Joseph Veltri - Vice President-Investor Relations, FCA-Global Sergio Marchionne - Chief Executive Officer & Executive Director Richard Keith Palmer - Chief Financial Officer, Director & Senior VP.

José Asumendi - JPMorgan Securities Plc Rod A. Lache - Deutsche Bank Securities, Inc. Stephen M.

Reitman - Société Générale SA (Broker) Thomas Besson - Kepler Cheuvreux Massimo Vecchio - Mediobanca Banca di Credito Finanziario SpA (Broker) Alessandro Foletti - Bank am Bellevue AG Richard John Hilgert - Morningstar Research Martino De Ambroggi - Equita SIM SpA Adam D.

Wyden - ADW Capital Management LLC Kristina Church - Barclays Capital Securities Ltd. Alexander Haissl - Credit Suisse Securities (Europe) Ltd. John J. Murphy - Bank of America Merrill Lynch Charles A. Winston - Redburn Partners LLP.

Good day, ladies and gentlemen, and welcome to today's Fiat Chrysler 2015 Second Quarter Results Conference Call. For your information, today's conference is being recorded. At this time, I would like to turn the call over to Joe Veltri, Head of FCA-Global Investor Relations. Mr. Veltri, please go ahead, sir..

Thank you, Elaine. And good day to everyone on today's call. The earnings release that was issued earlier today, together with the presentation material from this call are available on our Investor Relations website. Today's call will be hosted by the Group's Chief Executive, Sergio Marchionne and by Richard Palmer, the Group's Chief Financial Officer.

After introductory remarks they will both be available to answer your questions. Before we begin, let me remind you that any forward-looking statements we might make during today's call are subject to the risks and uncertainties mentioned in the Safe Harbor statement included on page two of today's presentation.

As always, the call will be governed by this language. With that, I'd like to turn the call over to Mr. Marchionne..

Thanks, Joe. We're going to start off today's pitch by somewhat of an unusual maneuver, but we're going to take a few minutes at the very beginning here to set the record straight on a few issues that have now surfaced in terms of an understanding of our settlement with NHTSA.

The press release that we put out Monday afternoon should have clarified matters, and certainly this morning's results should have done so.

But given most of you or some of you have expressed, at least on the phone, a wide range of projections about the costs that are flowing from this NHTSA settlement, I thought it'd be worthwhile to take a few minutes to go back to basics and just set out the facts.

Now the first slide simply sets out the specific time requirements for NHTSA reporting and customer notices and recall campaigns, and many of these rules are fairly specific and for the most part they're straightforward, although there can be questions about the triggering dates of some of these requirements.

The unfortunate fact is that we as an industry, and we in particular as a company, have not always been perfect in complying with these requirements, and over the last year and a half, NHTSA has begun to take a harder look at these technical compliance issues, and frankly we started to do the same thing about the same time.

Over a year ago, we saw that changes were coming, and we began to look more critically at our own governance and process on safety and recall compliance issues, and we had then identified a number of necessary steps to improve.

And both before and during our discussions with NHTSA we have been implementing some of the needed improvements that we have identified. Beyond the legal requirements, we need to improve our delivery to customers. We have to recognize both the concerns of customers and the inconvenience to them, any time a safety or a recall issue comes up.

And I think there's an undoubted obligation on our part to execute in a way that improves customer experience in every aspect of the safety and recall process. Now the next slide, slide number five, sets out the basics of the concerns that NHTSA raised with us, and the violation that they claimed in 23 recall campaigns over several years.

For the most part, the concerns related to delays in reporting to NHTSA; in a few cases, notices to customers. The late notices generally consisted of delays of several days in meeting the 60-day clock for notices to customers. Now that's not an excuse, and we must and we'll do better about this.

While we complied with the notice periods, over 98% of the time we need to achieve 100% compliance. And there are no questions and no excuses in connection with this objective. Now this next slide, slide number six, summarizes the potential payments that we agreed with NHTSA.

We agreed to a $70 million upfront penalty which we will pay shortly, and we've also agreed to a $50 million payment if we don't comply with the consent order or the Safety Act during the three-year period of that order. I think neither us nor NHTSA want to see that amount paid.

And finally, we have a $20 million fund for covering expenses of an expanded outreach and compliance effort. This amount is also available to fund any cost of the repurchase offers that have attracted most of the attention over the past few days, so that's what I want to turn to next. Slide seven summarizes the repurchase offer that we agreed to make.

It covers vehicles in three campaigns to the extent that they have not already been repaired. The press reported the original campaign number a little over a half a million vehicles, by about 70% of these would have been remedied before the repurchase offer starts.

If any owners take up the repurchase offer, we will repair the vehicles, we'll resell them, and we have previously accounted for the full amount of any repair cost. Now on slide eight, the final slide, gives you some detail on the vehicles involved and the status of repairs to-date.

As we said in our Monday press release, we do not expect to incur any material cost for this, beyond the $20 million available under the consent order. And we very carefully looked at the vehicles involved in the repurchase offer, many of which are work trucks where the owners depend on the truck for their livelihood.

And these tend to be among our most loyal truck owners and also due to our unique diesel offering in this heavy-duty truck segment. So we did take a hard look at the population of vehicles that are subject to the offer, their age, likely mileage and depreciation and other factors.

And while there's not much history out there on these repurchase offers, we have made a robust assessment of the likely take-up rate and a premium to develop our estimate of the expected costs. So hopefully with these comments we'll have clarified matters relating to the financial implications of the NHTSA settlement that was announced last Monday.

And if we can just turn now for a moment to slide nine, and I'll pass it on to Richard to explain the rest of the quarterly performance. I'm just going to make a couple of general comments about how we see the business running on a global scale. There's no doubt that we're pleased with the results of our NAFTA operations.

I think following our last get-together at the end of the first quarter, we did clearly undertake to remedy the shortfall between ourselves and the competitors on the margin side. We have started that process.

We are not even close to completion, but I think we've identified certainly the key areas that require intervention, and we're in execution mode. And hopefully we'll be able to move along the trajectory at a pretty rapid pace between now and the end of 2015. LATAM has come in as we expected.

We broke even out of our oldest mass market plant in Betim and all the losses that you see that we booked for Q2 are related to the startup of our plant in Pernambuco. Our expectations, notwithstanding the significant decline of the Latin America market, over 30% just in Brazil.

They reinforce the view that we had at the time that we made the investment in Pernambuco that the market would effectively split into two segments, and that we would have to effectively to de-risk our position in Brazil to start developing our involvement in the higher end of the market.

