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Operator
Ladies and gentlemen, thank you for standing by, and welcome to the General Motors Co.
first-quarter 2011 earnings conference call.
(Operator Instructions).
As a reminder, this conference is being recorded Thursday, May 5, 2011.
I would now like to turn the conference over to your Executive Director of Communications and Investor Relations, Mr.
Randy Arickx.
Please go ahead, sir.
Randy Arickx - Director, IR & Financial Communications
Thanks, operator.
Good morning and thanks for joining us as we review our first-quarter 2011 results.
As you know, our press release was issued earlier this morning, and the conference call materials are available on the Investor Relations website.
I would also like to highlight that GM is broadcasting this call via the Internet.
Before we begin, I would like to direct your attention to the legend regarding forward-looking statements on the first page of the chart set.
As always, the content of our call will be governed by this language.
This morning Dan Akerson, General Motors' Chairman and CEO, will provide opening remarks, followed by a more detailed review with Dan Ammann, Senior Vice President and CFO.
Dan Akerson will then provide closing remarks.
After the presentation portion of the call, we will open the lines for questions.
I would also like to mention that we also have Nick Cyprus, Vice President, Controller and Chief Accounting Officer; as well as Chuck Stephens, CFO of North America, with us today to assist in answering your questions.
With that, I would now like to turn the call over to Dan Akerson.
Dan Akerson - Chairman & CEO
Thanks, Randy.
Good morning, everyone, and thanks for joining us.
I would like to begin with a few comments about the first quarter, and then as mentioned, Dan will provide a more detailed review of the numbers, and then, as mentioned, I will sum it up.
Turning to slide two, let's look at the highlights for the first quarter.
I would describe the first quarter as steady progress, but with more work to do.
Our global deliveries and revenue were both up year over year, reflecting the benefits of our global footprint.
We were also able to outpace the market, resulting in global share increasing to roughly 11.5%.
Our revenue growth in the first quarter is further proof that we believe we are well positioned to take advantage of anticipated global industry growth.
We delivered $300 million increase in EBIT adjusted to $2 billion, which reflected the benefits of improved revenue offsetting higher commodity costs and future product cost.
GM North America improved EBIT adjusted to $1.3 billion, largely on the strength of stronger sales of fuel-efficient vehicles across the portfolio.
GM is much better positioned today to meet the demands of customers looking for fuel-efficient vehicles, no better example than selling 50,000 Cruzes in the first quarter alone.
There is also more fuel-efficient vehicles to come as we introduce the Chevrolet Sonic, the Chevrolet Malibu ECO, the Buick Verano, and the Buick Lacrosse and Regal with eAssist over the coming months and year.
I would also like to mention that GM Financial has a positive impact on the first quarter by improving credit availability in terms to our customers both through its own offerings but also by bringing competition to the marketplace.
And I'm pleased to report that GM achieved an important milestone of breakeven EBIT adjusted for the first quarter.
The job is by no means done.
We have got a lot of work to do, but this is a $600 million improvement versus our results from a year ago.
This improvement is a combination of good progress on the cost structure, more to come, as well as improved revenue driven by strength of the new Opel Corsa and Meriva.
GMIO reported adjusted EBIT adjusted of $600 million, down $300 million from an unusually strong prior year quarter.
In China, the largest automotive market in the world, we maintained our number one position with a market share of 13.6%.
And we feel good about our future in China with the introduction of our new Baojun brand, the continued strength of Buick and the launch of 60 new and upgraded models over the next five years.
And GM South America recorded EBIT adjusted of $100 million, down $100 million from the first quarter of 2010.
GM South America continues to be in the midst of overhauling nearly their entire product portfolio.
In fact, we hired 2000 people in Brazil in the first quarter as we ramp up for a very aggressive product cadence over the next 18 months.
In Brazil alone we will have nine new products by the end of 2012.
In the entire region, you can expect 40 new products this year and next.
In a sense South America is kind of the new version of what China was or Asia was a year or two ago.
During the quarter, we also made good progress strengthening our balance sheet.
We sold approximately $5 billion of non-core assets in the first quarter and made further progress on funding the US pension plan.
We ended the quarter with available automotive liquidity of $36.5 billion, up from a year ago and from 2010 year-end levels.
All-in-all a good start to the year.
And now I will turn it over to Dan Ammann who will provide additional details.
Dan Ammann - SVP & CFO
Thanks, Dan.
Before we get into the details, I would like to mention that we further refined our approach and made a few revisions to our common templates.
Based on your feedback, we will provide you with more detail regarding the adjustments to EBIT, including what regions they reside in.
As a result, you will notice that at the regional level our EBIT bridges are focused on EBIT adjusted.
Having said that, let's get started.
Slide three provides a summary of our first-quarter results compared to the prior year.
As you have seen by now, General Motors had a solid quarter posting $3.2 billion in net income to common stockholders on revenue of $36.2 billion.
Operating income was $900 million, and earnings per share were $1.77 for the quarter on a fully diluted basis.
Moving to our key non-GAAP metrics, EBIT adjusted, excluding the impact of special items, was $2 billion for the quarter.
Automotive free cash flow was negative $1.9 billion, and this includes the $2.5 billion impact associated with the termination of in-transit financing.
Excluding this, automotive free cash flow would have been positive $600 million.
Slide four provides a summary of the first-quarter special items and their impact on net income to common stockholders and fully diluted earnings-per-share.
As we previously covered, our net income to common stockholders of $3.2 billion or $1.77 per share included in both of these metrics was approximately $1.6 billion gain on the sale of our Delphi membership interest, $300 million gain on the sale of Ally Preferred Shares, a $400 million goodwill impairment related to our European operations due to a change in accounting standards, and $100 million in impairment and related charges associated with tax rule changes at our India JV.
We will cover these charges in more detail when we review those segment's results.
In total, special items contributed $1.5 billion to our first-quarter 2011 net income or $0.82 per share on a fully diluted basis.
Excluding special items, our first-quarter 2011 net income would have been $1.7 billion or approximately $0.95 per share on a fully diluted basis.
On slide five, we work operating income to EBIT adjusted.
For the first quarter of 2011, operating income was $900 million.
This includes the $400 million GME goodwill impairment charge.
Excluding the impact of this charge, operating income would have been $1.3 billion for the first quarter of 2011, approximately $100 million improvement over the prior year.
Equity income was $2.1 billion, which includes approximately $1.6 billion associated with a gain on sale of our Delphi membership interest.
