Dana Incorporated (DAN) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you, everyone, for joining us back here for our next session. Next up, we've got Dana Incorporated. Dana is a leading provider of axle, driveshaft, structural, sealing and thermal management products for a broad array of global customers across the light vehicle, commercial vehicle and off-highway end markets. Dana has also been very diligent in repositioning itself as a propulsion technology company through a number of key acquisitions over the past several years, and now boasts a diversified product set across combustion, hybrid and electric powertrain configurations for each of its end markets. From Dana, we are very happy to welcome Jim Kamsickas, the company's Chairman and CEO, a role he has held since joining the company in 2015. Prior to that, he served as President and CEO of IAC, and before that, in various leadership roles within Lear. We also have with us Jonathan Collins, the company's Executive Vice President and CFO, a position he has held since 2016; as well as Craig Barber, who serves as Senior Director of Investor Relations and Strategic Planning. As a reminder, through the course of this discussion, we will be receiving audience questions which you can submit through the Veracast system in the bottom corner of your webcast interface. We will be reading these questions anonymously and working them in with some questions that we've already formulated. If you experience any problems with the webcast audio at any point, please e-mail [email protected]. And they will get back to you in very short order with assistance.

First, I'd like to thank the Dana team for joining us today. To kick it off, I think we'll start with what is most topical among investors right now, which is where the industry ultimately stands in term -- in terms of a return to normal. So for Jim and the team, since you last communicated at earnings a few weeks ago, have there been any updates to your expectations around production restarts and ramps across major end markets and geographies?

Well first of all, thank you, Aileen. Thank you, John, and the BofA team for having us. And I hope everyone is safe. To your specific question on outlooks and volumes and net change from only a few weeks back, I would say, no significant changes -- this is Jim Kamsickas, by the way. No significant change. As we indicated, Europe was starting to come back then, and then it was starting specifically in agriculture. And then it was pivoting into commercial vehicle, tripping back into some production in Europe and North America. And then of course, as probably you heard throughout the course of the day today, we see the light vehicle portion here in North America starting to restart come this Monday. So not a lot of net change from where we were at before, although I would say there was a lot of moving parts in between with various countries having to work through their processes to be able to get supply into those individual areas. So for now, we're just -- we're moving forward.

So to follow up on some of the commentary they made. Within these markets, have the production restarts that you've seen in Europe in early May and North America kind of starting this week and next week, had they been relatively coordinated between countries and states? Or are there specific dislocations and disruptions that are emerging potentially in key production points like Michigan or Mexico?

Well I'll take that in 2 chunks, Europe and North America. In Europe, it was largely by country, so we have indirectly a blessing in disguise. So we have a quite a bit of operational footprint in Italy. Everybody's aware how the pandemic moved from China to Italy in such a rapid fashion. And as Italy came back, whenever it was, 2 weeks ago, and we went through this lesson learned, that country sort of came back up at the same time. We also know, taking example, Germany was less impacted and largely kept running and Scandinavia kept running. So that would be the way I would define the situation, but they came up almost more by country within continent than not was the way I look at it. And then in the North America region, as most of us are aware, I guess, we've all been sort of targeting this May 18 date. There was a lot of moving parts this week throughout what was going to happen in Mexico. As I mentioned, we were doing low volume production out of Mexico for some segments such commercial vehicle. But come Monday, we expect to be operating, of course, again at slower rates or lower rates, but for the light vehicle, passenger car markets for North America.

And that leads into a question that we're facing for North America is even with production restarts that you may see into next week, the question remains around how those plans ultimately ramp and what sort of target are in mind for various levels of capacity utilization where you start to reach profitable levels. Do you have any expectations or perhaps lessons learned from China as to your expectations for those ramps in North America through the course of the quarter?

