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Interested in Strattec Security Corporation? Here are five stocks we like better. Record fiscal 2026 performance: Revenue rose 2.5% to $579.4 million, while gross margin expanded 150 basis points to 16.5% and adjusted EBITDA increased 15% to $50.5 million. Restructuring, pricing actions and operational improvements helped offset automotive production volatility, EV program cancellations and foreign-exchange pressure. Strong balance sheet and capital allocation: Strattec generated $46.3 million in full-year operating cash flow, ended the year with $108.2 million in cash and no debt, and authorized a new $40 million share-repurchase program. Management is prioritizing buybacks, automation, customer-program investments and selective acquisitions rather than reinstating a dividend. Challenging fiscal 2027 outlook: North American vehicle production is expected to decline about 2%, while production at Ford, Stellantis and GM could fall nearly 6%. Foreign exchange remains a significant risk, though management expects canceled EV programs to no longer be a major incremental headwind and continues targeting 18%–20% gross margins over the next several years. Strattec Security (NASDAQ:STRT) reported record fiscal 2026 revenue and higher profitability as restructuring, pricing and operational improvements helped offset automotive production volatility, foreign exchange pressure and canceled electric-vehicle programs. President and Chief Executive Officer Jennifer Slater said fiscal 2026 revenue reached $579.4 million, while gross margin expanded 150 basis points to 16.5%. The company generated $46.3 million in operating cash flow and ended the year with $108.2 million in cash and no debt. → What Rising Delivery Forecasts Say About Rivian's Stock Prospects “Fiscal 2026 was a year of progress as we continued to reshape Strattec into a more resilient, higher-performing business,” Slater said on the company’s earnings call. Fourth-quarter net sales were $151.8 million, essentially unchanged from the prior-year period and above management’s earlier expectations. Senior Vice President and Chief Financial Officer Matthew Pauli said the company had initially expected quarterly sales to decline 3% to 4%, based on third-party estimates for original equipment manufacturer production. Actual OEM production declined 1.4% during the quarter. → NVIDIA Reveals $21 Billion SpaceX Stake: Signal of Confidence or Circular Financing? Compared with the year-earlier quarter, canceled OEM EV programs reduced sales by $3.2 million. That impact was partly offset by $1.4 million in pricing benefits and certain customer inventory builds, Pauli said. Fourth-quarter gross profit declined to $23.6 million from $25.4 million a year earlier, with gross margin at 15.6%. Pauli attributed the year-over-year comparison to unfavorable foreign exchange rates and lower tooling gains. On a constant-currency basis, gross margin improved due to lower tariff costs, pricing actions and restructuring savings, partly offset by higher costs associated with supplier-related quality and delivery issues. → Berkshire Boosts Its Bet: This AI Hyperscaler Is Now a Top-3 Holding Net income attributable to Strattec was $3.9 million, or $0.95 per diluted share, compared with $8.3 million, or $2.01 per diluted share, in the prior-year quarter. The quarter included business transformation and executive-transition costs, as well as $2.9 million of discrete income-tax adjustments related to changes in tax regulations. On an adjusted basis, fourth-quarter net income was $8.4 million, or $2.06 per diluted share, unchanged from the previous year. Adjusted EBITDA was $12.5 million, compared with $13 million a year earlier. For the full year, sales increased 2.5% from $565.1 million in fiscal 2025. Pricing contributed 2% to the increase, while volume growth was less than 1%, in line with the broader North American automotive market. Full-year gross profit rose to $95.4 million from $84.6 million, while adjusted EBITDA increased 15% to $50.5 million. Adjusted EBITDA margin improved 100 basis points to 8.7%, and fiscal 2026 earnings per share increased 9% to $5, according to Pauli. Strattec realized about $6 million in savings from restructuring actions during fiscal 2026 and $9.5 million in cumulative savings since fiscal 2025. Slater said the company consolidated test-lab operations in Auburn Hills, Michigan, added 16 automated assembly stations and freed up 91,000 square feet of production space at its Milwaukee facility. The company also reduced manufacturing headcount by an additional 7%. Management said automation remains a significant opportunity, with automated assembly stations representing 9% of the company’s total assembly stations. Slater said the company is pursuing simple automation projects with payback periods typically under one year, while also considering more comprehensive automation for future customer programs. Strattec generated $9.7 million in fourth-quarter operating cash flow and repurchased approximately 110,000 shares for $7.4 million during the period. The repurchase represented about 2% of shares outstanding, Pauli said. The board authorized a new $40 million share-repurchase program. Management said it plans to use the authorization to offset equity dilution and repurchase shares opportunistically, while preserving capital for organic investments and potential acquisitions. The company is not currently considering reinstating a dividend, Pauli said. Instead, its capital allocation priorities include investment in new customer programs, automation, process modernization, opportunistic buybacks and acquisitions that can add scale or diversify its customer, product and program base. Slater said Strattec is focused on opportunities that fit within its three product pillars: Permission, which includes secure vehicle-entry technologies; Motion, covering powered access systems; and Hold, consisting of latching products. The company has also invested in commercial talent and pipeline-management tools to engage customers earlier in vehicle development cycles. Management said it expects to continue manufacturing in Milwaukee but may pursue a sale-leaseback transaction for the portion of the facility it needs, as the site remains larger than required for current operations. Management expects automotive conditions to remain challenging in fiscal 2027. Based on current third-party forecasts, Strattec expects North American production to decline about 2%, while production at its three largest customers—Ford, Stellantis and General Motors—is projected to decline nearly 6%. Pauli said the production decline is expected to be relatively consistent throughout the fiscal year, aside from typical second-quarter holiday shutdown seasonality. He said canceled EV programs represented an approximately $10 million headwind from fiscal 2025 to fiscal 2026 and that the effect has been “flushed out” for fiscal 2027. Foreign exchange remains a major headwind. Pauli said that if the Mexican peso had traded at its five-year average of 19.50 per U.S. dollar, Strattec’s fiscal 2026 gross margin would have been about 100 basis points higher. A 5% change in the U.S. dollar relative to the peso could affect annual manufacturing costs by roughly $4 million before hedging. The company continues to target gross margins of 18% to 20% over the next several years, assuming the peso returns to its five-year average. For fiscal 2027, Strattec expects an effective tax rate of approximately 24% to 25%, normalized operating cash flow of about $10 million per quarter, subject to working-capital changes, and about $12 million in capital expenditures. Strattec Security Corporation is a Wisconsin‐based designer and manufacturer of mechanical and electronic locking systems for the global automotive market. Established more than five decades ago, the company supplies original equipment manufacturers (OEMs) and the aftermarket with a broad portfolio of lock and key solutions tailored to passenger cars, light trucks and commercial vehicles. The company's product range includes mechanical locking systems such as door lock cylinders, ignition lock modules, key blanks and door handles, as well as electromechanical and keyless‐entry systems. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Strattec Security Q4 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Interested in Ideal Power Inc.? Here are five stocks we like better. Commercialization advanced: Ideal Power’s B-TRAN technology is progressing through customer prototype programs, including solid-state circuit breakers for 800-volt AI data centers and energy infrastructure. A lead Asian customer expects prototypes and potential initial low-volume orders in the fourth quarter of 2026, while a U.S. hyperscaler-focused prototype is targeted for delivery by year-end. Expanded partnerships and pipeline: The company delivered additional B-TRAN samples to Stellantis and deepened work on EV solid-state contactors. Its potential revenue funnel grew to more than $400 million, split roughly evenly between automotive and AI data center/industrial opportunities. Financial position remains solid: Ideal Power ended the quarter with $41.3 million in cash, no debt and $27.7 million in net proceeds from a May stock offering. However, the net loss widened to $3.4 million, and management expects 2026 cash burn of approximately $10.3 million to $10.5 million. Doing Your Holiday Shopping? These Stocks Might Make Great Gifts Ideal Power (NASDAQ:IPWR) said it continued to advance commercialization of its B-TRAN power semiconductor technology during the second quarter of 2026, citing customer prototype programs, a growing sales funnel, a new wafer-foundry supply agreement and increased activity tied to anticipated 800-volt DC power architectures for AI data centers. President and Chief Executive Officer David Somo said the company’s lead Asian customer is finalizing development of a low-current solid-state circuit breaker, or SSCB, prototype that Ideal Power expects to ship later in the quarter for internal testing. That customer expects B-TRAN-enabled SSCB prototypes to be available for its 800-volt AI data center and energy-grid customers during the fourth quarter of 2026, with initial low-volume orders for prototype builds also anticipated in the fourth quarter. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be These 5 small-cap impact stocks are making social change Ideal Power is also discussing two additional projects with that customer: a medium-current SSCB for 800-volt DC data centers, energy storage, EV charging and industrial microgrids, as well as a low-current SSCB for smart industrial buildings. Technical discussions on the medium-current product are underway, Somo said. Under a letter of intent signed during the second quarter, Ideal Power and an industry partner are co-developing an intelligent B-TRAN-enabled SSCB prototype intended for evaluation by a U.S. hyperscaler. The product is being developed for a planned NVIDIA Rubin Ultra 800-volt DC data center power system, with prototype delivery targeted by the end of the fourth quarter of 2026. → Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand Somo said the prototype is also planned to be offered to other hyperscalers and AI data center operators using the NVIDIA Rubin Ultra Power Architecture or comparable 800-volt DC distribution systems. Ideal Power and its partner plan to introduce the intelligent SSCB concept at the Open Compute Project Global Summit in October. During the question-and-answer session, Somo said hyperscalers vary in how directly they engage with component suppliers, depending on their approach to system integration and relationships with suppliers. He said the company sees an opportunity to work at multiple levels of the supply chain, including with traditional customers that build circuit-protection products, higher-level systems integrators and potentially hyperscalers. → On Holding's Price Stumble May Be an Opening for a Company Built to Run In automotive, Ideal Power delivered a second set of Gen 2 B-TRAN custom-package samples and development kits to Stellantis. The companies are working on a detailed analysis of the customer’s solid-state contactor system-level specifications to optimize the solution and align remaining purchase-order deliverables. Somo said this work affected the timing of expected deliverable completions but did not change the company’s view of the EV contactor opportunity with Stellantis. Completed deliverables support the next project milestone scheduled for the fourth quarter of 2026. “The level of depth in the discussions with Stellantis” has increased in recent months, Somo said, describing work involving packaging and other elements of a total system solution. Ideal Power entered a long-term supply agreement with a high-volume, automotive-qualified wafer foundry in Asia, excluding China. The company said it achieved functional first silicon after beginning discussions with the foundry in the first quarter. According to management, the foundry has manufactured more than 1 billion power semiconductors and has capacity to support high-volume industrial and automotive customers. Chief Financial Officer Tim Burns said the agreement is intended to support long-term scaling and a cost structure consistent with Ideal Power’s targeted gross margin of more than 40% at scale. The company also introduced an SSCB reference design kit intended to help customers evaluate its technology and accelerate their own product development. One distribution partner has placed an initial stocking order for the kits, which Ideal Power expects to deliver in the coming weeks. Somo said multiple customers have requested access to the new kits. Ideal Power said it is prioritizing industrial reliability testing and qualification because AI data centers, energy storage and grid infrastructure represent its nearer-term revenue opportunities. It plans to begin the JEDEC industrial qualification process in the current quarter and complete it in the fourth quarter. Automotive qualification will be scheduled in line with customer timelines, management said. The company’s sales funnel grew to more than $400 million in potential revenue opportunity from about $300 million at its mid-May call. Management said the funnel is split roughly evenly between automotive and the combined AI data center and other industrial markets. Primary applications include SSCBs and solid-state EV contactors, with growing interest in solid-state transformers. Ideal Power reported modest revenue for the second quarter, noting that initial customer orders for product samples and development kits are expected to be small before potentially increasing as customers move through design cycles, qualification processes and inventory builds. The company posted a second-quarter net loss of $3.4 million, compared with a net loss of $3 million in the prior-year period. Operating expenses rose to $3.6 million from $3.1 million, driven primarily by higher stock-based compensation, personnel costs and non-cash patent impairments tied to a rationalization of pending patent applications. Burns said the company’s 105 issued patents were not affected by the portfolio rationalization, which is expected to lower future patent spending. Second-quarter cash burn was $2.5 million, flat from the year-earlier quarter and up from $2.3 million in the first quarter. Cash and cash equivalents totaled $41.3 million as of June 30. Ideal Power raised $27.7 million in net proceeds through a registered direct offering of common stock and pre-funded warrants that closed May 18. The company had no debt as of June 30. Management expects third-quarter cash burn of about $2.7 million to $2.9 million and full-year 2026 cash burn of about $10.3 million to $10.5 million. Burns said the higher expected full-year cash burn compared with 2025 primarily reflects additional sales and engineering hires. He added that the company intends to continue managing expenses aggressively despite the stronger balance sheet. Management also said a shelf registration filed in July was “good housekeeping” following the expiration of a prior shelf registration and does not indicate current plans to raise capital. Burns said the company could use registered shares for a potential strategic investment by a customer or partner, but stated that Ideal Power has no current intention to conduct another capital raise. Ideal Power Inc, based in Austin, Texas, specializes in the design and manufacture of advanced power conversion solutions for a range of energy applications. The company's core technology is its proprietary Coupled Power Delivery (CPD) architecture, which enables efficient bi-directional conversion between DC and DC, as well as DC and AC power streams. These solutions are widely applied in renewable energy systems, energy storage, microgrids, and electric mobility platforms. Ideal Power's product lineup includes bi-directional DC converters, solid-state transformers, and intelligent power controllers. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Ideal Power Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record revenue and profitability driven by 25% growth in recurring subscription revenue, which now constitutes 76% of total turnover. Net subscriber additions of 41,000 were fueled by healthy organic growth in core markets and the continued ramp-up of OEM programs in South America. Strategic focus on OEM relationships remains the primary vector for long-term growth, highlighted by the exclusive Connect Fiat program with Stellantis. Big data capabilities are being leveraged to transition beyond traditional subscription models, providing transportation insights to government and commercial entities. Operating leverage within the business model allowed profit metrics, including EBITDA and net income, to grow at a faster rate than total revenue. The company is utilizing its high cash generation to maintain a consistent capital return strategy through both quarterly dividends and active share buybacks. Management expects to announce additional big data agreements in the near term following successful pilot projects and initial governmental contracts. The IturanMob car rental solution in the U.S. is currently in a low-spend pilot phase to build operational confidence before scaling marketing and sales. Expansion of motorcycle OEM partnerships in Brazil is anticipated to become a major contributor to subscriber growth following success with Yamaha and BMW. Future big data monetization strategies involve targeting insurance companies and car importers to provide advanced risk assessment and behavioral analytics. Management remains confident in the ability to deliver continued growth through 2026 by transforming into a larger, data-centric organization. Finance expenses were impacted by the strengthening of the Israeli shekel against the U.S. dollar, affecting the value of dollar-linked deposits. Foreign exchange fluctuations resulted in an approximately $1 million impact on EBIT during the quarter. The Credit Carbon platform represents a new strategic entry into the ESG market, connecting EV drivers with companies needing emission offsets. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The initial deal was worth a few million shekels and focused on analyzing truck accident data to optimize the placement of rest areas. Management views this as a proof-of-concept for larger, more valuable deals with municipalities and public transportation agencies. Israel serves as the primary testing ground due to Ituran's high market penetration (1 million subscribers out of 3 million total vehicles). The company plans to export these data-driven models to Brazil and Mexico once the commercial framework is fully established in Israel. The project is currently in a 'low mode' to ensure operational readiness, with management describing it as a midterm initiative. Substantial financial contributions are not expected in 2026 or 2027, though market interest from car rental companies is reportedly high. Management intends to use big data to help traditional insurance companies improve pricing accuracy based on driving geography and behavior. Adoption is expected to be gradual due to the traditional and slow-moving nature of the insurance industry.

Interested in Ituran Location and Control Ltd.? Here are five stocks we like better. Record quarterly performance: Second-quarter revenue rose 21% year over year to $104.8 million, while subscription revenue increased 25% to $79.8 million. EBITDA grew 24% to $28.5 million and net income climbed 29% to $17.3 million. Subscriber and cash generation growth: Ituran added 41,000 net subscribers, reaching 2.711 million, and generated a record $32.2 million in operating cash flow. The company ended June with $103.7 million in net cash and no debt, while declaring a $0.50-per-share dividend and repurchasing $3 million of stock. Growth initiatives remain early-stage: OEM programs in South America, particularly with Stellantis, Yamaha and BMW, are supporting expansion, while data monetization and new offerings such as IturanMOB and Credit Carbon provide longer-term opportunities. Management said the U.S. rental-market rollout is still producing limited revenue and is unlikely to contribute materially in 2026 or 2027. Ituran Location and Control LTD, For Your Smallcap Dividend Portfolio Ituran Location and Control (NASDAQ:ITRN) reported record second-quarter revenue and profitability for 2026, driven by growth in recurring subscription revenue, subscriber additions and expanding original equipment manufacturer relationships. Revenue for the quarter rose 21% year over year to $104.8 million, while subscription-fee revenue increased 25% to $79.8 million. Subscription revenue represented 76% of total quarterly revenue, according to CFO Eli Kamer. Product revenue increased 8% from a year earlier to $25 million. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat CEO Eyal Sheratzky said the company added 41,000 net subscribers during the quarter, ending June with 2.711 million subscribers. He characterized the additions as consistent with Ituran’s expected run rate and said the company continues to pursue organic growth in its core markets through new products, value-added services, market segments and regions. EBITDA increased 24% year over year to $28.5 million, equal to 27.2% of revenue, compared with $22.9 million, or 26.4% of revenue, in the prior-year quarter. Net income rose 29% to $17.3 million, or $0.88 per diluted share, from $13.5 million, or $0.68 per diluted share, a year earlier. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be Kamer said second-quarter finance expenses totaled $1.3 million, unchanged from the prior-year period. The expense was primarily related to the strengthening of the Israeli shekel against the U.S. dollar, which reduced the value of U.S.-dollar-linked deposits held in Israel. The company generated $32.2 million in cash flow from operations during the quarter, which Sheratzky described as its highest-ever operating cash flow. As of June 30, Ituran had $103.7 million in net cash, including marketable securities, and no debt. That compared with $107.6 million at the end of 2025. → First Solar’s Profit Engine Faces a New Policy Test in Washington Ituran’s board declared a quarterly dividend of $10 million, or $0.50 per share. The company also repurchased $3 million of shares during the period. About $10 million remained under the buyback authorization, with repurchases to be funded by available cash and conducted in line with SEC Rule 10b-18, Kamer said. Sheratzky said OEM relationships remain a central component of Ituran’s long-term growth strategy. During the quarter, the company continued expanding existing South American OEM programs, including Connect Fiat, a program with Stellantis that launched earlier this year for the Fiat Strada. The company is also seeking to broaden existing relationships with Nissan, Renault, General Motors, Yamaha, BMW and other manufacturers, he said. In Brazil, Sheratzky said the company’s motorcycle-related OEM programs with Yamaha and BMW have been ramping up and are beginning to contribute to subscriber growth. “Our main focus in the Brazilian market” for motorcycles is centered on those OEM arrangements, Sheratzky said, adding that the company is discussing potential expansion to additional brands but had no new agreement to announce. Geographically, Israel accounted for 56% of second-quarter revenue, Brazil represented 22%, and the rest of the world accounted for the remaining 22%. Management also highlighted several longer-term initiatives beyond the company’s traditional subscription telematics business. These include IturanMOB, a car-rental solution recently launched in the United States; Credit Carbon, a platform intended to enable electric and zero-emission vehicle drivers to generate and sell verified carbon savings; and the commercialization of the company’s transportation data. Sheratzky said Ituran completed a previously disclosed data transaction with Israel’s Ministry of Transport and Road Safety at the end of the first quarter. The transaction involved several million Israeli shekels and provided historical data to help identify locations where truck rest areas could be developed to address driver fatigue and accidents. He said the company is in advanced discussions with additional potential data customers and is conducting several pilot projects. Ituran expects that its early big-data opportunities will be concentrated in Israel, where it has roughly 1 million subscribers among approximately 3 million vehicles, giving it a comparatively large data set for transportation analysis. Over time, the company aims to expand such efforts to Brazil and Mexico, Sheratzky said. Potential uses include supporting government agencies, transport authorities, municipalities, commercial centers, OEMs and insurers with data related to transportation patterns and driving behavior. In the usage-based insurance segment, Sheratzky said Ituran is currently focused primarily on Israel, with smaller activity in Argentina. He said the segment is growing but has relatively low average revenue per user and remains concentrated in specific customer groups, such as younger drivers and households’ second vehicles. Regarding IturanMOB, Sheratzky said market interest from car-rental companies has increased, along with the number of pilots and customers. However, the business remains at an early stage and is producing low revenue levels as the company expands its capabilities into more U.S. cities. Management said it is taking a measured approach to sales and business-development spending while gaining confidence in the offering. Sheratzky said the initiative is not expected to make a substantial contribution in 2026 or 2027, but the company plans to provide updates if it begins to scale to more material levels. Looking ahead, Sheratzky said Ituran remains confident in its ability to continue growing revenue and profitability through 2026, supported by subscription growth, OEM programs, newer business lines and opportunities to monetize its data assets. Ituran Location and Control Ltd. is a provider of wireless vehicle tracking and stolen vehicle recovery services. The company leverages a combination of cellular and global positioning system (GPS) technologies to offer real-time monitoring and location-based solutions for private vehicle owners, fleet operators and insurance companies. Its core offerings include subscription-based tracking devices, centralized control centers and software platforms that enable clients to detect unauthorized vehicle use, dispatch recovery teams and manage fleet logistics. Founded in 1994 in Israel, Ituran pioneered the use of wireless communications for security and telematics applications. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Ituran Location and Control Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized fiscal 2026 as the year of execution, highlighted by the transition of the xUI platform from concept to commercial production with approximately 100,000 vehicles now on the road. Performance in Q3 was driven by a 20% year-over-year increase in recurring connected services revenue, which management views as a critical engine for long-term visibility and margin expansion. The company secured a significant xUI win with Stellantis and the first customer for its mobile work agent, validating a strategy to sell standalone AI agents that can integrate into competitive technology stacks. Variable license revenue faced headwinds due to a difficult year-over-year comparison against a prior period inflated by pre-tariff production builds and unfavorable regional OEM mix in South America and South Asia. Management is pivoting toward non-automotive verticals, including industrial operations and robotics, leveraging edge AI reliability to address pain points like missed sales leads in dealerships. Strategic positioning is shifting toward higher average price per unit (PPU) models as xUI deployments offer broader software content and expanded agentic capabilities compared to legacy products. Fiscal 2027 is projected to be a year of growth, with management anticipating high-single to low-double digit revenue increases driven by the scaling of xUI and non-automotive initiatives. The xUI ramp is expected to accelerate significantly in 2027, with management targeting a move from 100,000 vehicles currently to a couple million cars on the road by the end of that fiscal year. Guidance for Q4 assumes a sequential revenue decline due to the absence of fixed license revenue and typical seasonal production step-downs, rather than a change in underlying business health. Non-automotive revenue is forecasted to grow at a faster percentage rate than the automotive segment in fiscal 2027, though starting from a smaller absolute base of approximately $7 million to $9 million. The company's financial framework assumes a continued shift toward recurring revenue streams, with connected service contracts extending from a 3-year average to approximately 7 years for xUI programs. The Board authorized the company's first-ever share repurchase program of up to $30 million, reflecting confidence in sustained free cash flow generation and a commitment to managing equity dilution. Free cash flow guidance for fiscal 2026 was raised to $76 million to $82 million, supported by disciplined cost management and strong cash conversion from operations. IP litigation remains a strategic priority with ongoing efforts against TCL, Apple, and Amazon; however, potential settlements are excluded from formal guidance due to unpredictable court timelines. A significant tax benefit is expected in Q4 to offset the front-loaded tax expenses associated with the Samsung IP license agreement recognized earlier in the fiscal year. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects xUI to be the primary growth engine for 2027, noting that while only 100,000 cars are currently active, production started just over a month ago. The price per unit for xUI is significantly higher than current products, and because all xUI models are connected, they generate both upfront license fees and long-term recurring service revenue. Growth will be fueled by higher PPU from xUI and a faster growth rate in non-automotive sectors, though professional services are expected to decrease as a percentage of the total mix. IP monetization represents potential upside 'on top' of core technology forecasts, with several cases expected to reach court milestones by the end of the calendar year. The sales cycle typically lasts at least six months and is increasingly focused on technical support and feature integration rather than aggressive price competition. Cerence often assists OEMs in defining the RFQ parameters, positioning itself as a strategic partner rather than a commodity software provider.

Image source: The Motley Fool. Thursday, July 30, 2026 at 8:00 a.m. ET Head of Investor Relations - Charles Christman Chief Executive Officer - Antonio Filosa Chief Financial Officer - Joao Laranjo Operator: Hello, and welcome to the Stellantis Q2 2026 Financial Results Call. [Operator Instructions] I now give the floor to Mr. Charlie Christman, Head of Investor Relations, to begin today's conference. Sir, the floor is yours. Charles Christman: Thank you. Hello, everyone, and thank you for joining us today as we review the Stellantis Q2 2026 results. Earlier today, the presentation material for this call, along with the related press release were posted under the Investors section of the Stellantis Group website. Today, our call is hosted by Antonio Filosa, Chief Executive Officer; and Joao Laranjo, Chief Financial Officer. After their prepared remarks, Antonio and Joao will be available to answer questions from the analysts. Before we begin, I want to point out 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 2 of today's presentation. As customary, the call will be governed by that language. Now I will hand the call over to Antonio Filosa, Chief Executive Officer of Stellantis. Antonio Filosa: Thank you, Charlie, and thank you all very much for joining us today as we discuss our quarter 2 results. Our second quarter execution and financial performance reflect the meaningful progress that the team and I have been focused on delivering over the last 12 months. All key financial metrics are significantly improved year-over-year. Net revenues are up 13%. AOI margin is up 120 basis points. Industrial free cash flow is positive EUR 1 billion, up EUR 1 billion compared to last year. This year-over-year improvement gives us confidence in our full year '26 financial guidance, which we are reaffirming again today, including our expectation that we will have positive industrial free cash flow in 2027. We set out our FaSTLAne 2030 strategy and its financial targets at our May 21 Investor Day, and these quarter 2 results demonstrate that we are very much on track in our journey towards those targets. In quarter 2, we made strong and significant progress on industrial execution. Through the good work of our operating teams, we have stabilized production and are running our plants much more efficiently. Year-over-year, overall production efficiency was improved 870 basis points in North America and 170 basis points in Europe. We also kept improving quality with 3 months in service quality improving 38% in North America and 24% in Europe. And we are making encouraging daily progress in the implementation of our value creation program, VCP. And as we shared with you at Investor Day, partnerships are a key pillar of our FaSTLAne 2030 plan. The announcements we made give you a strong sense on how attractive Stellantis is as a strategic partner both