Q4 2024 Dana Inc Earnings Call
Regina: Good morning and welcome to Dana Incorporated's fourth quarter and full year 2024 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 Q&A session, will be recorded for replay purposes.
Regina: For those participants who would like to access the call from the webcast, please reference the URL on our website and sign in as a guest.
Regina: There will be a question-and-answer period after the speaker's 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. If you would like to ask an additional question, please return to the queue.
Speaker Change: 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 Communication, Craig Barber. Please go ahead, Mr. Barber. Thank you.
Craig Barber: Good morning, everyone, and thank you for joining us today for Dana Incorporated's 2024 Q4 and full year earnings call. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we've discussed today.
Speaker Change: For more details about the factors that could affect our future results, please refer to our Safe Harbor Statement found in our public filings and our reports with the SEC.
Speaker Change: You'll find this morning's press release and presentation on our investor website. And as a reminder, today's call is being recorded and the supporting materials are the property of Dane Incorporated. They may not be recorded, copied, or rebroadcast without our written consent.
Bruce McDonald: On call this morning is Bruce McDonald, Dana Chairman and Chief Executive Officer, and Timothy Kraus, Senior Vice President and Chief Financial Officer.
Speaker Change: Now I'd like to turn the call over to Bruce to get us started. Thank you, Craig, and good morning everybody.
Speaker Change: Probably a little bit less than normal for me on this call, given we just spoke with a street here a month ago. But just on slide four, just a high level perspective on our financials.
for the full year sales.
Speaker Change: down about nearly 300 million, really reflecting softness, I would say, in a few key areas. One would be EV and some of our
Speaker Change: sales to the programs that we are currently in production on. And then as the year progressed, we saw increasingly weak markets in off-highway.
Speaker Change: In terms of our profitability, we benefited from strong operating performance with our sales with our EBITDA up 40 million on lower volumes and driving our operating margins up by 60 basis points.
Speaker Change: And really good to see here in the fourth quarter as we previously talked about, you know, the benefits of our cost reduction, our $300 million cost reduction program flowing through in the quarter, $10 million in Q4 here, and as I mentioned,
Speaker Change: Last month about 100 million dollars of the 300 million is actioned and you could think about in the bag.
Speaker Change: And lastly, in terms of free cash flow, big improvement getting from a slightly negative position in 2023 to $70 million.
Speaker Change: in 2024. We're pleased with the improvement, but it's nowhere near where it needs to be and, you know, the guidance that we're going to share with you later on, we have free cash flow more than tripling in 2025.
Speaker Change: Turning to slide 5, again, this is sort of a lift from the deck a month ago.
Speaker Change: Focusing on, Kim and I and the team are very heavily focused on completing the off-highway divestiture. I really don't have any new information to report versus a month ago. It's a robust process with strong interest and we continue to believe that we can
Speaker Change: execute the legal agreements and announce a transaction somewhere in early Q2 with a closing by the end of our fiscal 2025. In terms of EV...
Speaker Change: In our approach to the marketplace, that's been fully implemented and communicated. That's been critical for us. I think it de-risks some of the capital that we've committed in the future. And the fact that we're taking a much more measured approach really reduces the capex intensity of our business on a go-forward basis.
Speaker Change: underway in terms of completing that initiative. It's been kind of fully rolled out, but that savings is worth somewhere in the 15 to 20 million dollar level. That's kind of the run rate we hope to get from that initiative and under Byron Foster's leadership, I feel good about that.
in terms of financial commitments.
Speaker Change: We're fully committed to getting new Dana margins up to the 8.1 to 8.6 here in 2025 and pushing towards double digit in 2026.
Speaker Change: really benefiting from strong continued operation and performance and, of course, the benefits of the $300 million cost reduction that will be fully in our base in 2026.
you know, the discussions that we're having with our board.
Speaker Change: would suggest we're targeting a net leverage of about one times through the cycle. That does not mean we'll be at one times when we, on day one, we'll probably be lower than that, but we want to have a conservative balance sheet so that we're strong throughout the cycle.
