DAN - Earnings call transcript Q1 2018

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Operator

Good morning. And welcome to Dana Incorporated First Quarter 2018 Financial Webcast and Conference Call. My name is Tanya, and I will be your conference facilitator. Please be advised that our meeting today, both the speakers' remarks and Q&A session, will be recorded for replay purposes. There will be a question-and-answer period after the speakers’ remarks and we will take questions from the telephone only [Operator Instructions]. Barber. would over begin of to and Planning, I turning presentation Investor time, Strategic call the Dana's Craig this like the to by Relations At Senior Director Please go ahead, Mr. Barber.

Craig Barber

Today's of Dana copied performance. property our for They may and everyone our supporting consent Tanya. you, those call recorded, the materials us investor Dana's Today's XXXX Actual about Incorporated. morning's of not be differ And Dana's from Call. to forward-looking suggested or written press future the are the could site. expectations for Dana's Thank been statements on release posted without by rebroadcast Quarter First results on today. call and presentation thanks for our recorded, [Operator Instructions]. the joining Copies includes comments is this being Earnings today presentation Web have

affect filings the our our are Executive about public that and Safe factors morning and Presenting Chief reports Collins, Vice Chief are Jim statement. Officer this President information also These Harbor Officer. in Kamsickas, Financial Executive Additional results factors President including the with risk could Jonathan are SEC. and summarized in our detailed future

the Now, to to like turn over I would Jim. call

Jim Kamsickas

to organic and a increase we not quarter In vehicle a decade Brazil, future; the recovered as grow with are we've we SUV joining sustained about will sales commercial passenger been, for only market, hear as for consecutive because foreseeable look truck I our Good car year-over-year thank our in and volume last driveline we quarter continue and including achieved to of is upside tremendously remaining a and headed. you would a our growth. for our fifth over was have hereto, highest of strong in few continue over morning. to a the markets highway where XX% growth. in exposed which This but truck volume vehicle, while projections, in moment, highlights business; one business, perspective; from downturn. reflect largely well There organically year, about many suppliers, for that technology, the is line SUV markets; also created our that process we cooling extremely And organic on that acquisition; many especially you products value creator Dana. thermal differentiator with batteries, were grow organically, business you demand relates one trends. electrification of ask the When Brevini we Dana's require electronics of growth in sectors us and and billion, Dana's and earnings continue XXXX tolerance top will high through lastly, us think is hybrid growth, in the as for Power which products to Dana quarter, the you light the Because first cross-selling opportunities is call. first Technologies, benefits of sealing double-digit a A Why? XX% and grow the of largest to it include; Dana’s and both strong to not secular mortar to have significant where think $X.X

share. supports first diluted quarter million, year-over-year This our $X.XX growth; the adjusted income came $XXX performance $XXX for XX% EBITDA a to million, increased year. outlook the quarter in $X.XX year's last net adjusted remainder over first of was Our at strong or XX%; XX% EPS per

receive as of me an prior XX quarter, from basis sales attention key guidance, million raised our many you've including to customers. no measured As our this or This year recognition And X. your quarter customers. on growth in additional targets focus say laser our line is we you million heard past $XX full Slide times, turn additional is our adjusted financial recall And from success exception. in margin. earlier EBITDA this to growth, in our was top our points we Please $XXX of the XXXX an

everything is Our we core that to do. enterprise strategy

year to proof provide customers awards our commitment on our partnering customer with received relentless and strengthen provide XX commitments. and and our value, awards create develop innovation to centricity that customers illustrates serve These cutting-edge second passion exceptional two appreciate past The customer Dana’s satisfaction. our as our relationships, the over acknowledge execute customer to tangible months. points

conference. that received China, during challenging John from recently Dana John in XXth Award months, General excellence the recognition team XXXX Conference. few the award has XXXX. during This Supplier Motors Motors its past and the given a GM the technologies. General suppliers fifth by off-highway XXXX the Annual Dana's Quality the Supplier highest Dana to the XXXX vehicles. off-highway the as Dana for supplier best received Supplier where Supplier award was Over expectations. recognized Excellence honored year for XXXX. award the Dana's supplier of Quality of received was received The suppliers supplier cooling of deliver to ceremony also Award Year beyond during since in received meet global most GM’s is its team vehicle The quality in performance commercial technologies above automaker requirements and for award quality our China Deere going innovative Deere LiuGong Dana performance Remaining the the excellent