Nonoperating income was $500 million, $300 million of which is attributable to the gain on Ally Preferred, partially offset by approximately $100 million of India JV impairment-related charges.
This totals down to EBIT for the first quarter of 2011 of $3.5 billion, and after excluding the adjustments of $1.5 billion, EBIT adjusted was $2 billion.
Slide six provides the regional composition of EBIT adjusted for the first quarter of 2010 and 2011.
GMNA EBIT adjusted was $1.3 billion for the first quarter, up $100 million versus the prior year.
GME's EBIT adjusted was breakeven for an improvement of $600 million from last year.
GMIO's EBIT adjusted was $600 million, down $300 million from the prior year, and GM South America's EBIT adjusted was $100 million, down $200 million versus the prior year.
GM Financial reported $100 million on a pretax basis, and corporate and eliminations were flat for the first quarter of 2011.
This totals to an EBIT adjusted was $2 billion for the first quarter, up $300 million versus the prior year.
Operating adjustments at $1.5 billion EBIT was $3.5 billion.
Turning to slide seven, we provide our global deliveries for the last five quarters.
For the first quarter of 2011, our global deliveries were 2.2 million units, an increase of more than 220,000 units from the first quarter of 2010.
This increase is attributable to a 1.3 million unit increase in industry volume and a 0.4 percentage point increase in our global share to 11.5%.
On slide eight, we have our EBIT for the last five quarters.
The bars on the slide represent total EBIT, and in quarters in which we had adjustments, EBIT adjusted is represented by a line.
EBIT adjusted for the first quarter of 2011 was $2 billion, a return to more normalized levels from the below run-rate level of $1 billion in the fourth quarter of 2010.
These first-quarter results provide a solid foundation for the rest of the year.
Turning to slide nine, we will now move into the segment reviews.
GMNA deliveries for the first quarter of 2011 were 684,000 units, up 120,000 units versus the prior year.
This increase is driven by approximately 0.5 million units increase in the North American industry and a 0.5 percentage point increase in GMNA's share to 18.3%.
US all brand share was 19% for the first quarter of 2011, up approximately 0.9 percentage points versus the prior year.
Slide 10 provides what we view as key performance indicators on GM North America.
The two lines on the top of the slide represent GM's US total and retail share.
The bars on the slide represent GM's average US retail incentives on a per unit basis.
GM's US retail incentives as a percentage of average transaction price and compared to the industry average are provided on the bottom of the slide.
For the 2010 calendar year, our US retail incentives were approximately 10.4% of average transaction prices, which was slightly below the industry average.
We expect to deliver the same results for calendar year 2011, that is incentives at approximately the industry average on a percentage of ATP basis.
As previously discussed and noted on this slide, our incentive levels were elevated in January and February.
However, they have moderated substantially to below the industry average on a percentage of ATP basis during the months of March and April.
After experiencing some payback in March due to the full hit of sales in January and February, our share has returned to a strong 19.8% in the month of April, despite managing incentives down to the lowest levels yet for the new General Motors.
Finally, to help offset increases in commodity costs, we implemented price increases effective May 2.
This includes increases on our hot selling products, including the Chevy Cruze and Equinox, Cadillac SRX, GMC Terrain and Buick Lacrosse.
When combined with increases implemented during the fourth quarter and earlier this year, average prices increased 0.8%.
Slide 11 provides GMNA's EBIT and EBIT adjusted for the last five quarters.
For the first quarter of 2011, GMNA's EBIT was $2.9 billion.
Adjusting to exclude the gain on sale of our Delphi interest, first-quarter EBIT adjusted was $1.3 billion, up $100 million from the prior year.
Revenue for the first quarter of 2011 was $22.1 billion, up $2.8 billion versus the prior year, primarily related to increased production volume of 118,000 units.
US dealer inventory, which totaled 574,000 units or 86 days supply at the end of the quarter.
The 63,000 unit increased during the first quarter is consistent with our plan to increase in inventories during the first half of the year and [to peak] during the second half.
This will result in closing out the year at levels roughly equal to 2010 year-end but lower days supply.
Turning to slide 12, I wanted to provide you with added transparency to a non-cash item that runs through the GMNA income statement.
GM Canada's balance sheet has approximately $7 billion in net liabilities related primarily to pension, OPEB and other accrued liabilities.
During the consolidation process, GM Canada's balance sheet is translated to US dollars at the period end foreign exchange rate.
Changes in the exchange rate from period to period will drive variation in the US dollar value of the net liabilities.
Because GM Canada's functional currency is the US dollar, this variation is realized as a non-cash charge reported to the GMNA income statement as translational exchange.
By way of contrast, the majority of our foreign operations are local currency functional, whereby the assets and liabilities are translated from their local currency into US dollars with any translation adjustments recorded directly to stockholders equity and not run through the income statement.
The table on the bottom half of the slide summarizes the EBIT impacts of the translational exchange on the Canadian dollar net monetary liability position, as well as the period end exchange rates.
For the first quarter of 2011, the strengthening of the Canadian dollar relative to the US dollar resulted in a translational exchange EBIT impact of unfavorable $200 million.
For the 2010 calendar year, the total impact was a non-cash charge of approximately $400 million.
Obviously there is a lot of volatility here that is not indicative of underlying operational performance.
Slide 13 details the year-over-year comparison of GMNA's first-quarter EBIT.
Starting on the right-hand side, GMNA's EBIT for the first quarter of 2010 was $1.2 billion.
There were no adjustments for the period, so EBIT and EBIT adjusted were the same.
The middle section of the slight details the $100 million improvement in GMNA EBIT adjusted.
Volume and mix was favorable $900 million.
This includes approximately $1 billion improvement related to increased volume, driven by an 18% increase in industry volume, 0.5 percentage point increase in market share, and a 20,000 unit increase in year-over-year US dealer inventory additions.
The mix was unfavorable $100 million due to increased compact vehicle production and lower large truck production.
Price was unfavorable $300 million, primarily due to January and February incentive levels.
Cost was unfavorable $400 million due to increases in engineering expenses in support of future programs of $200 million, increased marketing expense of $200 million, partially offset by $100 million attributable to increased pension income.
Other was $100 million unfavorable due to the absence of the favorable restructuring reserve booked in the first quarter of 2010.
This works to an EBIT adjusted of $1.3 billion for the first quarter of 2011.
After adding back the $1.6 billion gain on the sale of Delphi, EBIT was $2.9 billion.