to other OEMs and to leading names in the tech space. We are also making good progress with the execution of our large-scale new product plan. One of the key strategies in our FaSTLAne 2030 plan is to invest in our brands, invest in our products and expand market coverage. In line with this plan, we are excited to have introduced the all-new Ram 1500 TRX SRT, the DS #7 and the Fiat Grande Panda ICE in H1, alongside 6 refreshed vehicles, including Opel Astra, Chrysler Pacifica and Peugeot 408, which is gaining strong momentum in Turkey. The Ram Dakota introduced in Brazil in early '26 is also delivering strong sales performance in the region's largest profit pool. We look forward to the 9 remaining new and refreshed vehicles still to come this year, and we are laser-focused on executing every one of these launches on time with the right cost and with the right quality. Now let me touch on some Q2 highlights from a regional perspective. In North America, we keep making significant progress and improving performance, powered by our great brands, our great products and our great people. Sales in quarter 2 were up 6% year-over-year for a fourth consecutive quarter of year-over-year gains. Ram was up 12% year-over-year. Chrysler was up 54% with the launch of the new Pacifica and Jeep Grand Wagoneer also posted significant gains. Overall, market share was up 40 basis points in North America, including 50 basis points in the U.S. Canada market share was also slightly up and Mexico with its strongest second quarter on record. Let me share a few highlights on Ram. The Ram 1500 was a key driver of both volume growth and profitability in the quarter with strong demand for the reintroduction of the legendary HEMI V8 engine. Building on that momentum, we are now shipping the highly profitable Ram 1500 TRX SRT to customers, just 6 months after its unveiling. This is the first off-road product from our SRT Performance division, which we relaunched only 1 year ago. This product follows the Dodge Durango SRT launched in December '25. And the SRT muscle truck, the Ram Rumble Bee arrives later this year, right on plan. As we presented during Investor Day, SRT brings unique capabilities and a powerful halo effect across all our lineup while delivering margins from 2x to 3x higher than comparable non-SRT variants. Still on the product side, we have the upcoming Jeep Recon BEV and the Jeep Grand Wagoneer REV launch coming this year. Now a few words also on our U.S. dealer inventory. The increase seen in June was the result of a proactive decision to support new product launches and powertrain offerings such as the Ram HEMIs, for instance, ahead of the sale that we expect to achieve in the coming months. It was also driven by a temporary buildup in advance of our planned summer production shutdowns. Based on preliminary sales rates in July, we expect that in July, you will see inventory already reduced from June levels. Turning to Europe. Growth in Europe was driven by strong demand for smart car platform nameplates such as Citroen C3 and C3 Aircross, Opel Frontera, Fiat Grande Panda, resulting in a 3% year-over-year increase in Stellantis brand sales in quarter 2. Including Leapmotor, sales were up 7% year-over-year, supported by the success of the T03 and the B10. This growth also reflects the acceleration we are seeing in the European passenger car BEV markets, where Stellantis BEV sales increased by 20% year-over-year and by 61% year-over-year when including Leapmotor. In light commercial vehicles, our Pro 1 division maintained the #1 position in the Euro 30 with over 28% market share. The ongoing product offensive in Europe will further strengthen our growth drivers. First, through the expansion of the smart car portfolio with the upcoming Fiat Grizzly and Fiat Fastback. We will also have a broader coverage of the C-SUV segment with the new Jeep Compass 4xe as well as the recently launched DS #7 and the upcoming Lancia Gamma. Finally, Leapmotor represents another important growth lever and keeps gaining commercial momentum. Quarter 2 '26 sales increased sixfold year-over-year, making Leapmotor the fifth largest Chinese automotive brand in the region. Turning to South America. We maintained our clear overall leadership position in the region. We are #1 in the region's 2 major markets with over 26% market share in both Brazil and Argentina. We also further strengthened our leadership in pickup truck in Brazil, home of the region's largest profit pool, with Ram sales increasing by 10% year-over-year. Moving now to Middle East and Africa. We delivered resilient results in a declining market with market share increasing 20 basis points despite an 8% decline in total industry volumes. The region achieved the #1 position in light commercial vehicles and maintained its #2 position overall. Lastly, in APAC. June deliveries reached a 6-month high, and we have localized Leapmotor branded vehicle assembly in Malaysia for C10 with the B10 launch on track for the third quarter. We also announced the partnership with Dongfeng to develop and manufacture Peugeot and Jeep models in China. So in summary, we are continuing the positive trend of quarter 1 with significant year-over-year improvements in all financial metrics. And our strong disciplined execution keeps driving significant improvements both in quality and industrial efficiency. Let me now hand you to Joao to walk you through the numbers. Joao? Joao Laranjo: Thank you, Antonio. Good afternoon and good morning, everyone. Q2 was another quarter of year-over-year improvement, in line with our full year guidance for 2026. Let me start with the key financial figures. Consolidated shipments were 1.6 million units, up 10% year-over-year, with growth driven by North America and Europe. Net revenues were EUR 43.5 billion, up more than EUR 5 billion or 13% compared to Q2 of last year. This improvement was driven mainly by the higher volume in North America, which was up 122,000 units year-over-year. Adjusted operating income was EUR 773 million in Q2, improving by EUR 560 million compared to Q2 of last year. AOI margin was 1.8%, representing a 120 basis point improvement year-over-year. The key drivers of the year-over-year AOI improvement were: Volume/mix had a positive impact of EUR 376 million, reflecting higher shipments in North America and Europe. Mix was unfavorable, mainly due to LEV penetration in Europe, partially offsetting the volume improvement. Net pricing was negative EUR 456 million, mostly driven by pricing pressure in Europe. Industrial costs improved by more than EUR 1.9 billion. This was driven by 3 main factors. First, we continue to improve our operational execution. Manufacturing efficiencies and purchasing savings, including those related to VCP more than offset increased raw material and tariff headwinds. Second, we had a non-repeat of prior year warranty costs from recall campaigns in Europe. Finally, the reduction of regulatory expenses in North America. SG&A costs increased by EUR 317 million, largely reflecting higher marketing expenses to support volume growth. Lastly, foreign exchange and other had a negative impact of EUR 861 million, driven mainly by the Turkish lira devaluation, the non-repeat of an indirect tax credit in Brazil and the impact of lower residual value in the used vehicle business. Moving to industrial free cash flow. Industrial free cash flow was positive EUR 1 billion in Q2, an improvement of EUR 1 billion year-over-year. The improvement was driven by 3 factors: first, higher AOI; second, positive seasonal working capital dynamics associated with higher Q2 volumes. Third, a lower run rate of CapEx and R&D spending during the quarter. The time of these investments remains fully aligned with our FaSTLAne product plan and is reflected in our full year's guidance. We continue to expect full year CapEx and R&D spending to be 6.5% to 7% of net revenues. These benefits were partially offset by provisions, including approximately EUR 300 million of cash outflows related to H2 2025 charts. Now looking at inventory. Total inventory increased 20% year-over-year to 1.4 million units. The increase primarily reflects the launch of new and refreshed vehicles and powertrain offerings and is consistent with our expectations for sales growth. As Antonio noted, dealer inventory also includes a temporary buildup ahead of the customary summer production shutdowns. As a result, we expect July inventory levels to be meaningfully lower than those recorded in June. Turning to our regional performance. North America delivered AOI of EUR 284 million with an AOI margin of 1.6%, representing a year-over-year improvement of EUR 724 million. This is mostly driven by higher volume, including the Ram 1500, Jeep Grand Wagoneer, Gruner ICE and the Chrysler Pacifica. Shipments were up 38%, driven, as we have already noted, by the launch cadence of our new products and build ahead in advance of the pre-planned summer shutdown. It was also driven by year-over-year improvement in industrial costs and the reduction of regulatory expenses. In Europe, AOI was negative EUR 94 million, an improvement of EUR 265 million year-over-year. The region continues to experience pricing pressure, which partially offset the positive impacts of improved manufacturing efficiency and purchasing costs and the non-repeat of EUR 474 million of recall campaign costs in 2025. In South America, we delivered AOI of EUR 402 million. Volume was down slightly year-over-year with a decline in Argentina more than offsetting gains in Brazil. The performance of the region remains resilient despite a challenging market and increasing competition. The AOI was in line with prior year, excluding the non-repeat of EUR 334 million of indirect tax credits in Brazil. In Middle East and Africa, we grew market share and delivered an AOI of EUR 329 million. These strong results were achieved despite the ongoing regional conflict, which resulted in an 8% decline in total industry volumes. In Asia Pacific, AOI was up 35% to EUR 27 million, with industrial cost improvements more than offsetting foreign exchange headwinds. Looking ahead to the rest of the year. As previously stated, we are reaffirming our 2026 guidance as well as our expectation of achieving positive industrial free cash flow in 2027. Before concluding, I would like to share a few observations regarding the remainder of the year. Our guidance assumes net tariff expenses of EUR 1 billion to EUR 1.2 billion, including the impact of the EPA credit recognized in Q1. This represents a modest improvement from the EUR 1.3 billion previously communicated. Our industrial free cash flow guidance also reflects approximately EUR 2 billion of payments related to H2 2025 charges, of which EUR 0.9 billion was paid during the first half of 2026. CapEx and R&D spending are expected to be 6.5% to 7% of net revenues in 2026, consistent with the approximately 7% outlined in the FaSTLAne plan. In the second half, we expect financial performance to be weighted towards Q4. Q3 will be impacted by the summer shutdown and continued raw material inflation, while Q4 is expected to benefit from higher volume and a stronger ramp-up of VCP initiatives. I will now turn it back to Antonio to wrap up before the Q&A. Antonio Filosa: Thank you, Joao. Before we move to the Q&A, I would like to step back and reflect on the big picture. I hope all of you either had the opportunity to attend our Investor Day or to view the presentations online. You will see that our FaSTLAne 2030 strategy addresses in a structured way the core issues that we face as a company and capitalizes on our biggest opportunities. We are fully focused on executing our plan, which will deliver significant benefits as we build a stronger Stellantis for the future. Nothing can be fixed overnight, but I would like to highlight 3 items that are our top 3 priorities. First, market coverage. Discontinued products from '21 to '25 led to a reduction in our market share, both in North America and in Europe. You have seen early progress in our market share gains this year. FaSTLAne 2030 reinvigorated the product portfolio, getting us to around 90% market coverage in both regions, representing a huge opportunity for growth. Second challenge, industrial cost. We have improved significantly in the past year, and this remains a big opportunity to drive our financial performance. In FaSTLAne, VCP will deliver EUR 6 billion of annual run rate cost reductions by '28. We are making strong initial progress on VCP, and we are on track to implement 40% of the initiatives by the end of this year. This means that in '27, we expect to enjoy EUR 2.4 billion of AOI benefits plus the partial benefits of the initiatives we implement in '27. Finally, quality. Our execution on quality in the past was not what it needed to be. But we have come a long way already in the last year. Quality has improved significantly by 38% in North America and by 24% in Europe. And FaSTLAne 2030 is giving the quality organization the focus and the resources they need to be in the top quartile in all regions and segments where we compete by '28. It will take time to fully capitalize on these opportunities, but it is a time frame that is fully embedded in our '26 guidance, in our expectation of positive industrial free cash flow in '27 and in our '28 FaSTLAne targets. The road is long, but we are moving in the right direction with the right priorities and with the right pace. Thank you. We will now ask the operator to open the line for questions. Operator: [Operator Instructions] And the first question comes from the line of Stuart Pearson from Oxcap Analytics. Stuart Pearson: Hopefully, you can hear me now, my mistake. Too many calls today. So I guess we have to start with North America and the lack of operating leverage there. Obviously, very strong shipments coming in. Obviously, we've seen, I guess, some of our expectations another weak margin there despite cost support. So I mean, can you just dig into a little bit more why we're not seeing that? Is it pricing that's really eating into that, whichever bucket in the bridge that might really fall into? And what would it really take to get those North America margins up? And what are the building blocks, I guess, into 2027 that can give us some confidence on that? And I guess one of those sort of partly self-answer, I guess, is going to be the industrial cost drivers. Obviously, a huge benefit there, that EUR 1.9 billion. And obviously, the team deserve credit for that. But maybe you can help us understand what's really in there? What are the examples of actions that are driving that kind of cost tailwind in the second quarter? And should we expect -- or what rate should we expect that to continue in the second half and into 2027? I know you talked about the VCP plan. But could we take the H1 run rate or at least most of it and extrapolate that? Antonio Filosa: Okay. I will take part of this question, and then I will pass to Joao the rest. So what is happening in North America is, number one, the trajectory is the right one. The trend is the right one. So if we compare AOI of Q2 versus AOI of Q1 net of IEPA refund, then we see a significant and meaningful improvement as we see an improvement in shipments, in market share, for instance. Now it's important to say, to repeat what I just mentioned at my closing remarks. We have a plan FaSTLAne 2030. It is a good, structured and articulated plan. And this plan addresses in North America and globally, the 3 major challenges that we see in our company. One of those is industrial cost. We have an industrial cost gap, and we are addressing that daily with VCP. And VCP will deliver, as mentioned, EUR 6 billion of cost savings run rate in '28. We are on track to full implement 40% of the initiatives that we have identified and there are many by the end of '26. That means that we -- '26 will enjoy EUR 2.4 billion of cost savings plus all the extra that will come from the additional initiatives that will be executed in '27 itself. So you asked some tangible example. So VCP, when it comes to cost, works mainly on 3 major drivers in our cost structure. One is direct material cost. This is the cost of component and system and subsystem that we use in our cars. And here, we have 2 leverage, the purchasing leverage to negotiation and the technical leverage to implementation of technical savings. And those technical savings can be many, for instance, new technologies that represent the same or better performances of our products with lower cost. For instance, which of material that keep the performance of the product where they are, but they represent a cost savings, et cetera, et cetera. The second driver is transformation cost. This is the cost of our manufacturing system in our plants. And on there, we have tons of projects to improve efficiency. And this is why our efficiency in our plants in North America is consistently and meaningfully improving since last year. So you see that today, our efficiency run in around 89%, which is a very good result, and that represents 870 basis points better than prior year. A year, the projects are really thousands. The third driver of cost that VCP addressed through projects and initiatives is logistics and distribution costs. And in this case, also the projects are mainly [indiscernible] . For instance, we are optimizing our routing from suppliers to plants for plants to the yards. We