Toyota supplier team analysis control focus for staunch this AGCO, to Germany Power to total our with excellent that time To strongly we of further month our commitment highlight honor Please Diamond with quality, by on We are and addition, delivery, is recently highest things. one instrumental in Dana earlier of the awards in was turn for two to supplier South a X Slide the level in Award from Dana and the for proof In support. that named achievement best be recognized Africa. partner the Spartan and feel cost and the Technologies stories. from can supplier was value obtain. customer continues I customer analysis award Motors announced our value relationship doing success the success and our right Dana from level localization

supplier highest knowledge over Wrangler performing the recall, years. been referred to by and enthusiast recent Wrangler accumulated manufacturing have has driveline vehicle on the JL. the vehicle off-road durability. recently and on iconic new the or Wrangler the the Dana the past over go deep Jeep extremely the utility to as drivelines engineering are to The proud its As anywhere you for quarters is Having XX we renowned for it's often of launched the century,

to interesting imagine advance at on actual extremely Can do event. do. the comes launch what With rest road the in the new recent it for I vehicle driverline, are can see of the on Moab, a of severe Wrangler’s of you Dana, and durability with Utah not climbing our AdvanTEK complex pictures XX thought These Dana And that Dana would successful the maybe Jeep and course torque Easter laurels. we axles. power, at course and the Safari you rocks XX

decades at The the business. outstanding JL with customers are words. is engineering job did X products new our launching New and update brought joint turn manufacturing Please key its for a to facilities Slide communities with delighting driving the to individual tremendous the of some performing extraordinary. FCA and being the engineering fantastic XX vehicle. market product talent the a experienced courageous Ultimate an performance new fantastic a of life. this goes for on our line customer fundamentals the is These climbers. that with Dana all the rocking same with new thousand of XX is Bottom pictures products high partnerships year combined obstacle representation supplier axles for

in driving As forward key success. this we look are year, fundamentals our three there

First is of our end the markets. strength

We expect continue to truck our strong programs continue and to it year. in core this see demand light we

the were drivers this commercial of year. production certainly very a recovered, to strong go before also we includes still ways the mid-teens is are a and in expecting vehicle Brazil but Our key This it guide raised off-highway markets improvement market and volume where is improving. fully increasing remained end full-year in

across fundamental end our all markets. our growth second The of is

year. front we Land vehicles. Rover these value to last the more iconic announced estimated engineering Rover in an electricity. to range, trucks, the for luxury Chevrolet, three France, and And next Dana compact market. commitment industry sites ability we supply it with will Jaguar Paris, tradeshow, urban world's gearbox of and on in our the contracts as The the Silverado new Jaguar with tomorrow, Dana programs Spicer testament that to building front all As the selected performance rear rear and driveline These an cab agreement million. axles for week £XXX a the meets of we award-winning later the axles Last signed recently for production EXX, for beginning generation exclusively INTERMAT month, than this construction supply of premier also runs total and Land in are was wheel demands which compactness. new the for fundamentals major duty medium supplier a chassis Dana’s meet a today excavator and announced Mecalac and that first

XXXX. technologies and that vehicles years, starting in may its Oldsmobile XXX supplied General has driveline more in you to know Something Joints for Buick not than Universal is Motors predecessors the and Dana Shafts with for

America Dana's their supplier early We’re with we CEO exclusive West facility an respected consistency in Mineral from customers commercial X The to and to consistent production working for day. Wells, To an hear life feedback was a the quoted was XXXX our for be that fit. our such and XL saying, anticipated to important effectiveness each the its is President trucks the goals finally, Hino for the would and also why work at and Hino And driveline Class like recently series share renowned impeccable exactly priorities. to to customer vehicles. go-forward trades are North made with trucks design, in customers. for them are X I chosen come Those bring of highly ideal will of our recently products in alliance. Hino as Dana Virginia.

for demand market mentioned, strong. remained our I As products

We’re demand managing end in virtually the our in of markets. all increase simultaneous

chain processes and key scale demand and supply to do to leverage profitably. were we integrated our meet around world the so and manufacturing engineering teams management, to as able global our For assets

We focus QX in growing excellence. you Company QX on think XXXX XX% the When line versus continue as earlier, will the maintain top is to operational our XXXX. it, I mentioned about

continue exceed influx easy quality, our higher While is expectations operating at teams extremely major we’ve complete our to customer do that continued basis, without performance, not commodity to discussion and On would manufacturing through to but inherently be a time mentioning done. coincide cost. team with which our has or the our go-forward eliminate will the of same business No new ways, cost talented delivery volumes.