As seen on slide 14, GME deliveries for the first quarter of 2011 were 433,000 units, up 29,000 units versus the prior year.
The increase is attributable to industry growth of approximately 260,000 units and a 0.1 percentage point increase in GME market share to 8.6%.
Compared to the fourth quarter of 2010, GME deliveries were up 5000 units, and GME market share declined 0.4 percentage points.
The decline in share is primarily related to growth in the Western European industry in which total share is slightly lower than our average European share and a decline in the Eastern European industry where our total share is higher than our average European share.
Importantly, we may change share in each of our Western and Eastern European markets respectively.
Turning to slide 15, GM Europe's first-quarter 2011 EBIT was a loss of $400 million.
Adjusting to exclude the goodwill impairment, GME's first-quarter results were breakeven.
This is an improvement of $600 million versus the first quarter of 2010 on an adjusted basis.
Revenue was $6.9 billion for the quarter, up $1.4 billion from the prior year.
The increase is attributable primarily to increased production volume of 39,000 units.
On slide 16, I wanted to provide you with some more background on GME goodwill impairment.
To begin, I would like to emphasize that this impairment relates to goodwill that arose from fresh start accounting for pension and other liabilities and is not related to any change in the underlying business prospects for GM Europe.
Now for some details.
Last December new GAAP accounting guidelines were issued regarding testing of goodwill impairment for reporting units of zero or negative equity effective January 1, 2011.
At that time, GME was in the negative equity position and had $3.1 billion of goodwill that was recorded as part of fresh start accounting.
The goodwill represents the difference between the fair value and US GAAP value of employee benefit plans and tax assets as of July 2009.
That difference in value was driven by high GM discount rates versus lower high quality bond rates.
Since that time, there has been a significant closing of the gap between GM discount rates and high quality bond rates causing a convergence of fair value and US GAAP value of employee benefit plans.
Accordingly, upon implementation of the new guidelines, goodwill impairment testing on January 1, 2011 resulted in a $1.5 billion write-down of goodwill recorded directly to equity.
Further testing at March 31 resulted in a non-cash impairment charge to EBIT of $400 million as discount rates converged further.
At quarter-end GME had approximately $1.3 billion of goodwill remaining, and accordingly, as we move forward, GME could experience future goodwill impairments related to similar factors.
Turning to slide 17, we provide the major components of GME's $600 million improvement in EBIT adjusted.
GME's EBIT was a loss of $500 million in the first quarter of 2010, and after adjusting to exclude the gain on sale of Saab, GME's EBIT adjusted was a loss of $600 million for the first quarter of 2010.
Volume accounted for approximately $200 million of the improvement in EBIT adjusted, primarily driven by a 5% increase in industry volume and a 0.1 percentage point increase in market share.
Costs were also favorable $200 million.
This includes approximately $100 million in lower manufacturing-related expenses due to the closing of the Antwerp, Belgium facility and associated labor cost savings, as well as $100 million in lower engineering expense.
Finally, other was favorable $200 million due to lower restructuring expense in the first quarter of 2011.
This totals to EBIT adjusted for the first quarter of 2011 breakeven, and after adding the impact of the goodwill impairment, EBIT was a loss of $400 million.
We are pleased with GME's results for the first quarter of 2011.
While there is still more work to do, breakeven adjusted is a meaningful accomplishment and an indication that the restructuring plan is working.
Based on our current plans, we are targeting to achieve breakeven EBIT adjusted before restructuring for the full year.
In terms of restructuring expense, going forward we believe that we may incur an additional $500 million in 2011 and 2012 combined to complete programs, which will affect an additional 2600 employees.
On slide 18, GMIO deliveries total 855,000 units, setting a new quarterly record and up 65,000 units or 8% versus the prior year.
In China GM outpaced a record first quarter industry, posting sales of 686,000 units and improved share to 13.6%, up 0.3 percentage points versus the prior year.
Versus the fourth quarter of 2010, GMIO share improved 0.6 percentage points.
China was the main driver for this improvement with a 2 percentage point improvement in market share to 13.6%, due primarily to the impact of the retiming between December and January that we discussed on the last call.
Turning to slide 19, GMIO's EBIT was $500 million for the first quarter of 2011.
After excluding adjustments of $100 million unfavorable due to the impairment and related charges on our Indian joint venture associated with changes to India tax regulations, EBIT adjusted was $600 million.
I would view this as a more normalized first quarter as opposed to the $900 million recorded in the first quarter of 2010, due in part to a handful of favorable items in that quarter.
GMIO's revenue was $5.4 billion for the first quarter of 2011, up $400 million versus the prior year.
The increase is related primarily to improvements in volume and favorable foreign currency, partially offset by unfavorable mix and the absence of our India operations, which are no longer fully consolidated.
On slide 21 we provide the major components of GMIO's $300 million EBIT adjusted reduction for the first quarter year over year.
GMIO's EBIT was $900 million for the first quarter of 2010.
Volume and mix was unfavorable approximately $100 million and is attributable primarily to unfavorable mix associated with an increased penetration of medium and mini vehicles and decrease sales of SUVs.
Pricing was flat, and costs were unfavorable $300 million due to increased commodity costs of $100 million, increased advertising of $100 million in support of our new products, and the launch of the Chevy brands in Korea and increased engineering of $100 million.
Other was positive $100 million and includes approximately $100 million higher JV equity income, $100 million lower minority interest, partially offset by lower derivative gains due to the absence of favorable gains that occurred in the first quarter of 2010.
This totals to the first quarter of 2011 EBIT adjusted of $600 million, and after adding back adjustments of unfavorable $100 million, EBIT was $500 million.
Turning to slide 21, GM South America deliveries totaled 250,000 units for the first quarter of 2011, up 9000 units versus the prior year.
The increase was driven by 164,000 unit increase in the South American industry volume, mostly offset by a 1.9 percentage point decline in GM South America marketshare.
The decline in market share is attributable primarily to aggressive price competition among key competitors early on in the quarter that we did not immediately follow.
As seen on slide 23, GM South America EBIT was $100 million for the first quarter of 2011, down approximately $200 million from the prior year.
Revenue totaled $3.9 billion for the first quarter and was up $600 million versus the prior year due to improved volume, favorable foreign currency and favorable pricing.
Versus the fourth quarter, revenue was down $600 million, primarily due to the impact of lower wholesale volume.
Slide 23 details the major components of GM South America's $200 million production EBIT versus the prior year.