Speaker Change: Lastly for me on on page six, just a few comments on our markets and our backlog for this year.
Speaker Change: I guess I'd categorize our outlook in terms of light vehicles as flat-ish year over year. That seems to be generally consistent with what other suppliers and OEs are talking about right now, and that's sort of been reflected in the releases that we've seen so far.
Speaker Change: In terms of commercial vehicle, a little bit of softness in the market. We do anticipate to see off... Sorry, commercial vehicle...
Speaker Change: stabilize here towards the end of this year and look forward to starting to see the beneficial impacts of pre-buys associated with the 2026 emissions legislation changes.
In terms of off-highway, similar type weakness in the market.
Speaker Change: I guess I would say, I haven't seen our numbers for January and early view on February. It's actually, the market's actually doing a little bit better than we had talked about.
Speaker Change: a month ago, so I'm not going to call it a turnaround yet, but it seems to be holding up a little bit better than we had
feared.
Speaker Change: Tim's going to get into our quarterly phasing later on, but one thing I would point out is we are going to have difficult comps here in Q1 and to a lesser extent in Q2.
and Light Vehicle. Obviously last year we benefited from volume.
Speaker Change: pick-up associated with the strikes in North America, and then we've got tough year-over-year comps in both off-highway and CVs.
In terms of our backlog, $650 million.
You can see how that flows by year.
Speaker Change: I'll see it's a little it's it's it's down about 300 million from our backlog the year before that really reflects I would say largely Lower volumes on the easy programs that we have in our backlog, but nonetheless. We've got strong growth
Speaker Change: in each of the next three years. And I guess I just remind folks that 80% type plus of our backlog tends to be in new Dana as opposed to off-highway. So with that, Tim, I'll turn it over to you to sort of deep dive into financials.
Tim: Thanks Bruce, and good morning to everyone. Please turn to slide 8 for review of our fourth quarter and full year results for 2024.
Tim: Beginning on the left column with fourth quarter sales were $2.34 billion, $159 million below last year due to lower vehicle production.
Tim: and Currency Impacts. For the full year, sales were $10.28 billion, down $271 million, driven again by end-market weakness.
Tim: Adjusted EBITDA was $186 million in the fourth quarter for a profit margin of 8% that is 170 basis point improvement over last year's fourth quarter. Full-year adjusted EBITDA was $885 million, $40 million higher than the previous year for a profit margin of 8.6%.
60 basis points better than last year.
Tim: The profit improvement is primarily due to cost-saving actions and better efficiencies throughout the organization.
Tim: Net loss attributable to Dana was $80 million for the fourth quarter, $41 million lower than last year, primarily driven by $31 million higher restructuring charges this year to implement our long-term cost savings plan and divestiture expenses.
Tim: Full year net loss was $57 million compared to net income of $38 million last year.
Tim: The primary difference of $51 million in higher restructuring charges and the $26 million loss recorded for the planned divestiture of our non-core hydraulics business.
Tim: that was announced earlier this year. The transaction did not occur in the third quarter as expected and was no longer classified as held for sale. However, this loss was recognized to adjust the carrying value of the net assets to fair value remains due to accounting rules.
Tim: Adjusted EPS for the quarter was $0.25 per share compared to a loss of $0.08 last year.
Tim: And finally, free cash flow was $149 million for the quarter, $70 million for the full year, a $13 million improvement for the quarter, and $95 million improvement for the year.
Tim: Please turn with me now to slide nine for the drivers of the sales and profit change for the fourth quarter of 2024.
Tim: Beginning on the left, organic sales were $135 million lower driven by lower OEM production of heavy vehicles.
Tim: Adjusted EBITDA on organic sales was 33 million dollars higher. This strong incremental margin was due to improved cost efficiencies across the entire company and generated 175 basis points improvement in margin.
Tim: As we detail in our business update call in January, we are showing the impact of our cost-saving programs in our profit walks.