offsetting in steel upward in contractual on success As recovery, may aluminum. all cost these And short activities. continue means through a price we while increases lag and know, savings and is we pressures to we there an see have

well had margin Brevini by us the companies Finally, improvement. has of has couple past tremendous Most of over drive integration we’ve operational annual the four acquired success asset overall integrating rate gone of exceptionally we’ve our as all the synergies that recently, which we’ve increased run XX%, over helped years.

more Dana customers. Now, we’re sales also benefiting and from and Brevini with more synergies

Now, financials. to presentation I a the the over of for review turn Jonathan

Jonathan Collins

Jim. for Slide results financial overview is you, X Thank an of XXXX. quarter first the

Our first revised you in quarter our with guidance firmly were investor we form line our year in at full March. shared results with

as in well our market year, up year's higher the $X.X the a last with strong backlog EPS, primarily per quarter Adjusted sales growth EBITDA, earnings. quarter quarter expected $XXX adjusted $XXX items, double-digit year, last excludes $XX growth from by the quarter, which the was from of compared depreciation the and sales EBITDA first organic below from with non-recurring quarter, prior quarter due the For higher a higher partially with driven $X.XX of quarter, $X.XX The share last margin adjusted million of this the year-over-year demand, reflecting for million, income tailwinds of improvement. earnings or of costs. increase XX.X% by first increased offset increased million once was expense. impact $XX Net first acquisitions. improvement was the XX%, driven Diluted million along of were first $XXX per as million again share first were currency to billion end the launch over higher year versus conversion representing an

me of cash as to benefit EBITDA than $XX further quarter profit spending. Please free of capital for with million offset was sales and capital growth. working a higher the $X to Finally, use million, the requirements regarding adjusted lower XX XXXX first details higher flow Slide turn

is higher year EBITDA First to by attributable $XX was year-over-year $XXX same quarter million to adjusted million. sales The increased compared growth the period factors. three by last and key

muted strong; organic key backlog demand on incremental sales by growth rate. our to all related in quarter new end which are and the growth in the and three added launch to $XX incurred to in growth conversion our Jeep was quarter amounts million in profit. full the organic to Wrangler, continue markets market expected reach remain second First, of million principally of were we bring run The as costs, we $XXX negligible production be prior the an as our to delivered the organic comparable

Margin Second, business Brevini realized. continued our sales significantly $X million improved in acquisitions contributed adjusted million in as was made synergy USM, EBITDA. and XXXX, $XX to and plan in be

dollar. currency at benefit U.S. that EBITDA converted cash by improving an overview adjusted was adjusted due flow. turn $X foreign Third, Slide to in of for against by quarter, how EBITDA strengthened to a of million free the the Please the currency XX results and translation sales to million rates international the $XX

outflows than result the year's as $XX increased few in sales, costs free net Brevini increases only than As cost, of combined year were dollars for by expected are to with of higher this payables capital has in driving Slide is first X%. of by the cash acquisitions And to our offset completion use our raised receipt lower investment higher quarter working to quarter the year, offset the incentive Today, related XX about significant of one-time in and outflows interest actions higher and lower the more timing GKN line million noting Please the It’s costs a USM. than worth was more occurred X% and of transaction year. our levels, with cash year. was sales sales cash slightly to related is last the in due our our for expenditures and quarter as result we lower year financial refinancing business, major forward of over year, was expenditures with payments fee. break of this were $XX last full prior turn than spending, transaction refreshes. deliver financial a Capital and year. paid March. One-time of with are as typically me were prior the Interest typical in of go related Working inventory approximately which were which capital the a outlook million normalized to million program growth. quarter non-interest as now of our primarily as rate capital than lower first net were well the XXXX month the last increased lower due the to that outflows prior balance to $XX Higher the of were our significantly million the compensation for that earnings, reaffirming capital the lower guidance we a plans, flow last month. run first last receivables requirements

approximately We year. $X.X digit be growth last double which sales expect represents billion, to over