Yes. There's a couple of questions kind of in there, and I appreciate the questions. I would say from how we're planning for it, I think, generally speaking because there is no one simple answer on a percentage, but big picture way of looking at it is at about 50% return to volume activity with some type of escalation, not rampant or not large throughout the balance of the quarter. And then beyond that, I don't think anybody really knows. As a correlation to China, our China operations, most -- for the most part, are back to normal, particularly strong in agriculture, et cetera, but back to normal. I don't know that we'll see the same thing because I would expect and I think most people would expect, you may not -- you may have more tepid demand coming through. What that means exactly, we don't know. But from the standpoint, that would be the only net major difference from China. What I expect, there was still quite a bit of demand out there when coming out of the pandemic in China where I'm not so sure that's going to be the case. It's certainly not to a 100%, as I've already said on this call, in North America and Europe.

Okay. And that kind of leads into another question. Following up from some of the commentary that you made at earnings in terms of refraining from giving any commentary around customer releases or expectations beyond the next month. As your customers have gotten close to restart dates or, in fact, restarted production at their facilities. In the past few weeks, has your visibility around production releases improved in any way? Or is it still a bit of a shot in dark, considering some of the uncertainty around the macro environment in the second half of the year potentially with wave 2 outbreaks or economic shutdowns? Not necessarily asking the question of what those production releases look like, but rather directionally, are you seeing revisions that make sense?

We get the -- all depending on the customer we're working with across the different end markets we participate in. We have various levels of release, what we call material schedules and releases that come through the system. I would tell you that we like the foundation behind the releases through the end of the quarter. But I would also tell you that we're not putting a lot of stock, one way or the other, positive or negative into the back half of the year. I think it's just way too many unknowns at this point in time for us to do so.

Okay. And one of the things that we're hearing or seeing, at least in the U.S. North American market, is that demand on the light vehicle side has been relatively resilient, all things considering with an 8.5 million SAAR in April even with the shutdown and then specifically, within that, some segments like light trucks performing really well. And if this persists, it could lead to some inventory shortages into the summer on the segment. So as we think about production restarts, that segment remains very much in focus for automakers, as they ramp production. How do you think about the opportunity for you guys as OEMs try to drive production within that segment to fulfill demand or even focus on higher trim levels to support their margins as they ramp the rest of their footprint?

I'd put it into this perspective. I think we do know where the markets have pivoted over the last decade, obviously, away from passenger cars more into trucks, SUVs. I think most of your people that have called in today are aware that we are a truck and SUV and larger supplier. We don't participate in the pass car markets with the exception of some of our power technology, sealing and thermal products. So we're going to be ready for that. What -- as it relates to the demand pull-through and what the customers see from the end consumer, I can't speak for that other than to say, like I said, relative to the releases that are out there through the course of the quarter, that depending on which platform and many of the platforms you refer to, the larger trucks and so and so forth, that look pretty solid. You've heard probably throughout the course of the day, starting at 1 shift, some going into 2 and even some maybe to 3. Those -- our customers have a lot of insight and have put a lot of thought to their own production scheduling. They don't do them on a whim, of course. And so therefore, I'd like to be optimistic that those are going to be strong as you indirectly indicated, Aileen.

Great. Great. That's helpful. And kind of last question on the production restarts. You talked pretty in-depth about your -- about working closely with your Tier 2, Tier 3 suppliers at earnings. Can you provide any color on what this entails exactly in terms of monitoring their liquidity levels or helping them on payment terms at all? Or is it more a function of ensuring their ability to restart and ramp production along with you across your major markets?

The answer to that is it's definitely both. I can tell you that really since 2015, '16, maybe before that, but at least since I've been with Dana, we put a lot of time and effort and focus and systems relative to supply risk management and risk avoidance. And it's managing and monitoring financial health and making sure we're working with the right partners and helping partners be strong in the long term. But it's also reviewing the short-term liquidity of the supply base, managing high-risk suppliers, if necessary. We're not in the mode of being the bank, but we certainly are out in front of it. And then as it relates to the operating side of getting up and going again, our supplier development and quality assurance team are in deep contact every single day via hotlines via reoccurring calls, everything associated with it, to ensure that they're ready to go, just like we're assuring that our operations are ready to go.

