Q4 2023 Dana Inc Earnings Call
Operator: Ladies and gentlemen, this is the Operator. Today's conference is scheduled to begin momentarily. Until that time, your lines will again be placed on music hold.
Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
[music].
Regina: Thank you for your patience. Good morning, and welcome to Dana Incorporated's fourth quarter and full year 2023 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 speaker's remarks and the Q&A session, will be recorded for replay purposes. For those participants who would like to access the call from the webcast, please refer to the URL on our website and sign in as a guest. There will be a question and answer period after the speaker's remarks, and we will take questions from the telephone only.
Regina: Good morning, and welcome to Dana incorporated fourth quarter, and full year 2023 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 for those participants who would like to ask.
Speaker Change: That's the call from the webcast. Please reference the U R. L on our website and sign in as a guest there will be a question and answer period. After the Speakers' remarks, and we will take questions from the telephone only to ensure that everyone has an opportunity to participate in today's Q&A, we ask that callers limit themselves to one question at a time.
Regina: To ensure that everyone has an opportunity to participate in today's Q&A, we ask that callers limit themselves to one question at a time. If you would like to ask an additional question, please return to the queue. At this time, I would like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations, Strategic Planning, and Corporate Communications, Craig Barber. Please go ahead, Mr. Barber.
Speaker Change: I'd like to ask an additional question. Please return to the queue. At this time I would like to begin the presentation by turning the call over to you Dana as senior director of Investor Relations strategic planning and corporate Communications Craig Barber. Please go ahead Mr. Barber.
Craig Barber: Thanks, Regina, and good morning, everyone, on the call. Thank you for joining us today for our fourth quarter and full year 2023 earnings call. You'll find this morning's release and presentation are now posted on our investor website. Today's call is being recorded, and the supporting materials are the property of Property Update Incorporated. They may not be recorded, copied or rebroadcast without our permission.
Craig Barber: Thanks, Regina and good morning, everyone on the call. Thank you for joining us today for our fourth quarter and full year 2023 earnings call.
Craig Barber: You'll find this morning's release and presentation are now posted on our Investor website, today's call is being recorded and supporting materials.
Speaker Change: They may not be recorded copied or rebroadcast without our written loving.
Craig Barber: Allow me to remind you that today's presentation includes forward-looking statements about our expectations for Data's future performance. However, actual results could differ from those suggested by our comments today. Additional information about the factors that could affect future results is summarized in our Safe Harbor Statement, followed by our public filings, including our reports. On the call this morning are Jim Kamsickas, our Chairman and Chief Executive Officer, and Timothy Krause, Senior Vice President and Chief of National. It is my pleasure to call you over to the gym.
Speaker Change: Allow me to remind you that today's presentation includes forward looking statements about our expectations for dana's future performance actual results could differ from those suggested by our comments today additional information about the factors that could affect future results are summarized in our safe Harbor statement.
Speaker Change: Including our reports.
Speaker Change: On the call. This morning are Jim Kim <unk>, our chairman and Chief Executive Officer, and Timothy Crouse, Senior Vice President and Chief Financial Officer.
Speaker Change: My pleasure to turn call over to Jim.
James K. Kamsickas: Good morning, and thank you for joining us today. Before I begin, I want to acknowledge that Dana is celebrating 120 years of serving as a leading innovator across all mobility markets. We've been serving our customers every step of the way, beginning with inventing the ENCASE universal joint, which enabled the transition from chain-driven vehicles to modern propulsion systems. Today, Dana develops fully integrated propulsion systems for the most advanced ICE, hybrid, and electrified powertrains. It's an honor and privilege for the 42,000 Dana associates today to represent the collective Dana family over the decades.
Jim Kim: Good morning, and thank you for joining us today before I begin I want to acknowledge the Dana is celebrating 120 years, serving as a leading innovator across all mobility markets. We've been serving our customers every step of the way beginning with inventing the encased universal Joy, which enabled the transition from chain driven vehicles to modern.
Jim Kim: Ocean systems today, Dana develops fully integrated propulsion systems for the most advanced IC hybrid and electrified powertrains and it's an honor and privilege for 42000, Dana associates today to represent the collective Dana family over the decades.
James K. Kamsickas: Please turn with me to page 4, where I will discuss the highlights from last year and our outlook for 2024. Starting on the left side, I'm pleased to report that Dana achieved strong sales of $10.6 billion in 2023, a nearly $400 million increase over last year driven by strong customer demand, the roll-on of our new business backlog across all-in markets, including traditional ICE and ED programs, market share gains, and cost inflation recovery. Our continuous year over year sales growth demonstrates the competence and trust our customers have in Dana. Adjusted EBITDA for the year was $845 million, up $145 million driven by efficient execution across the company. This is a significant accomplishment considering the headwinds the light vehicle market faced in the fourth quarter due to the UAW strike, which you are aware Dana was disproportionately impacted given the vehicles involved. As you know, some of Dana's largest vehicle platforms include the Jeep Wrangler and Gladiator, Ford Bronco and Ranger, and the Ford Super Duty, all of which stopped vehicle production due to the UAW stand-up strike last fall. Accordingly, numerous Dana plants immediately reacted and shut down all or substantial portions of their manufacturing, which supplied these respective vehicle programs.
Jim Kim: Please turn with me to page four where I will discuss the highlights from last year and our outlook for 2024.
Jim Kim: Starting on the left side I'm pleased to report that Dana achieved strong sales in 2023 of $10 $6 billion.
Jim Kim: And nearly $400 million increase over last year, driven by strong customer demand the rollout of our new business backlog across all end markets, including traditional IC EE programs market share gains and cost inflation recoveries.
Jim Kim: Our continuous year over year sales growth demonstrates the confidence and trust our customers have and Dana.
Jim Kim: Adjusted EBITDA for the year was $845 million up $145 million driven by efficient execution across the company. This is a significant accomplishment considering the headwinds the light vehicle market faced in the fourth quarter due to the UAW strike, which you are aware Dana was disproportionately impacted given the vehicles involved.
Jim Kim: As you know some dana's largest vehicle platforms include the Jeep Wrangler, and Gladiator Ford Bronco, and Ranger and the Ford Super duty, all of which stopped per vehicle production due to the UAW standup strike last fall.
Jim Kim: Accordingly, numerous dana plants immediately reacted and shut down.
Jim Kim: All our substantial portions of their manufacturing, which supply these respected vehicle programs.
James K. Kamsickas: As challenging as the shutdowns were, the restart was an even more daunting task, ensuring that labor, component supply, logistics, and so forth were in place and coordinated for a successful operational restart. It was very difficult to execute, but the entire Dana team pulled together, resulting in a near-flawless shutdown and restart across the company. A huge thank you to our Dana associates for their collaboration, commitment, and teamwork to ensure our customers were successfully supported. Next, pre-cash flow came in about where we expected for the year, which is reflective of the higher capital expenditures and working capital requirements to support our aggressive launch schedule this past year and new business growth, as well as some impact from the UAW strike. Moving to the center of the slide, a few key highlights of the year include our sales improving by 4% over the prior year, more than an 80% increase since 2016. Profit growth was up 20% year-over-year, leveraging organic incrementals of more than 40% driven by the roll-on of new and replacement programs, and improved efficiencies across the company, as customer order volatility continued to decrease.
Jim Kim: As challenging as the shutdowns were the restart was even more daunting task, ensuring that labor component supply logistics and so forth were in place and coordinated for successful operational restart.
Jim Kim: It was very difficult to execute but the entire Dana team pulled together, resulting in a near floor was shut down and restart across the company.
Jim Kim: A huge thank you to our Dana associates for their collaboration commitment and teamwork to ensure our customers were successfully supported.
Jim Kim: Next free cash flow came in about where we expected for the year, which is reflective of the higher capital expenditures and working capital requirements to support our aggressive launch schedule. This past year and new business growth as well as some impact from the UAW strike.
Jim Kim: Moving to the center of the slide.
Jim Kim: A few key highlights of the year include our sales improved by 4% over the prior year more than an 80% increase since 2016.
Jim Kim: Profit growth was up 20% year over year, leveraging organic incrementals of more than 40% driven by the roll on of new and replacement programs improved efficiencies across the company as customer order volatility continued to decrease.
James K. Kamsickas: In 2023, we made significant investments to support the growth of our business, including executing a record 100-plus launches spanning both ICE and EV vehicles across all end markets. Additionally, we continue to strengthen our capabilities across the company to improve our process technology and manufacturing capabilities. Simultaneously, we organically complete the build-out of our balanced product portfolio, including our complete in-house electrification capabilities that solidify Dana as an energy source agnostic supplier, providing class-leading products and systems to support I.C.E., hybrid, and E.V. manufacturers.
Jim Kim: In 2023, we made significant investments to support the growth of our business, including executing a record 100, plus launches spanning both IC E. N E V vehicles across all end markets. Additionally, we continued to strengthen our capabilities across the company to improve our process technology and manufacturing.
Jim Kim: During capabilities.
Jim Kim: Simultaneously, we organically complete the buildout of our balanced product portfolio, including our complete in house electrification capabilities that solidified Dana as an energy source agnostic supplier, providing class leading products and systems to support Ice's hybrid and EV manufacturers.
James K. Kamsickas: Our results to date are a direct reflection of the actions taken by our cohesive and integrated organization. Our efforts continue to strengthen our foundation, which is driving strong momentum going into 2024. Moving to the right side of the slide, we will provide details about our outlook for 2024. A key point this year is that we expect higher sales, profits, and free cash flow driven by an improved operating environment as supply chains and customer production schedules return to more normal conditions. We are continuing to drive synergies across the business, resulting in robust efficiency improvements. Not only did this positively impact our financial performance, but these actions also allowed us to differentiate in customer satisfaction, leading to a record sales backlog of $950 million over the next three years. This is a $50 million improvement over the prior three-year backlog.
