Hello, everyone. My name is Jamie, and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion Earnings Conference Call. This is being recorded and a replay will be available later today. After the company’s presentation, there will be a Q&A session. At this time, I’d like to hand the call over to Paul Blalock, VP of Investor Relations. Please go ahead.

Thank you, Jamie. Good day everyone and thanks for listening to Garrett Motion’s first quarter 2020 conference call. Before we begin, I’d like to mention that today’s presentation and press release are available on the Garrett Motion Website at garrettmotion.com, where you will also find links to our SEC filings along with other important information about Garrett. Turning to Slide 2. We note that this presentation contains forward-looking statements regarding our business prospects, goals, strategies, anticipated financial performance, payments to Honeywell, and the anticipated impact of the coronavirus on our business. We encourage you to read the risk factors contained in our financial filings, become aware of the risks and uncertainties in this business, and understand that forward-looking statements are only estimates of future performance and should be taken as such. The forward-looking statements represent management’s expectations, only as of today, and the company disclaims any obligation to update them. Today’s presentation also uses numerous non-GAAP measures to describe the way in which we manage and operate our business. We reconcile each of those measures to the most directly comparable GAAP measure, and you are encouraged to examine those reconciliations which are found in the appendix to both the press release and slide presentation. Also in today’s presentation and comments, we will be referring to light vehicle diesel and light vehicle gasoline products by using the terms diesel and gasoline only. I will now turn to the main purpose of today’s call and with us today is Olivier Rabiller, our President and CEO; and Peter Bracke, our Interim CFO. I’ll now hand it over to Olivier.

