Federal-Mogul Management Discusses Q1 2013 Results - Earnings Call Transcript

Federal-Mogul (NASDAQ:FDML)

Q1 2013 Earnings Call

April 24, 2013 10:00 am ET

Executives

David Pouliot - Director of Investor Relations

Rainer Jueckstock - Co-Chief Executive Officer, Chief Executive Officer of Powertrain Division and Director

Michael T. Broderick - Co-Chief Executive Officer and Chief Executive Officer of the Vehicle Components Solutions Segment

Alan J. Haughie - Chief Financial Officer, Senior Vice President and Member of the Strategy Board

Analysts

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Brian Sponheimer - Gabelli & Company, Inc.

Fred Taylor

Operator

Good day, ladies and gentlemen, and welcome to the Quarter 1 2013 Federal-Mogul Corporation's Earnings Conference Call. My name is Kathy, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would like to turn the call over to David Pouliot, Director, Investor Relations. Please proceed, sir.

David Pouliot

Thank you, operator, and again, we apologize for the technical difficulties with the phone line. But welcome to Federal-Mogul's First Quarter 2013 Earnings Conference Call. On Slide 2 is the company's safe harbor statement. Please note that the contents of the presentation slides and the comments and discussions provided by the speakers are covered by the provisions of the statement. Please turn to the agenda slide.

Our speakers today will provide an update on our first quarter results, with comparisons of both Q1 2012 and Q4 2012. They will also cover some recent developments in the company. Rainer Jueckstock will provide a brief total company results overview, then he and Mike Broderick will discuss the market and current developments relating to their respective business segments. Then Alan Haughie will cover additional details of the first quarter. And after their comments, we will open up the call for your Q&A. Rainer?

Rainer Jueckstock

Thanks, David. Good morning, everybody, and please turn to Slide 4. I want to start by saying that the company is running at a better performance level. This will start -- set on levels from previous years. We had sales of $1.7 billion and net income from continuing operations of $21 million during the quarter. EBITDA was $141 million or 8.3% of sales. We have made good progress on the restructuring actions and have implemented numerous actions to improve our margins. These are actions in virtually all areas of our cost base. Transactions, along with better sales volumes, have brought about better operating performance. Not at the level we want, but a solid foundation for future growth. I'm also encouraged to report that in spite of European headwinds, our year-over-year sales performance in our main operating region is as at or even better than the vehicle production rates in those regions. We are benefiting from solid light vehicle production rates in North America and most of our plants are running at stable level with smooth order flow. While light vehicle production is strong in North America, it remained weak in Europe. The region of the greatest growth continued to be China. Unfortunately, I cannot report the same good news in the commercial vehicle and industrial market, as all regions were down in these segments versus prior year's level. The aftermarket outlook is generally stable, in the near-term, according to the macroeconomic factors in some mature markets, there are growth opportunities in developing markets where the car part is increasing.

Please turn to Slide 5. As you know, in September 2012, Federal-Mogul began operating these 2 reporting segments led by our individual segment CEOs and management teams. I will next cover the Powertrain segments and then turn to -- the call to Mike Broderick for his comments about the Vehicle Components Segments.

Please turn to Slide 6. North America was a very solid market for us in quarter 1, especially in the light vehicle market. Europe remained weaker, with Powertrain sales down about 5%, while light vehicle production was down about 12% versus first quarter 2012, and commercial vehicle production was even down, 13%. We continue to benefit from strength in the Chinese market, where our sales were up 19% versus quarter 1 2012, while light vehicle production in China was up 12% from quarter 1 2012. The EBITDA of $90 million in Powertrain is driven by better volumes, SG&A reduction and the initial benefits of restructuring programs, including the Syntertech divestiture. We are also downsizing capacity realignment or closure actions that have begun and soon will be completed in the next few quarters. On these further actions, we have started customer and employee consultations at several locations and we will provide also updates in due course.

Please turn to Page 7. Here's another way of looking at our sales and EBITDA performance for quarter 1. It looks in -- if you look sequentially since quarter 1, 2012. You can see that the European market declined in related negative product mix along with other operating factors drove the EBITDA down by a total of $75 million from a baseline of $107 million in the first quarter of 2012. In quarter 1, 2013, we gained back $58 million versus the low point we reached in quarter 4, 2012. Alan will cover more details in specific quarter-over-quarter drivers in terms of volume mix, material, productivity and other factors, so I will leave those details to him.

