Dana Inc (DAN) 2022 Q1 法說會逐字稿

Good morning, and welcome to Dana Inc's First Quarter Financial Webcast and Conference Call. My name is Ray, 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. (Operator Instructions)

At this time, I would like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations and Strategic Planning, Craig Barber. Please go ahead.

Thank you, Ray. Good morning, everyone, on the call. Thank you for joining us for our 2022 first quarter earnings call. You'll find this morning's press release and presentation are now posted on our investor website. Today's call is being recorded, and the supporting materials are the property of Dana Inc. They may not be recorded, copied or rebroadcast without our written consent.

I'd like to remind you today that the 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 found in our public filings, including our reports with the SEC.

On the call this morning are Jim Kamsickas, Chairman and Chief Executive Officer; and Timothy Kraus, Senior Vice President and Chief Financial Officer.

Jim will start us off this morning with a little bit different. So flip back to our cover page there, [Kristen.] Jim, take it away.

Good morning, and thank you for joining us today. Before we begin this morning, I'd like to draw attention to the front cover of our presentation where we recognized that 100 years ago this month, Dana, then known as, Spicer Manufacturing Company, was listed on the New York Stock Exchange as a publicly traded company. When we joined the New York Stock Exchange on April 19, 1922, we had approximately 1,000 employees and 2 facilities, primarily making automotive universal joints, which were invented and patented by our company's founder, Clarence Spicer. At that time, our sales were about $4.5 million. Today, the Dana family is 40,000 strong, spread across 139 facilities in 31 countries with more than 10,000 patents granted and sales nearing $10 billion.

You may find it interesting that only 27 other companies currently listed on the New York Stock Exchange have a longer tenure. The company has always persevered to our longstanding commitment to providing industry-leading product engineering and innovation via our Spicer-branded suite of mechanical products and systems.

A century later, Dana continues to technologically differentiate not only in mechanical solutions, but now also through our full suite of Spicer Electrified, electrodynamic and e-Propulsion systems across all mobility markets.

Moving on to Slide 4, and our update for the quarter, Dana has significantly higher sales in the first quarter, totaling about $2.5 billion, a $217 million increase over last year, representing strong customer demand in our heavy vehicle markets and the recovery of some commodity cost. This strong sales performance is set against a backdrop of some of the most challenging market conditions any of us have experienced in our professional careers, including major global supply chain disruptions, severe input cost inflation and erratic customer production schedules that are impacting the entire mobility industry.

Our profit conversion on higher sales was tempered by these increased input costs and operational inefficiencies driven by erratic customer demand.

As is normally the case in our business, free cash flow was a use in the quarter. And as we discussed in our last call, we have higher working capital requirements driven by higher sales, short notice supply chain disruptions and elevated capital investment in support of our significant new business backlog and launches.

And finally, diluted adjusted earnings per share were $0.16 per share. Tim will walk you through the details of our financial performance in greater detail later in the presentation.

Moving to the right side of the page, some of the key areas we will discuss today include the impact of rising cost inflation and volatile customer demand patterns. We will also highlight that despite operating within this challenging environment, Dana continues to be recognized across the industry for our outstanding innovation, quality and commitment to customer satisfaction.

We are also excited to share several new business awards and how we are leveraging our EV capabilities to positively impact the lives of people in developing markets.

Please turn to Page 5, where I will provide an update on the market conditions. The first quarter saw ongoing commodity price increases, record cost inflation and global supply chain constraints that continue to disrupt our customers' production patterns, negatively impact our operational efficiency and drive up on-hand inventories. It's unclear if the supply chain will see some stabilization later this year. However, we do expect commodity prices and cost inflation to continue to rise. When our customer supply chains do recover, we expect improvements in OEM production across all of our end markets, resulting in higher sales.

Let's walk through each of our markets, beginning in the light vehicle on the left of the page. End market demand remains strong as vehicle inventories continue to be low as a result of disruptions in the OEM production due to ongoing supply chain constraints. As the year progresses, we anticipate that the global auto production output will increase somewhat through the balance of the year. This bodes well for Dana as we have been preparing for significant quantity of launches of refreshed OEM vehicles such as the JLR Range Rover, Range Rover Sport, Toyota Sequoia and Tacoma, and the Ford Super Duty, just to name a few.

Moving to the middle of the slide, the heavy vehicle markets are also experiencing similarly high demand with fewer OEM production disruptions than we are experiencing in light vehicle. In commercial vehicle, Dana is not only well positioned to support pent-up current demand, but we're also intensely preparing for previously announced new business growth.

In North America, we're expecting volume improvement for Class 8 truck builds in the second half of the year, combined with significant medium-duty EV launch activity at our customers. Globally, demand remains strong for the electric drive systems, especially for transit buses in Asia and we expect EV demand to continue to accelerate this year.

Moving to the far right, market demand in off-highway remains strong as backlogs have reached pre-pandemic levels and finished vehicle inventory for construction and agriculture equipment are at the lowest levels in the past several years. Additionally, we have seen minimal customer disruption as a result of the conflict in Ukraine.

While all end markets are poised to see market growth simultaneously this year, we expect inflation and commodity costs to continue to increase during the period of volatile demand.

Turning to Slide 6. I'd like to share with you how Dana's passion for customer satisfaction continues to be noticed across our industry.

During these challenging times, it's especially important to remain focused on our customers, which in turn help to drive our success. To this point, I'm pleased to share with you that Dana earned major custom recognition across all 3 of our end markets in the first quarter.

Starting on the left side of the page, Dana was named an Overdrive Award winner as part of GM's 30th annual Supplier of the Year awards, marking the fifth consecutive year we have been honored as a top GM supplier. This year, we're recognized for our leadership in advanced battery cooling technology, which is extremely critical for EV performance and reliability. This award is reserved for suppliers who display outstanding achievement across the global purchasing and supply chain, organization's key priorities, including sustainability, innovation, relationships, total enterprise cost, launch excellence and safety. To be a recipient, once again, of this prestigious award, while persevering through one of the most challenging years the history has ever faced is a testament of our team's resilience and commitment to pursuing sustainability and innovation.

Moving to the middle of the page, Dana was also recognized by PACCAR with their coveted North America's Supplier Performance Management Achiever Award for 2021, with numerous Dana facilities receiving the 10 Parts Per Million Quality Award. Considering the ongoing disruptions and uncertainty facing our industry, these awards truly highlight the tremendous focus and dedication our team has, delivering quality products no matter the business environment in which we operate.

