DAN - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to Dana Incorporated's First Quarter Financial Webcast and Conference Call. My name is Regina, 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'll 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

Dana's everyone. Regina, you, for today earnings and morning first Thank Thank XXXX quarter good joining you us call. for

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

the that summarized our public future results about safe statement with information reports our affect factors the found are harbor could SEC. filings, in our in Additional including

morning Executive the and are Collins, Jonathan Jims this and Officer. Officer; this and Chairman Kamsickas, Jim, morning. us please Vice On off call start Chief President Financial Chief Executive

James Kamsickas

us Good you thank for today. morning joining and

first all the markets million Adjusted our our the During with compared sales production XXX for to representing X.X in $XXX last XXXX. EBITDA driving quarter same nearly quarter billion of for to end million the with demand compared strong year, customers to meet improvement. period XXX accelerate a quarter across continued million in was

of same adjusted the shutdowns. were in due $X.XX of XX million pandemic of first quarter higher quarter XXX prior year. to global saw Diluted business, million, adjusted first XXXX, the use favorably of the first free with compares in use this share the flow this of earnings compared the the to with period year earnings $X.XX onset in which per the the our normal is quarter but was cash As a of XXXX, of

the markets in meet the the page, key and upper on to side demand of to able execute drive sales our to stronger strong continue higher we're key backlog the quarter. for Moving to highlights right-hand sales

continue and the labor constraints recovers cost our will sales recovery, backlog. to update supply EV our year's expand end a We the moment. chain around market meet manage in related and to growing quickly more this also provide you higher I the shutdowns. detail that production challenging as industry from efforts I'll electrification are disruptions, on also capabilities last logistics to

goals, Page sustainability responsibility Finally, recently the ESG which we'll our on social discuss we're X. illustrated and progress to turn Please published making in our is report.

further OEMs year demand Strong across continue around particularly especially volumes, vehicle world the capitalizing semiconductors, As North the time full changed as light on about successfully at the in cautious like the of in quarter to certainly higher of volumes from facing including driven our first market, the strong frame we're by ago, some into many trucks detail continued on the which how was the major demand to the same shortage of recover America. we impacting markets due to and The go I We outlook all industry, are higher of a capitalized our challenges world. in on remain three has markets. globally.

to expecting also segment X truck be Moving production Class continues, market of units. to America. medium-duty the The of remains vehicle in strong. we're XXX,XXX center slide, around the to heavy North rebound be the continues particularly The sales strong, as

somewhat demand are trucks for However, Brazil in medium-duty subdued. we and heavy seeing the remain

mining and to global presence and we a have markets especially markets, construction seeing we for rebound. Asia. strong beginning off-highway in remains Demand strong our and off-highway in improving. is for equipment, equipment Lastly, Europe It agriculture are

supply capacity and challenge. chain. across is Please how pushing the As to global X this up turn demand end the constraints of you higher both many Slide managing would expect against we markets across for the are labor

the to focused we issues rapid on the successfully a remained serve impacting rise semiconductor steel the to cost, mobility these continue SBQ all our logistics last managing these raw side challenges, customers. particularly industry. steel our left-hand Through upper material higher raw other in labor to and test from markets we've and shutdowns, material year As recover constraints customers, restrictions to related and COVID In seen have of slide, aluminum. costs, shortages continue shortages

our we have As of we customers. before from majority the stated recover increase

chain these mechanisms. supply impacts. outstanding team Our an base planning job in our supply And supply various has done continue actively manage team our for we recovery - to

side right-hand the upper on shortage semiconductor OEMs idle the major production. many fully to aware slide, the or is to call everyone of Moving causing of the slow

monitor of impact been and truck adjust our our in risk an for key mobility continue across our many as we that prioritized far, there's we to these vehicles. programs have customers on light with it is productions key customers the of something And less conjunction output the So This a accordingly. those remains industry. serve

has the bottlenecks facilities reports past shipping tripled also to port freight lower over the resulting cost of has the our shipping container risen nearly importantly November, early sea supply delays, at shortage in and since to and availability Moving chains industry year. by the XX% global vessel a left, According container impacted prices. and

pressures other on our challenges have and cost While supply these supply put chain.

impacts the commitments still to our limit can customers. maintaining our to continue to implement where while countermeasures we We

the proactive the chain. world. it's all challenges not to and On suppliers COVID a our as with material customers an the the on in Brazil to very that and pandemic are remains taken available. work putting approach right to past hotspots the course already page, ensure the lower and labor of risk is are supply related that added right mitigate challenged To have such we of we parts pressure There clear side of India

continue level we to customers be impacted we the outside. very As for to the our both service, about and maintain need of thoughtful within regions

aids market entire our this the in ability end forces. headline be our a these for to year, manage presence expect these industry multi we While global and issues will focus

been position backlog our in in we demand significant customers have electrification. our successful We and strengthen launch new while and vehicle to fulfillment, protecting enabling continue business

X, Slide I'd industry. update strategy right electrification needed infrastructure mobility Vehicle meet demand. will you electrification. new support we electrification on this to isn't in ambition facilities our in a to just that right for now Turning the the lead here our It's investing to far-off like are and to

Chakan Dana side active systems the growing in to voltage vehicle globe. capacity lines capital across new capabilities adding left As we electrification all and have serving Electrodynamics are future portfolio motors Dana's of India, of and we Electrodynamic electrification in This exists have engineering that automated the a continue our to to is We're manufacturing capacity and world to support the ready and the In is the By around The points footprint mobility equipment meet domestically vehicles global the across voltage also map. all Hence, the capacity and Weifang has new design, have on customer well we and and the needs export. for provides lines. to from winning industry that the Chakan of to and we human it's the important heavy to alternative our volumes, an support for in team inverters in markets for vehicle capability Manufacturing and mechanical to globe. expertise fashion for world a and the square EV our Dana class hybrid meet applications the of our in components The high expanding customers not electric operation responsible has trend to and future programs. expand capabilities facility drive with ensure installing regions our leveraging solution growth. customers. current at than more full backlog and the manufacturing regions by Beginning we including electrification. sales our base. Manufacturing light XXX,XXX electrification to Center. Weifang vehicle China, new strengthening as the electrodynamic measured manufacturing manufacturing electrical fast-growing demand integrated commissioned facility largest specialized support low for facility smallest current we Today, strong as propulsion The manufacturing capability feet of both the testing synchronous electric of global customers slide, footprint, our our production continue only electrodynamic are meet including