Pernambuco has been built and has been designed to provide cars in the B&C segment, and I think the initial reaction that we're having for the Renegade, in terms of market penetration, in terms of market sharing are encouraging.

We expect a significant portion of the segment to be in our hands by the end of 2015 and to continue penetration at that rate throughout 2016. So hopefully we'll be able to restore LATAM to profitability in short order, and mainly on the back of this additional investment that was made in Pernambuco.

Europe is encouraging positive earnings for the second quarter. I think we continue to have positive results from the startup of our plant in Melfi, as the newly launched Giulia goes into production in the third and fourth quarter of this year, we'll see the utilization of the Italian plants coming up to speed.

In APAC, and Richard will take you through some of these issues in detail, but APAC has been probably the one that has concerned us the most in the sense that we have seen a deterioration in the pricing arrangements, especially in China, for imported vehicles.

This has impacted especially the Maserati brand and the mix that we sold in that jurisdiction during the second quarter. And I think that the forecast for the year is that we're going to continue along the margins that we've indicated in the pack for the first semester of 2015. We have raised guidance for the year.

I think we feel comfortable that we're going to be in excess of €4.5 billion in terms of operating profit. Obviously, most of this is in the back of an expected continued performance in NAFTA. We've also raised our top line to over €110 billion for the year.

We really have no bad news to report, other than what I've told you in terms of market weakness in Latin America and APAC, which I think we will continue to monitor as the year develops. And on that basis, I'll pass it on to Richard..

So thank you, Mr. Marchionne. And good morning, good afternoon to everybody. Moving on to slide 10, we'll look at the operating highlights for the quarter. Shipments in the quarter were up in EMEA and NAFTA, offsetting declines in LATAM and APAC, resulting in a 1% increase at group level.

Net revenues were up 25% attributable to favorable FX translation and to volume growth and net pricing in NAFTA.

Adjusted EBIT for the group increased by 58% to over €1.5 billion versus €968 million last year and was driven by strong performance in NAFTA and continued improvements in EMEA and in the Components business, margin increased to 5.2% from 4.1% last time.

Adjusted net profit of €450 million more than doubled compared to the €204 million posted in Q2 2014.

This amount excludes pre-tax net charges of €177 million, primarily composed of two items, €80 million related to the adoption of the SIMADI exchange rates in Venezuela for our monetary net assets down there, and €81 million resulting from the consent order agreed with NHTSA that we discussed earlier.

Net profit after these items was up 70% to €333 million. Net industrial debt at the end of June was €8 billion, down from €8.6 billion at the end of March, reflecting positive cash flows from operating activities, offsetting our capital expenditures, which were €2.2 billion in the quarter.

Total available liquidity was €25.4 billion, in line with the end of Q1 2015 with €700 million of negative FX translation partially offsetting the positive cash flow for the period. Turning to page 11, you can see the year-over-year changes in adjusted EBIT for the various areas of the group.

NAFTA was the main contributor to adjusted EBIT growth, up over 120%, with EMEA reaching 1% margins for the quarter and Components also contributing positively.

These improvements more than offset declines in Latin America due to the market slowdown and to the launch costs of Pernambuco, and in APAC in Maserati due to the slowdown in the Chinese market for imported and high-end products. The increase in adjusted EBIT compared to Q1 2015 across the bottom of the chart shows similar drivers.

On slide 12, we show the change in net industrial debt during the quarter. At the end of June, net industrial debt declined to €8 billion versus €8.6 billion at the end of March.

The reduction was primarily driven by the positive cash flow from operating activities of €3.1 billion, which included adjusted EBITDA of €2.9 billion, a positive change in working capital of €800 million and €0.7 billion of financial charges and cash taxes. This net number offset the €2.2 billion in CapEx for the quarter.

Turning to page 13, we're looking at the regions, starting with NAFTA. The NAFTA industry remained strong, both in the U.S., up 4%, and in Canada, up 3% in the quarter. Group vehicle sales were up 5% in the region year-over-year. U.S.

sales were up 6% to 576,000 units, and the Jeep brand was up 19% to 223,000 vehicles, the brand's best quarterly performance ever. Chrysler brand sales increased 29% led by the all-new Chrysler 200, up over 300%. Ram brand was up 6%, while the Dodge brand sales were down 17% due to the discontinuance of the Dodge Avenger and lower Grand Caravan sales.

Total market share was 12.4%, up 30 basis points, with fleet mix at 20% versus 21% in the prior year. U.S. dealer inventory ended June at 78 days of supply versus 72 days at the end of Q2, with the increase due primarily to the launches of the Renegade, 500X, and ProMaster City.

In Canada, vehicle sales were up 1% to 86,000 vehicles, and the group confirmed its market leadership in Q2 with a 15% share. Jeep brand sales were up 17%, Chrysler up 9% and Ram up 4%. In the quarter, two new models of the Ram 1500 were introduced, the Limited and the Rebel.

Each model features a bold, unique appearance, with the Limited targeted to the premium customer and the Rebel targeted to the off-road enthusiast. Moving to slide 14. NAFTA shipments were up 8% year-over-year to 677,000 units, driven by the U.S., which was up 9%, and Mexico, which was up 25%, while Canada was down 2%.

Net revenues increased 40% year-over-year or 16% at constant exchange on the back of higher shipments and pricing. NAFTA adjusted EBIT more than doubled versus last year to €1.3 billion and adjusted EBIT margin came in at 7.7% compared to 4.9% a year earlier.

For the first half of 2015, NAFTA adjusted EBIT margin improved to 5.8% from 4.1% last year and is now within the 5.5% to 6% target set for the full year.

The improvement was driven by volume growth, primarily due to the all-new Jeep Renegade and the all-new Chrysler 200, positive net pricing and a reduction in dealer discounts, purchasing efficiencies and positive FX translation. This was partially offset by higher industrial costs due to increased base material costs for vehicle content enhancements.

Compared to Q1 2015, adjusted EBIT improved by €725 million driven by better volume and mix, lower industrial costs and the higher net pricing. Moving to slide 15. In Latin America, the industry was down by 18% versus last year driven by the continued macroeconomic weakness. The Brazilian market was down 23% while Argentina was down 3%.

Sales for the group were down 30%, with group share in the region declined to 13.9% for the quarter, down 220 basis points versus last year. This was driven by market share in Brazil, which was down 190 basis points due to the strong competition and our increased focus on pricing improvements to cover inflation on costs.