X.X% to reach we year. our a our the drivers we this profit change costs, Brevini contribution versus to transaction now the first you sales this last turn $X.XX throughout a the for year the and sales expected look and last associated remains expect the in by basis flow with realize expansion from grow million for expect raised at last by convert we profit will sales this meaningful what synergies translates capital sales Slide XXX growth, $XXX to margin, of cost XX me EBITDA the month of which X.X% principally cash driver our about our XX a XX.X% Please to free of adjusted to million growth diluted shared with the approximately basis we at We points points benefit expect closer EPS margin margin XX% Inorganic expected guidance. about delivering adjusted a requirements to of that $XXX due Organic when to expansion. Page to of reach from in we year, growth as spending lower to the year. improve the share. And launch conversion provide our unchanged anticipated per the XX%. to With year-over with lower both remains year. to confident quarter, year. XX primary remain growth we projections Despite of is growth at remainder we profit

adjusted tailwind lead are the drivers of me against shared Those and to flow. our we translation Finally, to see will in of to margin a Slide top of the to $XXX currency free how expected is change lines, euro XX what dollar. attributed in to cash the the Slide billion bottom expect profit a we to three from for with of provide expect turn U.S. convert EBIT XX.X%. million largely also Please we foreign to sales will both strengthening and March. $X.X that XX

by We sales. to is a in when compared approximately $XXX as million basis expect expressed cash percentage about flow improvement increase XXXX, free XXXX which to point of XXX

We will structure from one-time XXXX integration for EBITDA a to of This by as million $XX completed. increase an the higher acquisition of payments restructuring $XX cash restructuring will entity outflow taxes of costs in outside on will part a plan our in lower generating million, more million $XXX benefit tax timing forward. U.S. about a approximately going adjusted while efficient allow in one-time be is Cash and

year's have last allow sales support of the XX backlog. our a subsiding last a to overview flow. as finally, four our free into higher be These elements earned support of incentive our cash to peak combined we profit efficiently provides level an And of capital settling determinants investment well We spending expect use capital to new compensation working completed majority as us of year. payments performance. to growth convert will be our will key from growth, as the XXXX in business percentage large our Slide

First, heavy be The in market duty markets we supply. his and America is continue as of segments all the in drive off-highway continue key supply, construction positive Jim We we global mobility robust seeing trends will in will volumes mining, and to truck to are we remain light mentioned rebounding. three demand the major Brazil will volumes truck remarks, medium strong, believe North growth. in and truck

Second, some of us sales few will we ground last we regain the for in as currencies foreign drive we years. higher expect lost the

very in Third, business we million new next over million three new totals confident of year. remain and the losses, coming line this next our year additional net This $XXX backlog $XXX of net on the million business, incremental secured years. $XXX any and

we of a contractual, expect commodity to of commercial by operational the offset and Finally, headwinds combination means. majority

chains. supply have a managing navigating our input and We track record complex great costs of

We’re a remainder are great the our off on the year. for meet this start to and expectations track of year to

far to listening in like year questions. of expected. Our over enterprise so financial the you our guidance can originally I’d morning. for this a all year I'll we Tanya to earlier this thank strategy for attributed back targets your take the exceeds that now turn long-term we to call than And

Operator

Instructions]. to Session begin time, this the would we [Operator At like Q&A

question RBC Spak first Capital. from Your is with Joseph

Joseph Spak

back otherwise vehicle also sales, the had was you costs on it bit I Were have margins. like that as question strong wasn’t why a there the of first maybe weighted, incremental that or about some the can higher challenges maybe to with commercial some talk would just The as occurred? in the came conversion if little higher

Jonathan Collins

have particularly continue on first we working level, this adjust we as note, to things we did are have -- of our it we North couple CV inefficiencies through. some to in America, way that do to production higher In

meet some prioritize we going -- confident sure deliveries But in we improve high-quality. on been initiatives working the making time year. that through have are confidence we've do excellent We balance the that we've with that's of that to that

profitable by also the a drive we cost to us come will starting are in there. worth lower seeing what we're that was this Brazil is in for and is year. noting balance the the first in conversion encouraged year CV. of It better quarter So back, Brazil conversion

encouraged that. are becoming cash We few forward look by very the to quarters. next We it positive flow within

couple the of on So those are business. CV highlights a

Joseph Spak

mid-teens. costs I which think on underlying to two guess just about was quarter fourth light I then launch I said if mean And you similar the quarter vehicle, it I say you I million, were $XX the last in I heard think true think is quarter, the -- the or conversion

so is subside? the for to rate forward think segment will that And the going to launch down right cost about that