Tim: For the fourth quarter of 2024, cost savings added $10 million in profit through the various actions we took since we began the program in the fourth quarter.
Tim: Foreign currency translation decreased sales by $15 million, primarily driven by lower value of the euro and real compared to the U.S. dollar.
Tim: Profit was lowered by 1 million dollars with no impact to margin.
Tim: Finally, due to falling commodity prices, commodity cost recovery in the fourth quarter was $8 million lower than last year.
Tim: The profit benefit of the lower commodity prices was offset by the timing cost mechanisms within the commodity recovery agreements with our customers, resulting in profit being lower by $12 million, a 45 basis points decrement to margin.
Tim: Next, I will turn the slide 10 for the drivers of the sales and profit change for the full year 2024.
Tim: For the full year, organic sales were $164 million lower, driven by lower in-market demand in the second half of the year.
Tim: Adjusted EBITDA on organic sales was 76 million dollars higher. This strong incremental margin again was due to improved cost efficiency across the organization resulting in 90 basis points improvement in margin.
Tim: The cost-saving program, which began in the fourth quarter, added the same $10 million to adjusted EBITDA as was shown in the previous page for fourth quarter. Foreign currency translation lowered sales by $49 million and profit by $6 million, with no impact to margin.
Tim: Just as in the fourth quarter, the benefit of the lower commodity prices was offset by timing cost mechanisms with our customer agreements. Commodity cost recovery was $53 million lower than last year, and profit was lowered by $40 million, a 40 basis point impact margin.
Tim: Please turn with me now to slide 11 for the details of the full year pre-cash flow.
Tim: Free cash flow for 2024 totaled $70 million, $95 million higher than last year.
Tim: Higher adjusted EBITDA was partially offset by higher one-time costs related to cost-saving actions and the sale of the off-highway business, as well as higher net interest due to the timing of interest payments, and higher taxes driven by payment timing and regional mix of income.
Tim: Working capital use was 17 million dollars lower than last year. The use was due to the timing of payables and other working capital.
Tim: Finally, capital spending was 121 million dollars lower driven by a normalized launch cadence and lower investment for EV programs.
Tim: Please turn to slide 12 for a review of our 2025 guidance.
Tim: Our 2025 full year guidance remains unchanged from our business update call in January. As a reminder, our guidance includes the off-highway business for the full year and does not include any impact from unidentified tariffs.
Tim: We are expecting sales for this year of about $9.75 billion at the midpoint of our range. That is about $500 million lower than last year, driven by lower end market demand and the delay in some EV programs, as well as currency translation impacts.
Tim: Adjusted EBITDA is expected to be $975 million at the midpoint of the tighter ranges. This is approximately $90 million higher than 2024 and applies a profit margin of 10%, a 140 basis points increase over 2024.
Tim: Our adjusted EPS guidance is expected to be $165 per share at the midpoint of the range.
Tim: Please turn with me now to slide 13, where I will highlight the drivers of the full year expected sales and profit changes compared to 2024.
Tim: We are expecting about $285 million of lower organic sales for 2025, driven by lower demand in all end markets, partially offset by new business.
Tim: Adjusted EBITDA change on organic sales growth is expected to be approximately $40 million for a decremental margin of just 14%. This is due to the continued manufacturing and purchasing efficiency improvements in the organization.
Tim: Cost-saving actions are expected to total a hundred and seventy five million dollars this year increasing margin by a hundred and eighty basis points
Tim: Foreign currency translation on sales is expected to be a headwind of approximately $195 million, with a profit impact of about $25 million.
Tim: Finally, our commodity outlook is expected to be a headwind to sales of about 30 million dollars due to lower recoveries driven by falling steel and other commodity prices. We expect a 20 million dollar profit headwind due to the true up in pricing governed by our two-way commodity recovery mechanisms with our customers.
Tim: Please turn with me now to slide 14 for our outlook on free cash flow for 2025. We anticipate full-year 2025 free cash flow to be about 225 million dollars at the midpoint of the guidance range.
