The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Aileen Elizabeth Smith - BofA Merrill Lynch, Research Division - Analyst
: First question, using the midpoint of your revenue and EBITDA outlook for 2020 implies an EBITDA margin, I think, a little less than 9% for the fourth
quarter, some of which you noted with seasonal and then also a function of the Brazilian indirect tax recovery. However, as we think about the
starting point for 2021 in terms of margin performance, is 3Q or 4Q the more appropriate level to think about? Or perhaps asked another way, were
there factors that work in the third quarter, like very favorable volume mix and price, that perhaps inflated margins a bit more than you would
think would persist going forward, even despite you working down factors like premium freight and other cost efficiencies?
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OCTOBER 28, 2020 / 1:00PM, DAN.N - Q3 2020 Dana Inc Earnings Call
Question: Aileen Elizabeth Smith - BofA Merrill Lynch, Research Division - Analyst
: Okay. Great. That's helpful. And the second question is, I believe your last disclosure in the fourth quarter of last year was that about 15% of your
2020 to '22 backlog was attributable to EV programs. Given what appears to be real traction more recently with EV technology and EV players
across all end markets as well as some of your partnerships like Hyliion, do you have an updated or even high-level view around the percentage
of your backlog or even programs launching next year that are attributable to EVs?
Question: Aileen Elizabeth Smith - BofA Merrill Lynch, Research Division - Analyst
: Okay. And last question, if I may, and I appreciate it may be a tough one. As we think about the upcoming U.S. election and potential implications
from a new administration, internally what are some of the things that you're thinking about, whether it's taxes or trade or environment, and you're
planning around with respect to the election and perhaps some preemptive actions you might be taking to mitigate those implications, if there
are any under a new administration?
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: Can you quantify -- maybe I missed it, can you quantify the premium freight and inefficiency costs that light vehicle incurred in the quarter? Is this
expected to continue in the fourth?
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: So some spillover related to premium freight in the fourth quarter, but nothing too...
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OCTOBER 28, 2020 / 1:00PM, DAN.N - Q3 2020 Dana Inc Earnings Call
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: Okay. And then just back on the guidance for revenue, the fourth quarter, the implied decline is maybe a point worse than third quarter's. And I
mean, yes, if we look at commercial vehicle production comps for the fourth quarter, if we look at trends in off-highway, I mean there's nothing
that would directly support a worse revenue comp year-over-year for Dana in the fourth quarter compared to the third. Is it really just Brazil's
sluggishness and India construction? Or is there more to kind of round that out?
Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst
: Okay. Fair enough. And then just one last one for me. As we think about next year and Dana's normalized incremental margins, are there any
onetime costs or permanent savings to kind of call out as we consider next year's earnings bridge? I mean, does the unwind of this year's temporary
or austerity measures temper next year's incremental margins? Or are there positive offsets to sustain a normalized contribution margin, possibly
something better? How should we think about maybe some of those buckets?
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