Despite this, FCA increased its market leadership to 360 basis points over its nearest competitor. Palio retained its market leader position with 12% share and 125 basis points lead over its nearest competitor. Strada and Fiorino confirmed leadership with segment share at 53% and 69%, respectively.

In Argentina, market share declined by 360 basis points to 12.2%, due mostly to the effective import restrictions on supply. Dealer inventory was down to 39 days of supply at quarter-end versus 40 days at the end of Q2 2014 and down from the 46 days we had at the end of Q1 2015.

In the quarter, we launched the all-new Jeep Renegade in Brazil, which reached 15% share in its segment with 6,000 units sold. Turning to page 16, shipments in LATAM were down 32% with Brazil down 33% and Argentina down 28%. As a result, net revenues were down 15%.

Adjusted EBIT declined from €63 million to a loss of €75 million, mainly due to the lower volumes, higher industrial costs primarily due to higher input cost inflation and ramp-up costs of operations in Pernambuco and increased marketing costs for the launch of the Jeep Renegade.

This was partially offset by over €110 million of positive net pricing actions. Excluding the impact of the Pernambuco ramp-up costs and the Renegade commercial launch, LATAM results would have been at breakeven for the quarter.

Compared to Q1 2015, EBIT declined by €14 million with higher industrial costs being partially offset by the positive net pricing mentioned earlier. Moving to Asia Pacific on slide 17, industry demand rose by 1% with growth in all major markets except Japan. Group sales declined 20% year-over-year, driven by China, down 27% and Australia down 9%.

Jeep, which accounts for over half of group sales in the region, declined by 6%. Group share in the region declined by 20 basis points compared to last year. Inventories at the end of June were 104,000 units, slightly below last year's level. On the product side the Dodge Journey 2.0L diesel was launched in China in May.

Turning to slide 18, shipments in APAC were down 15% with all brands down year-over-year. Net revenues were flat versus prior year and down 12% at constant exchange.

Adjusted EBIT for the quarter declined to €47 million from €110 million last year, driven largely by the heightened competition from local OEMs in China, which also resulted in negative net pricing. In addition there were unfavorable foreign exchange transaction effects for vehicle sales in Australia.

These factors were partially offset by lower marketing spend. Adjusted EBIT declined by €18 million versus the first quarter, mainly due to negative net price effects, partially offset by better mix and lower SG&A costs.

For the EMEA region on slide 19, the passenger car industry in Europe was up 8% year-over-year to 3.8 million vehicles, with growth in all major markets. So the group sales rose 12% to 275,000 units. Share increased by 30 basis points to 6.4% driven by improvements in Italy, Spain and France, while share was stable in Germany and down in the UK.

In Europe, Fiat maintains its market leadership in the A and L0 segments and the all-new Fiat 500X became market leader in its segment in Italy. For light commercial vehicles, the industry in Europe was up 11% to 500,000 units, driven by increases in all major markets. Group sales were up 16% with stable share at 13%.

Ducato continues its segment leadership, with 10% sales growth over prior year, and for the first half of the year Ducato recorded record sales and share. On the 4th of July, we introduced the Refreshed Fiat 500, which has both refreshed exterior and interior design.

Slide 20, looking at EMEA's financial performance, shipments were up 13% to 322,000 units with passenger cars up 13% and LCVs up 12%. Net revenues were up 19% on the back of the higher volumes and favorable mix. Adjusted EBIT was €57 million versus breakeven last year. This is the third consecutive quarter of positive results for the region.

The main contributing factors were higher volumes and favorable mix, driven by the all-new Fiat 500X and the Jeep Renegade improved net pricing in non-EU markets and cost efficiencies. This was partially offset by higher costs of vehicles imported from the U.S. due to the weaker euro and higher advertisings to support Fiat and Jeep launches.

Compared to the first quarter, EBIT improved by €32 million driven by positive volume and mix and slightly offset by higher SG&A for product launches. Moving to Ferrari on slide 21, shipments for the quarter were up 6% to 2,059 vehicles with 8-cylinder models up 15% and 12-cylinder models down 16%. Shipments of the U.S.

and APAC were up 16% and 26% respectively, while shipments to the main European markets were down 8%. Net revenues were up 5% year-over-year, driven by higher volumes and favorable mix, partially offset by lower engine sales to Maserati.

Adjusted EBIT was up 18% to €124 million during the quarter driven by the volume increase, the product mix and margins were up to 16.2% versus 14.4% last year. The process for the previously announced IPO of 10% of Ferrari shares was initiated in July, with the filing of a registration statement with the SEC. Moving to slide 22 on Maserati.

Shipments in the quarter were down 13% due to lower volumes of Quattroporte, particularly in China where total shipments were down 37%. Shipments to North America were down 5% while shipments to Europe were up 10%. Net revenues were down 17% as a result of these decreased volumes and unfavorable mix.

While lower shipments and revenues were partially offset by reduction in SG&A, adjusted EBIT decreased to €43 million from €61 million last year. Slide 23 covers the Components businesses, which all had improved operating results year-over-year.

For Magneti Marelli, net revenues were up 17%, thanks to positive performance in the lighting and electronics systems businesses. Adjusted EBIT increased 38% to €76 million with margins at 4.1% versus 3.5% last year.

Growth was primarily related to higher volumes in addition to the benefit of cost containment actions in Latin America, partially offset by start-up costs related to the Pernambuco plant. Comau revenues were up 58% primarily due to body assembly and robotics business. Adjusted EBIT increased to €20 million due to volumes and mix.

Teksid revenues were up 4%, with growth primarily attributable to an 18% increase in aluminum business volumes. Slide 24 provides an update on recent and upcoming events. On June 24, the all-new Alfa Romeo Giulia sedan was unveiled to the international press at the newly-renovated Alfa Romeo Historic Museum.

The new Guilia has state-of-the-art innovative engines including a 510 horsepower V-6 inspired by Ferrari technologies to be introduced on the Quadrifoglio version as well as other dynamic vehicle attributes to allow it to effectively compete in the premium segment of the market. Production will begin in the fourth quarter this year.

On July the 7th, FCA renewed the company-specific collective labor agreement with the trade unions in Italy. This new four-year contract applies to over 67,000 employees and is now extended to all FCA companies in the country.

