Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Allison Transmission's fourth quarter and full year 2020 earnings conference call. My name is Melissa, and I will be your conference call operator today. At this time, all participants are in a listen-only mode. After the prepared remarks, the management team from Allison Transmission will conduct a question-and-answer session, and the conference call participants will be given instructions at that time. As a reminder, this conference is being recorded. If anyone should need operator assistance during the conference, please press star zero on your telephone keypad. I'd now like to turn the conference over to Mr. Ray Posadas, the company's Managing Director of Investor Relations. Please go ahead. Thank you, Melissa. Good morning, and thank you for joining us for our fourth quarter and full year 2020 earnings conference call. With me this morning are Dave Graziosi, our President and Chief Executive Officer, and Fred Bohley, our Senior Vice President, Chief Financial Officer, and Treasurer. As a reminder, this conference call webcast and this morning's presentation are available on the investor relations section of our website, allisontransmission.com. A replay of this call will be available through February 25. As noted on slide two of the presentation, many of our remarks today contain forward-looking statements based on current expectations. These forward-looking statements are subject to known and unknown risks, including those set forth in our fourth quarter and full year 2020 earnings press release, our annual report on Form 10-K for the year ended December 31, 2019, and our quarterly reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020. Uncertainties related to the COVID-19 pandemic and related responses by governments, customers, and suppliers, and other factors, as well as general economic conditions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those that we express today. In addition, as noted on slide three of the presentation, some of our remarks today contain non-GAAP financial measures as defined by the SEC. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures attached as an appendix to the presentation and to our fourth quarter and full year 2020 earnings press release. Today's call is set to end at 8:45 A.M. Eastern Time. In order to maximize participation opportunities on the call, we'll take one question from each analyst. Please turn to slide four of the presentation for the call agenda. During today's call, Dave Graziosi will provide you with a brief operational update. Fred Bohley will then review our fourth quarter financial performance and introduce full year 2021 guidance. Finally, Dave will conclude the prepared remarks prior to commencing the Q&A. Now I'll turn the call over to Dave Graziosi. Thank you, Ray. Good morning, and thank you for joining us. Before I begin the operational update, I would like to mention our announcement earlier this week that Larry Dewey has notified Allison's Board of Directors of his decision to not stand for re-election at our 2021 annual meeting of stockholders. On behalf of the Board of Directors and the entire Allison organization, we are extremely grateful for Larry's leadership and dedication to the company. I would also like to personally thank Larry for his mentoring and guidance as I have transitioned into the CEO position. In recognition of Larry's many years of service, the Board of Directors has named him to the honorary position of Chairman Emeritus of the Board following the 2021 annual meeting of stockholders. I'll now move on to the operational update. As we continue to navigate this critical period, our top priority remains the health and well-being of Allison's extended family. Safety measures and precautions that have been implemented throughout the pandemic remain in place today, and Allison is now providing on-site COVID-19 testing to our employees in Indianapolis. Though much progress has been made in addressing the effects of the pandemic, and there is good reason to be optimistic, the risk to our extended families and communities persist, and we encourage everyone to remain vigilant, follow all recommended guidelines, and look out for one another. We are pleased to report that Allison's fourth quarter and second half results reflected the ongoing global economic recovery. 2020 was obviously an unprecedented year. Severe disruptions to the global economy as a result of the pandemic led to substantial volatility in demand and considerable labor and supply chain constraints. Despite these challenges, Allison was able to maintain the uninterrupted delivery of our products and the generation of earnings and positive cash flow, once again, thanks to the unrelenting commitment, dedication, and resilience of Allison's employees, customers, suppliers, and communities. Also, during 2020, Allison settled a total of $225 million of share repurchases, or over 5% of our outstanding shares, and completed an opportunistic refinancing of our long-term debt, resulting in anticipated annual savings of $13 million in cash interest expense, with the earliest maturity due in 2026. Consistent with our capital allocation priorities, last week, the Board of Directors approved a 12% increase of our quarterly dividend from $0.17 to $0.19 per share. Aggressive cost management efforts throughout the year, while continuing to fund significant investments in engineering, research and development, and capital expenditures, have positioned Allison to capitalize on growth opportunities across all of our end markets for years to come. Thank you, and I'll now turn the call over to Fred. Thank you, Dave. Following Dave's comments, I'll discuss the Q4 2020 performance summary. K ey income statement line items and cash flow. I'll then introduce full year 2021 guidance before turning the call back over to Dave. Please turn to slide five of the presentation for the Q4 2020 performance summary. Net sales decreased 13% to $535 million compared to the same period in 2019, principally driven by the continued effect of the pandemic on the global economy. However, net sales increased $3 million on a sequential basis as the recovery in customer demand and the global economy that began in the third quarter