Dana Incorporated (DAN) Earnings Call Transcript & Summary

Welcome back, everyone. I hope you enjoyed the lunch break. We're going to continue on the track right now and very pleased to have with us Tim Kraus, CFO from Dana Inc. Dana has been one of our favorite names here for a while as they've been undergoing a transformation really by selling their Off-Highway business and recapitalizing the balance sheet with the proceeds. So Tim, thanks for joining us today to sort of talk more about the story.

I do want to sort of get into the sale of Off-Highway, what new Dana sort of can look like from here. But just because we are here sort of with 3 weeks left in the year, you gave some guidance that looks pretty reasonable, I'd say, sort of for the implied fourth quarter, but maybe you could give us a little bit of a level set as sort of how the quarter has played out thus far?

Yes. So we're 8 weeks in, really not much left for the year when you really think about the holidays coming up. But I think we're on track for the quarter. So we feel very confident that the implied guidance we had for the fourth quarter is where we'll end up. And despite some of the headwinds with, obviously, the fire at Novelis for Ford, but I think we're -- we had that in our forecast when we came out. So I think we're in really good shape.

And can you remind us roughly sort of what you assume for that? And has the downtime associated with that roughly played out as...

Yes. I mean we were pretty much in line with what Ford was saying. We've seen -- we saw -- definitely saw volume decreases in October and then -- which is what we were expecting. And I think it's -- we're getting -- the good news is, I think Ford is running less from a volume differential, but they're running consistently, which is always better for our perspective in terms of the efficiency that we can run our plants at. So we're pretty pleased where we're at. They've done a nice job of getting units out, and we're obviously supplying them as they need it.

And then I know it's still fairly early. I don't expect you to sort of give a '26 view here right now. But I was wondering if you could sort of talk at a high level, how you're sort of thinking about some of the end markets that Dana remains in? And even maybe more than that, especially on the light vehicle side, you're fairly program specific, right? So even if we think about Ford, for instance, right, not only are you sort of lapping against some of the downtime, specifically in the fourth quarter, but they have also sort of talking about adding capacity and shifts. So it seems like it could be a pretty good year for Ford on the Super Duty side next year. And then, of course, late in the year, you get the Canadian capacity coming on. But I wanted to get your sense of maybe the markets and some of the customers, how you think?

Yes. I think Ford is obviously, on the light vehicle side, the largest customer. I think you -- Joe, you said it right. I think we see relatively flat overall for the market. I think we do probably have a little bit of upside with Ford if they're able to get some of the issues behind them and run better, which is really great for us. I mean we're on really, really good programs, really with all the customers, but certainly with Ford, Super Duty, Ranger and Bronco. So those are great vehicles, and we're really proud to be the driveline supplier of choice for Ford. So...

With the -- it's been -- it's public information that Ford is sort of adding this capacity for the Super Duty up in Canada. Can you give us a sense of sort of what type of work you need to do in order to sort of help prepare the supply for that? Or where are you supplying that?

Yes. So we're not adding any concrete for supply out of it. So we produce the Super Duty axles in Dry Ridge, Kentucky today. So not far from Kentucky truck. We'll continue to produce the axles there for the production they're going to have in Canada. In terms of -- we've had to increase run rate for the lines and then some of the capacity we have on some components. But generally, with that exception, we haven't had to add any concrete, just some capacity in assembly and components.

That will help them with U.S. content requirements?

Correct.

Okay. So the sale of Off-Highway, I know we -- I think a week ago, maybe 2, we sort of saw that you got sort of final approval. We were just sort of chatting a little bit there outside. Just I know you sort of said close by the end of the year. As you sort of mentioned, we're getting pretty close. Like what sort of really needs to happen here now that you sort of have approval to sort of finish the close?

Yes, it's really separation, right? I mean, while the business was a separate segment and ran relatively separately from a sales organization and whatnot, there's a lot of systems that are integrated, especially on the IT side, on aftermarket. So we're just completing those separations. We also have physical separations that have to be completed. So that's all being.

