Dana Incorporated (DAN) Q3 2022 Earnings Call Transcript

Dana Incorporated (NYSE:DAN) Q3 2022 Earnings Conference Call October 27, 2022 9:00 AM ET

Company Participants

Craig Barber – Senior Director of Investor Relations and Strategic Planning

Jim Kamsickas – Chairman and Chief Executive Officer

Timothy Kraus – Senior Vice President and Chief Financial Officer

Conference Call Participants

Noah Kaye – Oppenheimer

Colin Langan – Wells Fargo

Operator

Good morning, and welcome to Dana Incorporated’s Third Quarter Financial Webcast and Conference Call. My name is Lisa, and I will be your conference facilitator. Please be advised that your meeting today, both the speakers’ remarks and Q&A session will be recorded for replay purposes. [Operator Instructions] There will be a question-and-answer period after the speakers’ 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 the 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.

Craig Barber

Thank you, Lisa, and good morning everyone. Thank you for joining us today for our third quarter 2022 earnings call. You will find this morning’s press release and presentation are now posted on our investor website. Today’s call is being recorded and the supporting materials are the property of Dana 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.

It’s my pleasure to turn the call over to Jim.

Jim Kamsickas

Good morning and thank you for joining us today. Moving to Slide 4 and our update for the third quarter, Dana had another quarter of strong sales totaling $2.5 billion, a $330 million increase over last year driven by continued robust customer demand in all of our end markets. While our strong customer requirements, Dana’s new business backlog and cost recovers – recoveries fueled sales growth in the third quarter, Our input costs continue to increase due to the global inflation. Additionally, volatile customer demand schedule fluctuations continue to create a challenging environment across the entire mobility industry, pressuring profit margins. Where possible, we’re taking actions across the company to mitigate the impact on our profitability, positioning us for strong rebound once the environment stabilizes.

Moving to the left, lower left side of the page, adjusted EBITDA for the quarter was $192 million, down slightly from last year, but up $30 million sequentially. For this quarter, we again generate a strong free cash flow of $77 million, an increase of $247 million over the prior period driven by lower working capital requirements as we manage through the choppy demand environment. Lastly for our results adjusted earnings per share for the quarter were $0.24. Moving to the right side of the page, some of the key areas we will discuss today include an update on critical market drivers for our business. Next, we will share exciting information relative to Dana receiving our eighth Automotive News PACE Award this year. We are recognized for the complete integration of e-propulsion, e-power systems in electric vehicles, which is proven to be a critical and foundational capability in helping to drive further EV penetration across all of our end markets. Lastly, we are announcing that we have been sourced for the next generation of the Jeep Wrangler and Gladiator programs building upon over 80 years of Dana partnering with Stellantis as their complete driveline supplier on this iconic vehicle platform.

Please turn to Page 5 where I’ll provide an update on prevailing market conditions. External market factors continue to dominate the discussion across all of our mobility markets. First, on the left side of the slide, many of our OEM customers are still experiencing issues in their broader supply change, which although somewhat improving or impacting our ability to run our operations as efficiently as we have been accustomed to.

As we detailed in previous quarters, OEM production stability is key to our manufacturing plants operating efficiently. This is primarily an issue in our light vehicle markets, but we are seeing it in a varying degree across all markets. Rapidly fluctuating demand generated higher cost for us in the form of unplanned downtime, line change over cost, expedited freight, trapped labor, and higher inventory.

As we look forward to the remainder of this year, we see some improvement compared to the third quarter. However, operational demand volatility will remain a headwind likely into early next year.

Second, moving to the middle of the page, the greatest impact we have faced this year has come from external forces, notably cost inflation, currency translation, and commodity cost. In the third quarter, we continue to see higher prices for operating costs such as energy, labor, and fuel that are used to transport goods. Sequentially, gross inflation was higher in the third quarter and we expect continued headwinds in the fourth quarter. This outlook is in line with our current financial guidance.

As we continue to bear the burden of inflation and other cost increases, we’ve been in constant discussions with our customers regarding cost recoveries. We have achieved positive developments in recovering some of these costs and we will continue to pursue an equitable position.