Moving to platforms, manufacturing expands facility that motor electrodynamic produces within facility integrated capabilities This Dana's and customers. pumps. more. important further work its or our many Chudleigh, products and seamlessly Europe, include of hubs serving UK excavators, telehandlers aerial gearboxes a are variety e-Axles, Applications

to we capable support supplier our the percentage delivering of the being growing complete electrified system sales partnering only of a are journey. to As we expect in our all mobility fully of meet a with customers larger demand, markets, continue elements across investing all their To electrification electrification backlog. the integrated

to continued making Slide and responsibility on to and an we're about governance towards our to environmental, Moving From update like are talk I'd the time providing social we time, sustainability you eight, activities. social progress objectives.

This our on quarter, XX. published we would recently and report responsibility thought I social annual sustainability April mention that I

electrification, before of adopt along commitment more considers work. our enables XXXX, just a we rather, vision measure reducing targets. a that Agreement end is this we achieve for other sustainability and that develop by vehicle approach the encapsulate Climate us, each total with a emissions do our our we annual planet that it products as to Highlights to initiatives the Dana's the balanced gas not helps report For include help we XX% the to supporting together but pull encounter, us progress greenhouse people year, and than the better Paris our and future

being Dana's our metric COX equivalent than than it exceeded starts In more US with all motors customer of to people. To electricity XXXX, in X addition, billion addressed committed and with driven demand miles we're of XX% tons eliminated. by to XXX,XXX wind clear, electric be more

us listening a market driven and provide one we work we shape opinions drive understand home. track and to and We first can that contractors strength, diverse providing to faster employees, visitors, improvement products safety participate priority continuous ideas. the contribute, in and that and health Dana enabling industry profitable respectful new trends everything We're helps of believe problems And anticipate, deliver everyone and work is fast part where that by Our and safe practice also innovation solve the and that communities work voices to to of customers, place a and number We safety do. our shaping suppliers, is the growth. inclusive gives desire environment thrive. call

is helps customers vehicle Our ultimately This strategy of brings to planet. a their sustainability leading our goals. us sustainability our objectives, of their key electrification and our and achieve customers element in to

committee greenhouse to and Officer Sustainability honestly, not of our in you our delivered integrity Board In which do addition outstanding very sustainability least, we to our but gas that years. take commitment a has leadership established a Directors more executive for time to emissions, everything technology Last Approaching Chief appointed we've with is corporate and Dana. Dana our today. with reducing and we culture, and governance ethics your at unwavering seriously service than strong Thank one ingrained to commitment for XXX team.

go it Please Collins, Now, I'd for our to ahead, turn update. like Jonathan. financial to Jonathan over

Jonathan Collins

of of XX XX% quarter demand quarter year for of the shortage. expectations sharply, the impacted vehicle Good million profit a result Thank Net sales ago. of approached quarter growth flow morning, overview XXX and billion, X.X year. On XXXX. last Adjusted first XX.X%, and use you, first chip few tax the supply charges XX of net February, adjusted higher incurred last due which was XX vehicle delivering of on rose Diluted than Jim XX a partially from costs in million $X.XX Slide improvement outlined here. and capital light period requirements. XXXX. same quarter sales of year. as compared quarter to and and changes negligibly first quarter. The adjusted to first higher prior the in in the million lower compared year year of drivers this quarter improvement of period the with year income challenges of shown higher million In the is sales by chain accelerated securities, as exceeding our impairment the premium in million me to Adjusted XX $X.XX, was look adjusted as Jim. by a expense that attributed offset the over fell changes this XXXX year and provides first key higher EPS moments short profit year, prior primarily to of basis, Dana difference marketable same EBITDA everyone. and was just first demand million, of was results a million quarter in compared hire profit first Please factors we EBITDA. closer now of XX expectations driven the earnings was The the by to of commodity the our was margin this income turn a the the XX and the working Slide year compared the first free quarter to this cash the heavy income was changes outlined an this valuation of at and for to costs year's for in adjusted EBITDA last last XX and an we lower

premium market all challenges. The resulting last sales demand. higher profit organic billion more were sales constrained supply stronger incremental by than from end segments year as than chain on First, from a conversion quarter cost our benefited was

by impact the million, sales weakened of currencies, the dollar euro. XX increased against the nearly translation no currency as foreign but namely margin with basket Second,

an in see spike a Gross revised at increased of the far cash how XX XX despite use we XX about million. in capital during of the seasonal year, XX due first compared to cash closer but lag the improvement lower cost with working prices year Slide XX than to for turn of with cost. closer compressed million, higher by buildup working for me guidance quarter last of slightly This flow the of our from profit, was form to to same neutral full spending. the basis costs Free Slide capital was period a margins million, flow. the up Please turn half selling recovered to now typical run only commodity steel recent and at converted higher XX typical for lower requirements profit precedents in historical Please customers Finally, in to look due quarter look our capital EBITDA XXXX. cost me adjusted a to at a the by was rapid points.