Thanks, Paul, and welcome everyone to Garrett’s first quarter 2020 conference call. Let me start by stressing two points in line with the unprecedented crisis that the world and more specifically our industry are getting through. First, the health and safety of our employees is a priority. We have taken very early proactive measures that sometimes go beyond the recommendations of the government authorities where we operate, but we have also made efforts to support the communities where we operate by providing protective equipment and even producing turbos to equip specific positive pressure ambulances in China. Second, the nature of the crisis has stretched the flexibility of our supply chain to a level we never imagined before. Think about it. Our fastest growing plant in Wuhan was shut down for six weeks in Q1. The supply chain with a number of suppliers we have in China was stopped and then we saw the opposite, with China restarting at full speed at a time when critical supply from Europe was interrupted. In these circumstances, I’m very proud of the efforts and results achieved by Garrett’s team. This crisis is re-highlighting how responsive they are and how flexible our operations are. All of this gets us to the results we see on Slide 3. For the first quarter, we demonstrated Garrett's flexible operating platform and global capabilities amid the onset of the global pandemic. The crisis is obviously not over and the future remains quite unpredictable, but we continue to take crisis measures to confront the coronavirus outbreak which we will discuss in more detail later on the call, with the priority on safeguarding the health and well-being of our employees and supporting our customers and local communities. For the first quarter, our net sales totaled $745 million, down only 8.5% at constant currency due to lower customer volumes stemming from the impact of COVID-19, although we continue to outpace the overall industry as global light vehicle production was down approximately 25% in Q1 versus last year. This represents about 16 percentage points of auto performance despite the shutdown of our fastest growing plant for six weeks in our fastest growing region. We also generated $108 million in adjusted EBITDA and $57 million in adjusted free cash flow, which excludes the indemnity related payments, representing a conversion rate of 84% of adjusted net income. Our ability to quickly ramp up production in China and to restore our global supply chain contributed to the strong global growth in our light vehicle gasoline segment, which climbed 14% at constant currency in Q1. Despite the current crisis, we achieved positive organic growth in gasoline sales in all regions as a result of our new product launches and share of demand gains. While we’re encouraged by the resilient market conditions in China, we have seen the spread of COVID-19 around the world and are now facing significant auto industry challenges in Europe, the Americas, and also India. We have implemented numerous actions to adjust our operations, reduce our costs, optimize our cash position, and strengthen Garrett’s financial flexibility. During the first quarter and into early April, we fully drew down on our $470 million revolving credit facility. Our total liquidity was approximately $665 million at the start of the second quarter, positioning us to better withstand the substantial disruption across the global automotive industry and economies worldwide. We continue to preserve capital by implementing strict cost controls and cash management actions, including significantly reducing discretionary expenses and temporarily reducing pay for Garrett’s senior leadership team. On the CapEx side, as most of our capital expenditure is related to volume growth, we are also reducing or postponing commitments for 2020 by up to 40%, while preserving our new product launches in both the near and long term. Turning to Slide 4. We provided an update on the impact of COVID-19. Starting on the left-hand side of the slide, we offer another view of the global production landscape. I mentioned about a month ago how conditions in China have rebounded faster than we anticipated. In addition to resuming normal operations at our two facilities in China, our supply chain and customers in China have basically resumed normal production levels as well. Our businesses in South Korea and Japan continue to operate, although at much lower levels than planned, and our plants in Pune, India remain temporarily closed. In Europe and North America, market conditions deteriorated towards the end of the first quarter. Beginning in March, most North American OEMs temporarily closed their plants in response to the rapidly accelerating coronavirus crisis. The major OEMs in both Europe and North America have gradually restarted production at their factories over the last two weeks or announced plans to restart production later this month, although at relatively low levels. Based on these developments, Garrett has temporarily closed or reduced production at many of its manufacturing facilities in Europe and North America during Q1 and into Q2. Our plants in this region are currently operating at low capacity in response to customer demand and local government mandates. The supply chain disruption in both of these regions has been mostly limited to date given the drop in demand. We continue to manage our plant supply base to ensure