In addition to cost inflation, we’re also facing macro headwinds from currency translation as the U.S. dollar has continued to strengthen against a basket of foreign currencies, most notably the Euro. These currency movements are linked to global inflation and geopolitical conflicts and will not ease any time soon.

The lone bright spot is that commodity costs, primarily steel, have come down somewhat from the record highs we saw in the first half of the year. We continue to have significant success in recovering commodity cost increases from prior periods. Combined with falling input prices, the recoveries are generating a slight profit benefit for us this year and should continue early next year before leveling out and returning to a more neutral position.

Moving to the right of the page, vehicle inventories remain at historically low levels in all of our end markets, while at the same time end market demand for key vehicle platforms remain strong. OEM fulfillment of the pent-up demand will likely take some time as our customers continue to improve their production rates. In Dana’s case, we also look forward to new vehicle launches such as the highly anticipated Ford Super Duty, which was recently unveiled at Churchill Downs in Louisville, Kentucky.

The market for heavy vehicle remains resilient with OEMs reporting strong order books leading into next year. For instance, in the North America Class 8 market demand has outpaced supply this year and with the limited dealer inventories, orders for new trucks appear to be quite strong. The combination of low inventory and pent-up demand could provide a buffer should there be any short-term demand weakness next year.

Turning to Slide 6, I’ll walk you through why Dana was selected for one of our industries most prestigious honors. We are pleased to share that Dana was recently honored with a PACE Award for the integration of e-Propulsion and e-Power systems. This year’s award was our eighth win and is unique and it showcases capabilities that only Dana provides to the marketplace. In previous years, Dana was honored as a PACE winner for a specific product innovation or technology. But this time Dana was recognized for ability to integrate our complete package of e-Propulsion and e-Power systems into electric vehicle, highlighting how we are supporting our customers throughout the entire process of bringing an electric vehicle to market. We believe this truly illustrates the shift to electrification taking place in the mobility market, and it’s significantly different than the traditional supplier OEM business model that has evolved over the last century.

If you recall, more than six years ago, we identified electrification as a megatrend that was real, thus leading to the foundation of our strategy to ensure that we establish the product portfolio and capabilities to support our customers across all mobility markets. From there forward, we never wavered from our very intentional commitment to lead an electric propulsion. We developed a deep understanding of all aspects of electric vehicle engineering and e-propulsion systems, bringing a foundation of in-house designed, engineered, and manufactured electrodynamic products and systems. Our goal has always been to create value for our customers and we do this by providing a complete portfolio of EV components that we combine and integrate into an OEMs platform, enabling them to move into the electric vehicle market quicker in a more cost effective manner.

When you think about e-propulsion and e-power, you likely think about components such as gear boxes, motors, converters, software and controls and battery cold plates, just to name a few. But Dana has taken a leading position in the natural evolution of EV by leveraging our vertical in-house assets and expertise to develop in-house complete four-in-one e-propulsion, e-transmissions, e-power systems, including complete thermal management products and capabilities.

In fact, we are the only supplier capable of delivering all elements of a complete, fully integrated electrified system across all mobility markets. The differentiator is our ability to move past just developing and manufacturing components and systems to also help our customers design vehicles and then develop and integrate a complete customized e-propulsion and e-power system with a global network of suppliers, market expertise, and EV technical centers, we leverage these capabilities across all markets, whether it’s the light-vehicle delivery vehicles, mining or electric access equipment, or Class 8 long haul trucks, Dana assists in determining how these systems are best integrated into a fully electric vehicle, no matter the application.

Our customers across all markets turn to us to help them accomplish their EV goals and rely on our strong institutional knowledge in the EV space to provide them with full turnkey solutions. From identifying market needs to design technology development and full integration of complex systems that make up today’s zero-emission vehicles, we are able to help our customers meet their needs.

Please turn with me to Slide 7. Slide 7 highlights the proof points of our ability to serve the customers at all levels and across all markets is making a direct and substantial impact as we deliver the next-generation of electric vehicles. To-date, we are providing world-class and award-winning components and systems to some of the world’s leading manufacturers across light-vehicle, commercial vehicle, and off-highway markets. Combined with our vehicle integration capabilities, Dana has a multitude of electric vehicle platforms currently in production with many more under development. In fact, we’re in the process of securing a number of confidential new programs that we will share in greater detail early next year, whether it’s long established global OEMs requiring full customized integration to non-traditional vehicle manufacturers in the market who may prefer an off-the-shelf solution from Dana’s established and validated product of electrodynamic products, we are able to provide the capabilities and solutions for their specific needs. In doing so, we’re creating opportunities to provide value to our customers for decades to come.

