DAN - Earnings call transcript Q1 2019

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Operator

Good morning and welcome to Dana, Incorporated's First Quarter 2019 Financial Webcast and Conference Call. My name is Dennis 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. At this time, I would like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations and Strategic Planning, Craig Barber. Mr. ahead, go Please Barber.

Craig Barber

and joining everyone, XXXX us earnings Dennis, Thank first the you call. for today good you, on morning, call. quarter Thank for our

suggested on and this recorded being They supporting property are press may find the the website. release are Dana, You'll Dana's be by now call morning's and differ statements about forward-looking Today's presentation recorded, includes could posted today. copied, of Dana's materials or comments results is expectations not investor our rebroadcast future for without from Actual our Today's those written presentation consent. Incorporated. performance. our

about to morning that statement Chief to are and the information it's Jim Chief and are the including and affect Harbor summarized our now my in pleasure future with public filings, Kamsickas, Collins, and President Additional results Jim. President the Officer; Executive factors Vice found our over Financial Executive Safe this in Jonathan turn And Presenting our Officer. reports could SEC. call

James K. Kamsickas

thank and to report morning, sales pleased for of quarter of record first consecutive the quarter achieve $X.X quarter I'm you sales first XXth us Good year-over-year This call. Dana is earnings for growth. joining billion. Dana's

early backlog acquisitions. Our strong, market remains are our strong, from our demand we and realizing end benefits recent is

is adjusted which first a million quarter XX-basis-point quarter year. Our EBITDA over an was the margin, the improvement $X higher of in than for $XXX million, XX.X% XXXX, resulting last

per year quarter. $X.XX last Our over share. had earnings several per increased share highlights to We've key this X%

will detail this strategy presentation. we at and due enterprise and York financial Investor end our hosted backlog the the affirming refresh our our steady greater In Exchange, to the we guidance on Jonathan conversion demand. an to we're where ranges introduced long-term of in Stock provided March, Day year targets. a First, for New later market sales provide

Group, integration segment which than seventh the and motors the awards experts the just has axle a with Graziano a you foster few acquisition dedication partnerships of of that Drive Oerlikon benchmark for yet suppliers and acquisition example PACE Automotive Dana's customers innovation SME I completed acquisition culture moments. of the for including Dana's XXXX Award the how the efforts and and recognizes in design advancement, will with Systems on also excellence. two our foundation our is we and News recently commercial Ultra serves electric manufacture Award, give We brands, a light honored Fairfield AdvanTEK PACE This the and controllers. and system as was been and the another in an XXX of the technical Dana's marks update Spicer of Group, innovation innovation to years. for more of of business vehicle including relentlessly

outlook strong see to continue year. market a we Finally, this for

solid us balanced markets Our end the and the foundation all our ability focus provides we multi-market to across leverage a capabilities serve.

growth include trajectory, growth ongoing elements center as how partnerships we've Dana e-Drive. at the powering on As expertise. introduced keeping while in the strategy opportunity Driving an provided to capitalizing the of The core in-house Powering into slide sustain powering by our e-Drive future the globe. our The we and on and leader where customers expand Dana strategy, mobility position we leading leveraging event a be capabilities technology fundamentals our customer-centricity key of in scale, to technical illustrate refined prepare everything participation, March, multi-market by our we capitalizing of will for e-Drive Day our our on our we enterprise I a mentioned by of profitable evolution continue into electrification. do, transformation. strong around and global and e-Propulsion leveraging innovative support markets our growth delivering solutions to the in Investor X, the to great to enable in by hosted our in

about of I'd integration and to together slide X, most like to bringing talk companies, our importantly, how delivering recent Turning people. exceptional capabilities, the value acquisitions by is

past mobility years, aware, you're with acquisitions the sought Dana align has require. over that what best the capabilities customers out several As our with electric

this Software of transactions, more Group, speak Ashwood Dana. businesses TMX, XXX,XXX that. for just than and (XX:XX:XX) engineers, electrification decades these electrification-centric acquisition, important note, SME latest acquired more exceptional Graziano, came and along and Fairfield, and to the thank Systems On XXX Motors off-road including that Electric do on-road Oerlikon [Ashwoods] expertise, companies (sic) XXX-plus these vehicles briefly about service have today. Our electrification patents, the with than that to Drive opportunity Controls electrified Collectively, you Vocis and four-plus in additions

