Nexteer Automotive Group Stock

Ladies and gentlemen, welcome to Nexteer Automotive Group Limited 2026 Interim Results Conference Call. [Operator Instructions]

I would now like to turn the conference over to Investor Relations Director, Mr. Tony Wang. Please go ahead.

Thank you, Betsy. Welcome, everyone, to our 2026 interim earnings call. We made the announcement of our interim results this evening, Hong Kong time.

Before we begin today's call, I would like to remind you that this presentation contains the safe harbor statement. For additional information, please refer to the content on the second page. The presentation accompanying today's call are available on our company's website. Please visit nexteer.com to download slides if you have not done yet.

Joining us today are Robin Milavec, Executive Board Director, President and Chief Operating Officer; Mike Bierlein, Senior Vice President and CFO. Starting the presentation, Robin and Mike will provide business and financial highlights, respectively. Then we will open the line for your questions.

With that, let me turn the call over to our President, Robin.

Thank you, Tony. Good morning, good afternoon, and good evening, everyone, and thank you for joining our 2026 interim results announcement. The first half was another period of strong progress for Nexteer despite a market environment characterized by geopolitical uncertainty, a lot of evolving trade dynamics, shifting customer production schedules and I would say, continued volatility within the global automotive industry in general, we delivered record first half revenue, improved profitability, strong free cash flow generation, and continued above-market growth. We also secured significant new business awards, providing additional confidence in our future growth trajectory.

Now these results reflect the disciplined execution of our global team, the strength of our customer relationships, and the continued competitiveness of our product and technology portfolio.

Over the last several years, we have focused on transitioning Nexteer into a stronger, more resilient company, and we're seeing the benefits of those efforts through improving margins, stronger cash generation and sustained revenue growth.

Equally important, we continue to advance our long-term strategic priorities. We achieved significant milestones in the commercialization of Steer-by-Wire, expanded our Motion-by-Wire portfolio, delivered strong launch execution across multiple regions and continued building momentum with both global and Chinese OEM customers. We believe these capabilities position Nexteer well to capitalize on some of the most important technology trends shaping the future of mobility.

While we're pleased with our first half performance, we remain realistic about the challenges that lie ahead. The industry continues to face uncertainty related to tariffs, customer product forecasts, EV market dynamics, commodity costs, and broader macroeconomic conditions.

However, we believe our strong balance sheet, diversified customer base, our growing technology portfolio and ongoing operational improvements position us very well to navigate these challenges and continue creating value for our shareholders.

As we look to the second half of the year and beyond, our priorities remain clear: to grow above market, continue improving operational performance, accelerate commercialization of our Motion-by-Wire technologies, invest in digital transformation and automation, and maintain a disciplined capital allocation in support of profitable long-term growth.

With that, let me begin with an overview of our business performance and strategic progress, and then I'll hand it over to Mike for a detailed review of our financial results and outlook.

Starting on Slide 4, I'd like to begin with 5 highlights that demonstrate Nexteer's continued progress in delivering profitable growth, advancing our technology road map and strong cash generation.

First is revenue. We achieved a record first half revenue of $2.3 billion. This reflects our continued above-market growth and successful conversion of new and Conquest business into production revenue streams. Our growth was supported by strong global execution, particularly in EMEASA.

Second is program launches. During the first half, we successfully launched 28 customer programs with particularly strong activity in Asia-Pacific. These launches included important milestones such as the first 2 Steer-by-Wire production programs, our first high-output column EPS launch in China, and the first customer program launch at our new facility in Thailand.

Third is bookings. We secured $3.3 billion of new business contracts in the first half, including our first Rack EPS win in Europe and another Steer-by-Wire award with a Chinese OEM. These bookings reinforce the strength of our product portfolio and provide a solid foundation for future growth.

We are particularly pleased with the first half bookings as it shows accelerating momentum in our quest to grow the top line, and it sets us on a good trajectory to finish the year above our $6 billion booking target.

Fourth is profitability. Adjusted EBITDA reached $263 million, with this first half year profit achieving its highest level in more than 6 years. The results reflect disciplined operational execution, improving efficiency, and our continued focus on profitable growth.

And finally, cash generation. We delivered $109 million of free cash flow during the first half. That's nearly 3x the level achieved in the prior year's period. This reflects again the strength of our operating performance along with disciplined capital allocation and inventory management, resulting in a strong conversion of earnings into cash.

Overall, these achievements highlight Nexteer's ability to grow above market, strengthen profitability, advance Motion-by-Wire strategy, and maintain a very strong financial position.

On Slide #5, as I mentioned earlier, we successfully launched 28 customer programs during the first half across multiple product lines, customers and vehicle segments. Importantly, 26 of these launches were associated with new or Conquest business.

That demonstrates our ability to convert bookings into revenue growth.

Now rather than reviewing every launch individually, this slide highlights several key programs that showcase the breadth of our portfolio and the progress we're making across both traditional and next-generation motion control technologies. Most notably, 2026 marks an important milestone for our Steer-by-Wire commercialization.

During the first half, we launched 2 Steer-by-Wire productions -- programs into production, including the Li Auto L9 in China and the Level 4 Robotaxi application in North America. These 2 launches represent the successful transition of our Steer-by-Wire strategy from business awards into launch and revenue generation, thereby validating our position as a leader in next-generation steering technology.

We also achieved the first high-output column EPS launch in China with Chery Jetour, further expanding our EPS portfolio and strengthening our position with leading Chinese OEMs.

Another important milestone was the first production launch from our Thailand manufacturing facility. This supports our strategy to enhance regional flexibility and better serve our customers across all of Asia. From a regional perspective, APAC remained the key growth engine for Nexteer.

The majority of our launches during the first half supported both Chinese and global OEMs, reinforcing our strategy of participating in the fastest-growing vehicle platforms and market segments. Overall, these launches demonstrate the increasing diversity of our customer base, the strength of our product portfolio and the ability to successfully convert new business awards into profitable revenue growth.

On Slide 6, we'll move from launches to bookings. So let's turn to our commercial momentum in the first half of this year. So we secured $3.3 billion in new business awards during this first half, putting us well on track towards our full year objective of $6 billion. These awards reflect a healthy mix across products, customers, and regions while continuing to strengthen our position in key growth areas.

One highlight was another Steer-by-Wire award with a leading Chinese OEM, including both hand-wheel actuator and road-wheel actuator applications. This represents our third Chinese customer to adopt Nexteer's full Steer-by-Wire system architecture and further validates growing market demand for integrated Motion-by-Wire technologies.

We also secured our first rack-based EPS program in EMEASA. This represents an important expansion of our premium steering portfolio with global customers. Combined with additional dual-pinion EPS as well as rear-wheel steering opportunities, we continue to expand the breadth of our steering solutions and strengthen our position across multiple vehicle segments.

Another important achievement was winning significant truck and SUV program extensions in North America, including Rack EPS and power column business that further strengthens our scale, competitiveness and long-term customer relationships in that region.

We also secured a significant breakthrough with a new Chinese OEM customer through a column-based EPS award. Winning these new customer platforms remains a key priority for us, and this Conquest business demonstrates our ability to gain market share in a highly competitive market.