our production levels match any changes in customer activities. Now turning to our ongoing priorities in this crisis. We have implemented best practices to protect the health and safety of our workforce, including stringent sanitation and cleaning protocols, workplace distancing, site access restrictions, and the worldwide travel ban. We have also implemented a work-from-home policy, where applicable. Garrett’s team members are its greatest strength and we remain committed to ensuring those being essential for maintaining business continuity work on-site in a safe and compliant manner. We are currently in a process of phasing in a more comprehensive return to our program that adheres to WHO and CDC guidelines, local government regulations, as well as our own precautionary measures. The recovery of operations at our sites will be gradual beginning with a period of reduced capacity with certain employees continuing to work from home, as appropriate. This policy of approach will enable us to fine-tune our measures wherever necessary, further ensuring we follow our commitment to keeping our personnel safe and healthy. Our staff has been relentlessly focused on working closely with our partners and leveraging Garrett’s global footprint and standardized processes to meet customer commitments. We engage in constant communication with all of our customers worldwide and we’ll modify our production plans accordingly as we manage the balance of 2020. We are also flexing our organizational cost structure in part by implementing short-term working schemes, including furloughs, reduced work schedules, and state funding leaves. By taking advantage of government assistance programs while allowing workers to safely return to their jobs at a future date, we are able to maintain our responsiveness as market conditions gradually improve. Additional cost control measures we are executing include reducing our factory workforce and contract service workers, which make up about one-fourth of our total workforce, delaying merit increases for employees, suspending discretionary spending that is not critical to our daily operations, and restricting external hiring. We also intend to optimize our working capital requirements by controlling inventory in a disciplined manner, which is a strength of our business, managing receivables, and collaborating with our suppliers as we have consistently done throughout our longstanding history. And, as I mentioned earlier, we are also temporarily reducing pay for senior leadership as well as Board members by 20% and postponing non-essential category expenditures. By actively managing our cost structure and preserving capital, we expect to generate significant cash savings for the year, and we are evaluating further steps to bolster our liquidity. As the COVID-19 pandemic continues to rapidly evolve, it has become increasingly difficult to quantify the impact on our business. While our visibility is limited, we expect the current quarter to be significantly more challenging than it was in Q1. Due to the highly uncertain operating environment, we recently withdrew our full year 2020 guidance and intend to resume providing an outlook at a future date. With that, I will hand it over to Peter to provide additional color regarding our financial results. Sorry. On Slide 5 first before I hand it over to Peter. We reiterate our long-term technology-centric growth strategy. Despite the near-term disruption in the automotive industry and global economy, it is important to bear in mind the positive long-term fundamentals of our business that are remaining intact. Garrett excels as an industry leader for over 55 years delivering critical cutting-edge technology to major automakers worldwide. Once this unprecedented situation is behind us, automakers will likely encounter even tougher regulations and technical challenges, and Garrett will be there fully engaged with them with a wide range of differentiated products and solutions. Our management team has navigated downturns in the past and we are determined to emerge from this crisis as a stronger company. We continue to benefit from higher overall turbo penetration rates, particularly in gasoline and hybrid platforms, and expect the adoption of VNT technology to drive higher content per vehicle and strengthen our long-term growth prospects. For 2020, we have adjusted our schedule on the new product launches to reflect a slower ramp-up due to lower expected volumes in light of the current environment, but so far, we have not been informed of any significant launch delays. We have also maintained an unwavering focus on bringing our new electrified technologies to market and remain on track to finalize the industrialization of our E-Turbo for an initial mass market launch next year. In addition, we intend to start production later this year of our second generation fuel cell compressor and increase the number of OE projects to develop our E-Compressor for hydrogen fuel cell vehicles. We would think that affordability may drive end consumers and car makers to reconsider how much they will spend on some advanced new technologies, but there is a domain where we are convinced that pressure will not reduce. It is about time issues and this is the space where we contribute the most with our technology solutions. And now let’s turn to Peter for the long awaited additional color regarding our financial results.