continued to the end of the year. Gross margins for the quarter was 47.3%, a decrease of 100 basis points compared to 48.3% for the same period in 2019. The decrease was principally driven by lower net sales. Net income for the quarter was $60 million, compared to $107 million for the same period in 2019. The decrease was principally driven by lower net sales, $19 million in expenses related to the long-term debt refinancing in November 2020, and $8 million favorable 2019 environmental remediation adjustment that did not reoccur in 2020, partially offset by lower selling, general, and administrative expenses and the inter-year timing of product initiative spending. Adjusted EBITDA for the quarter was $186 million, or 34.8% of net sales, compared to $216 million, or 35% of net sales for the same period in 2019. The decrease was principally driven by lower gross profit, partially offset by lower commercial activity spending and the inter-year timing of product initiative spending. A detailed overview of our net sales by end market can be found on slide six of the presentation. Please turn to slide seven of the presentation for the Q4 2020 financial performance summary. Selling, general, and administrative expenses decreased $14 million or 15% from the same period in 2019, principally driven by lower commercial activity spending and lower intangible amortization expense. Engineering, research, and development expenses decreased $7 million from the same period in 2019, principally driven by the inter-year timing of product initiative spending. Please turn to slide eight of the presentation for the Q4 2020 cash flow performance summary. Adjusted free cash flow for the quarter was $128 million, compared to $121 million for the same period in 2019. The increase was principally driven by lower capital expenditures, lower commercial activity spending, and the inter-year timing of product initiative spending, partially offset by lower gross profit, higher operating working capital requirements, and increased cash income taxes. We ended the quarter with a net leverage ratio of 3x, $310 million of cash, and $645 million of available revolving credit facility commitments. We continue to maintain a flexible, long-dated, and covenant-light debt structure, with the earliest maturity due in March 2026. During the fourth quarter, we settled $29 million in share repurchases and paid a dividend of $0.17 per share, and we ended the quarter with approximately $827 million of authorized share repurchase capacity. Our longstanding commitment to prudent balance sheet management, ample liquidity, profitable operations, and purposeful investments continues to position Allison well to navigate the current environment and realize future opportunities. Please turn to slide 10 of the presentation for the 2021 guidance. Despite the positive momentum in the economic recovery, supply chains across the globe continue to be strained. Current challenges include labor constraints and shortages of component material as global demand surpasses capacity recovery. Increased transport demand has created logistic issues for both ocean container and air freight, adding to freight delays across all industries, and certain electronic components, such as semiconductors or chips, are also constrained across all industries. Our procurement and global supply chain teams continue to work closely with our suppliers at every level to understand and mitigate constraints. Our suppliers understand the importance of Allison as an essential, critical infrastructure manufacturer and the impact both the commercial vehicle and defense industries have in the global pandemic recovery. Continued coordination with our suppliers, customers, and industry participants from order to delivery will be required as we work collaboratively to mitigate the ongoing and unprecedented risk caused by the global pandemic. With this in mind, we expect net sales for 2021 to be in the range of $2.265 billion-$2.415 billion, or a midpoint increase of 12% compared to net sales for 2020, reflecting higher demand in global on-highway and service parts, support equipment, and other end markets as a result of the ongoing global recovery, continued improvement in customer demand, and price increases on certain products. Our full year 2021 guidance assumes the continuation of supply chain challenges for the foreseeable future. In addition to Allison's 2021 net sales guidance, we anticipate net income in the range of $375 million-$445 million. Adjusted EBITDA in the range of $770 million-$860 million. Net cash provided by operating activities in the range of $560 million-$630 million. Adjusted Free Cash Flow in the range of $390 million-$450 million, and capital expenditures in the range of $170 million-$180 million, including approximately $60 million for sustainment and over $100 million for growth initiatives. Finally, our 2021 guidance reflects a 30% increase in engineering, research, and development expense. Consistent investments in R&D through the pandemic, along with planned increases to CapEx and R&D in 2021, will continue to fund product development initiatives in support of our long-term growth across all of our end markets. These initiatives include the advancement of the most efficient and innovative electrified propulsion and internal combustion solutions for the global on-highway end markets, more durable and higher-rated off-highway applications, new and more capable cross-drive transmissions for global defense, next-generation controls technology that can be leveraged across all of our end markets, and state-of-the-art and proprietary vehicle testing and product development facilities to virtually and physically optimize performance and accelerate time to market. We remain steadfast in our commitment to fund initiatives that will drive growth and expand our end markets while consistently delivering strong financial results. Thank you, and I'll now turn the call back over to Dave. Thank you, Fred. In the past, I've mentioned that Allison has more opportunities to invest for growth than at any other time in its history. Earlier, I noted that we are positioned to capitalize on growth opportunities across all of our end markets. And Fred just discussed how consistent investments through