On July 1, FCA announced a $280 million investment in its JV in India for the manufacturing facility in Ranjangaon to support the production of a new Jeep vehicle. Production is expected to start in the second quarter of 2017. We can now move to slide 25 to review our expectations for industry demand in each region.

For NAFTA, we assume that industry is going to grow to 20.5 million, slightly increased from our Q1 projection. This reflects a slight increase in U.S. market SAAR to 17.3 million vehicles. The LATAM industry is now forecasted to decline to 4.2 million vehicles versus our Q1 forecast of 4.4 million vehicles due to the continued poor trading conditions.

The Brazilian industry has been reduced to 2.6 million vehicles of forecast for 2015 from the 2.8 million vehicles we had in for first quarter, while expectations for Argentina remain unchanged. In Asia Pacific, the industry outlook remains unchanged from Q1 with a slight reduction in the China industry offset by a slight increase in other markets.

Forecast for EMEA, we have revised our forecast, up slightly to 15.7 million units from 15.4 million units in the first quarter. Finally, on slide 26, we show our full-year guidance, which as we mentioned earlier has been revised upwards. Worldwide shipments are now expected at around 4.8 million units.

Net revenues are expected to be over €110 billion, with EBIT equal to or in excess of €4.5 billion. And net profit is unchanged at €1 billion to €1.2 billion, with net industrial debt also unchanged at €7.5 billion to €8 billion. I'll hand it back to Joe Veltri..

Thank you, Richard. Last week, Ferrari filed a registration statement with the SEC related to its initial public offering.

While Ferrari is in the SEC review process, and before the IPO marketing process begins, we will not be able to comment on the IPO or go into detail on Ferrari's perspectives or value, or its recent performance beyond our customary remarks on Ferrari's historical performance as part of our luxury brand segment.

During our Q&A session, we would appreciate your cooperation by not asking questions in these areas. With that, I'm going to turn it over to Elaine to start the Q&A session..

Thank you. We will take our first question today from José Asumendi of JPMorgan. Please go ahead..

Thanks. A few questions, please. José, JPMorgan. The first one on LATAM. Can you do any restructuring actions, or are you planning any restructuring actions over the next two quarters that will allow you to cut the cost base a bit more and get quicker back to breakeven? On LATAM also....

Let me do the first question. We've already done that, which is the reason we are at breakeven now out of our main operations. The loss that we booked in Q2 is probably attributable to the startup costs of the plant in Pernambuco and the launch of Jeep Renegade.

So once that car goes into market and we start getting adequate volumes, it should turn positive quickly..

Thank you. Second item on Alfa Romeo plan.

Can you give us some guidance on where do you stand on the plan? How much CapEx you spent so far? What was the initial target? Have you found any actions to basically get smart and spend less CapEx going forward on it?.

Well, three months from the last time we spoke, there was not enough time for me to get smarter. But just give me the rest of the year, I might surprise you by year end.

But on the broader question, I think we spent just under €2 billion, but that involves effectively the industrialization on the first car, the architecture engines and effectively all the prep work in connection with the launch of the second vehicle, which is coming at the end of the first half, beginning of the second half of 2016.

So the plan is progressing as we told you will go. We are taking a very hard look at the sequencing of the products that we're launching to make sure that we get the biggest bang for the buck from utilization on the architecture in terms of volumes.

I think what I would definitely view on this hopefully by the end of this year in terms of how to move it forward, but the plans are unchanged, and I hate to disappoint you, at least as of now the numbers, in terms of the capital commitment that we're making are not drastically reduced..

Okay. Thank you. And then the final one, it's a simple one. I'm just looking at this NHTSA website, I read the whole raft of recalls have been announced, et cetera. I understand the presentation you gave and the financial impact of that. If we look at all the – everything has been listed there.

Are you addressing everything? With the current presentation you have today, are you addressing all the recalls on the website? I'm especially interested in this 252 on the fuel tank, is there anything that could come on top of what we're seeing or not?.

To the best of my knowledge, everything that I've given you so far is comprehensive of every action that's been discussed and undertaken with NHTSA. I am not in knowledge of anything else beyond what's already been booked, and more importantly I don't know the incident that you're referring to this 252. I can't help you. That's a specific question.

But whatever was required in terms of booking provisions and recording the costs associated with these actions are reflected in the accounts..

Okay. Fair enough. Thank you..

Thank you. We will take our next question from Rod Lache of Deutsche Bank. Please go ahead..

Hi, everybody. Few questions. One is first of all North America, I was hoping you might comment on the margin outlook. You and other automakers are at this point hitting or exceeding margin targets that were projected for several years from now. I think that a year ago you were thinking that you would get to 6% to 7% by 2018.

Can you talk a little bit about what the implications of hitting these targets already would be? What you think about – how you've revised your expectations for the longer term?.

Yeah. Just to begin with, we're still far away from where our other two competitors are. I take the numbers that were released out of Detroit in the last week as an indication of the amount of work that remains to be done by FCA in the United States I think we have a long way to go. But I'm encouraged by the direction that's been taken.

I think it shows that certainly at the top of the market we can extract significant margin generation. I'm particularly impressed by the results of Ford, which did not have an easy quarter, especially in view of the launch of the F-150. But we're the third guy on the totem pole. So it's no use bragging. I think we need to keep on pushing it.

I'm relatively happy with the progress that we made in Q2. I think all of it will be seen certainly by the end of this year. Obviously, Rod, the question is what happens in terms of the long-term volume outlook for the U.S. business. I do not see substantial deterioration of the market in 2016. I think we'll continue to face benign market conditions.

And so I'm hopeful that we can exceed certainly the target that we set for ourselves for 2015 and exceed the long-term expectations. The question that remains is over the cycle, what can this business yield? I think we need to be very careful not to fall in love with these numbers as being an indication of what the machine can produce at all times.

But I'm encouraged. And I think that the other two competitors in town should be complemented of what they've been able to do. We have a lot of work to do, but I think we have made good progress in terms of bridging the gap..

Great. Thank you. And just two other things I was hoping you can address. One is, maybe you can comment on these reports of delayed product plans from the company. I realize it's a dynamic process, but obviously just from suppliers and media reports there have been some discussions of some significant delays versus the original plan.

And then lastly, if you can maybe elaborate a little bit on your thoughts on China. Obviously, you're in a different position relative to some of your peers with a lot of growth.

But what are your expectations? How does this play out vis-á-vis growth and pricing?.

Let me deal with the easier question. Well, actually, I think that's relatively straightforward. The China issue for us is fundamentally different than it is for anybody else because our local manufacturing presence is severely limited.