Thanks, Olivier, and welcome everyone. I will begin my remarks on Slide 6. In the first quarter, Garrett reported net sales of $745 million, down 8.5% at constant currency. As Olivier mentioned earlier, our performance for the quarter was adversely impacted by our plants' shutdown in China, both of which are currently operating at full capacity. Additionally, our Q1 net sales were impacted by lower production levels in the final weeks of March at several of our manufacturing facilities in Europe and North America due to COVID-19. Notwithstanding these impacts, our Q1 net sales reflect higher gasoline volumes stemming from increased turbocharger penetration in gasoline engines and new product launches offset by lower diesel volumes and lower product sales in our commercial vehicles and aftermarket business. Adjusted EBITDA for the quarter was down 32% to $108 million for a margin of 14.5%, which is attributable to our lower volumes stemming from the coronavirus outbreak and unfavorable product mix and premium freight costs incurred mostly in relation to the interrupted supply chain from China. Our year-over-year decremental margin was impacted by the mixed headwinds stemming from the significant increase in gasoline growth during the second half of 2019. The sequential decremental margin versus Q4 2019 was approximately 34% despite the premium freight cost incurred in Q1, as I mentioned a moment ago, and was very much in line with our average contribution margin. Our adjusted free cash flow, which excludes indemnity-related payments to Honeywell, increased slightly year-over-year to $57 million, representing an 84% adjusted free cash flow conversion rate. Lastly, our adjusted diluted EPS, which excludes Honeywell’s indemnity obligation expenses and related litigation fees, was $0.89 per share compared to $1.22 per share in Q1 2019. On Slide 7, you see that our gross profit was down $54 million from lower sales, mix impact, and premium freight costs partially offset by productivity. Other expenses were down $3 million reflecting lower legal fees in relation to the indemnification agreement, and non-operating income was at $8 million primarily related to foreign exchange impacts, net of hedging. Lastly, tax expense was down $23 million, and this includes the benefits of reduced withholding taxes. On an overall basis, net income was down $90 million versus last year despite a lower tax expense of $23 million. Turning to Slide 8, we illustrate our net sales by region and product line. In Q1, our Asia sales as a percentage of total net sales decreased by 3 percentage points over the same period last year due to the impact of COVID-19 as previously discussed. On the product side, we grew our percentage of net sales from gasoline products to 36% in the first quarter, up 7 percentage points from Q1 2019. This segment remains our largest and fastest growing category. This trend is consistent with the commentary we provided in our Q4 call as we expected transformational shifts from diesel to gasoline to continue in 2020, although at a slower pace compared to 2019. To be more specific, the decline in our diesel sales for the first two months of the year was much lower than the decline in 2019, but this trend was reversed in March due to the rapid drop in sales related to the coronavirus, especially in Europe. Also on this slide, both of our higher margin businesses in commercial vehicles and aftermarkets declined as a percentage of net sales in the first quarter reflecting the continued headwinds for each of these end markets, which accelerated in March. Turning to Slide 9, we provide our net sales bridge for the quarter. Gasoline products grew $34 million, representing an increase of 14% at constant currency over the same period last year, while diesel products declined by $55 million or 18% at constant currency mainly due to the overall market decline and runoff of certain applications. Commercial vehicles declined by $29 million or 17% at constant currency, and aftermarket sales decreased $16 million or 16% at constant currency as the downward trend in both of these segments accelerated in the quarter due to COVID-19. There was an impact of FX totaling $19 million for the quarter. In summary, although we continue to grow our gasoline segment in Q1, all of our product lines were impacted by the COVID-19 pandemic, adversely affecting our net sales performance for the quarter. Turning to Slide 10, you can see our adjusted EBITDA walk for Q1 2020 as compared to Q1 2019. For the quarter, Garrett’s adjusted EBITDA was $108 million, down 32% compared to the same period last year. Higher premium freight expenses and lower volumes were largely due to COVID-19, as we already discussed. The unfavorable mix in the quarter was partially offset by productivity gains. We believe our Q1 productivity gains represent a notable accomplishment considering the significant supply chain disruptions that we experienced in the quarter. SG&A was essentially flat to Q1 last year, and R&D expenses decreased $4 million while preserving our core R&D to build for the future. The FX benefit on adjusted EBITDA in Q1 2020 versus the prior year was $5 million. Lastly, our sequential decremental margin was approximately 34% in Q1 versus Q4 2019, largely in line with our variable contribution margin for the quarter despite the incurred premium freight cost in the first quarter and the inefficiencies resulting from the plants' shutdowns in China. Turning to Slide 11, we provide our net debt walk for the first quarter. In Q1, we reduced net debt by $26 million to $1,230 million, including a $15 million benefit from working capital. Capital expenditures for the quarter on a cash basis totaled $39 million, which mainly represents Q4 2019 capital expenditure commitments paid in Q1 2020. As mentioned earlier, we have started to postpone all non-essential capital expenditures, which would generate cash benefits for the remainder of the year. In addition, our cash taxes of $3 million in Q1 were lower than average mainly due to some reimbursements received in Q1. As a reminder, our quarterly cash taxes are non-linear and can fluctuate significantly on a quarterly basis. For the first quarter, our adjusted free cash flow totaled $57 million including indemnity related payments of $39 million. Our free cash flow was $18 million compared to $15 million in the same period last year. Going forward, we will maintain our focus on preserving cash flow and improving our cash balances during these challenging times. Turning to Slide 12, we entered the first quarter with available liquidity of $658 million including cash and cash equivalents and funds available under the revolving credit facility. Total gross debt, excluding cash and cash equivalents, increased $41 million during Q1 to $1,484 million as of March 31 driven by a drawdown on the revolver of $66 million in the first quarter. On April 6, we fully drew the remaining cash available under our revolving credit facility supplementing our cash position of $254 million at March 31. As a result, we started the current second quarter with $658 million in cash and cash equivalents. Our net debt to consolidated EBITDA ratio was 3.01 as of March 31, and we have no significant debt maturities before September 2023. Based on our current projections, we expect we will not be able to comply with one of the financial covenants in our credit agreement as early as June 30, 2020. This covenant compares outstanding debt to our trailing consolidated EBITDA, and those financial metrics are being impacted as the market responds to the coronavirus crisis. We are currently in discussions with our lenders on potential modifications to our covenants as well as waivers. This process will pursue its course during the coming few weeks, and we have made significant progress to date. On Slide 13, we note our balance sheet items related to Honeywell. In the first quarter of 2020, we reduced our Honeywell liabilities by $47 million to $1,304 million, primarily due to payments of $35 million to Honeywell in January 2020. As a reminder, the indemnification liability which was recorded at $1,050 million approximately as of March 31 reflects a capped $175 million in cash payments per year and is paid to Honeywell in euros at a fixed exchange rate. Our estimated payment for 2020 remains approximately $108 million or $67 million below the annual capital of $175 million. For the second quarter, any payment will reflect a deduction of approximately $34 million stemming from overpayments made in 2019, as we disclosed in our previous call. The Q2 payment has been deferred at this point to May 31, and we are evaluating our obligations with respect to Honeywell as to when any payment must be made. Additionally, we have also deferred the annual mandatory transition tax payment to Honeywell of $18 million for the first two months to May 31.