Tim: We expect about $90 million of hire-free cash flow from increased adjusted EBITDA. One-time costs...
Tim: will be about $20 million higher as we invest in our cost savings program and work to finalize the off-highway divestiture.
Tim: Working capital requirements will be about $40 million lower, and capital spending is expected to be about $325 million this year, which is $55 million lower than last year.
Lastly, please turn with me to slide 15
Tim: Page 15 shows our sales by quarter for 2024 and our expected sales for 2025.
Tim: There are a few market drivers in 2024 that disrupted our normal quarterly cadence beginning in the first quarter where light vehicle production increased dramatically.
Tim: coming off the 2023 UAW strike in North America. This year, we are seeing a slowdown in production as vehicle inventories remain high for a number of our programs.
Tim: The back half of the year will see improved demand as we see inventories normalize and off-highway markets return to growth.
In the near term,
Tim: The impact to Q1 will be about $500 million in lower sales than last year due to lower end market demand.
Speaker Change: We will see between $35 and $40 million in cost-saving improvements in Q1 and are expecting about 8% adjusted EBITDA margins for the quarter. Thank you for joining us this morning, and I will now turn the call back over to Regina to start the Q&A session.
Regina: At this time, if you'd like to ask a question, press star then the number one on your telephone keypad. To ensure that everyone has an opportunity to participate, we ask that you limit yourself to one question at a time. We'll take our first question from the line of Tom Narayan with RBC Capital Markets. Please go ahead.
Regina: Hi, thanks for taking the question. I'll try to keep it to one. I just have a quick follow-up, if that's okay. So the robust process and strong interest, and I know a lot of this is covered on the January 25 call, it would appear that
Regina: you know, signing in Q2, that's only like two months away. So, I guess, is this timeline based on just a prediction of interest or is there something farther along, you know, specific interest from one or two bidders? And then I just have a quick follow-up.
Thank you for joining us for the second quarter.
Okay, if it's okay to follow up, so on
Regina: You have the market for light vehicle flat We have heard some from some other suppliers noting kind of get down mid single digits
Regina: Is this specific to your light vehicle OEM exposure, or perhaps to your graphics? And then on the backlog that you guys have, the $150 million.
Regina: Is that, could you split that out on across the segments just so we can, you know, just understand how that works with off-highway. Thanks.
Speaker Change: Yeah, I saw on your first, the light vehicle, our light vehicle view is really related to our programs, not to the overall market. You got to remember, one, we really only play in full frame truck.
Speaker Change: And even within full-frame truck, we have a disproportionate amount of our sales in a number of key programs, with Ford and Stellantis in particular.
Speaker Change: And on the backlog question, the vast majority, the predominant of that is not off or is LBE.
Speaker Change: and PT. So it's still the majority of that is in the light vehicle driveline parts of the business.
Got it. Thanks. I'll turn it over.
Speaker Change: Our next question comes from the line of Colin Langan with Wallace Fargo. Please go ahead.
Colin Langan: Thanks for taking my questions. It's just a basic question here, but what is going on with the taxes and guidance? It seems like EPS is moving a lot more than the EBITDA guide. Is there a change in the valuation allowances that we should be thinking about? It seems like, I assume, that's the big driver of why EPS is jumping a lot more.
Colin Langan: Yeah, I mean, Colin, this is Tim. So, yeah, I mean, because we have the valuation allowance up in the U.S., you know, the the the.
Colin Langan: You don't get a normalized rate, right, as mixed changes, you know, if a lot more of income comes into the U.S.
Colin Langan: It ends up being taxed essentially at a zero rate because of the evaluation allowance. So until we kind of get through this and through this period and
Colin Langan: and on the other side of the off-highway sale, we're going to continue to see a fair amount of volatility around the rate. And it's also a bit more difficult to sort of predict, just due to the mix of income, especially from year to year or quarter to quarter.