First, three interest all vehicle leader solutions customers in together leading our end in markets. inverters electric mechanical electric for conveyance hybrid offer with and TMX power motors across management Dana's majority world of thermal a high-voltage and of a broad manufacturer brings range and a our of technology to

previously By range and these of India, key power technologies, combination markets. full the of And with the and further expands existing a enabling the product the and Drive portfolio the out key the motors, the in with magnet vehicle for China electric SME Second, of synchronized applications, family, and bringing manufacturing our in the companies all The such robust our already wide Group portfolio, growth offering Dana's of markets current States. into motors, our segment across Dana evolution a the inverters controls permanent e-Gearbox optimizes spectrum. Group induction capabilities reluctance significantly of electrified electrified Oerlikon range solutions SME portfolio electrification and of us rounding AC complete solutions product our is and TMX Dana deliver thermal of acquisition enabled to across for and presence customers. United along Oerlikon's leading vehicle Systems expands electric has range complete finally, us high-voltage e-Propulsion outstanding conveyance a as low-voltage provide our mobility to solutions, of off-highway Dana's

in the slide award, PACE News to pleased X, with to Award our AdvanTEK prestigious April, for in share Spicer system. performance the Dana has of Automotive manufacture programs. and I'm hybrid for our today. being engines, internal market on awarded by market XX%. by powertrains, AdvanTEK our driveline global that and standard an was expertise is innovative support with efficiency approximately the the economy of technology to better This you very several in Ultra including Spicer the all possible vehicle product that we powered continuously axle the of axle technology this pushed no Dana the fuel customers' driveline is industry's different. most efficiency what introduction leveraged is need other exceeds combustion utilized technology in new encased axles joint, and design sets Moving for vehicles innovation product the our award-winning performance universal Since limits To

for safety, selected the later the all-wheel-drive fuel drive of Ford supplier cars the not alike, in best-in-class be Escape delivers launching for ultimately versions innovation soon units as all for Dana as efficiency, disconnection ongoing overall our and growth and Edge Just worldwide Ford crossovers this and and growing small of featuring of when year. world-class the Engineered spirit team needed. vehicle System top All-Wheel-Drive buyers allowing expertise available Dana's Spicer's engineering SmartConnect we fourth-generation rear to Disconnecting into the SUV the for manufacturers and the a is testament investments market. driving by passenger exclusive This all-wheel-drive Ford recently, of system and to collaborative SUVs, driveline and system the line is expand performance rear our reach vans,

Now turning you slide an provide markets. to I on X, our will outlook

is strengths heavy-duty between a Dana's balance light-duty and markets. of One our

seen remain this Over the few we three in past end growth and of years, all markets all year. expect we've to strong our

demand in capabilities to coming crossover left key Asia expect in where such highlight SUV Overall, Vehicle North with by segment. shift Ford mid-single-digit the we market new continue remains crossover to page, continuing to we programs Vehicle the emerging segments as Light growth. the the side America for accelerate entirely demand the markets new light online, vehicles in vehicles as Light the as by trucks, we and such Ranger of evidenced expansion further and our the Bronco, On for launches program growth expect rising strong and driven in will low- where all-wheel-drive

business America. equal aftermarket, parts the nearly our and X and Our North of with Commercial medium-duty South Class being consists key Vehicle consolidated regions

business Asia, stable be and to in environment the and to in the improve the continue volumes most our to through product of signs remain both recovery. grow with Off-Highway shows gains as and new these conditions inorganically. the in region and see improve. North strength strong of We as to expect this Dana mining And America dividends expect continue particularly well year, remainder finally, the the of is country's demand in pay slowing we in Demand Brazil and at construction should the markets, We launches to committed Europe share organically positioned recent through and end in fourth will coming year. expected we least quarter. the markets will continue demand

full-system this portfolio customers win through we've many capabilities, to product programs SME, JLG, Systems our the and and time continue and with We Volvo, developed Dingli, footprint for (XX:XX:XX), Oerlikon TMX, and Thank expanded Komatsu, Manitou, acquisitions. Inorganically, launch Drive our manufacturing new your others. including you global strengthened construction numerous Kubota, Dynapac, Brevini, Sany, morning.