Volume and mix was flat quarter over quarter with the industry up and share down.
Pricing was favorable approximately $100 million due to pricing actions implemented to offset inflationary pressures in Venezuela and our strategy of not following competitors as aggressively on incentives.
Costs were unfavorable approximately $300 million, including $100 million in increased material costs and manufacturing-related costs driven by labor economics, approximately $100 million in engineering-related and other costs in support of future vehicle launches, and a handful of other items that amount to $100 million.
This totals to our first-quarter 2011 EBIT of $100 million.
Turning to slide 25, we have our automotive free cash flow for the first-quarter of 2011, as well as the prior year.
After adding back noncontrolling interest, preferred dividends and subtracting GM Financial, our automotive net income was $3.4 billion for the first quarter of 2011.
Approximately $1.5 billion of special items are included in automotive net income, which we back out in our (inaudible) automotive free cash flow as the sale of Delphi membership interest and Ally Preferred Shares are classified as investing activities and the impairment charges are non-cash.
Depreciation and amortization was $1.6 billion in non-cash expense, a $200 million improvement from the prior year.
Working capital was a $400 million use of cash.
As announced back in October, we terminated our in-transit financing during the quarter.
This resulted in an increase to our Accounts Receivable of approximately $2.5 billion.
The purposes of this slide will detail this impacts separately for you.
Pension and OPEB cash payments exceeded expense by $400 million, and other was a use of $800 million.
This totals down to automotive net cash used in operating activities of $600 million, and after deducting capital expenditures of $1.3 billion, our automotive free cash flow for the first quarter of 2011 was unfavorable $1.9 billion, would have been positive $600 million excluding the in-transit repayment.
Before we move on, I wanted to highlight a few additional things for you regarding operating and free cash flow.
Versus the prior year, the first quarter had one additional previously scheduled supplier payment, and we expect that impact to result in the second quarter as we will have one less payment in that quarter.
Secondly, the first quarter of cash flow includes the impact of performance compensation payments.
In terms of capital expenditures, we anticipate that our capital spending will increase over the course of the year.
Slide 25 provides a summary of our key balance sheet items.
For the first quarter of 2011, we maintained very strong liquidity levels of $36.5 billion, consisting of $30.6 billion of cash and marketable securities and $5.9 billion of undrawn credit facilities.
On the bottom portion of the slide, our debt and book value of Series A preferred stock was $5 billion and $5.5 billion respectively, a significant reduction from levels a year ago.
US qualified pension plans were underfunded by approximately $11 billion at the end of 2010 and at the end of the first quarter of 2011; however, the first-quarter number does not reflect an approximately $2 billion stock contribution that we made in January.
Additionally asset returns and discount rates have been trending favorably over the course of the first quarter, further improving our funded status expectations.
Turning to slide 26, I want to talk for a moment about GM Financial, which posted its financial results yesterday.
I would characterize their results as good with strong credit performance.
We have provided you with a summary of GMF results in the supplemental section of our slides.
The two primary objectives of our automotive financing strategy is to provide certainty of availability to our customers all through the credit cycles and the business cycles and increased competition and transparency.
In this regard, GM Financial has certainly helped us to sell more vehicles.
Referencing the slide, you will note that GM has steadily increased its US subprime financing penetrations from 4% in the first quarter of 2010 when we already had a partnership with AmeriCredit to over 6% in the first quarter of 2011 and above the industry average, excluding GM.
In terms of leasing, we were offering programs through GM Financial in 21 states through quarter-end.
Consequently our US leasing penetrations have increased from 7.6% in the first quarter of 2010 to 16.8% in the first quarter of 2011, but still below the industry average, excluding GM, of 23%.
We intend to further improve on this with our target of national coverage for the GM Financial lease program by this summer.
These increased penetrations are in part a function of GMF providing financing, but equally important other financing providers responding competitively to our financing programs and capability in the market.
In order to expand availability of leasing into Canada where we have been clearly missing sales, as you can see on the chart, GMF in April acquired FinancialLinx, one of the major lease platforms in Canada.
Early signs of this expansion are encouraging with GM Canada lease penetrations increasing to 7% in April.
As GM and GMF become more closely integrated, GM new vehicles as a percentage of GMF's originations and GMF's percentage of GM subprime financing and leasing volume has increased significantly.
While leveraging GMF to support our business, we are committed to continued prudent underwriting.
GMF posted strong credit performance for the first quarter with annualized net credit losses of 4%, down materially from the prior year.
EBT was approximately $130 million for the first quarter.
From a funding prospective, GMF has good access to the capital markets to support its originations.
We completed two securitizations in February and April, the most recent $950 million securitization carrying an all-in cost of funds of 2.6%.
On slide 27 I wanted to share with you our current expectations for the year.
We expect 2011 calendar year EBIT adjusted to show us all an improvement over 2010.
The crisis in Japan is not expected to have a material impact on full-year results.
With regard to GMNA, we expect EBIT adjusted to improve on average from the first quarter for the remainder of the year.
This is primarily due to our expectation that better pricing and improved fixed costs will more than offset commodity cost increases and unfavorable mix.
In terms of GME, we are targeting to achieve breakeven EBIT adjusted before restructuring for the year.
With that, I would like to turn the call back over to Dan.
Dan Akerson - Chairman & CEO
Thanks, Dan.
Turning to slide 28, let's look at our net revenue by region.
As you can see, we have grown our revenue in each of our automotive regions.
In fact, our revenue growth is roughly in line or better than the year-over-your improvement in industry sales.
That growth has been fueled by the success of a host of new products underpinned by clearly defined and increasingly strong brands.
In North America, by having the right products in the market to take advantage of customer shifts to more fuel-efficient vehicles, we have been able to grow our revenue by 15% in the first quarter.
Products including the Buick Lacrosse, Regal, the Chevrolet Equinox, GMC Terrain, as well as our new Chevrolet Cruze, are all contributing to this revenue growth.
In fact, the Chevrolet Cruze commanded a price that was $3000 higher than the vehicle it replaced.
In Europe our restructuring is starting to take hold.
And while we have taken actions to reduce costs, equally important is we have made significant investments to have the right products to market that will enable us to capture sales and grow revenue.
The Opel Insignia, Meriva, and Corsa are just a few examples of the product renaissance, and there are many more to come.
In fact, by 2012 the majority of European product lines will be less than three-years-old.
Turning to our international operations, we have had growth of 9% in net revenue, excluding our joint venture operations in China.