Looking at the mix of bookings, 72% of awards were within our EPS steering portfolio, highlighting the continued strength of our core business. Regionally, North America represented 46% of bookings, while APAC contributed 34%.

This demonstrates balanced growth across our major markets. New and Conquest business represented 43% of total bookings, reflecting our ability to win new platforms and expand our customer base. Chinese OEMs represented approximately 30% of total bookings, reinforcing our strong participation in one of the industry's fastest-growing segments.

As we showcased at the Beijing Auto Show earlier this year, Nexteer's Motion-by-Wire portfolio now spans Steer-by-Wire, Rear-Wheel Steering, Brake-by-Wire and the enabling software technologies. We're very encouraged by the increasing level of customer engagement and believe these technologies will become a growing and significant contributor to future bookings as well as revenue as adoption accelerates over the coming years.

Overall, this diversified and technology-rich booking portfolio provides strong visibility into future growth and further demonstrates that Nexteer remains a trusted partner for both global and Chinese OEMs.

On the next slide, Steer-by-Wire continues to be one of the most important strategic growth opportunities for Nexteer. And this year marks a significant milestone for our Steer-by-Wire strategy as it advances from customer awards into commercial production.

Over the past several years, we built a strong foundation of Steer-by-Wire business across North America, Europe, and APAC. Today, that foundation includes 8 customers, 7 secured production programs, and active development projects across 3 regions, providing broad validation of both our technology and execution capabilities. Most importantly, we are now seeing the successful conversion of these awards into production revenue.

In North America, our Level 4 Robotaxi program featuring Nexteer's first Pinion EPS dual actuator gear has successfully entered production, representing an important proof point for highly automated vehicle applications. We also continue to advance development activities with additional customers supporting future growth.

In APAC, we achieved another major milestone during the first half with the launch of our first passenger vehicle Steer-by-Wire production program. That launch represents the world's first ASIL D certified full Steer-by-Wire system in production, demonstrating our ability to bring next-generation steering technologies from concept and development into commercial scale manufacturing. A second customer launch remains on track for the second half of this year.

And in Europe, we previously secured our first business award, and are now progressing towards future program launches with a defined production plan. What's particularly encouraging is that we are seeing momentum across every stage of the Steer-by-Wire life cycle.

Some programs now are already in production, others are approaching launch, and several customers remain in development. This progression provides increasing confidence that Steer-by-Wire adoption is moving beyond early validation towards broader market deployment.

As adoption expands, we believe Nexteer is exceptionally well positioned to benefit given our growing production experience, global customer base, and expanding portfolio of secured programs. The successful launches this year are not only an important operational achievement, but are also strong validation of our long-term Motion-by-Wire strategy and our leadership in next-generation steering systems.

And finally, I'd highlight that we are very pleased that our High-Mount Direct Drive Steer-by-Wire hand-wheel actuator was recently recognized as a 2026 Automotive News PACE Pilot Award finalist. This recognition highlights Nexteer's commitment to relentlessly advancing Steer-by-Wire technologies that enable greater vehicle design freedom and next-generation driver experiences while enhancing steering feel, modern airbag integration, flexible steering placement, packaging flexibility, and new driver display possibilities.

On Slide #8, that same instinct to keep advancing the technology that moves our industry forward is still what guides us across all of our functions. Just as we evolve our steering technologies, we continue to evolve the way we work. As part of our broader digital transformation strategy, we're embedding AI across the enterprise to improve efficiency, increase our speed and build more agile, scalable organizations.

Within manufacturing, we're deploying next-generation digital manufacturing standards and automation that can be constantly scaled across our global operations. By combining AI, manufacturing intelligence, and advanced analytics, we're improving productivity. We're enhancing product quality, increasing operational visibility, and giving our teams greater flexibility to respond to our customers' needs.

We're also creating a closed-loop digital ecosystem that connects engineering, manufacturing, quality and operations, allowing us to accelerate product launches and continuously improve our process. And we're also expanding AI-enabled planning capabilities that better connect customer demands with production scheduling and inventory management, helping us become more responsive and efficient across our global manufacturing network.

This next slide highlights an important milestone for Nexteer as we celebrate 120 years of steering innovation. Over the past century, we continuously evolved alongside the automotive industry, progressing from mechanical steering systems to today's advanced motion control technologies.

That evolution has been written in numbers. As examples, nearly 550 million steering columns have been produced by Nexteer to-date, also around 400 million hydraulic steering units, and almost 200 million electric power steering and Steer-by-Wire systems to-date.

In total, this equates to more than 1 billion units delivered across our steering portfolio, putting our innovation in the hands of real drivers on real roads. That same innovative spirit continues to drive our strategy today.

Building on this legacy, we launched our Accelerate with Purpose initiative in January to sharpen our organizational focus, improve execution speed, and align resources behind the priorities that support long-term profitable growth.

As we demonstrated through our recent Steer-by-Wire launches and strong commercial momentum, Nexteer is successfully translating innovation into customer adoption, production programs, and profitable growth. And our 120-year story is also more about than just what we build.

It's about the communities that made it all possible. In honor of our anniversary, Nexteer employees around the world came together in July for a global service month, giving back to the communities that have supported us throughout our journey.

Every one of our divisions far exceeded its goal of volunteer hours with employees contributing more than 3,400 hours in total to organizations and causes around the world. Those hours reflect the passion, generosity and commitment of our teams, the same qualities that has carried us through 120 years and will carry us into the future.

And now I'll hand it over to Mike for the financial update. Mike?

Thanks, Robin, and good day, everyone. I'll begin with a few key observations from our first half financial performance. Nexteer delivered a record first half revenue of $2.3 billion, representing growth of approximately 4% year-over-year. On an adjusted basis, we outperformed global vehicle production by approximately 180 basis points.

Profitability also continued to improve. Adjusted EBITDA increased 14.1% year-over-year to $263 million, with margin expanding 100 basis points to 11.3%. These results were driven by continued operating performance improvements and favorable foreign exchange due to the U.S. dollar weakening compared to the renminbi and euro.

We generated $109 million of free cash flow during the first half, demonstrating our focus on cash conversion of earnings and disciplined investments. Combined with our strong liquidity position, this provides financial flexibility to support future growth initiatives and shareholder returns.

Finally, we secured $3.3 billion of customer program bookings during the first 6 months of the year, including important wins in Steer-by-Wire and premium EPS applications. These awards support our long-term growth outlook and give us confidence in the continued strength of our business pipeline.

With that, let's take a closer look at our financial performance. This slide highlights our key financial metrics for the first half of 2026. And as you can see, all 4 metrics improved compared with the prior year period.

Revenue reached $2.3 billion, increasing 3.9% year-over-year and establishing another record first half revenue performance for Nexteer. Growth was driven by strong program volumes within EMEASA and North America as well as favorable foreign exchange.

Adjusted EBITDA increased 14.1% to $263 million with margin expanding 100 basis points to 11.3%. Net profit attributable to equity holders increased 35.2% year-over-year to $86 million, with net profit margin improving from 2.8% to 3.7%.

Free cash flow was particularly strong at $109 million compared to $37 million in the prior year period. The year-over-year improvement was driven primarily by higher earnings, disciplined capital spending, and continued focus on working capital management.