There were no shared facilities or anything like that?

There's no shared physical facilities. There's shared campuses. There's some built in things like that. But generally speaking, no shared facilities. So it's really the real nitty-gritty of getting to the business separated so that when we do close, it's in the best possible position for Allison to run the business without any issues.

Now the TSAs all set up.

The TSAs are all set up. I mean, we're in really, really good shape overall. It's really just making sure -- I mean, it's a big transaction for us from a divestiture, it's a big transaction for Allison, obviously. We -- on both sides, both us and Allison, we just want to make sure we're in the best shape and make sure that our customers, the operations, the suppliers, our employees, it's 10,000 or 11,000 employees that have been with us for some of them for a very, very long time. We want to make sure that transition happens really, really well, and it really gets off to a great start. So that's really what we're doing. I don't really have any concerns that we won't get there by the end of the year.

Yes. And one of the things I think I maybe sort of failed to appreciate, obviously, we knew the workers, the facility workers, the final work is sort of going over. But as you sort of indicated, there's a decent amount of sort of staff, right, that goes over with the deal as well to Allison.

Yes. I mean you think about like the Off-Highway business for our European business was the bulk of our European business. A lot of the sort of non-off-highway specific people really did support by and large, the Off-Highway problem. So many of those people are going over with the transaction, and they have to move legal entities and get reset up. And so there's a lot of really detailed oriented things that have to get completed to make sure we don't -- the last thing we want to do is not be able to deliver a part to a customer or pay one of our employees after the deal. So those are the things we're really focused on today.

But there will still be some stranded cost or headcount post the deal?

Of course. I mean just think -- I mean, part of my salary gets allocated and obviously, it gets absorbed by like they can't cut 30% of me off. I think my boss sometimes things he'd like to. But -- so yes, of course, there's some of those costs. I think we'll -- we've called out it's about $40 million. We think we get $20 million of that taken care of next year. And then by the end of the year, we'll be able to take the vast majority of that or offset it in some other way. But we're very confident in our ability to eliminate the impact of those stranded costs on the remaining margin of the business.

So with the cash coming in, you've been very clear, right, that a lot of that will be returned. There will be some sort of deleveraging. I think one of the things that early this year sort of surprised us a little bit was you did say you would sort of buy back some stock in advance. I think you bought back maybe a little bit more than sort of we anticipated. So can you just, again, remind us and sort of level set where you are with the cash that will come in, what can still be returned, what sort of goes towards deleveraging?

Yes. I mean we've called out about $2 billion of deleveraging on the growth side. That's obviously still where we'll be. We also announced a $1 billion capital return as part of what we announced over the last year. We've largely done -- we said we'd do $500 million to $600 million. We're largely on track for this year. We have bought back stock probably more quickly than we were originally anticipating. Some of that's obviously, one of our largest shareholders was Carl Icahn or the Icahn Group. We completed that transaction in the early summer. So that kind of kick started it. But our view of the stock has been undervalued and continues to be undervalued. And so we have a $1 billion authorization if the stock is on sale, might as well buy it back ahead of time. We have a lot of confidence. Obviously, we're going to get to closing. And so that's the reason we accelerated that. We still have about $400 million on the authorization, and we anticipate using that over the next 2 years through '27 to continue to buy back stock.

Okay. So let's talk a little bit, I guess, about sort of what new Dana looks like, right? So it is, I'd say, sort of a little bit more simplified, right? You've got the light vehicle driveline, which as we sort of discussed earlier, is -- has a couple of sort of very key customers and programs. And then you've got the commercial vehicle side. How would you describe the strategy for each of those sort of end markets from a growth or margin or a profitability perspective?