are increasing the loading of our logistic tools, thus saving costs or simply, we are combining warehouses or we are shutting down warehouses, and we are putting that space in our plants. And this is the third driver of efficiency that VCP will address. Again, with the objective this year, to fully implement by the end of '26, 40% of the main initiative mapped that will deliver EUR 2.4 billion of AOI savings improvement in '27 and then the EUR 6 billion in '28 as a run rate. And Joao, do you want to take the rest of the question? Joao Laranjo: Yes. So on the industrial cost, the EUR 1.9 billion, slightly more than 70% about EUR 1.4 billion. It's split between purchasing, material cost savings and warranty. On the warranty, the largest piece, it's the recall recorded in Q2 last year in Europe. So most of that is because of the non-repeat. On purchasing, it's the work that we are doing to reduce product costs as we have discussed in the Investor Day. And that is a number that we will continue to see it improving and accelerating as we evolve with VCP. The other items that are also included on the industrial costs to give context are logistic costs and manufacturing, which we also saw improvements, given the meaningful performance improvement at our plants, as Antonio mentioned on the opening remarks. And we also see benefits on manufacturing costs because of the higher volumes. So there's items that are temporary and also depends on the comparisons year-over-year. But we should expect to see material cost savings to continue to progress in the second half and beyond. And just to also remind that we expect that raw material continues to be a headwind and growing in the second half versus what we saw in the first half, including Q2. But yes, we see a lot of positives on the industrial costs and especially on the material cost, and we expect to build momentum on that. Stuart Pearson: And sorry, on the operating leverage side in Q2 in North America, just because 400 million volume and mix implies quite a negative mix in there, I guess, in Q2. Is that fair? In North America, sorry. Joao Laranjo: No, the mix was not very negative. Some of that is channel and product content. But the operating leverage of Q2 is consistent with the margins that we have had on the previous quarters. And to Antonio's point, we -- that is a gradual exercise that we're going to improve as we work on costs and also on warranty. But there was nothing -- anything exceptional to that is bringing the operating leverage in North America other than the challenge that we have in cost and quality that Antonio already mentioned. Operator: The next question comes from the line of Thomas Besson from Kepler Cheuvreux. Thomas Besson: I have a question about the shape of H2. I think you're coming out of relatively easy comps in terms of volumes in the first half. It becomes a bit more difficult in the second. Could you help us understand exactly what you're aiming for in terms of quarter-on-quarter or H2 and H2 improvement? Are you going to try to improve on the reported minus 1.7% AOI of H2 last year? Or are you going to try to improve on the 0.9% underlying AOI if we excluded the EUR 2.1 billion unusual item that you couldn't remove in the second half of the last year? And what will be the drivers of improvement as it will be less driven by volumes and as you will face more headwinds from raw materials? Joao Laranjo: Yes. So the -- our target for H2 is to deliver the best results possible, aligned with the full year guidance. So we are not setting any specific targets for the H2 on this call. The dynamics that we're going to see on the -- that we expect to see on the second half as the first half, it's a headwind of about EUR 1 billion between raw material and then the non-repeat IEPA credit that we recognized in Q1. And volume should be lower as we saw, we build up inventory in the first half, and we expect, as Antonio mentioned, to reduce inventory in the second half. But then we expect to see positive mix. We expect price to be constructive, especially in North America, and we expect to continue to make progress on cost reduction. So those are the puts and takes for the second half -- first half performance. Thomas Besson: Can I add a follow-up, please? Joao Laranjo: Yes, please. Thomas Besson: Okay. Great. On the North American business, to follow up on Stuart's question, your truck mix has been extremely strong in H1, and we still don't see a lot of traction. Could you help us understand what is still -- I mean I understand your costs are not where we'd like to be, quality is not perfect yet. What are the main negative drivers to your NAFTA margins? Is that channel mix? Is that relative pricing as well? Or is it just your industrial cost and some remaining quality issues? Antonio Filosa: Yes. So I will take this question, and then I will pass Joao for additional info. So as I mentioned in my closing remarks, our plan, which is a good plan, address in time the major challenges that we see, right? And calling on North America, for sure, we have a quality gap that translates into warranty cost and campaign cost. And this have been addressed with a very vast quality turnaround plan, which on the new product is already delivering a much improved product quality, 38% improvement in 3 months in service year-over-year. And then the second challenge that the plan addressed is a cost gap, as you mentioned, which we are addressing with VCP with the trajectory that I already stated, EUR 2.4 billion to start in '27, plus all the additional initiatives that we'll implement in '27, up to EUR 6 billion cost saving run rate in '28 and forward. Those are the 2 things that FaSTLAne address in North America and globally at the pace and in time, which is already embedded in all our targets, in the '26 financial guidances that we reaffirm, in the '27 free cash flow positive that we reaffirm and in '28 targets that we distributed in FaSTLAne 2030. The notional time and the time frame needed is already embedded in the plan, and we are executing and delivering as we showed in quarter 2, accordingly to the plan. We are on track. Joao? Joao Laranjo: I don't have anything else to add, I don't think. Operator: The next question comes from the line of Jose Asumendi from JPMorgan. Jose Asumendi: Antonio, just one question, please, again, on the North American margins. And I'm just wondering, is there a very large opportunity to increase the utilization, the loading of the plants in North America, which then in turn would unlock the PCP cost savings, right? But then when I think about this, you need to win market share in the U.S., you need to increase production by, let's say, 150,000 units from here, right? I mean when I look at the capacity of your business and I compare it a few years from now, there's a very large opportunity to increase production. So can you help me understand a bit better, please, which product cycle, which vehicles are going to drive this increase in production in North America, which I think will drive these cost savings across, again, PCP and loading of the plants, which I think is -- when I go back again to the operating leverage, why are we not seeing the operating leverage, it must be because the loading of the plants is low. I would love to hear your thoughts, please. And correct me, please, if I'm wrong. Antonio Filosa: Thank you. Thank you very much, Jose, for this relevant question. So here, again, I need to give the notion of what we are doing and on time and on the time that is embedded in the plan itself. So we know that we have a product gap, as you mentioned. And this product gap obviously hurted in the past that we are recovering market share in North America not only and obviously, capacity utilization. Now we are currently developing very competitive and successful products that we will deliver in high volumes starting from '28. So those are the steps. The step is now we focus on improving quality by daily and focused execution by improving industrial cost as we are doing by daily and focused execution. Both are happening, and we need to accelerate more. And those will remove warranty costs and campaign cost together with, obviously, increased cost savings and industrial efficiencies. Said that, at the same time, we are introducing and we will introduce more of the new products. So we introduced already some, as you see, the Ram TRX SRT that will be a great profit contributor has been recently introduced and distributed to our dealers just 6 months after unveiling. We are developing and we will launch this year Jeep Recon BEV, Jeep Grand Wagoneer REV. And then the high-volume products that we are executing in develop now will be delivered to the market by end of '27, starting from '28. So the steps are those, quality improving, warranty cost and campaign costs removed, cost improving, cost savings into our business, improving commercial efficiency with the lineup that we have, the new products we are introducing to increase volume and saturation and then the big products that are coming by end of '27, starting of '28. Joao, do you want to add something? Joao Laranjo: No. Thank you, Antonio. Operator: The next question comes from the line of Emmanuel Rosner from Wolfe Research. Emmanuel Rosner: My first question is on the second half puts and takes that you provided before, which are extremely helpful. So I understand a lot of the headwinds around raw materials, non-repeat of EPA, the volume destocking. I was hoping you can just give a little bit more color on some of the tailwinds. What will drive the positive mix in the second half, the positive U.S. pricing in particular? Antonio Filosa: Yes. I'll start to take the answer, and then I will give the word to Joao. So the headwinds that we see are the ones that Joao explained. So we see inflation coming. We see a memory chip shortage. And we see, especially in quarter 3, lower shipment driven by the shutdowns, both in Europe -- seasonality in Europe and in North America. Then when we project to half 2 and quarter 4 specifically, the major 2 tailwinds will be, one, again, VCP. So we are meant to implement 40% of the initiative that we have mapped by end of '26. That means that in quarter 4, we will start enjoying an acceleration of cost savings coming from there, for sure. And then we see a constructive environment for pricing in North America specifically. And obviously, we will take that as much as possible. Joao? Joao Laranjo: Yes. So on the mix, there are 2 things. One will be channel mix, given the seasonality of rental sales, both in North America and Europe more heavily in the first half of the year. And also as we introduce new vehicles here in North America, in other regions as well, we see benefits of mix. One obvious example is the Ram TRX. On pricing, given the inflation pressures and the raw material inflation that everybody is expecting in the second half, we see constructive price again in North America and then stabilization in the other regions. And the third one that is very important, it's acceleration of cost reductions, as Antonio mentioned. But those are the -- so it's really operational drivers and that we are working every day to improve our business efficiencies as we develop the new products that Antonio was mentioning before. Emmanuel Rosner: My follow-up question is, would you be able to describe for us the competitive environment and traction you're seeing in the full-size pickup market in the U.S. Your inventories of Ram are particularly elevated, I think, around 110 days at the dealers. There are some media reports on some pretty large incentives being offered in the month of July. So just curious how much market traction you're seeing? And yes, could you describe the competitive environment for us? Antonio Filosa: Yes. I will take the first part of the answer. And I must say that I'm very happy with Ram 1500 trajectory. So Ram 1500 specifically, which is a cornerstone as a product for the Ram brand, it was declining steadily in the previous year. And then after the introduction of the Ram HEMI V8 engine, then it started climbing up again. In July, it's crossing the line of 20% plus segment share and has been gaining segment share and market share since 12 months ago. Joao, do you want to take the other? Joao Laranjo: Yes. So the -- specifically on the Ram light duty, what we have on the '26 model year, it's a normal model year transition. And again, we are constructive on pricing on the second half. So this is the price position that we have on the Ram light duty right now is specific on the transition of the model year, and we are definitely taking advantage of the strong position that we have on that car, including the stock to accelerate sales as we transition the model year. Operator: The next question comes from the line of Michael Foundoukidis from ODDO BHF. Michael Foundoukidis: So 2 questions on my side. First on VCP. Of the EUR 2.4 billion of VCP benefits that are expected in 2027, how much should flow directly to AOI versus being reinvested into pricing and market share gains? And second question, maybe on North America and following up on your previous answers. How much of North America margin recovery would you consider depends on higher utilization from new products arriving in 2027, 2028 versus cost reduction alone? Joao Laranjo: Okay. On the VCP, the 2.4 billion savings, we expect all of that will flow to AOI. And then on the second one, the biggest items to improve the AOI in North America are material cost and quality improvement. Plant utilization, it's important, and we are seeing already some efficiencies, but the magnitude of purchasing material cost efficiency and warranty is much, much larger than any efficiency that we can get on better utilization of the plants. Operator: The next question comes from the line of Philippe Houchois from Jefferies. Philippe Houchois: Two questions on product more. One is on the Cherokee. There was a lot of hope Cherokee would make a difference to market share. We don't really see it. And I know there may be some production issues, but I'm trying to understand, are you deemphasizing the products because it is not as meaningful to profitability and then it needs to be somewhat redesigned? Or is it because the tariff in Mexico made it uncompetitive? And in that scenario, any particular expectation of USMCA evolving? And at one point, would you be transferring production of Cherokee to Belvidere if that is the case? And is that the answer to Cherokee being a more meaningful contributor to volume and profitability? And the other question I have on product still, but more on the European side is Leapmotor. So we've seen good volume from Stellantis in Europe, but we see negative volume mix impact. I understand the mix can be negative. I'm trying to understand how much of a contribution we would expect from Leapmotor. And to what extent my understanding of the Leapmotor setup and the cost efficiency is that the product could be dilutive to the mix of Stellantis, but still be accretive to earnings. And is that still the right approach? And when do we start to see that show up in the profitability of Europe? Or do we have to wait for eventually the Peugeot brand to start coming through and contribute more positively to mix as was the case in the past? Antonio Filosa: Okay. So I will split the question into 2. I will take the Cherokee question, and I will pass to Joao the Leapmotor question. So on Cherokee, first of all, we see high interest from consumers on Cherokee. We map that every time on the funnel management and interest is very high. What we are doing, as you said, it is very exposed to tariffs. So we are balancing volumes with profit generation. We are doing that by limiting some trims and mixing on the highest and more profitable trims and limiting some channel, so improving the quality of the mix channel. This is what is happening now in Cherokee. What we are doing in parallel is to put it into VCP. So it will be one of the nameplate that will receive the cost savings that we are identifying, mapping and implementing. We are introducing more competitive trims. This will happen in half 1 next year. And then as you mentioned, we are repatriating Jeep Cherokee into Belvidere. And that will make Cherokee tariff-free, almost tariff-free. On Leapmotor? Joao Laranjo: Yes. So Leapmotor, it has been so far very successful. The vehicles are profitable. But as you mentioned, because of the powertrain mix of those vehicles, they have margins that is lower than the average in Europe. But we continue to expect positive contribution and increasing contribution from Leapmotors as we launch new vehicles and expand the portfolio in Europe. So, so far it's very successful. And again, it's profitable, but definitely has a negative impact on mix because of the powertrain. Philippe Houchois: Understood. If I can squeeze in for back to Antonio, but do you have a date for when Belvidere would start production of the Cherokee, please? Antonio Filosa: No, we cannot unveil this date in this call. Operator: The next question comes from the line of Christoph Laskawi from Deutsche Bank. Christoph Laskawi: I'd like to ask on cash generation in the second half. Now obviously, you point to Q4 being better than Q3 and CapEx ramping up quite a lot. Could you comment on the CapEx phasing? Will it start in Q3 right away with higher spending? Or is it mostly Q4? And with working capital reversing or likely reversing in Q3, should we prepare for free cash flow, which is an outflow of over EUR 1 billion-plus in Q3? Any comment on free cash flow phasing would be appreciated. Joao Laranjo: Yes. No, thank you for the question. The first comment is that if we look at the second half versus first half, we expect to have higher CapEx, and we expect the higher CapEx to pick up already in Q3 and then Q4 again. So we'll see a gradual improvement as we continue to develop the new programs that were set under FaSTLAne 2030. For the second half, we expect working capital to be again positive as usually happens at the end of the year as we reduce especially property stock. On seasonality between Q3 and Q4, you're right that working capital in Q3, it's negative, and you will have the same -- not the same amount, but the same dynamic that happened last year because of the summer production shutdowns, both in North America and in Europe. So Q3 it's normal that the working capital is negative and it will be the same this year. Christoph Laskawi: And if I may, a follow-up just on Europe. You mentioned other regions pricing stabilization. Is this seen in Europe? Or is it actually the competitiveness accelerating given the inflow of low-cost competitors in the market? And do you expect the pricing pressure in H2 essentially to be offset with the industrial savings? Antonio Filosa: So the industrial savings will have an important role, both in North America and as you mentioned, in Europe. The pricing environment will be constructive in North America, and we believe not deteriorating in Europe. And in the other region, we believe that as well, VCP and industrial savings will be a major lever. We see some opportunity of pricing in the other regions. Operator: The next question comes from the line of Itay Michaeli from TD Cowen. Itay Michaeli: Two quick questions for me. First, I was hoping you could maybe share how you're thinking about targeted U.S. inventory levels by year-end, whether it's days supply or absolute units. And then secondly, as we think about the achievement of positive industrial free cash flow in 2027, I was curious kind of what kind of volume growth or revenue growth you roughly might need to get to that level of free cash flow next year? Antonio Filosa: Okay. So I will answer to the question of the U.S. inventory. So I said, we peaked in June at 390,000, moving from January to June, plus 70,000. 