The expansion of Korea build Chevrolet products being sold in countries throughout the region, as well as Europe, is a significant contributor to this revenue growth.
And finally, in our South America region, where Chevrolet has taken a strong foothold, we generated $3.9 billion in revenue for the first quarter of 2011, a 17% increase over the prior year.
We continue to hold a strong presence in Brazil and have been able to maintain our market position while remaining disciplined in the marketplace.
Revenue growth is an important objective, and we are investing in the necessary resources to refresh our product line up over the next couple of years.
As I talked about before, our Company has an entirely new mindset and new operating model that centers around designing and building and selling the world's best vehicles.
That does not mean better than the model it replaces or as good as the other guys, it means defining the standard, it means being the best, and that is how we hope to drive revenue.
Turning to slide 29, our first-quarter results can best be described as on plan.
We have delivered strong revenue growth, recorded EBIT adjusted of $2 billion, including breakeven in Europe, and further improved an already strong balance sheet.
As I indicated, we have a lot of work to do to leverage our scale and realize the full potential of our brands.
An important part of that is making sure we keep the breakeven low in the United States and then take full advantage of expected industry growth.
A key part of improving the leverage will be intense focus on cost containment in the Company.
We are currently faced with increasing commodity costs, which we need to offset through cost reduction in other areas, supplier performance and increased prices.
We will also need to drive efficiency in the product development factory as we increase and stabilize our engineering and capital spending over time.
Today's results are a good start to the year, and it provides a foundation for us to expect full-year 2011 EBIT adjusted results that are a solid improvement over 2010.
Thank you and okay, let's open it up for questions, Randy.
Randy Arickx - Director, IR & Financial Communications
Okay, operator.
We are ready for the first question, please.
Operator
(Operator Instructions).
Adam Jonas, Morgan Stanley.
Adam Jonas - Analyst
Dan, somebody give this guy a glass of water.
I have not heard anyone read through so much so fast.
Can you quantify the two cash flow tailwinds that you alluded to, Dan?
You talked about the supplier payment timing and the employee compensation payments?
Dan Ammann - SVP & CFO
Yes.
The employee compensation payment is the largest component of the other item that you saw on the slide there, the $800 million.
So it is -- there are other items in there, but that is the biggest component.
And then, as it relates to the supplier payment impact, that is probably over $1 billion.
Adam Jonas - Analyst
Over $1 billion on the cash flow, and that is 2Q versus 1Q?
Dan Ammann - SVP & CFO
Correct.
Adam Jonas - Analyst
Okay.
And just another question, just finally on the North American profit outlook, now you in your guidance expect the run-rate to be better than the $1.3 billion you did in Q1.
Any reason why you did not target specifically North American improvement year on year, or can we assume that that is solid improvement in group EBIT would also include a North American participation?
Because if I look at last year's average run-rate of EBIT in North America, it was about $1.4 billion.
Dan Ammann - SVP & CFO
The short answer is yes.
Adam Jonas - Analyst
Okay.
Great.
And then as a follow-up to that, how much will pensions be a tailwind there, because the $0.1 billion in Q1 year on year seemed, I think, much lower than people would have expected given the accounting going on.
Dan Ammann - SVP & CFO
It is about $300 million for the full year.
Adam Jonas - Analyst
$300 million tailwind for the full year?
So even less than the Q1 delta?
Dan Ammann - SVP & CFO
Yes.
Adam Jonas - Analyst
Okay.
Thanks very much.
Operator
Chris Ceraso, Credit Suisse.
Chris Ceraso - Analyst
Can you talk about where you are on truck inventory?
The comments about North America improving relative to Q1, you did have it would seem pretty favorable truck production in Q1, and now you are sitting on some extra inventory of pickups in SUVs.
And so how do you reconcile an improvement in North America in coming quarters with your current stock level?
Dan Akerson - Chairman & CEO
Well, I think it is our expectation that we will continue to monitor obviously truck inventory.
I think Mark Reuss was out yesterday saying that we will make adjustments to production schedule as we think we need to.
So we are certainly tracking that.
And in our forward-looking comments for the year, we do have some adverse mix assumption baked into that.
Chris Ceraso - Analyst
Do you have a Q2 production schedule that you can share with us?
Dan Ammann - SVP & CFO
No.
Chris Ceraso - Analyst
No?
Okay.
What is your expectation for the year-to-year increase in material costs in aggregate, let's say, for the Company and the year-to-year increase in structural costs?
Dan Ammann - SVP & CFO
I think what I would say on the material cost side is we are looking at the same set of parameters that everybody else is.
So we would expect to have presumably a proportional impact relative to that.
However, measuring and comparing that across companies is difficult to do for a number of reasons, and it really gets to how we are mitigating it.
One is we have supply contracts and supply arrangements that provide us with some level of protection against increases, and so we're going to get some meaningful benefit from those.
Secondly, we obviously have supplier performance that we are continuing to get.
Thirdly, you saw our price initiative a couple of weeks ago following on from some earlier price initiatives, which was based on offsetting material cost headwinds.
So we are really looking to address commodity costs and material costs through those three elements, and we will do our best to fully offset to the maximum extent possible.
As it relates to structural costs, we don't see that significant an increase overall for the Company, and we see essentially a flat result in North America structural cost year over year.
Chris Ceraso - Analyst
So.
Just back on the material, if you are referencing other players, can we put an over/under on this?
Is it more than $2 billion, is it less than $2 billion if we set aside price and think about that as a separate category?
Dan Ammann - SVP & CFO
Yes, we are not going to put a number out there, but it is the same general parameters that others are seeing.
But I would point out that we do have some meaningful benefits from some of the supply arrangements that we have and pricing arrangements that we have relative to some of the bigger commodities.
Chris Ceraso - Analyst
Okay.
Just last quick one, what is the plan for pension contributions this year?
Do you have a number?
Dan Ammann - SVP & CFO
We have made obviously good progress.
We ended the year, as you saw, at around $11 billion.
We made the $2 billion stock contribution in January, and as I indicated in my prepared remarks, we have had good asset returns in the first quarter, some favorable move on discount rate.
So we are making pretty good progress even just here in the first quarter above and beyond the reported results if you like.
So we are going to continue to track that and see how that evolves over the course of the year.
We obviously don't want to get into a significantly overfunded position either, so that is why we are monitoring it as we go along.
Operator
Himanshu Patel, JPMorgan.