Lastly, Dana was honored for the fifth consecutive year by John Deere for supplier excellence, best quality, innovation and best process alignment. The best process alignment award is a result of all Dana functions engaging with the customer to create value and improve customer satisfaction throughout the entire product cycle. Dana's passion for customer centricity is core to who we are and how we run the business.

Being recognized by some of our most important customers is a true honor, and it further illustrates the commitment we have to providing our customers the world-class innovation, quality and customer service.

Turning to Slide 7. I'm excited to share how Dana's secured a leading position across the Automotive News PACE and PACEpilot award programs. Earlier this year, we announced that Dana leads this year's Automotive News PACE and PACEpilot awards program with 5 innovative electrification technologies being named as finalists. The PACE awards represent the highest level of recognition in our industry. These prestigious awards distinguish suppliers for their game-changing technologies to deliver superior innovation, technological advancement and business performance.

For this year, Dana was named the PACE finalist for our complete e-Propulsion and e-Power systems, being a TM4 high performance inverters and metallic bipolar plates for fuel cell stacks. In addition, our electric rigid beam axle and composite battery enclosure with integrated thermal management were both selected as finalists for the PACEpilot award, which recognizes pre-commercial, post-pilot innovations in automotive or future mobility space, including products, processes, software and IT systems.

Over the last decade, Dana has won 3 PACE awards, 2 partnership awards and has been named finalist 12 times. Whether it's individual components, fully integrated systems or complete vehicle e-Propulsion, we are leveraging our expertise in design, engineering, manufacturing and integration to meet electrification needs of our customers across all mobility segments.

Slide 8 highlights the depth of our industry-leading driveline solutions as well as steadfast commitment to partnering with our customers to meet their unique vehicle platform needs. We're very excited to share with you that Dana's Spicer driveline technologies, including our drive axles, front steer axles and driveshafts are featured on the Work Truck Magazine 2022 Medium-Duty Truck of the Year winner, the Ford F650 and 750. And our award-winning technology was also featured on all 5 of this year's finalists. In fact, Dana provided the complete driveline on 13 of the 15 winning vehicles beginning in 2008. The truck of the year winner is chosen by the real-life professional fleet managers who are asked to select the truck that best fits their fleet requirements as it relates to durability, quality, servicing, maintenance and lifecycle cost.

It's a tremendous honor to be able to partner with our customers as they provide vehicles to the marketplace that impact real people who are running businesses and providing services.

Turning to Slide 9. I'll provide you an update regarding an exciting new electrification win for Dana in our light vehicle segment. Dana has been at the forefront of developing and manufacturing electrified vehicle powertrains for some of the world's most recognized brands in the heavy vehicle markets.

If you recall, last fall at our Capital Markets Day, we shared with you how electrification adoption is rapidly accelerating the light vehicle segment, and that there are a number of new programs that Dana is working on with major customers.

Today, I'm pleased to announce that Dana has been selected as the electrification partner for a major light vehicle OEM for multiple all-new EV programs. While we're not able to name the customer at this point, I can share with you that it's a significant multiyear relationship, which we expect to be worth over $1 billion dollars in sales for us. The first models are slated for production in the next few years and will include our integrated complete e-Propulsion systems, providing greater than 3x the vehicle content versus the traditional ICE drivelines.

Consistent with our commercial vehicle and off-highway customers, our light vehicle customers recognize and are capitalizing on Dana's complete in-house e-Propulsion capability, including, but not limited to, inverters, e-thermal, software, motors, controls, and of course, e-mechanical capabilities to differentiate their vehicles in the future.

Moving to Slide #10. Speaking of electrification, off-highway is one of the fastest growing segments in the mobility industry. And as you would expect, Dana is at the forefront, partnering with our customers to meet their unique electrification needs in construction, underground mining, material handling and agricultural applications.

Again, during our Investor Day in September, we outlined the new opportunities that are emerging and showcased how we are working with new and existing customers to further penetrate this market.

As Slide 9 highlights, we continue to build on that momentum by winning new EV programs with a number of important customers, including Arcimoto, Hyster-Yale, JCB, Polaris, Scania (sic) [Sanica], Takeuchi and Toro among others to provide our advanced electrified solutions for a broad range of applications. This includes mini excavators, boom lifts, port equipment, electric loaders, access equipment, motor support, recreational vehicles and lawn and turf equipment. As we continue to see the expansion in our addressable markets, we are able to support a wide range of vehicles by leveraging our capabilities across many different applications to achieve maximum efficiency, productivity and performance for each vehicle.

A great example are mini excavators, which are rapidly transitioning to electric power. This is one of the fastest growing segments in the construction market with a 5-year growth rate of about 30%. It's a market that Dana did not historically participate in, but our multi-market e-mobility capabilities and scale are positioning us to secure several new business wins for electric versions of this equipment.

Whether we're providing electric drive systems on -- or low voltage motors and inverters, the key takeaway is that we are working in lockstep with our customers to ensure that we are in the forefront of the transformational EV growth in these new markets. And the result is increased content per vehicle for Dana.

Turn with me now to Slide 11, where I'd like to illustrate how electrification is not only about protecting the environment, but it's about impacting people's ways of life. Sustainability directly aligns with our leadership in vehicle electrification and is critical to supporting our customers as they work to achieve their goals. But sustainability is more than just efficiency and protecting the environment. It's about helping people to live better lives. That is why I'm so excited to be sharing with you that Dana is leading efforts to provide the e-Power train for the world's first flat-pack utility vehicle destined for emerging markets in Africa from OX Delivers, a UK-based zero emissions smart logistics company.

To support these efforts, we've been able to leverage current capabilities and designs to supply the OX truck with our electric motor, inverter, e-Gearbox, and software, which are engineered to tackle the toughest terrain. These systems will be shipped as a flat pack and assembled in the destination country, providing efficiency and ease of use for OX and helping to advance prosperous trade in rural emerging markets while driving sustainability. We are proud to be partnering with OX on this important initiative. It illustrates how Dana's guiding vision toward zero emissions future is focused on what is most important: people.

Thank you for your time today. Now I'd like to turn it over to Dana's CFO, Tim Kraus, who will walk us through the financials. Please go ahead, Tim.

Thank you, Jim. Please turn to Slide 13 for our first quarter 2022 results compared to last year. Sales were up, $2.5 billion, driven by stronger demand in our heavy vehicle markets and recovery of commodity costs, partially offset by currency impacts. Adjusted EBITDA was $170 million. Profit margins in the quarter were 340 basis points lower than the same period last year, despite higher sales, due to margin compression from inflationary costs, including the higher costs for labor, energy, transportation, raw materials as well as operational inefficiencies resulting from customer supply chain challenges and customer schedule volatility.