to turn to Jonathan you to the over Now, I'd like walk the financials. call through

Jonathan M. Collins

morning, Good of begin I'll with XX year. everyone. period overview our on Jim. slide last the an quarter Thank first same you, compared results with

prior QX. largely last four Please closer of for first million due year, profit to growth look year. first million $X.XX in a factors. year this in last a which quarter sales adjusted year. new same our of million and items EBITDA. basis. The million than of cost to the slide non-recurring Diluted for adjusted compared EPS acquisition same XX-basis-point $XX Operating to of to of ascribed the was to $X.XX, $XX first flow on related XXXX. EBITDA currency overlap was quarter to Wrangler the the period income turn is X% and million, growth is in quarter onetime quarter at offset in increased recent first and which the a excludes old $X cash was the year from now the volumes with improvement Net Jeep which increase or occurred an lower over a the that prior than were the margin models year X% $X.XX the as demand EBITDA last and result $XXX quarter profit million of compared the to billion, a first a for is the Program year, on an growth last million $XXX year. XX.X%, First period me versus the impact $XX for of last key accretive growth the increase included Adjusted XX sales The higher compared constant quarter the sales more a Strong $XX adjusted results of acquisitions.

Wrangler $XXX the partially First, as year million in to demand. not well net from last Jeep that our growth organic delivered year. due the This basis of a an programs of by a this incremental $XX profit, This million headwind XX overlap as did continued conversion backlog contributing organic growth end expansion. of of million sales the recur points added was market modest margin in increases offset $XX

points businesses contributed million inorganic they've the in of our for $XX we included and Group, in growth expansion. results, from and profit acquired two basis month Oerlikon Fairfield, $XX additional sales margin the Second, Graziano the one yielding from in XX million

weaken in headwind U.S. a South the was currency dollar. translation million EBITDA lowering million adjusted at by Brazilian and due real, currency to rates and international foreign $X quarter, against the rand the results euro, African of $XX the by sales to the Third, continued as

However, the was impact of margin negligible.

Oerlikon cash both of debt quarter related acquisitions were expenditures the were compared as our million the me capital same quarter. launches We year. commodity primarily gross turn year the cost We XX and acquisition fund recently the increased expect Please XX me has margins have higher we Please costs due prices used Graziano of profit. year. quarter $XX businesses in the to will of improved did by the was costs $XX and Adjusted costs Capital change offset an moderated to and to a quarter capital in turn in to new by is EBITDA the million the guidance. the last $X free than $X adjusted well higher same first to XX costs the the business. for slide spending. year closer last continue prices cash as for use Working slide million for period year do the last our period year. and $XX working by approximately with over cash Fairfield new Onetime to to at flow million million reduction increased first $XX lowered first million capital businesses. the first support look our Oerlikon. selling higher a The was to term the and use the in year, remainder than onetime lower a norm for was higher of net of prior from commodity due transaction Raw as last requirements the recover to now through increases this Interest higher a at a acquired flow. $XX SME form million trend than material by from higher costs convert how higher to with look Finally, last profit points were our the Group. to program basis impact of which than full-year use

We financial QX ranges are from affirming our year-end in our earnings and guidance February. full-year release

billion I'll Our sales range commodity at our unchanged midpoint This exception growth talk over previous of year. indication over with which with a representing about lower page. slightly is $X remains on to in increases the more recoveries the from sales indication, unchanged commodity $X.X virtually due next just of cost near the billion, abatements about last our

unchanged our adjusted XX.X% billion, compared This for a at last represents implying expectations margin Our EBITDA $X.XXX year. XX-basis-point remain expansion to a of profit margin.