Jonathan Collins

lag recover overlap significantly inefficiencies, old very teens. We've will true we of convert the were vehicle were still certainly the in run launch related that with And the the at the Wrangler in light is costs the believe The that associated the inefficiencies we higher be that improve We which there the were the other throughout on the there new new the will in and get think balance in QX, vehicle. we upon of some indicated year. a the running that light the were items. the some year. year will in rate issue, of driver balance new in primary there just did Wrangler first quarter. of believe We but part quarter. affected other little Wrangler, jumped not to couple a a of the balance with of necessarily so There the high bit Wrangler caught a latter of Steel very

QX. So forward. think we confluence business in be to of in rely teens going the conversion us those But got are high the factors what we’ll three that

Operator

of question line Barclays. Brain Your next comes with Johnson from the

Brian Johnson

Could you marketplace? I now After after go at independently electrification want a to tying of are plans with your what and question you your us couple a with then remind since where in and near to start going housekeeping. path strategic you’re least that term to not GKN. be more are

Jim Kamsickas

we Dana been the of once to is really they to able First radar. they did as as have aware we and the capable profit team the wasn’t the definition think the -- situation, et the was I warnings relates were, team, It as react et everybody opportunistic. it cetera of fast on as this, we even that GKN as The UK that foremost wasn’t in wouldn’t over talented wouldn’t learned cetera. and but

So purpose was fit. that the that really

where now, largely stays in Our forth RFI right place. and organically. just we’re and RFQs, we’re in we’re to back to further that so where first already because was out be strategy not it in cycle truck to is no and really so on There SUV, a essentially its the in position answer able situation the

As most people on our this sets have for vehicle, skill call realize, we've been off-highway transformed very into strong decade. in in vehicle region commercial Those are been electrified a over products in segment the being light products developed. over

We’re bus axles launching right China now. the in

Mecalac about product today. earlier heard You the

do get just to organic fair come growth we’re to to we’re continue XX% the believe alone, as you customers, have the products the through mean this I we’re share. going And saw ready going just system. our quarter to the So going the if we’re we continue what to doing. number, RFQs

Brian Johnson

look a Is which you through? to Could Are there to in up some it our model how talked there for the coming vis-à-vis segments through a Tech, flow how the the very the launches at them you one Power significantly that’s give us was look going bunch cadence as is of growth, backlog terms question, about there? wasn't Second like least you year? going strong except at of sense ahead. seems of

Jonathan Collins

Just Tech. of couple comments Power on

market engine greater over during engine same and efficient, within seen so by there. engine internal opportunity that solutions, heat, for its on managed again you’ll thermal we’ve which note business about seen basis the reminder line. by the is about really encouraged the there has last vehicle currency combustion by sealing has that five increases, average. in period, XX And growth we’ve that becomes the that are we improved that a are at outperformed absolutely that it factor a margins basis, by is to light on business the years on there greater per Also of adjusted top business the pressure as points annum and more our that is content you X.Xx, six If look

We as have strong and that an well quarter very a were there comping continue difficult few small way, this year. first that balance, few too. to we perform the small didn't think our business, last went will the business. quarter That’s conversion beat the see of opportunity expand line market driving for that we items In unfavorable go continue the margins. will margin well a really as within year. this think quarter, But we will against We the items first that had what's our growth and that that on way first attractive and top on that business to

Brian Johnson

the And but JK. had housekeeping from out as volume ramped question, a JL run launch costs down for obviously of up, impact the final it ramps you the

So how quarters? does that play out through the remaining

Jonathan Collins

year That’s the primary reason full guidance. that our you can't annualize QX to sales and get

Wrangler old but in first part $XXX So in the We sales we’re with done in the associated built of second quarter. the some the we quarter. for million April had program with most about that

pretty that that through much our of it’s year. range $X.X the in the you that, full sales QX for of So the adjusted million of balance we with million about $XXX guidance had line for won't in year see

Operator

comes next Guggenheim. from Your question with Emmanuel Rosner

Emmanuel Rosner

at opportunistic for money the So time of think, was a it. same obviously prepared but Dana realize issue well I to I as I GKN decent guess spend amount shares

for buybacks? of or the use acquisitions allocate aggressive I you the faster towards acquisitions ahead is maybe for and So use you were what even other it appetite near-term, more some cash and your looking guess could