Okay, great. Now to switch gears a bit and focus on how these operational dynamics translate into financials. You outlined at earnings a lot of the actions that you've taken already on the cost side to help manage your decrementals with the dropoff, particularly in the first quarter with volume, including some temporary layoffs and compensation reductions, but then also reductions in fixed costs as you've consolidated some of your facilities. How much of your cost reduction efforts would you characterize as more near-term stem the bleeding versus those that are more structural and sticky and therefore, may remain even as you ramp up volumes once again?

Sure, Aileen, this is Jonathan. I think -- oh, sorry, go ahead, Jim.

No, go ahead. Go ahead.

Yes. We're just going to highlight a number of the actions that we talked about in the second quarter are really more short-term focused. So the reduced work schedules for not only our hourly associates, but also our salary associates. So the types of things that are providing an immediate near-term benefit as production levels and demand for the work that all those people do are much lower. So I would highlight that, that's been the real focus in the second quarter are things that are going to adjust our costs and flex those lower given the significantly lower production demand in April and in May. And then we would expect some of those costs to ramp up a bit as production comes back.

So you've guided for a slightly higher decremental margin in the second quarter versus the first quarter due to the substantially lower volumes across your major markets. However, a decremental margin in the mid-20s, which was implied by your breakeven scenario for 2020 is still pretty impressive. Where are the additional cost levers coming from in the second quarter that is helping to contain some of those decrementals? Is it just continuing to be diligent on pulling out variable costs with volumes? Or are there substantial opportunities on the fixed cost side as you perhaps consolidate capacity?

Sure. I mean, it's certainly being effective in reducing the direct variable cost and making sure that the labor demand in the factories is aligned with the production demand. But in addition to that, we're in pretty unique times. It's less common for us to make the types of salary reductions that we have and the temporary layoffs applying to salary associates around the world. So those are austerity measures that are somewhat unique, given how low demand is in the second quarter. And that's really one of the things that is helping to keep those decrementals at a pretty positive position, all things considered. I'd also highlight that we talked about the fact that even though we had widespread production downtime in the month of April, we still had sales in April. We have a pretty healthy aftermarket business, in particular, in our heavy vehicle segments and then as well in our gasket business and in power technologies, and that continued revenue at attractive margins is also helping during this period. So I'd say it's a combination of those factors.

Okay. That's pretty helpful. And switching gears a little bit. Can you talk about the performance of your acquired operations in the current market crisis, especially in comparison to some of your legacy business? Have you been able to establish best practices across those acquired plants in fairly short order?

Sure. From a financial perspective, the margin profile of the most significant recent acquisition, the Oerlikon Drive Systems businesses, Graziano and Fairfield that we acquired over a year ago. The integration on those has been very solid. The cost synergies ran ahead of schedule and are delivered as of 2020. The margin profile on a full synergy basis is pretty comparable. So I would say they're operating from a financial perspective, consistently with the rest of the Off-Highway segment. And the team there has done a very nice job in flexing those costs on the lower demand.

Okay. That's helpful on the synergies element, at least in the near term. With the market resizing and perhaps global volumes remaining lower for longer, have you identified any incremental opportunities for synergies and cost reduction and perhaps capacity consolidation across some of those acquired plants?

Yes. I can jump in there, if you'd like, Jonathan. There was kind of a, I'd call it, the pool plan of a 2-year synergy plan, let's take the Oerlikon Drive Systems. As you just -- for everybody, as a reminder, we closed on that at the end of Q1, I guess, 2019. So we were -- and we had actually started the process of putting a plan together even just prior in the prior year. So what we've been able to do is we've closed quite a few facilities. We've taken out a lot of fixed costs. And what I'd say the downtime has allowed us to do is done a bunch of initial incremental planning. Even in some cases, if you can believe it, some bank builds, if we were still able to operate, so on and so forth. So I don't think the plan itself changes significantly because I think we had a very good plan in the first place. But we may be able to just pull a few things that we're going to be probably on the back end of the second year of owning it -- owning the assets up slightly earlier, maybe into the end of this year or something like that.