We get the benefit of the $300 million that we're...
Road Mappin'
Colin Langan: We'll be back to sort of like a normal company in terms of a tax rate. Yeah, I would agree. We would anticipate, we obviously won't know until we get there, but you know.
Colin Langan: Given the changes in interest expense as well as the cost-saving program, we would anticipate that we could probably be able to relieve the valuation allowance at some point after that.
Colin Langan: and start talking about EPS as being more normal flowing. Correct.
Yeah.
Colin Langan: So, this would be a sign though that your U.S. operations have went from unprofitable and are turning profitable and that those profits no longer have a tax on them.
Colin Langan: Yeah, that's correct, and obviously a big chunk of our cost-saving program is predominantly or disproportionately in North America, and specifically in the U.S., so that should help as well.
Colin Langan: Yeah, so you think about why it's high now, it's like we have losses in the U.S. that are not tax-benefited.
Correct. Yep. Okay.
Colin Langan: And just to follow up on the prior question about customer mix because S&P has like the super duty down double digits
Speaker Change: are you assuming a similar assumption there because that is a pretty big platform for you guys if I'm right and then so if that's the case what is offsetting that to keep it only you know flat
Speaker Change: Yeah, so the way our forecast is built is based on the mix of models that we're seeing. So even within SuperDuty, there's a pretty big difference between the mix.
And so even though overall Superduty could be down...
Speaker Change: You know, single digits or even double digits, depending on that mix, it will have a different impact to us. We do most of the super duty, but not all, so some of it's still done in-house, especially the low-end 250s that are generally gasoline powered.
Speaker Change: Yeah, and it's also somewhat offset, Super Duty, by the fact that we're not expecting the inventory correction on some of the Jeep products to occur in a second launch.
second shift coming on I think it's for
Gladiator
Got it. Okay. All right. Thanks for taking my questions.
Speaker Change: Our next question comes from the line of Edison Yu with Deutsche Bank. Please go ahead.
Edison Yu: Hey, good morning. Thanks for taking our questions. I just wanted to come back to commercial vehicle. It seemed that the quarter was that was a bit weak. And I mean, just thinking more high level about it. When can we start seeing that kind of turnaround?
Speaker Change: some adjustments for EV bad debt and inventory in the quarter given where where that business is gone, and then we did have a Inventory or a warranty item that that we ended up recording as well so
Speaker Change: And don't forget, there's going to be significant cost savings coming through in CV as part of the $300 million program.
Got it. And just a quick follow-up.
Speaker Change: Gotcha, just a quick follow-up on the contrasting there, right, light vehicle was quite strong, is that a good kind of jumping-off point for 25?
Speaker Change: Yeah, I think we're going to continue to see, you know, strong improvement, you know, really across all the markets for
Speaker Change: as we go in, but yes, we do expect there to be continued growth
in
in both.
Speaker Change: core profit and and the margin in light vehicle as you know, we sort of see Production stabilized and we start seeing that the benefits of the cost savings flow through
Speaker Change: Yeah, I mean, we do tend to see a bit of lumpiness, though, in timing of custom recovery.
We incur costs in some quarters and get...
Speaker Change: sort of catch up recoveries in different quarters, so that business is always sort of lumpy.
Speaker Change: things like that. So you have some of that. But yeah, I mean, if you think about the first quarter sales are, you know, we would anticipate sales being down quarter over quarter given given how strong first quarter 24 was coming off of the strike. So even despite that, I still believe that we'll have a strong margin that we can turn in on first quarter given the work we're doing on the cost side of the business.
Got it. Thank you.
Speaker Change: Our next question comes from the line of James Picariello with BNP Paribas. Please go ahead.
Hey guys, this is Jake on for James.
Speaker Change: As we think about the discussions with Hydro-Quebec around their TM4 put option, can you just provide any clarity on the timing or magnitude of the potential payment you're expecting?
