Dana Incorporated (NYSE:DAN) Q2 2023 Earnings Call Transcript

Colin Langan: Got it. That’s helpful. Then all of the segment margins were really good, except Power Technologies seemed to be a pretty weak margin there. What’s going on in that segment? Is that some of the EV investments? And how should we think about the trajectory of that?

Timothy Kraus: Yes. So it’s two things. So that business, we continue to launch and bring up to scale on the battery and electronics schooling. So, we expect that to improve in the back half as our customers continue to move through that launch cadence. On the traditional side, right, so, the difference in our Power Tech business versus some of the other businesses, that’s a very diverse business from a commodities perspective, and from just the sheer number of part numbers we have versus, say, the light vehicle driveline business. Some of this is also driven by our ability to continue to have and get the recoveries. We see that those recoveries and things continue to work. We’ll see some more of that benefit coming in and catch up in the back half of the year. So we do expect that the margin profile and the conversions in that business will improve in the second half versus the first half. .

Operator: Your next question comes from the line of Noah Kaye with Oppenheimer.

Noah Kaye: Hey, thanks. I guess first, just a follow-up to Colin’s question around the second half. And I just want to unpack it a little bit further. Excluding commodity, what are you actually assuming in terms of second half versus first half on organic sales? Are you assuming basically flat organic sales first half to second half? Is it getting a little bit better? It will be because, based. Yes, go ahead.

Timothy Kraus: I’m sorry. Yes. Organic sales will be down a little bit first half to second half, but that’s primarily driven by lower recoveries on lower gross inflation in markets more or less flat.

Noah Kaye: Okay. All right. I’ll take that offline. But congratulations on the e-Axle award. I’m just curious a little bit about the content there. I know you can’t name the manufacturer, yes, it sounds pretty significant. So I just would love to understand your full content on this. You’re supplying the Rigid Beam axle. Does this potentially include motor and inverter, is that sort of an option to add on? Maybe you can talk a little bit about the content and how this is leverageable.

Jim Kamsickas: Noah, thanks for the question. This is Jim. As you allude and I mentioned, I really can’t go too far out there in terms of specifics on the customer for sure, but even the content for clarification, and for reference for everybody and the key with us is when it’s in-house supply of electrodynamics there’s a lot of opportunity for people to back into potentially what the technology would be, and we’re not going to get out in front of any of our customers, probably more than most suppliers. So, what I can tell you is that as I go through — as I went through in my prepared remarks, our suite of electrified products, the only thing I’d add to it is the e-Thermal piece, and we call it the 4-in-1 system. There are strong elements of those perform one, I just can’t be specific on which ones today. So it will be definitely the mechanical as well as portions of thermal and electrodynamics.

Noah Kaye: Okay. Great. I mean maybe just the second part of my question about how you see this is leverageable to future RFP activity to get this high-volume award to be designed in. What do you think this might mean in terms of the growth of the EV business from here?