Please turn to Page 8. Each year, Automotive News, Ernst & Young and also sponsors conduct a product and process evaluation called PACE Awards. For 2013, Federal-Mogul Powertrain had 3 finalists. The final awards were given out recently, and Federal-Mogul earned the best awards in the product category for our IROX bearings and in-the-process category for the injection-moulding process used to make our hydraulic unit pistons for automated gear boxes. IROX is an innovative polymer-coated, engine banks that has experienced rapid success for its ability to withstand harsh operating environments caused by today's highly loaded engines and the challenging lubrication condition of start-stop engines. In less than 3 years IROX bearings have launched with 4 largest global OEMs in 3 continents. Federal-Mogul expect to produce more than 70 million IROX bearings annually in 2016. In North America, within the next 3 years, 30% of the new engines assembled will use IROX bearings in both passenger cars and the heavy duty segments. The unipiston is used in high-pressure automatic transmission, where 6 or 7-speed is a current standard, moving to 8 or even 10-speeds in coming years. The Federal-Mogul rubber injection-moulding process enabled our products to meet customer requirements for smaller packaging and even higher pressure. Federal-Mogul has been and continues to be one of the most awarded suppliers, earning 12 PACE Awards since the competition started in 2003. This collection of awards over 10 years is a very solid reflection that FM's -- Federal-Mogul's core Powertrain products and technologies in piston, rings, bearings, spark plugs and axles are market-leading, key-enablers for high-efficient, downsized combustion engine for passenger cars, trucks and for industrial engines. We see some -- I will pass the call to Mike for his comments about the -- his segment.

Michael T. Broderick

Thanks, Rainer, and good morning. For the quarter, revenue for the vehicle component segment was $737 million, which is down 2% on a constant dollar basis compared to Q1 2012. Overall sales in North America were down about 7%, as we exited some unprofitable contracts and reduced export deliveries to Venezuela. EMEA, Europe was a strong market for us in the first quarter 2013, with total sales up 8%, and our new aftermarket revenue in the region was up -- and our new aftermarket revenue in the region was up 22% due to increased sales in our new distribution agreement with BERU Ignition products. As with the Powertrain segment, our OE sales in Europe were down, reflecting the drop in light vehicle and commercial vehicle production in the region. EBITDA was at $51 million, down slightly from 1 year ago. On a sequential basis, our EBITDA bounced back strongly as we are starting to see the benefits of our restructuring actions and the plan to station off certain underperforming contracts. We are on schedule with our previously announced site closures and we are continuing to assess and rationalize the footprint of vehicle component facilities so that we are ultimately utilizing our capacity and achieving savings in our manufacturer costs. The last point on this slide is that we are focusing on what I consider to be fundamentals, the first byproducts to meet the needs of our customers for their region, working to reduce our material costs, optimizing product design for assembly and last, deploying new commercial strategies across all our customer generals to grow the equity of each of our leading brands. On the next slide, the waterfall chart shows the quarterly walk from the Q1 2012 results for the vehicle components segment on the left, Q1 2013 on the right. In Q1 2012, we had EBITDA $58 million. The red bars represent a $21 million reduction in EBITDA over the remainder of 2012, primarily due to our lower volumes over the period and stabilization of operational performance combined with project investments, including restructuring and marketing. In Q1 2013, we gained back $14 million versus the low point of Q4 2012. On the next slide, during the first quarter, there were some very significant successes within the vehicle components segment that I'd like to highlight, as they have a direct impact on our business going forward. During the quarter, we received several conquest bookings for our low-copper brake friction material from global auto manufacturers. Our low-copper friction material meets the Californian and Washington state environmental requirements for 2021. And these bookings are significant as they are contracts for vehicle platforms sold around the world. We expect to introduce a low-copper friction to the aftermarket very soon and we'll be communicating more about this to the customers in the near-term. Also during the first quarter, among other patents received, we were awarded a U.S. patent for our significant beam style wiper blade technology. The last point on this slide underscores the fact that we are extending the distribution channels and reach of our aftermarket products and brands. We have won new sales in chassis, gaskets and lighting to major aftermarket customers in Europe and North America. We recently launched our Ferodo brand in India, our Payen brand in Australia. And finally, I want to note that we are in the process of opening up a new aftermarket distribution center in Russia, which is a key growth region for us. At this time, I'll turn the call over to Alan.