With that, I will now turn the call back to Paul.

Thank you, Olivier. Before we begin the Q&A portion of the call, I need to mention that we will not be taking questions related to the existing lawsuit with Honeywell. Operator, we are now ready to open the call for questions.

Ladies and gentlemen, we have now reached the question-and-answer portion of the call. Our first question comes from Brian Johnson from Barclays. Please go ahead with your question.

Yes. Good morning. I know you don’t want to talk about the Honeywell lawsuit but you did put a page in there about the indemnification payments to Honeywell and my reading of your filings would seem to say that if you do trigger an event of default, the Honeywell payments gets subordinated. I’m not sure if it’s deferred here. I’m not sure if interest accrues. So could you take us through that mechanism and maybe comment on where that could be going?

Yes, you’re right. The current agreement states as you will breach – as the company would reach the leverage covenant, which we expect to happen as we said at the end of the second quarter. The deferral mechanism for any payments to Honeywell with respect to the indemnity obligation kicks in. So we are back in compliance with the covenant. So we expect that to happen as soon as Q1. So we are back, so to say. We’ll take it from there.

And just as a follow-up, many other auto parts companies gained some covenant relief coming into their calls. The banks generally seem to not want to foreclose on what could just be a temporary downturn. Is there something different about your lending relationships that prevents that?

Brian, I’ll let Peter comment on where we are in this, but I will comment before that. As you remember, we have spun out from Honeywell only six quarters ago, which is very specific. Our former parent imposed on us a rigid capital structure that was unable unless Garrett executed perfectly in a highly favorable macroeconomic and industry environment, meaning that was really unsustainable that way unless everything was perfect. With insight, it is clear that our capital structure was ill-suited to cope with any meaningful operating challenges, much like those we faced in the current environment. So now that’s probably the specifics of Garrett. And I’ll let Peter comment on what we do currently with the banks.

There are a few options open. As you can understand, we cannot go into the specifics about how we are going to potentially get into waivers or amendment of our credit agreements. What I can say though is that we have started the process. We expect it to close relatively before the end of the month, and there are still a few elements of the agreement between us and our agents in discussion. I think we should get a light on a few of these outstanding potential changes in the amendment agreement in the coming few days, honestly, and then we are going to get into a process of reaching out to our lenders probably as soon as later this week.

When you say agreements, do you mean with your former parent or do you mean with the banking group?

With that banking group.

Okay. Thank you. I’ll go back into the queue. I do have some questions on incrementals, but want to pass the touch.

Thank you.

Thank you very much. Maybe just a little bit on sort of the decremental margins. I know it’s sort of highly unusual times, and I think you even sort of talked about maybe sort of sequential sort of better to look at here. But the bridges you provided were on a year-over-year basis, and if we look at the mix factor, which is large, obviously, continuing – with the continued shift from diesel to gas. But even if we back that out, like the volume price factor on what you indicated where the organic decline, it seems like 45% decrementals. And I know plants were closed, et cetera. But I guess I was just wondering if you could provide a little bit more color and maybe something you wouldn’t normally want to get into, but just a sense of the decrementals in China versus sort of the rest of the world, and just so we could get a little better sense for how the decremental margins or the margins in general hold up as we move to the second quarter when the regional mix clearly changes.

