Federal-Mogul's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Federal-Mogul (FDML)

Q1 2012 Earnings Call

April 24, 2012 10:00 AM ET

Executives

David Pouliot – Director, IR

Rainer Jueckstock – CEO

Alan Haughie – SVP and CFO

Analysts

Patrick Archambault – Goldman Sachs

Brian Sponheimer – Gabelli and Company

Presentation

Operator

Good day ladies and gentlemen and welcome to the first quarter 2012 Federal-Mogul Corporation Earnings Conference Call. My name is a Ferris and I will be your coordinator for today. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session. (Operator Instructions). As a reminder this call is being recorded for replay purposes. And I would now like to hand the call over to your host for today, David Pouliot, Director of Investor Relations. Please proceed, sir.

David Pouliot

Thank you operator, good morning and thanks to all of you for joining Federal-Mogul's first quarter 2012 earnings conference call. Before I begin, I would like to refer you to the company's safe harbor statement shown on this page of the presentation and included in the earnings press release filed this morning. Please consider my reference to the statement of notification of the applicability of the safe harbor provisions to today's call and the documents referenced during the call. Please turn to the Agenda Slide.

(Inaudible) start, Federal-Mogul's CEO will begin this morning's call by providing a brief overview of the company highlights for the first quarter. Following this overview, Alan Haughie will cover the detailed quarterly company and business segment financial results. We will finish with closing remarks and then open up the call for your Q&A.

Rainer Jueckstock

Yes, good morning. Thanks David. Good morning to everybody on the phone. As I am just since three weeks CEO of this company I will use this first call to introduce myself. I am born and raised in Germany and since 10 years I am living here with my family in the US and so it means some also of this US (inaudible). I am graduated college engineer and since two years I am with Federal-Mogul. I grew in Federal-Mogul in various function regions and product lines. I have been an application engineering, in commercial sales; I was as a crew controller for a few years. I was running a plant and since early 2005, I was running Federal-Mogul's powertrains and energy division. During this time I gained experienced running and developing operations and units in Europe, North America, in some big countries and I have been leading and participating in setting up new operations, joint ventures and acquisitions in India, Sweden, China, Russia, Turkey, Korea and virtually in every countries where Federal-Mogul is operating and has been. I know most of the OE product lines and units in Federal-Mogul and for many years, Federal-Mogul's aftermarket was one of my largest customer, but since a few weeks I am also intensively in (inaudible) in softer markets.

I took over a company with a proven (inaudible) especially on leading technology and so equipment OE portfolio. We continue to invest in technology and just yesterday evening, one of our proposals that final year awarded this award technology watch here into US. On the aftermarket, I think this company has a great set of premium plans and we provide exceptional service to our aftermarket customers around the world. And we do have on those OE and aftermarket a highly diversified customer base with strong regional presence in virtually all segments so it's likely (inaudible) or industrial applications. So we are well placed in growth and mature markets.

In the future I am going to run the OE segment of Federal-Mogul and I am going to ensure profitable growth with efficient use of capital and resources and the prime part for me to push for this growth will be to drive a focused approach around our core product lines we have in Federal-Mogul on a global basis. We want to enhance our competitiveness and customer orientation especially for this core product lines in every single market.

Federal-Mogul is a (inaudible) company that's excellent technology grants interpretation and we are responsible to persist into the future to create value for our shareholders customers and employees. One of the key task I got from the board of directors of Federal-Mogul is to prepare the company for a segmentation into OE and aftermarket segments. My team is focused on preparing this in the best way and the fastest possible and we see opportunities to find an optimal model for the two units which have very different customers, business models and processes. The customers and the market requirements of these two segments are very different. Think about those unique working capital requirements we have to serve our aftermarket operations compared with the capital investment requirements to expand and install capacity for our OE business around suburb. We believe that this segmentation will enable us to customize and optimize the decision processes should foresee two different segments.

Important for us is to do this segmentation in a way that we establish optimal relationship between the two segments OE and aftermarket going forward. These two segments will make business together in the long run and we have to ensure that this business runs in a way to create value for our shareholders, customers and employees.

I see segmentation could be done in different ways and we are currently putting together models to understand the pros and cons of each of this alternatives. It could go from an integrated aftermarket unit with limited manufacturing capabilities up to a fully integrated aftermarket unit with manufacturing capabilities for most of the product lines they are selling. We will put together these models and the decision for which model to go will be made jointly after the new aftermarket CEO is appointed with him and the board of directors so that we have to come an understanding how to go forward. We believe the new aftermarket CEO will show up in the next few weeks before end of quarter two, selection process is an advanced status.

Read the rest of this transcript for free on seekingalpha.com