the pandemic, along with planned increases in 2021, will continue to fund product development initiatives in support of long-term growth. One of the key areas where Allison has been investing extensively for decades is in electrified propulsion. In the last three years alone, Allison has made approximately $250 million in direct investments to advance electrified propulsion technology. We have fully funded state-of-the-art and proprietary manufacturing and development infrastructure in place, including our recently completed electric axle development and manufacturing facility in Auburn Hills, Michigan, and our recently unveiled Vehicle Environmental Test Center here in Indianapolis. These investments and capabilities, combined with our decades of experience with vehicle propulsion, extensive knowledge of vehicle controls technology, our vocational and duty cycle expertise, our customer relationships, our brand promise, and our service network, are formidable differentiators in an emerging industry attempting to serve uncompromising end users. These differentiators are why multiple major OEMs, representing over 70% of the North America, North America on-highway revenue, have already chosen to integrate Allison's eGen Power electric axles into their electric and hydrogen fuel cell truck development and validation programs. They are also why we are consistently engaged in senior-level discussions with many more new and established OEMs that have expressed interest in Allison's electric propulsion solutions. Collectively, these opportunities span a broad range of markets and duty cycles, including the Class 8 linehaul market, where Allison's eGen Power is ideally suited to meet the demands of heavy-duty Class 8 tractors while expanding Allison's addressable market. Allison's eGen Power 100D electric axle, unveiled late last year during Hino Trucks' Project Z path to zero emissions initiative, is one of the most powerful and fully integrated electric axle systems in the world. It features multiple electric motors and a two-speed transmission integrated into the central housing, facilitating a high starting grade ability, increased top speed, and superior efficiency. The eGen Power 100D is a highly engineered and fully integrated solution that eliminates many of the inefficiencies of competitive electric axles. These performance and efficiency advantages translate directly to wide-ranging duty cycles and increased range capability, or a reduction in battery pack size for the electric truck, optimizing the economic value delivered to the end user. The economies of an electric truck remain one of the most significant obstacles that needs to be overcome in order to achieve broad adoption of EVs in the commercial space. Ultimately, no single component will solve this equation by itself. It will take a collaborative effort across the entire powertrain to sufficiently reduce the total cost of ownership of an electric truck. The Allison eGen Power 100D is designed and developed for wide-ranging performance, efficiency, and durability, reducing the total cost of ownership and contributing to the economic viability of the electric truck. In addition to the opportunities presented by electrified propulsion, Allison is exceedingly well positioned to capture and capitalize on the long runway of conventional growth opportunity that lies ahead. We continue to make significant investments to advance innovative and more fuel-efficient conventional propulsion solutions for the global on-highway end markets. For example, our upcoming nine-speed transmission will provide reduced emissions, improved fuel economy, and advanced stop-start capability. Drivers will enjoy improved acceleration, which could lead directly to increased productivity, and when combined with Allison's FuelSense and xFE technology, the nine-speed will set a new benchmark in fuel efficiency and reduced emissions, helping our customers meet increasingly rigorous environmental regulations and supporting the expansion and increased penetration of our addressable markets. Investments in increasingly more capable and higher-rated products will help our pressure pumping and hydraulic fracturing customers meet the demands for greater efficiency, smaller footprints, and shorter times to depth and increased productivity.... Despite the state of the global energy markets throughout the majority of 2020, Allison remained committed to its global off-highway customers and is ready to support them with solutions that deliver the Allison Promise for years to come. Our investment in advanced cross-drive transmission solutions for the global tracked defense market offers exceptional growth opportunities for Allison, as Allison partners with the United States Department of Defense and our peers and allies to develop new tracked applications with autonomous and electrified features to increase soldier survivability and maintain battlefield dominance for decades to come. Opportunities to equip the latest tracked defense platforms in development include the Army's new Mobile Protected Firepower program, which could lead to the procurement of up to 500 vehicles over 10 years, and the upgraded M88A3 Hercules prototype, designed to modernize the Army's existing M88 platform. The Army currently has a fleet of more than 900 M88 vehicles, and the potential revenue opportunity for Allison could represent approximately $500 million over two decades if the entire fleet is modernized. Lastly, on defense, investments in Allison's next-generation electrified cross-drive transmission propulsion system with autonomous and electric propulsion capabilities to reduce detection and electric, hybrid, and exportable power features, is being developed to meet the unique armored vehicle requirements of tomorrow's Optionally Manned Fighting Vehicle program and can ultimately replace nearly 3,800 Bradley Infantry Fighting Vehicles. We are also investing in next-generation vehicle controls technologies featuring enhanced security, functional safety, and over-the-road programming capabilities. Our vehicle controls technology will also be leveraged across multiple platforms in all of our end markets. Finally, our previously announced Innovation Center will be completed in 2021 and feature expanded and