Jim Kamsickas

fever. been not clear take -- any having willing I once GKN to since We situation our entire the overpay. deal hope from lever would least were thing at we just never did that here, group that is not were we never whole one sheet. The come up you away consistent I've We balance willing once were across very to

don't we the we would it up it shareholders incredibly tight we in what -- very asset I is. have my how wasn’t to within do it, to at to that and the So point decided could just work inorganic we stay go what strict it they like take would didn’t made as goal an it. bringing these didn't is posts asset, entire it But approach GKN us, company that. our to Ultimately all goal again And have tight a -- be wanted to about we run want on relates back guidelines the as out. is post it's they sell

which that a in having Again, in in management -- So aware but many software we maybe what do not to of we develop. of and business, position aren’t, products transmission are keep deep continue eyes we've I have which that of capabilities, of our you’re has the much other we developed in into are play. electrified Emmanuel need very the amount not tied brought tremendous open organically know controls being and a of but already strength people regard, an that we're to

buyback, the wheel. the to relates it As share take I’ll Jonathan, let you

Jonathan Collins

on a earlier to million. been, announced of to where our good be is had in any you meaningfully Emmanuel, not a strong do to conviction been back us the reenter We make credit see the we We of think couple and to our to strengthen since year opportunity to really second announced profile. our size maintain sheet. also that this the has that half And our ago. the a to intend and balance important for is buy We a next really this we've next did XXX it and years, balance further and year year stock. sheet of did bought It's back quality that a authorization and really we active buyback we quarter this do perspective, our size doubled that value here of and price given scale program From authorization. trading compared larger. indicated we've that's where Relative stock a intention that it month of GKN, we intend what an to under

Emmanuel Rosner

And then year. growth the expected you is I guess organic on for the follow-up

of conditions. the improved market as some to seems million So which part in that $XXX the update had million brought $XXX are I of guess very, $XXX up $XXX particular It you’re in million, very quarter give first you million QX market your growth. of guidance, like tracking you market terms from you an contribution? on Can strong and on in where through these

Jonathan Collins

balance we the have most And mentioned basis, period. anomaly just -- came growth year given then last had as of year. the in where the of expect time a we first where well year-over-year production the compared year. of also in market the I demand We were levels have to at to strong see that running the On we programs that very Wrangler the that quarter, that both prior

piece of did to quarter, expect come markets in and our So in one-time that worth a was growth or of on the a benefit also fourth we backlog, amount noting second do did of million line that It's modest unique the meaningful it large in a end that's QX through see come expected amount but QX. contributor. the $XXX of we see in

content see to expect largely We basis Wrangler to platform. on significant levels driver on year, its up the the that that to expect deliver incremental a year-over-year of new and the the be as able a in we balance production that gets to

Operator

comes Colin question Langan with next UBS. Your from

Colin Langan

vehicle for for Just Is the at question. said the the year up the a already in on rest of rest you is commercial follow was most assumption of this point growth What QX? the the year? it for market last since the

Jonathan Collins

are perspective were at from already slightly. of the expecting were half particularly we first the rates year, we producing the vehicle be commercial quarter. the that a run second in But the America will that producing up We North in

we a So year expect vehicle next into in in come largely for line America. bit of half be by but see North commercial to a time quarter of for bump second you the little the second

balance growth the expecting and year. and the markets truck in of in the are large bus Brazil We

move to a growth So to as we contributor XXXX. the remainder of that through expect be we do

Colin Langan

off-highway the some or? you side, on to out And are expecting also that level more

Jonathan Collins

We lift growth some the more for been are a back balance of we in of over of little market, strong see construction to will off-highway ag mining held the well coming a strong expecting the conservative they’ve now. year in but which with probably has remain markets, that reasonably little and level year expect a the do bit pretty but on

Colin Langan

that deal headwind the you just axel do by size your out And any through policy. issue in pass maybe hedging the bit you I agreements? of of remind little of end think was with of all and your an year mean, wash you’ll highlighted QX us a the

Jonathan Collins

that. strategies the it. agreements work of the we in and recoveries impact as offset have that in -- because as quarter do mentioned, we prices well other started lagged late as take to quarter of care be will mostly just up to our commercial able to operational the We most arrangements address that. I an But supply But them it with, going was the

to meaningful So a expect profit see do within on we a be commodities we quarter, year but basis, did of an to impact impact. the bit full not

Colin Langan

on be started down And is reform when help I year. for think Auto Show think on I and you U.S. about high the the that the that But the we the the over you would indicated a Detroit that time? a right is $X.XX with tax tax of know now should it XX% -- rate tax rate. going so Why at guidance adjusted rate, of

Jonathan Collins

The the it’s profits an rate bigger issue at of our mix they tax we issue where in is and taxed. jurisdictional effective earning are the are which rate

more our we expect both profitability higher include So a would longer-term tax to projections would at continues overall you’re to yes the a rate, help in effective rate that jurisdictions. U.S. perspective, From as become accounts. profit the profitable that higher seeing so

Colin Langan

here? come So down it should time over

Jonathan Collins

over expect would we a time. modest improvement Yes,

Operator

Long with comes from Justin question Your next Stephens.