Speaker Change: Yeah, so I don't want to get into anything specific, but we continue to work through that with Hydro Quebec, but I'm pretty confident we'll be able to get something done here this year at some point.
So.
Speaker Change: All right, thank you. And then just one piece of housekeeping.
Speaker Change: When do you guys expect to actually implement the re-segmentation with Powertech getting folded into light vehicle and commercial vehicle? Thank you. Yeah, we'll be doing that during, you know, here in Q1. So when we report first quarter, you'll see Powertech having been folded into LDCV.
All right, thanks guys. Yep, anytime.
Speaker Change: Our next question comes from the line of Ryan Brinkman with J.P. Morgan. Please go ahead.
Ryan Brinkman: Hi, thank you. Thanks for taking my questions. I note that consistent with every other supplier this quarter, your guidance excludes the impact of obviously difficult-to-predict tariffs.
Ryan Brinkman: I'm curious, though, what early scenario planning you may be doing around tariffs on Canada and Mexico in particular, Mexico especially, and what your exposure there might be, how you're thinking about the ability to either mitigate or pass potential tariff costs along to customers.
Ryan Brinkman: So I think the, you know, we're obviously, you know, looking at the impacts, you know, across the the business.
Ryan Brinkman: It's hard to predict, as we said, what they ultimately will be or really what the impacts will be. What I can tell you is that we have put all of our customers
Ryan Brinkman: formally on notice that that we intend to pass every dollar of any tariff impacts through to them and and that that that's our our position and we're not planning to waiver from it.
Speaker Change: Good to hear. Thank you. And then regarding the $175 million of targeted cost saves in 2025,
Of course, a very impressive amount.
Speaker Change: How much of this, and of the $55 million of lower capex, how much would you say relates to the changed ED strategy, or maybe less pursuit of other future revenue opportunities, versus more simply drifting in greater efficiency on your part?
Speaker Change: to the change in our EV strategy that's flowing through. So you would have expected that. I think when you think about the 175, as Bruce mentioned, we've already actioned
certain.
Speaker Change: Yeah, and just on your question about capital, I guess I would say is, you know, we'll be able to return back to, you know, the sort of roughly 4% type capital reinvestment in the business.
Speaker Change: You know, obviously we were significantly higher than that last few years. In the next couple years, we still have a few programs that we have that will require some capital expenditure and we expect
Speaker Change: You'll see a little bit of change in the balance sheet, but what we do expect to have suppliers
Speaker Change: Okay, thanks. And then just lastly, you know, I think one of the reasons why there's been such a positive share price reaction to your multi-year cost savings plan is that it comes
Speaker Change: Supplying Across Multiple End Markets, and you will still be supplying across the light and commercial market, of course, but just wanted to check in on that and what you think, you know, there may be from a dis synergies perspective, or are most of those synergies between, you know, the light and the commercial and the sort of, you know, in between space there class, you know, four or five, etc. Just curious. Yeah. Yeah. I mean, I'll do a few, maybe. I guess, first of all,
Speaker Change: our corporate costs that get allocated to off-highway and how some of them are very variable. Some of our corporate costs will go with the sale, but that is a dis-synergy that we have to chip away at.
Secondly, you know, I think about we buy
You know, it's manageable. And to your point about
The driver for the off-highway business is...
Speaker Change: very straightforward. It slips the value of that business in terms of the multiple it trades at, it will sell for.
Speaker Change: versus the value that's reflected in our stock price is just not being recognized at the market. And the market has spoken. Our stock price has reacted very favorably because we're going to capture that delta.
Speaker Change: Tim, you may have a few others. Yeah, you know, I think the...
Speaker Change: The C.V. and L.V. businesses certainly are much more aligned in terms of both process and product, but also geography, so those are just two businesses that are primarily North American businesses, so there are certainly more synergies there than
Between those and the off-highway business
Speaker Change: taking those into consideration as we've thought about, you know, how the value unlock happens and and where new Dana you know margins end up so when we think about new Dana margins in the
Speaker Change: you know, the ten, ten and a half, you know, when we get on the other side of this thing, that already has those impacts. And as Bruce mentioned, we are currently showing that we have about $40 million worth of stranded costs.