Yes. As we said before, the margins in China are not that different compared to the global average margins of the company. So the fact that Q1 was proportionately significantly impacted by China or by a decline in sales in China does not necessarily have an out of proportion hit on the decremental margins. And we also expect that the rebound in China that we currently expect in the second quarter not necessarily to have significant impact on the same decremental margins as we will see in Q2. I think the way—and that’s how we basically said it—the way to look at this is obviously versus Q1 last year, the impact is significant. But if you go back to 2019 and our quarterly financials, there was a significant difference between our adjusted EBITDA margins for the first half being north of 19% and the second half being 17%, 16.5%. This has to do with the fact that our gasoline business ramped up so significantly in the second half of the year, specifically in Q4, you remember when we had organic growth also driven by high volume gasoline program. So we have two different worlds basically in 2019. Therefore, it’s more meaningful to look at it we believe sequentially and there the math gets you to 34%, which is close to the variable margin of the business. What is it going to mean moving forward for Q2? We believe that we can improve this decremental margin trend because of all the cost actions that we have deployed, obviously, and that Olivier explained, including obviously reducing our temporary resources, contract service workers, implementing reduced work schedules across all of our sites including SG&A and R&D expenses. So obviously there are going to be benefits coming through from this which should overall reflect in some favorability in the decremental margins in the second quarter. When it gets to the second half of the year, the year-over-year story is going to be different because of the dynamics that I explained. The savings from all the incremental cost actions are going to depend to a significant extent on how the state-funded lease programs in the different countries in the world are still going to be applicable and honestly also to what extent we will still need them at that time and that will depend, of course, on the business dynamics at that point. That all depends still forecasted in a pretty wide range as you can imagine. But I guess it gets you something about how we think about it.

Yes. Thank you. I guess, secondly, I know you’re pretty variable as you’ve sort of indicated and so much shown. But I think your sort of historic EBITDA margin range, 18% to 20%, assumes some higher volumes. And if we’re entering this period over the next couple of years where volumes might be a little bit lower for longer than thought, is there more you can do on the cost side? Is there some more restructuring you can do? And how should we think about your ability to pay for that just given some of the financial constraints?

Joe, let me pick up this one and Peter will add some color to that. But the first thing is that, in this company we have never been doing cost actions by waves. We are doing that constantly and we are always optimizing along the way. So it’s not very often. I think it’s difficult to see any press report or stuff except factory closures we did in the past, but we are highlighting repositioning. It’s part of the discipline that we have every year, which is addressing our costs and driving the necessary actions if we need to. And we always have space to do that. So it’s not big news usually. It’s a continuous process which loosens the need obviously for big bank capital needs. The second point is that for us the question is how fast the industry is obviously recovering post-2020. So 2020 as a year we know it’s almost a year that is dead. So the question for us is really where is 2020, 2021, 2022? And there is one thing that I would like to share with you, it’s that it’s not only about the automotive industry. We have won significant programs. We are, as you’re seeing, doing better from a dynamic standpoint than the industry. This will remain in 2021 and 2022, so that will come back. The real question which is the one you have is how quick are we getting ourselves back on the trajectory that we are in a pre-crisis keeping in mind the mix impact. I would say it’s just too early to say. We need to have better visibility on the industry before answering that. But quite frankly, we are not planning to have a business after the crisis that is less performing from a cost standpoint versus entering the crisis.

Thank you. I’ll pass it on.

Great. Thank you for taking the question. Just wanted to get some visibility on the supply chain. I know it’s been uniquely constructed by you and how we should think about that, the health of the Tier 2 supply chain that you’ve effectively constructed?

Well, as you know, we are spending a lot of energy, resources, and money at developing our suppliers and this is something we’ve been doing for a long time. So that’s a little bit of the secret sauce behind our supply chain model. At the same time it means that we are very close with our suppliers. And even in times of crisis, we are trying to balance that supply chain to be as efficient as possible. If you want an example, today, what we see from the car markers is that it’s taking a lot of time for them to adjust their forecasts. You will not believe the forecasts we are still receiving from the car makers. It’s a little bit like ignoring that there is a crisis. So what we do with our suppliers, not only are we monitoring very closely their financial strengths, this is something we’ve been learning in 2008, 2009 and keep on doing so. We are also making sure that we reshuffle the program so that it’s not putting them in a difficult position from a cash need standpoint, and that’s something that we take pride in doing in the way we’re managing them. So it’s staying close to the Tier 2 supply base wherever they are around the world. The good news is that we have a lot of them in China, and China is recovering as a country faster. And the second point is really making sure we manage our supply chain needs even if we do second guess because of lack of information from what we get from our customers.