Alan J. Haughie

Thank you, Mike. Now please turn to Slide 13 for more details on our first quarter earnings performance. Our results are presented here on a continuing operations basis. During the quarter, we divested our Syntertech components business in France, which for the year 2012, had sales of about $70 million and a negative EBITDA of $13 million. This business was taken over by a French industrialist for a payment by the company of EUR 32 million. The recognition of the ensuing loss on divestiture, combined with the losses that that business incurred during the first 2 months of 2013, are shown as a one-line entry under loss from discontinued operations of $53 million. So on a continuing operations basis, the company report sales of $1.7 billion, net income of $21 million and EBITDA of $141 million. However, sales are indeed $41 million lower than last year, including about $8 million due to adverse currency impacts. Now these sales movements are best explained by individual segment. But in general, there is a carry over into 2013 of the lower European light vehicle production levels from late 2012 combined with lower commercial vehicle production and lower industrial demand on a global basis. Against this backdrop, our sales have remained fairly robust, with a modest 2% decrease, far better than what we expected based solely on vehicle production levels, given the size of our European business. Gross margin decreased by $26 million or 1.1 percentage points. Although we have experienced stronger sales growth versus the market, the shift in mix, meaning lower European sales and lower global commercial vehicle sales has carried over from 2012 and continues to impact our margins. However, with the cost reduction actions now taking effect, our first quarter gross margin of 14.8% is better than both the third and fourth quarters of 2012, which were 13.5% and 10.8%, respectively. Interest expense is also lower than the prior year due to the rolloff, about midway through the quarter, of out-of-the-money interest rate swaps established in 2008, which was costing the company about $40 million per year or roughly $10 million per year -- sorry, per quarter for interest expense. The remaining year-over-year variances on the P&L are relatively small, except for the change in other income, which mainly relates to currency exchange gains this year versus exchange losses recognized last year. And so our net income from continuing operations is $21 million versus $37 million last year, but we do report a net loss attributable to Federal-Mogul, including the loss from discontinued operations of a net $34 million loss versus net income of $32 million last year.

On Slide 14, we have our reconciliation of our EBITDA for the period to our net income from continuing operations. And there are a couple of changes where we have note in the reconciliation. Firstly, interest expense is lower this year due to the interest rate swaps and the change on the quarter, as I mentioned a moment ago. And secondly, due to the freezing of the U.S.-funded pension plan in 2012, the non-service portion of the expense is negligible for 2013 hence the reduction in the charge from $9 million per quarter in 2012 to $1 million per quarter this year.

Turning now to Slide 15, which describes the first quarter performance of the Powertrain segment. Sales decreased by $25 million or 2%, with $5 million of the drop being due to adverse currency movements. Furthermore, when we strip out the year-over-year impact of the BERU spark plug acquisition of $14 million, the organic year-over-year sales decline was $34 million or 3%. With a 1% or $3 million increase in North America, a 3% or $4 million increase in the rest of the world, all more than offset by an 8% or $41 million decline in Europe. However, this European sales decline of 8% should be measured against reductions in European light and commercial vehicle production of about 13%. So this demonstrates solid growth in market share compared to the first quarter of last year. Now our operational and overhead cost control actions are starting to take effect. So in spite of the European volume and mix headwinds, if you refer to the waterfall on the bottom right-hand side, you can see the that we lost $17 million of EBITDA on a net $25 million of revenue decline, a healthier conversion than we saw in 2012.

Turning now to Slide 16, which describes the first quarter performance of the VCS segment. Revenue declined by $17 million or 2% year-over-year, including $3 million due to adverse currency movements. Furthermore, as Mike mentioned, we entered into a European distributional agreement for admission products during the quarter and this added about $27 million to European revenues. Again, stripping out these factors leaves VCS with an organic revenue decline of about $41 million or 5%. And this reflects a 7% decline in North America, largely as a result of the managed exits from low-margin business, as well as the decline in shipments into Venezuela from our U.S. distribution centers as a result of the currency devaluation there. European sales declined 3%, largely due to the OE portion of the business declining in line with the reduced European vehicle production of about 13%. So EBITDA was $51 million compared to $58 million in 2012. And next shown on the chart, on the bottom left of the slide, VCS is experiencing a similar trend to the Powertrain segment. EBITDA has increased, but in absolute dollar terms and as a percentage of revenue since the third quarter of 2012.