Justin Long

cross-selling I and much that’s if Brevini, forward? us opportunities of tailwind a to could you’ve help was about way understand related about how that to that to times. mentioned a So Any seen, you couple how been, cross-selling the you're going opportunities talk you start, wondering of thinking particularly

Jim Kamsickas

commitment you. a this provide I’d make that, provide we the on opportunities that I are the some where do down the for visual you not of -- will But to relative cross-selling as numericals will so for rather that out you, it specific give prepared I to information you there give will road you, not for to really coming from.

So that full axle you something you those that, historically. have of line. work we the some if work you or platforms, platforms something often can Home can think aerial supplied cross, that Low’s dimension example, it like But a which about, before would down you aerial or get would have Depot in for be that I see

it. around package around Now overall more small we as piece it, the the customers, want so unbeknownst that. we're a seeing And planetary world, in spend as vehicles lot in of that with in hydraulics motor-on-wheel also through call many, Brevini for I there opportunity had would able with and technology, that albeit not this, acquisition, of where shortage and hydraulics we acquisition, then important of cross-selling out but the don’t of capacity assembly so vice that Those it Brevini network of well can many, and the But strong Dana time more a of line be we electronics with for you is to smaller Brevini get we in something boutique which aware well is again those know very is have those pull is we demand forth. comes we over on were so capability now the customers don't motor-on-wheel truck oversell that. as you of as that of the as on type smaller market when for it comes bit we up and shouldn’t not out people Dana, a We're across more many the have because are a what products quite our of world, distribution where is strong call through centers may with spread to did comes not world. planetary service it there and folks to the with product a versa sell because pulling because

which on But associated bunch numbers former example, of to frame customers things, hopefully with getting Dana down opportunity highway we're answer that to controls, of to it tipping joystick you as the give electronics, for of helps type controls could in and up commitment relates functions other lot a question road. the off the the be, sensing the equipment. So some the a with

Justin Long

think second had I question Brazil. I on was

the how Brazil wondering from XXXX are longer-term. assuming into continues could Brazil as you're , What talk that recover? in was that expected heading I So if as year you see compares opportunity within this the potential the what you EBITDA to to geography EBITDA and do and about contribution you

Jonathan Collins

in Brazil the us. certainly course quarter. absolutely first And are increased over by past seeing the very the So encouraged quarters, of demand to encouraging the we been that profitability few to was we've and returning

actions we expect due in the other to than a we've the the Brazil dollar given there But couple of indicated indicated margins of through business, and be of contribution have for not the a some our we profit the considerably We specific nor to that's margin. higher aspects amount series that principally have of incremental factors.

the SIFCO made we integration side a go on a that forward higher forging incrementals as create play largely vertical in First, acquisition Brazil on basis. will the

the had becoming downturn. downturn, the securing capacity as can the a very on is, because local to while more to sure But business during markets. that downturn, that. factor during little efficient small. we have much a during on better landscape to which of was are enough we're the us became costs competitive to see We number downturn the structure reducing it help that for capitalize some numbers difficult fixed beneficial meet worked competitors hard that we us we And about exist the so the demand, and fixed competitive to bit position the and win a during to cost within were which ceased and the make Second, as upswing, third did then the we make sure we could encourage

expect a EBITDA those margins digit our of commercial the encouraged in by difference margin a factors. vehicle Brazil three And EBITDA we’re double all maker do to business we that will moving single-digit be business. So from

more business to basis. will than commercial XX% of vehicle or level the for go better So a reasonable we Brazil a with be double-digit historical heavy and forward bus, returning on have said demand truck business

Operator

Your next question Brian from comes with Sponheimer Gabelli.