Net income attributable to Dana was $17 million in this year's first quarter compared to $71 million last year. The difference was primarily due to lower adjusted EBITDA. Diluted adjusted EPS was $0.16, $0.50 lower than the prior year due to lower adjusted EBITDA and lower earnings from equity method affiliates.

Free cash flow was a use of $237 million compared with a use of $26 million in the first quarter of 2021. The higher free cash flow use in this year's first quarter was driven by lower earnings, higher working capital requirements and elevated capital investment in support of awarded new business. As we discussed last quarter, we continued to work through higher inventory levels, driven by customer supply chain challenges and customer schedule volatility.

Please turn with me now to Slide 14 for a closer look at the drivers of sales and profit change for the first quarter. First, organic sales growth of $82 million was driven by higher demand, primarily in the heavy vehicle segments, and, to a lesser extent, recovery of some cost inflation from customers. Adjusted EBITDA on higher sales was a loss of $35 million for a margin headwind of 170 basis points. This loss was driven by input cost inflation and continued operational inefficiencies brought about by volatile customer production schedules, primarily in our light vehicle markets.

The inflationary impact in the quarter was significant, totaling about $45 million in organic profit reduction.

Second, as we began in our 2022 outlook in February, we were detailing the impact of EV sales on our results. For the first quarter, EV product sales grew $68 million from the same period last year. The profit impact from the required investment in engineering to develop and commercialize these new technologies drove a $7 million loss in Q1, a margin headwind of 50 basis points.

Third, foreign currency translation reduced sales by about $55 million as the dollar increased in value against foreign currencies we transact in, principally the Euro. This drove a slight profit margin impact as our largest Euro exposure is in our higher margin off-highway businesses. Finally, commodity costs, primarily steel, continued to rise in the quarter. Gross material costs were $138 million higher in this year's first quarter compared to 2021.

For our commodity inflation recovery mechanisms, we recovered approximately 88% of our commodity cost increases from our customers through higher pricing. The net impact of rising costs and higher recoveries resulted in a $16 million profit headwind and 115 basis points of margin deterioration due to lag and timing of customer recoveries.

Please turn with me to Slide 15 to look at our free cash flow for the first quarter of 2022. While it's normal for our business to use cash in the first quarter, this year our use of cash was $237 million, which was $211 million higher than the previous year due to lower adjusted EBITDA, working capital requirements and higher capital spending, each of these contributing about 1/3 of the change. Higher working capital requirements in this year's first quarter is primarily due to increased accounts receivable due to higher year-over-year sales. Elevated capital spending is due to the timing of investment in support of new business and program launches.

Please turn with me now to Slide 16 for an update in the market dynamics that are impacting our business. We continue to track the main factors challenging our end markets and our operations. While production disruptions continued in the first quarter, we are expecting some easing of OEM production volatility caused by shortages of semiconductors and other key components in the latter part of the year. This assumes China returns to normalized port operations during the second quarter. We do not expect the issues driving higher transportation costs to abate this year. Issues such as the conflict in Ukraine, while not directly impacting our operations, have caused an already stressed global transportation network to adapt and has increased costs to reroute shipping lines. We will continue to actively manage our supply chain to mitigate the impact, where possible.

The most acute concern has been the rapid rise in inflation of input costs and continued rising commodity costs. Higher prices for energy, transportation and labor were a $45 million headwind for us in the first quarter of this year alone. We expect these inflationary pressures to continue throughout the year as we work with our customers and supplier partners to mitigate these impacts. When we guided last quarter, we anticipated some modest easing of commodity costs, primarily steel products later this year. Given global events and tight supply market, we now anticipate steel and other commodity prices will remain at elevated levels this year.

To highlight the scale of the swings, price forecast for scrap steel, a key input to many of our steel products, has increased over 80% since February alone. The combination of rebounding volume and increased cost recoveries are driving up sales, while higher input costs and lag and associated recoveries continue to pressure margins.

Please turn with me now to Slide 17 for a look at our revised full year guidance for 2022. We are updating our full year financial guidance to account for the cost inflation pressures that we are now -- we now expect to continue for the remainder of the year. We now expect 2022 sales to be approximately $10.1 billion at the midpoint of our guidance range, an increase of about $225 million above our previous expectation, driven by stronger end market demand and cost recoveries. Adjusted EBITDA is now expected to be about $820 million at the midpoint of the range of our guidance, which is lower by about $130 million from our prior guidance due to the continuation of elevated commodity and input costs.

Increased sales and lower profits will generate margin that is expected to be approximately 7.8% to 8.4%. Free cash flow margin is expected to be approximately 1.9% to 2.3% of sales. Diluted adjusted EPS is now expected to be $1.30 per share at the midpoint of the range with the change due to lower earnings, higher expected income taxes and lower equity income.

Please turn with me now to Slide 18, where I'll highlight the drivers of the full year expected sales and profit changes from last year. Beginning with organic growth, we took to add about $685 million in sales from traditional products through a combination of new business, market growth and recovery of cost inflation. Adjusted EBITDA on these higher sales is expected to be about $75 million. Included in the organic element is the impact of inflationary costs, including labor, energy and transportation. We are estimating that these incremental costs will total about $120 million net of recoveries. Adjusting for inflation, our conversion on total organic sales growth is expected to be about 27%.

We expect $200 million of added EV product sales this year. This is a combination of market demand and our strong backlog. Due to the required investment for development and commercialization, we expect incremental EV EBITDA to be a modest loss.

Next, we now anticipate the impact of foreign currency translation to be a headwind of approximately $200 million to sales, primarily driven by the Euro with minimal impact to margin.

Finally, we expect commodity costs to remain elevated through the year. We anticipate recovering about $470 million from our customers in the form of higher selling prices, while higher prices for steel and other commodities will result in a net profit headwind of about $20 million.

Please turn with me to Slide 19 for an outlook on free cash flow for 2022. We anticipate full year free cash flow to be about $215 million at the midpoint of our guidance range. This is an improvement of about $425 million compared to last year. The benefit is being driven by lower working capital requirements, specifically lower inventory. We have been operating with higher-than-normal inventory levels as a hedge against both an unreliable global supply chain and unpredictable customer demand and build patterns. As these 2 factors stabilize, we should be able to drive our inventory levels as we move throughout the -- drive our inventory levels down as we move throughout the year.

Page 20 provides an updated summary of our outlook for the remainder of year, which highlights an expected outcome of higher sales growth muted by cost inflation. We remain committed to capitalizing on the strong drivers of growth, including the accelerating EV market and our growing backlog as we continue to work to offset the inflationary pressures that are plaguing every corner of our industry.