Overall, we are seeing improvement across every key financial metric. The combination of revenue growth, stronger earnings, and significantly improved cash generation demonstrates the strength of our operating performance and the benefits of our strategy for profitable growth.

This slide provides a bridge from our first half 2025 revenue to our first half 2026 revenue and highlights the key drivers behind the year-over-year increase. Revenue increased by $87 million or 3.9% to a record $2.3 billion in the first half of 2026.

Foreign exchange was a positive contributor, increasing revenue by $59 million, reflecting the strengthening of the euro and renminbi relative to the U.S. dollar. Commodity pass-throughs had a favorable impact of $10 million.

Volume, pricing, and other operational drivers contributed $18 million of growth, including new program launches and higher production schedules, which were partially offset by customer pricing headwinds, particularly in APAC.

This slide shows our adjusted revenue growth relative to the market, excluding the impacts of foreign exchange and commodity price changes. On a global basis, Nexteer delivered 0.8% adjusted revenue growth, outperforming the market by 180 basis points during the first half of 2026.

While industry production remained relatively muted, we continue to benefit from recent program launches and the ramp-up of new and Conquest business across our portfolio.

Looking at the regions. North America delivered 2% adjusted revenue growth and outperformed the market by 2 percentage points. This performance reflects the strength of our core customer programs, particularly in truck and SUV platforms.

EMEASA delivered the strongest growth over market performance with revenue growth of approximately 3% and growth over market of 6%. This outperformance was primarily driven by higher volumes with our European OEM customers.

In APAC, revenue was approximately flat on an adjusted basis relative to market performance despite a more challenging operating environment. Strong program launches and customer growth were largely offset by pricing headwinds, particularly with the China market. Even so, APAC continues to be an important contributor to our overall revenue base and remains a key driver of future growth opportunities.

This slide summarizes our revenue performance by region and highlights both the composition of our revenue base, and the key drivers of growth during the first half of 2026. Starting on the left, total revenue increased from $2.24 billion in the first half of 2025 to $2.33 billion in the first half of 2026.

From a regional mix perspective, North America remains our largest region at 50% of total revenue, followed by APAC at 30%, and EMEASA at 19%. Overall, our revenue base remains well diversified across the regions.

Turning to the regional performance on the right. North America revenue increased 2.7% year-over-year to $1.17 billion. Growth was driven by favorable production schedules and the continued contribution from key customer programs, particularly in the truck and SUV segments.

In APAC, revenue increased to $708 million, representing growth of approximately 3.2% year-over-year. Favorable foreign exchange drove the increase. EMEASA delivered the strongest regional growth with revenue increasing 11.6% year-over-year to $447 million. The improvement was also primarily driven by favorable foreign exchange.

Turning to earnings performance. Adjusted EBITDA increased to $263 million in the first half of 2026, up 14.1% year-over-year, with EBITDA margin expanding 100 basis points to 11.3%. This marks another period of improving profitability and continued margin expansion.

Looking at the drivers on the right of the slide, production volumes had a favorable impact of $4 million. Favorable foreign exchange contributed $11 million, driven by $18 million relative to the strengthening of the euro and renminbi to the U.S. dollar, and partially offset by $7 million due to the strengthening of the Mexican peso against the U.S. dollar.

We also realized $8 million year-over-year benefit from customer tariff recoveries. This includes customer recoveries of tariffs related to costs incurred in 2025.

All other factors contributed $15 million with material and manufacturing performance outpacing customer pricing and economics. Partially offsetting these favorable items was a $5 million unfavorable impact from a temporary electrical outage in 2 of our Mexico plants, causing production disruptions, premium freight, and other costs. We are currently working with our insurance provider and expect recovery in the second half.

This slide highlights EBITDA and margin performance across our 3 regions during the first half of 2026. Starting with North America, EBITDA was $86 million, consistent with the prior year. Margin was 7.3% compared with 7.6% in the first half of 2025. North America profitability was impacted by the electrical outage and unfavorable foreign exchange.

Moving to APAC. EBITDA increased to $120 million compared with $116 million in the prior year. EBITDA margin remained strong at 16.9%, demonstrating the resilience of the business despite a challenging market environment, including customer pricing pressure and elevated commodity costs.

Continued operational discipline, strong execution and the benefits of scale helped offset these headwinds and supported another period of strong earnings performance.

In EMEASA, EBITDA increased significantly to $55 million, up from $35 million in the first half of 2025. EBITDA margin expanded from 8.8% to 12.2%, reflecting continued operating efficiency improvements, favorable revenue growth, and successful execution of our margin enhancement initiatives across the region.

This slide provides a bridge from EBITDA to net profit for the first half of 2026. Overall, the $33 million increase in EBITDA was the primary driver behind the $23 million improvement in net profit, which increased from $63 million in the first half of 2025 to $86 million in the first half of 2026.

Let me highlight a few key items. Depreciation and amortization totaled $147 million compared with $137 million in the prior year period. The increase was driven by $3 million foreign exchange impact, $3 million from a customer recovery received in 2025, and $4 million due to ongoing investments supporting future growth, particularly in APAC.

As a result of the stronger EBITDA performance, operating profit increased to $116 million compared with $93 million in the first half of 2025.

Income tax expense decreased from $27 million to $25 million. The effective tax rate for the first half of 2026 was 21.6% compared to 27.9% in the first half of 2025. The reduction in effective tax rate was primarily driven by improved profitability in the U.S. entity related to stronger operating performance and tax planning initiatives.

Our U.S. entity remains in a full tax valuation allowance position. We now expect our full year effective tax rate to be slightly below 25%, and our long-term effective tax rate remains in the high teens.

Moving to the balance sheet and cash flow. On the left of the slide, you can see our cash flow performance for the first half of 2026 compared with the first half of 2025, while on the right side summarizes our balance sheet and liquidity position.

We generated $109 million of free cash flow during the first half of 2026 compared with $37 million in the prior year period. Cash from operating activities totaled $262 million, an increase of $120 million compared with the first half of 2025. This improvement reflects stronger earnings performance, customer recovery, and favorable working capital.

Cash used in investing activities was $153 million compared with $106 million in the prior year period. The increase was primarily driven by higher capital expenditures and engineering investments supporting future growth opportunities.

Turning to the balance sheet. We ended the first half with $597 million of cash and only $51 million of gross debt, resulting in a net cash position of $516 million, an increase from $414 million at the end of 2025. Our liquidity position remains very strong.

Total liquidity increased to $968 million, consisting of $598 million of cash and $372 million of committed credit facilities, providing substantial financial flexibility to support both strategic investments and shareholder returns.

Before concluding the financial section, I'd like to step back and highlight what we have accomplished since 2023. As this slide illustrates, Nexteer has delivered 3 consecutive years of revenue and EBITDA growth, demonstrating our ability to achieve profitable growth through disciplined execution and strategic transformation.

Since 2023, revenue has increased from $4.2 billion to $4.6 billion in 2025. And we have continued that momentum in the first half of 2026 with another record revenue performance.

Over the same period, EBITDA grew from $347 million to $472 million, while EBITDA margin expanded from 8.2% in 2023 to 10.3% in 2025, reaching 11.3% in the first half of 2026. This progress is a result of several strategic initiatives working together.