raising relatively just market year for and as ago by are clear exceed expectations. of quarter that provided demand first The full results, our guidance is months a We sales our sight guidance line revised second quarter bolstered financial we strong ranges couple a continues sales. to our end of

adjusted chain per However, our X.X%, sales to X.XX short given EPS actions. improve range, disruptions an our midpoint X% term. is and with a changes profit of now expected the with cost we unchanged nearly per the to be the share. full highlight drivers half as year me the I profit XX at higher XXX approximately our prior where remains regional to year. we anticipate which uncertainty share an Please Diluted second pandemic containment which challenges of chain expected half ongoing commodity previous temper at remain between at in our cost billion is cash range, and is implied full our basis of now cautious on the sales the We points increase to our margin Slide higher $X.XX which increase over the of prior flow the range, of from to guidance. XX%, approximately guidance. to compared We be the supply will billion will continue now adjusted guidance at the the an the midpoint Adjusted for anticipate from of premium expect turn midpoint about of expected margins modestly our EBITDA now to is free million and XX and year surrounding $X.XX approximately supply midpoint be of margin

XXXX profit chart in expected our key for highlights driving year. earlier the factors change last to comparison, the this and sales compared As with

to now margin more X.X which than basis sales, X a the in backlog remain organic increase, expected is growth end add and are including our First XXX billion, a new nearly business of in providing XXs billion expected mid is of Incremental strong margins billion. points half approaching to the expansion. volume market

we're of We expect half and later the but until transaction first timing automotive the to this transaction Second, the close of do status acquisition liquid we not in the year, to of the the originally regulatory business. year. pending closing on close our the process Modine's approval for based outlook expected of in Germany the cooling updating Austria,

We of as acquisition continue updates further to provide our we'll this the and exclude unfolds. the from impact guidance, process

Third, profit to impact we with anticipate be sales, million XX of to impact to of the margin. foreign approximately a XXX to now about currency translation and benefit no million

expect of a Regardless, years. supply ability margins the will XXXX, year, in this And to we basis confident holding abilities these costs, compresses by this to basis It's our limited than three about basis majority another We gross about are these of our commodity points expand is the our higher remain as points a acknowledging XXXX the million costs lower net margins is profit compress increases investment chain. our will XX selling XX XX% nearly cost cost gross offset by in increase from investments leaving recur XX products the points. higher form impact about margin recover next in we of And which few another XX efficiencies despite recovery by are headwind. comparable fuel rise. million there resulting prices points. to factors. now three, XXX than of Finally, million, recovering electrified XX% customers an XXXX. prices, indirect basis we've given sales. in in the continued we XX even of have million, not also with anticipate basis will in Two, margins XX commodity over This million, though back XX of than XX of worth retroactive in the more that XXX by current taxes elevated condition Brazil One, point as driven to

and our to to we As Please for EBITDA sales how supply of cash XX me challenges convert detail X prosecute achieve Slide flow. on more now we than plan this adjusted abate. turn with to year's will the expect billion growth, chain more

higher cash growth page, has year. Our full driven increased prior the increased XXX margin over entirely offset flow of by future profit range X% growth, Please year the of working free just sales for representing partially perspectives million year fuel with higher Page taxes of a navigate profit we this by I cash issues me year. XX sales, outlook remainder adjusted the the The deliver slightly for X.X% growth. our a last on to the requirements improvement is capital growth, approximately a higher to result outlined which is now to as to expenditures and major will capital turn on sales the of to through

manage in the keeping our remain tenant with as our earlier of of mobility we pressuring outlined factors customer on strategy, delivery we industry. laser that products Jim As focused quality core external call, a and entire the are the centricity, in

impact are recovery mitigate Our to the raw cost mechanisms material rapid effectively prices. increase working the in of economic

recovery shortage customers. for the potential comes slowdowns We There's So to the effect our microchip to online. cost the as resolution also higher the through and ratios of this resulting to debates. remain see production the lag expect year at more the year regarding as we capacity remainder uncertain cautious moderate steel later

the chain port many and second access quarter global seeing market to of cost constraints previously, logistics associated the impacted is We're supply But than As actively trucks which frame our we in impact guidance. lesser and capacity the with shipping we our managing we more full a our meaningful our bottlenecks. many reflected in heavy to industry the vehicle to higher due quarter, mix end of a also first of light in buffer mentioned beneficial to are were and in extent vehicles. businesses,

second higher We expect continue quarter, in year. but the half to second moderate the see of the into costs

constraints. of people customers Our pandemic our restrictions impact operations prioritize continue in regions still the and to serving safety facing of through our the resource global heightened the while

cautious but result place use work fundamentals I'll of your thanks to in markets, mobility serve. for the back have all the global customers in and We're required significant thank products to support months, by taken are of opportunity. driving As put coming listening trend deliver morning. Dana we the supply about grow the the take entire definitive fully I'd to this this and all Regina upswing the questions. necessary for globe encouraged We're vehicle to like electrification our meaningful business we demand to creates the and steps a back the also to survey and we call clearly now to over new and the by the to to towards our to capacity landscape you turn on in steps to the the opportunity we're this demand step prepared this in markets encouraged long-term your as cyclical across these extremely meet customers. team incredibly capitalize to tireless opportunity the a take commitment And our so that can all this secular

Operator

with At would the Our Langan Wells of [Operator Q&A session. the begin will like this come Colin from time Fargo. first Instructions] we question line to

Colin Langan

to thanks weaker sort of on quarter, Great, would QX, going Any had in are be margin. didn't noticed wasn't seem my the higher does question. here. taking key be like in I the indicated you bit I a cadence? side QX platforms color - QX. for that It some the of Last

So think rest through the the of should sort we year? is that about quarter? now a How progression of much the weaker

Jonathan Collins

little Sure. on this have welcoming a will we the opportunity to to by commodity primarily Well, for Yeah, just think improved back morning, because recovery. good color be second modestly from morning. you of want to the margin just QX start Collin, joining Dana. color, Thanks the quarter,

So the in catch effect lag start should to up QX.

some continue to costs. going see are We to premium

get margins will continue. the better that we middle of curve year likely in the So where original indicated

the just these the little year XX ago. the And the couple we'll how half is essentially second next on relatively July. showed when of we're days. a We'll months in together our a unchanged to of in the you half have of what continue we better outlook for sense of year, all second then shape As factors from see up

Colin Langan

up. that's is know infrastructure your could from of of There's one that? follow much just sort tailwind something goes like what through, headlines I lot quick business we maybe be Any be expecting? lot helpful. of kind your How a Europe. if of Great, of around on bill. in a And benefiting color the could off-highway that business

Jonathan Collins

the a seeing we're of is right that market. lot the in off-highway benefit Yeah, ag now from

So there's still of room quite to for bit construction a improve.

you the As production that even demand could equipment construction of Europe, well that a world, that's a around of increase because though margin could for benefit business. that's noted, do we segment are real used certainly our off-highway any for Dana, so segments lot more help our that business. in to be these stimulus mining could And benefit the as as profitable and within catalysts

yeah, certainly by we're encouraged that. So

Colin Langan

thanks my Great, questions. for taking

James Kamsickas

Colin. Thanks Sure.