Yes. I mean I think the light vehicle business largely has the old light vehicle driveline business and the vast majority of old Power Technologies group, so which was the sealing and the thermal business, which primarily serves light vehicle, not in its entirety. There's still a little bit that goes to off-highway or commercial vehicle customers, but that's largely what's in the light vehicle segment, and those are pretty traditional products. So you mentioned the driveline, the 4 big programs that we serve here in North America, and then we do various sealing and then thermal products, which is really classic oil and transmission coolers, but also contains our battery and electronics cooling, which continues to be a growth area, not the kind of growth we were expecting or had planned for a couple of years ago, but it's an application of technologies that we've developed for ICE that are completely applicable to the EV segment. So while that growth is a bit slower, still a great opportunity for us to continue to grow as the market for electric or hybrid vehicles continues to develop.

And when Power Technologies was its own segment, that was one area where we did see sort of margins languish a little bit. And do you think we bottomed there in that specific business? And where are we in sort of the ramp?

Yes. I think we're -- we've had a couple of things. Obviously, there's quite a bit of volume that came out, especially on the EV side. So we've managed through that. I think it's been a process, but a good one. We've had some plant optimization that we went through, like launches that we struggled with a little bit over the last year. That's largely behind us. So I think those margins improve as we move into '26, part of the margin improvement story that we've been talking about. And I think largely, the other part of this is the number of SKUs in that business, the number of part numbers that we sell in -- especially in the ceiling side of the business is pretty significant, especially on the OEM side, not just for light vehicle, but commercial vehicle off-highway. There's an industrial component of that relatively small. But we're evaluating that business now in terms of what parts are profitable, which ones aren't as profitable as they need to be and really evaluating those and going through and saying, look, if that part doesn't meet our profitability or our return thresholds, we're going to go to the customer and get a price increase. And if they don't want the price increase, they'll tell them, "Hey, you're happy to take the business elsewhere. And I think that leads to maybe a shrinking on the top line, but a much more profitable business going forward for what was the Power Technologies segment. And by the way, I think when you think through that, that gives us opportunities as we go through, we end up with plants that are less than utilized. We've got some opportunities to maybe rationalize some of the manufacturing and take additional fixed cost out of the business. So I think there's a lot of opportunities for us as we come through both for margin expansion and for growth.

I want to get back to that point on margins and rationalization in a second. But just to sort of close loop on that on the commercial vehicle side, Bruce sounded pretty despondent, I think, on the hopes for recovery there, which has obviously been a market that sort of struggled. I mean what's your sort of latest and greatest sort of view on commercial vehicle market heading into '26? And are there growth opportunities in that market? Or is it just sort of with the ebbs and flows of the cyclical?

Yes. From a market perspective, we're talking about North America. Yes, Bruce -- it hasn't changed from what Bruce said. We don't see much recovery certainly in the first half. We don't see it getting any worse. So it's not in a great position from a total volume perspective, but it seems to have stabilized. As we look out into the back half of next year, maybe there's some opportunities. We haven't seen that yet. Our customers -- the order books don't seem to suggest it. But that would be sort of, I think, the first opportunity. I think the only bright spot there is the year-over-year comparables like aren't going to be -- could be better just because this year has been -- especially in the back half of this year has been pretty tough.

And I know there are other geographies in that business, Europe, South America, China. So it's a little bit difficult. But by our measure, it does seem like you've probably been outperforming the markets even though we sort of try to blend that, which suggests that there's either share gains or some sort of pricing or something. So what do you think?

It's both, right? So we have -- like that's really part of the offset we have next year as we continue to gain share with customers that historically have been pretty small for us. And that continues to be an opportunity for us as we compete and from an end market customer demand for that -- for our products. On the CV side, we have an opportunity with customers like Navistar, like Volvo, who are -- which have a much smaller share, picking that share up to offset some of the weakness in the macro volume is pretty helpful. So I think that's our area we kind of...

That's to sort of get as -- because I know the customers can ultimately choose their sort of axle drive, but that would be sort of like as the standard or recommended fit.

Yes, I think there's a couple of parts there. One is where we sit in the book. That's really how we work with the OEM themselves. And the other side is on the end market fleet customer and making sure that they understand the value proposition of having a Dana axle and driveshaft in their truck and then using that as a pull-through with the OEMs to push the product or pull the product through the supply chain. So it's really a combination of the 2. And then as more customers really want that in the order book, our position in the order book and the pricing in the order book gets better and that should lead to better market share.