Now on Slide 17, we provide a summary of the first quarter consolidated cash flow. Cash from operations was an outflow of $50 million compared to an inflow of $5 million in the prior year. The cash consumed by working capital, in total, was about $106 million this quarter compared to $77 million last year. The 2013 figures include $23 million of additional working capital as a result of the new VCS European ignition distribution agreement, with the balance of $83 million largely reflecting normal first quarter working capital requirements. And although we did factor about $25 million of long-dated accounts receivable in the quarter, the majority remains unfactored as of March 31. Cash outflow from investing activities includes the payment made to divest the Syntertech business during the quarter, which largely offset the $37 million reduction in capital spending, and this leaves us with $269 million in cash and just over $500 million in undrawn revolver. But let me talk a little more about the impact of the Syntertech divestiture. We paid about $42 million to rid ourselves of $13 million of EBITDA and the cash flow that was worse than the $13 million dollars of negative EBITDA. So this is very much the way we would view restructuring or plant closure, except this was a more economical option. And also, when I refer to the balance of first quarter cash flows being due to normal seasonal movements, I mean that the working capital movements, such as the increase in accounts receivable, are in line with the increase in sales from the end of the fourth quarter of 2012 and the increase in inventories and readiness for the peak selling season in the aftermarket, which is the second quarter. Now recall that on a quarter-over-quarter basis, our sales have increased by $121 million. And in fact, our days sales outstanding have actually fallen from the end of December to the end of the first quarter. Historically, the quarterly cash flow pattern for Federal-Mogul have shown a pattern of an outflow in the first quarter followed by roughly breakeven or positive cash flows for 2 quarters and then a healthy fourth quarter. We didn't see that pattern in 2012 because, over the course of last year, terms extensions to aftermarket customers took effect. This phenomenon will not recur in 2013. So that concludes my comments about the quarter. Operator, please provide the instructions for the Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from the line of Patrick Archambault of Goldman Sachs.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Great. Yes, so I guess I just wanted to follow up on -- start on the cash flow slide. Can you give us -- okay, so I get the seasonal pattern that you've outlined. And I take it, obviously, the suggestion is that we should have much more of a traditional set of quarterly seasonal behaviors than we did last year. How do we think about overlaying the restructuring needs on top of that? And specifically, I think in the press release, you refer to, on the first page, $80 million in restructuring charges that are related to further actions. Those are charges, not necessarily all cash, of course. But then, I think further, and you referred to some of these new programs you're taking on specific to the engine business, which are just kind of in the processes of sizing up now. So how do we kind of walk through -- you've kind of given us a map for the fundamental cash flow, but how do we sort of layer on the transitional realignment cash needs as well?

Alan J. Haughie

Thank you, Pat. That's a good detailed question. I'll do my best to answer, without giving any forward-looking statements. The -- when I referred to the historical pattern, it's worth bearing in mind that given that Federal-Mogul is an automotive supplier, there has -- there is that pattern or tradition, if you like, of us always having to restructure. So if you look through our historic cash flows, there's always something like, I don't know, it's gone up between $30 million to $60 million a year of restructuring in some form or other. So the 2013 figure is maybe a little bit higher, given the projection that we just made in the press release, but not -- they're not substantially so that they would be significant enough to distort the trend that I've described. Also bear in mind that, at least in the absence of a refinancing, interest expense or interest payments are going to be $10 million per quarter lower than they were last year, given the rolloff of the swaps.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay, sure. I mean, just following up on that. Any kind of maybe quantification of what you guys expect to spend on restructuring this year? I know that indicate you're -- in the K, you outlined $400 million CapEx number, and I believe part of that included some restructuring CapEx. But obviously, there's going to be a severance piece on top of that. So maybe give us a sense of what the incremental might be?

Alan J. Haughie

Yes, I can give you a rough breakdown actually of the $80 million. We quoted in the press release, about $80 million of approximately that outflow. Roughly speaking, it's about $50 million to $60 million of severance and exit costs and the balance being mainly CapEx and essentially, within the normal CapEx level. But nonetheless, the $80 million is comprised roughly of those 2 components.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay. So if I kind of map out about $100 million in CapEx a quarter, which you were pretty close to in line on this quarter, and then some kind of assumption on $50 million to $60 million in terms of severance payments of -- I'm capturing a good chunk of your realignment cost for this year from a cash perspective?

Alan J. Haughie

Yes.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay. Okay, great. I guess just going to some of the walks, which are always helpful, maybe starting in the Vehicle Components Solutions one on Page 16. I'm sorry, I might have missed it, but what -- can you -- 2 questions there. Can you give us a sense for what project cost is? And then secondly, I believe that part of the approach here, which involve kind of getting more value out of the brands that you have and reinvesting in service, those are all things that I think most people would agree with, but they probably do entail some reinvestment in SG&A, so -- and as we think about this walk going forward, I'm sure volume and mix gets better, but how much reinvestment is -- should we be thinking about for this particular segment?