Operator

line comes Deutsche Emmanuel from the next of with Your Rosner question Bank.

Emmanuel Rosner

the about quarter I Hi, it morning. impact the to inefficiencies quarter from in maybe rest think over Apologies missed and quantify how second in in if Could the first the the that. of or you good year? chain the supply the

Jonathan Collins

in Sure for significant was it QX, us.

While on meaningful quite still it, a our to in of couple we areas. continue give didn't you bit number put a it just to margins expedited Number of had a impact a on freight. one, the we a see form sense, specific

some Jim normally freight premium that's global in chain ended a suppliers we logistics rate have then above at gotten just with that what that We would. ago, have slowdowns about the to moments a incur few And we up well the having to talked continue behind.

sitting less around waiting for they're parts. operations efficient are when our Secondly,

other So drive as imagine factors you over can well, running that too. and time that

terms are of in do continuing some we that unfortunately, the it see progressing, seeing we improvement areas. in So quarter, into how we see second

in little later expect to in And towards together may start just that on tailwind would we there So gravitate we share year certainly we'll few But we have of we're in normal to months. more a again the that a we were that cautious bit see a QX. levels. more

Emmanuel Rosner

the of half. guidance helpful. so the you of that's in then the remain a increase at first some in is of point mostly the year, think from Okay, the indicated but reflective on prior I top second cautious earlier clarification line the you half And just strength the comments,

the more you on seeing not factors to clear, the half? Just second is in Or that saying positive this to be specifically early half are second of risk are too get sort you as any well?

Jonathan Collins

and think more next It's few can they're of customer starting latter expecting to pretty releases. due months see We shortage. line really it's that sight see particular have orders in a year signs encouraging our half the in up. all we're the with the continued But second segments to in vehicle the where the supply I good the position as reluctant uncertainty yet. Yeah, heavy to the shortage those from into just call go the of to chip downtime we chain have in Emmanuel. We're up with that chip we're of the

through the we higher as a confidence We want just months before have few in it sustaining the through latter. balance more I demand year. more characterize the the would to get So of of greater

Emmanuel Rosner

one and quick on Okay, follow one. just this up

by up end top markets? for your to from the line, contribution increased factors your to nearest that the anyway year, about So market $XXX think between million split I

Jonathan Collins

It's pretty evenly spread.

the in we due was an a light contemplated even actually segment. really truck than first commercial produce, as we had bit Ag had first also, But in heavy we in picked the us both heavy and demand we bit vehicle vehicle in we medium-duty up vehicles diverting the that vehicle Jim occurred. for example, or touched to than better quarter, quarter saw the platforms the off-highway on more downtime chips and the saw key so we anticipated. better And saw the we higher thought. markets. shortage signs towards encouraging a So our fact than chip that do customers

across it the board. So evenly was distributed pretty

to headwind light move we see with shortage. that the just on As quarter, heavy vehicle a the bit vehicle little chip due of demand in the a side second strong we continued to

So broadly distributed markets. three well speaking, all across end it's pretty of our

Emmanuel Rosner

Great, thank you.

Operator

Your next question with of Brian will the line Barclays. Johnson come from

Brian Johnson

just I the - appendix. you - know, in don't discuss except start we don't I the to segment want

motion Can talk of drive that more that follow typically supply segment, little up then and but if bit commercial got pressures that negative a the XX on some longer I've And incremental around kind So was are vehicle where term. of million. chain I systems these most particular a in it segment? Is you a look low margin at about concentrated?

Jonathan Collins

on the first - part. I'll take so Yeah,

in On It the is you more impacted is CV was supply it. longer supply That chain the margins, nailed chain. a acutely CV.

of sales. didn't premium affected biggest them ran we the challenges more see incurring was the That some why And we incremental those driver, incremental on into freight. profit

where the is we're other electrification early business that's our seeing growth most The in undertone on. of

So when one starting is an really compared XXXX, areas of that you're where example, CV spending it. highlighted see to those I EV to higher as

some into they've made sight improving, QX. we progress in see of So chain, but biggest driver that line that was supply the on the

Brian Johnson

for range a multi-years, cycles, re-price cost and the And it's we US. question mechanisms, cost, in which you feel more scenario have if input broad be of to locked to increases? forth. Second environment, of either pass Dana not its you that pricing the the and but not the you or freight moving as about inflationary commodities at think it's programs versus and and just electricity around so recovery business of on around do at impact pace kind shorter least ability It's on are electrification. in at how extent an globally say you just costs in you have an light least mechanisms, as what recovery where labor, formal contractual do vehicle a might everything, north contractually, inflationary pointed To going out mid-term, - can your into about