Yes. So I think you sort of talked about -- you typically do sort of a backlog update. I think you indicated you might do that at some point in January ahead of reporting earnings. What -- obviously, you're still sort of working through that, you might still get some business. You're not going to give us a number today. But like again, broadly, like how should we think about what drivers really are for that business? Because I think historically, on the commercial vehicle side, backlogs a little bit of a funny concept because it is sort of more built to order, right, as opposed to sort of orders in advance.

Yes. Our backlog, when you break down, if you look at the backlog from a year ago, right, the amount of backlog related to either Off-Highway or CV is relatively small, especially on traditional. A lot of the backlog is in CV.

Was EV.

It was EV because that's brand new -- those were brand-new programs. So obviously, those are going to be lower tomorrow than they were yesterday because of just what we're seeing in the market.

So then when we think about on the light vehicle side, right, like, I mean, it's a pretty unique set of product for a very specific segment of the light vehicle market. So how do we think about sort of continued wins in that business?

Well, I think there's a couple of things. One, we still have significant EV business coming online, albeit at lower volumes, but still incremental sales dollars that flow through that we didn't have in the past. And that's true on driveline and on battery cooling and electronics cooling. I think the other is, as the customers start to rethink their product plans, we are seeing renewed opportunities in -- for ICE programs or new variants within the programs that we're already on. So we are seeing a change, whereas if you went back 2 years ago, there was virtually no RFQs for new ICE platforms or significant adjustments to those platforms. That's changed quite a bit today, and we're seeing a lot more of that interest from our customers in terms of those platforms or new platforms that they might be considering.

Would something like the expanded volume for the Super Duty and kind of be considered backlog is that we spend...

We would -- typically, we wouldn't consider volume uptick to be backlog. In this case, we do because it's a brand-new plant, incremental volume. So yes, we are -- we would consider that. The other things that would go through volume is where we've got additional content on the vehicles, right? So where they -- the customer may have added variants that weren't there before and those come with additional content because of different gear ratios or options, then that goes through backlog when it's a renewed program.

And to the extent -- one of the things like Ford has alluded to is sort of maybe some richer mix of, let's say, performance vehicles, right? And I think we typically think of engine when we hear that. But the same can be said for the axle. So to the extent there's more Bronco Raptors...

Right? Those are great vehicles for both us and quite frankly, obviously, for our customer. But those are great because they do, they come with significantly better content and the OEM gets to sell it for a premium price. So yes, more of those types of vehicles are always helpful from our perspective. And the nice part there is it's not a variant that they run one-off. They tend to run them in a set. So you can set up run and the profitability is really quite good on those programs.

I guess final question on the backlog. I mean, I think if I recall correctly, almost 3/4 of less backlog seem to be tied to EV, and you just sort of alluded that it's not going away, but there's definitely been sort of a pushout or to the right or the area end of the curve looks a little bit different. So how should we think about that in the context of sort of what you've already reported for that 3-year backlog and then as you sort of roll on?

Yes, I think we'll talk about this next month. But there's going to be a number of components. There'll be some clearly canceled programs that will affect backlog. There's volume decrease assumptions that will affect backlog and then some delays in the program that will move backlog around in the year. So like I mean, our backlog on EV is going to be a little bit -- if you just look at '27 from before and '27 tomorrow, it will obviously look a little bit different. But we still expect a good chunk of the backlog to be EV. It just isn't going to be as large as we once thought it would be. But again, that comes with less investment, too.

Well, I was just going to say, with that business, which you sort of won, how has sort of the conversation with the customer sort of changed in order to sort of take that?

I would -- I mean, the conversations with our customers are -- I never put them in the easy category. But I think they've been very, very constructive. And I would say that they've been we got to where we need to be with many of the programs.

When you say less investment, is that because you're leveraging investments already made or because they're shouldering more of the investment.