Please turn with me to Slide 8, where I will share some exciting news about a new business award that will serve as one of Dana’s foundational programs for years to come. While it’s very clear, the mobility industry is rapidly moving towards electrification, internal combustion engine power vehicles remain very prominent dependent on end market and application.

In fact, some OEMs recently communicated with the media their intent to not electrify large pull frame vehicles in the near-term, and while we talked a lot today about how Dana is helping our customers transition to electrification more quickly, we have also shared with you on numerous occasions that our sales backlog includes a good balance of traditional ICE programs as well as EV programs.

As you recall from July’s earnings call, Dana has numerous launches taking place this year that support traditional ICE programs. Today, I have the privilege on behalf of the Dana team to announce that we’ve been sourced the next generation Jeep Wrangler and Gladiator programs beginning for the model year 2024. This program has been and will continue to be one of Dana’s largest programs.

Both multi-year programs will launch next year and will feature Dana’s award-winning driveline, including axles and drive shafts, which deliver on parallel performance, allowing Jeep enthusiasts to handle some of the most extreme off-road conditions.

In fact, Dana has provided high quality driveline and aftermarket products for this historical Jeep brand since its first manufactured 81 years ago. The Jeep vehicle concept was born in answer to the U.S. Army’s call for design, an easily transportable 4×4 general purpose vehicle during World War II.

Many historians acknowledge that the Bantam general purpose vehicle was the original inspiration for the design that eventually became the Jeep and is production version used the Dana model 25 front axles, model 27 rear axles, spicer prop shafts, and a Dana 18 transfer case. Today, our products continue to enable Jeep owners around the world to tackle some of the most extreme conditions, whether that is on or off-road.

Thank you for your time today. Now, I’d like to hand it over to Tim to provide you a financial update. Please go ahead, Tim.

Timothy Kraus

Thank you, Jim. Please turn to Slide 10 for our third quarter results compared to last year. Sales were $2.54 billion that’s – that is $331 million higher than last year’s third quarter, driven by strong demand across all of our end markets and recovery of commodity and inflationary costs, partially offset by currency impacts.

Adjusted EBITDA was $192 million, $18 million lower than the same period last year. Margin was 7.6% in the quarter, 190 basis points lower than last year. Margin compression was due to the benefit of higher sales being more than offset by inflationary costs, including labor, energy, transportation, and raw materials, as well as operational inefficiencies resulting from continued volatile demand patterns.

Net income attributable to Dana was a loss of $88 million in this year’s third quarter compared to income of $48 million last year. The loss was entirely driven by a non-cash goodwill impairment charge in our Commercial Vehicle segment triggered by higher discount rates and the impact of sustained cost pressures from commodities, inflation, operating inefficiencies driven by industry supply disruptions.

We generated $77 million in free cash flow in the third period – third quarter, compared with the use of $170 million in the third quarter of last year. The higher free cash flow was driven by improved working capital management.

Please turn with me now to Slide 11 for a closer look at the drivers of the sales and profit change for the third quarter. The first driver is traditional organic sales growth of $263 million driven by higher demand in each of our segments and inflationary cost recoveries. Adjusted EBITDA on the increased organic sales was a loss of $19 million, a margin headwind on the 180 basis points. This loss was driven primarily by net cost inflation of approximately $10 million and operational inefficiencies caused by the volatility in our customer’s production schedules, resulting from continued supply chain disruptions.

Sequentially, profit improved over the second quarter of 2022 due to increased cost recoveries, partially offsetting higher gross inflationary costs. Second, EV product sales increased $73 million over last year’s third quarter. We continue to see profitable contribution from new EV sales. However, investment in engineering to bring these new technologies to market and cost inflation drove a $4 million loss in the third quarter, a margin headwind of 35 basis points.

Third, foreign currency translation headwinds accelerated this quarter and reduced sales by $139 million, as the dollar increase in value against a basket of foreign currencies, notably, the Euro, baht and rupee. This lowered profit by $16 million and a margin impact of 20 basis points.

Finally, the recovery of commodity costs added $134 million in sales and a net profit benefit of $21 million. On a gross basis, we are still experiencing higher input costs, primarily steel. This year compared to 2021, but we are seeing material costs decline from a peak earlier this year. Due to the lag in recovery mechanisms, the lower commodity costs this quarter, our recovery rate has ticked above 100%.

Please turn with me to Slide 12 for detail on our third quarter free cash flow. This quarter, we again generated significantly higher free cash flow compared to last year as we actively managed our working capital. In the third quarter, we generated free cash flow of $77 million, which was $247 million higher than the previous year, even with lower adjusted EBITDA and higher interest in taxes.

Net interest was $20 million higher this quarter due to timing of interest payments, resulting from debt refinancing actions taken last year. Similarly, taxes were $20 million higher due to the jurisdictional mix of earnings and the timing of payments during this year’s third quarter. Working capital was a source of $55 million of free cash flow. That is a $300 million improvement over the third quarter last year, as we continue to manage inventory and align commercial terms with our suppliers and customers. We remain on track to meet our target range for this year, as our business traditionally generates the majority of our free cash flow in the fourth quarter.

Please turn with you now to Slide 13 for a full year outlook, which remains unchanged from our last earnings report. We are reaffirming our full year guidance as shown on Slide 13. Demand for our products remained strong and our outlook for sales remained unchanged at $10.1 billion at the midpoint of our guidance range. Adjusted EBITDA is expected to be about $720 million at the midpoint of our guidance range. Implied margin is expected to be between 7% and 7.3%. Free cash flow margin is expected to be in the range of 1.8% to 2.2% of sales. Diluted adjusted EPS is expected to be $0.75 per share at the midpoint of the range.

Please turn with me now to Slide 14 where I will highlight the updated drivers of the full year expected sales and profit changes compared to last year. Beginning with organic growth compared to last year, we expect an additional $900 million in sales from traditional products through a combination of new business, market growth and recoveries. This is about $20 million higher than our previous estimate as we adjust our expectation for inflation cost recoveries.

Adjusted EBITDA on traditional organic sales growth is now expected to be a loss of about $30 million, included in the organic element is the impact of inflationary costs, including labor, energy and transportation. We are now estimating these inflationary costs will total about $125 million net of recoveries. This is about $20 million lower than our previous estimate due to expected higher recoveries more than offsetting higher input costs.

Inflation, lower cost savings from suppliers, customer order patterns, supply disruptions and launch costs are all primary drivers of the lower than normal profit flow through from organic sales. Also included in the organic element is the headwind to profit due to the sale of higher value inventory driven up by the commodity costs over the last several quarters. This headwind is now forecast to be about $60 million for the year, which is $10 million higher than our previous estimate, reflecting the stabilization of our commodity forecast.

As commodity prices fall and inventory levels decrease, inventory valuations will return to normal as the more expensive goods are shipped from inventory and the headwind will evade. We now expect $270 million in added EV product sales this year, about $40 million higher than our previous estimate. We are also expecting a slight uptick in our investment for development and commercialization of the new EV business, which will offset the profit benefit from higher sales.

Our expected EV adjusted EBITDA on the incremental sales will be a loss of about $10 million. We now anticipate a greater headwind from foreign currency translation on sales, which should be about $470 million with a profit impact of about $55 million.

Finally, our commodity outlook has stabilized and we anticipate recovering about $455 million from our customers in the form of higher selling prices. While lower prices for steel and other commodities will result in a net profit tailwind of about $20 million.

Please turn with me to Slide 15 for our outlook on free cash flow for 2022. Our full year free cash flow outlook remains unchanged. We anticipate full year free cash flow to be about $200 million at the midpoint of our guidance range, and improvement of over $400 million compared to last year. The year-over-year improvement is being driven by lower working capital requirements as we actively manage inventory levels and negotiate customer and supplier terms that are better aligned with the current market conditions. Capital spending outlook remains unchanged as we are on track with our investments to support our substantial new business backlog of both traditional and EV products.

Thank you all very much for listening today. I will now turn the call back over to Lisa for your questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] We’ll take our first question from Noah Kaye with Oppenheimer.

Noah Kaye

Good morning. Thanks for taking the questions. Nice to see a little bit of incremental benefit from pricing. I guess if you just look at the impacts of pricing actions that, that you’ve been able to get year-to-date just, how much of an impact to growth would price be as we think about 2023? Because there’s clearly some tailwind into next year from that.

Timothy Kraus

Yes, thanks, Noah, this is Tim. So certainly going to be some growth into next year. As we anticipate some of the inflationary costs that we’ve seen this year. Won’t retract, think of labor. I think the other part that, that you have to think about in terms of pricing in the next year as some of our programs turnover and re-launch will be resetting economics within those programs, and those would be reflected in pricing as well.

Noah Kaye

All right, terrific. And then actually plays into my next question just around the timing of launches. Can you comment on timing any slippage in expected program dates and just your level of confidence in being able to stand up those launches smoothly at this point?

Jim Kamsickas

Hey, no, good morning. It’s Jim Kamsickas. Good question, and good question different than maybe other times in our perspective careers, because it is much more difficult to launch now than it historically would because of trying to get all the components for equipment and labor constraints that don’t allow equipment suppliers to get things done, whatever the case. But I can tell you at least from our line of site for our major launches, and I’m pretty sure you’re aware of them, such as we’re just coming up to launch curve right now and the new Range Rover Sport with Jaguar, we’re obviously in the early days of the Super Duty with Ford. We’re going to be headed into a cadence of the global Ranger around the world, which coming up right now is the South African portion of it, is challenging at times out there. Our customers are finding a way and we do not see any slippage at this point in time.

Noah Kaye

That’s excellent. One last one, we’ve got Bauma going on right now and it seems like virtually every OEM is coming out with a new battery electric or electrified product. So Jim, I don’t know if you’re there or if you’ve heard from your folks on the ground there. But what are you hearing about the rate of quoting activity and the adoption trends in off highway and can you comment a little bit on your positioning there?

Jim Kamsickas

Another really solid question, obviously, you understand all different markets have the different pull through, and I guess just to answer it for momentum for the broader audience is, Dana was – Dana took a strategy in 2016 to get in front of it because we knew there were going to be various pull through markets that were going to come first. And so when the bus market came, we were ready, then the last mile delivery came and we were ready. And then kind of the rest of the story, you all know the story, but the – we always knew given, considering the use case that the off highway markets would be more towards the end of that. But it’s really important when you think about the off highway. It’s such a consolidated phrase or word for a market, but it’s got eight markets, 10 markets on its own between construction, agriculture, underground mining, whatever it may be.

So what we’re seeing is a very fast adoption of like the area work platforms and vehicles like you would see like in a Home Depot or a Lowe’s or something like that. And we feel very strong about that. You also see a much faster adoption. Some of you may have saw it in the Wall Street Journal if you – about a month ago, where you’re seeing a lot of the lawn mowing equipment is out there, because not only the emissions, but the noise factor of that. So we’re seeing quite a bit of success in that area.

And by the way, proud of the team. Our team’s done a remarkable job because that wasn’t necessarily one of our core areas within our off highway group, but the team’s done a great job with the full proportion system there. So those are pulling through faster. We are in all sorts of dialogue with all of the customers from construction, underground mining is always participated and it’s just – it’s coming, it’s getting more aggressive in the electrification side. They’re all pulling. And I think what the punchline to the story is any curve that you’ve seen out there across electrification over the last five years is pulled forward. I would expect the same thing to happen in off highway.

Noah Kaye

That’s super helpful. And by the way, I think we’d all appreciate some quieter lawn mowing equipment in the community. So thanks and nice quarter.

Jim Kamsickas

Thank you.

Timothy Kraus

Thanks.

Operator

We’ll take our next question from Colin Langan with Wells Fargo.

Colin Langan

Oh, great. Thanks for taking my question. Just to follow up on the decline in inflationary costs of the $20 million, you held guidance, so just broadly, what are sort of the buckets of offset that sort of offset that good news? Two I’m trying to do the math from what you’ve indicated before, it kind of implies not much of a headwind left for Q4, is that correct? And then just for those that overall 125 [ph], I mean, how should we think about that recovery into 2023? Do you expect to get all of this back eventually, or are some of it’s just you’re going to be stuck with?

Timothy Kraus

Sure. Colin, this is Tim. On your first one regarding sort of the decline in the buckets. So gross cost, we don’t see having declined much. It’s really on the recovery side. The offset that that we’re seeing there is still within the – from an operating and also from a volume and mix perspective as we move into the fourth quarter as well as a little bit more headwind on the decapitalization within the inventory. So it’s a mix of all of that that’s offsetting that that $20 million pickup on the net inflationary costs.

And then on your question regarding inflation into next year. So obviously as inflation continues into next year, we’ll continue to work and there should be recoveries in 2023 related to those inflationary costs. So I think most of the customers we’re not – we’re not seeing it built in necessarily to base peace price. It depends on the end market but obviously from a commercial recovery perspective, we’ll continue to go after those and recover them. We do think that the gross inflation will probably be smaller next year than it is – than it was this year. And I’m sorry, what was your last one – your last question?

Colin Langan

The Q4 impact is there much left because I thought the 125 [ph], I feel like we’ve almost seen 120 [ph]so far. I’m not…

Timothy Kraus

Yes. If you did the math, there’s about $30 million to $35 million of headwind in the fourth quarter on a quarter-over-quarter basis from inflation.

Colin Langan

Okay. Okay. And just lastly, I don’t know years ago you were looking at GHN they announced the spin of their auto division. I guess just sort of makes you want to ask, I mean, do you – is that an asset that you would still be interested in and or is it that you sort of find the technology and scale that you need outside of that at this point? Any sort of color or thoughts there?

Timothy Kraus

Yes, I’ll take that one to, just real quick. We, I would say you’re going to expect the next comment, we’re not going to, we would never comment in any potential acquisition or merger or anything like that, ever period. So there’s the public service announcement of the day, right?

But separately – says we, one thing I take great pride and what this team has done over the years. There was a latency of almost two decades before Dana had done an acquisition prior to 2017 or something to that effect. And we built the team out to make sure that we were very open to considerations and looking at opportunities. And obviously we went on a fast horse and acquired the 12 electrification assets post the considerations, which you can’t. So the long and short to that is that, we pivoted and we pivoted hard into making sure that we accumulated the skill sets and portfolio across the electrification, electrodynamics spectrum.

Putting all those together, the team integrating those is to one, you can’t tell the difference inside of Dana anymore for propshaft supplier, transmission supplier, axle supplier or motor and inverter and to full system supplier. So we’ve filled out the portfolio the way we needed to. That was a big part of what we were considering there. Would that be helpful in terms of being ready for electrification? I don’t think there’s anybody on the planet that would say, Dana is not ready for electrification based on what we’re doing now. So we went about it a different way.

So like I said, everybody’s always open to everything, but and we have the capability to do anything, but we are very proud of the portfolio we put together in this capabilities that we put together by doing up the roll up of all of the other assets since then.

Colin Langan

Got it. All right. Thanks for taking my questions.

Jim Kamsickas

Okay. With that, I’m actually going to jump in and just do a brief close and that and not a lot today other than to say that, the team really did an excellent job in the corner. It’s rocky roads out there for sure. There’s, two’s appraise. We all know it’s like playing Whac-a-Mole when you talk about container shortages and energy increases and customer sporadic builds and all the other things associated with it. But if you’re cohesive and you’re running your company as a system, you’re going to be able to navigate through it and you’re going to be able to position yourself to be very strong for the future.

And that exactly what this team has done and continues to do. And the other thing is just to reiterate that, as much as all of the success we’re having in electrification is going to come from certainly having the product portfolio and the capabilities, at the end of the day, no customer is going to source you for that alone.

They’re going to only source you if you’re creating value across the board, across the board in operational excellence, which of course is quality delivery and other, and sourcing you for having a global footprint, sourcing you for having a trustworthy relationship. Trust source you for multiple things. So on behalf of the entire team, we continue to do a good job of balancing by winning foundational internal combustion engine wins as you witness today with the Jeep Wrangler, but also plenty of great opportunity that we continue to execute on the electrification side. So, thank you for your time and attendance today. We’ll look forward to providing you an update I think in early February. Thank you everybody.

Operator

And that concludes today’s presentation. Thank you for your participation. You may now disconnect.