Okay. And then how do you think about the operations in Mexico and how those resume?

Well, Mexico has been quite the center of our focus for the last few weeks. As you know, in Mexico we have the rights to serve essential businesses and we’ve been able to do that for some time. We are still to close the factory for a couple of weeks. And then we have restarted the factory to supply those essential verticals that we are serving, so think about the oil industry and agriculture, which represent a significant piece of our activity in Mexico. For the passenger vehicles side and the commercial vehicles side, we are obviously waiting to see when the authorities will decide. We are in the middle of discussions with them, so we cannot tell you if it’s a matter of days versus a matter of months, obviously.

All right. And then my last one here, with—you mentioned that the capital structure is ill-suited to cope with any significant challenges, but if you make it out of this crisis as it appears you’re progressing, in some ways that justifies the capital structure that was created at the onset. What are some other things that the current capital structure prevents you from doing?

Well, the analogy I would take is that just imagine you have Usain Bolt running and you put on the back of his sandal something like a 10-ton container. He could potentially run, but he will run much slower. So that’s a way to think about our capital structure today.

Good morning. My line cut out earlier, so apologies if either of my questions were addressed. But I guess how should we think about the productivity impact of social distancing, PPE, staggered shifts, the various changes to plant work as you ramp back up, and give particularly impact on decrementals potentially going forward? Would be great.

So we are obviously very careful about the social distancing and all the measures that we have in place in the factories. Quite frankly, the worry we have is much more about getting people onto the lines and getting people off the lines. So think about order placing in a factory where people can interact with each other, and that’s where we’ve put a lot of focus. Because, quite frankly, on the lines, we have the right things in place to protect the employees. It’s all about limiting the social distancing in all the interaction areas of our factories, and this is what we spent a lot of time over the last few weeks. But it’s more a matter of implementing the disciplines than the cost that will come with it. We really believe that the additional cost and the impact on decremental margins will be completely immaterial. Obviously, there are going to be some more supplies that you have to buy to ensure we do what we have to do. But I think, as a big picture, it shouldn’t have any significant material financial impact.

Okay, great. Thank you. And then a couple of segment-related questions. Your peer has discussed stronger than expected diesel sales in the quarter. Just curious as to how diesel tracked relative to your expectations here?

Well, there is a pre-COVID-19 and a post-COVID-19 view on this. The pre-COVID-19 is that diesel was doing better than expected, and we got that from all your peers as well. And we do confirm that. The question mark—and there are all kinds of reasons for that and people optimizing—car makers optimizing their CO2 balance early in the year versus what they were shooting for, for the end of the year. So we saw at the beginning of the year diesel is down versus prior year, obviously, but better than anticipated. The question is with the big disruption that’s happening to the market today, we don’t know what would be the mix post-COVID-19. We don’t know yet the extent of the government incentives. We don’t know yet the way car makers will re-compute their average CO2 emissions with respect to Europe in light of the full year compliance that they need to achieve, and we don’t know what the crisis will do on the mix of vehicles that car makers will sell. To know that we need to have car makers starting to sell vehicles, and so far in Europe, as you know, it’s difficult to buy a car—you cannot even get to a shop. So that’s the point. The post-COVID-19 mix will tell us if what we saw pre-crisis is still happening post-crisis, but we have a question mark.

Okay, great. Thanks. I appreciate the color there. And then just one quick segment follow up. Just curious if you could talk about the aftermarket outlook in this environment? I would assume it would be somewhat more defensive, but clearly as you mentioned this is not a normal market downturn type scenario either. So any color on the aftermarket would be great.