65,000 of those 70,000 are new products that we expect to accelerate in sale in H2. And then also the anticipation of buildup for the planned summer shutdowns in our North American plant. July sales rates are already moving the inventory largely down. So we believe that we will end July as U.S. dealer inventory at around 365,000. And moving forward, we believe that this absolute number can be the one that will allow us to accelerate the sales that we want to do and also introduce the new products that we are doing, such as the Ram TRX SRT, which will be very profitable and very positive for mix, the Jeep Recon BEV and the Jeep Grand Wagoneer REV. Joao, do you want to take the other one? Joao Laranjo: Yes. So the in FaSTLAne, we set the revenue target for 2028 at EUR 175 billion. So the revenue that we are expecting for '27, it's intermediate between what we're going to close 2026 and the 2028 target. So it's reasonable volume growth on the back of the products that we continue to launch. The biggest driver for the positive free cash flow next year is the earnings. Volume will be a part of that. But the biggest part of the earnings growth next year, as we are talking many times here, it's industrial efficiencies, including the savings that we expect from VCP. So industrial costs and industrial efficiency will be the biggest driver of the earnings improvement next year that will drive to the positive free cash flow. Operator: The next question comes from the line of Christian Frenes from Goldman Sachs. Christian Frenes: I just want to come back to North America again and specifically on the volume and mix portion of the bridge where you reported EUR 409 million of benefit. That's down sequentially. And I'm just wondering the drop-through. If I look at the drop-through from Q1, I think you were 27% on that line item and it's now dropped to 8%. So I'd just like to understand again if there were any sort of specific reasons for that or if the recalls, I think you mentioned the recalls were also present in North America. And I'm not sure if raw mats would come into this line item, but if you could flag any reason for that significant sequential drop in volume and mix drop-through? And then secondly, on the vehicle net price also sticking with North America, we went from a positive number in Q1 to a negative number. And just trying to understand, especially on the content side, what happened there and how we should think about the second half? Joao Laranjo: Okay. On the sequential drop-through impact, the biggest driver of the Q2 versus Q1 mix deterioration is nameplate mix as we increased shipments of some of the vehicles built, especially in Mexico. So basically, the increase of vehicles built in Mexico were the ones. So it's basically nameplate mix based on the vehicles that we shipped in Q2. So nothing special other than a specific time of the mix that happened in Q2 versus Q1. Christian Frenes: Okay. That's really helpful. And then if I could just have a follow-up question on your investment spend. I think you're keeping your investment spend for the full year, still intact. And if my calculations are right, in H1, you spent about EUR 3.5 billion, which would imply H2 spend -- investment spend of about EUR 7.4 billion or thereabouts. That's a very significant increase H1 to H2, which we didn't actually see in the last 2 years. So again, could you help me understand why there's this significant shift or perhaps I'm making an error in these numbers? Joao Laranjo: Yes. We can take this offline because I think some of the numbers that you're taking, you're probably not capturing all the perimeter. In H1, our total investment as a percentage of revenue, and we can reconcile offline, it was 6.3%. So we -- yes, so there is over EUR 1 billion of higher CapEx in the second half versus first half. That's what we are expecting. Operator: Ladies and gentlemen, this was the last question for today. With this, let me now hand the call back to Mr. Antonio Filosa for the conclusion. Antonio Filosa: Well, very, very well. And thank you again for joining us today and for the time and focus you have put into reviewing our results and listening to our business updates. Thank you again, and see you next time. Bye-bye. Before you buy stock in Stellantis, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Stellantis wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $386,727!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,232,139!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. 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Interested in Stellantis N.V.? Here are five stocks we like better. Stellantis reported a stronger second quarter: Net revenue increased 13% year over year to €43.5 billion, while shipments rose 10% to 1.6 million units. Adjusted operating income climbed to €773 million, and industrial free cash flow reached positive €1 billion. Cost-cutting and operational improvements supported profitability. Industrial costs fell by more than €1.9 billion, while the Value Creation Program is targeting €6 billion in annual run-rate savings by 2028 and €2.4 billion in adjusted operating income benefits in 2027. The company reaffirmed its full-year outlook but expects a back-loaded recovery. Third-quarter results may be pressured by plant shutdowns, lower volumes and roughly €1 billion in second-half headwinds, while fourth-quarter performance should benefit from new launches and accelerated cost initiatives. 5 Reasons to Pony Up for Pony AI Stock—and 1 Reason to Wait Stellantis (NYSE:STLA) reported improved second-quarter 2026 financial results, citing higher shipments, stronger production efficiency and cost reductions, while reaffirming its full-year outlook and expectation for positive industrial free cash flow in 2027. Net revenues rose 13% year over year to €43.5 billion as consolidated shipments increased 10% to 1.6 million units. Adjusted operating income, or AOI, reached €773 million, up €560 million from the prior-year quarter, while the AOI margin improved 120 basis points to 1.8%. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Qualcomm's TikTok AI Chip Deal Rewrites the Rules Industrial free cash flow was positive €1 billion in the quarter, improving by €1 billion from a year earlier. Chief Financial Officer João Laranjo said the improvement reflected higher AOI, favorable seasonal working-capital dynamics tied to higher second-quarter volume and a lower run rate of capital expenditures and research-and-development spending. Chief Executive Officer Antonio Filosa said the company’s operational efforts improved manufacturing efficiency by 870 basis points in North America and 170 basis points in Europe from a year earlier. Three-month-in-service quality improved 38% in North America and 24% in Europe, he said. → Microsoft Just Flipped the AI Spending Narrative Overnight Detroit's Great Divide: Two Titans, Two Paths to Profit Industrial costs improved by more than €1.9 billion year over year. Laranjo attributed the change to manufacturing efficiencies, purchasing savings, lower regulatory expenses in North America and the absence of prior-year European recall-campaign warranty costs. These gains more than offset raw-material and tariff headwinds, according to the company. The company’s Value Creation Program, or VCP, is intended to generate €6 billion in annual run-rate cost reductions by 2028. Filosa said Stellantis expects to have implemented 40% of identified initiatives by the end of 2026, supporting an expected €2.4 billion of AOI benefits in 2027, plus partial benefits from initiatives implemented during that year. → Carrier Earnings Could Send the Stock to a New All-Time High In response to analyst questions, management said material-cost savings and quality improvements are expected to be the largest contributors to margin improvement in North America. Filosa described VCP initiatives spanning direct materials, plant transformation costs, logistics and distribution, including supplier-routing optimization, higher utilization of logistics assets and warehouse consolidation. North America posted AOI of €284 million and an AOI margin of 1.6%, representing a €724 million year-over-year improvement. Shipments increased 38%, aided by new-product launches and production built ahead of planned summer shutdowns. North American sales rose 6% year over year, marking a fourth consecutive quarter of gains, while regional market share increased 40 basis points, including a 50-basis-point increase in the U.S. Ram sales rose 12%, Chrysler sales increased 54% following the launch of the new Pacifica, and Jeep Grand Wagoneer sales also advanced. Filosa said the Ram 1500 benefited from demand following the return of the HEMI V8 engine. The company is now shipping the Ram 1500 TRX SRT, and said the Ram Rumble Bee is scheduled to arrive later in the year. Stellantis said U.S. dealer inventory reached 390,000 units in June, up about 70,000 units from January. Filosa said approximately 65,000 of that increase was associated with new products and preparations for summer plant shutdowns. The company expects inventory to decline to around 365,000 units by the end of July and said that level could support planned sales growth and upcoming launches. In Europe, AOI was negative €94 million, though it improved €265 million from a year earlier. The region continued to face pricing pressure, which partially offset improved manufacturing and purchasing costs. Stellantis brand sales in Europe increased 3%, while sales including Leapmotor rose 7%. Battery-electric vehicle sales grew 20%, or 61% including Leapmotor. Laranjo said Leapmotor vehicles are profitable but carry lower margins than Stellantis’ European average because of their powertrain mix, creating a negative mix effect. Still, the company expects an expanding product lineup to increase Leapmotor’s contribution over time. Leapmotor’s European sales increased sixfold year over year in the quarter, according to Filosa. South America generated AOI of €402 million, with Stellantis maintaining more than 26% market share in both Brazil and Argentina. Middle East and Africa delivered AOI of €329 million despite an 8% decline in industry volumes, while Asia Pacific AOI rose 35% to €27 million. Management said second-half performance is expected to be weighted toward the fourth quarter. The third quarter is expected to face pressure from summer shutdowns and continued raw-material inflation, while the fourth quarter should benefit from higher volume and a stronger ramp of VCP initiatives. The company expects second-half headwinds of roughly €1 billion from raw materials and the non-repeat of an IEEPA tariff refund recognized in the first quarter. It expects lower volumes in the second half as inventory is reduced, but sees positive mix from lower rental-channel sales and new-product launches. Management also said pricing should be constructive in North America and stable elsewhere. Stellantis now expects net tariff expenses of €1 billion to €1.2 billion in 2026, modestly better than the €1.3 billion previously communicated. It maintained its expectation that capital expenditures and R&D spending will equal 6.5% to 7% of net revenues for the year, with spending increasing in the second half. Filosa said high-volume North American products currently in development are expected to reach the market beginning at the end of 2027 and into 2028. He added that the company plans to move Jeep Cherokee production to Belvidere, though he did not provide a production start date. Stellantis N.V. is a global automotive manufacturer formed through the merger of Fiat Chrysler Automobiles (FCA) and Groupe PSA, a transaction completed in January 2021. The company designs, manufactures and sells a broad portfolio of passenger cars, light commercial vehicles and related powertrains under a large number of well-known brands, including (but not limited to) Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, Fiat, Jeep, Maserati, Opel, Peugeot, Ram and Vauxhall. Stellantis also provides parts, accessories, service operations and branded aftersales support through legacy networks such as Mopar and regional dealer ecosystems. In addition to vehicle manufacturing, Stellantis operates mobility- and software-related businesses and financial services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Stellantis Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Image source: The Motley Fool. Thursday, July 30, 2026 at 8:00 a.m. ET Head of Investor Relations - Charles Christman Chief Executive Officer - Antonio Filosa Chief Financial Officer - Joao Laranjo Operator: Hello, and welcome to the Stellantis Q2 2026 Financial Results Call. [Operator Instructions] I now give the floor to Mr. Charlie Christman, Head of Investor Relations, to begin today's conference. Sir, the floor is yours. Charles Christman: Thank you. Hello, everyone, and thank you for joining us today as we review the Stellantis Q2 2026 results. Earlier today, the presentation material for this call, along with the related press release were posted under the Investors section of the Stellantis Group website. Today, our call is hosted by Antonio Filosa, Chief Executive Officer; and Joao Laranjo, Chief Financial Officer. After their prepared remarks, Antonio and Joao will be available to answer questions from the analysts. Before we begin, I want to point out 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 2 of today's presentation. As customary, the call will be governed by that language. Now I will hand the call over to Antonio Filosa, Chief Executive Officer of Stellantis. Antonio Filosa: Thank you, Charlie, and thank you all very much for joining us today as we discuss our quarter 2 results. Our second quarter execution and financial performance reflect the meaningful progress that the team and I have been focused on delivering over the last 12 months. All key financial metrics are significantly improved year-over-year. Net revenues are up 13%. AOI margin is up 120 basis points. Industrial free cash flow is positive EUR 1 billion, up EUR 1 billion compared to last year. This year-over-year improvement gives us confidence in our full year '26 financial guidance, which we are reaffirming again today, including our expectation that we will have positive industrial free cash flow in 2027. We set out our FaSTLAne 2030 strategy and its financial targets at our May 21 Investor Day, and these quarter 2 results demonstrate that we are very much on track in our journey towards those targets. In quarter 2, we made strong and significant progress on industrial execution. Through the good work of our operating teams, we have stabilized production and are running our plants much more efficiently. Year-over-year, overall production efficiency was improved 870 basis points in North America and 170 basis points in Europe. We also kept improving quality with 3 months in service quality improving 38% in North America and 24% in Europe. And