Alan J. Haughie

Yes. The majority of the project costs, Pat, are sort of one-off costs that are related to the plant closures in VCS, essentially, the bits that essentially cannot be classified as restructuring in the P&L account. And then something else. The VCS segment, as you know, is going through a degree of reinvention. And that does require heavier marketing and advertising presence as we continue to promote our global premium brands. And there are some expenditure being incurred in that respect also.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay. So I guess, I mean, the way to characterize it, sort of volume obviously, knock on wood, getting better, and then -- but there will be some offsets from the reinvestment as you put that strategy into play in the coming quarters?

Alan J. Haughie

Yes. And something else.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

And then I would have a -- last one for me, and then I'll turn it over. Just on Slide 15, the similar walk. I guess, just sort of one thing that surprised me is that you did this -- the -- you've significantly narrowed the gap in terms of the year-on-year declines in EBITDA, which is obviously pretty important here. And it seems like, if I read this correctly, you did it without really a big tailwind in structural costs. And I understand that you have some of the sort of fixed cost restructuring is coming, but I think I remember talking about temporarily furloughs and taking advantage of government programs to take out some temp employees being something that you could take advantage near-term and maybe -- why is -- how come we're not seeing that in there? Is that maybe just offsetting inflation in other areas? Just wanted to frame that a little bit more.

Rainer Jueckstock

Yes. Patrick, Rainer speaking. If you run a plant and you have high-speed and then you put on the brake and you have to take the plug, and shortly after, you get the big order again and you have to run even though it's weakened, this volatility in demand is creating a significant inefficiencies in plants. And we have to admit that in quarter 4 especially, we have been probably too optimistic and we have been too late in some of these actions. And I think in quarter 1, we have been, by far, better able to follow these ordering patterns into different regions and different customers. And we took advantage, in quarter 1, definitely, of our relatively flexible workforce in Europe. And we have, historically, a flexible labor force in the U.S.. And so we bounced, to a certain extent, in quarter 1 was a better adoption of this up and down into order inflow. And we are not by far where we have to be. And it's still, if you see customers like we saw just last week, 2 customers, large OEMs announced significant reduction in the 2013 outlook. And virtually, on the same day, they cut all those for the month. And we are able to adjust our capacity in a better way than we did before. So that's, more or less, the trend. It's still -- we would like to operate in much more stable environment, but I don't think that is near-term future.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Got it. Actually, if I could sneak one more in there, just based on the color you've provided there, which was interesting. I mean, JCI was out yesterday saying they thought European production might be down only 3% in the calendar second quarter, based on what they were seeing, and they actually were hopeful that you might actually have a little bit of small tail in the second half. Is this -- like, just based on the order flow that you're seeing, is -- are you seeing something a little bit different than this, a little bit more cautious from the behalf of your customers?

Rainer Jueckstock

No. I think we are all somewhat carefully optimistic about the second half of the year, and maybe starting in quarter 2 for the European demand. We do see the volumes, this concern in heavy duty, which is significant part of our business. And the segment heavy-duty is still down. And there are more, I would say, negative news in the order books than positive news. Passenger cars, still -- some of the big OEMs in Europe are benefiting from the export to the U.S. or to the -- to China and India. And so we are not too much concerned about cost of decline in the passenger cars in Europe. We are carefully optimistic. But heavy-duty and industrial is still a concern.

Operator

Your next question comes from Brian Sponheimer of Gabelli & Company.

Brian Sponheimer - Gabelli & Company, Inc.

So when we spoke last quarter, Alan, I think you mentioned $300 million is kind of the cash balance necessary to run the business, and you're obviously a little bit below that right now. Anything structurally changed regarding your thoughts on the cash balance that you want to run? And what sense of urgency is there now versus, say, 3 to 6 months ago?

Alan J. Haughie

It's a good question. The approximate cash balance of $300 million being roughly the minimum is about right, the daily fluctuations. As I mentioned, that we did factor some receivables in the quarter a little, $25 million. The facilities are in place for us to execute a greater, far greater degree of factoring, should we so wish. So -- but the critical point, I think, for us, really, is the cash management over the next 3 quarters, as I sort of outlined in my answer to Patrick.

Brian Sponheimer - Gabelli & Company, Inc.

So if you're thinking about the next 3 quarters and we can kind of talk about it as it relates to profitability, which, by the way, congratulations on some very strong moves quarter-to-quarter. If we have profitability that's going in the right direction, we've got working capital and we've got CapEx, thinking about those 3 buckets, where do you see the most opportunity to help drive that cash balance to a healthier level?