First, we successfully converted strong bookings into revenue growth through consistent execution of new and Conquest program launches across all regions. We leaned into growth in our APAC division, and secured the #1 market share position with the China OEMs.

Second, we have focused on operational excellence through restructuring initiatives, footprint optimization, manufacturing productivity improvements, and focused cost management, driving improving profit margins.

Third, we have continued to strengthen our technology portfolio, expanding beyond traditional steering systems into Steer-by-Wire, Rear-Wheel Steering and Brake-by-Wire as well as expanding mass production of Rack EPS and Dual Pinion EPS for the China OEMs.

Taken together, we have expanded margins by over 300 basis points, strengthened cash generation, improving returns, and building a more resilient business with a diversified customer base and a differentiated technology portfolio. We continue to see strong momentum in the business with further opportunity to continue to grow revenue above market levels and to further expand profit margins.

Turning to our 2026 considerations. Despite expectations for a relatively soft global production environment, we remain on track to achieve another year of record revenue and continued above-market growth. We are also seeing continued momentum in operating performance.

Over the past several years, we have taken meaningful actions to improve the profitability of the business through restructuring initiatives, manufacturing productivity improvements, supply chain optimization, and disciplined cost management. The benefits of these actions are evident in our margin expansion and earnings growth, and we expect that momentum to continue in the second half.

At the same time, we remain actively engaged with customers regarding tariff reimbursement, North America EV program recoveries, and commodity cost impacts. We have made good progress recovering tariff-related costs during the first half, and we'll continue working closely with customers and suppliers to mitigate external cost pressures and protect profitability.

From a technology perspective, 2026 is shaping up to be a milestone year for Steer-by-Wire following the successful production launches achieved during the first half. We expect additional Steer-by-Wire program launches later this year. These launches further validate our ability to successfully transition from awards and development activities into commercial production and revenue generation.

Finally, our first half bookings performance provides a solid path toward achieving our full year bookings target of $6 billion. We continue to see healthy customer engagement across our core steering portfolio as well as growing interest in our Motion-by-Wire technologies.

Overall, we remain confident in our outlook, supported by continued above-market growth, improving operating performance, increasing commercialization of Steer-by-Wire, and a strong pipeline of future business opportunities.

Thank you for your attention during the call. Betsy, please open the line for questions.

[Operator Instructions] The first question today comes from Joey Yang with Bank of America Securities.

Congratulations on the solid results despite the weakness in the global auto production market. My first question is, could you give us some outlook on the growth momentum by region in the second half of this year and also 2027, and to exclude other FX impact?

Yes. So thanks, Joey, for the question. Certainly, we're excited with the results that we achieved in the first half and look forward again to a strong second half of the year. We are seeing on a year-over-year basis, production volumes are lower.

They were lower in the first half year-over-year by about 1%, and we're seeing production volumes as well looking to be lower about 3% on a year-over-year basis with all regions being lower.

That said, we gave guidance back when we were with you for the -- for our March Investor Call of 200 to 300 basis points of growth over market. We fell slightly below that in the first half of the year with this 180 basis points growth over market.

The majority of the miss in the first half -- or slight miss in the first half was related to the lower production volume environment within China. However, we do still see that our growth momentum will start to pick up again in the second half of the year with these additional program launches, and we still expect to outperform the market growth by 300 -- 200 to 300 basis points for the full year.

In terms of 2027, it's a little bit early for us to talk about guidance for 2027 as we're just now going through our budget and financial planning process. What I can say, though, is that we are focused on continuing to grow our revenue over market and see quite a lot of opportunity to continue with this momentum that we have over the past few years.

That's very clear. And my second question is on your first half new bookings. I noticed that the contribution from APAC customers declined to 34% versus 45% in 2025 full year.

Would you think this contribution from APAC customers will remain as low as this 33.33%? And if you look at half year or half year pattern, so in 2025, around 70% of new bookings happened in first half versus only 30% in the second half.

Would you think we should use this as a reference for 2026, meaning that there could be much lower new bookings in the second half of this year?

Yes. So our booking cadence really depends on how our customers roll out their sourcing schedule. So I'd say for the first half, we had a $3.3 billion of bookings. We're still forecasting to meet our goal of $6 billion for the full year.

And within the -- within our bookings for the first half, we did have strong bookings in APAC, about $1 billion of bookings in the first half for APAC. We just had also strong bookings within North America and EMEASA that overall slightly reduced the total. But I would expect to have about 1/3 or around $2 billion of bookings for our APAC division for the whole year.

The next question comes from Shelley Wang with Morgan Stanley.

Congratulations on the very good results. I have 2 questions here. The first one is on the revenue growth. So it was 0.8% for the first half. Can management share more color on the volume versus the price and the growth breakdown?

Because we know the ASP trend for the APAC was negative. I'm not sure for the overall, the ASP trend. And because we are migrating to the more advanced products like the REPS, dual-pinion, like, Steer-by-Wire, I assume like the ASP is higher. So do we expect to see the higher ASP growth in the future, and therefore, the higher revenue growth in the future? That's my first question.

Okay. So the revenue growth -- and first, thanks for the questions, Shelley. Appreciate it. If you look at our presentation on Slide 13, we have a bridge for the revenue growth.

So FX was a large driver for us. We did have $10 million for commodity recovery and then $18 million in the volume mix other category. And that includes pricing. And we're running and we've historically run pricing of about 1% to 2% per year.

And we're seeing certainly pricing pressures within APAC. And that pricing pressure is pushing us up to closer to the 2% pricing level in the first half. Now you can see with the strong margins that we delivered in APAC, we were able to offset these pricing reductions as well with -- also with cost reductions, both on material costs as well as efficiencies in our manufacturing costs.

And I guess, Shelley, I'll add to what Mike just said in terms of our product mix. Certainly, as we transition into more premium steering products like Rack EPS, like Steer-by-Wire, and other Motion-by-Wire products, we would expect higher content in the vehicle with those products.

I would point to the business award we had in Europe with Rack EPS that this would be our first introduction of Rack EPS by next year into the European market. So we're very optimistic about the opportunity of expanding that premium product into the European market.

So the trend tends to be skewed towards more premium products driven by heavier electric vehicles in one aspect, but just our portfolio in general is really now trending more towards the by-wire technologies, which have higher content.

My second question is on the margin. So we have received some recoveries in the first half. May I ask if that's all? Or can we expect to receive more recoveries in the second half, either, like, related to the tariff, commodity price or like the customer reimbursements related to the previous project cancellations?

Yes. So the recoveries that we received in the first half were largely related to tariff recoveries for costs on tariffs that we incurred in 2025 that we had yet recovered from the customer. So that improved our profitability by $8 million in the first half of '26 compared to 2025.

In terms of recoveries related to the North America EV cancellations, we did not record any recoveries in the first half of the year and continue to negotiate with a couple of our customers for recoveries. And we look to achieve those in the second half of the year.

The next question comes from Yiming Liu with Guotai Haitong Securities.