James Kamsickas

really good good morning, Jim, is Hey, question. Brian, this

more said programs the it, point, the yes, to already side But on hard structured You so commodity much going there's of okay. I'm it. reiterate

minute. So that one we for a place hold

The future box. second that XX Dana with first unfortunately, base, and XX and put to will the - that would into years from the are 'XX providing focus they my where supplier in be tell a so for the a different are of at. the commitment of supply out a base, they'd one healthy than crisis 'XX supply one ago. healthy I to be need company customer the that solution and our they say, somebody need in you especially opinion a much middle And base, electrification certainly they and like in But customers things a that and money start so running was were,

not think be would you're a there level related world. event the says pressures holds to what discussions said around black this white. inflationary I different as pressures what in out to to but end the know what inflationary necessary, the where ability extreme being supply what the to a I I going the chain that and health and base But supply take others ability combination of understanding at of cost, This they'd I'm had, a yet. true are. contract says, So of are be yet the saying. as think customers the of the maybe the is is more be I'm not much there that well you have as to global as the contract our again, day, between critical. isn't have of reasonable the

I they having and customers. They're their are the want to Dana there's to about mean, have create evidence to get challenges value relates such make now sophisticated as capable that if we'll just the for there sure right that, to think suppliers OEMs no be for to I think supply. to global as there than them going continue better it

Brian Johnson

price they're the benefiting ATPs. and in Right from inflation

an kind is pricing? Just flexible? a procurement path on Or light drive is follow it more the vehicle there's for to it quick fleet annual and the six vehicle a first of bit because there pricing glide where a up that's basis? selected, Is contracts similar

Jonathan Collins

Yeah, there's differences. similarities some and

there I address LV. But say mixed well, principle, opportunities that. structure some time it there's in over flexible some I as to So are it's It's certainly but think more would a But bag. than bit a characterized you right.

Brian Johnson

you. Okay. Thank Thanks.

Operator

Your from Kaye will with next Oppenheimer. line come the Noah of question

Unidentified Analyst

strategic Brendan Appreciate the Hey, to initiatives talk on little track about and any you're to pursuing just inventory Steven supply guys, this diversify the a [ph] base? better on Noah for color suppliers Kaye. you're their doing supply And what is Can levels? bit the you chain.

Jonathan Collins

re-engineering welcome be a doing from are are enough produce manufacturing, for been many. the in through that. a initiative products at through but my I We're in done a that. in question. an multi-dual of on middle to supply. not to sure But years, we something in closer go we're don't instead least There world. that we're everything speak fortunately do we've of list to four Good for three those of of That's right has for - supply. a making kind just there's what And living. that us, able be for day And country. every that let's it's to able we sourcing, the said, like working said, we work is example. to the supplied terms just long. them to believer oh sake American to don't flexibility to we've balance And for But you I now anything mean even home mean, vertical I having journey around with One that the And is time goodness, we have do that. that pandemic, we to there vertically call. not have be the of appreciate terms thing to on a I'll

or many cetera. - flexibility four country, an form, that of years independent of example give we recall the in may us more I'll forging to to three or Brazil, So the - back you bought back et company acquired ago, largest out getting give

the certainly get as in are to back in some now. do just and we some are from the it continuous V though it chain, continue So why to one, everything but talked on. that case going through you're see my fact as as But we'll it of could through came we those was you two things have many and those place about, on and I argue again, on in shape time on go Because in improvement go go may view. recovery, takes And place, whatever I that to to all supply in place. U, things

Unidentified Analyst

thoughts then any incremental on update and portfolio? it got And up a thanks. terms in us thoughts but follow into of delayed, integration just there? Great, said know that Modine the acquisition, any I you just can fit planning you give

Jonathan Collins

able normal. to that progressed work Yeah, business. be in PMI to the integrate We're position is good a as

for Just in should you we months. the longer. bit few when a together a update And again has regulatory we're process taken a have better

Unidentified Analyst

thanks Great, so much.

Jonathan Collins

welcome. You're

Operator

Your line will Aileen from with Smith of next the question come Bank of America.

Aileen Smith

Good morning, questions. the And thanks everyone. for taking

semiconductor for for chain vehicle getting aggravating each America regions? to segments And shortages with that First and per is is where possible would how is vehicle we North content when at when regions, this the which the appears we supply I'm disruptions, question of one, about you content quantify impacted it assume guys. you one more across should think of per to one look be I higher has your

fair future this continues is regional within headwind characterization? is mix offset see quarters? Or a that fact on the it to you So any growth expect would improve? generally to by going to And regions revenue mix in be

Jonathan Collins

Ford programs Duty, when in that content, about second Yeah, point. high CPV us so the so quarter. the reflected very very for North fair carry that some Wrangler would Jeep America, in think those be we've vehicle it's the is of our highest foundational in we a Super America some downtime Certainly North that about and right light our the segment of you're

have think that power the content comparable in right, most businesses. segment to across light going you're exception it's start technology Maybe That's that is true the in So regions. the vehicle we QX. affecting pretty to we do

a a which tech, see the won't of largely light So market. in there content you vehicle regionally from serves difference power much

side, off-highway the the more there's parity a bit and think I across commercial region. in On the vehicle content

market fair. we're what do to largely I comparable, skewed - vehicle pretty for certainly and So light drive is a more producing a bit That's is global is but systems North America.

Aileen Smith

year-over-year when around the impact I year, Is And for for quarter? which bridge XQ you perspective going supply basis particularly of disruptions possible lapping Or on the conversion may that revenue, an organic think operational you look in a full Is about it mat. in conversion to backdrop course at a be question, then the from the talked the to just the is through year? for chain function you've think you we excludes raw year? the something back second get in there Great, a XX% is half that's and that how comps, XX% the resolved us linger easier helpful. relative from to second commentary on of it from where of

Jonathan Collins

things. two it's Yeah,

them. It's comp of hit You the QX. in one

And that But helps sales premium half standpoint, second profile we for cost some we to those the second it's is second outside the them. So items. in approaching of a the to two of other is across year, And organic, see half abating. the of touched these decline. is which also do a obviously indicated recovery QX of saw on from in a impact just year all dramatic you the then but parts last but material isolated in just business, premium costs margin pretty raw was breakeven really on organic of those factor the up significant the overall we've the last year really conversion, the catch costs one, of of

Aileen Smith

Thanks question. very taking for the That's helpful. Fantastic.