Our results to date are a direct reflection of the actions taken by our cohesive and integrated organization. Our efforts continue to strengthen our foundation, which is driving strong momentum going into 2024.
Jim Kim: Moving to the right side of the slide we will provide details about our outlook for 2024.
Jim Kim: A key point this year is that we expect higher sales profits and free cash flow driven by improved operating environment as supply chain and customer production schedules retuned returned to more normal conditions.
Jim Kim: We are continuing to drive synergies across the business, resulting in robust efficiency improvements not only did this positively impact our financial performance, but these actions also allowed us to differentiate and customer satisfaction, leading to a record sales backlog of $950 million over the next three years. This is a $50 million improve.
Jim Kim: <unk> over the prior three year backlog.
James K. Kamsickas: This steady and measured sales growth is balanced across ICE and clean energy programs and aligns with our respective OEM partners' product development plans, which span their full suite of vehicle portfolios. The strength of Dana is that we are balanced by ICE and EV products, mobility and markets, geographies, and customers. By driving natural synergies across our company, Dana is more capable than ever to continue to deliver profitable growth. Please turn with me to page five for the outlook on the operating environment for this year.
Jim Kim: This steady and measured sales growth is balanced across ICD and clean energy programs and aligns with our respective OEM partners product development plans, which span their full suite of vehicle portfolios. The.
Jim Kim: The strength of Dana is that we are balanced by Ice's and EV products mobility end markets geographies and customers by driving natural synergies across our company Dana is more capable than ever to continue to deliver profitable growth. Please.
Jim Kim: Please turn with me to page five for the outlook on the operating environment for this year.
James K. Kamsickas: As we look to 2024, we anticipate Dana's overall operating environment to improve due to the refresh programs, our record new business backlog, and ongoing company-wide efficiency improvements driving profitable growth. Being on the left side of the slide, we expect commodities to be a slight headwind to sales and profit in 2024. This is true even though steel prices have declined from their peak and are expected to be modestly flat compared with 2023 with lower volatility as we see the reversal of commodity recoveries with customers. Finally, for this section, foreign currencies as translated to United States dollars will continue to be a slight headwind due to the relative strength of the dollar. Moving to the center of the slide.
As we look to 2024, we anticipate dana's overall operating environment to improve due to the refresh programs our record new business backlog and ongoing company wide efficiency improvements driving profitable growth.
Jim Kim: Being on the left side of the slide we expect commodities to be a slight headwind to sales and profit in 2020 for.
Jim Kim: This is true even though steel prices have declined for peak and are expected to be modestly flat compared with 2023 with lower volatility as we see the reversal of commodity recoveries with customers.
Jim Kim: Finally for this section foreign currencies is translated to the United State dollars will continue to be a slight headwind due to the relative strength of the dollar.
Jim Kim: Moving to the center of the slide cost inflation continues to moderate the labor cost have increased globally with recent global events. We are monitoring ocean freight conditions, and we will navigate ultra alternative logistics as needed and.
James K. Kamsickas: Cost inflation continues to moderate. Labor costs have increased globally. With recent global events, we are monitoring ocean freight conditions and will navigate alternative logistics as needed.
James K. Kamsickas: And, of course, we are continuing our efforts to improve cost and price to mute the impact of inflation. Finally, on the right side of the page, as customer production stability continues to improve, it enables us to avoid numerous inefficiencies, eliminate waste, and acutely leverage cost synergies across the company. This, coupled with the return to a more normalized number of new program launches after our record year in 2023, will enable us to lower launch costs.
Jim Kim: And of course, we are continuing our efforts to improve cost and price to mute the impact of inflation.
Jim Kim: Finally on the right of the page as customer production stability continues to improve enables us to avoid numerous inefficiencies eliminate waste and acutely leverage cost synergies across the company.
Jim Kim: This coupled with the return to a more normalized number of new program launches. After a record year in 2023 will enable us to lower launch costs.
James K. Kamsickas: Let's turn to slide 6, where I'll provide perspective on the global end market trends we are seeing across light vehicle, commercial vehicle, and off-highway markets. I want to remind you that our market outlook is based on input from third-party forecasters, as well as from our customers and our own experience. The arrows for the markets in the regions indicate the change expected for this year compared with the prior year for production volumes in these key markets.
Speaker Change: Let's turn to slide six where I'll provide perspective on the global end market trends, we are seeing across light vehicle commercial vehicle and off highway markets.
Speaker Change: I want to remind you that our market outlook is based on input from third party forecasters as well as our customers and our own experience the arrows for the markets and the regions indicate the change expected for this year compared with the prior year for production volumes in these key markets. The arrow at the right under the Diamond is the <unk>.
James K. Kamsickas: The arrow at the right under the diamond is the net sales impact for Dana from Market Volume, Pricing, and Market Share Changes. Beginning at the left of the page, we anticipate the light vehicle full-frame production volumes to be up 2% and 5% as customer demand remains resilient for key platforms and returns to normal production after the UAW strike last year. Moving to the center of the page, the market for heavy vehicles will be lower compared to last year after several years of growth. As we will share with you a little later, Dana is gaining market share in Commercial Vehicles, which will help offset lower production levels in this market. Moving to off-highway, with improvement in equipment inventory levels last year, we expect agriculture to be down, while construction and mining demand should both trend somewhat flat compared to last year.
Speaker Change: Net sales impact Medina.
Speaker Change: From multi volume pricing and market share changes.
Speaker Change: Beginning at the left of the page, we anticipate the light vehicle whole frame production volumes to be up 2% and 5% as customer demand remains resilient for key platforms and returns to normal production after the UAW strike last year.
Speaker Change: Moving to the center of the page the market for heavy vehicles will be lower compared with last year. After several years of growth.
Speaker Change: As we will share with you a little later dena is gaining market share in commercial vehicle, which will help offset lower production levels in this market.
Speaker Change: Moving to off highway with improvement in equipment inventory levels last year, we expect agriculture to be down well construction and mining demand should both trends somewhat flat compared with last year.
James K. Kamsickas: We will continue to monitor these end markets as demand can move quickly. At the bottom of the page, you can see on a regional basis, it's a bit of a mixed bag, with North American Asia seeing growth, somewhat offset by Europe and South America. The net result for Dana will be market growth of $135 million. This above-market growth is driven by share gains and a beneficial market mix.
Speaker Change: We will continue to monitor these end markets as demand can move quickly.
At the bottom of the page you can see on a regional basis, it's a bit of a mixed bag with north American and Asia seeing growth somewhat offset by Europe, and South America. The net result for Dana will be a market growth of $135 million.
Speaker Change: This above market growth is driven by share gains and a beneficial market mix.
James K. Kamsickas: Please turn to slide 7, and I will provide a brief update on our very substantial new vehicle program launch performance last year. As we shared with you in prior calls, Dana completed a record number of launches in 2023, with over 100 programs encompassing traditional, hybrid, and EV applications across all markets globally. This effort required a significant investment of people and capital resources to launch our extremely large and complex programs that together represented more than $2.5 billion in annual sales. The bottom line is that if a company gets its launch wrong, it often requires years to recover. If you get them right, the programs often serve as a foundation for future company success.
Speaker Change: Please turn to slide seven I'll provide a brief update on our very substantial new vehicle program launch performance last year.
Speaker Change: As we shared with you in prior calls.
Speaker Change: <unk> completed a record number of launches in 2023 with over 100 programs encompassing traditional hybrid and EV applications across all markets globally.
Speaker Change: This effort required a significant investment of people and capital resources to launch are extremely large and complex programs that together represented more than $2 $5 billion in an annual sales.
Speaker Change: The bottom line is that if a company gets launches wrong. It often requires years to recover if.
If you get them right the programs often serve as a foundation for future company success. There is no question. We had a remarkable launch here in 2023 customer satisfaction was outstanding as our program management product engineering and operating teams performed at an exceptionally high level.
James K. Kamsickas: There is no question we had a remarkable launch year in 2023. Customer satisfaction was outstanding as our program management, product engineering, and operating teams performed at an exceptionally high level. A big thank you to the Global Dana team for their tremendous efforts and, of course, for successfully industrializing the new programs to ensure that our customers were, in turn, successful in their respective vehicle launches. Please turn to slide 8 for a look at some examples of new vehicles we will be equipping with our award-winning systems as part of our record three-year new business sales backlog. For the seventh consecutive year, Dana has increased our three-year sales backlog. As a reminder, we calculate our backlog on a net basis, which includes only new sales, net of any lost business, and we rebase the starting year and push out the ending year of that three-year period.
Speaker Change: A big Thank you to the global Dana team for their tremendous efforts and of course for successfully industrializing the new programs to ensure that our customers were in turn successful and they're respectful respective vehicle launches.
Speaker Change: Please turn to slide eight for a look at some examples of new vehicles, we will be equipping with our award winning systems as part of our three year were a record three year new business sales backlog.
Speaker Change: For the seventh consecutive year Dana has increased our three year sales backlog as a reminder, we calculate our backlog on a net basis, which includes only new sales net of any lost business and we rebase the starting here and push out the ending year of that three year period.
James K. Kamsickas: This methodical, methodically helps to provide a clear view of the actual above-market growth. This slide shows just a representative sample of representative programs as our record three-year backlog is made up of numerous new business wins for both EV and ICE powered vehicles. To that end, Dana has amassed nine hundred and fifty million dollars of sales backlog through 2026, another record for the company. That is $50 million more than our prior three-year backlog and, as you can see in the upper part of the slide, includes $350 million of incremental new sales coming online in 2024. Included in this year's $350 million in incremental new business is a strong balance of new ICE and EB programs across all markets and regions.