Well, the best thing I can tell you is that if I put aside the off-highway segment that we have which serves generative sets and data centers and all the rest, and if we look mainly at the vehicle side which are passenger vehicles and commercial vehicles, all these measures of lockdown in the countries, especially in Europe and to a certain extent in the U.S., have drastically reduced the traffic on the road. So as a result of that, people are using their cars less. The cars are less subject to failures, and therefore that’s probably a point that is not the same as what we saw in the crisis of 2008, 2009. This drop in activity is just a drop of miles driven and therefore could directly lead to the aftermarket. So you see less than what we would see in production for new cars, but – and you just need to go to a shop in Europe where the car dealers are always trying to get people to come, and they sell them cars, although this is an activity that is authorized. Selling cars is not authorized in many countries, but repairing cars is. And believe me it’s not difficult to get enough contracts and speaking by experience.

Good morning, everyone. Thanks for taking the questions. Can you remind us what your current expectations are for production restarts across major regions, particularly Europe? Specifically, what percentage of your Europe plants have restarted with customers and what does the ramp in China inform you about production ramps potentially in other regions?

So in China, we are back to pre-crisis levels. So we are very much aligned; it’s like if there was no COVID-19. It’s very impressive by the way. Although we are worried that China may be getting into a W-shape recovery, and that’s why we are very careful about the way we are managing our cost on the ground. For Europe, all of our Europe factories have restarted. We are producing in all of them. The point though is that some of our customers have not restarted yet. So that’s why we are in very low volume of production in Europe, and we expect that ramp-up not to be very fast over the coming weeks.

Okay. And in terms of the cost reduction actions you’ve been able to execute on, is it fair to characterize more of these as staunched the bleeding efforts with the volume drop-off and costs that you would actually add back with volumes, or has some of this been more structural? I’m just trying to think about the possibility for incrementals on the other side of this.

In the short term, technically for Q2 it’s less structural. And if you think about what we have just explained, it’s what the actions are—short scheduled work weeks for many of our employees worldwide, basically reducing discretionary spend, reducing contract service workers and temporary employees. All of that is to a significant extent less structural. I think when it comes to structural cost in the discussions and decisions, we probably need to be a little bit more thoughtful about what could be the potential recovery in the second half of the year and 2021, what is the potential payback on some of these actions because as it was mentioned before, these actions typically come with some cash outflows as well. So we want to make sure that we make the right decisions from a payback point of view as we manage through the crisis here in the coming few quarters. But that doesn’t mean that we are not considering structural cost takeout to protect the second half of the year and to be prepared for 2021. That’s something that is part of our DNA as we always do it, as Olivier said before. Probably the need is higher now, but at the same time you want to make sure that it’s cash very well spent.

And Aileen, let’s keep in mind something that I mentioned today, which is the fact that we are still in a temporary workforce and contract service workforce that makes up something like one-fourth of the total workforce. So it’s giving us flexibility obviously on the way down, but it is giving us flexibility as well on the way up.

Great. That’s helpful. And one last question on the capital structure. Can you believe that recent revolver draws are sufficient to withstand the current market crisis or would you look to proactively augment your liquidity potentially with additional capital? And are there any constraints in the Honeywell indemnification that would prohibit you from doing so?

Well, we can’t give you the final answer on this. That’s ultimately going to depend on how badly and how long lasting the crisis is going to be. We truly believe that even today, in the middle of May, we still have the very substantial liquidity position starting from the $658 million that we started the quarter with. We are very, very closely watching our cash forecast on a weekly basis for the coming few months actually to make sure that we have a very close handle on this. For the time being, we believe that we are okay with the liquidity that we have. But who knows how the crisis is going to develop from here. I think in our base scenario, there is no need to what you just referred to. If there would be potentially a scenario of another economic lockdown across the world and a second wave of coronavirus spreading, then that could be a different scenario that we need to look into to add liquidity to the company. So there is no firm answer to this. I think the only thing we can say is that for now we believe that should be okay, but this can definitely change depending upon how the crisis develops.

Great. That’s very helpful. Thanks for taking the questions.

Thank you, Jamie. That concludes our call for today. We appreciate your time.

Ladies and gentlemen, that does conclude today’s presentation. We do thank you for joining. You may now disconnect your lines.