Our core business remains strong, and we are not wavering from our commitment to future technology. We have a rock-solid balance sheet and the right assets in place to push through yet another challenging year. Thank you all for listening this morning.

I will now turn the call back over to Ray, so we can take your questions. Thank you.

(Operator Instructions) Your first question comes from Colin Langan from Wells Fargo.

If -- can we go back to Slide 18 where you talk about the walk. I just want to understand, the $685 million that was up from the original guidance, is that related to the inflation or are some of the markets coming in better? I wasn't sure where sort of those buckets kind of go because I was assuming the inflation hits your margin more than the sales. And if so, what markets are actually coming in better?

Colin, this is Tim. So it's a combination of both higher end market demand as well as recovery of inflationary costs. We continue to see positive end market demand, well, across all of our markets, but the heavy duty markets or heavy vehicle markets continue to sort of lead the way.

Okay. So heavy duty's better. And of the $120 million, is that -- that's different than the raw materials? Or is that $120 million headwind that you're expecting also include raw materials (inaudible).

No. The $120 million is solely non-commodity inflation related costs.

Excellent. Okay. And then just going on Slide 9, the $1 billion, I think you said it was over the life of $1 billion light vehicle e-Propulsion win. Is that your sort of first win in light vehicle market? Because I mean most of the headlines I recall being more medium and off-highway. And then any color on the kind of product? Is this more like a light truck, like most of your core business? And is this in your gearbox, e-motor, inverter or what is actually included?

Well -- Colin, thanks for the questions. This is Jim. I would say it's our largest full, complete e-Propulsion system win when you're talking about motors, invertors, gearbox, et cetera, and other. I can't go a lot deeper than that. So it's the largest in that. But as you recall, we've talked about multiple other wins. Let me just think back. The last meeting, we tried to give you a little bit each month -- each quarter. I think last quarter we talked about Aston Martin, so on and so forth. But from a scale standpoint, this is the largest with the full e-Propulsion system, if you want to call it, vertically integrated by Dana.

Your next question comes from Aileen Smith from Bank of America.

I wanted to ask the first question around cost inflation. And on the one hand, you have the commodity cost recoveries with your customers that are contractual and you're making good progress on that front. But the cost inflation's everywhere and you've pointed out and you've commented a couple times the $120 million net expected impact in your outlook. It's clear to us that automakers have been successful in passing on incremental cost, whatever form it may take, to their customers in the form of price. So based on your experience with inflation and discussions with your customers over the past few months, are automakers more receptive to maybe taking on some of the incremental cost burden beyond commodities? And do those or can those come in the form of recoveries or rather just help from a pricing or a booking perspective for new business?

Aileen, I'll take that one. This is Jim. I think the key question is, just to have a little bit of tongue in cheek with you, is define receptive. From the standpoint of, are there more -- are there discussions now in the playbook between suppliers and OEMs on the key -- the new buckets, if you want to call it that, energy, freight, labor cost? Absolutely. Are they going to get on a fast horse to be kind of closed loop like the commodity programs we've all collectively put in between the customers and suppliers over the last 20-25 years? No. They're not there yet or whatever. Depending on how things go here, we also -- it's not as if the supply base doesn't know how to adapt to that and we don't know how to provide the information. If you take hyperinflation countries such as, I'll make one -- use one, such as Argentina, we operate in that type of environment every day, and we have for years, with monthly true-ups and all the other things that go along with it.

I can tell you that there's plenty of discussion about what to do with the other 3 pillars because at the end of the day, as I've said on every -- I think almost every quarterly earnings call I've had with all of you is just that the OEMs have definitely adjusted to be much more flexible and to work with suppliers more since the 2008-2009 crisis because without a stable and healthy supply base, there's no vehicle production. So they're a lot more receptive to the conversation. But because it's really much newer, especially in markets such as North America and Europe that it's taking some work and there's some wood to chop for all the suppliers to get that done.

Got it. That's helpful commentary. And then second question. I wanted to get some clarity around the EV business. You cited I think on Slide 14 that investment in the growing EV business is offsetting profit contribution from early low volume programs. And I think Tim mentioned that in total, the incremental EV business is expected to be a modest EBITDA loss for this year. The early low volume programs being profitable outside of investment in the business, would you say that's better than expectations? And what confidence does that give you in terms of some of the targets you've provided at your Capital Markets Day last year? Specifically, what I think was adjusted EBITDA breakeven around 2023 and then adjusted EBITDA accretive by the end of the decade?

Yes. I'm not trying to be direct with -- this is Jim. I'm not trying to not be direct with the answer, but I would just call -- I would almost tell you it's a little bit too early to tell, to give you any direct answer on profitability on new programs versus other more traditional programs. It's just because most of our programs, as I said in my prepared remarks, we're starting to see a lot of the medium-duty programs start to roll in towards the end of this year. We have a lot of new business, electrification, both mechanical, e-mechanical as well as full 3-in-1, 4-in-1, 5-in-1, 6-in-1 programs starting into next year.

So there's a lot of moving parts here, especially with everything going on that I'd rather not comment on where that profitability is. I am comfortable that they're going to -- our programs are going to meet our hurdle rates at which we invested in them. So I feel good about that. But other than that, I can't really give you any other commentary at this time.

Your next question comes from Brian Johnson from Barclays.

Looking at Page 22 and continuing the theme of working with customers for reimbursement for non-index cost, it looks like -- just as I look at the waterfall, that the off-highway and commercial vehicle customers either are more receptive or perhaps you have less rigid, more flexible pricing arrangements with those than light vehicles. I mean, first question is, is that a fair assessment of the difference between [PT] and LV, light vehicle and CV and off-highway?

Yes. Traditionally -- Brian, thanks for the question. This is Jim, again. Yes, traditionally that's the nature of the business. For a multiple of different reasons, that's the case. And that's kind of what I was alluding to back to when I was talking about is -- and more so for light vehicle. Traditionally, commodity programs, as you know, you and I talked about it directly before, commodity programs have been instilled over the course of the years. But there hasn't really been a significant reason to do it until now in the more established mobility markets, such as America, Canada, Western Europe, et cetera.

So the answer is yes. There's better programs or more detailed programs in some of those markets than there is in the light vehicle, but we're working on it. And I think all suppliers are working on it.

And do you see, just kind of broadly for the industry, light vehicle industry, either a way to amend the existing procurement agreements to put in -- these are all buzzwords from the '70s -- COLAs, inflationary adjustments. Or is it something that's going to be ad hoc on the existing book of business in which -- then it's the second question, which -- we did hear from (inaudible) yesterday, new contracts will get signed with the '70s style inflationary protections or Brazilian or Argentine style inflationary contractual terms.