Okay. And you commented, to think about the opportunity on the other side of this crisis. You commented at earnings that you would expect incrementals on the other side as production volumes ramp once again to be comparable to some of the decrementals that you posted in the first quarter and expect for the rest of the year. However, traditionally, what we see after a market resizing and cost structure work by companies, is your bigger incrementals as volumes recover from low levels. Can you talk about what element of your cost structure, perhaps temporary hiring and adding back to compensation reductions that you would expect to add back along with volumes or -- and perhaps variable costs? Or could this potentially even be a somewhat conservative outlook for you?

Sure. As it applies to the incrementals we were responding with regards to when demand comes back, if it starts to come back in the second half of this year and at what level. In principle, with a lot of the near-term actions that we have taken, we would expect some of those costs to come back. If demand is lower for a longer period of time, and we make some more permanent adjustments to the cost structure, I think the potential that you highlighted is certainly there for the incrementals to be stronger to the extent that we take fixed cost out on a more permanent basis. But I think in the next couple of months, we're heavily focused on lowering cost to match the very low levels of demand now. But we would certainly anticipate that volumes are going to begin to recover. And at the second half of the year, we'll be taking a hard look at which of these actions may continue for longer periods of time or other structural cost reductions we may take based on our outlook for demand later this year.

And moving on a little bit from the cost structure work that we've discussed at length and incrementals and decrementals to perhaps some of the cash conservation actions that you've talked about, which are related to that. In terms of CapEx thrifting that you outlined at earnings between this really 3 different buckets that we would identify, how much of this would you attribute to a pushout in CapEx to 2021 and beyond versus perhaps lower CapEx for what will likely be lower volumes on new product launches, at least in the near-term versus potentially more efficient spending on your part?

Yes. It's certainly going to be a mixed bag of each of those. And I would say that it's somewhat going to be predicated on how long we see a contraction in volume. So if it's a shorter period of time, we may be able to just choose to make some deferrals. But as we get to more permanent decisions on new programs and where we're going to invest and at what level into the supply chain, that will have a more long-lasting impact. So we'll be making some choices. Certainly, we're going to continue to deliver these programs and invest in our future. But we have options on new programs at what level of work we may do in-house versus outsourcing. So if we choose to outsource, that would be something that would be an example of a permanent reduction in spending once that capital is installed by the supplier, more buying parts, that decision has been made. But there are some other areas where we may have aspirations to invest in developing new technology. We're putting new assets in place to make us more efficient that we could choose to defer for a period of time. And as the market starts to come back and we see -- if we see an improved outlook, we'll be able to make those decisions then. So as you highlight, it's going to be a balance. And the mix of those will depend on, I think, the duration of the lower demand.

And remind us how much of your CapEx budget would you characterize as more program specific? And is it fair to assume this is all -- all that program-specific capital is encompassed in the CapEx that you outlined under your breakeven scenario?

It is. So we highlighted -- we started the year with CapEx guidance at about $385 million on a full year basis. We indicated that with a 30% decline in volume, we take that down over $100 million to about $275 million. The majority of that would be spent on new business and on new programs. And that would still be the case at the lower level. There'd be a number of efficiency type investments that we may choose to defer. There may be a number of refreshing of equipment that we choose to defer for a period. But it would still be -- a majority of our spend would be to deliver that new business. And then we make it a little bit of a benefit to the extent that programs, milestones or the time lines of those move out slightly. At this point, we haven't seen any major delays of program, but if you start to see a couple of months or more, that provides an opportunity to delay some of that spending as well, too.