We're in the process of correcting that now with the launch of the Cherokee at the end of this year, the launch of the Renegade next year. And I think we will be able to benefit from benign local producer conditions. And I think it's all accretive to our case, it's what was built into our plan going back into May of last year.

What I think is impacted is the ability to extract a significant margin for cars that aren't imported from the outside for a variety of reasons. I made reference to Maserati, but obviously Jeep is in no different a condition than Maserati. In that sense, we have seen a drop both in volumes and in the ability to generate margins.

And I think that's something that's permanent and I think it reinforces the commitment that we made to local production and which is being implemented now.

On the postponement issue, we have always run an incredibly fluid product portfolio because we have been able I think over time to try and improve the quality of the decision making on the basis of information that's relatively fresh. What we have not wavered on is the development of both powertrain and basic architectures.

Those are things that continue unabated. The work on the Giulia architecture, which is fundamental to the relaunch of Alfa and to the possible utilization globally of that architecture for rear-wheel drive applications. This continually goes forward. As I mentioned earlier, we have committed significant capital to that venture.

The minivan is coming out next year, which is a huge step forward for us, not just in terms of renewal of relatively old architecture, but also in terms of embracing plug-in hybrid technology. There are things that we continue to tweak. I think that the future of the new Grand Cherokee may be accelerated as opposed to being pushed forward.

We keep on looking at these cases on a relatively frequent basis to make sure that we're making the best economic decisions given our choices. We have not postponed anything else that I can remember of substance.

I think we are being incredibly careful on the development of the new pickup truck in view of what we see in the marketplace today, especially given the increased competitiveness that we see in pricing. But other than that, I can't think of a thing that we've pushed off the table. Richard? He keeps on shaking his head.

I'm not sure you can see it on the phone, so he agrees with me I think..

Thank you..

Thank you. We will now move to Stephen Reitman of Société Générale. Please go ahead..

Thank you. A couple of questions, please. On the EBIT walk in the NAFTA region, could you give a bit more information on the change on investments, FX and others? What happened there? And secondly, on Maserati, I think the guidance earlier this year was towards flat sales. We have now had two sequential quarters where you've had declines in shipments.

What's your best guess for how we're going to end 2015? Thank you..

So the first question, basically the EBIT walk is principally the FX translation. So with the dollar results being impacted by the rate on average being just about €1.12 for the quarter instead of over €1.30 last time around. So most of that number relates to the FX translation. Your second question on Maserati volumes.

I think we're looking at more or less flat, maybe slightly down for the year. Obviously, we haven't had a great first half. It's been impacted by China and also by some management of our stock position in the U.S. So I think we should see a number which is going to approach last year's volume for the full year..

Yeah, and just to add onto what Richard is saying in Maserati, I think that the thing that we're watching very, very carefully is the mix between Ghiblis and Quattroportes, because they obviously have different margin generation capabilities.

And the more we shift towards Ghibli and deemphasize the Quattroporte, the more negative the impact is on margin and absolute EBIT generation. So as we have seen the shift – I mean when I look at market share on a global scale, I think Maserati has not lost any market share. As a matter of fact, I think it's held its own, especially in China.

But the mix itself has been fundamentally different than the original proposition. So we need to be very careful. I think a lot of it will be helped when we launch the new Levante in the first half of 2016. I think that that will change certainly the earnings generation capability of Maserati as a brand, but I think we need to wait till then.

I am not as negative as Richard may have sounded about the second half. I think a lot of it has to we'll be able to tell much more at the end of Q3 as to what the fourth quarter will yield..

Thank you. If I could just ask another one, just on diesel. We're in rather an unusual situation in the U.S. that diesel prices now at the pump are pretty similar to those of gasoline.

What impact is that having on diesel demand, on the Ram particularly? Are you going above 20%?.

I don't know whether we're past 20%, but I can tell you we're sold out just in terms of capacity of engines for the Ram. It's progressing well. I may not comment on pricing. As you well know, the decision that you're going to make between diesel and gas is one that goes beyond the price of fuel. It has to do with mileage.

We do have the highest mileage of anybody in the pickup truck segment in the U.S. today with diesel. I think it's something that certainly has attracted a large portion of the buying public, not to mention issues about the actual performance of diesel in terms of torque and capability.

So I continue to be hopeful that that solution will continue to get share. I'm looking at Richard to know whether he knows whether it's beyond or below 20%. It's below 20%? Richard I think may have made that number up, but he sounded incredibly informed when he made the guess so I'm going to rely on his comments..

Thank you..

Thank you. Our next question comes from Thomas Besson of Kepler Cheuvreux. Please go ahead..

Thank you very much. Can I come back on the NAFTA performance and ask you candidly what has changed sequentially so dramatically to drive such a move in profitability? Because even if we take into account your comments on what was included in terms of one-offs in previous quarters, you're massively ahead of what has done before.

So what has really changed?.

Well, a variety of things. Well, the most significant thing that has changed in terms of our NAFTA dynamics is that we got smart on pricing. I think we understood the portfolio impact of particular pricing decisions that were being taken in the marketplace, and I think that we've adapted to market conditions.

I think we may have been overly generous in some of the positions that we've taken. We corrected those, I think that it's a continuous process of learning. I think I learn a tremendous amount from our competitors as I get older. And so I think we try and emulate them in the best of their traits, and we try and avoid the crap that they pull.

So at the end of the day I think we've learned the right things in Q2. I think we're about to get better as we go forward..

Great. Maybe still very candid again but I'm puzzled that the three of you post recalled results just into labor negotiations.

Do you mind giving us an update on that, where you stand? Whether you think you'll get to a conclusion on time? Or whether you think that there's any risk as we get to the end of it?.

There's always a risk. I think that we've approached these negotiations with an incredibly open mind. With UAW I think we both recognize the pitfalls of a break in talks and the inability to define a consensus resolution to the objective.

I think that all of us who have lived through the crisis in the last six years recognize the negative implications of a very shortsighted view of wage progression. I still think that we should not be falling in love necessarily with this margin generation stuff that we've had, especially with us in the last quarter or in the last couple of quarters.

I think we're playing this game for the long-term, and I think that that message is certainly shared in principle with UAW and in particular with Dennis Williams. I am fully cognizant of the fact that our pay arrangements in the U.S.

is structurally inequitable, and I think it's something that we need to address, and I much prefer to address it now as we renew our contract. We need to find an intelligent way to get that done that allows people to effectively participate in wealth generation when wealth does exist. And so that continues to be my main theme.