I think you'll see some of that maybe, but I would say it's going to be on a customer-by customer basis. I'll use a different set of words. Will there be potentially indexes put in for freight in the future, indexes put in for labor in the future or energy in the future? I think you're going to see some of that on a customer-by-customer basis. There's actually some customers, no matter what the end market, are very bullish on getting that in. They'd rather have it via transparent activity between us and -- between the supply base and the customer. So it takes -- kind of takes the noise away from the rest of it. There's others that are not. So it's going to be a case-by-case basis. It just feels a little bit, Brian, like deja vu where we were 20, 25 years ago putting programs in for copper and for resin and for steel and for everything else. But -- so we're working on that. And again, every customer's a little bit different.

I remember when John Devine switched from fighting off those requests of GM to actively pursuing them at Dana. So good luck.

Your next question comes from James Picariello from BNP Paribas Exane.

Congrats on the light vehicle EV program. Just wondering, can you confirm what was mentioned over -- the $1 billion in revenue over the life of the program, but the question I really wanted to ask was, are you providing the complete rear e-axle for those 2 vehicles shown on Slide 9? I mean, I assume your axle is included. But I mean -- I suppose given Dana's complete portfolio that you could just be providing the mounted e-drive.

Thanks for the question. I would -- for the audience, I would say, like it usually is, those are representative pictures. In this case, that was a shelf photo, I guess we would call it around here. So we definitely do not get out in front our customers to say exactly what the propulsion system's going to be. What I will -- what I said in my prepared comments, and I'll just reinforce, it is definitely the full system, inverter, motor, gearbox software, et cetera, that we're providing to the customer. But that's the extent I can give you today.

Okay. Fair enough. And then light vehicle seems to be getting hit the hardest by current cost pressures. Just wondering if you could kind of split out what -- given the last 2 quarters in light vehicle, what attributes to the erratic stop starts by your key customers? I mean, we understand the inflation and the commodity pressure, but what really is tied to those inefficiencies, just from the customer -- the lack of visibility with your key customers.

Yes. I don't want to get in front of the customer. I think they're going to provide you plenty of color or already have relative to the challenges that they have. I can only represent that, let's say, we're all in manufacturing. Let's put it that way. We're all in a global integrated supply chain. So they're -- I'm sure they're challenged with exactly what we are challenged with is that there's -- it's a Tier 1, Tier 2, Tier 3, Tier 4, you name it, all the way through the pipeline. And there's just starts and stops of what there'll be -- again, based on public information, I'm not (inaudible) microchips has certainly got to be the biggest challenge out there.

But it does create -- it creates some havoc and what has become a bit of the new normal in a way. It doesn't necessarily eliminate the production inefficiency we've had. I can tell you -- speaking on behalf of Dana, we've adapted our business to be much better at adjusting to kind of like immediate term change on schedules and output from our customers, but it's still a real issue and a real challenge that until things kind of calm down out there, we're going to have to deal with it.

Got it. And if I could just squeeze one more, just back to profitability around electrification, and now that you have this light vehicle program, obviously, you haven't started to ship it yet. But as you think about commercial vehicle, off-highway, light vehicle, is there going to be a material difference in the profitability for the EV programs that you have won and will win in the future? Will the margin differential be similar to what it is today in combustion?

This is Tim. So I think it's a little early to break down either the new program or some of them. Obviously, we see a pretty sizable uplift in content per vehicle. And as Jim mentioned, the programs are all coming in above our hurdle rate. And we expect, as we laid out last year during the Investor Day, a cadence of a breakeven and then positive contribution to EBITDA after that point.

Your next question comes from Emmanuel Rosner from Deutsche Bank.

First question is on the commodities inflation. Can you give a little bit more detail around how you expect this to play out for the rest of the year, the push and pull between commodities hit and recovery? Looks like the gross hit that you expect now for the year is probably twice as high as what you saw 3 months or so ago, but then the net is really only $50 million higher or so. And then also this $20 million net headwind for the year is pretty much what you saw in the first quarter. So does that mean that, for the next 3 quarters, commodities should be neutral as a factor?

Yes. Emmanuel, this is Tim. Yes, you you're saying it right. Obviously, we've seen a very dramatic uptick in commodities over the first quarter. You can see it in SBQ, scrap, nickel, aluminum. They're all at significantly elevated levels than from where we started the year and from where we were expecting them. So that's why you're seeing the increase in that recoveries on the top line.

Yes, we don't expect significant further increases. There's some in there, but we do think that they'll start to moderate as we get into the back half of the year -- really late in the year, which is why you're seeing the recoveries for us come in at around 96%. It's reflecting a little bit of that catch up in the lag.

And in terms of, I guess, walk for the next 3 quarters or so, I mean, is it fair to say based on what you're showing that you're essentially expecting recoveries to catch up to be basically offsetting the complete hit?

Yes. I mean, there'll be some variability by quarter because the decrease we're seeing -- or the slight decrease we're seeing in base commodity costs won't be till later in the year. So it's not like you'll see it next quarter. So there'll be some variability in there by quarter.

Okay. And then I guess looking ahead on this factor as well, how does this recovery mechanism play out as you move into next year? Like would there be still more -- like assuming commodities stay at this higher level, would there still be more catch up in terms of additional recoveries next year, which would then become a tailwind? And I guess sort of like broader picture, obviously, I assume that your previous 2023 targets are going to be difficult to achieve at this point. But I guess what would be required for you to eventually achieve them? Like is there going to be a period of time where you could sort of like recover some of these headwinds assuming sort of like the prices stay stable?

Yes. I mean, I think, obviously, a more stable commodity environment would be very helpful in terms of stabilizing the changes in profitability. But obviously, if commodities stay at the higher levels that they're at today, there -- ultimately, the lag will be caught up. But if they stay elevated, then the margin pressure we've seen, while it will be abated a little bit, will still be there because we typically aren't recovering 100% of those commodities.

Okay. And then on the non-materials piece, the inflation expectation of net $120 million, are there some -- are you embedding some recoveries in there? Are there some discussions going on and then potential for better outcomes in the back half of the year? And then how does this $120 million compare with, I guess, previous -- what was previously embedded in guidance?

So I'll take the last piece. The current $120 million is obviously higher than the headwind that we had assumed in our guidance in the first quarter. That's obviously a reflection of what's going on from a macro perspective across all of our end markets. Yes, the $120 million is a net number. And as Jim mentioned, we're in -- really on a daily basis talking with all of our customers across all of the end markets about recovering these higher costs. And we'll continue to do that, and the teams continue to make really good progress with all of the OEMs across the end markets.