unique virtual and physical system simulation capabilities, including development and validation, functional safety and regulatory compliance, focused on fuel efficiency and greenhouse gas emissions reduction. Once complete, the Innovation Center, combined with our vehicle environmental test center, will significantly enhance Allison's proprietary product development and vehicle testing capabilities. The market leadership that Allison enjoys today was not achieved by chance. Allison has always been at the forefront of innovation, and this has never been more true than it is today. We will continue to invest appropriately to drive growth, expand our market leadership, and further position Allison as a preferred and long-term partner. There's a great deal of excitement and innovation taking place across the entire industry at the moment, and Allison thrives in this environment. We look forward to providing you with more product development and collaboration updates in the coming months and quarters. This concludes our prepared remarks. Melissa, please open the call for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you keep to one question each. Our first question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question. Yes, hi, good morning, everyone. And Dave, congratulations on your new responsibilities. I'm wondering if you gentlemen can talk about your market position as a component supplier to the new startup companies that some of which have been listed, some which are on their way to being listed. Where, what proportion of them are you working with? Sort of similar to the 75% number, Dave, that you shared in your prepared remarks. And I'm wondering if you could touch on what the sort of electric powertrain contribution does your 21 revenue guidance embed? Sure. Good morning, Jerry, and thank you. It's, it's Dave. A couple of things. We've, you know, as we've indicated on some of the prior calls, you know, our team is, engaged broadly across the industry, whether that be with established OEMs or some of the, the new, OEMs, shall we say. I would tell you that, that engagement is, is broad-based, but very much focused on, the eGen Power lineup at this point. So, having said that, we've had a number of discussions around, volume and timing. To be blunt, what we've found is, frankly, whether it's established OEMs or some of the, the, the newer ones, there's a wide range on volumes. There's also a wide range on timing. So, you know, we need to do more work, frankly, in response to your question there about ultimately, what does that mean from a near-term perspective, as well as what I would define as the more mature market outlook in terms of share and what those vehicle lineups ultimately are. I think it's fair to say there's a lot of, you know, good intentions and statements that have been made about what could be, but we're very much focused on, you know, probable outcomes at this point, and that requires a very focused approach. So that's where our team is-... Spending the majority of their time, but I would ultimately expect that, you know, we'll have share with a number of different OEMs, but those will be, I think, very focused and consistent with our goals, which is, you know, a mature view. And I think, frankly, production level vehicle releases ultimately, because these are very complex systems and don't lend themselves to what I would define as prototypes to ultimately, you know, a regular production transition. Those get very complicated, very costly and timely to ultimately implement. Okay, thank you. Thank you. Our next question comes from the line of Rob Wertheimer with Melius Research. Please proceed with your question. Hey, good morning, all. It's actually a similar question to Jerry's. To the extent you can, can you talk about what is the scope of opportunity for you within new powertrains? E-axles obviously have made a big push. And then Dave, could you define... I'm sorry, maybe I missed the context around the 75%, but could you just kind of define, and I know you just touched on this with Jerry, just what that comment was, and then just maybe any more color on how many competitors you're facing and what you're doing and how you look like you stack up now? Thank you. Good morning, Rob. Thank you. Look, I think the comment, you know, made is, you know, our position is very similar to what we talked about with the Q3 call in terms of who we're working with at this point. I think we're, you know, certainly confident in what those efforts pretend to be. Ultimately, again, focused on where we are from an e-axle perspective. I would say what's continuing to evolve in a number of discussions with OEMs and evaluations is a focused effort around what is today, and I think this is important, you know, when you think about what exists today with conventional, you know, there's a fairly keen level of desire and focus around proliferation, in other words, the lack thereof. And as we look at the space, as you see it evolving the EV space today for commercial vehicle, it's, you know, there are a lot of different discussions, components, systems being evaluated, but the industry, it really doesn't lend itself to that level of proliferation. So I think the way we are considering this space is ultimately having a foundational design or frankly, a base model, if you will, that's capable of covering a wide range of different duty cycles and vehicle sizes and ratings. So that's really what the focus is currently is providing that type of solution that ultimately addresses the proliferation question, at the same time, delivers what I would define as at or better than conventional performance today. You know, the fact is, end users, OEMs are, we all are, really come accustomed to a high level of uptime and reliability and cost definition, and ultimately certainty. That's gonna be required over time to be successful, and that's really what, you know, our focus is. But the audience that we're targeting continues to be the same. I would say what has changed and is evolving for us is this broader objective about a full range covered by essentially a base architecture with some variation, but very limited from that perspective. That's a fascinating answer. I know I'm supposed to do one. Is the industry