I am not in a position today to tell you whether we're making rapid or significant progress compared to other negotiations. I know that the opening has been a good opening of discussions. I think the dialogue so far has been constructive. I think the next four weeks will tell us a lot more. We just need to wait till the end of August to tell.

I don't think we're going to get past the September deadline and fail. It's sincerely not my objective and it's not my hope..

Great. Thanks. One final question from me, please. On the new guidance, can you just elaborate on why it's only affecting the adjusted EBIT, clearly your net financial....

Because Richard was too lazy to work his way down to the net income line, that's why. So we'll fix it in Q3. I'm serious..

Thank you. We will now move to Massimo Vecchio of Mediobanca. Please go ahead..

Good afternoon. First question is on the gross cash on the balance sheet, which remains at very high level, and obviously impacting your financial charges. I was wondering if you can help us understand how it could develop by year-end and next year.

Second question is on the pricing in Europe, if you can elaborate a little bit more? Also if you believe that the slowdown in China could push some of the European players to refocus a little bit on Europe, trying to increase volumes there by reducing the pricing? And third and last question is on Magneti Marelli, there has been some articles on the press in recent days about potential offers that you may have received.

My question is, to what extent you consider a competitive advantage having the component making company within the group? Or probably how much by decision in some cases where will be better than a make decision?.

We have an intimate relationship with Marelli. It's been in our fold for a long period of time. I think that there are no immediate plans of divestiture of Marelli. I think it continues to be certainly a strong contributor to the technical evolution of FCA. I've been public on this issue.

I think there may come a time in the future, and it's not something I would certainly forecast in the next months, where Marelli may find it useful to develop its own strategy outside of FCA. We're not at that stage. There are no immediate plans to divest the business, and so we continue to work and develop it.

As you well know we have made recently a significant change in leadership at Marelli. I'm expecting that Pietro will do a phenomenal job of building the business going forward, and that remains the key objective for the time being.

In terms of your issue about China, I do think that the slowdown, at least in terms of imported vehicles I think is a permanent shift. It is a permanent condition. It's very difficult for me to tell as to whether it's going to have any negative impact on pricing in Europe.

As much as I think some of the less than rational activities that characterize the past activities in Europe have now stopped, I still do not think that there is an incredibly benign pricing environment in Europe compared to other parts of the world.

It continues to be incredibly competitive, and I think we continue – thank god, we have been able to invest now in products that appear to be getting significant market traction and give us some level of satisfaction in terms of margin generation of a variable cost. But we have a long way to go.

I think we need to continue the reindustrialization of the footprint here in Europe, which will obviously come with the relaunch of Alfa until that process is complete. I don't think we're going to rest at all. I think we have a long way to go. Having said this, as Richard mentioned, we have had three quarters now of positive performance.

It's not a bad indication of the fact that we're coming out of the hole, but it's a very small recovery. We're at 1% margins. We've got a long way to go..

And on the gross cash?.

Yeah. The balance sheet, so we have the €21 billion of cash at the end of June. If we look out through the next say 15 months or so, there are €2.8 billion of euro bond maturities and Swiss franc bond maturities falling due through November next year. And there are – the opportunity clearly which we've been very vocal about of prepaying the 2021 U.S.

dollar bond for ex-Chrysler by the middle of next year, obviously depending on how aggressive we want to be about taking the call premium. So I think that's another nearly €3 billion. So between the two, we have nearly €6 billion of maturities coming through.

And I think our plan today, if we continue to execute as we are and markets remain positive, then I think we'll be using cash basically to pay down these maturities.

And as we pay down the Chrysler bond and amend the term loan, take away the ring-fencing constraints that we have today, that I think would be appreciated by investors and by rating agencies.

It will also give us some flexibility to operate with something approaching €15 billion of cash, potentially less, but I think at the moment the first step would be to use that €5 billion and take the cash balance down to something around €15 billion.

Especially now, obviously, that we have put into place the new revolver, so that gives us a bit more coverage also in terms of liquidity. So I think we have an opportunity over the next 12 months to significantly reduce our overall gross debt and reduce the interest charges..

All right. Thank you very much..

Thank you. Our next question comes from Alessandro Foletti of Bank am Bellevue. Please go ahead..

Yes, good afternoon, gentlemen. Thank you for taking my questions. I'm looking at your slide 12 on the cash flow.

Can you give some indications on how the different components of working capital has been moving?.

Yep. Just a second. So basically we had some – most of the improvement is due to payables increasing and slightly offset by receivables and inventories, but basically the improvement of just under €800 million is the payables impact..

All right.

And what would be your view for the full year on the same position?.

I think for the full year we're going to continue to have some benefit in the second half, because our volumes are going up in Melfi, in Windsor and in Latin America. So we get continued benefit through the second half of the year working capital as well.

It's not going to be quite to this level every quarter but I think we're going to have – our net impact for the year is going to be in excess of this number..

All right.

Any other positions that you book inside that that are not receivables, inventory or payables?.

No. Nothing else that's significant in there..

All right. Thank you..

Thank you..

Thank you. Richard Hilgert of Morningstar has our next question. Please go ahead, sir..

Thank you. Thanks for taking my question. I wanted to ask about EMEA, the €132 million improvement in volume and mix coming from the ramp up of the 500 and the Renegade in Melfi.

I'm wondering, was this quarter a normalized run rate? Or are you expecting additional efficiencies out of that factory in the next couple of quarters?.

Well, the factory is still ramping up to full production rate. It's getting – it was not there for the full quarter in Q2. It's basically there now in July, I think, as we get up to full production on both 500X and Renegade. So we're going to get some benefit in the second half compared to Q2..

Okay. And then in Pernambuco, it sounds like the improvement in EBIT you had commented earlier that that could have been the breakeven in South America if it weren't for the launch costs in Pernambuco. How long does that launch situation last? It seemed like if memory serves right they are on a fairly long runway for launch in Pernambuco.

So this might be something that goes until 2016?.

No. I think, we'll be out of there by Q4 of this year..

Okay.

So we could see breakeven possibly by the end of the year in Brazil?.

Yeah, unless the underlying market deteriorates further. But in the absence of further decline, this should go positive..

Okay. Great. Thank you very much..

Thank you. We now move to Martino De Ambroggi of Equita. Please go ahead..