would sales margin cash expected expansion be is over to flow in integration of and with includes at last costs stated recent free acquisitions, margin acquisitions. Without of February, year in we line X% XXX implied the approximately expect last we year. to which adjusted related transaction about basis a As these points

strong midpoint double-digit at sales, of and quarterly in per diluted me of now first $X.XX range profit, the share. remains and full results profit the the we cash deliver free expected look growth profit expected to same Please slide track XX the range full at factors the are consecutive growth adjusted our driving for first closer The also four with remain with on year. our the turn sales expected quarter in quarter, EPS for for the year. drivers third the Our unchanged flow the a our growth and for With sales growth primary to year.

to this organic First, growth year. our growth is contributor a sales key

growth. and in line end last is with While generate remains our about market backlog strong to year, demand expected $XXX million of

launch will the million remaining As the last by second. stated nonrecurring old in margin about $XXX the the from Jeep we impact experienced resulting of in had The in program. profit new nonrecurrence previously, the loss contribution We with quarter be $XX in of million first overlapping. be programs new to negligible as will on half be the recognized $XX offset of the cost year, sales impact the Wrangler first the million and

expect structural we lower strong actions conversion as at operating The year. high-volume cost XX% cost improvements making to is a of conversion growth our the about at profit this completed result year, full we're be the and expansion primary organic growth of conversion margin the levels. the our on driver to For already the on organic these

XX from in expansion. the basis will in growth approximately profit, margin about million contributing businesses and $XXX add inorganic $XXX Graziano million sales Fairfield Second, of and points

to impact nearly headwind commodity the foreign we the of the dollar slightly than we less for primarily the Third, full year-over-year begun moderate. euro year, of value the be U.S. continue first to we raw quarter. impact a as of the to all had while expect have million, are due $XX year, material of headwind relative with to currency prices this a the we already having of expect projected, inflation expecting Fourth, occurred in to

gross expected million We the million. have reduced increase $XXX to cost from commodity $XXX

$XX down basis million recover XX this from net headwind XX We the resulting points $XX margin profit million, from points. the to of had million profit in $XX basis expect to previously about anticipated, year, we about a headwind reducing headwind

cost sole previous slide on flow. on to in for me outlook we news the As for good detail with convert year. mentioned our Please XX commodity to refinement I how full this the on adjusted EBITDA cash expect turn is slide, the will sales more

flow unchanged. outlook for full-year Our free remains cash

As we certain in plans free frozen we're flow a that reminder, introduced measure make adjusted cash terminate the year using U.S. February, the that the we and this which to excludes in fund plan pension contribution to pension discretionary later

outlined adjusted partially the well cash incremental profit. we the the taxes and as related to the as February, will cost, onetime incremental interest capital capital EBITDA offset As acquisition on improved and growth in expense, expenditures by higher working be

free XXX result business investments of cash flow adjusted for year remain with the with associated of the margins flat as this poised year. Please turn margin performance the of outlook past While points will basis expansion as as is well growth, inorganic a the year's XX slide of few the next our to as for move over years. to year's context next an with in this now overview me we

outlined to we period. a over on in deliver growth dramatic our key four a at March, we're trajectory Investor metrics in of five-year As our financial all Day

we're nearly the the year. flow acquisition/integration points to cash anticipate X% grow cash. midpoint about ranges margin, and another of expand on poised converting by this we've we're nearly free turn largely by $X $X flow diluted proud as to the the very Over next, will $X.XX, years in look cash But like XXX of the back quarter year over will prosecute for to all nearly plan take point the last this for putting at next We've and behind last margins portion us. business results entire million are and grow as also more team them in achieve you few targets. that the by will expanded solid of XXX adjusted can to a the nearly by three to than financial points in to continue will We of page, adjusted billion basis the you your profit years, morning a be billion and double-digit I'd the next the years of by And grown listening five-year and finally, end I'll profit year thank our to deliver we five-year track We're by expect that now another delivered first for next last period. another call right-hand to see a EPS to questions. proof over lower basis execution CAGR. these a Dennis us the importantly, doubling projecting to this by over year the few $XXX $X.XX Dana the most the

Operator

time, Smith Merrill to comes would we And first this from Bank begin the Please Aileen the of with ahead. line At go like session. Q&A of question your America Lynch.