yet focused on that proliferation issue that you mentioned? And I understand it well and your point there. And then do you have enough data or knowledge of where the industry is going to know that your product is right within the band of what, you know, people want? And I will stop. Thank you so much. No, that's okay. A couple things. You know, the proliferation issue, again, you know, you get so close to things, sometimes you need a little perspective, and that's where we are with conventional. You know, we're so close to it, we're used to it. I personally do not believe that the industry has fully come to grips with what that means and what that ultimately leads to. And we're, you know, it's a lot of things. I would not focus on necessarily, you know, what's first is ultimately what is the mature objective, and that's the way we think about it. I think the short answer to your question is, I'm not sure the proliferation issue has really been fully captured, but ultimately, I would say based on the amount of inquiries and interest that we're receiving, you know, there's a signal there that I think there's starting to be some sense or broader sense of what that mature view is. And again, it's evolving, and it'll continue to change, but I would not describe the voice of customer at this point as, you know, highly matured to a level that you could, I think, make very firm decisions, ultimately a range that addresses proliferation and has performance that is at or better than conventional experience. Thank you. Thank you. Our next question comes from the line of Larry DeMaria with William Blair. Please proceed with your question. Thanks. Good morning, everybody. Can you talk a little bit about market share in 2020? Obviously, I think you've done this in prior calls. Oh, I'm sorry, 2021 or 2020. I'm curious how you did, and then also, if you think about over the next three to five years, because I know you've been gaining share the last few years, how do you think about attrition to EV over the next few years compared to what you have now? Just trying to understand how you think you might lose a little bit over the next few years. Thank you. Hey, Larry, it's Dave. Let me start, and I'll let Fred finish. You know, as to your question on shares, assuming that's really focused on the on-highway business, as we think about what occurred in 2020, we're, you know, I'm certainly very proud and pleased of what our team accomplished despite the conditions that everybody's dealing with. But I would say from a share perspective, overall, good outcome for us as we, you know, largely maintained, or I would argue, improved in certain cases. To your question on what that means relative to potential EV attrition, you know, there's a number of forecasts by various parties that are out there. I would offer that, you know, we view, you know, the November 2020 U.S. election results as providing potentially the opportunity to accelerate the pace at which end markets evolve, you know, to what we're, I think, what everybody's looking for, to answer your question, which is sustainable demand, given what we believe is the governing impact on consequential commitments by all parties that are involved. In other words, you know, as I mentioned earlier, when you look at, what's being proposed by a number of, you know, OEMs on potential ranges of programs, et cetera, you know, our experience would say they're, at least to date, they're very wide ranges of volume, which probably tells you something. There's also timing that in many cases, you know, is certainly set out to be, I think, you know, what everybody wants to do, but ultimately is getting, in many cases, delayed for a number of valid reasons. Point being is that all of that is gonna impact, you know, the answer to the question that you asked, which is attrition. And I think my, our view is a lot more needs to be understood about ultimately the cost of these systems and when they are economically viable within the addressable spaces that we participate in, with and without any type of non-subsidies. I mean, the fact is, again, I think there's a lot of optimism around what the elections last November could mean, but you still need to address all the issues that everybody is familiar with, in terms of performance, cost, infrastructure, et cetera. So, the answer is, I think, as we look at it, many of the ranges that we've seen tie out to, you know, say, 2025, post-2025, in terms of any, I would say, level of volume that's discernible within the, you know, the spaces that we see. And even then, they seem, you know, they're relatively small in comparison to the broader space, which creates its own challenges, as you know. So with that, I'll turn it over to Fred in terms of, you know, the market share point. Sure, Larry, really relative to 2020, you know, we've been on really, you know, multiyear gaining share. You know, the biggest share jump there for us was Class 8 Straight up from 2019 level of 75% penetration of, you know, all transmissions, you know, total share in Class 8 Straight up to about 80%. Thinking about 2021, you know, our assumptions in the guide is basically neutral on share gain, no loss, no gain. Okay, that's great. Thanks for all that. Would you guys host an analyst meeting to go through all this long-term strategy on EV at some point? And I'll leave it there. Thanks very much, guys. Certainly, that's in the mix. You know, we have a tremendous amount going on from a technology standpoint, that we'd like to lay out to the investment community. Thanks. Good luck, guys. Thank you. Our next question comes from line of Courtney Yakavonis with Morgan Stanley. Please proceed with your question. Hi. Thanks, guys. Maybe just a follow-up to that. You know, I know you mentioned the Class 8 Straight share, but if you could talk a little bit about, you know, school bus. You know, I think that's a place where you've been losing share. It seems where that is where a lot of the electrification, you know, adoption might be happening a little bit sooner. So if you could just, you know, reference what your expectations for share there are in 2021. And then going back to your R&D increase of about 30%, that's baked into your guidance for 2021. I think that's gonna get your R&D, you