First, congratulations for your strong first half results. So I've just got one question on Steer-by-Wire. So with the development of global L4 autonomous driving, so do you see any driver of your products? So are they going to be more utilized on those like Robotaxi, [ robo-truck ] or similar products? And could you provide an expectation on the penetration level of those products in the next couple of years?

Yes. Thank you for the questions. So I think the Steer-by-Wire product brings a lot of flexibility to OEMs. So it's made up of really 2 systems, a road-wheel actuator, which is the mechanical system that turns the wheels of the vehicle and then a hand-wheel actuator, which provides the steering input and provides driver feedback.

So in a, like, fully autonomous vehicle, an L4 vehicle or a Robotaxi-type vehicle with no steering wheel in the vehicle, they're only using the road-wheel actuator and the vehicle is driven autonomously. So that is one application of Steer-by-Wire.

Another application is where you would have the full system, so the road-wheel actuator in addition to the hand-wheel actuator as well. And those can be used in vehicles all the way up to L4, L5 in terms of autonomous driving, but they also provide the capability of drivers to control the vehicle as well.

So we see the technology applicable to all levels of autonomous driving, and we have customers that are looking to apply that in multiple different ways. But it's clear that there is becoming more momentum around this technology.

We're starting to see our first launches as we have talked about. We have a major program in Europe that will launch towards 2030-type of a time frame at a much higher volume. So I think over the next few years, we're going to see a gradual ramp-up. And then after 2030, I think the Steer-by-Wire systems will become more meaningful in terms of our total revenue.

Due to the time limit, we will take the last question from Elizabelle Pang from DBS.

Congratulations on a strong set of results. This is Elizabelle from DBS. I have 2 questions.

Firstly, I'd like to congrats Nexteer management in obtaining the $8 million tariff-related recovery, and understand that the team is still continuing to negotiate for the EV cost recovery. Just like to ask, could management guide a potential magnitude of this EV cost recovery in the second half?

Should we expect close to full recovery like what we've witnessed for tariff costs or perhaps around half of this $24 million cost that we saw in '25? Some guidance in the magnitude of EV cost recovery would be helpful. That is my first question.

Yes. So we continue to -- thanks for the question. We continue to discuss with our customers on various aspects. We did have for the second half of 2025, we had a net impact of $24 million, and that included some customer recovery of $5 million related to these North America EV programs.

So of course, we do aim to work to offset the write-offs that we had to take. Also, we have significant challenges throughout our supply base related to these program cancellations. So still working through the negotiations, a bit early to forecast what the net impact would be on the second half. But I'd say between dealing with recoveries with the customers as well as with our supply chain partners, I wouldn't expect a significant upside in the second half.

That's very clear. And my second question is with regards to raw material costs. Should we expect a softening in gross margins and EBITDA margins going forward given the increases in raw material costs that we've seen?

And I'd also like to clarify that we've seen that the raw material cost as a percentage of revenue also declined in the first half of this year compared to last year. So perhaps management could share the reason for this improvement, even though we've seen raw material costs continue to rise? And is this improvement durable for the second half of this year?

We're certainly facing increased commodity prices as increases in oil, aluminum, steel, copper are impacting our business. Now in terms of copper and aluminum and steel, we do have commodity escalation contracts secured with most of our customers.

Now where we do have challenges is in -- particularly in China with the China OEMs. Most of the China OEMs, we do not have escalation clauses with. So that will be a headwind for us as the prices are increasing.

And you're right, our material cost percent of revenue has reduced in the first half of this year versus last year. And I'd attribute that to our strategy around purchasing. We have instituted dual supply for most of our -- majority of our parts, and that's helped us to drive our more efficient cost reductions across our supply chain as well as we are continuing to partner with our supply base and our customers for design changes, which has also reduced our cost through removing costs from our bill of materials.

Thank you so much for all the questions and today's participation. If there are any further queries, please contact us at [email protected]. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Ladies and gentlemen, welcome to Nexteer Automotive Group Limited 2025 Annual Results Conference Call. [Operator Instructions]

I would now like to turn the conference call over to Investor Relations Director, Mr. Tony Wang. Please go ahead.

Okay. Thank you, Jamie. Again, welcome, everyone, to our earnings call for the full year of 2025. We made the announcement of our annual results this evening, Hong Kong time. Before we begin today's call, I would like to remind you that this presentation contains a safe harbor statement. For additional information, please refer to the content in the second page of our slides.

The presentation accompanying today's call are available on our company's website. Please visit nexteer.com to download slides if you have not done yet.

Joining us today are Robin Milavec, Executive Board Director, President, CTO and Interim Global COO; Mike Bierlein, Senior Vice President and CFO. Starting the presentation, Robin and Mike will provide the business and financial highlights, respectively. And then we will open the lines for your questions.

Please follow the limit of 2 questions per person. With that, let me turn the call over to our President, Robin.

Thank you, Tony, and hello to everybody online today. I'll begin with an overview of our business performance and strategic progress, and then I'll hand it over to Mike Bierlein, our Chief Financial Officer, and he will walk you through our financial results and 2026 outlook.

So starting with Slide 4 in our deck, let me start with a high-level overview of our full year business highlights. This reflects 5 key milestones demonstrating Nexteer's focus on long-term profitable growth.

First is revenue. Our total revenue reached nearly $4.6 billion increasing 7.2% compared to 2024. And as a result, we achieved record revenue for a third consecutive year. This reflects sustained above-market growth driven by new and Conquest business wins.

Second is program launches. We successfully launched 57 customer programs with particularly strong momentum in APAC, reflecting our deepening engagement with both global and Chinese OEMs.

Third is new business bookings. We achieved customer program bookings totaling $4.9 billion, including new Steer-by-Wire wins with 2 leading Chinese NEV OEMs. The business development on Steer-by-Wire is well on track, along with the solid execution by our team in 2025.

Fourth is revenue in our Asia Pacific division. APAC revenue reached a record of approximately $1.5 billion. This represents a 9.8% increase year-over-year, making the fourth consecutive year of record revenue in this region. This milestone highlights a remarkable organic growth trajectory with revenue surging from about USD 1 billion to USD 1.5 billion in less than 3 years.

In 2025, Nexteer China and Nexteer India, each achieved record revenue, reflecting continued growth and strong regional execution.

And finally, enhancing shareholder returns. We are glad to announce that the Board of Directors has approved a $46 million dividend subject to the approval of the shareholders in the upcoming Annual Shareholders Meeting. This dividend amount is more than double that of last year and represents a total of 45% payout ratio of the 2025 net profit attributable to equity holders which is an increase from 35% we had in 2024.

These milestones collectively demonstrate Nexteer's ability to grow above market, while maintaining financial discipline.

As I mentioned earlier, we successfully launched 57 customer programs across multiple product lines, regions, customers and vehicle segments. 42 of these were new or conquest wins and 36 were for electric vehicle platforms, demonstrating strong executions as bookings convert into revenue.

Today, rather than walking through a detailed launch list line-by-line, this slide simply highlights the selection of major program launches that illustrate our new bookings wins that are translating into tangible growth.

First, we achieved the initial launch of our Modular Column EPS or mCEPS in the EMEASA region. While Nexteer's mCEPS was first introduced in China, leveraging our industry-leading EPS building blocks. This successful EMEASA launch further enhances our competitiveness and our regional footprint.