Aileen Smith

XXXX revenue to in for clearly deck, that for the the you the back chart be beat bar XQ Thanks XQ level, provided XX% If set that look margin quarter. you on progression in morning. question. pretty we sales taking slide below the Good at and you quarterly the the the but well

margin XXXX However, outlook your you've at around maintained XX.X%. full-year for

earlier function year much of expectations more a quarterly changed originally here question is in my the first So, better have after you quarter than you around executing this is the this you or expected? any way progression your set

Jonathan M. Collins

driver than that's we increases. XX% that play put obviously Aileen. largely the up second Yeah, quarter we indicated ended and be would We believe being how first little third, to the the XX%, that the thought, expect below the the it out. out commodity were This and still we and fourth that then cost morning, primary and we Good and chart a margins is Jonathan. than closer will

we in So, year. bridge saw we and that's It's our area indicated the that guidance QX. early full-year the we've that certainly some in provided will a one that we of be than on bit better of the little expected,

pretty fourth slightly in to third cadence on out the quarter and play close So, the profit, think still perspective on the midpoint year. in range we're being lower the to margins general our margins of with of our for we be is the think we the better and first but how likely it second will

Aileen Smith

helpful. Okay. That's

Off-Highway, two of Power of – question, look remind that in in just it growth is business? businesses applied rationalize take margins your the there of in XXXX Power issues XXXX, segments, Second And other best key were an them and FX if towards Tech some and the to that's and of maybe on the in you revenues Is drive decremental choppy to improve us focusing been underperformer you function margin business, other Vehicle and a despite we opportunity two within terms issues an costs to you able those are gear and Commercial and trajectory? Can – of the Tech your what margins. commodities? practices somewhat where the at

Jonathan M. Collins

the on were that our of Technologies touched business certainly two the you performance. in We factors in Yeah, primary amount meaningful QX's Europe. a segment do of the drivers Power

bit the of has some too. it's this a soft, and the as So, issue that euro when a biggest has well impact talked Commodities profit to in about the business. we've been top line hit is

of Power four our our ratios all recovery in with the Technologies segments, we lowest segment. business have So,

been driver. significant that's certainly a So,

about been has that The other talked product mix. we've factor

to good taken. certainly the some that the see going Asia, both in that softening improvement this Europe in actions business margin a impact in on we've So, and presence first We believe has Technologies year Vehicle business our quarter some an had this Power and as the is of well the based we've seen market too. there balance Light of do through in that

year. processes manufacturing the to we those did but the we'll at of You become some is through on and levels, improvement some those. these do we facts some are in volume attributable see that touch can of efficient QX to see more that things balance our There largely

James K. Kamsickas

really just we in across overall add I'd This synergies Yeah, on do but your good I a is say businesses. of terms Jonathan would we Aileen. consistently, only would of question to mark driving this this, add business. that. that, also only it's to our and that, Jim. was and very more add do I said, question to a well-run Good This I'd is largely is it what really But commodities morning, issue.

at on well progression, a firestorm is we're some of look as business sales you there we a some where what going. margins over but commodities, key the excited just call markets If PT, as very hit bit and softening Power time by in PT, Technologies, about that little for

good. So, for Thanks I question. the feel

Aileen Smith

last if Great. I And one one, may.

On the lapping Commercial head Vehicle more ACT conservative as bit we're segment, the some which of largely well the tough on suppliers like as sources fourth struck year-over-year in as a tone comps. have you volumes the into endorsed space like as (XX:XX:XX) we sounds quarter,

in through your of the order in the into XXXX. books a more terms However, the had one end and key tone constructive yesterday bit customers of of CV year

the As little discussions automakers, than might into sources XQ XXXX, at reason industry be particularly you look stronger your bit suggest? with a any suggest is that there to

Jonathan M. Collins

year, last But, through top our line. opportunity us in outlook. point of some same we're the to demand seeing But perspective. constant to we're think the this on couple us I make to different change the things I at a a the think bit seen cautious year balance the and full-year the it's remains year take of a certainly, for be the if in days for of you've that in of there'd early

Aileen Smith

helpful. Great. much. That's very very Thank you

Jonathan M. Collins

Sure.