Himanshu Patel - Analyst
In your walk on the cost components for NAFTA in Europe, I don't think I heard anything on commodities.
Was there a Q1 commodity hit in NAFTA or Europe?
Dan Ammann - SVP & CFO
No.
No, you heard right, which is in South America and IO there was some, and in Europe and North America, there was not.
Himanshu Patel - Analyst
Okay.
So is the progression of this -- I mean presumably are you thinking the back half on commodities is worse year over year from North America and Europe in H1?
Dan Ammann - SVP & CFO
Directionally, yes.
Chuck, do you want to add anything to that?
Chuck Stephens - CFO, North America
Yes, I would say based on the latest outlook for GMNA material costs net of supplier performance, we see most of the risk manifesting itself in the second half of the year.
Himanshu Patel - Analyst
I guess going back to Chris' question, I know you don't want to give a number, but is the message here that gross commodity cost impact, whatever it may be, is largely going to be offset with either price increases at the retail level or internal efficiencies on your purchasing?
Dan Ammann - SVP & CFO
And supplier performance.
(multiple speakers) We don't know exactly what is going to happen on commodity costs, but that is certainly the objective to use those tools, as I'm sure others are, to try to offset debt to the maximum extent possible.
Himanshu Patel - Analyst
Okay.
The comment about North American mix and commodity pressures being offset by pricing performance, I'm curious just to understand what are the items that you are looking at that are making you more confident on the perspective pricing outlook for the next three quarters?
Is it primarily GM's product cadence that is driving that, or has your view on pricing also been altered given the recent developments in Japan?
Dan Ammann - SVP & CFO
Well, I think it is both of those, and I would not just link the pricing to Japan.
I think, first of all, as you saw, in the first-quarter walk year over year with $300 million due to the elevated incentive levels, the first thing you do is get rid of that.
Then we have put in the price increases (inaudible) a couple of weeks ago, the ones we announced earlier in the year and in December.
And look at the April incentive levels, look at the supply/demand equation as we see going forward, and that's an important part of what is underlying the statement about North America.
The two components is the net price component, and there is a cost component which I will address in a minute.
On the price side, it is both price and incentive reductions or average transaction price up favorably due to both of those.
Then on the cost side, you should also think about this as a walk from Q4 to Q1 for North America as well.
As we talked about at length, Q4 was impacted by some higher structural costs, particularly around marketing and engineering.
We have had some of those come out in Q1.
We will have some more of that come out for the balance of the year.
So there was a ramp-up into Q4, a ramp down, partially down into Q1, and you will have some more of that come out going forward as well.
Himanshu Patel - Analyst
Okay and the last question on Latin America.
I appreciate the opening comments about a lot of new product flow there.
Can you just give us a sense of how we should think about the balance of the year?
Is Q1's earnings profile in Latin America representative of the balance of the year?
Dan Ammann - SVP & CFO
I would say that we are in investment mode for the next few quarters there as we get some of these products launched.
And so I would expect to get some benefit from those launches into the latter half of the year, but the launches continue all the way through into next year.
So we will start to get improvement the launches really are at full run-rate by middle of next year.
Operator
Rod Lache, Deutsche Bank.
Rod Lache - Analyst
I don't want to beat a debt horse here, but to clarify your comments on North America, are you basically saying that contribution margins are going to be better or be maintained despite weaker mix, despite commodities because of pricing and supplier performance?
I just wanted to clarify the contribution margin part of that.
Is that accurate?
Chuck Stephens - CFO, North America
I would say on a go forward basis there is going -- at a contribution margin level, obviously material cost headwinds will have an adverse impact to pricing, and reduced incentives will have a positive impact.
Kind of the way I think about it, those will wash out for the rest of the year, and then the cost improvements, fixed cost improvements, that we are anticipating versus Q4 Q1 spend levels is where we are going to see the improvement on a year-over-year and a Q1 basis.
Rod Lache - Analyst
Okay.
And that would offset the weaker mix that you are anticipating?
Chuck Stephens - CFO, North America
Correct.
Rod Lache - Analyst
I presume.
Okay.
And you disclose the impact of contribution margins on cars, trucks and crossovers in your 10-K.
I'm just curious about whether that relationship is changing just given some of the price changes you see with some your cars, some of the performance on some of the new vehicles.
Do the historical sensitivities still apply?
Dan Ammann - SVP & CFO
I.e.
is the gap closing is the question?
Chuck Stephens - CFO, North America
And I would say based on what we just disclosed, the relative profitability between trucks, cars and crossovers has not significantly changed share in Q1, and for the rest of the year, we will have to see how things develop.
Rod Lache - Analyst
Okay.
And just also to clarify on the North American pricing, we all know what happened in January and February versus March and April.
I'm just curious about the P&L impact of this.
Did you also have to take an adjustment through your P&L for the 574,000 units in dealer inventory, or does that -- in other words, did you get an extra benefit because you did lower incentives from March to April?
Was that something that was reflected in the Q1 P&L, or is that something we see more of in Q2?
Chuck Stephens - CFO, North America
You will see that impact in Q2.
The March incentive programs ended April 2, so that would have been a Q2 event.
Rod Lache - Analyst
Okay.
All right.
Well, that clarifies that.
And then just lastly, I don't know if you can do this, but if you were to assume that pricing stays at current levels, can you give us a sense of what we would expect to see in Q2 either on a year-over-year basis or sequentially just in terms of P&L impact?
Because you do have all these adjustments in there.
Dan Ammann - SVP & CFO
In terms of a price quarter to quarter?
Rod Lache - Analyst
Yes.
Dan Ammann - SVP & CFO
We are not going to get into that.
Rod Lache - Analyst
But you would see some -- (multiple speakers).
You will see an extra adjustment then just based on the last comment that Chuck made for the inventory, you are going to get some help because the incentives came down in the beginning of April?
Chuck Stephens - CFO, North America
I'm going to say that Q2 versus Q1 pricing will be favorable.
Operator
John Murphy, Bank of America/Merrill Lynch.
John Murphy - Analyst
I actually have a follow-up question to the incentives and the price.
If we look at slide 13 and we look at price being about $300 million negative in the quarter and we look at what you have done as far as scaling back incentives and raising price, it looks like there is about an $800 improvement per vehicle on a year-over-year basis that is coming in the second quarter.
If we apply that to a 700,000 to 800,000 unit run-rate in production -- and I'm not asking for specific guidance in the second quarter -- but that would really imply that price should be a positive of at least $600 million to $700 million as opposed to the negative $300 million it was in the first quarter.