we are making encouraging daily progress in the implementation of our value creation program, VCP. And as we shared with you at Investor Day, partnerships are a key pillar of our FaSTLAne 2030 plan. The announcements we made give you a strong sense on how attractive Stellantis is as a strategic partner both to other OEMs and to leading names in the tech space. We are also making good progress with the execution of our large-scale new product plan. One of the key strategies in our FaSTLAne 2030 plan is to invest in our brands, invest in our products and expand market coverage. In line with this plan, we are excited to have introduced the all-new Ram 1500 TRX SRT, the DS #7 and the Fiat Grande Panda ICE in H1, alongside 6 refreshed vehicles, including Opel Astra, Chrysler Pacifica and Peugeot 408, which is gaining strong momentum in Turkey. The Ram Dakota introduced in Brazil in early '26 is also delivering strong sales performance in the region's largest profit pool. We look forward to the 9 remaining new and refreshed vehicles still to come this year, and we are laser-focused on executing every one of these launches on time with the right cost and with the right quality. Now let me touch on some Q2 highlights from a regional perspective. In North America, we keep making significant progress and improving performance, powered by our great brands, our great products and our great people. Sales in quarter 2 were up 6% year-over-year for a fourth consecutive quarter of year-over-year gains. Ram was up 12% year-over-year. Chrysler was up 54% with the launch of the new Pacifica and Jeep Grand Wagoneer also posted significant gains. Overall, market share was up 40 basis points in North America, including 50 basis points in the U.S. Canada market share was also slightly up and Mexico with its strongest second quarter on record. Let me share a few highlights on Ram. The Ram 1500 was a key driver of both volume growth and profitability in the quarter with strong demand for the reintroduction of the legendary HEMI V8 engine. Building on that momentum, we are now shipping the highly profitable Ram 1500 TRX SRT to customers, just 6 months after its unveiling. This is the first off-road product from our SRT Performance division, which we relaunched only 1 year ago. This product follows the Dodge Durango SRT launched in December '25. And the SRT muscle truck, the Ram Rumble Bee arrives later this year, right on plan. As we presented during Investor Day, SRT brings unique capabilities and a powerful halo effect across all our lineup while delivering margins from 2x to 3x higher than comparable non-SRT variants. Still on the product side, we have the upcoming Jeep Recon BEV and the Jeep Grand Wagoneer REV launch coming this year. Now a few words also on our U.S. dealer inventory. The increase seen in June was the result of a proactive decision to support new product launches and powertrain offerings such as the Ram HEMIs, for instance, ahead of the sale that we expect to achieve in the coming months. It was also driven by a temporary buildup in advance of our planned summer production shutdowns. Based on preliminary sales rates in July, we expect that in July, you will see inventory already reduced from June levels. Turning to Europe. Growth in Europe was driven by strong demand for smart car platform nameplates such as Citroen C3 and C3 Aircross, Opel Frontera, Fiat Grande Panda, resulting in a 3% year-over-year increase in Stellantis brand sales in quarter 2. Including Leapmotor, sales were up 7% year-over-year, supported by the success of the T03 and the B10. This growth also reflects the acceleration we are seeing in the European passenger car BEV markets, where Stellantis BEV sales increased by 20% year-over-year and by 61% year-over-year when including Leapmotor. In light commercial vehicles, our Pro 1 division maintained the #1 position in the Euro 30 with over 28% market share. The ongoing product offensive in Europe will further strengthen our growth drivers. First, through the expansion of the smart car portfolio with the upcoming Fiat Grizzly and Fiat Fastback. We will also have a broader coverage of the C-SUV segment with the new Jeep Compass 4xe as well as the recently launched DS #7 and the upcoming Lancia Gamma. Finally, Leapmotor represents another important growth lever and keeps gaining commercial momentum. Quarter 2 '26 sales increased sixfold year-over-year, making Leapmotor the fifth largest Chinese automotive brand in the region. Turning to South America. We maintained our clear overall leadership position in the region. We are #1 in the region's 2 major markets with over 26% market share in both Brazil and Argentina. We also further strengthened our leadership in pickup truck in Brazil, home of the region's largest profit pool, with Ram sales increasing by 10% year-over-year. Moving now to Middle East and Africa. We delivered resilient results in a declining market with market share increasing 20 basis points despite an 8% decline in total industry volumes. The region achieved the #1 position in light commercial vehicles and maintained its #2 position overall. Lastly, in APAC. June deliveries reached a 6-month high, and we have localized Leapmotor branded vehicle assembly in Malaysia for C10 with the B10 launch on track for the third quarter. We also announced the partnership with Dongfeng to develop and manufacture Peugeot and Jeep models in China. So in summary, we are continuing the positive trend of quarter 1 with significant year-over-year improvements in all financial metrics. And our strong disciplined execution keeps driving significant improvements both in quality and industrial efficiency. Let me now hand you to Joao to walk you through the numbers. Joao? Joao Laranjo: Thank you, Antonio. Good afternoon and good morning, everyone. Q2 was another quarter of year-over-year improvement, in line with our full year guidance for 2026. Let me start with the key financial figures. Consolidated shipments were 1.6 million units, up 10% year-over-year, with growth driven by North America and Europe. Net revenues were EUR 43.5 billion, up more than EUR 5 billion or 13% compared to Q2 of last year. This improvement was driven mainly by the higher volume in North America, which was up 122,000 units year-over-year. Adjusted operating income was EUR 773 million in Q2, improving by EUR 560 million compared to Q2 of last year. AOI margin was 1.8%, representing a 120 basis point improvement year-over-year. The key drivers of the year-over-year AOI improvement were: Volume/mix had a positive impact of EUR 376 million, reflecting higher shipments in North America and Europe. Mix was unfavorable, mainly due to LEV penetration in Europe, partially offsetting the volume improvement. Net pricing was negative EUR 456 million, mostly driven by pricing pressure in Europe. Industrial costs improved by more than EUR 1.9 billion. This was driven by 3 main factors. First, we continue to improve our operational execution. Manufacturing efficiencies and purchasing savings, including those related to VCP more than offset increased raw material and tariff headwinds. Second, we had a non-repeat of prior year warranty costs from recall campaigns in Europe. Finally, the reduction of regulatory expenses in North America. SG&A costs increased by EUR 317 million, largely reflecting higher marketing expenses to support volume growth. Lastly, foreign exchange and other had a negative impact of EUR 861 million, driven mainly by the Turkish lira devaluation, the non-repeat of an indirect tax credit in Brazil and the impact of lower residual value in the used vehicle business. Moving to industrial free cash flow. Industrial free cash flow was positive EUR 1 billion in Q2, an improvement of EUR 1 billion year-over-year. The improvement was driven by 3 factors: first, higher AOI; second, positive seasonal working capital dynamics associated with higher Q2 volumes. Third, a lower run rate of CapEx and R&D spending during the quarter. The time of these investments remains fully aligned with our FaSTLAne product plan and is reflected in our full year's guidance. We continue to expect full year CapEx and R&D spending to be 6.5% to 7% of net revenues. These benefits were partially offset by provisions, including approximately EUR 300 million of cash outflows related to H2 2025 charts. Now looking at inventory. Total inventory increased 20% year-over-year to 1.4 million units. The increase primarily reflects the launch of new and refreshed vehicles and powertrain offerings and is consistent with our expectations for sales growth. As Antonio noted, dealer inventory also includes a temporary buildup ahead of the customary summer production shutdowns. As a result, we expect July inventory levels to be meaningfully lower than those recorded in June. Turning to our regional performance. North America delivered AOI of EUR 284 million with an AOI margin of 1.6%, representing a year-over-year improvement of EUR 724 million. This is mostly driven by higher volume, including the Ram 1500, Jeep Grand Wagoneer, Gruner ICE and the Chrysler Pacifica. Shipments were up 38%, driven, as we have already noted, by the launch cadence of our new products and build ahead in advance of the pre-planned summer shutdown. It was also driven by year-over-year improvement in industrial costs and the reduction of regulatory expenses. In Europe, AOI was negative EUR 94 million, an improvement of EUR 265 million year-over-year. The region continues to experience pricing pressure, which partially offset the positive impacts of improved manufacturing efficiency and purchasing costs and the non-repeat of EUR 474 million of recall campaign costs in 2025. In South America, we delivered AOI of EUR 402 million. Volume was down slightly year-over-year with a decline in Argentina more than offsetting gains in Brazil. The performance of the region remains resilient despite a challenging market and increasing competition. The AOI was in line with prior year, excluding the non-repeat of EUR 334 million of indirect tax credits in Brazil. In Middle East and Africa, we grew market share and delivered an AOI of EUR 329 million. These strong results were achieved despite the ongoing regional conflict, which resulted in an 8% decline in total industry volumes. In Asia Pacific, AOI was up 35% to EUR 27 million, with industrial cost improvements more than offsetting foreign exchange headwinds. Looking ahead to the rest of the year. As previously stated, we are reaffirming our 2026 guidance as well as our expectation of achieving positive industrial free cash flow in 2027. Before concluding, I would like to share a few observations regarding the remainder of the year. Our guidance assumes net tariff expenses of EUR 1 billion to EUR 1.2 billion, including the impact of the EPA credit recognized in Q1. This represents a modest improvement from the EUR 1.3 billion previously communicated. Our industrial free cash flow guidance also reflects approximately EUR 2 billion of payments related to H2 2025 charges, of which EUR 0.9 billion was paid during the first half of 2026. CapEx and R&D spending are expected to be 6.5% to 7% of net revenues in 2026, consistent with the approximately 7% outlined in the FaSTLAne plan. In the second half, we expect financial performance to be weighted towards Q4. Q3 will be impacted by the summer shutdown and continued raw material inflation, while Q4 is expected to benefit from higher volume and a stronger ramp-up of VCP initiatives. I will now turn it back to Antonio to wrap up before the Q&A. Antonio Filosa: Thank you, Joao. Before we move to the Q&A, I would like to step back and reflect on the big picture. I hope all of you either had the opportunity to attend our Investor Day or to view the presentations online. You will see that our FaSTLAne 2030 strategy addresses in a structured way the core issues that we face as a company and capitalizes on our biggest opportunities. We are fully focused on executing our plan, which will deliver significant benefits as we build a stronger Stellantis for the future. Nothing can be fixed overnight, but I would like to highlight 3 items that are our top 3 priorities. First, market coverage. Discontinued products from '21 to '25 led to a reduction in our market share, both in North America and in Europe. You have seen early progress in our market share gains this year. FaSTLAne 2030 reinvigorated the product portfolio, getting us to around 90% market coverage in both regions, representing a huge opportunity for growth. Second challenge, industrial cost. We have improved significantly in the past year, and this remains a big opportunity to drive our financial performance. In FaSTLAne, VCP will deliver EUR 6 billion of annual run rate cost reductions by '28. We are making strong initial progress on VCP, and we are on track to implement 40% of the initiatives by the end of this year. This means that in '27, we expect to enjoy EUR 2.4 billion of AOI benefits plus the partial benefits of the initiatives we implement in '27. Finally, quality. Our execution on quality in the past was not what it needed to be. But we have come a long way already in the last year. Quality has improved significantly by 38% in North America and by 24% in Europe. And FaSTLAne 2030 is giving the quality organization the focus and the resources they need to be in the top quartile in all regions and segments where we compete by '28. It will take time to fully capitalize on these opportunities, but it is a time frame that is fully embedded in our '26 guidance, in our expectation of positive industrial free cash flow in '27 and in our '28 FaSTLAne targets. The road is long, but we are moving in the right direction with the right priorities and with the right pace. Thank you. We will now ask the operator to open the line for questions. Operator: [Operator Instructions] And the first question comes from the line of Stuart Pearson from Oxcap Analytics. Stuart Pearson: Hopefully, you can hear me now, my mistake. Too many calls today. So I guess we have to start with North America and the lack of operating leverage there. Obviously, very strong shipments coming in. Obviously, we've seen, I guess, some of our expectations another weak margin there despite cost support. So I mean, can you just dig into a little bit more why we're not seeing that? Is it pricing that's really eating into that, whichever bucket in the bridge that might really fall into? And what would it really take to get those North America margins up? And what are the building blocks, I guess, into 2027 that can give us some confidence on that? And I guess one of those sort of partly self-answer, I guess, is going to be the industrial cost drivers. Obviously, a huge benefit there, that EUR 1.9 billion. And obviously, the team deserve credit for that. But maybe you can help us understand what's really in there? What are the examples of actions that are driving that kind of cost tailwind in the second quarter? And should we expect -- or what rate should we expect that to continue in the second half and into 2027? I know you talked about the VCP plan. But could we take the H1 run rate or at least most of it and extrapolate that? Antonio Filosa: Okay. I will take part of this question, and then I will pass to Joao the rest. So what is happening in North America is, number one, the trajectory is the right one. The trend is the right one. So if we compare AOI of Q2 versus AOI of Q1 net of IEPA refund, then we see a significant and meaningful improvement as we see an improvement in shipments, in market share, for instance. Now it's important to say, to repeat what I just mentioned at my closing remarks. We have a plan FaSTLAne 2030. It is a good, structured and articulated plan. And this plan addresses in North America and globally, the 3 major challenges that we see in our company. One of those is industrial cost. We have an industrial cost gap, and we are addressing that daily with VCP. And VCP will deliver, as mentioned, EUR 6 billion of cost savings run rate in '28. We are on track to full implement 40% of the initiatives that we have identified and there are many by the end of '26. That means that we -- '26 will enjoy EUR 2.4 billion of cost savings plus all the extra that will come from the additional initiatives that will be executed in '27 itself. So you asked some tangible example. So VCP, when it comes to cost, works mainly on 3 major drivers in our cost structure. One is direct material cost. This is the cost of component and system and subsystem that we use in our cars. And here, we have 2 leverage, the purchasing leverage to negotiation and the technical leverage to implementation of technical savings. And those technical savings can be many, for instance, new technologies that represent the same or better performances of our products with lower cost. For instance, which of material that keep the performance of the product where they are, but they represent a cost savings, et cetera, et cetera. The second driver is transformation cost. This is the cost of our manufacturing system in our plants. And on there, we have tons of projects to improve efficiency. And this is why our efficiency in our plants in North America is consistently and meaningfully improving since last year. So you see that today, our efficiency run in around 89%, which is a very good result, and that represents 870 basis points better than prior year. A year, the