Brian Sponheimer

North to dynamics America ago. in couple So more the come maybe you’ve you market within just you idea and back as just business, time market gains the market the give how seen absent we’ve some than years over trucking share of owner-operators go some one the had companies commercial there? Can customer

Jim Kamsickas

demand But touch a haven't supporting So the point, functions, first don’t struggle I do we CV really seen stressor. this of that a seen haven’t commercial better XXXX, consistently another, as bus getting were because the on through too in hope and long as our give purchasing have of market type on shout think I I to much reference very, we I time. team you I vehicle very And this. we know and in that to

had for To world, all geographies around operating really of and to that in your in across to very, the how really continue that teams the more customer a combination terms both. and in have We because revenue gain not terms high business it specific the whatsoever of very a level. supply new it’s issue of any matter, question of winds approach of

we it so any at going sure forth. and to products there. with Dana more got product making market tremendous has them same of a would satisfy and more the to providing, and able team OEs help are have providing that frankly that a in done that we’re we’re in we’ve doing customers with of you, a announced the be But and interest and how than Our the customers anything few this our services can job on making job just new win OEM in having is to sure help our market tell it fleets think awards and offering the we’ve fleets tremendous the know, them I new so time, They demand. that

the other. vehicle So commercial and repeatedly that your business different years ago new answer or definitely it hopefully our through are than is was and awards displaying it four customers but a three that question

Brian Sponheimer

opportunities their given how about important electrify talk Last you driveline they can package? to So battery to you cross truck in sell. SUV platforms? and and as looking separately take the some to you some enterprise a you. vehicle capabilities plans have to strategy say gave how ability cooling Ford is to its electrified to a along opportunity let’s bring the light the Ford powertrain, that and and then do And add are say and How week as

Jim Kamsickas

we’re at business, the anybody’s whatever Technologies thermal cooling across our business in your being and on being OEMs, for battery categories And everything There’s And have level. we business, solutions been that category and that two group is electronics relationships. forth, in so so fortunately for starts really main the Power us, sealing. looking for cooling lot relationship product things with those of our

there, So everyone tent of and future of we’re se the with us being most major under they're out customers per pulled solutions what asking are. the

chose cooling, recall in products lot the different to enclosures may electronics cooling, where we full of even conference January back relative seeming concepts behind You a relative to getting from and batteries for battery that to that, traction that.

it So starts at relationship level. the

there on type because to and so let’s as things Dana well. still the is And interesting those but is a not cool now electric, forth, the between in so so it what's actually as within when you have then we’re OEMs is my anyway groups of in And well. tighter E-axle now within view, bridge much there much only with and tighter, there a

vehicles. electrified So those of comprehensive solution more cooling a giving across we're them for

Operator

with comes from Ryan Morgan. question JP Your last Brinkman

Ryan Brinkman

automakers maybe be some or cover with customers you’re commodities? of of any suppliers, that raising the the degree then your might protection indexed just the full-year less indexed less the you example geographic Can average those you’re incremental understand price we've quantify last today what areas be remind operations to some and relative your what there to should perhaps for from business the look headwinds across customers, despite primary heard Are we to all, on are, for domestic globally. us prices I suppliers which your the guidance Chinese commodities. that lines aftermarket you season there at but be and as of? exposures you which tends on spot also help or And this to commodity with running we mindful

Jonathan Collins

the us in first example There is end from of just commodity So the rise steel impact perspectives quarter. the types. was largest a for sharp various a for the -- towards

that exposures is commodity negotiated. that's cover indicated We piece majority a majority contractual that our are commercially publicly the and have before of the part the commercially, we covered as

we typically with talk or So because steep reduce we us higher short-period end customers is to from you up is is a saw there exposure to our hear the that of the systems supplier that from right rise raised a end from is largely that of not But sales something perspective, for lag between we the quarter customer which cost where are changed provide. a the continue time us causes when POs our because a and impact first it covered. the we or for when in commodity at reason The about perspective, prices. costs partner quarter, getting it opportunities of it of the the profit the

Ryan Brinkman

Very thank you. Great. helpful,

Jim Kamsickas

are that and with -- for a today close top wanted take you to at you Okay, like with where outstanding upfront, organic. the I close. -- as not highlights. XX% of is of is. is do the QX said quarter more this fantastic privilege us, Thank obviously, this I to XX%, Those numbers. through your go only allowing just I forward again have for Jim. the to call line us also would underestimate joining your -- of But is time which

talked what and new customers, to us. But about that commercial again profitably we the it We with with We to with and business customers talked care partnering year taking we’re only new have. going and the about Obviously, have are the and year about of effectively growth talked cadence. we backlog excited once stay manage growth off-highway Mecalac. numerous do particularly vehicle are this on that's it we numerous update customers. customers a We Our about to JLR. we with

very time. So you your for much thank

Operator

our conference. concludes This

disconnect. many now You

Dana (DAN) 30 Apr 182018 Q1 Earnings call transcript