Is there anything really kind of flawed in that logic or line of reasoning for the second quarter?
Chuck Stephens - CFO, North America
About as far as we are going to go talking about price in the second quarter is that it will be favorable versus Q1.
There is a lot of moving pieces that impact that.
John Murphy - Analyst
Okay.
And the second question on slide 17, you guys showed price as a neutral in the quarter in Europe.
There's a lot of other companies that mentioned that GM and other companies were being aggressive on price in the first quarter.
So this seems like it's a very positive performance relative to our expectation.
Are there any other actors in the market that are being very aggressive on incentives in Europe?
And also on Europe, it looks like your guidance implies there might be a deterioration through the rest of the year because you are already at breakeven.
What is the real factor that is really constraining you from saying that you actually might be slightly profitable in Europe this year?
Dan Ammann - SVP & CFO
Well, let me answer the last question first.
Just to clarify, what we are saying for the full year is that we will be breakeven, targeting breakeven on an EBIT adjusted basis but excluding restructuring charges.
As you know, we would view restructuring as a cost of doing business, and we don't back it out of our EBIT adjusted.
In the first quarter, there were no material restructuring charges, so we essentially hit the objective in the first quarter.
We will have, as I pointed out, we expected some more restructuring charges to come through the year, which is why we are saying the result that we are targeting is EBIT adjusted for restructuring, if that answers the question.
John Murphy - Analyst
That is exactly -- yes, thank you.
But then on pricing in Europe, the environment there?
Dan Ammann - SVP & CFO
I think it is tough as it usually is would be the general characterization.
John Murphy - Analyst
Okay.
And also, the termination of the in-transit financing, $2.5 billion that was expected, is there anything else out there that we should be thinking about there would be big swing factors for working capital or cash flow?
Dan Ammann - SVP & CFO
Not at this point in time, and we are continuing to look up and down the balance sheet.
The driver behind terminating in-transit financing was that it was pretty expensive financing for us.
So we are obviously in debt reduction mode and interest expense reduction mode, and that is what that was all about.
But we don't have any other, right now any other big items like that, but we are continuing to review the balance sheet and look for areas for efficiencies.
John Murphy - Analyst
Okay.
And then just lastly, on pension it looks like your $11.2 billion underfunded US plan, your $2 billion contribution from stocks and $9.2 billion underfunded at this point, discount rates moving in the right direction, expected returns pretty good; I mean is there -- when and how do you actually analyze how much you will put into that pension plan?
Because based on market factors here, it looks like you might be improving quite dramatically.
Is that a third-quarter decision, an end-of-a-year decision?
Can you wait because that is a potentially huge source of capital that might not necessarily be needed given market factors?
I'm just trying to understand what exact metrics where you would draw the line in the sand and say, we don't need to put any more money into the US pension plan?
Dan Ammann - SVP & CFO
Yes, I think to answer the question in terms of timing, it will be in the back end of the year.
As we have said all along, pension-funded positions can come about from really three things -- contributions, asset returns and discount rate performance.
In the first quarter, we have had some of all of those.
None of which are reflected in the reported $11 billion at the end of the quarter.
So we are very much in a let's wait and see mode for now.
Obviously we would like to minimize contributions and maximize discount rates and asset return benefits.
John Murphy - Analyst
So it is a second half of the year decision?
Dan Ammann - SVP & CFO
Yes, later in the year.
Yes.
Operator
Brian Johnson, Barclays Capital.
Brian Johnson - Analyst
I've got two questions one for Dan Ammann -- both around cost -- one for Dan Ammann just around the sequential look and then the second one in North America.
And the second one for Dan Akerson in terms of how do you manage both driving structural costs down while hitting your goals of product differentiation and avoiding falling into the old GM pennypinching bean counting strategies?
So maybe start with Dan, can you just maybe give us a sequential look on the North American structural cost drivers?
Dan Ammann - SVP & CFO
Yes.
North American results Q4 to Q1 revenue was about flat.
So revenue was about flat.
We had an improvement in EBIT from $800 million to $1.3 billion.
A good chunk off that was structural cost reduction, primarily around marketing and engineering, to get back to what we talked about in Q4, with those being elevated in Q4 that have come down meaningfully in Q1.
We expect them to come down further in the balance of the year as we talked about.
So that is a high-level way to think about the Q4 to Q1 North America look.
Dan Akerson - Chairman & CEO
On structural costs, we recently completed some studies both from an internal and an external perspective, and it is clear that from both a manufacturing and product development perspective that we need to really drive a brand perspective deeper into the organization.
And we need to make our processes much more simple, get rid of some of the complexity in our product development, and that will simplify and take costs out of our product development.
It will also simplify our manufacturing processes.
We can see really strong potential progress in both of these areas.
That will be a significant departure from what you described as old GM.
So I will not say the fruit is low hanging, but it is not a far reach for us.
And that will be an ongoing effort within the Company over the next couple of years.
We think we have a lot of opportunity there.
Brian Johnson - Analyst
So that is really a multiyear payback on that program?
Dan Akerson - Chairman & CEO
Yes, but I will say I think we understand the task before us, and we are pursuing it now, and it will just take a while to play out.
Operator
Tim Denoyer, Wolfe Trahan.
Tim Denoyer - Analyst
Can you give an update on the UAW negotiations?
Just the ongoing talks and what your expectations are within your guidance for North American EBIT improving sequentially through the year in terms of labor costs?
Dan Ammann - SVP & CFO
Well, I will take the last part of it first, which is there is nothing in particular baked into the EBIT projections.
Dan Akerson - Chairman & CEO
I will take the first half of that question.
We meet routinely and reasonably frequently with UAW leadership.
I think there is a common understanding on both sides of the equation that we have a vested joint invested interest in making this negotiation a plus not a negative, at the worst a neutral.
So there is what I would call steely-eyed objectivity on both sides of the table.
And we are both pretty clear in what we need to accomplish and to ensure that we stay, this is critically important to both of us that we stay competitive with our competitors and not just our US competitors but the foreign transplants, and that is a guiding principle I think and kind of a new realization for both parties.
Tim Denoyer - Analyst
Thanks and then a follow-up on the pension and just your uses of cash.
If you were to make a decision later this year that the pension is in a good enough funded position, what would be your next plan for next priority for uses of cash?
Dan Ammann - SVP & CFO
Well, our number one priority is obviously reinvesting in the business and making sure that we have the product portfolio that we want to have going forward.