Second, we delivered the first Dual Pinion EPS program launch with a leading Chinese OEM. Following the inaugural Dual Pinion EPS launch in EMEASA, we have secured additional orders from multiple Chinese domestic OEMs and other European OEM over the past year. The customer demand for this product is strong, driven by the need for cost-effective speed-to-market solutions combined with Nexteer's proven steering, reliability and performance.

At the same time, despite the emergence of Dual Pinion EPS, we have built a very solid and growing Rack EPS business foundation in China.

Nexteer Technologies have been adopted across numerous mainstream and premium EV models with customers, including Xiaomi, XPeng, Li Auto, Zeekr, Chery, Changan, and others. Overall, the strong launch momentum across gear-based EPS platforms, including our single pinion, dual pinion and Rack EPS products continue to reinforce Nexteer's market leadership, particularly in the China market.

Out of the 57 program launches, 48 of those were in APAC, supporting both Chinese and global customers. This, again, is another proof point of Nexteer's strategic targeting and capitalizing on the region's growth opportunities. This robust launch pipeline reflects increasing diversity across products, across customers and regions which is critical to our long-term success. Looking ahead, we are particularly excited about 2 Motion-by-Wire related product launches beginning in 2026.

Turning now to new business awards. We secured $4.9 billion in customer program bookings in 2025, reflecting strong commercial momentum across products, regions and customers. These wins include several breakthrough awards and important first, underscoring our leadership in advanced steering technologies. Most notably, we secured Steer-by-Wire program with 2 leading Chinese new energy vehicle OEMs. And these cover both the handwheel actuator as well as the roadwheel actuator applications. These awards further reinforce Nexteer's leadership in next-generation Motion-by-Wire technologies.

Let me expand a little bit more on these 2 customers. So building on our first Steer-by-Wire win with a leading Chinese OEM in the second half of 2024, we successfully secured a second award with this customer in 2025. This follow-on win demonstrates growing customer confidence and an expanding adoption of by-wire technology across the OEM's upcoming vehicle platforms.

In addition, we secured our first Steer-by-Wire booking with another leading Chinese OEM, including, again, both the handwheel actuator and roadwheel actuator applications. This program is expected to launch as early as next year, reflecting a short lead time from a business award to production and strong execution capabilities.

Beyond Steer-by-Wire, we continue to expand our dual pinion and rear wheel steering business across APAC and EMEASA, deepening relationships with existing Chinese OEMs, while also securing a new European-based OEM. These wins highlight not only the scalability of our dual pinion product technology, but also our ability to deliver cost-effective, lightweight rear wheel steering solutions that enable up to 12 degrees of rear wheel steering turning angle and supporting a broader growth pipeline.

We also earned our first Column Assist EPS win with a market-leading OEM in India. This marks an important milestone for Nexteer in 1 of the world's fastest-growing automotive markets. This win demonstrates our ability to localize proven global electric power steering technologies and compete effectively on cost, quality and reliability in a highly value-focused market.

Another important first is that we earned the first high output Column Assist EPS win with a leading Chinese OEM. This represents an important expansion of our Column EPS portfolio into higher performance and load applications. This win highlights our ability to extend Column EPS technology beyond the traditional output range to meet more demanding vehicle requirements.

We continue to capture the global expansion of Chinese OEMs as they grow their presence in Europe and South America, by leveraging our strong China relationships and global footprint to support customers with consistent scalable steering solutions across regions. Importantly, this trend allows Nexteer to extend China originated wins into incremental global revenue opportunities.

And lastly, we successfully conquested a new Power Column business for full-size truck platform in North America, strengthening our leadership position in this region as well.

Looking at bookings across product lines and regions, over 75% of Nexteer's bookings were in our EPS product line and nearly half or 45% of our bookings were secured in the APAC region. Overall, this diversified portfolio indicates our technology is becoming the product of choice by many domestic and global OEMs.

On the next slide, this highlights that customer diversification remains a core growth pillar for Nexteer. We partner selectively with OEMs to align with the long-term industry mega trends, including electrification, autonomy and connectivity. And today, we serve more than 60 OEMs globally. Over the last year, we've expanded our customer base by winning programs across a broad range of customer models from leading domestic OEMs in China to the market leader in India, to premium EV manufacturers in North America as well as an emerging autonomous mobility company.

Importantly, these wins span a wide mix of technologies, including our Rack EPS, Column EPS, Dual Pinion, Rear Wheel Steering, Driveline and Columns and Intermediate Steering Shafts. This demonstrates our ability to deploy the full Nexteer portfolio. It positions us to capture growth from established volume leaders, while also participating in the emergence of new mobility players which are reshaping the industry.

While every competitive situation is different, our success consistently comes down to a few core strengths. We bring world-class product and process technologies. Our quality and reliability performance as measured by our customers remains strong and continues to improve.

We listen carefully to understand what each customer truly values. And as the Tier 1 in our space was experienced as a global OEM in our early history, we truly understand how critical speed, agility and mindset are in responding to those needs.

And finally, flawless execution from development through launch remains a defining differentiator. Together, these capabilities underpin our ability to win, scale and grow profitably across a diverse and evolving customer base.

We also continue to make disciplined progress in expanding our manufacturing and technical footprint across Asia Pacific to support long-term growth and localization. This slide shows the time line on how APAC steering production and validation has expanded in the past 5 years.

In January of 2025, we opened our state-of-the-art Changshu Manufacturing and Testing facility in China, strengthening our ability to support the growing demand from Chinese OEMs, while aligning with China's focus on high-end intelligent and sustainable manufacturing. That expansion is complemented by our Asia Pacific technical center in Suzhou, which brings comprehensive engineering, validation and corporate functions together in 1 location, enabling faster development cycles and closer proximity to our customers.

We have also expanded our India Technical Center near Bengaluru with additional physical validation capabilities, enhancing localized engineering support in that region.

Looking into 2026, we've opened our first manufacturing facility in Rayong, Thailand, which has begun production with an initial focus on Column Assist EPS to support growing demand across Southeast Asia.

And finally, we broke ground on new smart manufacturing facilities in both Liuzhou and Suzhou, further expanding capacity for advanced steering technologies, including EPS and Steer-by-Wire. Together, these initiatives reflect our disciplined approach to scaling capabilities and supporting customers across the region.

On this next slide, I'd like to update the status of 1 of our most important Motion-by-Wire development portfolio products, which is electromechanical breaking or EMB. Nexteer publicly debuted EMB at the 2025 Shanghai Auto Show. We leveraged our technology building blocks to create a modular high-precision braking system to strategically expand into Motion-by-Wire chassis control. Following the Winter Test on EMB 1 year ago, a second round of winter vehicle tests were completed in Yakeshi, China during the period between December of 2025 and March of this year. In this event, we had more than 17 OEM customers that were engaged and had given very positive feedback on the vehicle performance through the on-site test driving and technical review. Meanwhile, our customers were surprised by the rapid pace of our EMB product development progress.

Right now, we're developing highly automated production line to accelerate our industrialization process. And we also will continue to optimize the function, performance and durability of the EMB product. We're looking to secure our first business booking of EMB with the Chinese OEM in the course of this year.