know, close to 8%-8.5% of sales based on your sales guidance, which is significantly higher than we've seen historically and obviously understandable given the investment that you're, you're doing in the eGen platform. But as we look longer term, is that the right level that we should be thinking about, or should that be kind of, you know, continuing to increase at this double-digit rate, for the next couple of years? So just trying to, to frame where R&D should be, in the medium term. Sure, Courtney. This is Fred. I'll take the first part relative to our expectations on school bus share. And we have it basically neutral in 2021 from 2020 levels. And then, Dave, you want to respond to the R&D question? Sure. Courtney, morning. It's a couple things. With the R&D, you know, as we've mentioned before, it's very much tied to market opportunities, right? And this goes beyond EV to frankly, all of our end markets. And certainly, again, recognizing our team's efforts to drive growth, and that's really the outcome, is what you see is the investment in R&D, and the increases there is a combination of electrification as well as other initiatives in our broader end markets portfolio. That being said, I wouldn't assume, to your point, in terms of, I would not really look at it as a% of sales, although I can appreciate the fact that it's, it does facilitate some level of modeling and such. But the way I would think about that is, it's ultimately market driven, and if you break down what's happening in 2021, and then off of that base, you know, the expectation is, I think over time, it'll moderate ultimately. At the same time, you know, we're also doing a fair amount of investment, have done a fair amount of investment in capital investments around our technical capabilities, you know, and I would, again, see that very much moderating after this year. The balance will come to us with market demand, frankly, and those investment analyses will be made, and we'll make appropriate decisions. But it's clear from our comments and our actions, that we are investing in growth opportunities across, you know, the entire portfolio. And then to the extent that there's more opportunities there where and appropriate returns, we'll fund accordingly. But you know, I can certainly assure you the investments are there. The team is very much engaged. And you know, we look forward to bringing these things, these programs ultimately to market and you know, looking beyond those in terms of what's next. Great. Thank you. Thank you. Our next question comes from the line of Ian Zaffino with Oppenheimer. Please proceed with your question. Mr. Zaffino, your line is live. Sorry, thank you. Our next question comes from the line of Jamie Cook with Credit Suisse. Please proceed with your question. Hi, good morning, and congratulations, Dave. I guess, two questions. One, first, you know, the implied incremental margins on your guidance, I think, are ranging from 20%- 40%. Understanding R&D is part of that, but is there anything else you can point to, whether it's COVID challenges or supply chain? You know, and I guess how conservative that guide is. And then my second question, you've talked a lot about the organic growth initiatives. I'm just wondering how you're thinking about inorganic opportunities and opportunity in, you know, in terms of M&A, and whether there's an opportunity for you to get into adjacent products, whether it's power electronics, battery packs. I'm just trying to understand how you could somewhat, you know, broaden your product offering if there's an appetite to. Thanks. Hi, Jamie, this is Fred. I'll take the first part of that question. Relative to the implied incrementals, you know, at the midpoint, you know, it's a 32% incremental on a drop through. Realizing that we've got, you know, engineering R&D up 30%, you know, absent that increase in R&D, the drop through would be about close to 50%. So certainly a fairly attractive, you know, performance from a gross margin standpoint, and we're, you know, we're funding the business. On a year-over-year basis, you're really looking at the, you know, the additional spend on R&D. You've really got-- at this point, you have a par payout on extended comp rolling through. That is really somewhat offset by the unfavorable policy and warranty adjustments in 2020. You know, we do anticipate getting price, you know, 50-75 basis points. But, you know, there's a lot of cost pressures with the supply chain challenges. So, where we're typically, you know, price- cost positive, this year, we're anticipating being closer to neutral. Certainly the price is there, but, you know, the expedited freight, the commodity pressures, you know, we definitely will attempt to mitigate those. But, you know, the other thing you have rolling through, just when you think about, you know, 2020, just a lot of spend that just couldn't happen. You know, so there's a little pressure upward on SG&A as your economy opens up, and you're able to begin travel. Jamie, thank you, and good morning. In terms of your question on organic growth or, you know, supplementing that, I guess, through potentially M&A and across, whether it's EV or conventional adjacencies, to your point, you know, we are actively engaged in assessing external investment opportunities to further enhance our position in electrification, as well as expanding our addressable markets. I think to your point, whether it's electrification, which, you know, we obviously have done a few things in 2019 and continue to be very engaged. I would note, you know, for as you think about electrification, to the comments in our prepared comments, this point about collaboration is important because I don't know as to, you know, the answer necessarily is absolutely control everything. I think that's challenging to do, especially when you think about a relatively immature voice of customer and a number of other frankly attributes that need to be addressed and ultimately answered to. We believe ultimately there's collaboration that will be required, that could take the form of a number of different partnerships, arrangements, et cetera. So it's not only from an M&A perspective as we're approaching the market, it's also from a collaborative perspective. I think at some level, leveraging