It's a bit of both, where we hadn't put capital on the ground yet, that capital is coming in smaller because the volumes are down. So some of it's like, hey, we hadn't ordered the programs. And some of this is true also because they delayed it. Now they've actually taken the volume down. So because of the delay, we hadn't ordered capital and then we can put it in. The other is where we do have opportunities, and I think this is to go back to the growth conversation, we're offering a lot more to the customer now saying, "Hey, look, if you -- especially like on the CV, if you -- we have an off-the-shelf product, we can make it fit what you want. If you want that, you can have it at x price, and it's great. If you want something that's bespoke, you're paying the full bill. And what we're seeing is a lot more acceptance of something that, that's less bespoke and more off-the-shelf with some adjustments, which the customer then is willing to pay for. And don't forget these systems, we're on a mechanical system, you have to change the mechanical aspect of the axle to get a different drive. On an EV, you can change ride characteristic with software. So you could have principally the same motor inverter and hard parts and change that ride dynamic and how the customer feels in that vehicle by changing the way the software runs. So there's a lot of opportunities. And I think more of the customers are -- as volumes just aren't going to be there, are rethinking kind of do they really need something that's special or bespoke to them.

Maybe going back to the cost side and the margin side, where you sort of talked about $310 million, I think, of cost out, right? You've done -- I think you're probably ahead of plan basically to date. Does that -- as you sort of work through that, have you sort of uncovered additional opportunities where I'm not saying you're -- I'm not going to sort of hold you to this as saying like it's for sure, but does -- as you sort of evaluate and see what you've been able to do, do you see more opportunities for even more cost outs down the line.

Think about the $310 million, right? We started out with $200 million, went to $300 million, now it's $310 million. I think the team has done just an absolutely fantastic job, not only identifying the cost out, but really getting more efficient, right? Here's the things we're not going to do. Here's how we're going to do the things we need to do more efficiently. And that's why we have such confidence. One, the costs are going to go out and the costs are going to stay out. I think as you move forward -- and a lot of that was -- that was all above the plants, right? So you're talking about a lot of corporate back office, right? It's a lot of engineering that like -- and by the way, the reduction in EV really helped drive a lot of that because we put a lot of infrastructure into the business for that growth that's now not coming and that cost has been taken out, not just engineering, but I think program management purchasing, right? This is going to be a $3 billion, $4 billion, $5 billion business comes with a lot of other costs. I think now are there still some additional opportunities? Yes, I mean, is it...

But more in the plants, right?

Definitely in the plant. So as we've been sort of down this EV journey over the last 4, 5, 6 years, we spent most of our time and effort maintaining the business we had and then developing the products that we needed for EV. That's been done. But what we didn't do is spend as much time or capital, mostly because we didn't have it because we were spending it on EV on really trying to improve the -- really supercharge the efficiencies in the plants. And that's the opportunity that we see over the next year, 2, 3 years is really at the plant level, being able to do consolidation or automation, other efficiency within the plant that really will help take that profitability to that next level.

Is there also internal benchmarking? Like do you think some plants are just inefficient relative to other areas of other plants you have within the organization?

We certainly have a gradation, right? A newer plant is obviously more efficient than the one that's been around for 60 years. I think the more important thing is we're behind on base automation. If you just look at a typical auto industrial type manufacturing. And that's where we've really, I think, going to be concentrating. It comes with investment. But that was investment that would have gone into EV, which will now go to these types of activities. And the great part here is the returns are excellent, right? And there are a lot -- from a risk-adjusted basis, far, far easier to understand. As long as the volume on, say, an ICE program is going to be there, like that additional profitability and savings are going to flow through because we know what variable costs or fixed costs we've taken out of the business.

And that's not just labor savings, right, where I know at times, like labor has been a little bit of a challenge. But is it also sort of are there also -- one would imagine efficiency savings, quality savings, right, from automation?