But this already assumes some recoveries.

Yes. It does.

Your next question comes from Dan Levy from Credit Suisse.

Wanted to just follow up on that last question from Emmanuel. Maybe you can just elaborate a little more on the non-commodity inflation headwinds. I think in the prepared remarks, you mentioned it's energy, it's labor, it's transport. Is any one of these the dominant factor? And just how -- should we consider these as temporary or permanent that it's just not going to come out and -- maybe you can have discussions with your customers, but for now we should just assume this is permanent in the cost structure.

Yes. I think, obviously, as you look across, they're all a little bit different. I would say labor tends to be a little more permanent than freight. Obviously, freight's contingent on many things, some of them very macro based in terms of the economy and then, obviously, very micro based in terms of the availability of sea containers and port congestion and the like. So I think -- and the same is true for energy, right? We saw dramatic increases in energy, especially in Europe, as a result of what's going on in Ukraine and the issues around supplies of natural gas and other energy products into -- in Europe.

So it's very hard for us to make a call on, are they truly permanent. Are they going to be here for a while? I think our view is we're going to continue to monitor them and work with our -- both our customers and our suppliers to try to mitigate what we can around these impacts. But it looks like they're going to be with us at least in the near term and probably into the future for -- just to some extent. Jim, I don't know if you...

I'll just put a final point on that a little bit. And again, as it relates to it, it all depends on end market and it all depends on customer and it all depends on your roll -- what I'd like to call is, your roll-on, roll-off business, right? So if you have programs that are long in the tooth, that are ready to build out, and new programs are rolling in, those are obviously going to get reset and reestablish your points of cost.

And if you're in end markets where it's appropriate and you work through it with customers that are really keen on ensuring that there's a reasonable profitability coming out of the program, so everybody's healthy, et cetera, it's going to be different on a case-by-case basis.

So Tim's right. We don't know exactly what's going to happen on sea container costs these days or energy costs these days, and so on and so forth. But we do have a playbook either on the pure recovery for programs that will stay in production or new programs that are rolling on. And we -- as I think I mentioned earlier in my prepared remarks, we have a significant and a new roll-on business coming our way this year and really in the next 18 months.

Great. And then to follow up -- and you mentioned it's going to depend on end marketing customer. When we look at the first quarter results, we see this very stark contrast between light vehicle and off-highway. So maybe you can just give us a bit more color on how inflation and the operating inefficiencies are hitting the segments differently because it is just interesting to see that off-highway is doing still really well, pretty good conversion. Interesting actually that all of your, or a lot, of your Europe exposure is in off-highway and yet really no impacts from what's going on in Ukraine, but auto -- light vehicle seems to be hit much harder. So maybe you can just give some color on how the inflation and inefficiencies between your segments differently.

Yes. I feel almost like a macro economist, I guess, because I got to talk about all the end markets. But it's -- no, it's good because it actually helps us as a company because we see different trends and different inputs to help us manage through the other markets.

But anyway, the point of the matter is just that I can -- without going on for hours, the 2 big picture things to think about in that is recovery percentages across just not commodities, but the other input costs is the biggest difference on that. And the second one is volume matters. And what do I mean by volume matters? If you have a customer in one market that's a low volume, high complexity market and they end up having different interruption, short notice stoppages, so on and so forth, obviously, your ability to control cost and the impact on having, for example, a full plant or full plants full of people on site already or whatever example you want to use, it's going to multiply faster in the larger plants, larger volume. So therefore, you can see the impact when you have customers in the light vehicle segment that are going to be more sporadic. That's going to have just pure statistics and math. You're just going to have a bigger impact on the business than it would on low complexity -- high complexity, lower volume facility, such as an off-highway and to a lesser degree in commercial vehicle.

Great. Jim, if I could just squeeze in one more. This is a weaker earnings profile for you and questioning whether the 2023 guidance hold or not. But we know that alongside this, you have this longer-term push toward electrification. So very simply, does the weaker earnings profile impact how you think about spending toward electrification or pursuing new electrification? I assume the answer is no.

No, definitely not. I mean the enterprise strategy, which we outlined originally in 2016 and then updated in 2018, I think a picture's worth a thousand words. In every earnings deck we show you, including today's, it continues to come together. That is the future of mobility. It doesn't matter which market you're in. And we're spending quite a bit of money now and we'll continue to roll on programs. And without a top line, I don't think you have a bottom line and all the things that go along with it.

So we're going to continue to invest as we have. And -- but it's not just that. ICE products are going to be around for a long period of time. And we have very, very healthy -- I mentioned a couple of programs and customers earlier in the prepared remarks. We have very strong backlog on ICE.

So we're going to continue to have a nice pivot table of strong backlog on the ICE products for the next whatever number of years they're going to be in production, 5, 10, 15, 20. But we also have a really strong stream of electrification products at the same time.

I don't know any other way to run a business, but in terms of -- other than to make sure you have the optionality and that you get your fair share of the market. And I think we've positioned the company to do that. We just have -- you can't be at more trough than we and many other suppliers for that matter because of this tsunami of inbound costs that are coming at us like nobody's ever saw before. But we'll work our way through it. And I'm not just saying this. I'm very excited about 2023 and beyond, for sure.

Your next question comes from Rod Lache from Wolfe Research.

I think like a lot of other people just trying to interpret your comments about adapting to the higher inflation environment ex commodities, so can you just maybe give us a little color about a realistic time frame for this? You mentioned that it depends on the customer. So does it look like maybe half of your customers are working with you to help recover it and half could take a couple of years to tether that into pricing on contracts? And it also, by the way, looks like your conversion on volume includes something that is temporary. Because it looks like it was weak even adjusted for inflation Q1, but much more normal adjusted for inflation for the year. So maybe you could just comment on what inefficiencies or the magnitude of temporary factors in there.

I'll let Tim give any color. Let me take the second one. It's Jim. The inefficiencies, if Tim has some color, he can add it, but I will tell you, at least for our production schedules, particularly in January and February, they couldn't have been more erratic. They couldn't have been more kind of all over the place. So there's a real cost to that. So I'll let Tim kind of put some color to that in a second.

And then back to your question really on inflationary cost outside of commodities. I'd like to give you a more direct answer, but it's just -- it's a complicated puzzle. What I'd take you back again to, it depends on the end market recoveries for the reasons I've already mentioned, less so on the customers -- I'm not saying it's on a customer-by-customer basis. But if you take them on kind of a layered effect, we had stronger recoveries in our off-highway side of the business for the reasons I've already mentioned. We got strong recoveries, but not quite as solid recoveries in the commercial vehicle. And we're still working a lot more on the light vehicle.