investments that have already been made, in trying to do that and from a view of capital efficiency and ultimately, the most, appropriate application of existing, technology or, or other opportunities. That being said, the adjacencies point that you raised, you know, as, as we've thought about that and continued to look at the market opportunities, we believe they are there. Whether those are in ultimately conventional or EV, I would say on the conventional side, as you think about what's happened even over the last year, year plus, you know, there's a number of issues that have been raised relative to supply chain and more broadly the sustainability of that supply chain going forward, just given the amount of demand that was there and then the pandemic and then recovering from the pandemic. So we believe there's opportunity there as well to look at the market. In addition, you know, our relationships over the years in certain adjacencies are proving to be attractive as well in terms of potential opportunities. So as we think about it, it's broad, as I think we should be open-minded, but as part of our capital allocation priorities, you know, M&A is certainly at the forefront to ultimately support growth, whether that be through organic initiatives that are underway or ultimately, you know, broadening our adjacencies. Okay. Thank you. Thank you. Our next question comes from line of Felix Boeschen with Raymond James. Please proceed with your question. Hey, good morning, everybody. Morning. Morning. Hey, I was hoping you can maybe give us your thoughts around international opportunities. On one hand, you have tightening emission standards in places like China. I would assume that would be a positive for you all, all else equal, but obviously, electrification is accelerating quickly there also. Do you still see some incremental opportunities on a shift toward automatic transmissions, or does more EV effectively cannibalize that? And if you could just help us think through your approach, and thoughts, that would be super helpful. Felix, good morning. It's Dave. So, to your question, it's really there are, we believe, significant opportunities out in emerging markets for, you know, ultimately fully automatic solutions. Those markets have many of the same demographic attributes and challenges that you would argue more established developed markets do, whether that's the U.S. or Europe or others at this point. So there is gonna be demand there because of a lack of skilled drivers for manuals, thus the demand ultimately for fully automatic solutions. So I think your point on emissions is well taken as you think about all the work that we've done in partnership and collaboration with the entire powertrain. That's gonna be required to meet a number of tightening situations globally. And I think we obviously have experience with that and we'll continue to drive that. But, to your point, you know, certainly EV, in China, for instance, is very, you know, very heavy in bus. Truck has proven to be, you know, I think, much more challenging for a number of reasons. They're moving around some subsidies there, but the fact is it will be, a bit of a reach, we believe, in terms of, total cost of ownership, especially when you think about the challenges of, of, you know, addressing the need for automation in those same vehicles today and the cost challenges. So, you know, I think the long answer to your question is, we still, I believe, there's significant opportunity for growth in those markets. Thanks. Thank you. Our next question comes from the line of Ann Duignan with JP Morgan. Please proceed with your question. Yeah. Hi, good morning. Just back to the base business for a moment. For your on-highway North America business, can you just talk about the cadence of sales that you're anticipating? Do you expect all quarters will be up year-over-year? And then within your core markets in on-highway, could you just talk about maybe the differences or the similarities in terms of the growth rates that you're expecting therein? Thank you. Morning, Ann. It's Dave. To your question, as we think about the quarters, just describing, you know, looking at them on a year-over-year basis, for North America, on-highway, I would expect Q1 to ultimately be a bit lower than last year on a quarter-over-quarter basis. We expect Q2 and Q3 to be better on a year-over-year basis, and then Q4 probably, you know, slightly positive. Again, to your point on cadence, though, everything I just said with the caveat of the various supply chain issues, and I'm sure you're well, probably too well versed in at this point, and to what we commented, including Fred's detailed commentary there. You know, that's an open switch, frankly, and it's one that is taking a tremendous amount of time from our team to ultimately look to address. I will also offer relative to the supply chain issue that, you know, potentially has impact throughout a number of different end markets because we're seeing lead times be impacted and specifically around the availability of certain raw materials, et cetera. So, you know, the caveats apply, but to your question there, that's the way we would see ultimately the year breaking out for North America on- highway. To your, I think second part of your question is, we think about the individual components of North America on- highway. Medium duty, as you know, continues to be strong, given the lack of inventory, whether new or used, and the strong order boards and backlogs. I think frankly, sets up for a reasonably positive 2022, interestingly enough, at this point. Lease and rental, a key segment for us, we believe those fleets at this point are either right or undersized, and they're continuing to experience high utilization rates. Muni is mixed, but I would say overall, you know, you're continuing to see strength in residential refuse, decreased bus utilization. Tax revenues depends on regions, obviously, in terms of how they've responded to the pandemic. I think this weather that we're experiencing in many parts of the U.S. right now is consuming budgets at an alarming rate for some of these municipalities. So that'll be an issue as to how they look at their, their budgets for the balance of this year in terms of both maintenance