Yes, I'll give you a great example. So this is -- so when you build the center section on an axle, right, you put a gear set, right, a hypoid gear set in. The hypoid gear set is made, and there's some movement inside that. There's a shim that gets put in there. And there's varying sizes to reduce gear wrap, noise, vibration, right? Historically, right, you had Bob or Mary who would like would be, oh, I think I need #3. Well, what's going on now is, as you think about automation is there's an automated camera that's looking at it and then calculating and say, hey, like your best choice is shim #3. And the number of times that, that's correct goes up. So OEE comes through and starts to go up. That's not really automation in the sense of a robot, but it is a -- in terms of our OEE and the amount of throughput we can have on the same type of machine, maybe we don't need to run 3 cells. We only need to run 2 cells and get the same output. So those are the things that I think when you think about how we can continue to invest in the -- on the plant floor to really improve the productivity, but also to your point, quality, right? You're less likely to make the wrong choice and end up with a gear that doesn't pass NVH at the end of the line. So...

So it's not just automation, right? It's also the use of more AI and other software technologies to help get that quality up. So you mentioned there would be some investment, but that's otherwise investment that would have gone to EV. As we think about -- you've given some free cash flow margin color for the company on a go-forward basis. CapEx, I know it could be variable from year-to-year depending on program launches, but how should we think about CapEx as a percent of sales on...

Yes, it's like -- I mean, I think next year is probably 4%. So in the 4-ish, 4.5%, it probably is a reasonable number. Like you say, it will move around depending on where we are in the refresh cycles. But I think generally, 4% to 4.5%, I think, is where we're at. We have a 4% of sales free cash flow number for next year. I think that is not an issue at all because you think about it, right, we're at 10% to 10.5% EBITDA margin and with a better capital structure, obviously, lower tax base, we continue to see some efficiencies from a working capital. But even without that and with a 4% free cash flow or CapEx, like getting to a 4% free cash flow is -- the walk is pretty easy to understand from my perspective.

Can we talk about the working capital part for a second because I think -- I don't know whether this is true or not, but please correct me like when I thought about the Off-Highway business, right, great business, good margin business. But generally, lower volumes and a more diverse array of SKUs, if you will, right? So that seems like it probably was a working capital headwind relative to the rest of the business, but I'm not sure whether that's true. But maybe just some color on how you could see working capital for new Dana emerging relative to old Dana without the Off-Highway business.

Yes. I mean, certainly, it was our highest working capital-intensive business, right, for exactly right. And it's an Italian, largely or a large portion of it is in Italian. And those customers tend to live off the old fiat 90-day terms, 100-day terms. So yes, even outside of inventory, you see that on the -- or the receivable side, get a little help on the payable side, but even still absolutely less intensive. And by the way, one of the things in that business is when sales fall off pretty quickly, you end up with pretty long supply lines and you do end up with bubbles in working capital until you can kind of work that out. So that will be certainly helpful to new Dana as we go through. I think for the rest of the business, we've -- this year, we had obviously a pretty significant falloff in the commercial vehicle, which does have a bit longer supply chain metrics than our light vehicle business. So we think some of that will come back next year as well as we kind of work through. Well, it stopped falling. And of course, now we're kind of working through what's already been ordered and come into the plant. So we do think there's a bit of help there. And we still have some work to do on some of the other aspects, but I think that will be helpful next year as well.

Okay. I forgot to mention this, but to anyone in the audience has a question, if you scan the QR code, it will pop up here on the iPad, and I'm happy to ask a question on your behalf if you have one. So I'll be on the lookout for that if there is anything. Metals pricing. We've seen the price of metals sort of fluctuate a little bit. I know SBQ is a big input as well to you, and that's a market that is quite frankly, a little bit more sort of opaque to us. So maybe you could just remind us sort of what -- or tell us what you're seeing on metals pricing heading into '26 and then remind us sort of how that works its way through the year.

Yes. I mean we're not seeing any -- we're not anticipating any drastic changes in the core metals. So I think SBQ. Another one that's a core piece for us is really North American scrap pricing, right, because that's really an input for a lot of the steel we buy. What we've seen as the commodity prices have sort of swung and moved quite a bit over the last 2, 3, 4 years is our commodity recovery mechanisms that are contractual have worked very, very well. We tend to be able to recover somewhere in the 75%, 80% range. It depends on the customer and the program, and we tend to be on a 90% to...