Jonathan Collins

Yeah. Thanks Aileen.

Operator

Markets. - of Spak question comes line next Your Joseph from RBC Capital a

Joseph Spak

Thanks. everyone. Good morning,

sort holding You the the and talked also this been and a up is you better any if do wondering but couple I'm mix to light times there's - about of at difficult some least maybe the sales, can. those this of of quantify, a sort and the guys versus vehicles make LVD you sort vehicle quarter. trucks lot much they as employed these from this forecast your strategy for benefit, of automakers of for as a because to compare production of think

a reported results of difficult compare little is especially comprehend? produced sort your that maybe versus that is as what or to might bit screened what was was you be better - actually So

Jonathan Collins

Yeah, I on it's think is risen. haven't for the margin because if it vehicles inventories those the

Demand low relatively remains perspective. really from they're historical a So still strong.

as dislocation a And I would think our sales see that going going as OE programs. I comparable expect with are Xs supplying other Tier much to there. QX in that to our of in these So well don't you're likely more be is there's customers, what

Joseph Spak

you I slides, noticed XX raised EV Okay, the points. for also you you talked guidance. know growing your investment then basis sales by thank that. about And I the in

your stuff that talking Or just dollar coming bit? terms you guidance? taking out in also it a up opportunity what little could with that more the maybe previously about also you expected maybe is fits was So in like start into better sales are

Jonathan Collins

pretty thought of ago. it's Yeah, a close what months to we couple

million that There's a more XXXX headwind that thought. markets. engineering of XX our and amount tremendous to of was giving than work I BP the carefully. happen continues customers advanced was all or that So sales key We'll compared continue end what across $XX watch to we to increase reference pretty advanced that close that to with is

customers it's change not opportunities to going So that. of that. But advantage When that's take core guide. a the we're we do been to from continue smarter original current this technology, to to attractive this with no, - there's highlight meaningful guide

Joseph Spak

particular one. just this, the maybe this if in quick conversion power anything last one technologies I'm Okay, in quarter. behind but sorry, strong missed I

Jonathan Collins

steel has most Just the the so they're of commodity been we've those of of launches the some saw. markets continuing to getting perform impact. past us seen obviously, having we And that an side, on inflation less

So really well. the business markets that's better and performing getting

last we've really seen couple that recovery encouraged about of the in years. business the we're So over

Joseph Spak

Thank you.

Jonathan Collins

Yeah.

Craig Barber

the we're for going Alright, minute reconnect a just our the operator we'll moment. take next just line here while question. and just with we'll our in we continue to Regina pause Q&A a

Operator

line the Capital from Picariello Markets. question of comes KeyBanc next Your James with

James Picariello

good guys. Hey, morning,

Craig Barber

patience for your ahead. James. Thanks Go

James Picariello

problem. No

sounds for decent the to year, for though cadence the you visibility have quarter. second back the as Just it

to framework? should So second if both half your we on a current first half we thinking within half provide now half prior split revenue any breakout back per Can that think you had EBITDA. which first for just guidance, right, and how your even second about be color pretty

Jonathan Collins

upside comparable in I to a mean, potential - follow see typically any would third going where and a workdays, QX Seasonally, we're the second follow margin. better we and which had think the phasing middle would the towards little on quarter, the half sales upside yields I the Yeah, profits. lighter usually bit based a higher sales of on is on the year, second

the about of chip through second half obviously, next shortage, a year. couple better And the clarity we on a we'll kind and of we're months the position that's the give greater what it. thinking get for out So of to how once have better be in

James Picariello

what can then is on any to provide EV you EV the what already pipeline? then And based programs, just what programs, mean, there I communicated, EV program And starting you've maybe update is us, Okay. timeframe. that this that awards on the I remind are XX - that, or you new And that is a ship basis point spend, Dana's - there's number year, out impact the is related for EV then know year? that guys the called unchanged new is

Jonathan Collins

that. consistent, having So change not And we remains the margins in point. with do that that's there. we What to to there's great supply right on did That want meaningful that is couple a to offset ago. to - were happening chain, ability of that. Typically, years in so that's other one accentuate efficiencies that. help just compared But limited look everything a areas we impact just highlighting would now, for cost the

excited relates today really for backlog, programs, vehicles where the medium-duty to about them. PACCAR we're it As producing

software reminder, our vehicle e-propulsion As or encouraged the e-power highlighted so complete call. that. also on embedded the the a electric the really just system and drive about the system not electrified full and programs last the but that, train, that's controls of off-highway line, power on only We some

that's excited we're the scissor have lift that. with about We JLG coming the online, Devinci

the electrification key the programs of front. So those a couple are there on

moment work new relates tremendous of As business. is all to our just a amount all across it with on our of highlight to end programs, I of the There markets customers ago. a tried new

programs. teams now getting we're really business about to infrastructure excited these absolutely timing near the of electrified talk we that swamped doing pricing of a customers future. sure sales But engineering right focus those technical wanted all more to about to lot new our today is for So on and in are that what and electrification the make advanced products. We're advanced we support can work to

James Picariello

markets, markets X%. as think asked collectively the And anywhere about though in volumes talked global just if one more your you plus of I flat mining, in recovering industry XX-K I more seems in range off-highway two the - are on those where ag then, a And rapidly. it for construction

a of the off-highway, you seems raised think market just it's XXX million? that I it that is split component the on indicators of but So major segments, said just fast. turning evenly wondering because outlook the are green across fairly

Jonathan Collins

absolutely ag so right, the in you're than Yeah, more other two.

and a were in going that seeing, chip bit But are we done see But could QX ag than a QX encouraging. off of pure so. particularly signs demand for quite that anticipated construction, caught really we that there hopeful very some better been And up margin we contribution that great So we than did guard. what this has that's infrastructure of construction impacting too bit as some that we us by standpoint, as are more thought in our what a it's vehicle with why do really there spending split in on a pick that's see better the you're starts that's shortage because from well overall. business to little or quarter. planned more affected second encouraged evenly off-highway bit segment we light Part right, the well fact is to side, guidance is the Dana actually as the

James Picariello

Thanks.