Then it gets into a customer-by-customer discussion. And depending on that customer, the timing -- again, it all depends. Some of it I expect more and more of it to come in the non-commodity cost in Q2 and Q3. Some maybe not as much because they may have a different strategy on different things as it relates to those recovery. So that's a lot of words to say that it all depends, but it usually comes back to the end market, more so than it does the customer itself. So I didn't want to over overcook it. It was a customer piece. Tim, did you have something to add?

Yes. I think the -- when you think about variability in terms of schedule and production, what you're seeing in the segments is what's showing up in -- with our light vehicle customers, which they've been more erratic than the other segments. So that's part of what you're seeing when you kind of compare light vehicle to, say, off-highway.

I think the other thing to look at when you look at power tech, that conversion is also impacted by aftermarket and the situation in Europe with Ukraine. So it's a lot of different factors that come in that Jim mentioned. And obviously, all of them need to be thought about, and then obviously managed.

Okay. And just secondly, Jim, since you're willing to put your economist hat on here for us, obviously, a lot of discussion about the macro environment and maybe you could just give us your thoughts on how you are reading those tea leaves. If you look beyond this year, do you have more cyclical concerns about commercial vehicle or off-highway? Or do you see yourselves as kind of insulated because of pent-up demand? And on the off-highway side, we're looking at high commodities, relatively high ag prices. There's some infrastructure spending. It seems like there are a few things that actually look pretty good.

Yes. Thanks for the question, Rod. I mean, there's a lot of moving parts out there and I won't play economist, but thanks for allowing me to have a little fun here. The -- but I will say this. The way I look at it is that let's go to the starting point, which is -- to me, it is demand and we have strong demand. This isn't a Dana advertisement. It's a fact. Because we have strong demand across all of our end markets. So the secondary question will be, our customer's ability to get the supply that they need to be able to produce a vehicle because there's plenty of pent up demand across all.

So I don't see that -- getting back to the broader picture on all the causal factors, everybody on this call probably studies it more than I do [for degree.] But there's still plenty of concern out there for everybody. We didn't talk too much about it. Tim had a little bit of it in his prepared remarks is how much of an impact does Shanghai ports have on not so much us, but maybe our OEMs across all end market's ability to get product. We have -- the mobility markets have incredible tenacity and abilities to get things done. We've seen that for decades.

So do I think they're going to overcome? I think they will. But we just don't know. And then, when you have those constraints, is that going to be a bigger constraint on this end market versus that end market? Is it going to be a bigger constraint on this customer versus that customer? Using that as an example.

And so that's a lot of words to say that I'm not exactly sure. All I know is we have strong demand and we're prepared for that demand. And we have a lot of roll-on business that's coming at us that we're preparing for at the same time, both in internal combustion engine products that we are going to build for a good decade as well as in electrified product, which we all know is going to be the propulsion solution of the future.

Your next question comes from Noah Kaye from Oppenheimer.

So thanks for breaking out the EV business. There have been a couple of questions this morning around profitability there. So if it's possible to clarify, if we look at the $5 million expected EBITDA loss for the year, how much of that is just pure investment spend?

How much of the $5 million loss is pure investment?

Yes.

The programs from individual contribution margin perspective are generally profitable. And what's showing up there is the investment costs related to commercialization, engineering, all that goes into helping to continue to develop and drive what is a very large and growing pipeline of EV wins. And so that's what's offsetting the contribution margin that's coming from the individual products. If you looked at our Investor Day last year, right, we show that kind of getting -- the size of the EV business needs to grow to its critical mass in order to have enough contribution margin to cover that investment, and we see that sort of happening in late 2023.

Yes. And it's fair to say you're front-loading EV investment for future growth. So if it's -- I'm just thinking numbers out of a (inaudible) here. But whatever the investment spending is that's in this year's number, you strip that out and the existing programs are profitable, probably near corporate average or better. Is that fair?

That's fair.

Okay. Great. Clarifying the production inefficiencies, just with respect to the choppy customer scheduling, did that increase in the last few months, particularly post Russia-Ukraine? Is it the same? Is it better? What's the incremental inefficiency that you've embedded?

Yes. I would tell you that's a good question, but almost an impossible question to answer. It's been rough for a good 6, 9 months, whatever the case may be. I will tell you it was very severe for us at least in the first couple months of the year, but a lot -- it started to calm down quite a bit in March. And so we're hopeful that it will continue to calm throughout the balance of the year, especially for Q2, which is obviously right up in front of us. So I wish I could give you more direct answer, but that would be we try to speak for multiple customers across all end markets and everything's a little bit different. So...

Okay. Great. And then, Jim, you talked about the enterprise strategy that you formulated many years ago and leveraged the core. And I think it's clear that the resiliency of the company and (inaudible) the industry is much better now than it was decades ago. But last 3 years, you had -- if you want to throw China tariffs in there but then, obviously, COVID and the chip crunch and now Russia-Ukraine and the commodities inflation, I guess, how do you, when we take a step back, think about strategic priorities to keep pushing the quality of the resiliency of business forward, where are the focus areas that we should be looking for?

Let me start with don't let your kid grow up to be a CEO. No. And also just the way I look, I mean it is raw. I mean, all of our jobs are tough. I'm just having to put a little light on a tough situation for all of us, right? How do I think about the resiliency? I think the most important thing is when I look at it, I ask myself the question, are you creating value for your customers? They call you first. Or when the door closes, they say, we have to work with that company to create value for them to sell more vehicles that are going to be more reliable, so on and so forth.

I can tell you on behalf of Dana, when we leverage the core, that's a set of words that means a lot of things, but it's -- mostly, it was to leverage all resources across the company, people resources in particular, equipment resources as well to make sure that we got all the best practices utilized and we are the best of best of everything we've done.

And that's working in the spirit of creating value for our customers, that our customers are saying to themselves, as they moving into this -- as they're moving into this disruptive world of electrification, who are they going to bet on to make sure that they're there to create value for them, so they can sell more vehicles that are more reliable. I can tell you across all of our end markets, we position ourselves, in my view, I'm not saying -- it's not with any ego or it's not with anything that we feel any entitlement, I'm just saying I think we've positioned the company with all of our end markets to ensure that we're in that position and our continued backlog. I mean customers just don't decide to pick somebody for the sake of picking somebody. They pick them because they believe in them. And I think we put ourselves in a position to do that.