Alan J. Haughie

Working capital, without question.

Brian Sponheimer - Gabelli & Company, Inc.

Okay. Can you elaborate a little bit there?

Alan J. Haughie

Not really.

Rainer Jueckstock

Rainer speaking. I can. I mean, if you think about -- we're entering into restructuring in order to improve the long-term position as a company. So it would not be prudent to slow down. It's opposite is the case. We want to speed up. To a similar degree, the statement is valid also for capital. When we invest currently in new programs and in new plants, we want to ensure that we do have a solid footprint and a solid capacity in place in all of our segments for future opportunities and we have to follow our customers and we do it in a very diligent way. So the restructuring and the capital investments are more for the long-term and therefore, the statements that the most critical source for short-term improvement on the cash position is the net working capital.

Brian Sponheimer - Gabelli & Company, Inc.

Okay. All right. Rainer, while I have you, it's good to get rid of the Syntertech. My question is, are there any other Syntertechs within the business that you see other as opportunities to do something similar in the next 12 months?

Rainer Jueckstock

We do have a few of what we call non-core operations. None of them creates a short-term headache because we do not have large loss-making positions left. We have several of our units in both segments where we would like to see and we pushed hard to see improved margins, but we do not have a large loss-making position left to Federal-Mogul.

Brian Sponheimer - Gabelli & Company, Inc.

Okay. And Alan, as I'm thinking again about cash and where we may be relative quarter-to-quarter, Q2, Q3, Q4, how does this relate to you looking to refinance quarter 4 where your Q3 and Q4, which is typically where you get some inflow back. Is that more or less where we should start thinking or when we should start thinking about you going back to the capital markets to try and refinance, in the best terms possible, potentially, without any sort of equity offering to dilute current shareholders?

Alan J. Haughie

That's a tough-loaded question. We are still very, very much focused on developing our refinancing plan at this point in time, Brian. It's a very, very significant focus of the company at the moment.

Operator

Your next question comes from Fred Taylor of MJX Asset Management.

Fred Taylor

I think most of them were answered, but would you expect to be in your revolver throughout the year, given that you're underneath the minimum $300 million in cash? And what might the high point in that revolver draw be?

Alan J. Haughie

Well, we're not in the revolver at the moment. And given my predictions -- they were predictions, I guess, for the remainder of the year. And I'm not anticipating a significant use of the revolver at this point.

Fred Taylor

Okay. So another way of saying you're getting closer to a cash breakeven versus almost $600 million of cash burn in the last 12 months? Is that fair for me to say?

Alan J. Haughie

Yes.

Operator

We have no further questions. I would now like to turn the call over to David Pouliot for closing remarks.

David Pouliot

Thank you, operator. If you can, please refer to Page 19. Before I close up the call, I'd like to inform you of a change to my assignment here at Federal-Mogul. After 6 years of heading up Investor Relations and transitioning to a new position. I'll be responsible for quality and customer satisfaction for the Powertrain segment, reporting directly to our Powertrain CEO, Rainer Jueckstock. In that role, I'm returning to operations, where I spent a considerable amount of career before taking on several different corporate roles here at Federal-Mogul during the last 10 years. Investor Relations will now transition to Steve Gaut, Federal-Mogul's Vice President of Corporate Communications and Investor Relations. Steve has been with Federal-Mogul for 5 years and has been involved in preparing our quarterly earnings releases and presentations, and we've always coordinated very closely in regards to the Investor Relations function. Before arriving at Federal-Mogul, Steve was at Delphi and GM for 23 years in several different roles, including 5 years overseas in Europe. So he has an extensive knowledge, not only about Federal-Mogul, but the global automotive industry. We will have a brief transition period, after which, I'm sure you will find that Federal-Mogul's commitment to providing information and access remains unchanged. Please note that Steve's contact information is shown above on Slide 19. In closing, I have enjoyed very much establishing and building relationships with everyone who has followed Federal-Mogul over these last 6 years, and I wish you well and look forward to speaking with you in the future. Okay, operator that concludes today's call.

Alan J. Haughie

I'm Sorry. David, we just -- we did just have -- operator, I see a question has just come in and I think we should give the person an opportunity to go ahead and raise the question if you're capable of bringing him in.

Operator

That's fine. The question comes from Jared Well [ph].

Alan J. Haughie

Okay. It appears that we have lost Jared. So okay, operator, that concludes today's call, so everyone may now disconnect. Thank you.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

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