Thank you. Good afternoon, good morning, everybody. My question is on EMEA region return on sales. If I remember correctly during last year presentation in Detroit, you mentioned the normalized or best possible best case return on sale was in the region of 1%, 2%.

Is it still the case? Noting that the market is improving, you're launching new products with a decent success, and Alfa Romeo is going to be launched? Or cannot be changed the gap of 2%?.

Well, I think, our expectation by the end of our business plan is to get our margins in EMEA up to 2% to 3% in the business plan. We're performing probably slightly better than the run rate that we had in our plan. And obviously we're working hard to improve that run rate margin in EMEA, but I think at the moment that is our business on target..

Okay.

And on NAFTA region you explained improving pricing is one of the main reasons for the improvement that you had in Q2? But is it in line with your internal plan, the second quarter performance, considering the target you provided last time?.

No, it was better than I think I explained in Q1. So, I gave you a run rate margin by Q4 of 7% and we hit that already in Q2, so we've that....

Let me try and throw a veil of optimism in Richard Palmer's comments. The first one is that the EMEA target for 2018 at 2% to 3% I think embedded a view that the mass market will flatten out to zero and that whatever money we will be making, we will be making out of the so-called premium brands.

And so it involves the margins on Alfa generation and it takes a very conservative view of what that generation could be going forward up to 2018. The fact that we are at 1% now in the absence of the Alfa numbers is an indication of the fact that we're substantially ahead of plan and I feel relatively good about what that will yield going forward.

In terms of the NAFTA numbers, yes, we have made significant progress. But the best way to get – whether they're ahead of or behind our internal targets is almost an irrelevant question, because I look at what our competitors are pulling out of North America and we're still significantly behind their performance.

And the objective for us is to close that gap and to close it as quickly as we can. And, yes, if we do that, we're going to be well in excess of what the internal target was. But the objective is to close the margin gap with our competitors..

Okay. Thank you..

Thank you. Adam Wyden of ADW Capital has our next question. Please go ahead..

Hi, guys. Thank you for taking my call. I just want to say congratulations on narrowing the gap on the North American margin. I guess my question revolves around narrowing the gap on the multiple compared to your peer group.

I mean, if I look at based on your public comments on where you think Ferrari is worth, the company is trading at roughly 1 and some change times EBITDA 2016.

I guess my question is, what tools do you think you have available to narrowing that gap? I mean, could you spin-off Ram because it doesn't have any shared platforms? Could you spin-off Alfa Romeo and Maserati?.

Adam, let me help you with your thinking. The best catalyst to crystallize value in an environment like ours is to prove the value of Ferrari in an IPO and wait for its distribution at the beginning of 2016.

That is the best, it's the shortest way to try and get to a very clear valuation of what is left behind in FCA, which is a very large car company of nearly 5 million cars a year. And that business will be valued on its merits after this unique asset that's represented by Ferrari will have found its own way into the capital markets.

We're not that far away. We're less than six months from that D-Day. Just tighten up your belt, put your seatbelt on and we'll have a phenomenal ride until then..

And in the event that Ferrari gets spun-off and basically the core company, the stub company, doesn't reflect any increase in value, I have to believe that you are thinking about strategies to make sure that the core car company is properly valued. I mean, this North American margin is not that far from your peers at this point..

Well, we have a long way to go in terms of closing the gap with our competitors, but I'm sure that a wise market will recognize the value of what they're looking at. And I think I count on our ability to deliver performance and to get the markets to understand the quality of that performance going forward. So give us some time.

We're not that far away..

Congratulations. I appreciate all the hard work..

Thank you, Adam..

Thank you. Our next question comes from Kristina Church of Barclays. Please go ahead..

Hi. Yes, Kristina Church here. Just one question coming back to your Q1 call and the capital intensity discussions you had. I guess are you any further along in the views on that in terms of getting closer to 2020 targets in Europe and cafe in the U.S.? There's obviously still a lot of spending to be done on products.

Where do you see your plan versus the need for increased spending there? And do you still see room for tie-ups with competitors that might ease those costs going forward? Thank you..

Okay. My views have not changed from April 29 until now. The validity of the arguments that I made on April 29 continues I think irrefuted until now. I think I've done and I've said all I can in terms of the capital objective presentation. I think we need to let market participants deal with this issue over time. It will happen.

What the timeframe of that realization will be I cannot tell you. I think you need to let us work on this and I'm sure that we'll come up with the right answer. But all the concerns that you've raised, Kristina, are concerns that we are fully aware of and are incorporated in our concerns about the development of the industry going forward.

We will deal with it. And I think the capital objective presentation provides a good basis for tackling those issues..

Thank you..

Thank you. Alexander Haissl of Credit Suisse has our next question. Please go ahead..

So good morning. Good afternoon. This is Alex Haissl, Credit Suisse. Three questions if I may, two on NAFTA. The first one would be on you pitch again, but on volume and mix. You have shown like €253 million year-over-year and 8% volume growth. If I go back in the first quarter, you printed €75 million.

Maybe you could give us some indication here what was driving this meaningful improvement in volume and mix? This is my first question on NAFTA. My second question is related to NAFTA industrial costs. It's pretty much the same figure than in the first quarter.

What needs to happen to drive down these industrial costs more sustainably going forward? And my last question is on EMEA. We have seen industrial costs up, it's minus €70 million versus minus €25 million in the first quarter. I was just wondering if you can provide more insight what was driving this sequential increase in industrial costs.

Is it really just imported cars? And what would be a best indication going forward in Europe? Thank you very much..

So NAFTA, the mix impact, the positive mix impact is basically all our volume growth is coming in retail and we're actually taking our fleet numbers down sequentially. So that is helping profitability. The volume itself is also coming out of the new launches of Renegade, the 200, but also on the Ram side we're continuing to grow the business.

So the volume drivers are across a number of nameplates, but the important thing is most of it is focused into U.S. retail and that's driving good mix. The NAFTA industrial cost is principally related to Charger Challenger 300 product renewals that have some level of increased cost.

And everything else is basically being managed with productivity actions, et cetera. So I think we're going to see that number continue to be mildly negative through the year as we work through the comps. Last year, we didn't have those vehicles yet. But we're obviously at a much lower number than we were running at in the past.

And going forward, this number should start to become positive. And then on EMEA in the quarter. Basically all of the impact is negative transactional exchange on the Jeeps and basically the Jeeps coming out of the U.S. into European market.

So the European industrial base is actually being efficient in driving cost out, but the exchange impact is hitting the cost of those imported vehicles, which is more than offsetting the efficiencies..