So the resiliency, having a strong top line, having a lot of deep technology behind it and most importantly, have the people that can execute it. And if you think about how we've tried to build the company or transform the company by doing a lot of acquisitions kind of before maybe other people were looking at electrification or didn't believe in it has been incredibly instrumental in terms of developing our people, training our people and making sure that we're not faking it when it comes down to electrification and supporting our customers. That to me is how I define resiliency and being in a position to win for decades to come.

Your next question comes from Ryan Brinkman from JPMorgan.

Another one on the light vehicle electrification win on Slide 9. I think, to date, your electrification wins have been disproportionately on the commercial vehicle side. And I think you'd suggested maybe your light vehicle electrification wins could be weighted more toward like higher torque applications. So just curious, to what extent you see yourself as a competitor to others, such as BorgWarner, American Axle, Magna in the so-called electronic drive unit or integrated drive module market for light vehicles. I understand you're limited in what you could say about this particular program behind those blue sheets, which might be sort of a template picture, appear to be an SUV and a passenger car. So just curious, the extent to which you see yourself competing in electronic drive unit market, even for like light duty passenger cars. And just sort of trying to size up what you see as your addressable market on the light vehicle electrification for drive units and your appetite for pursuing programs for vehicles of different sizes, drive configurations and torque ranges on the light vehicle electrification side.

Wow. You're going to make me work for a living today, Ryan. That's a lot. Let me try to dimension it for you here. Let me start with this. As it relates to wins and timing and all that stuff, I call it 2 words. I call it inflection point, right, which we knew each one of our end markets, even products within the inflection points that hit the different points when they were going to come. So we knew back 2, 2.5 years ago the bus market was coming first. We had to be ready. Then we knew last minute mile delivery, medium duty. We needed to be ready. And I can go on. Underground mining, et cetera. We were ready as each of those came.

As our product portfolio needed to be ready in the light vehicle side of the business, we told you the inflection point would be likely around 2022 and that's essentially what we're talking about here today. So it came together in that regard.

How do I feel about the competitive segment? I never underestimate any competitor. I respect all competitors. Those are all really good companies that you referred to. Only thing I can tell you is we're going to stick to our competitive advantage, which is we have the full, I'll call it, 3-in-1 e-Propulsion. It's actually much more complicated than that because it also talks about software and cyber and all the other things that go with it. You can't fake it. And I feel very good that all of the lessons learned and product that we have on the road, in the field already over the last couple years continues to grow our talent and depth to be able to support our customers in any end market that goes forward. So I think we have plenty of opportunity moving forward. That's how I kind of look at the world. I hope that answers your question.

Your next question comes from Joseph Spak from RBC Capital Markets.

Maybe just one clarification first on your EBITDA guidance. The commodity impact you're saying is now a $20 million year over year headwind. I know previously your EBITDA was going to be positive. But then it was already sort of minus 16 in the first quarter. So the implication's it's pretty limited for rest of the year. I just want to better understand, I guess, what your underlying assumptions of inputs are there. Is it sort of current levels, some further inflation or maybe just some clarification.

Yes. Joe, this is Tim. So yes, obviously, 16 in the first quarter, 20 overall. What you're seeing -- and I think I mentioned this earlier, elevated levels of commodities. So we'll probably continue to see some headwinds in -- over the next couple of quarters. And then late in the year, we start to see some of those come down, albeit modestly. And then we'll start to get a little of it back, which is why you sort of see the 20 overall and 16 in the first quarter and maybe having a hard time sort of boxing it. But that's kind of the...

So it goes higher and then maybe some recovery at end of the year.

Exactly.

Okay. And then -- look, obviously, a ton of questions here on light vehicle. I mean -- I'd be curious if you'd be willing to sort of help us out and help investors out a little bit, maybe to sort of proper set expectations in terms of like what is the level of profitability you are expecting there for this year? Because -- I mean, we could all look at production schedules. You guys have been doing like, call it, $900 million to $1 billion per quarter. It seems like that's probably mostly reasonable for the rest of the year, but you used to be doing double digit margins and now you're down to 3%. So how does that sort of progress through the year? I understand there's both schedule volatility and inflation, but at least it sounds like you're hopeful the schedule volatility can start to get better. So was wondering if you just set the record straight here for us.

Yes. So I won't get into sort of margins by -- projected margins by segment for the year. But yes, we continue to see (inaudible) demand and that's impacting schedules for customers in light vehicle that are continuing to impact margins in the near term. Obviously, we're continuing to work. As Jim mentioned, we're starting to see a little bit of that starting to lighten up and get some good runs out the customer. That certainly should help on conversion cost for us.

And then obviously, we're continuing to work with the customer for the recoveries on all of the inflationary costs that are continuing to impact the business especially -- not just light vehicle, but all the businesses, but obviously with light vehicle.

I think Jim mentioned something a little bit earlier that I think is really important. We've got a great number of our light vehicle programs that are going to be rolling off, right? We've got global Ranger launching now. We're going to have Super Duty launching near the end of the year. These are all opportunities where the programs will get repriced for a lot of the impacts we've seen over the last few years. And so those should help generate and start moving the margins in the business back to where we know they should be.

Okay. Just before I close real quick, I did miss the second half of one of the questions. One of the questions was on the light vehicle award and pass car versus truck versus this and that -- the other one. I just wanted to -- I apologize for missing it. Just to be clear, so there's no ambiguity in the Dana's strategy, it wasn't by -- it has not been by accident over the years that we evolved the strategy to be focused on truck, SUV. And more recently tied in with an acquisition that we did, we didn't get into passenger car, but we did into the high-performance vehicle market, as we talked about with different examples of Aston Martin, Ferrari, so on and so forth.

So to answer the question back to that, because there is a lot of product similarity and synergy between high torque, high-performance truck, SUV, and the high-performance vehicle segment, that's why that bridges with our strategy. So there's no -- I don't want there to be any ambiguity in that. We are not diverting back trying to be everything for everybody, trying to be in the passenger car business itself. So I wanted to that first.

Coming back to the summary comments of the day, like I said a little bit earlier, I believe the enterprise strategy still continues to fall in line exactly the way we would've hoped it would. I mean, this is just a very rocky road out there as it relates to -- I can't use the word hyperinflation, they tell me, but I'll call it super-inflation, that's out there. I do have a lot of confidence in our customers. Our customers are really working with us quite well. It's painful to go through it as I think Brian mentioned a little bit earlier today, but that's what we get paid to do. So we'll continue to charge the hill and we'll provide you more color, commentary around it as we proceed throughout the balance of the year. Thank you all for your time and attention today.

This concludes today's conference call. Thank you all for joining. You may now disconnect.