So that is obviously capital expenditure and engineering and part of the ongoing costs of the business.
So, as I have said repeatedly before, we never want to get into a position again where we have to change our investment cadence in the business because of whatever is going on in one quarter or another.
So that is priority number one.
But beyond that, once we get the balance sheet where we want it to be, obviously it is our goal over time to return cash to shareholders.
That is an important part of what we are trying to do here obviously.
We obviously are some time away from making any decisions as to when and how and in what form and so on on that front.
But that that is obviously a medium to longer term objective.
Operator
Patrick Archambault, Goldman Sachs.
Patrick Archambault - Analyst
Just on -- well, actually let me start off with just one last North American beating a dead horse question here.
Sequentially moving from Q1 to Q2, it sounds like pricing is positive, structural costs are positive.
Mix is negative, and commodity costs are negative.
I know you are not giving a set production schedule, but can you at least give us a sense of how volume is likely to trend on that sequential look?
Chuck Stephens - CFO, North America
Yes, it looks like right now Q2 volume generally will be flat versus Q1.
Patrick Archambault - Analyst
Okay.
Great.
And moving to GM Financial on slide 26, I just wanted to get a sense of where your longer-term objectives are in terms of subprime and US lease?
Obviously subprime it seems like you are comfortable running a little bit above the industry average.
Do you think you can get leasing at least in line with the industry average?
Is it something you want to do?
Is it something you have the balance sheet to do?
Dan Ammann - SVP & CFO
Well, we certainly have the capability to do that.
And again, this is not all about GM Financial writing the leases.
So we have had a very significant improvement year over year from 7.6% to 16.8%.
We were really hurting a year ago in terms of lease availability.
I would say right now we don't have any issues at all with credit availability.
GM Financial is writing leases, but equally importantly, Ally, US Bank and other providers are responding and coming into the market more aggressively and are writing a lot more business for us as well.
So our overall strategy is not for GM Financial to do everything; it is for us to have the capability ourselves to drive competition in the market, and this is really the case study year over year of US lease penetration that we are doing.
In terms of objectives, we don't have a hard objective to get to the industry average or not.
The industry average includes luxury brands that have a much higher percentage of leasing.
So it would be natural for us to be a little bit below the industry average in terms of our overall lease mix.
We don't have a hard objective that we want to reach, but the objective that we do want to make sure that we are not missing any sales because the customer can't get a lease that they want to get, and that is really what it is all about.
Patrick Archambault - Analyst
Okay.
Great.
Yes, that is helpful.
One last one for me just on the cash flow.
Working capital was a slight negative despite increases in production.
Typically we are used to seeing that negative working capital investment be a source to cash when volume is rising.
Can you give us a little bit of color how you would expect that to trend over the course of the year?
And if there is something -- (multiple speakers)
Dan Ammann - SVP & CFO
That really ties back to that comment I made about the one less supplier payment.
Patrick Archambault - Analyst
Okay.
So it is entirely a timing issue.
Got you.
All right.
Thank you.
Operator
Peter Nesvold, Jefferies.
Peter Nesvold - Analyst
Continuing on the North America questions, you have outlined pretty clearly pricing was a headwind for margins in first quarter.
But I guess even if I add back the $300 million of pricing that was a headwind on the quarter, the incremental margins were still less than 15%.
You did talk about structural costs getting better from 1Q to 2Q.
You talked about pricing getting better from 1Q to 2Q.
The mix maybe deteriorating a bit.
I know you're not in the business of giving us specific quantitative guidance, but any prospective on whether 15% roughly speaking is the benchmark for us to think about in terms of contribution margins out of North America going forward?
Dan Ammann - SVP & CFO
I don't think we want to get into specific numbers around that.
But you're looking at the right components and thinking about it the right way.
Peter Nesvold - Analyst
Okay.
And just the second follow-up, international businesses top line growing very strongly.
You talked about continued product investments in South America, which probably continue going forward.
At what point do you anticipate starting to see operating leverage out of those -- out of that really strong double-digit revenue growth you are seeing outside of Europe?
Dan Ammann - SVP & CFO
In South America, as I said, it is going to be a function of when the new product portfolio is really ramped up enough and running.
So we hope to see some of that later in the year and then rolling through into next year.
And then, as it relates to IO, as we pointed out in our comments, the comparison there was against an unusually strong first quarter last year.
So that makes the year-over-year comparison look a little unusual.
I would view the first-quarter run rate here for GMIO this year as much more of a typical Q1 result for them.
Operator
Itay Michaeli, Citigroup.
Itay Michaeli - Analyst
I just wanted to go back to the North America structural cost.
It sounds like you still expect that to be flat for the full year, even though there was a $400 million headwind in the quarter.
So was the quarterly impact on structural cost expected internally, or did you actually see a little bit of a creep there?
Dan Ammann - SVP & CFO
I would say again I would go back to the comment which is Q4 last year was quite elevated, as we talked about, around marketing and engineering in particular.
We have had some of that come out in this quarter.
We expect essentially the balance of that to come out for the rest of the year.
So if you think about where that ramp-up and ramp-down has happened, it has happened around the year-end Q4 last year or Q1 this year essentially.
Itay Michaeli - Analyst
Okay.
But for the year the outlook there is just still essentially flat?
Is that correct?
Dan Ammann - SVP & CFO
Yes.
Itay Michaeli - Analyst
Okay.
And then just so I'm clear on Europe, I guess the new outlook now excludes restructuring.
Is that an upward revision from what you were thinking about earlier, or is it just simply defined a little bit differently?
Dan Ammann - SVP & CFO
Rather than try to compare it to what people interpreted earlier, we will just say that the guidance is what it is, which is EBIT adjusted excluding restructuring charges for the year.
Itay Michaeli - Analyst
Okay.
Great.
Lastly, any change in the CapEx outlook for the year?
I think last quarter you are talking around $7 billion-ish or so.
Is that still the right number?
Dan Ammann - SVP & CFO
I think order of magnitude, yes.
Operator
Mr.
Arickx, I will now turn the call back to you.
Please continue with your presentation or closing remarks.
Randy Arickx - Director, IR & Financial Communications
Thanks, operator, and thanks, everybody, for joining us this morning.
Have a great day.
Operator
Ladies and gentlemen, that does conclude the conference call for today.
We thank you for your participation and ask that you please disconnect your lines.
Have a great day, everybody.