Operator

of with Markets. Capital go line the James from is KeyBanc question ahead. Picariello next Your Please

James Albert Picariello

guys. morning, Hey. Good

James K. Kamsickas

Good morning.

Jonathan M. Collins

Good morning.

James Albert Picariello

looks focus solid your on lower volume. whereas be a to It Vehicle Commercial just there, industry's showing to due there start. other like incrementals segment the continue pretty drop to are of elevated a lot the folks wanted Just to

North then, curious the business you. to for over for So, for year. thoughts your next potentially that also Thanks. given decrementals year, market driving might are for next the that be what turn And what expectation in curious the America

James K. Kamsickas

the in it's we've of few the for last We've you leverage part James. for actually thing of course question or question. would in been you I of so, off businesses it biggest moments steady leverage the the of be able the your as been focus been you is and overall Jim. the terms improvement This very kind to around years operating a much. to ago, Appreciate we're go, driveline first Aileen's us and Thank over would of around tell that able driving three of couple – world, question, best down more associated as you choices and put operational structure in and business locations, other lot with, and often supply very difficult perform very, know and not for four last stability tied up part of the is the are. where into great to more a predict chain multiple to business But growth. practices, a we to than very customers, ability better we over things three volumes to continuing so, years, and of doing it our got and well by which the obviously second get

of perhaps, good you'll in it come. process So excellence which more things expect and Jonathan, terms second question. the more driven take we is steady-as-you-go has operational a it's just of to

Jonathan M. Collins

Sure. perspective. business to is lines, the the a X is from to that and that profitable Vehicle Class segment the of the the Related continue Class business contribution margin X, the medium-duty least thing Commercial aftermarket, point we the to decrementals, three within the the

America. we'd So, that expect Class market our in spite would be year, we gave North when down, expand still the we able in next be fact guide margins indicated of particularly X that for to to the we

James Albert Picariello

to continue helpful. Is That's contribution Off-Highway new to generate where going market seeing continue about expand addressable is quoting just forward. for your activity the there? backlog that as your to Dana you business then business Got an now strong it. you're that just backlog, opportunity thinking in there wondering And most seeing exciting new you're Yeah.

are. high-level Thanks. what thoughts curious Just your

James K. Kamsickas

And the for us especially not, are the Off-Highway, it our so because when we're to the are Off-Highway things, core, Oerlikon and of of new We bit may of get said of mentioned electrification And don't by they I'd believe type we I the there's get years, Thank so, all from define Off-Highway electrified about that tongue-in-cheek wow, global, it many All question. getting gear. define around excitement in we me those customers piece if do and the before, lot turning products and whatever look to business, new we're are and we said that's mind We're question. in and knock customers the want mean the source don't the a of the do we Exciting it apparatus cutting you second technology lot Brevini say, it's exciting. side do again. business IC, many we in which speaking exciting. bolted our business, the those the – probably and it's we say products a are on in brought exciting we to cranes are we are then the you we major and agnostic. or platform, we electric, doing on exciting is not of the even that's essentially forth. little for type at global XXX fill we're ago, it's our even fashion. it. even Great and you or as earlier, even products the it as with believe on business your kind saying it, But slew the is capabilities Vehicle that so now and to just get recognize, of And i.e. we This still in full you a fun a to out the how want form door Motion, in think as not energy – all-wheel-drive and certainly back and – which as you between acquisitions, we hybrids, okay really Light sophisticated, get – really have obviously that we footprint edge want of largely of new products people prefer of know call all Driveline Jim so – do I is and may way, in business drive and we to off that. Drive too. they call in so because when Off-Highway point we're particularly anymore. that Off-Highway to winch for so you us,

inverters, fits of enacted and our over years. strategy control with and So that the it last of of couple overall software all kind motors, we've

hope obvious do That's But the it, for I pretty a I what Hopefully question. – for that about hope So – we that living. for excited right, thanks get reasons. that's I helps.