How much higher is that than it was, let's say, 5 years ago?

It's really not unchanged. Like that aspect changed many, many years ago. I think what we learned through the last 2, 3 years of these swings is some of the indexing that we had worked fine when metal prices were relatively mirrored. Now that there's been some [ discrepancy ], we found that some of the indexes that we were using no longer really estimate the impacts. And so we've gone back over the last few years and actually improved those and had the customer agree because it doesn't help either one of us if the index were marked off of isn't working. But -- and you can see that like the impacts on -- when you look at the walks, it hasn't been dramatic other than the impacts you have from a lag perspective.

And that lag is still generally a quarter or so?

It's a quarter, maybe again, it depends. It could be 90 days. It could be 120 days depending on the...

And any material differences between the businesses that you retain control of versus Off-Highway?

Yes, Off-Highway had very little contractual commodity adjustments. Those were all negotiated other than with some of the very large, the Deere's, the AGCO's of the world. The rest of them were all -- you had to go in and negotiate. So in that respect, I think the percentage of the business that is covered by contractual obligations will actually increase after the sale of Off-Highway. That said, I mean, the one thing in the Off-Highway business was very adept at was going in and getting those -- that pricing from the customer when that happened. And you saw that over the last few years when margins in that business actually improved despite inflation and commodity prices increasing.

I'm curious sort of how you think about opportunities in the China market. I know it's not a large portion of the business, but it is a large market, the largest market in the world. And some of those players will undoubtedly exercise more influence on the global automotive industry. So what's sort of the strategy there?

Yes. So we're selling a large chunk of our Chinese business along with Off-Highway. That was a large.

I was talking about on RemainCo, yes.

Yes, on RemainCo, if you think about it -- so on the commercial vehicle side, from pure ICE, we have a joint venture with Dongfeng on it. So we -- it's nonconsolidated. So that's how we play in the ICE commercial vehicle market. The part of the commercial vehicle market where we have a really good position is in the EV. So they're very early adopters from an EV even in the truck and bus market. We continue to see while that market has been reduced, still very supportive and adoptive of our EV technology. So we'll continue to be able to plan there. On the light vehicle side, it's not a light truck -- it's not a full-frame truck and SUV market. So we have some business through joint ventures with a number of the OEMs, but it's relatively modest. So we'll continue to look at opportunities, especially in the CV market. And the LV market, the place where we play is really in the old Power Tech stuff. So in thermal, and we'll continue to see growth and work to grow those -- that part of the business in China as we move forward. But our core light vehicle driveline business just isn't really -- it just doesn't have the market products that really match up well with ours.

On the light vehicle, the commercial vehicle side of the business, are you comfortable with where the portfolio is at either from a -- are there holes where you sort of want to fill in either organically or inorganically? Maybe that could be sort of a -- potential sort of use of cash going forward? Or conversely, are there still some areas that as you sort of continue to go through the business, evaluate what you have, where you may realize this business doesn't make sense for us to be the owners of the products.

Yes, if you look -- I mean, we've sold a couple of small joint ventures that we've had that were nonconsolidated this year. There's...

Well, just not even China, just overall.

No, no. I'm not talking about China. I'm talking about overall. I think on use of proceeds for acquisitions, like we're really focused on the business. We love the businesses we own. In terms of what -- do we have any holes, I think the place where we see a lot of growth, and we're spending a lot of time, and this is really around our aftermarket business, especially on the ceiling side, really in North America. We have a very strong position in Europe, really trying to replicate that here and going after some of the big box retailers to get that done, I think, is a great spot to be in. But generally speaking, we love the businesses we're in. We like where we're positioned and we like the technologies that we have.

Great. Well, with that, Tim, I think we've timed it perfectly. Stark zero.

Thanks, Joe.

Thanks for having us. All right. Thanks for being here.