And that actually leads into another one of questions that we had for you in terms of -- you've commented that you're not seeing any significant delays or cancellations in new product launches by customers, but yet at earnings, you commented that your backlog would probably see some pro forma adjustment for a lower industry environment going forward. Do you get compensated by your customers for this in any way as you have capacitized your plants accordingly for certain levels of program volume? And how would that be adjusted as we enter a new potentially lower for longer volume environment? I?

I can jump in on that one. The -- this is obviously unchartered times for us. But I would say when you -- typically in the business, if the programs you've capitalized for them, and they're flat out just not demand because the vehicle didn't make it, it didn't have the right attributes, whatever it may be for the consumer, then those discussions are very open and you work through those -- you work through the appropriate things to do in that. But volume goes both ways, right? So they usually end up washing out and programs overperform, et cetera, et cetera. But in a pandemic, in a situation like this, similar, I would call it, to '08,'09, that's less to be the conversation. Everybody understands it's essentially an act of God. We all just try to kind of do the best we can to work through the funnel.

And to date, have you seen any significant revisions to the volume assumptions underlying those new program launches in terms of customer releases? Or is -- as you noted, it's uncharted time so the industry itself is trying to adjust.

If I tried to give you some framework around it, I would say that everybody understands there is like a, let's call it, an 8-week downtime. Sticking to light vehicle here for a minute, is the 8-week downtime. I'm not saying every program out there that's in the pipeline is delayed 8 weeks. But I think, as a rule of thumb, it's natural to believe that, that could be something that could happen just because of workloads and you can't skip steps on prototype builds. You can't skip steps at line rate builds. You can't skip steps to make sure the product is validated to even go to job one. So if I gave any sense of guidepost, that would be the thing I could offer best. But never once it's a one-shoe-fits-all.

And you commented specifically on the light vehicle market. Is there anything different in terms of what you are seeing with launches or planned launches for the commercial vehicle or Off-Highway market?

Good question. I would just tell you that you're more apt to have longer delays than it being a systematic, particularly in Off-Highway. I think commercial vehicle would be more apt to be closer to light vehicle. But Off-Highway, for various reasons, it could be some delay to it. But remember, in the Off-Highway markets, in the first place, there's not nearly the launch cadence and quantity of launches as a percentage of sales or any other metric you want to use. So it's not as much of a variable.

Okay. And switching gears a bit to talk a little bit about liquidity. You recently executed on a $500 million bridge loan, driven by what you described as an abundance of caution. You sit with about $1.8 billion in terms of liquidity, and you've adjusted your liquidity mix to be half cash, half revolvers. So I think it's fair to say that your capital structure appears very well suited to weather through the current market crisis. Over the longer term, on the other side, what do you view as a sustainable capital structure and leverage levels?

Sure. Maybe I'll start on the liquidity front. We are carrying more liquidity now because times are uncertain. I think as we get on the other side of this and demand stabilizes, you'll see us have a liquidity level that's more consistent with what we have in the past. We usually have about $500 million of cash on hand at year-end and about $1 billion available under our revolving credit facility has been the norm. We think that's appropriate for the size of the business. And as it relates to the capital structure, we ended the year with about $2 billion of net debt or just under -- and about $1 billion of EBITDA. So leverage was less than 2 turns. We stated that we aspire to drive the leverage ratio on a net basis closer to a turn of leverage, which is why we put term debt in place. So we have both a term loan A and term loan B that can be repaid anytime in the next few years without any penalties, and that's why those are in place. So we would continue to expect that as production improves, we start to generate cash flow that we would be using most of that to pay down debt to move towards our longer-term target of about $1 billion in net debt. So the bonds that we have out there, we view as our more permanent source of debt capital and net of the cash we have on hand, that would get us pretty close to our longer-term target.

And when you describe or comment on a longer-term target of net leverage closer to 1x, as you think about the opportunity on the other side of the crisis and specifically capital allocation towards deleveraging, what does the time line look to as we assess what longer-term means? I mean would we try to assume or should we be modeling a return to closer to that 1x net leverage as soon as possible, meaning the majority of your capital is being allocated towards debt paydown? Or is it probably going to be lumpy depending on how you look at additional capital allocation towards M&A or share repurchases?