Speaker Change: related to the transaction that we're fully focused on actioning and reducing after we get through the sale.
Very helpful, thank you. Yep.
Speaker Change: Our next question will come from the line of Joseph Spack with UBS. Please go ahead.
Hi, good morning. It's Alejandro on for Joe.
Speaker Change: Maybe just following up on the backlog question, I think you highlighted sort of roughly 20% will be an off-highway, so should I be thinking about the remaining 80% in LV, or how should I think about that LV and CV split?
Speaker Change: typically through the three years but yeah I mean there isn't a lot of backlog in the in the CV business you know it's a catalog based business and usually market share based not not backlog there is a little bit of backlog in there but it's it's not
Speaker Change: Got it, okay. And maybe as a follow-up, you mentioned some weakness in 2Q in your prepared remarks. Can you maybe just give us some additional color on that?
Speaker Change: Yeah, it won't be as dramatic as first quarter, but we'll see a little bit of additional weakness across the end markets in Q2. And then we'll see that recovery start to really come through in Q3 and Q4. And I think if you look at...
Speaker Change: Page 15 of the deck, you know, you can see the bars reflect, you know, sort of that cadence.
Great, thank you.
Speaker Change: Our final question will come from the line of Dan Levy with Barclays. Please go ahead.
Dan Levy: Hi, good morning. Thank you for taking the questions. I'm joining late, so I apologize if it's mentioned earlier. But if you could just talk to the backlog within the light vehicle side.
Dan Levy: How much of that is reflecting, you know, extensions of current light vehicle programs, and given this idea of there could be a potential super cycle here as automakers see the longer tail of ice.
Dan Levy: How much incremental activity could we see, you know, added to the backlog in subsequent periods?
Dan Levy: It won't. Now, if they bring out a brand new variant or something like that, that would go to backlog, something we haven't previously made or sold to the automakers, but not pure volume.
Speaker Change: Great, okay, thank you. And then just as a follow-up, with the news of potential tariffs on steel and aluminum, can you just remind us of how this played out when we saw this in 2018 and just what the timing effects are of you passing this on to your customers?
Speaker Change: are likely to be on the business and we continue to kind of work through that. And as we know more about like how they're going to deal with, you know, Makila's and some of the other, you know, the other nuances within the.
Speaker Change: the supply chain will know more, but one thing we have done is we have put all of our customers on formal notice, so we formally notify them that it is our intention to pass through every dollar of tariff that comes through as a result of it.
Speaker Change: and that we expect them that they're going to pay. Yeah, I guess I'd maybe add to that, Dan, is if you think about the light vehicle business, we're far more indexed now than we would have been back then.
So so to the extent the tariffs drive up
Speaker Change: The cost, the recovery mechanisms, the indexes we already have in place is
Speaker Change: And that at least gets you 75%, but our view is we're not going to eat the 25% that doesn't get recovered in our current commodity agreements.
Speaker Change: We also don't know if it will be reflected in the indexes or not, it may be surcharge. We just don't know, but at the end of the day, our intention and our expectation is that our customers will pay every dollar.
Thank you. Yep.
Speaker Change: Okay, maybe just in a few concluding remarks, I guess. First of all, I'd like to thank the Dana team and our leaders for delivering our improved financial results.
Speaker Change: For me personally, I feel really good about the progress the team is making in actioning the $300 million cost reduction roadmap that we have. 2025 for us is going to be a transformational year for Dana.
The sale of our off-highway business.
Speaker Change: is going to unlock significant shareholder value, while at the same time enabling us to return capital to our shareholders and be left with a best-in-class balance sheet in our space.
Speaker Change: I'm really excited to be here and I look forward to sharing our progress in three months time. Thank you everyone
Speaker Change: That will conclude today's call. Thank you all for joining. You may now disconnect.