Speaker Change: Methodical.
Speaker Change: Methodically helps to provide a clearer view of the actual above market growth.
Speaker Change: This slide shows just a representative.
Speaker Change: Representative programs as a record three year backlog is made up of numerous new business wins for both <unk> and ICD powered vehicles.
Speaker Change: To that N. Dana has amassed $950 million of sales backlog through 2026, another record for the company.
Speaker Change: That is $50 million more than our prior three year backlog and as you can see in the upper part of the slide includes $350 million of incremental new sales coming online in 2024.
Speaker Change: Included in this year's $350 million incremental new business has a strong balance of new ICT and EV programs across all markets and regions.
James K. Kamsickas: We expect to see an additional $300 million increase over the prior backlog for 2025, which will total $650 million in incremental sales, with several important programs coming online from JLR, Volvo, and Mitsubishi Caterpillar, to name a few. Through 2026, sales backlog increases by an additional $300 million with the major Global Light Vehicle program that I touched on earlier in the presentation, along with key programs in both commercial vehicle and off-highway customers, such as Navistar and Kramer. As you move to the bottom right corner of this page, you will notice that the EVs and ICE chart shows that 74% of the total $950 million backlog is coming from electric vehicle platforms.
Speaker Change: We expect to see an additional $300 million increase over the prior backlog for 2025, which will total $650 million in incremental sales with several important programs coming online from jail are global and Mitsubishi Caterpillar Caterpillar to name a few.
Speaker Change: Through 2026 sales backlog increases and additional $300 million with the major global light vehicle program that I touched on earlier in the presentation, along with key programs in both commercial vehicle and off highway customers, such as Navistar and Kramer.
Speaker Change: Turning your attention to the upper right hand side of the slide you can see that our sales back backlog is well balanced across end markets and regions.
Speaker Change: As you move to the bottom right right corner of this page you will notice that Evs and ICU chart shows that 74% of the total 950 million backlog is coming from electric vehicle platforms.
James K. Kamsickas: Our consistent and sustained revenue growth continues to serve as evidence that our energy source agnostic propulsion strategy is highly valued by our customers. By, excuse me, possessing complete ICE hybrid and EV in-house capabilities, we create value for our customers, which leads to content for vehicles and overall revenue growth for Dana. Dana is well positioned to build on the strong momentum, as we expect to further expand sales, which puts us firmly on track to achieve our long-term sales target of more than $11 billion in 2025. Our next few slides will provide a sampling of new business awards across our end markets. Please turn to slide 9 for a unique off-highway new business win, which happens to also be a new market for Dana. We are excited to share with you today that Dana is providing our class-leading electric vertical motor drive unit for a home-moved Hyster Yale three-wheel electric forklift truck going into production next year.
Speaker Change: Our consistent and sustained revenue growth continues to serve as evidence that our energy source agnostic propulsion strategy is highly valued by our customers.
Speaker Change: [noise] excuse me by possessing complete ice's hybrid and EV in house capabilities, we create value for our customers, which leads to content per vehicle and overall revenue growth for Dana.
Speaker Change: <unk> is well positioned to build on the strong momentum as we expect to further expand sales, which puts us firmly on track to achieve our long term sales target until 2025 up more than $11 billion.
Speaker Change: Our next few slides will provide a sampling of new business awards across our end markets. Please.
Speaker Change: Please turn to slide nine for a unique off highway new business win which happens to also be a new market for Dana.
Speaker Change: We are excited to share with you today that Dana is providing our class leading electric vertical motor drive unit four and on <unk> three wheel electric forklift truck going into production next year.
James K. Kamsickas: The newly designed forklift will feature a super compact electric drive unit with a high efficiency Dana motor that offers both superior traction and steering benefits, as well as enhanced productivity and cost of ownership. This is not only new business for Dana, but it is also a new market for us as well. This is further proof that our early push towards electrification has allowed us to expand into previously untapped markets, which is creating new and exciting growth opportunities for the future. Please turn with me to slide 10, where I will share an update on a new multi-market EV program in Europe. The next update was previously shared with you during our last Investor Day, when we communicated that Dana had been awarded a multi-market motor application for an unspecified major European OEM. Today, we can provide you with some details on this important new business. We're excited to share that Dana is supplying electric motors for Volvo's commercial vehicle business for their heavy duty and vocational trucks, while also supplying this technology for Volvo's construction equipment business for their new EC230 electric excavator off-highway application.
Speaker Change: The newly designed forklift will feature a super compact electric drive unit with a high efficiency Dana motor that offers both superior traction and steering benefits as well as enhanced productivity and cost of ownership.
Speaker Change: This is not only new business for Dana, but is also a new market for us as well further proof that our early push towards electrification has allowed us to expand in previously untapped markets, which is creating new and exciting growth opportunities for the future.
Speaker Change: Please turn with me to slide 10, where I will share an update on our new multi market EV program in Europe.
Speaker Change: The next date update had previously been shared with you during our last Investor day, when we communicated the Dana had been awarded a multimarket motor application for unspecified major European OEM today, we can provide you with some details on this important new business wins.
Speaker Change: We're excited to share that dana's supplying electric motors for Dana for <unk> commercial vehicle business for their heavy duty and vocational trucks. While also supplying this technology for Volvo construction equipment business on their new E. C. Two 230 electric excavator off highway application.
James K. Kamsickas: We have been supplying this technology for Volvo's latest medium duty truck in Europe since the second half of last year, and the electric excavator will be launched later this spring. Thus far, the launches and the products have been a great success. As you can see on this page, we continue to successfully scale our electrodynamics components and systems across multiple mobility markets. Internally, this is possible because we leverage internal purchasing, product systems, and engineering, manufacturing, and so forth, while, of course, benefiting from many other institutional synergies across the company. This is nothing new for Dana, as we have scaled our traditional ICE products across multiple end-user markets with customers such as Volvo for decades. Stay tuned, as we'll be making additional announcements about other vehicle applications that will also leverage this new technology in the future.
Speaker Change: We have been supplying this technology for mobile's latest medium duty truck in Europe since the second half of last year and the electric excavator will launch later this spring thus far the launches and products have been a great success as.
Speaker Change: As you can see on this page we continue to successfully scale, our electrodynamic components or systems across multiple mobility markets internally. This is possible because we leverage internal purchasing product systems and engineering manufacturing and so forth while of course benefiting from many other institutional synergies across the company.
Speaker Change: This is nothing new for Dana as we have scaled our traditional ICD products across multiple end user markets with customers such as Volvo for decades.
Speaker Change: Hey, tuned as we'll be making additional announcements about other vehicle applications that will also leverage this new technology in the future let's.
Speaker Change: Let's move to slide 11, where I'll talk about how we are further penetrating the north American commercial vehicle market.
Speaker Change: Operationally, taking on a significant taking on significant market share on short notice in a stable market is difficult to accomplish now consider doing so in the middle of the most challenging operating environment in decades, and Edina specific case launching more than 100 complex high volume programs at the same time.
James K. Kamsickas: Let's move to slide 11, where I'll talk about how we are further penetrating the North America commercial vehicle market. Operationally, taking on significant market share on short notice in a stable market is difficult to accomplish. Now consider doing so in the middle of the most challenging operating environment in decades and, in Dana's specific case, launching more than 100 complex, high-volume programs at the same time.
Speaker Change: Through our exterior an extraordinary efforts in 2023, Dana is methodically gained commercial vehicle market share under the <unk>.
Speaker Change: Under some of the most extreme and compressed industrialization timing and conditions as.
James K. Kamsickas: Through our extraordinary efforts in 2023, Dana has methodically gained commercial vehicle market share under some of the most extreme and compressed industrialization timing and conditions. As highlighted on slide 11, I'm excited to report that through these gains, we are achieving a more balanced customer distribution with multiple OEMs, including Packard, Trayton-Navistar, and Volvo. In fact, in 2023, we achieved our highest revenue in this segment since 2011 and increased our market share by more than 70% since 2016. We're also expecting increased sales in 2024. Our collaborative approach and operational execution are appreciated by our customers, which I believe will continue to drive growth now and in the future. Please turn to slide 12, where I will share some exciting news about expanding new business with our light vehicle customers. Slide 12 is another example of our ability to leverage our mechanical, electric, and thermal management capabilities across multiple vehicle platforms.
Speaker Change: As highlighted on slide 11, I am excited to report that through these gains we are achieving a more balanced customer distribution with multiple Oems, including pet car trading Navistar and Volvo in fact in 2023, we achieved our highest revenue in this segment since 2011 and increased our market share by more than 70% since two.
Speaker Change: 16.
Speaker Change: We're also expecting increased sales in 2024.
Speaker Change: Our collaborative approach and operational execution are appreciated by our customers, which I believe will continue to drive growth now and in the future.
Speaker Change: Please turn to slide 12, where I will share some exciting news about expanding new business with our light vehicle customers.
Speaker Change: Slide 12 is another example of our ability to leverage our mechanical electric and thermal management capabilities across multiple vehicle platforms.
Speaker Change: You recall, we announced during our prior earnings call that Dana was selected as the electrification partner to supplier integrated complete E propulsion systems for multiple all new EV programs for a major well known light vehicle OEM.
Speaker Change: We are still not permitted to share the specifics at this time, what I can tell you that we have recently expanded on a significant multi year relationship with the addition of an all new electric SUV to the lineup.
James K. Kamsickas: If you recall, we announced during a prior earnings call that Dana was selected as the electrification partner to supply our integrated, complete e-propulsion systems for multiple all-new EV programs for a major, well-known, light vehicle OEM. We are still not permitted to share the specifics at this time, but I can tell you that we have recently expanded on our significant multi-year relationship with the addition of an all-new electric SUV to the lineup. As you can see in the picture of the eDrive unit itself, our 4-in-1 independent drive system, including the Dana motor, inverter, eTransmission, and, pictured in blue, is an example of our eThermal components. As a reminder, the Dana 4-in-1 independent eDrive uses similar technology and many of the same components as our rigid eBeam system, which we have talked about previously for use in heavier applications for full-frame programs we have been awarded in our light vehicle segment.
Speaker Change: As you can see in the picture of the E drive It E drive unit itself, our foreign one independent drive system, including the Dana Motor inverter E transmission and pictured in Blue isn't.
Speaker Change: As an example of our E thermal components.
Speaker Change: As a reminder, the Dana form one independent E drive use a similar technology in many of the same components as our Richard E beam system, which we have talked about previously for use in heavier applications for full frame programs. We have been awarded in our light vehicle segment.
Speaker Change: Consistent with our commercial vehicle and off highway customers, our light vehicle customers recognize and are benefiting from dana's complete in house E propulsion capability, while electrification adopt and adoption is accelerating at different rates. When you compare heavy vehicle to off highway to light vehicle. The truth of the matter is we are scaling volumes.
Speaker Change: Across markets and are prepared for whatever our customers' needs may be regardless of where they are in their journey towards zero admission.
James K. Kamsickas: Consistent with our commercial vehicle and off-highway customers, our light vehicle customers recognize and are benefiting from Dana's complete in-house e-propulsion capability. While electrification adoption is accelerating at different rates when you compare heavy vehicle to off-highway to light vehicle, the truth of the matter is, we are scaling volumes across markets and are prepared for whatever our customers' needs may be, regardless of where they are in their journey towards zero emissions Please move to slide 13, where I'll discuss drivers of profit improvement. This slide illustrates the drivers of Dana's profit growth in 2023, as well as 2024. Beginning on the left, as we have seen less volatility in customer bill patterns, we have been able to accelerate actions to improve the overall efficiency of the business, driving increased profitability. For example, we have been able to achieve fixed cost savings and increased asset utilization by ensuring that we are leveraging our resources in the most efficient way possible.
Speaker Change: Please move to slide 13, where I'll discuss drivers of profit improvement.
Speaker Change: This slide illustrates the drivers of Dana's profit growth in 2023 as well as 2024.
Speaker Change: Beginning on the top left as we have seen in the lit seen less volatility in customer bill patterns. Thus, we have been able to accelerate actions to improve the overall efficiency of the business driving increased profitability.
Speaker Change: For example, we've been able to achieve fixed cost savings increased asset utilization by ensuring that we are leveraging our resources in the most efficient way possible.
Moving down to the center box the two most relevant factors and improving profitability have been the rollout of new and replacement programs at stronger margins and our ability to drive greater efficiencies across the entire organization.
Speaker Change: In the bottom left corner ongoing inflation recoveries from customers as well as more efficient supply chain management and product engineering help have helped us lower our cost and improve profit.
Speaker Change: Now if you look to the right of the slide our EBITDA increased by $245 million or greater than 20% from 2022 to 2023 landing on 840.
James K. Kamsickas: Moving down to the center box, the two most relevant factors in improving profitability have been the rollout of new and replacement programs at stronger margins and our ability to drive greater efficiencies across the entire organization. Third, in the bottom left corner, ongoing inflation recoveries from customers, as well as more efficient supply chain management and product engineering, have helped us lower our costs and improve profits. Now, if you look to the right of the slide, our EBITDA increased by $145 million, or more than 20% from 2022 to 2023, landing on $845 million of EBITDA for the year. As Tim will walk you through in greater detail in a few minutes, we're guiding earnings again to increase by another $80 million, or nearly another 10% from 2023 to 2024, with the company expecting to realize around $925 million in earnings
Speaker Change: $5 million of EBITDA for the year.
Speaker Change: As Tim will walk you through in greater detail in a few minutes, we're guiding increased again by another $80 million or nearly another 10% from 2023 to 2024 with the company expecting to realize around $925 million in earnings in 2024.
Speaker Change: We are on a solid trajectory in 2024 to achieve approximately a 32% improvement or $225 million of additional profit over a two year period.
Speaker Change: I'm very proud of the collective Dana teams efforts and leveraging our core meaning implementing synergies across the organization to drive earnings expansion and strongly positioning us towards our long term sales and profit targets of over $1 billion of adjusted EBITDA in 2025.
Speaker Change: Thank you for your time today I'd now like to turn it over to Tim who will walk you through the financials.
Tim: Thank you Jim and good morning, Please turn to slide 15 for a review of our fourth quarter and full year results for 2023.
James K. Kamsickas: We are on a solid trajectory in 2024 to achieve approximately a 32% improvement or $225 million of additional profit over a two-year period. I'm very proud of the collective Dana team's efforts in leveraging our core, meaning implementing synergies across the organization to drive earnings expansion and strongly positioning us towards our long-term sales and profit targets of over a billion dollars of adjusted EBITDA in 2025. Thank you for your time today. I'd now like to turn it over to Tim, who will walk you through the financials. Thank you, Jim, and good morning.
Beginning with the fourth quarter sales were $2 $5 billion $61 million lower than last year, driven by the impact of the UAW strikes at several of our key customers.
Tim: For the full year sales were $10 $6 billion, an increase of nearly $400 million higher sales were primarily driven by improved demand in all of our end markets and recovery of cost inflation, primarily offset by lower volume due to the UAW strike.
Tim: Adjusted EBITDA was $156 million in the fourth quarter for a profit margin of six 3%.
Tim: Full year adjusted EBITDA was $845 million that is $145 million higher than the previous year, primarily due to improved efficiencies aided by more stable customer order patterns and cost improvements across the company.
Tim: Please turn to slide 15 for a review of our fourth quarter and full year results for 2023. Beginning with the fourth quarter, sales were $2.5 billion, $61 million lower than last year, driven by the impact of the UAW strikes at several of our key customers. For the full year, sales were $10.6 billion, an increase of nearly $400 million. Higher sales were primarily driven by improved demand in all of our end markets and recovery of cost inflation, primarily offset by lower volume due to the UAW strike. Adjusted EBITDA was $156 million in the fourth quarter, for a profit margin of 6.3%. Full-year adjusted EBITDA was $845 million.
Tim: The net loss attributable Dana was $39 million for the fourth quarter of 2023, due primarily to the impacts of the UAW strike lower earnings from equity method affiliates and the devaluation of the Argentine peso.
Tim: The net loss of $179 million in the fourth quarter of 2022 was mainly driven by the recording of non cash tax valuation allowances.
Tim: Full year net income was $38 million compared to a net loss of $242 million last year. The net loss in 2022 was primarily driven by one time noncash goodwill impairment charge and the recording of noncash tax valuation allowances.
Tim: And finally free cash flow was $136 million for the quarter and a use of $25 million for the full year.
Tim: That is $145 million higher than the previous year, primarily due to improved efficiencies aided by more stable customer order patterns and cost improvements across the company. The net loss attributable to Dana was $39 million for the fourth quarter of 2023 due primarily to the impacts of the UAW strike, lower earnings from equity method affiliates, and the devaluation of the Argentine peso. The net loss of $179 million in the fourth quarter of 2022 was mainly driven by the recording of non-cash tax valuation allowances. Full-year net income was $38 million compared to a net loss of $242 million last year. The net loss in 2022 was primarily driven by a one-time non-cash goodwill impairment charge and the recording of a non-cash tax valuation allowance.
235, or excuse me $234 million lower than 2022, the decreasing key free cash flow for the full year was driven by higher working capital requirements and higher capital spending.
Tim: Please turn with me now to slide 16 for the drivers of the sales and profit change for the fourth quarter of 2023.
Tim: Beginning on the left traditional organic sales were $132 million lower driven by the impact of the UAW strike at several of our light vehicle customers.
Tim: As mentioned previously Dana was disproportionately impacted by the mix of customers and programs targeted by the strike.
Tim: And while the restart of production occurred in an orderly fashion the ramp up in unit volume was a bit slower than expected.
Tim: Adjusted EBITDA on our organic sales was $7 million lower than the fourth quarter of last year.
Tim: This is a very low decremental margin was due to our improved cost efficiencies across the entire company and nearly offset the profit impact of the lower volume due to the strike.
Tim: And finally, free cash flow was $136 million for the quarter and $25 million for the full year, $234 million lower than 2022. The decreasing free cash flow for the full year was driven by higher working capital requirements and higher capital spending.
Tim: Our excellent performance yielded a 10 basis points benefit to margin.
Tim: EMEA organic sales were $34 million higher than 2022, and adjusted EBITDA was $14 million lower a 60 basis point margin headwind.
Tim: Higher engineering investments for EV programs totaled drove the lower profit offsetting the positive contribution from the higher sales.
Tim: Foreign currency translation increased sales by $45 million in profit by $3 million with no margin impact as the dollar weakened in value against several currencies, primarily the euro.
Tim: Please turn with me now to slide 16 for the drivers of the sales and profit change for the fourth quarter of 2023. Beginning on the left, traditional Ocranic sales were $132 million lower, driven by the impact of the UAW strike at several of our light vehicle customers. As mentioned previously, Dana was disproportionately impacted by the mix of customers and programs targeted by the strike.
Tim: Finally, due to falling commodity prices commodity cost recovery in the fourth quarter was $8 million lower than last year.
Tim: Profit benefit of the lower commodity prices.
Tim: Was offset by the timing of cost true up mechanisms within the commodity recovery agreements, we have with our customers, resulting in profit being lower by $2 million, a 10 basis point decrement to margin.
Tim: And while the restart of production occurred in an orderly fashion, the ramp-up in unit volume was a bit slower than expected. Adjusted EBITDA on organic sales was $7 million lower than the fourth quarter of last year. This very low decremental margin was due to our improved cost efficiencies across the entire company and nearly offset the profit impact of the lower volume due to the strike. Our excellent performance yielded a 10 basis points benefit to margin. EV organic sales were $34 million higher than 2022, and adjusted EBITDA was $14 million lower, a 60 basis point margin headwind. Higher engineering investment for EV programs drove the lower profit, offsetting the positive contribution from higher sales. Foreign currency translation increased sales by $45 million and profit by $3 million, with no margin impact as the dollar weakened in value against several currencies, but primarily the euro. Finally, due to falling commodity prices, commodity cost recovery in the fourth quarter was $8 million lower than last year.
Tim: Next I will turn to slide 17 for the drivers of the sales and profit change for the full year 2023.
Tim: First.
Tim: Is traditional organic sales growth of $228 million, driven by cost recoveries and higher demand across our segments, except for light vehicle, which was down slightly due to last year, the <unk> impact of the UAW strike.
Tim: Adjusted EBITDA on the increased traditional organic sales increased by $100 million.
Representing a 44% incremental margin and in 80 basis points benefit to overall margin. This increase was due to the cost saving actions improved efficiencies across the entire company and customer recoveries that offset nearly all cost inflation in 2023.
Tim: Second EV product sales grew by $182 million over 2022 total EV sales in 2023 were $760 million across all of our end markets.
Tim: The adjusted EBITDA on the incremental sales was $8 million as the benefit of higher sales slightly more than offset the investment in engineering and commercialization cost needed to bring new E beam technologies to market.
Tim: Third foreign currency translation reduced sales by $9 million.
Tim: The profit benefit of the lower commodity prices was offset by the timing of cost true-up mechanisms within the commodity recovery agreements we have with our customers, resulting in profit being lower by $2 million, a 10 basis point decrement to margin. Next, I will turn to slide 17 for the drivers of the sales and profit change for the full year 2023. First, there was traditional organic sales growth of $228 million driven by cost recoveries and higher demand across our segments, except for light vehicle, which was down slightly due to last year's impact of the UAW strike. Adjusted EBITDA on the increased traditional organic sales increased by $100 million, representing a 44% incremental margin and an 80 basis points benefit to overall margin.
Tim: As the dollar increased in value against the basket of currencies profit was lower by $12 million due to the mix of currencies involved.
Tim: Finally.
Tim: The lower recovery of commodity costs reduced sales by $2 million as prices for materials moderated throughout the year due to the inherent lag in our recovery mechanisms profit benefited from the falling commodity prices for the majority of the year.
Tim: Ever as we showed in the previous slide the recovery mechanism began to reverse in the fourth quarter as customer pricing normalize to account for the lower input costs margin benefited by 50 basis points driven by lower sales recover in higher profits due to lower commodity costs. Please.
Tim: Please turn with me to slide 18 for details of our 2023 free cash flow.
Tim: Free cash flow was a use of $25 million in 2023 higher profit was offset by increased working capital requirements.
Tim: That were.
Tim: $289 million higher than the previous year.
Tim: This was primarily driven by three factors first the higher inventory required to support increased sales and the large volume of program launches. We also ended with higher inventory late in the year due to the UAW strike secondly, the timing of the U N. W strike drove lower sales in the early part of the fourth quarter, which drove lower cash collections later in the quarter.
Tim: This increase would be due to cost-saving actions, improved efficiencies across the entire company, and customer recoveries that offset nearly all cost inflation in 2023. Additionally, EV product sales grew by $182 million over 2022. Total EV sales in 2023 were $760 million across all of our end markets. The adjusted EBITDA on the incremental sales was $8 million, as the benefit of higher sales slightly more than offset the investment in engineering and commercialization costs needed to bring new EV technologies to market. Third, foreign currency translation reduced sales by $9 million. As the dollar increased in value against a basket of currencies, profit was lower by $12 million due to the mix of currencies involved. Finally...
Tim: And lastly, as we mentioned on our third quarter call, we continue to render sport to distressed supplier.
Tim: Capital spending was $61 million higher than last year to support our backlog of new business as well as the capacity and capability improvements that have allowed us to capture market share gains.
Tim: Please turn with me now to slide 19 for an update of our guidance for 2024.
Tim: We expect 2024 sales to be approximately $10 $9 billion at the midpoint of our guidance range, an increase of about $345 million over 2023.
Tim: Adjusted EBITDA is expected to be about $925 million at the midpoint of our guidance range, which is up approximately $80 million from last year.
Tim: The lower recovery of commodity costs reduced sales by $2 million as prices for materials moderated throughout the year. However, due to the inherent lag in our recovery mechanisms, profit benefited from falling commodity prices for the majority of the year. However, as we showed in the previous slide, the recovery mechanisms began to reverse in the fourth quarter as customer pricing normalized to account for the lower input costs. Margin benefited by 50 basis points driven by lower sales recovery and higher profits due to lower commodity costs. Please turn with me to slide 18 for details of our 2023 free cash flow. Free cash flow was a use of $25 million in 2023. Higher profit was offset by increased working capital requirements that were $289 million higher than the previous year.
Tim: Profit margin is expected to be approximately eight two to eight 7% a 50 basis points improvement at the midpoint of that range.
Tim: Free cash flow is expected to be approximately $50 million at the midpoint of the range, which is a $75 million increase compared to last year.
Tim: Primarily driven by higher profit and lower capital spending.
Tim: We are introducing a new guidance item this year GAAP diluted EPS. This metric will replace our prior non-GAAP diluted adjusted EPS EPS metric.
Tim: For 2024, we expect diluted EPS to be approximately 60 at the midpoint of the range.
Tim: Which is a 34 cent per share increase compared to last year's result to.
Tim: To support this new EPS guidance, we have added a few outlook assumptions at the bottom of page 19.
Tim: This was primarily driven by three factors. First, the higher inventory required to support increased sales and the large volume of program launches. We also ended with higher inventory late in the year due to the UAW strike. Second, the timing of the UAW strike drove lower sales in the early part of the fourth quarter, which drove lower cash collections later in the quarter.
Tim: Please turn with me now to slide 20, where I'll highlight the drivers of the full year expected sales and profit changes from 2023.
Tim: Beginning with organic growth for 2024, we expect about $240 million in additional sales from our traditional products through new business market growth and market share gains the.
Tim: The adjusted EBITDA increase on traditional organic sales growth is expected to be approximately $135 million.
Tim: And lastly, as we mentioned on our third quarter call, we continue to render support to distressed suppliers. Capital spending was $61 million higher than last year to support our backlog of new business as well as the capacity and capability improvements that have allowed us to capture market share gains. Please turn with me now to slide 19 for an update of our guidance for 2024. We expect 2024 sales to be approximately $10.9 billion at the midpoint of our guidance range, an increase of about $345 million over 2023. So Justin Trudeau's net worth is expected to be about $925 million at the midpoint of our guidance range, which is up approximately $80 million from last year.
Tim: The higher profit and margin increase of about 110 basis points is a continuation of the improved efficiency and cost saving actions that we began in 2023.
Tim: Our more efficient operations will allow us to capitalize on a more stable and predictable customer order patterns that would expect to see throughout 2024.
Tim: We expect about $245 million in incremental EV product sales. This year. This will bring our expected total EV sales to more than $1 billion in 2024, as I mentioned, a few moments ago. The EV business contributes positive profit. However, we expect <unk> adjusted EBITDA to be a headwind of about 20 million.
Tim: This year due to continued spending on engineering and associated costs for new EV programs.
Tim: Foreign currency translation on sales is expected to be a headwind of approximately $70 million with a profit impact about $10 million.
Tim: Finally, our commodity outlook is expected to be a headwind to sales of about $70 million as.
Tim: Profit margin is expected to be approximately 8.2 to 8.7%, a 50 basis points improvement at the midpoint of that range. Free cash flow is expected to be approximately $50 million at the midpoint of that range, which is a $75 million increase compared to last year, primarily driven by higher profit and lower capital spending. We are introducing a new guidance item this year, GAP diluted EPS. This metric will replace our prior non-GAAP diluted adjusted EPS metric. For 2024, we expect the looted EPS to be approximately 60 cents at the midpoint of the range, which is a $0.34 per share increase compared to last year's result. To support this new EPS guide, we've added a few outlook assumptions at the bottom of page 19.
Tim: Due to lower recoveries, driven by falling steel and other commodity prices, we expect a $25 million profit headwind due to the true up and pricing governed by our two way commodity recovery <unk> that we have with our customers.
Tim: Lastly, please turn with me to slide 21 for an outlook on our free cash flow for 2024.
Tim: We anticipate full year 2020 for free cash flow to be about $50 million at the midpoint of the guidance range, we expect about $80 million of higher free cash flow from increased profits on higher sales net interest will be about $35 million higher due.
Tim: Due to higher interest rates and payment timing due to the refinancing that occurred in 2023 and capital spending to support our sales growth in technologies is expected to be about $450 million. This year, which is $50 million lower than last year as we continue to flex spending to match customer program timing.
Tim: Thank you for joining us today I'll now turn the call back over to Regina and we will take questions.
Tim: Please turn with me now to slide 20, where I'll highlight the drivers of the full year expected sales and profit changes from 2023. Beginning with organic growth, for 2024, we expect about $240 million in additional sales from our traditional products through new business, market growth, and market share gains. The adjusted EBITDA increase on traditional organic sales growth is expected to be approximately $135 million.
Regina: At this time, if you'd like to ask a question press star followed by the number one on your telephone keypad to withdraw your question Press Star One again, our first question comes from the line of <unk> with Oppenheimer. Please go ahead.
Oppenheimer: Oh. Thanks. Good morning. Appreciate you taking my questions first one just start out with a question on cadence.
<unk>: In the outlook are we kind of back to a more normalized cadence for the company with.
In Q4, Q being lighter Q3, keeping the heaviest is there anything that would.
<unk>: The impact of seasonality this year that we should be aware.
Tammy: Hi, Noah as Tammy I, no I wouldn't I would I think that's accurate we see our our profit pattern cadence returning to more normalized Ryan you have it right.
Tim: The higher profit and margin increase of about 110 basis points is a continuation of the improved efficiency and cost-saving actions that we began in 2023. Our more efficient operations will allow us to capitalize on a more stable and predictable customer order pattern that we expect to see throughout 2024. We expect about $245 million in incremental EV product sales this year.
Speaker Change: Okay, Great and then actually.
Speaker Change: I actually just picking up on your comments around the EV profile. So your sales will be at more than $1 billion.
Speaker Change: Getting a pretty significant growth year over year here.
Speaker Change: Is it is it possible to kind of dimension out the level of engineering spend step up I think.
Speaker Change: It will help folks understand kind of what the profit actually it looks like on an underlying basis for these programs.
Tim: This will bring our expected total EV sales to more than $1 billion in 2024. As I mentioned a few moments ago, the EV business contributes positive profits. However, we expect EV-adjusted EBITDA to be a headwind of about $20 million this year due to continued spending on engineering and associated costs for new EV programs. Burn Currency Translation on sales is expected to be a headwind of approximately $70 million with a profit impact of about $10 million.
Speaker Change: Yeah, we're not going.
Speaker Change: Can you give any real specifics, obviously as we continue to to.
Speaker Change: Move through the development cycle, it's pretty fluid given what's going on with many of the end markets and the customers, but you know as we've been saying the profit margin.
Speaker Change: In terms of the contribution is positive.
Speaker Change: The other issue with sort of dimension that is its a competitive.
Speaker Change: Issue for US we are we don't like to give too much weight to the to the competition.
Speaker Change: So I had to try.
Speaker Change: Let me ask a little bit about the backlog in a in a way that maybe it hasnt really been naturally as we havent asked before but just to think about that.
Tim: Finally, our commodity outlook is expected to be a headwind to sales of about $70 million due to lower recoveries driven by falling steel and other commodity prices. We expect a $25 million profit headwind due to the true open pricing governed by our two-way commodity recovery mechanisms that we have with our customers. Lastly, please turn with me to slide 21 for an outlook on our pre-cash flow for 2024. We anticipate full year 2024 free cash flow to be about $50 million at the midpoint of the guidance range.
Speaker Change: The mix of.
Speaker Change: Components versus systems.
Speaker Change: Maybe an arbitrary distinction, but when I hear about some of your wins some of them are for <unk>.
Speaker Change: Components like like Motors some of them are more integrated units.
Speaker Change: Can you just talk a little bit about how that is trending and whether you can put it into numbers or just talk about it qualitatively.
Speaker Change: I think it will help us get a sense of how much of this new business and particularly on the EV side is really integrated systems for subsea.
Tim: We expect about $80 million of higher free cash flow from increased profits on higher sales. Net interest will be about $35 million higher. Due to higher interest rates and payment timing due to the refinancing that occurred in 2023. Additionally, capital spending to support our sales growth and technology is expected to be about $450 million this year, which is $50 million lower than last year as we continue to flex spending to match customer program timing. Thank you for joining us today. I will now turn the call back over to Regina, and we'll take questions. At this time, if you'd like to ask a question, press star followed by the number one on your telephone keypad.
Speaker Change: Hey, Good morning. This is Jim I'll take a shot at it.
Jim Kim: The answer to the question is there is no one shoe fits all in terms of that is different by end market.
Jim Kim: Vehicle within end market by region by customer across the board in.
Jim Kim: Our various customers have changed strategies, two or three different times over the course of the last three years to four years and that's going to continue to be that way and if I. Just spoke like an example forms right. There may be some regions, where they have a particular customer.
Jim Kim: Just wants to go with a component type of strategy with Dana Conversely.
Jim Kim: Let's take an example, perhaps we have footprint, many footprint and capability et cetera in a region, where maybe they don't that it's more appropriate for us to do a full system whatever the case may be and there's multiple other things as it relates to differentiating between the technology that we have versus other people had efforts or whatever so we will never get to this is a this is a black and white cut in <unk>.
Regina: To withdraw your question, press star one again. Our first question comes from the line of Noah Kaye with Oppenheimer. Please go ahead. Thanks. Good morning.
Noah Kaye: Appreciate you taking the questions. First, I want to just start out with a question around cadence in the outlook. Are we kind of back to a more normalized cadence for the company with 1Q, 4Q being lighter, 2Q, and 3Q being the heaviest? Is there anything that would impact seasonality? I know I was Tammy.
Jim Kim: Dry once you fits all for everybody, it's always going to be based on based on those type of factors. The thing that works for US just to just to remind you. Though is just that because we are able to scale across not only the across the end markets, but <unk> been able to scale across the regions to scale across multiple other factors. It puts us in a good position for whatever our customers want.
Tim: No, I would I would I think that's accurate. We see our profit pattern cadence returning to more normalized, right? And you have it, Okay. Great. And then, you know, actually just picking up on your comments around the EV profile.
Tim: So your sales will be more than a billion dollars, you know, and you're getting pretty significant growth year over year here. Is it possible to kind of dimension out the level of engineering spend? I think it will help folks understand kind of what the profit actually looks like on an underlying basis for these programs. Yeah, but we're not going to give any real specifics.
Jim Kim: US to adapt to we just find a way to adapt with them either on a component level or a full system level.
Speaker Change: Alright, thanks, very much and I'll turn it back.
Speaker Change: Your next question comes from the line of James Picariello with BNP Paribas. Please go ahead.
Hey, guys. This is Jake on for James.
Jake: In the slide deck, you made a comment that you're on track to hit the 2025 cell target.
Jake: <unk> also still expect to exceed the $1 billion EBITDA.
Tim: Obviously, as we continue to move through the development cycle, it's pretty fluid given what's going on with many of the end markets and customers. But, you know, as we've been saying, the profit margin, you know, in terms of contribution, is positive. The other issue with this sort of dimensioning is that it's a competitive issue for us. We don't like to give too much away to the competition. Yeah, I had to try it.
Jake: And can you share just sort of puts and takes and how you're thinking about cash flow because obviously those.
Jake: Pretty big bridge to hit that 3% of sales.
Yeah.
Jake: Hey, James as Tim Yeah, So absolutely we're still on track for both sales and EBITDA I think the when you think about cash flow it remains a little bit more fluid given timing on programs and whatnot, but.
Tim: As you saw what we put out for next year, we do continue to see.
Noah Kaye: Let me ask a little bit about the backlog in a way that maybe hasn't really been asked, at least we haven't asked before. Let's think about the mix of components versus Now that may be an arbitrary distinction, but when I hear about some of your wins, I think some of them are for... Dr. Joseph Spak, Colin Langan, Ryan Brinkman, Dan Levy, Samik Chatterjee, Good morning. This is Jim.
Tim: Improvement in the cash flow conversion over the next few years.
Tim: As we continue to grow the business and it moves through the investment.
Tim: Our timeline for the end markets and the products.
Tim: Thank you and then how should we think about the.
Tim: The overall wyman of your EV programs, so if EV launches or pushed out or come on at lower volumes.
Tim: Should we expect to see some nice programs extended and filling that revenue gap. Thank you.
Speaker Change: Yeah to the extent.
James K. Kamsickas: I'll take a shot at it. The answer to the question is that there is no one-shoe-fits-all in terms of that. It is different by end market, vehicle within that end market, by region, by customer across the board. And, you know, our various customers have changed strategies two or three different times over the course of the last three to four years, and that's going to continue to be that way. And if I just spoke in terms of example forms, right, there may be some regions where a particular customer just wants to go with a component-type strategy with Dana. Conversely, just take an example, perhaps we have a footprint, manufacturing footprint, and capability, et cetera, in a region where maybe they don't, so it's more appropriate for us to do a full system, whatever the case may be. And there are multiple other things as it relates to differentiating between the technology that we have versus other people have versus whatever. So we will never get to this is a black and white, cut and dry, one-shoe-fits-all for everybody.
Speaker Change: You were seeing.
Speaker Change: A delay or a trade off between ice and EV that is.
Speaker Change: But assumption it really does depend on.
Speaker Change: The program is whether we're on the ice version.
Speaker Change: Because we're both winning conquest business and.
Speaker Change: As well as our traditional business with customers that we historically supplied ice on.
Speaker Change: Very helpful. Thank you.
Speaker Change: Your next question comes from the line of Colin Langan with Wells Fargo. Please go ahead.
Colin Langan: Oh, great. Thanks for taking my questions.
Colin Langan: Your commentary indicate that youre expecting cost recoveries to offset inflation.
Colin Langan: Any parameters on inflation other suppliers have kind of highlighted continued labor inflation and other cost into this year just.
Colin Langan: I'm trying to gauge how much.
Colin Langan: Recoveries youre going to be meeting.
Speaker Change: Yeah, So I mean, we're continuing to see.
Speaker Change: Inflation from from twenty-three ended 24.
Speaker Change: You know what what we're certainly starting to see is as the customers.
Speaker Change: Reverting back to their traditional way of looking at.
Speaker Change: Recoveries were.
Speaker Change: We need to go and get recovery around inflation and other costs through.
James K. Kamsickas: It's always going to be based on those types of factors. The thing that works for us, just to remind you, though, is that because we're able to scale not only across the end markets but to be able to scale across the regions, to scale across multiple other factors, it puts us in a good position for whatever our customers want us to adapt to. We just find a way to adapt to them, either on a component level or a full system level.
Speaker Change: Added productivity improvements within our own cost structure, and that's really what we're concentrating on we continue to to.
Speaker Change: Address.
Speaker Change: The recovery question as we go through.
Speaker Change: <unk> new role on programs, but I think from from our perspective, we're starting to see.
Speaker Change: Movement back to the to the environment in which the Oems really across all the end markets.
Noah Kaye: Thanks very much. I'll turn it back. Your next question comes from the line of James Picariello with B&P Paribas. Please go ahead. Hey guys, this is Jake on behalf of James.
Speaker Change: Operated in.
Speaker Change: Prior to Covid.
Speaker Change: Got it.
Speaker Change: And in the backlog in our roads, but not only did it rise, but your mix of EV increased which is it's a bit surprising because all we've seen are headlines about EV programs getting pushed out I.
Jake: So in the slide deck, you made a comment that you're on track to hit the 2025 sales target. So do you also still expect to exceed the 1 billion EBITDA? And can you share just some of the puts and takes and how you're thinking about cash flow? Because obviously, there's still a pretty big bridge to hit that 3% of sales. Yeah. Hey, James, it's Tim.
Speaker Change: I mean, what is driving the higher EV growth in the backlog.
Speaker Change: By some of the cuts to programs that have been going on.
Speaker Change: Hey, Collyn just this is Jim good morning.
Collyn: What I would offer to you is maybe think about it in buckets of time.
Collyn: If you kind of go back I mean, we've all seen this <unk>.
Jim Kim: Significant shift on I'll call it somewhat of a pull out pull back and push out on electric vehicles for all the reasons. We all understand at this point, but if you go back in buckets of time over the last year two years three years I mean, the cadence of electrification sourcing.
Tim: Yeah, absolutely. We're still on track for both sales and EBITDA. I think when you think about cash flow, it remains a little bit more fluid given timing on programs and whatnot. But as you saw from what we put out for next year, we do continue to see improvement in the cash flow conversion over the next few years as we continue to grow the business and move through the investment timeline for the end markets and the products. Thank you. And then how should we think about the overall alignment of your EV and your ICE programs?
Jim Kim: In that window of time was really heavily.
Jim Kim: Influencer pivoted towards electric vehicles, so now.
Jim Kim: From a balancing standpoint, I think you'll start to see maybe that kind of a blend back to a more you know more of an average more of a middle of the road average I'm not going to predict what that's going to be exactly but again, it's important what was what was sourced or what was pursued and what was sourced over the last couple of years is what's going to be reflected that we're putting into the backlog. So that's the best way I would do it its just buckets of <unk>.
Tim: So if the EV launches are pushed out or come at a lower volume, should we expect to see some of those ICE programs extended and fill in that revenue gap? Thank you. Yeah, to the extent that you were seeing a delay or a trade-off between ICE and EV. That's a good assumption.
Speaker Change: Jim would be the most important thing to think about.
Speaker Change: And I guess I'd also add that it doesn't include wins for the current business and Ice's, our ICEE business because that's all staying in line, maybe even slightly better because those are often are more often to be a replacement win in our backlog.
Tim: It really depends on what the program is and whether we're on the ICE version because we're both winning conquest business and, and as well as traditional business with customers that we've historically supplied ICE. Very helpful, thank you. Your next question comes from the line of Colin Langan with Wells Fargo. Please go ahead.
Speaker Change: So it doesn't add to the pile.
Speaker Change: Got it and just lastly, how should we think about off highway that's.
Speaker Change: Obviously, the highest margin segment.
Colin Langan: Oh, great. Thanks for taking my questions. Your commentary indicates that you're expecting cost recoveries to offset inflation. Any parameters on inflation that other suppliers have kind of highlighted?
Speaker Change: And those markets seem to be rolling over but is that going to be down next year is that a drag overall that we should be considering thanks.
Speaker Change: Just briefly make Tim may have some additional color on that Jim again, just tried to mention in my prepared remarks that we see egreteau agriculture down a little bit this year, we see the other other other.
Tim: Yeah, so I mean, we're continuing to see inflation from 23 into 24. I think, you know, what we're certainly starting to see is customers, you know, reverting back to their traditional way of looking at recoveries where, you know, we need to go and get recovery around inflation and other costs through added productivity improvements within our own cost structure. And that's really what we're concentrating on. We continue to, you know, address the recovery question as we go through and have new roll-on programs. But I think from our perspective, we're starting to see a movement back to the environment in which the OEMs, really across all the end markets, operated prior to COVID. And in the backlog. Roads, but not only did it rise, but your mix of EVA too.
Tim: And markets are underground mining or material handling et cetera to be relatively neutral to prior year.
Speaker Change: Okay, Alright, thanks, taking my question.
Speaker Change: Your next question will come from the line of Dan Levy with Barclays. Please go ahead.
Dan Levy: Hi, Trevor young on for.
Dan Levy: For Dan, leaving today, thanks for taking the questions. So I guess first.
Speaker Change: Wanted to ask a.
Trevor: For the guide for the guide on free cash flow.
Trevor: Are there any ways for you to manage down the capex spending at customer planned slow in that and is there also is there not a meaningful unwind.
Trevor: Working capital coming from the non repeat of the UAW strike impacts you mentioned and then I guess more broadly on free cash flow.
Trevor: When can we expect to start to see a stronger conversion.
Speaker Change: Yeah, I'll I'll take those in pieces. So your first one you know.
Speaker Change: Absolutely as a as we move through the development cycle and.
Jim: It's a bit surprising because all we've seen are headlines about EV programs getting pushed out. I mean, what is driving the higher EV growth in the backlog despite some of the cuts to programs? Hey, Colin. This is Jim.
Speaker Change: Programs are pushed off then absolutely. We're we're able to flex capital don't forget some of the largest wins that we've announced R. R.
Jim: Good morning. What I would offer to you is maybe think about it in buckets of time if you kind of go back. I mean, we've all seen the significant shift on, I'll call it, somewhat of a pull-back and push-out on electric vehicles for all the reasons we all understand at this point. But if you go back in time, the last year, two years, three years, I mean, the cadence of electrification sourcing in that window of time was really heavily influenced or pivoted towards electric vehicles. So now, from a balancing standpoint, I think you'll start to see maybe that kind of blend back to more of an average, more of a middle-of-the-road average. I'm not going to predict what that's going to be exactly. But again, it's important what was sourced or what was pursued, and what was sourced over the last couple of years is what's going to be reflective of what we're putting into the backlog. So that's the best way I would do it. It's just buckets of time would be the most important thing to think about.
Speaker Change: Not in the backlog, so we wouldn't be spending.
Speaker Change: An enormous amount of capex in the near term on those programs. So.
Speaker Change: We're not seeing some of that.
Speaker Change: Unnecessarily affecting.
Speaker Change: Our capex spend but absolutely we continue to to flex capital not just in <unk>, but in ice as well.
Speaker Change: And then yes, we'll continue to see an unwind in a in some of the working capital that is the result of the UAW strike, but the sales growth will also come with with some additional capital and then we.
Speaker Change: We continue to work with customers around terms changes and things like that so I think there's there's.
Speaker Change: <unk>.
Speaker Change: Still some opportunity in in free cash flow as we move through but.
Speaker Change: I think when you look at the sales growth I think it's converting it.
Speaker Change: Twentyish percent so.
Speaker Change: A little bit.
Speaker Change: Some efficiency there that we can probably still go get.
Speaker Change: And then you know I.
Speaker Change: I think we will continue in your longer term question on sort of the free cash flow conversion as we as we continue to see the replacement programs come on and the margin increase that that free cash flow conversion.
Jim: And I guess I'd also add that it doesn't include wins for the current business in I.C.E., our I.C.E. business, because, you know, that's all staying in line, maybe even slightly better, because those are more often just a replacement win in our backlog, so it doesn't add to the pile. And just lastly, how should we think about off-highway that's..., segment?
Speaker Change: That growth that you've seen from from last year to 24, and then 'twenty four 'twenty five 'twenty five 'twenty six I think you think youll continue to see that cadence.
Jim: And those markets seem to be rolling over a bit. Is that going to be down next year? Is that a drag?
Colin Langan: Just briefly, Tim may have some additional color on that. Jim, again, just tried to mention in my prepared remarks that we see agriculture down a little bit this year. We see the other end markets, underground mining or material handling, etc., to be relatively neutral to the prior year. OK. All right. Your next question comes from the line of Dan Levy with Barclays. Please go ahead. Hi, Trevor Young on behalf of Dan Levy today.
Speaker Change: Grow throughout that period.
Speaker Change: Great. Thank you for that and then on the.
On the EV on the guide to the $20 million headwind in 2024 can you quantify the portion of that that relates to the spending that was delayed from 2023, and then I guess on top of that do you have any updates and sorry, if I missed it but do you have any updates on the timing for reaching breakeven.
Speaker Change: Overall.
Speaker Change: So on an on the amount that's.
Speaker Change: That was delayed from last year I don't I don't have enough.
Trevor Young: Thanks for taking the questions. So I guess first, I just wanted to ask, for the guide, for the guide on free cash flow, are there any ways for you to manage down CAPEX spending if customer plans slow? And if, and is there also, is there not a meaningful unwind of working capital coming from the non-repeat of the UAW strike impacts you mentioned? And then, more broadly on free cash flow, when can we expect to start to see a stronger conversion? Yeah, I'll take those in pieces.
Speaker Change: A number but there there's there's obviously millions of dollars.
Speaker Change: That continues to get pushed around depending on program timing by customers. So.
Speaker Change: It'll it'll move this year as well I have no doubt it will go up go down just depending on on where we're at in the product cycles, and what new quite frankly, what new business we win.
Speaker Change: So and then in terms of breakeven.
Our view on breakeven hasn't Hasnt changed we continue to.
Tim: So your first one, absolutely, as we move through the development cycle and programs are pushed off, then absolutely, we're able to flex capital. Don't forget, some of the largest wins that we've announced aren't in the backlog. So we wouldn't be spending an enormous amount of capex in the near term on those programs.
Speaker Change: To see both the sales growth and then you know as Ive mentioned on a number of the calls we continue to get more efficient in terms of deploying the <unk> cost that we need to to commercialize these technologies and these programs and we think that will continue so.
Speaker Change: No change on our view on when will we will hit.
Tim: So you're not necessarily seeing some of that necessarily affecting CapEx spend. But absolutely, we continue to flex capital, not just in EV but in ICE as well. And then, you know, yes, we'll continue to see an unwind in some of the working capital that is the result of the UAW strike. But the sales growth will also come with some additional capital.
Speaker Change: Breakeven on our EV business.
Speaker Change: Great. Thank you.
Speaker Change: Yes.
Speaker Change: Your next question will come from the line of Joseph Spak with UBS. Please go ahead.
Thanks, Good morning.
Joseph Spak: Maybe to start.
Joseph Spak: On the traditional organic in the guidance for 'twenty four I trashed organic 56% conversion I know you you sort of provided some of those factors on slide 12 is there any way you could sort of.
Joseph Spak: Help us with order of magnitude or even a little bit more more detail there to sort of get comfortable with.
Tim: And then, you know, we continue to work with customers around terms changes and things like that. So I think there's still some opportunity for free cash flow as we move through. But I think when you look at the sales growth, and I think it's converting at, you know, about 20-ish percent. So a little bit of efficiency there that we can probably still get.
Joseph Spak: With the with the conversion on higher sales.
Speaker Change: No I'm not going to go into a whole bunch of detail, but if you really look back look back to 'twenty one.
Tim: And then, you know, I think we'll continue to see, in your longer-term question on sort of the free cash flow conversion, you know, as we continue to see the replacement programs come on and the margin increase, that free cash flow conversion, you know, that growth that you've seen from last year to 24 and then 24, 25, 25, 26, I think you'll continue to see that cadence grow throughout that period. Great. Thank you for that. Now, on the guide to the $20 million EV headwind in 2024, can you quantify the portion of that that relates to spending that was delayed from 2023? And then, I guess, on top of that, do you have any updates? And sorry if I missed it, but do you have any updates on the timing for reaching EV breakeven? Overall, So on the amount that was delayed from last year, I don't have a number, but there's obviously millions of dollars that continue to get pushed around, depending on program timing by customers.
Speaker Change: We look at the Decrementals that we that were impacting us when we had a lot of the supply chain and in.
Speaker Change: In customer order pattern issues, you know those are starting obviously started to reverse last year.
Speaker Change: You see those.
Speaker Change: These benefits coming into into 'twenty, four and that's that's.
Speaker Change: Part of what's reflected.
Speaker Change: In that that positive.
Speaker Change: Conversion rate that Youre seeing I think the other thing there is we continue to drive efficiency across the.
Speaker Change: The business, so whether it be plant related on conversion costs or.
Speaker Change: Or with our fixed cost structure and those are all being reflected primarily in that that is traditional.
Speaker Change: Conversion rate.
Speaker Change: Okay.
Speaker Change: On the 225 million higher EV sales.
Speaker Change: If I look in 'twenty, three and in your appendix it actually looks like.
Speaker Change: It was pretty evenly split between.
Speaker Change: Between the different segments is that what we should expect to continue in 'twenty four or is any of that growth targeted more towards one segment versus another.
Tim: So it'll move this year as well, I have no doubt. It'll go up, go down, just depending on where we're at in the product cycles and what new, quite frankly, new business we win. And then in terms of break-even, our view on break-even hasn't changed. We continue to see both sales growth and, as I've mentioned on a number of calls, we continue to get more efficient in terms of deploying the cost that we need to commercialize these technologies and these programs, and we think that'll continue. So there's no change in our view of when we'll hit break-even on our EV business. Great, thank you. Your next question will come from the line of Joseph Spak with UBS. Please go ahead. Thanks, good morning. Maybe to start... on the traditional organic in the guidance for 24, traditional organic 56% conversion.
Speaker Change: I think the growth continues to be relatively balanced I mean, I think that we continue to see a lot of puts and takes even throughout the years relative to.
Speaker Change: Where we're seeing growth or demand and I think that that probably continues but I don't think there is one.
Speaker Change: One segment, that's that's over weighted.
Speaker Change: But it is it is it still the case just broadly right, where you sort of first started with this technology in the commercial vehicle segment, where that where that sort of still the largest I guess profit contributor and then you need to sort of continue to scale in the other segments as that growth comes through.
Speaker Change: Yeah Theres some of that I think you know when you think about some of the places where the growth is.
Joseph Spak: I know you sort of provided some of those factors on slide 12, but is there any way you could sort of help us with the order of magnitude or even a little bit more detail there to sort of get comfortable with the conversion on the higher sales? You know, I'm not going to go into a whole bunch of detail, but if you really look back at 21 and look at the decrements that were impacting us when we had a lot of the supply chain and customer order pattern issues, you know, those are starting, obviously started to reverse last year, and we'll continue to see those benefits coming into 24. And that's part of what's reflected in that positive conversion rate that you
Speaker Change: As.
Speaker Change: Is coming from yes, we continue to see it in.
Speaker Change: We continue to see growth.
Speaker Change: In the CD market, but I think the other thing you should think about it.
Speaker Change: I'd like to sort of rethink through that rate I think we will see.
Speaker Change: Little bit more growth in the light vehicle segment than we will in <unk>.
Highway or CV this year.
Speaker Change: Wait it some of that's due to some of the production loss.
Speaker Change: In the <unk> section of our <unk> business last year from from the UAW strike.
Speaker Change: Okay.
Speaker Change: Last one sorry, if I missed this but.
Speaker Change: Did you say how much of the.
Joseph Spak: I think the other thing there is, you know, we continue to drive efficiency across the business. So whether it be plant related conversion costs or with our fixed cost structure, and those are all being reflected primarily in that ICE traditional conversion rate. Okay, on the 225 million higher EV sales. You know, if I look at 23 in your appendix, it actually looks like this.
Speaker Change: For 50 million in Capex is for electrification.
Speaker Change: Electrification.
Speaker Change: No. We don't we don't break out the capex between ice and EV.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Okay with that thank you very much for joining the call as always we appreciate the privilege of your time, just a recap from my standpoint from a business perspective.
Speaker Change: Collectively it's been a life and death life and death collided everyday is a company that's trying to survive product portfolio disruption as well as a three to four year Colgate Slash UAW, driven industrial crisis, but I would offer that Dana has more than survive. These two once in a lifetime generational challenges in fact, I think we use.
Tim: It was pretty evenly split between the different segments. Is that what we should expect to continue in 24? Or is some of that growth targeted more towards one segment versus another? Um, I think that growth continues to be relatively balanced. I mean, I think that, you know, we continue to see a lot of puts and takes throughout the years relative to where we're seeing, you know, growth or demand.
Speaker Change: It is the events to significantly strengthen the company arguably it's terminology I like to use called the crisis is a terrible thing to waste by doing that we focused on the processes. We focused on the business, we focused on customers and as you can see as it relates to creating long term shareholder value, we believe you're starting to see it come through in the.
Tim: And I think that that probably continues, but I don't think there's one segment that's overweighted. But is it still the case, broadly, right, where you sort of started with this technology in the commercial vehicle segment, where that's sort of still the largest profit contributor, and then you need to sort of continue to scale in the other segments as that growth comes through? Yeah, I think there's some of that when you think about some of the places where the growth is, is, is coming from, yet we continue to see it in the CV market. But I think the other thing you should think about is, as I sort of rethink through that, right, I think we will see a little bit more growth in the light vehicle segment than we will in off-highway or CV this year, if you're trying to Some of that's due to some of the production lost in the LV business last year due to the UAW strike.
Speaker Change: And Youll continue to see it come through the numbers. So thank you very much for your continued support and interest in Dana and we will talk to you all soon.
Speaker Change: That does conclude today's conference. We thank you all for joining and you may now disconnect.
Speaker Change: [music].
Joseph Spak: Okay, and last one. Sorry if I miss this. But did you say how much of the 450 million in CapEx is for electrification?
Tim: No, we don't. We don't break out the capex between ice and, Thank you. Okay, with that, thank you very much for joining the call. As always, we appreciate the privilege of your time. Just to recap, from my standpoint, from a business perspective, you know, collectively, it's been a life and death struggle every day as a company that's trying to survive product portfolio disruption, as well as a three to four year COVID slash UAW-driven industrial crisis. But I would offer that Dana has more than survived these two once in a lifetime generational challenges. In fact, I think we used them as events to significantly strengthen the company. Arguably, the terminology I like to use called the crisis is a terrible thing to waste.
Speaker Change: Okay.
Speaker Change: [music].
James K. Kamsickas: By doing that, we focused on the processes, we focused on the business, and we focused on the customers. And as you can see, as it relates to creating long-term shareholder value, we believe you're starting to see it come through in the numbers, and you'll continue to see it come through in the numbers. So thank you very much for your continued support and interest in Dana, and we'll talk to you all soon. That does conclude today's conference. We thank you all for joining us, and you may now disconnect. Thank you all for joining us. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.