Sorry, just coming back on the mix.

I mean, what is the further upside to shift to a three day (1:07:34) over the next, let's say, two quarters to four quarters? Is there more upside so that the mix impact should be similar to the second quarter year-over-year?.

Well, I think we're continuing to improve our mix, in particular, in the Pickup segment. We've been talking about this for a few quarters. Our Ram product is very well regarded in the marketplace. It has gained the brand a lot of share over the last four years, getting up to near 20% from less than 12%, I think, when we started this process.

And in the last year, we've been working very hard on also driving the mix up into higher end product, crew cabs, et cetera, and that will continue. So I think we're going to see positive mix coming out of that.

And I think the growth in the marketplace that we've seen and the product range we have is allowing us to force a lot more of the volume into the retail channel because the demand is strong, so that would also give us, I think, continued positive mix going forward..

Thank you. And just on the industrial costs, you kind of (1:08:46), you said mildly negative for the rest of the year. Does it mean below three-digit losses? There actually....

Well, no, it's not..

Yeah, well, the word losses is not appropriate. Yeah, I mean, this is a cost of the improved content we're putting into the vehicle, which is obviously one of the reasons we're being able to drive volume in positive mix, so you can't look at in isolation.

You need to look at it as part of the strategy to improve the brand equity, drive the volume into retail, improve the mix and moving up the versions, et cetera. So it's not something we're concerned about because I think we're investing in the product renewal process to continue to drive our competitiveness in the market and our profitability..

Thank you very much for the clarifications..

Thank you..

Thank you. We will now move to John Murphy of Bank of America Merrill Lynch. Please go ahead..

Good morning. Believe it or not, my first question is still on North America.

When we think about the gap that you have with GM and Ford, I mean what specific actions do you think you need to take to close that? I mean is it – just predominantly on pricing and product cadence? And then also as we think about North America through this cycle and ultimately hit the next downturn 5 years, 10 years out in the 14 million unit to 15 million unit range, do you think you can retain breakeven or slightly better in that kind of a downturn?.

I'll give you the quick answer, and then I'll get Richard to answer the first part of your question. But, yeah, we'll survive 14 million at positive numbers if the number is 14 million..

That's great..

And Richard?.

Now I think, John, I think we're continuing to the last question – to the point of the last question, investing in our product, it's driving equity in the brand and improving our competitiveness and our mix in the marketplace.

That's obviously key for us to be able to position ourselves at the same sort of revenue per unit as our competition across the board. And I think we still have some improvement areas there that we can continue to go after.

And then we've been through a very fast and intense process of product renewal in the last five years with an industrial base that had an – had the need for a lot of investments.

So I think now we really need also to focus a lot more on the cost equation and get the sorts of efficiencies and productivity gains that we've been seeing in some of the variances that our competition have been demonstrating in improving their margin rates over the last couple years.

So we haven't had the focus on that, that maybe we could have had, but for various reasons given the intensity of the product renewal process. So I think, we have an opportunity there to also drive improved margins by working a lot more on the cost equation..

Thank you. That's helpful. And then just a second question, there was a very interesting acquisition that Magna made of Getrag. Obviously Magna is a great partner with you on the supplier side. Getrag is a great transmission manufacturer. They have a big JV with Ford.

Would you ever consider JVing with Magna and Getrag for your transmissions? Because obviously – I mean this looks like it could become essential depository for transmission technology for the whole industry and solve some of this scale issue that you've kind of been talking about across the whole industry..

The answer is it's possible, although I'm not sure that Getrag will be my sort of distinctive sort of first choice. And it's not to take away from their skills, I think we do use Getrag in a variety of applications. I'm not sure that they're as widely usable across the – our car base as we would like. But it's something to think about.

I mean, I have no objections to looking at ways to get that done. As you well know, we run the largest transmission plant in the world out of our facilities in Kokomo. So we're not shy of committing to transmission technology. I'm not sure that this one would be the right candidate, but I mean now that you raise it, we will look at it.

I doubt it, though..

Okay. Thank you very much..

Thank you. Ladies and gentlemen, we will now take our final question today from Charles Winston of Redburn Partners. Please go ahead, sir..

Yeah. Hi. Good afternoon. Thanks for taking my questions. I hear what you say about the NHTSA deal, it's very clear. Could I perhaps widen the conversation out just to recalls generally? Obviously there was quite a theme across the industry last year in terms of the one-time and exceptional recall costs.

Are we done there? In other words, recalls continue to be announced across the industry, it's still very much an issue? Do you think there is any risk of further sort of exceptional one-time recall costs? Or have you built a big enough warranty provision that you're done, the risk to the P&Ls from here is pretty limited? Thank you..

To begin with on the warranty side, I think we have adequate provisions to deal with what we think will happen on vehicles that we have sold. So we have neither excessive provisions or under provisioned the thing – these things are done in an incredibly methodical way, and there is reason and method in the way in which these numbers are determined.

It is my sincere hope that whatever it is that we've done in terms of one-off costs on recall items are things that are slowly dwindling away and that they will disappear, especially if all the things that I said of our commitment with NHTSA is to continue to improve the way in which we interface with our consumers and the speed of response that we have to issues.

For me to make a categorical statement about the fact that these things have come to an end require a level of knowledge about the future that I do not have, and I feel it would be incredibly unwise for me to make these sort of categorical assertions about the fact that these things are over.

I can only tell you that our intention is for these things to be over, because it's unwise for a variety of reasons, and I think, it will certainly be against all the other principles that we've outlined as the basis for collaboration with NHTSA going forward. I think, it's not proper, but I can't tell you that it's over.

I think it will be over when it's over. I think when we all feel comfortable, that we've adapted to this – to a regulatory environment of this caliber and that we continue to do things as we've indicated I think that day we'll make sure that these costs don't come off below the line as being unusual items.

They should be unusual and they should be really, really rare. And that's why we class them that way. I think that the house has learned and I think, it's reflected in the pricing dynamics and the marketplace as to what is required in terms of intervention with our products going forward.

But I agree with you, they're anomalous, they shouldn't be here..

Clear. Thank you..

All right..

Ladies and gentlemen, that will conclude the question-and-answer session. I would now like to turn the call back over to Joe Veltri for any additional or closing remarks..

Thank you, Elaine, and thanks to all of you for joining the call today. Have a pleasant day..

Thank you. Ladies and gentlemen, that will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect..