Good morning, welcome to Dana Incorporated Second Quarter 2023 Financial Webcast and Conference Call. My name is Josh, and I will be your conference facilitator. Please be advised that our meeting today, with the speaker's remarks and Q&A session, will be recorded for replay purposes. For those participants who would like to access the call from the webcast, please reference the URL on our website and sign in as a guest. There will be a question-and-answer period after the speaker's remarks, and we will take questions from the telephone only. To ensure that everyone has an opportunity to participate in today's Q&A, we ask that callers limit themselves to one question at a time. If you would like to ask an additional question, please return to the queue. 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, Mr. Barber. Thank you, Josh. Good morning, everyone on the call. Thank you for joining us today for our second quarter 2023 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 supporting materials are the property of Dana Incorporated. They may not be recorded, copied, or rebroadcast without our written consent. Allow me to remind you that today's 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. I'll now turn the call over to Jim. Jim? Good morning. Thank you for joining us today. Please turn with me to Page 4, where I will discuss our highlights for the second quarter of 2023. Starting on the left side, we're pleased to report that Dana achieved record second quarter sales of $2.7 billion, a $162 million increase over the same period last year, driven by continued strong customer demand, the roll-on of our new business backlog across all of our end markets, and our ongoing cost recovery efforts. Adjusted EBITDA for the quarter was $243 million, up $81 million, or 50% over the second quarter of last year, driven by our strong operational execution and improving customer schedules. Free cash flow was $134 million, which is a good second quarter performance, driven by higher profit and our working capital efficiency. Lastly, for our results, adjusted earnings per share for the year were $0.37, an improvement of $0.29 per share. Dana remains on track and extremely focused on the execution of our company-wide transformation that has securely positioned us to be a leading supplier to the world's most prolific ICE and zero emissions vehicle manufacturers. While this ongoing transformation has not been easy in light of the challenges that continued to impact the mobility industry between 2020 and 2022, it was necessary to completely reposition the company for long-term profitable growth as the industry transitions to a zero emissions world. Dana recognized that this industry transitioned early on and took measures, actions to enhance our product portfolio and ensure that we are an extremely cohesive and aligned organization, spanning all markets, to drive forward our technology excellence with the goal of being a leading energy source, agnostic mobility supplier with the capability to design, engineer and manufacture fully electric powertrains in-house across all mobility markets. That is why I'm very proud of how the Dana team has continued to relentlessly drive operational efficiency, exceed customer satisfaction expectations, and leverage our best practices and technology capabilities across the entire organization to ensure that we can meet whatever needs our customers have in this quickly changing market. Moving to the right side of the slide, I will be highlighting the following key items today as we reach the midpoint of the year. First is an update on the current operating environment and outlook for the remainder of the year. While we continue to navigate numerous challenges, including inflationary pressures, customer demand volatility, supply chain disruptions, and currency fluctuations, market conditions have begun to stabilize, and we expect them to continue improving through the back half of the year. I will also give you a brief update on a few of the key high volume, new business launches that have just concluded or are now underway and gradually accelerating serial production volumes. Moving to the lower left, we are excited to report that Dana continues to win new electrification business, partnering with the world's largest OEMs for some of the most marquee programs in our industry. Lastly, we will highlight another example of how Dana is intentionally leveraging our expertise to develop the most advanced e-Propulsion systems, in this case, e-Transmissions, across all three mobility markets. Please turn with me to Page 5, where I will walk you through an update on our operating environment. As we shared with you last quarter, we are anticipating an overall improved operating environment as we go through the second half of 2023. Beginning with commodity costs and currency impacts on the left side of the left side of the slide, we continue to see steel prices moderating compared with 2022, and though we expect commodities to remain a tailwind for the rest of the year, prices have not fallen quite as fast as we had previously expected. Commodity recoveries continue to continue, but are returning to a more normal pace as base material prices fall. Finally, for this section, foreign currencies as translated to U.S. dollars, were a headwind in the 2nd quarter, but we expect that will moderate in the back half as the relative strength of the dollar weakens. Moving to the center of the slide, cost inflation continues to continue to be an issue as many input costs remain high, including labor and European energy. Pricing actions are muting the impact of inflation, but will not completely offset it in the 2nd half. There has been a sequential improvement starting late in the 2nd quarter in customer production volatility, and customers are indicating that their supply chains are improving, which should help us to reduce production volatility and schedule disruptions through the rest of the year. Moving to the right of the page, demand across all end markets remains strong as vehicle manufacturers are working to restock inventory. Like everyone in the industry, we continue to monitor the possibility of an OEM labor disruption. With approximately 120 active program launches this year, including a great, great balance of EV and ICE programs spanning all of our markets globally, the preparation and efforts our team members committed to over the prior years have paid off as all of our launches continue to progress exceptionally well. We are successfully through the launch of the Ford Super Duty and are currently ramping up the GM Ultium and beginning the launch of the new Jeep Wrangler program. We also expect higher EV volumes to benefit battery and power electronics cooling product sales in the second half of the year, primarily impacting our Power Technologies segment. As we move into the back half of 2023, we expect to see the benefits of decreasing production volatility, somewhat offset by higher net inflation. Let's now turn to Page 6, where I'm excited to share with you another new and transformative EV program with a major OEM. Dana has been at the forefront of developing and manufacturing electrified vehicle powertrains for some of the world's most recognized brands across the entire mobility market. Previously, we had shared with you how electrification adoption is rapidly accelerating in 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 supply partner for an all-new, high-volume electric vehicle program with a major North America OEM. While I'm not able to name the customer or the vehicle yet, we will be supplying our Rigid Beam e-Axles for a highly anticipated light and medium-duty truck program. The first models are slated for production in the next few years and will include Dana's designed and manufactured rigid e-Beam that will include Dana's electrodynamics and e-Thermal management components. Consistent with our Commercial Vehicle and off-highway customers, our Light Vehicle customers recognize and are turning to Dana's complete in-house e-Propulsion capabilities, including motors, inverters, e-Thermal, software, controllers, and of course, e-mechanical capabilities to differentiate their vehicles for the future. It is another great example of how the transformation to electrification is providing Dana an opportunity to supply three times the vehicle content versus traditional ICE drivelines on programs big and small. Stay tuned. We'll be able to provide you more details about this major EV program award in the coming months. Please turn to Slide 7, where I will talk about how Dana is successfully leveraging our class-leading e-Transmission capabilities across all three of our end markets in multiple applications. If you recall, I shared that Dana would have a prominent presence at the Advanced Clean Transportation Expo, known as ACT Expo or ACT, which features some of the world's leading OEMs and commercial transportation technology providers, showcasing the latest products and solutions designed to decarbonize transportation and pave the road to a zero-emission future. The show was a huge success, with countless industry leaders taking part. During the week, Dana announced the expansion of our Spicer Electrified e-powertrain offerings to include a family of e-Transmissions for a wide variety of medium-duty electric vehicle applications. Launching on a global electric vehicle platform in early 2024, Dana Spicer Electrified Zero-6 e-Transmission optimized operating range and vehicle performance for applications ideally suited to a central drive e-Propulsion system with a conventional axle and driveshaft layout. It is a significant step towards further electrifying the medium-duty commercial vehicle market. Dana's superior engineering and technical expertise in EV and hybrid transmissions provide us with the inherent capability of leveraging our proven expertise across all the markets that we serve. If you recall last quarter, I shared how our e-Transmission capabilities are driving some of the world's most notable and advanced high-performance vehicles, such as Aston Martin, Audi, Ferrari, Lamborghini, and McLaren. In addition to the supercars and commercial vehicles, our e-Powershift technology is translating to our Off-Highway market as well, where we are already leveraging it across numerous vehicle types, including wheel loaders and rough terrain cranes in construction, large lift trucks, empty container handlers, reach stackers, terminal tractors and material handling, load/haul dumpers in underground mining, and forwarders in forestry. As the markets continue to evolve, we are in a leading position to provide solutions that fit our customers' unique needs, whether it's for light vehicle, off-highway, or commercial vehicle applications. Thank you for your time today. I'd like to turn it over to Tim, who will walk you through the financials. Thank you, Jim. Good morning. Please turn to Slide 9 for a look at Dana's second quarter 2023 results. Sales were $2.75 billion, a $162 million increase over last year, primarily driven by strong demand in our Driveline segments and recoveries of cost inflation. Adjusted EBITDA was $243 million, for a margin of 8.8%. That is a $181 million higher and a 250 basis points increase over last year. While we still experienced some lingering customer-driven production inefficiencies, our profit improvement was driven by lower net manufacturing costs, strong operational execution, and the timing of EV investments. The net income attributable to Dana was $30 million, compared with $8 million last year, driven by higher operating income. Diluted adjusted earnings per share was $0.37, a $0.29 improvement over the second quarter of last year. Lastly, free cash flow was $134 million, down $33 million from last year, driven primarily by higher capital spending. Please turn with me now to Slide 10 for a closer look at the drivers of sales and profit change for the second quarter of 2023. Beginning on the left, traditional organic sales growth of $137 million was driven by higher demand, improved pricing, recoveries, as well as product and market mix. Adjusted EBITDA on higher sales was $45 million, which improved margin by 130 basis points. Cost inflation was offset by customer recoveries in the quarter. Improved operational execution muted cost headwinds from inefficiencies driven by volatile customer production, which, while lessening in intensity, was still an issue early in the second quarter, primarily in our Light Vehicle segment. Next, EV organic sales were $36 million higher in the second quarter versus last year. Adjusted EBITDA was $4 million higher for negligible margin impact. As we noted last quarter, our Electrification business remains profitable on a contribution basis, but will generally show negative profit and margin when we factor in continued investment we are making to bring EV business up to scale. However, this investment is variable, and this quarter, our required investment was lower than it was last year, which is why the walk shows some profit growth. This is just a matter of timing. We expect investment will ramp up in the second half of 2023. Third, foreign currency translation lowered sales by $21 million as the U.S. dollar increased in value against several foreign currencies. This lowered profit by $5 million for a margin impact of about 20 basis points. Finally, the recovery of prior period commodity cost increases added $10 million in sales and net profit benefit of $37 million, driven by lower commodity costs compared to last year. This resulted in a 140 basis point margin benefit. Next, I'll turn to Slide 11 for a closer look at the drivers of free cash flow change in the second quarter. Free cash flow was $137 million in the second quarter. Higher profit this quarter was offset by smaller incremental improvement in working capital and higher capital investments. A few items of note. Cash interest was $5 million higher due to higher interest rates and an accelerated payment relating to our debt refinancing. Working capital improvement was $74 million lower in this year's second quarter, primarily driven by increased sales and higher inventories for new program launches. Finally, capital spending was $32 million higher than last year to support our backlog of new business. Please turn with me now to Slide 12 for our revised guidance for 2023. We have revised our full- year guidance ranges due to solid first half results and our expectations for a stable second half. We now expect sales to be approximately $10.7 billion at the midpoint of our guidance range. This is an increase of $100 million from our prior outlook and an increase of $400 million or $545 million over 2022. The sales increase is being driven by lower currency headwinds and higher expected commodity recoveries, as material prices have remained elevated longer than previously expected. Adjusted EBITDA is expected to be about $850 million at the midpoint of our revised guidance range, which is up approximately $50 million from our prior outlook and $150 million higher than last year. The increase in guidance is driven by improving operational efficiencies, slightly lower EV spending, and a beneficial product in market mix. Profit margin is now expected to be approximately 7.6%-8.2%, a 40 basis points improvement at the midpoint of that range from our last guide, and a 100 basis points improvement over last year. Free cash flow is expected to be approximately $75 million at the midpoint of the range, which is a $50 million increase from our prior guidance. Diluted adjusted EPS is expected to be $0.80 per share at the midpoint of the range, a $0.30 improvement. Please turn with me now to Slide 13, where I will highlight the drivers of the full-year expected sales and profit changes from last year. In line with our revised guidance ranges, we are updating the drivers of our year-over-year change in sales and profit for 2023. Beginning with traditional organic growth, compared to last year, we now expect $380 million in additional sales from traditional products through a combination of new business, market growth, market share gains, and customer recoveries. This revised estimate is about $50 million lower than our previous outlook due to an anticipated lower gross inflation and subsequent recoveries from customers. Adjusted EBITDA increases over the last year for traditional organic sales growth is now expected to be about $125 million, or about $45 million higher than our previous estimate, due to a more efficient operating environment and beneficial product and market mix. Note that net cost inflation compared to last year is still estimated to be about a $50 million headwind. Our outlook for EV organic sales remains unchanged, as we expect about $150 million in incremental EV product sales this year. However, the timing of investments we are making for development and commercialization of this new technology has shifted out a portion of the cost, meaning our expected EV sales to be about $20 million decrease in adjusted EBITDA this year compared to our prior estimate of a $35 million decrease. Foreign currency translation on sales is now expected to be a slight tailwind of approximately $15 million, primarily due to the relative strength in the euro and Brazilian real. However, due to the blended basket of currencies in which we contract, we still expect a slight profit headwind of about $5 million. Finally, our revised commodity outlook, is expecting material prices to remain elevated longer this year than previously planned, meaning that our prior estimate of $35 million lower sales due to lower recoveries has been revised upwards, so that recoveries will be equal to last year as we continue to recover the higher costs. We still expect total material prices to be lower than last year. Our revised outlook is a net profit tailwind of about $50 million. This is about $20 million lower than our previous estimate. Please turn with me to Slide 14 for our outlook on free cash flow for 2023. Our revised full-year free cash flow outlook is about $75 million at the midpoint, primarily due to higher profit. We expect about $150 million of higher free cash flow from increased profits on higher sales and lower input costs. Lower one-time costs will offset higher taxes due to the increased profit. Working capital remains unchanged in our current outlook as we continue to improve capital efficiency. Our sales growth and launch cadence this year will likely result in about $190 million less in free cash flow generation compared to last year. Capital spending remains unchanged. To support our sales growth and technology transformation, we are expecting to invest about $70 million more in capital expenditures as compared to last year. Turning to Page 15 for an update for a strong balance sheet and our second quarter refinancing actions. On the left side of the page, you can see that we have ample liquidity of about $1.6 billion at the end of the second quarter. Our maturity profile is illustrated on the right side of the page. During the quarter, we took proactive actions to bolster our debt capital profile by extending maturities and balancing our geographic borrowings. In May, we issued EUR 425 million in new euro s enior notes maturing in 2020, or excuse me, in 2031. Proceeds of this issue were used to redeem half of our U.S. bond maturing in 2025. The remainder was used to repay outstanding borrowings on the revolving credit facility. We expect to redeem the remaining 2025 bonds over the next 12 months. Our balanced liquidity, attractive long-term term debt maturity profile, and free cash flow generation to continue to give us sound foundation to continue to transform our business for an electrified world. Thank you for listening on this Friday. I will now turn the call over to Josh to open for questions. At this time, if you would like to ask a question, please press Star followed by the number one on your telephone keypad. Your first question comes from the line of Tom Narayan with RBC Capital Markets. Your line is open. Hi, thanks for taking the question. I just had a question on the on the guidance raise EBITDA bridges. If I compare the Q1 bridge you guys provided to the to the Q2 bridge, you know, obviously, the traditional EBITDA moves higher. You called out more efficient operating environment and mix. Just would love to hear more kind of details there. The timing of investment shift on EVs is creating the reason why that piece of the bridge is moving higher. That sounds like you're just saying if I understand it correctly, just shifting the investments to 2024. Is that, is that fair to say? Or is there, is there anything more behind that? Thanks. Yeah, I'll, I'll take the, the EV first. This is Tim. Yeah, I, I, I think what we're, we're seeing in the business is on the EV side is just a little bit of slipping of the investment, a little bit that will flow into 2024. You know, we're about $15 million less now than we were originally, but we still expect to invest significantly in that business as we continue the transformation. On the, on the, the traditional, you know, what you're really seeing is some of what we've been talking about, right? A lot of work's been going on in the operating level of the business to become more efficient and to, and to drive those improvements. Some of that's been held back by these volatile demand patterns and supply chain issues. As those start to abate, and we started to see that late in the quarter, you start to see the operating improvements in the plant start to flow through, and that's really what's being reflected when you look at the improvement in the flow through and conversion on our traditional business. Then on mix? Mix, yeah, you're, you're obviously you're seeing some, some, higher mix relative to our, our Off-Highway business that tends to come with, higher margins, and, and offset in, in other parts of the business. Okay, got it. Thanks a lot. I'll turn it over. Yep. Thanks, Tom. Your next question comes from the line of Colin Langan with Wells Fargo. Your line is open. Oh, great. Thanks for taking my question. When I look at your implied second half versus the first half, you have slightly down sales, but margins, I think something like 60, 70 basis points down, which is a pretty high incremental. I think most suppliers are indicating things get better in the second half, so you seem to be bucking that trend. What would drive the weakness in the second half versus the first half? What are the factors we should thinking about that cause margins to kinda erode from here? Hey, hey, Colin, this is Tim. Thanks for the question. Yeah, it, it's, it's a couple of things. Big driver on sales. The sales are down, you know, about $80 million, first half to second half. That's driven by recoveries and, and commodities with a, a little bit of offset those for, for FX. I, I think. Then on the EBITDA side, and those recoveries, don't forget, don't come with, with any margin. Then the commodities kind of flow through with, with very high margin. If you look at our EBITDA, you know, it's down, you know, $40 million between first half and second half. That's evenly split, right? If you think about it, we made money or, or on an incremental basis, had flow-through profit on EV, which, which we're now showing as a, as a overall loss for the year, or still showing as an overall loss, slightly lower. That, that differential is about half of that. The other is really just the, the lower flow-through from, from commodities that we're expecting to continue to decrease, which now we, we don't see. You really look at the base traditional business, it's, you know, it's down on sales and about break even on profit. When you look at those, those that decremental is, is, is actually really, really good. When you kind of parse it apart, I, I would say the business still in the back half, we, we show pretty sizable improvement on a, on a base organic sales level. Got it. That's helpful. All the segment margins were really good, except Power Technologies seem to be a pretty weak margin there. What's going on in that segment? Is that some of the, the EV investments? And, and how should we think about the trajectory of that? Yeah, it's, it's, it's two things. That business, we continue to launch and bring up to scale on the battery and electronics cooling. We expect that to improve in the back half as our customers continue to move through that launch cadence. On the traditional side, right, the difference in our Power Technologies business versus some of the other businesses, that's a very diverse business from a commodities perspective, and from a, from a, you know, just the sheer number of part numbers we have versus, say, the Light Vehicle Driveline business. Some of this is also driven by, you know, our ability to continue to have and get the recoveries. We, we see that, those recoveries, the teams continue to work. We'll see some more of that benefit coming in and, and catch up in the, in the back half of the year. We do expect that the, the margin profile and the conversions in that business will improve in the second half versus the first half. Got it. All right. Thanks for taking my questions. Sure. Your next question comes from the line of Noah Kaye with Oppenheimer. Your line is open. Hey, thanks. I guess first, just to follow up to Colin's question around the second half, and I just wanna unpack this a little bit further. Excluding commodity, you know, 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'll be- because, you know, bas... Yeah, go ahead. I'm sorry. Yeah, organic sales will be down a little bit, first half to second half, but that's primarily driven by lower recoveries on lower growth, gross inflation. Your market's more or less flat. Okay. All right. I'll, I'll, I'll take that offline. You know, congratulations on the e-Axle award. I, I, I'm just curious a little bit about the content there. I know you can't name the, the manufacturer yet, but it sounds pretty significant. Just would love to understand, you know, your full content on this. You're, you're supplying the Rigid Beam e-Axle. Does this potentially include, you know, motor and inverter? You know, is that sort of an option to add on? Maybe you can talk a little bit about the, the content and how this is leverageable. Hey, Noah. Good morning. 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 any customer, for sure, but even the content for clarification. For reference for everybody, and the, the key with us is when it's in-house supply of, of, electrodynamics, you know, there's a lot of opportunity for people to back into potentially what the technology would be, and we're not gonna get out in front of any of our customers, probably more than most suppliers. What I can tell you is, is that 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, of, of those, the 4-in-1, I just can't be specific on which ones today. So it will be- I, I understand. It'll definitely be the, that will be definitely the mechanical as well as portions of thermal- Yeah. and electrodynamics. Okay, great. I mean, maybe just the, the second part of my question about how, how you see this as leverageable into, you know, future RFP activity and to, to get this high volume award, you know, to be designed in, what, what do you think this might mean in terms of the growth of the EV business from here? Well, you know, it's starting, kind of as a starting point, what it certainly does is it confirms what I think we all knew by now, but I'm going to say it anyway, is that customers, like they have for years in, in the axle business and the seat business and all sorts of other businesses, they're, they're going to have a bit of a pivot table of what's they're gonna produce in-house and what they're not gonna produce in-house, et cetera, et cetera. As we've been saying since 2016, we doubled down in 2018, we had, we had high confidence with our partnerships, with our customers, that, you know, there was going to be a place for our e-Axle business, e-Transmission business with it, but you had to have the full capability to create value. What it means to us is, is that as we're, you know, across all of the end markets, the scaling on certainly on engineering, the scaling on supply, on components, the scaling on how to launch the product, the scaling on having the global footprint to support global programs, like I could go on and on and on. That's what the whole thesis was from the very beginning, obviously, the thesis just came together directly the way we expected it to. The most important thing is the institutional learnings of our company. I mean, our company now versus where we were 6 or 7 years ago, when it was pure mechanical, very, very good mechanical, engineering company. Now you kind of go across our company, and it's almost figuratively half and half when you think about electrodynamics and mechanical, that you have those capabilities. Why is that important? When you're facing off with your customer, and you're trying to create value for them to help them sell more vehicles in the long haul, you put them in a much better position because by now, we're taking all the lessons learned of all the bus market products we have in the field, all the medium-duty truck products we have in the field, you know, off-highway products we have in the field, and this is just a good representative example. As the inflection point came to the light vehicle truck market, which is where we participate, we don't participate in fast car, is that we were prepared and were able to create value with our customers to give them high confidence that they were going to win in the market with their electric vehicles and specifically electric truck vehicles. That, that's great context, Jim. Congratulations again on the award and the great quarter. Thanks, Noah, for both. Thank you. Your next question comes from James Picariello with BNP Paribas. Your line is open. Hey, guys, this is Jake filling in for James. First, if you could just talk through the net cost inflation dynamics. It looks like everything was fully offset in the first half, and you have about, what, $50 million headwind in the second half. Or am I thinking about that right? Yeah, that, that's correct. We had, we had a little bit of net inflation in the first half, just kind of rounds away. Yeah, we are expecting to see the, the net $50 million in the back half. The, the big driver is in the first half of the year, we continued to see recoveries, over-recoveries from, from, from the prior year coming through, and we don't expect that obviously to continue in the back half. What's showing through in the back half is sort of the net, you know, unrecovered inflation number that we expected for the year, despite the lower gross, overall gross cost. All right, thanks. Just to follow up on the e-Beam or the e-Beam axle win, could you give us some more color on the timing from when you expect this to launch and the overall investment required to support a higher volume program like this? Yeah. We, we can't, we can't talk specifically about timing, but I can tell you that it is-- it is, it would be outside of our traditional 3-year backlog window. You know, obviously, an award such as this does, does come with an increased amount of, of, of investment, both on the, the period cost side and on the, the fixed capital side. All right. Thanks for taking my questions. Your next question comes from the line of Ryan Brinkman with JP Morgan. Your line is open. Good morning. Thanks for taking my questions. It seems like you're winning more of these Light Vehicle Driveline awards, as opposed to a couple of years ago. I thought it looked like, you know, maybe you'd benefit more from electrification on the, the Commercial Vehicle Driveline side or, or from hybrids or maybe battery cooling plates on the Light Vehicle side. Where would you say that the, either the light vehicle, e-Beam axle or the light vehicle, call it 3-in-1 or 4-in-1 electric drive unit opportunity, where those sort of fit in, kind of rank ordered in terms of the electrification opportunities for the whole company? Great question. A little bit difficult to answer, to be honest with you, but I'll, I'll give it my best shot. The best way to kind of, I hope, illustrate it for the, to the audience today and yourself, is that if you took a snapshot in time of, like, five years ago, where a company like Dana would have been having the various RFI that turned into an RFQ with our customers, that turned into an internal combustion engine or diesel engine type of driveline sourcing situation, it's essentially the same thing for electrification today. Almost everything that comes at us has an element of mostly electrification, maybe some hybrid to it, but it doesn't matter. The point I'm trying to make is it doesn't matter anymore what end market that we're participating in. All of them are coming. It's just a matter of, you know, for example, in the Commercial Vehicle segment, did some of our commercial vehicle customers have first mover position, get some stuff out to the market using what we call a direct drive solution, which basically is a bridge off of a traditional architecture for an ICE vehicle, and they got that, and maybe that's okay for 2-3 years, and therefore, no incremental new sourcing has happened since, or anything that we want to talk about has happened since. In the Light Vehicle set standpoint, maybe they're going a little bit faster directly to a full e-Axle solution, which by our definition, and e-Transmission, depending on which application, will be the most efficient solution. The sourcing pattern seems like it's more prominent right now, but it's really not. It's that all of the end markets are sourcing in electrification these days. That's just how it's going. Okay, great. Thanks. Very helpful. Maybe just lastly, I'd like to ask about two of these kind of related comments in the slides. One, one's on Slide 12, you know, pertaining to higher sales in 2023 due to cost recoveries hindering margin. The other comment on Slide 13, referencing, you know, gross inflation and related recoveries, are now expected to be lower than the prior estimate, with the net impact from inflation on the full- year profit being the same. You know, with margins for the whole sector, you know, lower, the supplier sector, lower than where they were pre-pandemic, in part, given this phenomena, you know, I thought to ask, like, is lower inflation, because we hear about these headlines about lower inflation, now, is that the answer really to restoring, you know, supplier margins? Would that just simply be offset by lower related recoveries, such that you need to rebuild margin by some other means, such as fixed cost leverage or a pivot toward intrinsically higher margin products, et cetera? Should investors not even be, you know, too bothered about getting back to pre-pandemic margins because, you know, margins might be structurally lower now, because of all this low or no margin pass-through of higher costs, and maybe instead we should focus on return on invested capital or cash and cash returns, or just kind of how are you thinking about that? Yeah, you know, Ryan, I, I think you hit it right on the, on the head. I, I think as you, as you think about the inflation effect on the business, it has a even if you were to recover 100% of your inflationary costs, which would keep your total profitability, you know, the same, you're gonna have a margin squeeze because you're the customers are not paying any, any margin, any profit on, on those costs. And in fact, if you look at us this year, right, we, we still expect to see a $50 million net headwind. You know, that's not only do we have the margin impact of just recov if we were to recover dollar for dollar, we, we haven't recovered dollar for dollar. I think when you think about the supply base, I think it's gonna be more important over the longer- term. Over the longer- term, as all the programs turn over and things get repriced and, you know, all the costs get built in, I think you'll see margins, you know, start to move back to where they may have otherwise been. I think that's a long road. I think the better metric to be thinking about is total profitability, total amount of dollar generated and what that return is. Because our view is as we move through, especially as, like, these large programs are now rolling on and we're seeing them come through and we get them repriced, while we're recovering, you know, those added costs, we're not recovering all that margin. What we are doing is getting these programs back to an equal or better economic return. I think as you think about return on invested capital, that's a really good way to think about these programs and the way we are continuing to think about them, because margin as a percentage is, I think, going to continue to be, you know, lower than what it was pre-pandemic. Very helpful. Thank you. Sure. Your next question comes from the line of Dan Levy with Barclays. Your line is open. Hi, good morning. Thanks for taking the questions. Jim, why don't start with a high level, please? You know, I think the theme that we're seeing from some of the legacy automakers on EVs, and we've seen it this week in earnings, is it's just a tougher environment for them on EVs. You know, this EV euphoria has dissipated. You know, volume targets are getting pushed out. Ford just pushed out some of their volume targets on EVs. You know, there's an increased push to be a bit more efficient on spending, maybe more reuse of architectures. How does this impact you? Are you seeing automakers change their focus on the light vehicle side, on vertical integration? I mean, this used to be very heavily focused on vertical integration, but perhaps with the idea that if there just isn't enough volume, if those volume targets are getting pushed out, does that maybe change the way that some of the automakers are looking at vertical integration, maybe opens up more opportunity for you? That's great questions. A lot to unpack there, but I'll do my best. The way I see it, first of all, you know, in terms of the volumes. We, well, I absolutely follow the same commentary that you follow as it relates to that. At least from our line of sight, at least in the truck business, and I think we have to remind ourselves of that quite regularly, truck business versus car business is two different things, right? At least from the truck business and where we see electrification going, at least from our line of sight with our customers, I think they see it going as well. It still is nothing but green shoots and positive. I'm not trying to market a positive story there. That's just the facts as I see it, based on a bunch of other data points. As it relates to running the company and how Dana operates as well, the beauty of the way we've set the company up, as you know, over the last 6 to 7, 8 years, is this Leverage the Core strategy. The priority of the enterprise strategy is to leverage not only people capacity, but also equipment capacity and engineering capacity, so on and so forth. In a lot of our products and components and so on and so forth, we will be able to balance, I'll call it almost like balancing a line balance in a plant. You can line balance your capacities for all the things I just referred to, to protect the company and actually benefit the company moving forward. Maybe you weren't going so directly down that road, the way I see it is, there's plenty of opportunity for us to move forward, we're very bullish that there's gonna continue to be the same balance. I can remind the audience, perhaps, the same balance on axles being in-house versus outsourced. There's gonna be some form of balance of that for years to come, what's the important point to remind everybody? It's been that way for decades. There's plenty of Axle business that's been in-house across end markets in the past. There'll be plenty of that in the future, there will be plenty on the outside because there's plenty of use cases. Companies such as Dana that has such a reputation and capability, especially in areas such as the off-road enthusiast market, the truck business and the Commercial Vehicle segments, the consumers and the dealers and the fleets. I mean, they don't just pick us because we're a commodity. They pick us because we help them sell trucks. That's not, in my view, is not gonna change. If anything, we're gonna benefit from it because of what we've done in electrification. We're not guessing at it. We've been doing it now three, four, five years in production, so I feel very strong about it. Great. Thank you. Your next question comes from the line of Emmanuel Rosner with Deutsche Bank. Your line is open. Thank you very much. My first question, as we start thinking about 2024, I'm curious if you'd share your thoughts on what is sort of like a good starting point or a good base to sort of like, build, you know, our, you know, initial forecast? I guess it's more, you know, the first half where you know, in 2023, we've had some, you know, better than expected, you know, margins. Is it more the second half because, you know, you would have, I guess, the full impact from these EV investments, as well as some net unrecovered inflation? Whereas, like in the first half, you recovered some inflation related to last year, or is it sort of like the full- year? I'm just curious to what extent you think the exit rate that you're essentially implying for this year is sort of like the right way to think about the business, or is it, you know, would it be better than that? Emmanuel, I, this is Tim. Hey, I, I'm- we're just trying to get through 2023 here before we get into 2024, but, but I'll try to do my best for you. I, you know, I think the way to think about this is, is, is really from our full, full- year forecast and, and sort of how it implies us coming out of, out of 2023 and into 2024. You know, we, you know, earlier this year, we, we gave a, a, a longer-term view. You know, we, we, we still see that view, as being where we want to get the company. I think the company's performance and the raise in guidance here out of 2023, just reiterates, you know, makes us more confident in our ability to get there, if that, if that helps you in, in sort of planning around 2024. Yes, it does. I guess another way to, to ask maybe is, if things play out the way you're sort of guiding now, what will be left by the end of 2023 in terms of, you know, unrecovered, inflation, both material and, and non-material? What, what would be sort of like the path forward to, or I guess, the likelihood of recovering those in, in, in 2024? Yeah. In, in terms of unrecovered inflation, we, we continue, like, this year, we'll have another $50 million of unrecovered inflation. You know, that, you know, and again, until we sort of see all of the programs, really work their way out, I, I don't think you could say that, Hey, we've, we've gotten everything recovered. I, I, I think, you know, we continue to work with all the customers to, to, to go get recoveries, but, you know, that's gonna be with us for, for a little while. On commodities, you know, they, they tend to ebb and flow through the regular business, and those, the, the agreements and processes that we have in place are working extremely well. And, and we would expect that to continue. Great. Thank you. Okay. Well, hey, thanks, everybody. This is Jim. Thanks, everybody, for joining the call. As always, we appreciate your attendance and interest in Dana. Obviously, as a continuation from the strong Q1 results, you can see from today's update that Dana is not only trending extremely well, we're progressing to a trajectory of the company record financial performance, similar to what we delivered in 2018, 2019, and had financially guided to in 2020 prior to the COVID shutdowns, which commenced obviously in March of 2020. What's important to note, though, is Dana is very unique. Dana, over the same period of time, not only was a first mover in establishing in-house e-Powertrain electrification capability, we had the courage to never waver from this commitment throughout the time, from the, what I would argue, was a three-year black swan event in the B2B mobility supply industry. Wavering from the enterprise strategy and decommitting from electrification would have been the easy answer. However, as we can tell now, it definitely would not have been the right answer. Today, in addition to the tremendous revenue growth we've had over the last 6 years, improving our earnings intensity, Dana is clearly a winner in electrification and a supplier of choice for all mobility segments. As electrification volumes continue to accelerate, and they will, Dana will continue to be an energy source agnostic, partnering with our partner customers in both internal combustion engine and electrified vehicle manufacturing for years to come, and to win. Again, thank you for your time and attendance. We look forward to talking to you next month, or next quarter. Thank you. This concludes today's conference call. Thank you for joining us. You may now disconnect.