This next slide highlights how we are capitalizing on Motion-by-Wire and MotionIQ to enable Intelligent Motion in the vehicle. First, we're integrating smart chassis technologies, including steer-by-wire, rear wheel steering and brake-by-wire, with the electric powertrain architectures. This system-level integration allows us to deliver precise coordinated motion control across the vehicle, while supporting OEMs efforts to simplify platforms and scale advanced architectures.

Second, we're embedding software-defined vehicle and AI capabilities directly into motion control. Through MotionIQ, we combine proven safety critical algorithms with flexible software tools enabling OEMs to develop, tune and update motion functions more quickly, while retaining control over vehicle differentiation.

And third, these capabilities support autonomous vehicle applications, including Robotaxi and ADAS Level 3 Plus. Our Motion-by-Wire, hardware and software foundation enables the redundancy, the precision and the control required for higher levels of automation.

Now I'll hand it over to Mike Bierlein for the financial review.

Thanks, Robin, and good day, everyone. Nexteer delivered a record year in 2025 with full year revenue reaching $4.6 billion. On an adjusted basis, excluding foreign exchange and commodity impacts, revenue increased 6.9% year-over-year outperforming the market by approximately 320 basis points. Importantly, all 3 regions delivered growth, supported by strong production schedules.

Profitability continues to improve. EBITDA grew 11.2% year-over-year, with margins expanding by 40 basis points. We generated positive free cash flow of $124 million, and our balance sheet remains strong, ending the year with $414 million of net cash.

From a growth and visibility standpoint, we secured $4.9 billion of customer program bookings during 2025, including 2 Steer-by-Wire program awards reinforcing our long-term growth outlook.

Finally, reflecting our confidence in Nexteer's financial strength, our Board approved a $46 million dividend representing a 45% payout ratio, up from 35% in 2024. This confirms our commitment to disciplined capital allocation and increasing shareholder returns.

This slide highlights our key financial metrics for 2025: revenue, EBITDA, net profit and free cash flow, and demonstrate solid improvement across our core earnings profile.

Revenue reached $4.6 billion in 2025, up 7.2% year-over-year, reflecting favorable volumes and execution on New and Conquest program launches. EBITDA increased to $472 million representing an 11.2% increase versus 2024, with margins expanding to 10.3%, driven by favorable volume and improved operating performance.

Net profit attributable to equity holders was $102 million or 2.2% of revenue compared to $62 million in 2024. This includes a $24 million of net impairment costs driven by customer program cancellations. While we recognized a similar net impaired cost of $23 million a year ago. Adjusting for these onetime items, our net income would be $126 million or 2.7% for the year of 2025.

Free cash flow was $124 million in 2025 compared to $166 million in 2024. Improvements in EBITDA were offset by a onetime favorable tax benefit received in 2024 and by net investment in working capital to support growth. Overall, 2025 represents a year of improved earnings quality, supported by stronger volumes and operating performance.

This slide shows a walk of 2024 revenue to 2025 revenue. Favorable foreign exchange increased revenue by $15 million, driven by the euro strengthening compared to the U.S. dollar. As noted here, the largest driver of the year-over-year increase in revenue was represented by volume, pricing and others, which provided an uplift of $293 million, driven by strong customer schedules and above-market growth in all 3 segments. APAC continued to lead with revenue growth, mainly with the China OEMs. Finally, commodity prices reduced slightly, causing a year-over-year revenue decrease of $1 million.

This slide shows our year-over-year revenue growth versus the market in 2025, adjusted for foreign exchange and commodity price changes. On a global basis, Nexteer delivered 6.9% adjusted revenue growth year-over-year, outperforming the market by approximately 320 basis points.

Looking at the regions. North America revenue increased by 4.4% year-over-year and 5.4% above market as our customer programs continue to perform well in the market. APAC continued to lead with 10.2% year-over-year growth and 3.1% growth over market, underscoring the strength of our regional execution and customer portfolio. EMEASA delivered strong growth with 8.5% year-over-year revenue increase and 9.5% above market, supported by program ramp-ups.

This slide summarizes our 2025 revenue performance by region and highlights both the mix and growth dynamics across the business. Starting on the left. Total revenue increased from $4.3 billion in 2024 to $4.6 billion in 2025. From a mix standpoint, North America remains our largest region at 50% of total revenue, with APAC at 32%, and EMEASA at 17%. Overall, the regional mix remains balanced with continued structural growth in APAC.

Turning to the regional growth performance on the right. North America revenue of $2.3 billion increased 4.4% year-over-year. APAC delivered strong growth of 9.8% or 10.2% excluding FX and commodity impacts supported by sustained momentum from New and Conquest program launches over the past several years and our leading position with the Chinese OEMs.

EMEASA revenue increased 11.4% year-over-year or 8.5% excluding FX and commodity impacts driven primarily by Conquest program volume ramp-ups.

This slide walks through the year-over-year change in EBITDA from 2024 to 2025. EBITDA increased from $424 million in 2024 to $472 million in 2025, representing an 11.2% year-over-year increase with margins expanding from 9.9% to 10.3% of revenue.

Starting with the key drivers. Volume and mix contributed $59 million, reflecting higher revenue and improved operating leverage across the business. These gains were partially offset by $10 million related to troubled supplier costs as well as $10 million of net tariff impact, both of which pressured year-over-year performance in North America.

Restructuring cost was $9 million in 2025, which was equal to our restructuring cost in 2024. Restructuring costs were primarily to support a further 15% reduction in U.S. salaried employment in 2025, as we continue to focus on optimizing our cost structure to improve margins and costs related to the transfer of the Columns operation from the U.S. to Mexico, which is nearing completion.

All other performance factors contributed $9 million, reflecting continued improvement in manufacturing and material performance more than offsetting price reductions and economics.

This slide highlights our EBITDA and margin performance by region in 2025 compared with the last year. Starting with North America. EBITDA was $174 million in 2025 compared with $178 million in 2024. EBITDA margin declined from 8.1% to 7.6%, as margin improvement initiatives were more than offset by troubled supplier and net tariff costs.

APAC EBITDA increased to $243 million up from $230 million in the last year, driven by continued strong revenue growth, EBITDA margins remained robust at 16.6%. APAC continues to deliver solid earnings growth and margin performance supported by increased scale and operating execution.

In EMEASA, EBITDA increased significantly to $69 million, up from $36 million in 2024. EBITDA margins expanded from 5% to 8.6%, driven by improving operating efficiency and revenue growth, reflecting meaningful year-over-year progress in the region.

This slide shows our EBITDA to net profit walk for 2025. Overall, the year-over-year $48 million in EBITDA increase is driving the net profit increase from $62 million to $102 million. Depreciation and amortization totaled $309 million in 2025, broadly flat versus last year. D&A includes depreciation of plant, property and equipment as well as amortization of intangible assets. The results include a $24 million net program impairment charges recorded in 2025. And $23 million in 2024, primarily related to North America EV program cancellations and volume reductions. We continue to work with our customers on cost recoveries related to these programs.

Operating profit increased to $163 million, up from $115 million last year, reflecting the stronger EBITDA performance. Below operating profit, JV earnings increased modestly, driven mainly by contributions from our Chongqing operations.