Yes. I think we started this year being pretty clear that we intended to use most of the cash we anticipated generating in 2020 to pay down debt. And I think that nothing has changed on that front. We've highlighted it from an M&A standpoint. We have the pieces in place that we want to be able to compete not only with our traditional products, but also with our key propulsion systems that we're bringing to market. So we feel like we're in a good place from an M&A perspective. Anything we do would likely be smaller. So you'll see us focus on using that cash flow to delever. We originally expected, coming into this year, precrisis, we would have expected to be able to get to our leverage target by the end of next year. Certainly, the market has moved against us in the near term. And there's quite a bit of uncertainty relative to the back half of this year and next year. So I think putting a time frame on that right now is a bit challenging. But I think as we get into the second half of this year and have a better sense of how this year will play out and the world starts to get back to normal, if you will, then that will -- we'll be in a position to be able to estimate the cash flow generation over the next few years and the progress we'll make towards that longer-term leverage target.

To follow up along that commentary around M&A, you very much understood that there's no major technology or business holes that you see currently that you need to plug in terms of M&A. But obviously, what market crises do create is opportunities for good longer-term assets to be acquired at somewhat near-term distressed levels. Are you seeing any major opportunities in the acquisition landscape and perhaps more willing sellers in the market that you would potentially look to execute on?

Aileen, now this is Jim. I'll jump back in on that one. I would say, no, from my point of view, not any more than that's always floating out there per se. And I would also kind of bring it back to the powertrain space at which we participate. I would expect to probably see less in this area than maybe some other segments in that there's significant -- as you're aware, there's significant larger capital intensity. There's significantly more vehicle validation requirements associated with any like distressed type of situations. A big picture, not a big net change for us. We always keep our eye open, but our focus really is just continuing to strengthen the balance sheet, like we've been doing for the last couple of years.

Okay. And to follow up along that question, as you think about strengthening the balance sheet over the next couple of years, is there a specific ratings -- credit ratings target that you would be angling for as you look to pay down debt over the next couple of years? Meaning, are you looking to get to investment-grade rating at any time in the near future?

We certainly aspire to have IG metrics. The rating falls a little bit out of our control, but we believe that leverage of about one turn with the cash flow profile of free cash flow margins in excess of 4% of sales. We think that's a pretty attractive position. Certainly, we were on track for that moving into this year, precrisis. And I think that's reflective of where we would like the balance sheet to be. I think it's important that our customers recognize that we're in a very strong position financially to be able to continue to invest in technologies that are critical for them in supporting them as they migrate their vehicle fleet from internal combustion engines to electric propulsion.

Okay. And beyond deleveraging, can you talk a bit about what the decision tree looks like for you guys in terms of additional capital deployment, even outside of M&A, specifically, as you think about reinstating the dividend or executing on share repurchases, given where the stock is currently trading? What levels of operational or financial performance would you need to see to go down that road? Or is it a function of seeing stabilization in the volume environment across your end markets?

Yes. I really -- Aileen, I really think it's more of the latter than the former. So I think it's really about when the market starts to return to a stable pace, customers are producing. The demand levels are more consistent. So I think as we get into the second half of this year, we'll really start taking a hard look at where we believe the market is going to be, what adjustments we've made to our cost structure, and then we'll reevaluate that. But certainly, it's -- as we deal through -- in the near term, we deal as ramping back up. This is something that we're going to keep in place for a while. I would say the second half of the year, we'll certainly take a look again at those priorities.

That's helpful. And then to refocus, I think, a little bit on some of the longer-term business dynamics outside of this crisis. But as we think about recent market volatility, has it created a substantial opportunity for takeover business from other suppliers for you guys, perhaps those that are smaller, more regional and less capitalized? And has there been any notable changes in win rates and bookings with customers over the past several months?