and equipment. Oil and gas is an interesting one because we're certainly starting to see utilization rates go up, and the impact of that starting to flow through with higher energy prices. Dealers are certainly concerned around the deficiencies that they're experiencing and struggling to maintain, you know, a manageable level of stock inventory. Bodybuilder lead times are out there. They're, they're really extending now at this point. But I would say overall, you know, the positive momentum carried from, from certainly Q1 into-- or Q4 into Q1. But these supply chain issues that I mentioned earlier are really gonna have a number of us working extremely hard to try to manage from at least into, I think, the first half of the year, so. Okay, and just as a quick follow-up, you didn't mention school buses. Could you go back, Fred? You didn't tell us what your school bus market share was in 2020. You just said flat in 2021. And then do you expect school bus demand to be up, flat, or down in 2021? Thank you. Sure. Sure, Ann. Our 2020 school bus penetration's 84%. You know, we have school bus, you know, and I think it's somewhat of a wild card how it's gonna play out, but, you know, we have school bus modeled slightly down in 2021. Okay. Thank you. Appreciate it. Thank you. Our next question comes from line of Brett Linzey with Vertical Research Partners. Please proceed with your question. Hi, good morning, everyone. Morning. Hey, I wanted to come back to the e-axle initiative and the electrified powertrain, understanding you're building off a base architecture. But could you just talk about your technology, where you think you differentiate versus peers in that category? And then is there anything you can share along the lines of the number of customers engaged or pilot programs underway, to help frame that progress? Sure. This is Dave. You know, again, in terms of the technology, you know, as I think we covered in some of the prepared remarks, the level of integration that the eGen Power ultimately offers is, we believe, at a level of performance that is unique in the marketplace currently. So, what do I mean by that? Again, if you think about conventional experience today, when we talk about gradeability and performance, those are all attributes that are taken for granted. There are, with you know, very few exceptions right now, at least in terms of what is available that meets those requirements. And, you know, I use the word uncompromising in the prepared remarks for a reason, because that's what everybody is used to. We are taking, again, the ultimate focus and objective is meeting or exceeding conventional experience, and that really has been the focus of the eGen Power development program. So, to your question, in terms of number of parties we're working with, et cetera, beyond the, you know, the 70% or so of our North America on-highway revenue, I would also tell you there's parties outside of North America that, you know, we're talking to as well and considering those development programs, again, back to what I mentioned earlier, which is really focused in probable engagements. Meaning, the ranges that are being provided, whether those be volume or timing, become relevant as to where anybody's gonna spend their time at this point. I think without more certainty, there's gonna continue to be a fairly high level of variability around what you hear and over what period of time. We're focused on what we really probable outcomes, and that's important because every one of these, whether you have one unit running or 1,000, is a significant undertaking in terms of time by both parties. But the more important thing is, you know, customers are not interested, you know, explaining why things don't work to the expectations that they have. You know, we are certainly intending on meeting or exceeding current performance, that they're experiencing with our brand in conventional, and that is really uncompromising. So as we focus on it, it's, you know, the right parties ultimately with probable outcomes. You know, frankly, I think the market will sort through that. As I think, as everybody knows, the market doesn't like chaos, and this is one that I think will bear itself out over time, as you know, really a focused approach to probable outcomes that deliver our brand promise. And I think that's probably the most concise way to describe it. Okay, and a helpful color. And appreciate the thoughts on the M&A strategy on different pockets of opportunity. But as you think about balancing capital deployment, is there room to do both share repo and deals, or is, you know, M&A the priority, and you toggle to repo if discussions aren't progressing? Just trying to understand, you know, how much stock you could maybe buy this year and, you know, the next couple years while you're doing things and pursuing inorganic opportunities. Yeah, Brett, this is Fred. I mean, you know, in the middle of a global pandemic, you know, 2020, we generated over $450 million in free cash flow. So, you know, we've laid out our capital allocation policies, and we're fortunate in that we generate so much cash, we're in a position to fund all of those priorities. You know, and you're seeing it, you know, we've funded, you know, we've funded, you know, the organically, you know, for revenue and growth, and we're funding for product development and technology. You know, Dave mentioned, you know, pursuing strategic opportunities. You know, we're returning capital to shareholders. You know, in the last four years, we've repurchased over a third of our shares. We just raised our dividend by 12%, you know, and then, you know, we've got the balance sheet in really great shape. And again, we're always focused on, you know, maintaining that low-cost, flexible, prepaid, prepayable debt structure. So, you know, we are positioned, you know, on a go-forward basis to fund all of our capital allocation priorities. Yep, absolutely. Okay, great. Thanks. Appreciate the color. Thank you, ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Graziosi for any final comments. Thank you, Melissa, and thank everybody, for their continued interest in Allison and for participating in today's call. Enjoy the rest of your day. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.