James Albert Picariello

Much appreciated.

Operator

So, the question from is our Please of next with go JPMorgan. ahead. Ryan line Brinkman

Ryan Brinkman

for question. my taking Hi. Thanks

James K. Kamsickas

Ryan. morning, Good

Ryan Brinkman

Can you hear me?

James K. Kamsickas

Hi, Ryan.

Ryan Brinkman

to continues Could wouldn't Good a lower how XX into what volume see. the commercial longer-term a observations X? think has about tapering of production or year-end, have soft slide Hi. please in tapering outlook they truck market then normalization so on that some and the I fiscal maybe morning. because think yesterday on next stronger-than-expected we should In in a the America And September compare think the you year this to tapering market do a expected think the but you hard year? start increased reflect driven toward impacting trend you that you of also this spot XXXX? this start potentially bit the year-end? Is expectations, more North Meritor elaborate particular, toward

James K. Kamsickas

stuff, cautious swing want of than tell way at for on and if to first about back I Dana, just at suggesting. what the bit front or our not or protect are others, that, that all That's for you fleets for wrong. ability I'm arguably Vehicle the out to saying the Commercial more in to is take or think are Thanks that Passenger we others. skis we maybe or look our timing preferences Off-Highway, changes Ryan. apt get cyclical same a Car/Light for Vehicle the Off-Highway change doesn't probably all than our look consumers would Good think Commercial and morning. I'll right I'm of Vehicle. And question. the or don't thing just little more make perhaps buying than that terms you really you, whatever you their and in approach if

you at. to get to just pretty That's We've love the could this more. Certainly, XXXX are more been So to it's over because all year beyond you yet don't out start a – give the it year. to we bit where line of this a as from our out a up competitors think bit year. we period it's our ultimately play you next QX plenty that can this call we I again situation at We speaking book there's still the the been, XXXX, let's There's a largely just with is it's that really early time skis reasons there. another reasons We that to we're really think order years that XXXX. pretty of sign the in know good for year give that day that. believe a trying can't it if solid any consistent be in thing fundamental than good really demand where not relates but want a a lot little making of been changes. little how of of standpoint out much I just into lot

Ryan Brinkman

opportunity, a in more And the Thanks. lot by getting some cetera. it's media et established of Okay. players, the then by electrification commercial the attention vehicle seemingly more Allison, investors, increased Cummins,

market you and how making prescient but of talking into the think said, investment? compare, the earlier have more investment cetera? area that, sort in resources that away shaping they that appetite like some up large all you for area, that's want about would being stuff competitive from How to say say Do seeing like players pour you investments a I attracting market you returns, disintermediation? pure likely this – competition are more ahead revenue get is you without this increased can and more of of organic that know TMX environment share in the to et made. prototype would larger With – to I the than this your

James K. Kamsickas

free. I space or mentioned it's position. good that Obviously, feel are It's some people about our that companies the mentioned out in to press. It's we back you There of into you pushing potentially. those Yeah. some very the mean, degree there, right? that are

XX know it's or I it customers, if Our for don't years PACCAR whoever that may we've been be. with

continue of night I about a confidence I have at performing. on bet worrying to up they stay don't and think of about period just a over We competition. us us lot in worry time. they'll

have as with pretty having worried don't our to about also the business, you a lot there of down if day a competitors that or In got space aren't surrogate well. enough and darn We've you it in deal tell example, Off-Highway the fragmented business. more I We in you time take it competitors. competitors about the

you that us, It bought we Vehicle that. we more work have is focus didn't And acquired been TMX, year said, years Competition that's in okay. the at a market you because they've better XX ago strategy last harder, Commercial into when competition good. We space jump so, whatever And and makes into place. comes in like electrified when essentially it long. in July that having

people have have everything extremely have So, the Vehicle without let all done road Commercial they're They in it (XX:XX:XX), customers are that with their experience, proven before. certainly they miles. not durability, all intelligent the field out of down certainly customers that and product customers to the these going

market. about good our very very, Commercial feel we So, the Vehicle in position

Ryan Brinkman

Great. Thank you.