I'll take that one. It's Jim again. The -- no, the answer is no relative to, per se, opportunities for something like that. It kind of obviously goes with the theme of some of the other answers we've given you. That's not a major focus, but we have to keep an eye on it, especially if it's maybe even vertical supply of some sort. But it's, of course, we all know this, it's a little bit early days to see something too. Where -- if you stick to light vehicle, well, pretty much all of the markets, mid-March, the spicket turns off. Everybody is getting paid and up until recently. And now you're going to have the bubble going out until July. The rocks will show a little bit more, and we'll see what happens. It doesn't mean there's going to be anything happening because most of the balance sheets were stronger than they certainly were in '08 or '09. But from the standpoint of us focused on that, there's nothing imminent for us to look at or any major concern there.

And as you look out at your future business, particularly with regards to a lot of the efforts you've made in repositioning for electrification across your end markets, as a result of the recent crisis, or I guess, during some of the production volatility, have your customers altered their investment efforts at all towards newer technologies and solutions like electrification? And with this, do they appear more likely perhaps to rely on some of their suppliers like Dana for investment burdens as they reprioritize their capital allocation?

I think it falls in -- good question. I think it falls in line with almost a similar theme in my last answer. I would say there's no net change for us. I think there's a lot of discussions probably being had across the OEMs we partner with about what to do with all their programs. But I can tell you the ones that we are either sourced on or working together on, there's really been no net change from that standpoint on the new energy programs.

Okay. And as we -- we have about 2 or 3 minutes left in our session. So I think the last question we probably want to close out with. Coming out of this crisis, you guys have provided sort of longer-term financial targets like an EBITDA margin of 12% and free cash flow as a percent of sales at around 5%. Obviously, the world in 2020 remains very much volatile. But as you look forward, down the line in terms of the time line for you to reach those financial targets, have they been pushed out in any significant way with the market pressure from the pandemic? Or perhaps, were these based on some underlying level of production volumes that may take at least a few years to recover back to?

Well, I wish I could give you a better answer than it's going to take some time to see things play out. So certainly, at the production levels we're seeing in the near term, those targets are much further away than we would have originally expected. It's really going to be a function of how the markets recover and at what rate. And the second half of this year is going to give us a better indication of that. But it would really be quite early to call the timing on those targets, just given how fundamentally different the market is than it was even just a few months ago.

If I could, I just -- maybe close -- if I could just close with a final comment. And that's for sure. But I will say if they're -- from a Dana standpoint, there's a silver lining. We are just happy that we got a lot of the foundational transformational activities done before the pandemic. And what I mean by that, what was some of the vision pockets of things we wanted to get down going back to '15 and '16, we use terminology like filling the white space to get us balanced around the globe. We got a lot of that done. If you think about one of the targets was to get to a 50-50-ish balance between heavy vehicle, which is a combination of off-highway and commercial vehicle. But then on the light vehicle side, the other 50% that's done to get the leverage to core matrix organization, to get scale benefits across purchasing, manufacturing and all the other elements done. So now it's like -- now it's a matter of execution. If we would have been in the middle of a pandemic trying to buy an Oerlikon, trying to buy a Brevini, trying to integrate it all that stuff, trying to get all the electrification assets in-house, that would have been a train wreck. And it wouldn't have been possible, frankly. So we're happy that we positioned the company so when we do get this train wreck in line, we think we'll be really positioned quite well to be able to capitalize.

That's really helpful commentary. And in the grand scheme of things, I think, looks very, very prescient. So I have to commend you on that. With that, we are kind of bumping up our -- against our 40 minutes. So I think we're going to close it there. I just want to say thank you again to the Dana team, to Jim and to Jonathan and Craig for joining us and for being very generous with your time and investors in doing one-on-one meetings today as well. So thank you, guys. For those of us that -- or for those of you that are sticking around for our next couple of sessions, up next, we do have Penske, which will start in about 10 minutes. And with that, thank you everyone, and hope everyone stays healthy and well.

Thank you.

Thank you.