Jonathan Collins

Yeah.

Operator

next Your line of Research. Wolfe from Rod with comes Lache question the

Rod Lache

longer-term electric with GMs the bit aspects ask be would procurement And wondering be Dana suppliers be or seem drive of electronics talk drive to for whether could a in themselves aligning of about you are multiple wanted and electrification, whether I even power light ones if any everybody. separate certain I'm that their Fords vehicle a to suppliers. line worlds just electronics there's of implications power from going about morning, sourcing lines, number think Good that the ultimately to maybe you the OEMs, that little other like has strategy?

Jonathan Collins

create it's in in to range conversations a component of sourcing. Rod. ability from a models to system. across electrification our or We're the system certainly all continue think of in think components customers upside. been engaged at I observation interesting end going seeing We've it's broad an We full sourcing Yeah, sourcing supply content to to markets certain complete

power in a in electronics years electrodynamic ago. or and couple electric have just that we motors have didn't we So offerings now of the

for But of smaller So clearly, we're a in focused opportunity But forward our that across for that light two. our and end market in next for But to our encouraged on the they lot with highlight, us. you vehicles. backlog growth wins one vehicle slowest is that's three, because a our looking the are that's the early the system. full and this the are moving year markets engagement are by we customers or have the the lighter unfolding all

Rod Lache

back visibility of maybe that you Okay. could you just in and for Can size what think we bridges premium have might improving has And and any as if you incrementals have, you half. into costs, the of the up think the about XXXX be delta sort recovers? decline the on us whether that that you confidence the in clarify degree as implications or that

James Kamsickas

But manufacturing piece recoveries. my We've of the details chain the like a part far run is on supply weeds. let and that of one. being he Rod, of into in that I've competence, like Sure, seen it, terms Jonathan question too or the good big if anything I'll without supply it touch backside into can, of I morning. but run years this besides XX just seen in the want in plus it of think reiterate, a to going ups, don't in not going I picture up.

mean it what I is. So is it

to relates little back a come world - to it it to is starting starting supply chain, the together bit. As is

direct everybody you of it manufacturing when maybe that there in potatoes follow ship, out you is small to was they can you that you're to that a don't about as were sea all get port need compared at a those container I other et But cetera, or talk So the know delays, about sea I stuck answer. container Los that company, in certainly, et leading Angeles cetera. as the port give when you don't of closely talked that Norfolk, if are delays

vessels jam a back containers starting into that's sort delay issue countries which ultimately to origin a massive itself was turned out. of and to of other so of that returning And

say very, vessels a the this to very quantify between so to moving you I Xs, going that - it's and you're to issues containers Rod, the There Xs, very forth, any there obviously, will your quantify. the Tier that's million Tier So so going to this. about sea from to is have labor Xs quarter, one to hear of and calls Tier parts to you only out of exactly that you're supply and it difficult. difficult know supply

know this per what on guy in Now rodeo time. its first on to we're isn't else better being first and second, I It's is a something se comfortable operations this don't that that's to be Feel basis. an week. - that sure, it's a going But my not is fixed day for a getting take something or day-to-day going I

Jonathan Collins

to year the think would be margin such expect XX%. and Rod, is better of the it QX. we Yeah, in profile we at we're just - first terms that half But than going of QX wouldn't be to be indicating the

the improvement in of most expecting second the of to certainly happen the in we're half cost year. So the

are As this these Jim get to XX% to days work through some not indicated, we've to improvement an still year But of us issues. that weeks got months, expecting we or margin.

Rod Lache

Great.

you. thank Okay,

Jonathan Collins

Yeah.

Operator

line Suisse. from Your Credit comes question with of next Levy Dan the

Dan Levy

for questions. Thanks taking the

a margin where I obviously had platforms, your contribution vehicle, very that's contribution having want light good magnified. purely of were where and the First, core just margin in the outside issues that I revenue chain in by that America you only more good, questions. programs. contribution, just And the addressed much But Is I that's lower good what North think function core think quite supply XX%. dynamics vehicle, of That's despite the you particularly this but - - were exposure. this to underscores sort

Jonathan Collins

it. when they're It's the the our to we're these but logistics factories needed. only that incurring, operating due premium got costs Yeah. You not in getting not implications also deliveries side, on

hit conversion LVs So quarter too, you're items. the commodities key just in the first well affected you obviously, by but then was right. margin the organic And overall on as

Dan Levy

what up Okay. what is discussions tenor when a And the quick then same seeing the tone how that, up? so sort shape did to them the they're seeing customers they commercial with same - of a well shape does do margin of and pressures mitigate discussion? the commercial the as on that trying their pressures just follow the pressures to Because can your sets how they're on side, or of are the

James Kamsickas

apologize, question else's will or earlier, - think to I to so I but you little somebody question need buckets. be my answer, which is, bit different redundant dimension a into A good two

First talk both we path collectively - there's commodity customers work formulaic, if us are and of with. our not all, together. down generally And to just that costs, about everybody precedents they're pretty those are that And familiar we formulaic. roll and

sales. do this, or it, ability the that, price - on would it reached but on pinnacle ability, it hasn't to have it a say not move associated to As it's but that the I would I saying they pressure relates become other costs vehicle they say it's a easy, that the point have they're would do I call

degree with the I trying some been say a and have more call I'll the - be And in doing supplier already customers that, some are into. side all so business won't they've and that off-highway X going beyond our for extraordinary for would visualize multiple it And to on the and it recognition blunt get Tier flexibility extraordinary about to costs. so can't visual ensure I'll But so I that market there's and on depending sandwich. I'm some think just And paint different to there, they're fair very And you forth. it the a be can work protected. on the things on to the the with and that things some And some of supplier, extraordinary ham they'll fashion, us I we're us. reasons even

put Let's it that way.