projects are really thousands. The third driver of cost that VCP addressed through projects and initiatives is logistics and distribution costs. And in this case, also the projects are mainly [indiscernible] . For instance, we are optimizing our routing from suppliers to plants for plants to the yards. We are increasing the loading of our logistic tools, thus saving costs or simply, we are combining warehouses or we are shutting down warehouses, and we are putting that space in our plants. And this is the third driver of efficiency that VCP will address. Again, with the objective this year, to fully implement by the end of '26, 40% of the main initiative mapped that will deliver EUR 2.4 billion of AOI savings improvement in '27 and then the EUR 6 billion in '28 as a run rate. And Joao, do you want to take the rest of the question? Joao Laranjo: Yes. So on the industrial cost, the EUR 1.9 billion, slightly more than 70% about EUR 1.4 billion. It's split between purchasing, material cost savings and warranty. On the warranty, the largest piece, it's the recall recorded in Q2 last year in Europe. So most of that is because of the non-repeat. On purchasing, it's the work that we are doing to reduce product costs as we have discussed in the Investor Day. And that is a number that we will continue to see it improving and accelerating as we evolve with VCP. The other items that are also included on the industrial costs to give context are logistic costs and manufacturing, which we also saw improvements, given the meaningful performance improvement at our plants, as Antonio mentioned on the opening remarks. And we also see benefits on manufacturing costs because of the higher volumes. So there's items that are temporary and also depends on the comparisons year-over-year. But we should expect to see material cost savings to continue to progress in the second half and beyond. And just to also remind that we expect that raw material continues to be a headwind and growing in the second half versus what we saw in the first half, including Q2. But yes, we see a lot of positives on the industrial costs and especially on the material cost, and we expect to build momentum on that. Stuart Pearson: And sorry, on the operating leverage side in Q2 in North America, just because 400 million volume and mix implies quite a negative mix in there, I guess, in Q2. Is that fair? In North America, sorry. Joao Laranjo: No, the mix was not very negative. Some of that is channel and product content. But the operating leverage of Q2 is consistent with the margins that we have had on the previous quarters. And to Antonio's point, we -- that is a gradual exercise that we're going to improve as we work on costs and also on warranty. But there was nothing -- anything exceptional to that is bringing the operating leverage in North America other than the challenge that we have in cost and quality that Antonio already mentioned. Operator: The next question comes from the line of Thomas Besson from Kepler Cheuvreux. Thomas Besson: I have a question about the shape of H2. I think you're coming out of relatively easy comps in terms of volumes in the first half. It becomes a bit more difficult in the second. Could you help us understand exactly what you're aiming for in terms of quarter-on-quarter or H2 and H2 improvement? Are you going to try to improve on the reported minus 1.7% AOI of H2 last year? Or are you going to try to improve on the 0.9% underlying AOI if we excluded the EUR 2.1 billion unusual item that you couldn't remove in the second half of the last year? And what will be the drivers of improvement as it will be less driven by volumes and as you will face more headwinds from raw materials? Joao Laranjo: Yes. So the -- our target for H2 is to deliver the best results possible, aligned with the full year guidance. So we are not setting any specific targets for the H2 on this call. The dynamics that we're going to see on the -- that we expect to see on the second half as the first half, it's a headwind of about EUR 1 billion between raw material and then the non-repeat IEPA credit that we recognized in Q1. And volume should be lower as we saw, we build up inventory in the first half, and we expect, as Antonio mentioned, to reduce inventory in the second half. But then we expect to see positive mix. We expect price to be constructive, especially in North America, and we expect to continue to make progress on cost reduction. So those are the puts and takes for the second half -- first half performance. Thomas Besson: Can I add a follow-up, please? Joao Laranjo: Yes, please. Thomas Besson: Okay. Great. On the North American business, to follow up on Stuart's question, your truck mix has been extremely strong in H1, and we still don't see a lot of traction. Could you help us understand what is still -- I mean I understand your costs are not where we'd like to be, quality is not perfect yet. What are the main negative drivers to your NAFTA margins? Is that channel mix? Is that relative pricing as well? Or is it just your industrial cost and some remaining quality issues? Antonio Filosa: Yes. So I will take this question, and then I will pass Joao for additional info. So as I mentioned in my closing remarks, our plan, which is a good plan, address in time the major challenges that we see, right? And calling on North America, for sure, we have a quality gap that translates into warranty cost and campaign cost. And this have been addressed with a very vast quality turnaround plan, which on the new product is already delivering a much improved product quality, 38% improvement in 3 months in service year-over-year. And then the second challenge that the plan addressed is a cost gap, as you mentioned, which we are addressing with VCP with the trajectory that I already stated, EUR 2.4 billion to start in '27, plus all the additional initiatives that we'll implement in '27, up to EUR 6 billion cost saving run rate in '28 and forward. Those are the 2 things that FaSTLAne address in North America and globally at the pace and in time, which is already embedded in all our targets, in the '26 financial guidances that we reaffirm, in the '27 free cash flow positive that we reaffirm and in '28 targets that we distributed in FaSTLAne 2030. The notional time and the time frame needed is already embedded in the plan, and we are executing and delivering as we showed in quarter 2, accordingly to the plan. We are on track. Joao? Joao Laranjo: I don't have anything else to add, I don't think. Operator: The next question comes from the line of Jose Asumendi from JPMorgan. Jose Asumendi: Antonio, just one question, please, again, on the North American margins. And I'm just wondering, is there a very large opportunity to increase the utilization, the loading of the plants in North America, which then in turn would unlock the PCP cost savings, right? But then when I think about this, you need to win market share in the U.S., you need to increase production by, let's say, 150,000 units from here, right? I mean when I look at the capacity of your business and I compare it a few years from now, there's a very large opportunity to increase production. So can you help me understand a bit better, please, which product cycle, which vehicles are going to drive this increase in production in North America, which I think will drive these cost savings across, again, PCP and loading of the plants, which I think is -- when I go back again to the operating leverage, why are we not seeing the operating leverage, it must be because the loading of the plants is low. I would love to hear your thoughts, please. And correct me, please, if I'm wrong. Antonio Filosa: Thank you. Thank you very much, Jose, for this relevant question. So here, again, I need to give the notion of what we are doing and on time and on the time that is embedded in the plan itself. So we know that we have a product gap, as you mentioned. And this product gap obviously hurted in the past that we are recovering market share in North America not only and obviously, capacity utilization. Now we are currently developing very competitive and successful products that we will deliver in high volumes starting from '28. So those are the steps. The step is now we focus on improving quality by daily and focused execution by improving industrial cost as we are doing by daily and focused execution. Both are happening, and we need to accelerate more. And those will remove warranty costs and campaign cost together with, obviously, increased cost savings and industrial efficiencies. Said that, at the same time, we are introducing and we will introduce more of the new products. So we introduced already some, as you see, the Ram TRX SRT that will be a great profit contributor has been recently introduced and distributed to our dealers just 6 months after unveiling. We are developing and we will launch this year Jeep Recon BEV, Jeep Grand Wagoneer REV. And then the high-volume products that we are executing in develop now will be delivered to the market by end of '27, starting from '28. So the steps are those, quality improving, warranty cost and campaign costs removed, cost improving, cost savings into our business, improving commercial efficiency with the lineup that we have, the new products we are introducing to increase volume and saturation and then the big products that are coming by end of '27, starting of '28. Joao, do you want to add something? Joao Laranjo: No. Thank you, Antonio. Operator: The next question comes from the line of Emmanuel Rosner from Wolfe Research. Emmanuel Rosner: My first question is on the second half puts and takes that you provided before, which are extremely helpful. So I understand a lot of the headwinds around raw materials, non-repeat of EPA, the volume destocking. I was hoping you can just give a little bit more color on some of the tailwinds. What will drive the positive mix in the second half, the positive U.S. pricing in particular? Antonio Filosa: Yes. I'll start to take the answer, and then I will give the word to Joao. So the headwinds that we see are the ones that Joao explained. So we see inflation coming. We see a memory chip shortage. And we see, especially in quarter 3, lower shipment driven by the shutdowns, both in Europe -- seasonality in Europe and in North America. Then when we project to half 2 and quarter 4 specifically, the major 2 tailwinds will be, one, again, VCP. So we are meant to implement 40% of the initiative that we have mapped by end of '26. That means that in quarter 4, we will start enjoying an acceleration of cost savings coming from there, for sure. And then we see a constructive environment for pricing in North America specifically. And obviously, we will take that as much as possible. Joao? Joao Laranjo: Yes. So on the mix, there are 2 things. One will be channel mix, given the seasonality of rental sales, both in North America and Europe more heavily in the first half of the year. And also as we introduce new vehicles here in North America, in other regions as well, we see benefits of mix. One obvious example is the Ram TRX. On pricing, given the inflation pressures and the raw material inflation that everybody is expecting in the second half, we see constructive price again in North America and then stabilization in the other regions. And the third one that is very important, it's acceleration of cost reductions, as Antonio mentioned. But those are the -- so it's really operational drivers and that we are working every day to improve our business efficiencies as we develop the new products that Antonio was mentioning before. Emmanuel Rosner: My follow-up question is, would you be able to describe for us the competitive environment and traction you're seeing in the full-size pickup market in the U.S. Your inventories of Ram are particularly elevated, I think, around 110 days at the dealers. There are some media reports on some pretty large incentives being offered in the month of July. So just curious how much market traction you're seeing? And yes, could you describe the competitive environment for us? Antonio Filosa: Yes. I will take the first part of the answer. And I must say that I'm very happy with Ram 1500 trajectory. So Ram 1500 specifically, which is a cornerstone as a product for the Ram brand, it was declining steadily in the previous year. And then after the introduction of the Ram HEMI V8 engine, then it started climbing up again. In July, it's crossing the line of 20% plus segment share and has been gaining segment share and market share since 12 months ago. Joao, do you want to take the other? Joao Laranjo: Yes. So the -- specifically on the Ram light duty, what we have on the '26 model year, it's a normal model year transition. And again, we are constructive on pricing on the second half. So this is the price position that we have on the Ram light duty right now is specific on the transition of the model year, and we are definitely taking advantage of the strong position that we have on that car, including the stock to accelerate sales as we transition the model year. Operator: The next question comes from the line of Michael Foundoukidis from ODDO BHF. Michael Foundoukidis: So 2 questions on my side. First on VCP. Of the EUR 2.4 billion of VCP benefits that are expected in 2027, how much should flow directly to AOI versus being reinvested into pricing and market share gains? And second question, maybe on North America and following up on your previous answers. How much of North America margin recovery would you consider depends on higher utilization from new products arriving in 2027, 2028 versus cost reduction alone? Joao Laranjo: Okay. On the VCP, the 2.4 billion savings, we expect all of that will flow to AOI. And then on the second one, the biggest items to improve the AOI in North America are material cost and quality improvement. Plant utilization, it's important, and we are seeing already some efficiencies, but the magnitude of purchasing material cost efficiency and warranty is much, much larger than any efficiency that we can get on better utilization of the plants. Operator: The next question comes from the line of Philippe Houchois from Jefferies. Philippe Houchois: Two questions on product more. One is on the Cherokee. There was a lot of hope Cherokee would make a difference to market share. We don't really see it. And I know there may be some production issues, but I'm trying to understand, are you deemphasizing the products because it is not as meaningful to profitability and then it needs to be somewhat redesigned? Or is it because the tariff in Mexico made it uncompetitive? And in that scenario, any particular expectation of USMCA evolving? And at one point, would you be transferring production of Cherokee to Belvidere if that is the case? And is that the answer to Cherokee being a more meaningful contributor to volume and profitability? And the other question I have on product still, but more on the European side is Leapmotor. So we've seen good volume from Stellantis in Europe, but we see negative volume mix impact. I understand the mix can be negative. I'm trying to understand how much of a contribution we would expect from Leapmotor. And to what extent my understanding of the Leapmotor setup and the cost efficiency is that the product could be dilutive to the mix of Stellantis, but still be accretive to earnings. And is that still the right approach? And when do we start to see that show up in the profitability of Europe? Or do we have to wait for eventually the Peugeot brand to start coming through and contribute more positively to mix as was the case in the past? Antonio Filosa: Okay. So I will split the question into 2. I will take the Cherokee question, and I will pass to Joao the Leapmotor question. So on Cherokee, first of all, we see high interest from consumers on Cherokee. We map that every time on the funnel management and interest is very high. What we are doing, as you said, it is very exposed to tariffs. So we are balancing volumes with profit generation. We are doing that by limiting some trims and mixing on the highest and more profitable trims and limiting some channel, so improving the quality of the mix channel. This is what is happening now in Cherokee. What we are doing in parallel is to put it into VCP. So it will be one of the nameplate that will receive the cost savings that we are identifying, mapping and implementing. We are introducing more competitive trims. This will happen in half 1 next year. And then as you mentioned, we are repatriating Jeep Cherokee into Belvidere. And that will make Cherokee tariff-free, almost tariff-free. On Leapmotor? Joao Laranjo: Yes. So Leapmotor, it has been so far very successful. The vehicles are profitable. But as you mentioned, because of the powertrain mix of those vehicles, they have margins that is lower than the average in Europe. But we continue to expect positive contribution and increasing contribution from Leapmotors as we launch new vehicles and expand the portfolio in Europe. So, so far it's very successful. And again, it's profitable, but definitely has a negative impact on mix because of the powertrain. Philippe Houchois: Understood. If I can squeeze in for back to Antonio, but do you have a date for when Belvidere would start production of the Cherokee, please? Antonio Filosa: No, we cannot unveil this date in this call. Operator: The next question comes from the line of