Income tax expense increased to $55 million compared with $42 million last year. This increase was primarily driven by improved profitability. Our U.S. operations remain in a valuation allowance position, driving our effective tax rate to be elevated at 33% for 2025 compared to 36% in 2024. As our profitability continues to improve in the U.S., our effective tax rate will continue to reduce. For 2026, the forecast for effective tax rate is slightly below 30%, and our long-term effective tax rate remains in the high teens.

Moving to the balance sheet and cash flow. On the left of the slide, you can see our full year 2025 cash flow performance compared with 2024. Cash from operating activities of $405 million in 2025 was $41 million lower than 2024, as increased EBITDA was offset by a onetime favorable tax benefit in 2024 and by a net investment in working capital to support growth.

Cash used in investing activities totaled $281 million in 2025, largely in line with the last year. Overall, free cash flow was strong at $124 million. We ended 2025 with $501 million of cash on hand and gross debt of only $50 million with finance leases of $37 million, resulting in a net cash position of $414 million at year-end.

Total liquidity stood at $833 million comprised of $501 million of cash and $332 million of committed credit facilities, providing significant financial flexibility.

Turning to our 2026 operating considerations. Despite expectations for modestly lower global OEM production in 2026 we remain on track to deliver another year of record revenue. We expect above-market revenue growth in 2026 of approximately 200 to 300 basis points, driven primarily by continued growth in APAC, particularly in China as we continue to expand with both global and domestic OEMs.

From a profitability perspective, we expect continued margin expansion benefiting from net performance improvements and increased volume leverage. Our Motion-by-Wire portfolio continues to build momentum with additional order opportunities anticipated and initial revenue recognition expected to begin in 2026, marking an important milestone in the commercialization of this technology.

At the same time, geopolitical risks persist, including ongoing conflicts and trade tensions, we remain vigilant and continue to actively manage these risks through close engagement with customers, suppliers and our global operating footprint.

Nexteer's long-term investment opportunity remains compelling, supported by above-market revenue growth, continued margin expansion through operational efficiency and execution, our leading position in Motion-by-Wire technology and a strong balance sheet, enabling strategic investments and increasing shareholder returns.

In closing, Nexteer has a well-defined strategy focused on technology leadership, portfolio alignment with megatrends, disciplined cost management and targeted growth in China and emerging markets.

Thank you for joining us today. Operator, Jamie, please open the line for Q&A.

[Operator Instructions] And our first question today comes from Shelley Wang from Morgan Stanley.

I have 2 questions. The first is about our new products. And it's good to see the progress on the Steer-by-Wire project wins. And then, I was wondering, like, in the long term, are we more focused on the Steer-by-Wire itself or we target to provide like the integrated solutions, maybe including the Steer-by-Wires like EMB. And then if it's the integrated one, then what's our advantage if comparing to other chassis suppliers and the start-up? So this is my first question.

And my second question is about the impairments and the compensation. And because from the financial statements, we see we booked $54 million customer compensation in 2024, but only $8 million last year. So are we expected to receive more compensation this year? Or the $8 million is for the project installations last year? Yes. So that's my second question.

Okay. Thank you, Shelley. This is Robin. I'll take the first question that you had, and then I'll turn it over to Mike to address your second question. So in terms of the new product strategy, certainly, we've been developing our Steer-by-Wire product for a number of years now, and we are beginning to see traction in the market, especially in the China market with Steer-by-Wire, new business wins, production launches that will start this year. And as a part of this by wire technology, our intention is to be a chassis Motion-by-Wire supplier. So that is the reason for the recent development of our electromechanical braking system. And that is a critical milestone in the Chassis-by-Wire system that we need to fulfill. So I would indicate that the advantage that we will have in this market, obviously, when you think about braking, we don't have a long history of braking as a company.

However, we are very experienced in safety-critical vehicle systems, and the EMB product has -- shares a lot of commonality with electric power string in terms of the electric motor, the actuator, the electronics, the software, all of that is very scalable, and it builds on those critical technology building blocks with the EPS.

So we see a lot of potential to increase our scale and really drive competitiveness by having both the Steer-by-Wire and the EMB products together. In addition, we don't have a lot of legacy investments in hydraulic braking. So we're really free from the past legacy of this older technology that will be phasing out and we are entering in this technology shift in the industry to electric braking. So we believe that is also an advantage for us.

And the third advantage I would highlight is the close partnership that we have developed with the China OEMs. I noted that we had 17 customers evaluating our Brake-by-Wire vehicles in our Winter testing. There is significant interest from many of the China OEMs to support Nexteer, and we believe that relationship will lead to business sourcing for both Steer-by-Wire and EMB, and that will enable us to enter the braking market globally at some point in the near future.

With that, let me hand it over to Mike for part 2 of your question, Shelley.

Thanks for the question, Shelley. So in terms of the impairments, it's certainly a challenging situation in North America with the changing, say, demand and support from government programs to support the electric vehicles. So each of our 3 major customers within North America determined to cancel or significantly reduce volumes on their EV truck and SUV platforms. And that happened towards the end of the year of 2025.

We did record $32 million of impairments between write-offs for our engineering intangible assets as well as write-offs for some specific, say, machinery and equipment. We did recover $8 million that netted us down to $24 million on a P&L impact for the year. And because these program cancellations happen toward the end of the year, we were not able to fully negotiate the recoveries with our customers, and we do expect to receive recoveries yet in 2026.

Now we also have to deal with challenges across our supply chain. And certainly, we have costs that our partners and our supply base have incurred relative to these program cancellations as well. But to answer your question, yes, we do expect to recover this further cost to offset these write-offs in 2026.

And our next question comes from [ Jiayi Shi ] from Guotai Haitong Securities.

And I'm just wondering how much would you estimate the growth of revenue of each area in 2026 and the EBITDA margin of each area?

Thanks, Jiayi, for further questions. And certainly, considering the dynamic environment that we're facing in 2026, there has been certainly a mix of impacts on our revenue outlook forecast. As I mentioned, we are expecting our revenue to grow on a year-over-year basis, above market by 200 to 300 basis points. And with that, we are, at this point, anticipating a global market volumes to be lower by about 1% for the year. And I think that the 1% really depends on how this geopolitical conflict between the U.S., Israel and Iran ends up playing out over the years -- over the year. Hopefully, the conflict ends sooner.

Our forecast is, of course, assuming a short-term conflict with that. So from a volume perspective, we are seeing that most of our growth over market will be in Asia Pacific. So you can think about, the 200 to 300 basis points growth being largely in Asia Pacific.

From an earnings profile. We do see a continued margin expansion. And if you think about breaking that down then by region, I continue to challenge our Asia Pacific region to maintain profit margins in around the 16% to 17% EBITDA range. And we continue to see improvement and momentum in our EMEASA segment. So you can expect added improvements in EMEASA as well as we see improvements in North America as we have these onetime charges related to troubled suppliers and net tariff costs within North America.

[Operator Instructions] And at this time, I'm showing no additional questions, we would like to thank you for the questions and today's participation. If there are any further queries, please contact us at [email protected]. The conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.

Thank you, gentlemen.