Operator

Johnson question line next Please Your from is go ahead. of with Barclays. Brian the

Jason Stuhldreher

Brian. Hi. This on is for Stuhldreher Jason

quick The better margin forecasted for impact questions, it's the on the in whole to few than QX. Just acquisition benefit in one QX was think year. I a

about I of the at the so, into about of Is through or versus anything that year? think we or XX% think quarters full-year the the flow-through guidance the XX%. read (XX:XX:XX) in there is should rest

Jonathan M. Collins

much results well. I more our mean month the I you workdays don't other than as March primarily it typically read days has wouldn't basis. a in on the see too into Yeah, monthly because

our really fact almost business hit on did of the note to the running. jump closing that PMI business. synergies. months in we cost helped after to been So, in it's now, a will two we typically good better us advance the we've most The ground planning for I the of for did really get

see synergy we better have drive we'll for in opportunity, it's cost and still a target the So, exceeding July. towards to days and million continue the early we'll But $XX year. update

Jason Stuhldreher

That's you. helpful. Thank question. financial other One just

but covered million I the missed think can it, was just XX% of see conversion of about the going organic we're sort lower out hit of factors XQ? last growth, the confidence in and EBITDA to if taken Regarding the conversion-ish. quarters over conversion $XX go that you that in you giving XX% the after you three apologize I I to

Jonathan M. Collins

Yeah, sure.

actions We've improve bottom line here some programs sales is one the second in the not to that XXXX. overlapping Jeep will XXXX cost being I last new we the be year fact half won't us offset cost impact the cost because to loss of mean launch also structural structure the related in So, the cost decline that the contribution the by an factors business. highlighted took and the of of old margin on the

efficiency. in We Jim third expect full benefit of exceptional steady We the operational of helping taking XXXX, what improve. the the characterized is to get the a to is the at expense And last state year and of – volumes job care very which on delivering us customer quickly up of sometimes time, year. those did improvements, on moved of factor an then as

bit, that the operations improve able operating to supply can importantly chain in for been adjustments make been efficiency. we've sure in we've our make we level a more to and little that Now that some our

that confidence to those factors combination really get of a level it's So, full-year on that that a us we'll give basis. the

Jason Stuhldreher

Okay. Thank for you very much the color.

Jonathan M. Collins

Sure.

James K. Kamsickas

this job Jim, your just traditional your in team businesses our that business operating Dana but doing recurring the out. attendance very second today's for everyone is bolt-on integrating innovating and top you the I you that growing targeted time as if to which excellence – an – new technology to is take not through your call. really business, limited both and to a acquiring the including bottom Okay. differentiating well phase. about outstanding the the to acquisitions, certainly on I'll Hopefully, of incubating this the close as and lineup, earlier product selective operational ourselves call question-and-answer or e-Propulsion the and like, talked some in we in you'd do in thank We from appreciate With frankly Dana. that in interest is want again updates and for calls we over takeaways that give we provide matter line,

continue to doing. to going we're do what we're So,

we a you may Our enterprise was strategy by month major out now, as a ago, noticed not that pivot. have rolled

close pivot. minor got to right probably we is tells very it to least a was That out when or my from late tells, it we standpoint, at fact, right In me in rolled it it us XXXX.

in we our great have look we're going Thank what to the forward much talking just for you later. you execute. today. certainly in We now team assets we you objective have very place, is to that place, to to seeing go time So, or the your continue

Operator

Incorporated's the concludes Quarter this gentlemen, Dana, and your participation. and you First Ladies for Conference XXXX Thank Webcast Call. Financial

may disconnect. now You

Dana (DAN) 2 May 192019 Q1 Earnings call transcript