Christoph Laskawi from Deutsche Bank. Christoph Laskawi: I'd like to ask on cash generation in the second half. Now obviously, you point to Q4 being better than Q3 and CapEx ramping up quite a lot. Could you comment on the CapEx phasing? Will it start in Q3 right away with higher spending? Or is it mostly Q4? And with working capital reversing or likely reversing in Q3, should we prepare for free cash flow, which is an outflow of over EUR 1 billion-plus in Q3? Any comment on free cash flow phasing would be appreciated. Joao Laranjo: Yes. No, thank you for the question. The first comment is that if we look at the second half versus first half, we expect to have higher CapEx, and we expect the higher CapEx to pick up already in Q3 and then Q4 again. So we'll see a gradual improvement as we continue to develop the new programs that were set under FaSTLAne 2030. For the second half, we expect working capital to be again positive as usually happens at the end of the year as we reduce especially property stock. On seasonality between Q3 and Q4, you're right that working capital in Q3, it's negative, and you will have the same -- not the same amount, but the same dynamic that happened last year because of the summer production shutdowns, both in North America and in Europe. So Q3 it's normal that the working capital is negative and it will be the same this year. Christoph Laskawi: And if I may, a follow-up just on Europe. You mentioned other regions pricing stabilization. Is this seen in Europe? Or is it actually the competitiveness accelerating given the inflow of low-cost competitors in the market? And do you expect the pricing pressure in H2 essentially to be offset with the industrial savings? Antonio Filosa: So the industrial savings will have an important role, both in North America and as you mentioned, in Europe. The pricing environment will be constructive in North America, and we believe not deteriorating in Europe. And in the other region, we believe that as well, VCP and industrial savings will be a major lever. We see some opportunity of pricing in the other regions. Operator: The next question comes from the line of Itay Michaeli from TD Cowen. Itay Michaeli: Two quick questions for me. First, I was hoping you could maybe share how you're thinking about targeted U.S. inventory levels by year-end, whether it's days supply or absolute units. And then secondly, as we think about the achievement of positive industrial free cash flow in 2027, I was curious kind of what kind of volume growth or revenue growth you roughly might need to get to that level of free cash flow next year? Antonio Filosa: Okay. So I will answer to the question of the U.S. inventory. So I said, we peaked in June at 390,000, moving from January to June, plus 70,000. 65,000 of those 70,000 are new products that we expect to accelerate in sale in H2. And then also the anticipation of buildup for the planned summer shutdowns in our North American plant. July sales rates are already moving the inventory largely down. So we believe that we will end July as U.S. dealer inventory at around 365,000. And moving forward, we believe that this absolute number can be the one that will allow us to accelerate the sales that we want to do and also introduce the new products that we are doing, such as the Ram TRX SRT, which will be very profitable and very positive for mix, the Jeep Recon BEV and the Jeep Grand Wagoneer REV. Joao, do you want to take the other one? Joao Laranjo: Yes. So the in FaSTLAne, we set the revenue target for 2028 at EUR 175 billion. So the revenue that we are expecting for '27, it's intermediate between what we're going to close 2026 and the 2028 target. So it's reasonable volume growth on the back of the products that we continue to launch. The biggest driver for the positive free cash flow next year is the earnings. Volume will be a part of that. But the biggest part of the earnings growth next year, as we are talking many times here, it's industrial efficiencies, including the savings that we expect from VCP. So industrial costs and industrial efficiency will be the biggest driver of the earnings improvement next year that will drive to the positive free cash flow. Operator: The next question comes from the line of Christian Frenes from Goldman Sachs. Christian Frenes: I just want to come back to North America again and specifically on the volume and mix portion of the bridge where you reported EUR 409 million of benefit. That's down sequentially. And I'm just wondering the drop-through. If I look at the drop-through from Q1, I think you were 27% on that line item and it's now dropped to 8%. So I'd just like to understand again if there were any sort of specific reasons for that or if the recalls, I think you mentioned the recalls were also present in North America. And I'm not sure if raw mats would come into this line item, but if you could flag any reason for that significant sequential drop in volume and mix drop-through? And then secondly, on the vehicle net price also sticking with North America, we went from a positive number in Q1 to a negative number. And just trying to understand, especially on the content side, what happened there and how we should think about the second half? Joao Laranjo: Okay. On the sequential drop-through impact, the biggest driver of the Q2 versus Q1 mix deterioration is nameplate mix as we increased shipments of some of the vehicles built, especially in Mexico. So basically, the increase of vehicles built in Mexico were the ones. So it's basically nameplate mix based on the vehicles that we shipped in Q2. So nothing special other than a specific time of the mix that happened in Q2 versus Q1. Christian Frenes: Okay. That's really helpful. And then if I could just have a follow-up question on your investment spend. I think you're keeping your investment spend for the full year, still intact. And if my calculations are right, in H1, you spent about EUR 3.5 billion, which would imply H2 spend -- investment spend of about EUR 7.4 billion or thereabouts. That's a very significant increase H1 to H2, which we didn't actually see in the last 2 years. So again, could you help me understand why there's this significant shift or perhaps I'm making an error in these numbers? Joao Laranjo: Yes. We can take this offline because I think some of the numbers that you're taking, you're probably not capturing all the perimeter. In H1, our total investment as a percentage of revenue, and we can reconcile offline, it was 6.3%. So we -- yes, so there is over EUR 1 billion of higher CapEx in the second half versus first half. That's what we are expecting. Operator: Ladies and gentlemen, this was the last question for today. With this, let me now hand the call back to Mr. Antonio Filosa for the conclusion. Antonio Filosa: Well, very, very well. And thank you again for joining us today and for the time and focus you have put into reviewing our results and listening to our business updates. Thank you again, and see you next time. Bye-bye. Before you buy stock in Stellantis, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Stellantis wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,081!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,166,221!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of July 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy. Stellantis (STLA) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Net Revenues: EUR43.5 billion, up 13% year-over-year. Adjusted Operating Income (AOI): EUR773 million, improving by EUR560 million year-over-year. AOI Margin: 1.8%, a 120 basis point improvement year-over-year. Industrial Free Cash Flow: Positive EUR1 billion, an improvement of EUR1 billion year-over-year. Consolidated Shipments: 1.6 million units, up 10% year-over-year. North America AOI: EUR284 million, with an AOI margin of 1.6%. Europe AOI: Negative EUR94 million, an improvement of EUR265 million year-over-year. South America AOI: EUR402 million. Middle East and Africa AOI: EUR329 million. Asia Pacific AOI: EUR27 million, up 35% year-over-year. Total Inventory: 1.4 million units, up 20% year-over-year. Warning! GuruFocus has detected 7 Warning Signs with STLA. Is STLA fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Net revenues increased 13% year-over-year, driven by higher volumes in North America and Europe. Adjusted operating income (AOI) margin improved by 120 basis points year-over-year. Industrial free cash flow turned positive at EUR1 billion, a EUR1 billion improvement year-over-year. Production efficiency improved significantly, with 870 basis points in North America and 170 basis points in Europe. Quality improved, with three-month in-service quality up 38% in North America and 24% in Europe. Net pricing was negative $456 million, primarily due to pricing pressure in Europe. Europe AOI remained negative at $94 million, despite a year-over-year improvement. Total inventory increased 20% year-over-year to 1.4 million units, partly due to new product launches and summer shutdowns. Foreign exchange and other factors had a negative impact of $861 million, driven by Turkish lira devaluation and lower residual values. The company faces headwinds from raw material inflation and tariff expenses, expected to be EUR1 billion to EUR1.2 billion for the full year. Here are the key highlights from the Stellantis NV (NYSE:STLA) Q2 2026 earnings call, focusing on the most significant Q&A exchanges. Q: Can you dig into why we aren't seeing more operating leverage in North America despite strong shipments? What are the building blocks for margin recovery into 2027?A: (Antonio Filosa, CEO) The trajectory in North America is the right one, with meaningful improvement in AOI from Q1 to Q2. The core challenges are a quality gap (warranty/campaign costs) and a cost gap, which are being addressed by our Fast Lane 2030 plan. The Value Creation Program (VCP) is the key lever, targeting 6 billion in annual run-rate cost savings by 2028. We are on track to implement 40% of initiatives by end of 2026, delivering 2.4 billion in AOI benefits in 2027. (Joao Laranjo, CFO) The 1.9 billion in industrial cost improvements in Q2 were driven largely by purchasing material cost savings and the non-repeat of prior year warranty costs. We expect material cost savings to continue accelerating in the second half and beyond. Q: What are the key puts and takes for the second half of 2026?A: (Joao Laranjo, CFO) We expect headwinds of about 1 billion from raw material inflation and the non-repeat of the IEPA credit recognized in Q1. Volume will be lower as we reduce inventory built in H1. However, we expect positive tailwinds from a better product mix (including the Ram TRX SRT), constructive pricing in North America, and an acceleration of cost reductions from VCP initiatives, particularly in Q4. (Antonio Filosa, CEO) Q3 will be impacted by summer shutdowns, while Q4 will benefit from higher volume and a stronger ramp-up of VCP. Q: Is there not a large opportunity to increase plant utilization in North America to unlock cost savings? Which products will drive this?A: (Antonio Filosa, CEO) We know we have a product gap that hurt us in the past. We are currently developing very competitive, high-volume products that will launch starting in 2028. The immediate steps are improving quality and industrial costs to remove warranty and campaign expenses. Concurrently, we are introducing profitable new products like the Ram TRX SRT, Jeep Recon BEV, and Jeep Grand Wagoneer REV this year. The high-volume products are in development and will arrive by end of 2027/start of 2028. Q: How much of the 2.4 billion in VCP benefits expected in 2027 will flow directly to AOI versus being reinvested?A: (Joao Laranjo, CFO) We expect all of the 2.4 billion in savings to flow directly to AOI. The biggest drivers for improving North American AOI are material cost reduction and quality improvement, which are much larger levers than plant utilization. Q: Can you comment on the competitive environment and traction for the Ram 1500, given elevated dealer inventories?A: (Antonio Filosa, CEO) We are very happy with the Ram 1500 trajectory. After the introduction of the Hemi V8 engine, it has been climbing and is now crossing the line of 20%+ segment share, gaining share for 12 months. (Joao Laranjo, CFO) The current inventory situation is a normal model year transition for the light duty. We are constructive on pricing for the second half and are taking advantage of our strong position to accelerate sales during this transition. Q: What is the strategy for the Jeep Cherokee, and what is the timeline for moving production to Belvedere?A: (Antonio Filosa, CEO) Consumer interest in the Cherokee is high, but it is very exposed to tariffs. We are balancing volumes with profit by focusing on higher-margin trims and channels. We are also applying VCP cost savings to the nameplate and introducing more competitive trims in H1 2027. We are repatriating Cherokee production to Belvedere, which will make it almost tariff-free, but we cannot unveil the specific date on this call. Q: How should we think about the free cash flow phasing in the second half, particularly Q3?A: (Joao Laranjo, CFO) CapEx will be higher in H2, picking up in Q3 and continuing into Q4 as we develop new programs. Working capital is expected to be positive for the full second half as we reduce inventory at year-end. However, Q3 will see negative working capital due to summer production shutdowns, similar to last year's dynamic. Q: What are your targeted US inventory levels by year-end?A: (Antonio Filosa, CEO) We peaked in June at 390,000 units. Of the 70,000 increase from January, 65,000 were new products we expect to sell in H2. July sales rates are already moving inventory down, and we expect to end July at around 365,000 units. We believe this absolute number will allow us to accelerate sales and introduce new profitable products. Q: What kind of volume or revenue growth is needed to achieve positive industrial free cash flow in 2027?A: (Joao Laranjo, CFO) The revenue for 2027 will be an intermediary step between our 2026 close and our 2028 target of 175 billion. While volume growth will contribute, the biggest driver for positive free cash flow next year will be earnings growth from industrial efficiencies and the savings from VCP. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Stellantis reported second-quarter net profit of €293 million on Thursday, swinging from a net loss of €1.87 billion in the same period a year earlier, as rising North American sales bolstered the company's turnaround effort. Stellantis stock fell more than 8% before paring losses to around 5%. Adjusted operating income surged to €773 million, nearly four times the €213 million recorded in the same quarter last year, while net revenues climbed 13% to €43.5 billion. That revenue gain was driven by a 32% increase in North America and a 6% rise in South America, while Enlarged Europe was flat and the Middle East & Africa and Asia Pacific regions declined. The adjusted operating income result fell short of an analyst consensus estimate of €914 million, according to CNBC. The adjusted operating income margin came in at 1.8%, up 120 basis points year-over-year. Citi analysts flagged the margin as "very low" and, in a note to clients, cautioned that the market would probably want to see sustained operational improvement before growing more bullish on the stock. Industrial free cash flows came in at €1.0 billion for the quarter, representing a €1.0 billion swing from the second quarter of 2025. The result cleared Citi's €600 million projection by a comfortable margin, according to CNBC. North America was the standout region. Sales rose 6% year-over-year, the fourth consecutive quarter of growth, with U.S. sales up 6% and Mexico posting its strongest second quarter on record. North America's adjusted operating income swung to €284 million from a loss of €440 million a year earlier. Enlarged Europe remained a drag, posting an adjusted operating income loss of €94 million, though that was an improvement from a loss of €359 million in the prior-year period. "The second quarter was marked by continued progress, led by North America and supported by important contributions from all other regions," CEO Antonio Filosa said in a statement. "With implementation of our FaSTLAne 2030 strategy well underway and this year's exciting new product launches on time and on track, we remain confident of delivering our 2026 financial guidance." Stellantis reaffirmed its full-year 2026 guidance, targeting mid-single-digit percentage revenue growth and a low-single-digit adjusted operating income margin. The company estimated net tariff headwinds of €1.0 billion to €1.2 billion for the year, noting that first-half net tariff costs were €0.3 billion after a €0.4 billion refund related to IEEPA tariffs. Second-half performance is expected to be weighted toward the fourth quarter, following a third-quarter summer production shutdown. Stellantis unveiled its FaSTLAne 2030 strategic plan in May, calling for €60 billion in investment through 2030 and concentrating roughly 70% of spending on four brands: Jeep, Ram, Peugeot, and Fiat. The company aims to return to positive industrial free cash flow in 2027. Stellantis returned to quarterly profitability in the first quarter of 2026 for the first time in over a year, though its stock also fell that day despite the beat.