Dan Levy

sourcing work and I up that's Trucks on second question. the to investing Great batteries doing side. a on just We and Volvo technology. company commercial mobile then in saw question on and some of EV some the wanted vehicle follow specifically charging news

revisit the EV past on I that's light commercial in different where efforts, So you versus side, know in interesting just maybe there's vehicle, questions more the we in vehicle because all? of on the maybe specifically can had dynamic sourcing the suppliers. that of how decision? Is evolving a maybe at there's on working looking you are vehicle at side customers Are at reliance more commercial sourcing shift all their seeing that your terms where

Jonathan Collins

Yeah. Dan, characterization. well, that's a fair

that Our been to consistent XX XX over pretty past experience is it's months. the

help to the as increase CV forms of that system, looking on lot these those. they provide component sourcing. as side, some matures, solutions. But market, take early we've some system broad And to it's a are volumes, a that think different that very of some to we and on in are even great coming of total level vehicles been So for some position going subsystems

opportunity of and customers with there of all models the space. different engaged lots vehicle So commercial those we're in within our out

James Kamsickas

million a stuff there's bit models have discussion, a we only not and be add to the into call turn that because in every and for our that and interest business careful things always of upfront I I'd color in been we've happen many in base inverters customers if to and other little in reiterate, travelled little the said over over to all we our a to like million, over backlog our motors earnings business, relates their of not it's a on a leave that decade. as garbled overall so have my world, customer at just well on miles lost But to sourcing a million commentary, and it is it cetera. lost et as this

learnings could capital, as associated of other the you knowledge argue all the this. the with it's it's same the warranty Okay, people, issue, but acquired, field some and base, of things it and same some the same same was

total as one we're to go ownership, we one the the So of actually put customers It's that where very don't sure road on be. is another not are to to It's as it. well our on bullish basically, cost our - sell it fake program. make thing our needs to it reliability

our And bullish customers so it. on are really

through a continue as markets to through. going our they pull of we're in think strength to I be pull as So position

Dan Levy

Great, you. thank

Jonathan Collins

Thanks, Dan.

Operator

with of from Your the line Ryan next JP Brinkman comes question Morgan.

Ryan Brinkman

hear There's And incremental my fleshed high discussion business, or more where for Maybe have tonight, thanks for you're cetera. the on support et on more lot if Great, amount electrification, tax lot a for or Biden of curious the given vehicle consumer the for benefit math might electrification been expecting driven the et administration of charging subsidies funding details greater for just out. side vehicle cetera. the question. we'll regarding to per any of seeing, light I be including think of hearing even of support subsidy a but yet taking support stations, credit, miles commercial maybe be cost

Jonathan Collins

to speak don't to Good of number or kind want government commercial I'd the they're think I that, administration am on and two of crazy is question. know anything behalf vehicle be because saying I I number to like light or I one, did, two? going number for vehicle who the isolate But If don't anything. anything to else.

solution, world green tomorrow? it's overall, emission more today. our and focus the think Not where's of sustainability I a on

that's So - obvious it going it's more bold reasons. case I to that forward. moving it for think although big I light don't, may don't in print the the seem be vehicle in like that

you're about end a the you're to think sure across to I make board. markets more going hear lot going

Ryan Brinkman

market? finally, going the that seeing, great. the off-highway the in what revenue of flip or just the of sort the around think or forward, just demand in miners for you have the be maybe like length. on of raw been What just then curious discussed you're world? material what And higher at ag look might Okay, the side farmers Thanks. cost input and increase how might on which - might it sides light I'm track there mining the of happening

James Kamsickas

of indicator great mining think And as been this that's in it well certainly of better be could so ag segment part catalysts too. performance the a one in early that performing the of we leading strong demand the Yeah, in year.

strengthen a that's the a we're year. part of So the reason throughout continued that eye careful And there's to we the catalyst think markets on. opportunity for keeping

Ryan Brinkman

final they I a can Okay, been sort and did as ag that second then bit derivative have little down might just know sometimes benefit around truck commercial follow And Brazilian that there there, of softer. the from you it mining truck and mention up commercial transport the country.

around some that and what market, Brazilian know due might with forward. don't if the I curious, how truck the Just you're down there, going track COVID seeing of commercial that's or headlines to

Jonathan Collins

Yeah, the underlying demand fundamentals are it's a - good point. The strong. demand

there. a our better output. you're see from bit the on So containment team best we and a customers right, that the have is cap a and we measures The get affected indication local of our had have from should performance pandemic country

safe, hopeful we're demand the better other more and they in work are a will through that and of products year. for that as one later our So be people services the benefits

Ryan Brinkman

Very helpful, thank you.

James Kamsickas

Ryan. Thanks

James Kamsickas

thanks joining well, call Okay, today. the for everyone

we've As we've one super returning what I bit season of. here of is into the put preparing a the done or as And in that of business you levels. is it a I of obviously been on This Profits team guess job. this a are always, summary earning of what this is put been aware many The normal growing. spear a the tip - I'd has waiting to for. the think of bit a We're for. remarkable phrase I quick almost stamp encouraged. are I'm

a this moving like the feel global the parts - I bit degree. falls along every and all to So it. into of a to we're with explaining also the is pandemic go might year in once a umbrella be unexplainable This of XXX

and their in I of list tell saw you our fact for with. 'XX is we out on. this of things. opportunity just anything as some on through are support the audience view protect dramatically challenges customers any goes clarity what doing customers us employees there have hope they're people in we they're anyway my through back for thank dealt like the to our than I dealing besides is well in us It on navigate got you nothing the ever with it 'XX. doing the we to So working the is as everything gave as this to Thank I and will tougher that with before. take our craziness whatever go and

update giving quarter. thank you for an to you your forward everybody next So support. We look

Operator

call. for today's This concludes conference Thanks participating.

now disconnect. may You

Dana (DAN) 28 Apr 212021 Q1 Earnings call transcript