan - Chief Financial Officer & Senior Vice President: Thank you. Jeffrey A. Craig - President & Chief Executive Officer: Thank you.

Just to clarify, the EPS guidance does not include any equity repurchases, correct? Kevin Nowlan - Chief Financial Officer & Senior Vice President: It includes those that we've executed today. So it includes the $20 million that we executed in the month of October, but nothing looking forward beyond that.

Okay. So that would be all upside of the current $1.60 to $1.70 guidance? Kevin Nowlan - Chief Financial Officer & Senior Vice President: That's correct.

Okay. And then the medium-duty outlook for North America of a 6% to 10% decline seems to be a little bit more bearish than other component suppliers or industry forecasters are projecting for next year. Are you guys seeing weakness currently, or are you just taking a more conservative view just based on what's transpiring in the cost market? Jeffrey A. Craig - President & Chief Executive Officer: I think we're maybe more at the conservative side of the spectrum, but remember also that has a much smaller impact on us. Our exposure to the medium-duty is primarily through Navistar where freight – because freightliner tends to be virtually 100% insourced on that product. So we tend to be less sensitive to that market movement, far less sensitive than Class 8.

Okay. Great. Thanks very much, guys.

Thank you very much, indeed. Your next question comes from the line of Itay Michaeli. Please go ahead.

Great. Thank you. Good morning, everybody. Kevin Nowlan - Chief Financial Officer & Senior Vice President: Good morning.

Just a few questions. Maybe to follow-up to Pat's question on margins for 2016; slide 13, the sales walk is helpful for fiscal 2016. Could we maybe run through an EBITDA walk as well in terms of the margin impact from some of the revenue drivers for 2016? Kevin Nowlan - Chief Financial Officer & Senior Vice President: Yeah. I mean, clearly you can see what our expectations are as it relates to revenue with revenue slightly down and you would expect that and we would expect that, overall, revenue is not going to be a positive contributor for EBITDA performance in the year, which just tells you that where we're expecting to see the EBITDA improve on a year-over-year basis and where margins improve is really coming from our performance initiatives: material performance, labor and burden performance, continued discipline around cost management including our legacy costs, all of those things are the types of things that we expect to continue to drive. And remember, the last two years, we've driven 230 basis points of improvement with revenue down. And so what we're suggesting this year is, hey, we are expecting to see another challenging market just like we've seen in the last couple of years. But once again, we're expecting to drive the same types of performance to improve our margins 50 basis points in the year.

Great. That's helpful. And then as we think about the new business that you've been winning – and maybe it's a little bit early to talk about fiscal 2017. But any way of how to think about the incremental new business contribution from what you've won to-date, roughly speaking, for 2017? Trying to think about your kind of growth profile outside of the markets. Kevin Nowlan - Chief Financial Officer & Senior Vice President: What I would say is, I mean, where we stand right now, obviously, we've indicated that we're going to have achieved $275 million of the $385 million of new business wins in the 2016 P&L, which just tells you that the other $110 million or so is coming after 2016. Not prepared to provide any more specific detail than that as we look to what years those hit, 2017, 2018, et cetera. But we would expect to provide more color on that at Analyst Day in December in terms of what our revenue outlook is as we look beyond 2016.

Great. That's helpful. And then just a quick last point of clarification. I think earlier on the pension, you mentioned about $100 million in liability. Is that global and do you maybe have the rough split between the U.S. pension and the global pension plans? Kevin Nowlan - Chief Financial Officer & Senior Vice President: That's global. That's global. And it's predominantly – the underfunded position is predominantly in the U.S. We're actually overfunded a little bit in the United Kingdom on a U.S. GAAP basis. But on a blended basis, we're a little bit over $100 million underfunded globally. And you'll see those specific numbers when we file our 10-K which is slated to go out I think about a week from today.

Great. Thanks so much for taking my questions. That's all I have. Kevin Nowlan - Chief Financial Officer & Senior Vice President: Thank you.

Thank you very much for your questions, ladies and gentlemen. That concludes your Q&A time for now. I'd now like to turn the call to Mr. Jay Craig for the closing remarks. Jeffrey A. Craig - President & Chief Executive Officer: Thanks for joining the call today. If you have further questions, please feel free to contact Carl. We look forward to seeing you in December and especially looking forward to rolling out our next strategic plan. Thank you.

Thank you for joining in today's conference, ladies and gentlemen. This concludes the presentation. You may now disconnect. Good day.