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Dana Incorporated (NYSE:DAN)
Q1 2021 Earnings Call
Apr 28, 2021, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Dana Incorporated's First Quarter Financial Webcast and Conference Call. My name is Regina, and I will be your conference facilitator. Please be advised that our meeting today, both the speakers' remarks and Q&A session, will be recorded for replay purposes. [Operator Instructions] 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 -- Senior Vice President of Purchasing and Supplier Development

Thank you, Regina, and good morning, everyone. Thank you for joining us today for Dana's First Quarter 2021 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 a written consent. Allow me to remind you that the 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 Jonathan Collins, Executive Vice President and Chief Financial Officer. Jim, please start us off this morning.

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Good morning, and thank you for joining us today. During the first quarter, our customers continued accelerate production to meet strong demand across all of our end markets, driving sales for a quarter to nearly $2.3 billion compared with last year, representing a $337 million improvement. Adjusted EBITDA in the quarter was $234 million compared with $205 million for the same period in 2020. As is normal with the first quarter of our business, adjusted free cash flow was a use of $26 million. But this compares favorably to the use of $114 million in the first quarter of 2020, which saw the onset of the global pandemic shutdowns. Diluted adjusted earnings per share were $0.66 in the first quarter of 2021 compared with $0.47 in the same period of the prior year due to higher earnings this year. Moving to the key highlights on the upper right-hand side of the page, we were able to meet stronger demand in key markets and continue to execute our sales -- our strong sales backlog to drive sales higher for the quarter.

We also continue to manage higher cost-related supply chain disruptions, logistics and labor constraints that are challenging the industry as end market recovery quickly recovers from last year's production shutdowns. I will provide more detail around this in a moment. I'll also update you on the efforts to expand our electrification capabilities to meet the growing EV sales in our backlog. Finally, we'll discuss the progress we are making on our ESG goals, which is illustrated in our recently published sustainability and social responsibility report. Please turn to Page five. As I'd like to go into further detail about how we're capitalizing on strong demand across all three of our markets. The world has certainly changed from a year ago. As markets continue to recover globally, strong demand in the first quarter was driven by continued higher volumes, especially in the light vehicle market and particularly full frame trucks in North America. We successfully capitalized on higher volumes. At the same time, we remain cautious on the outlook due to some of the challenges facing our industry, including the shortage of semiconductors, which are impacting many of the major OEMs around the world. Moving to the center of the slide.

The heavy vehicle market continues to be strong, particularly in North America. The rebound of Class eight truck sales continues as we're expecting production to be around 300,000 units. The medium-duty segment also remains strong. However, we are seeing demand for the heavy and medium-duty trucks in Brazil remained somewhat subdued. Lastly, in our off-highway markets, we have a strong presence in Europe and Asia, demand for off-highway equipment is improving. It remains especially strong for agriculture equipment, and we are seeing global construction and mining markets beginning to rebound. As you would expect, the higher demand across many of the end markets is pushing up against both capacity and labor constraints across the global supply chain. Please turn to Slide six for how we are managing this challenge. As markets continue to recover from last year's shutdowns, higher raw material costs, semiconductor shortages impacting our customers, logistics constraints and labor shortages related to COVID restrictions continue to test the mobility industry. Through all these challenges, we remain focused on managing these issues to successfully serve our customers. In the upper left-hand side of the slide, we have seen a rapid rise in steel and other raw material costs, particularly SBQ steel and aluminum.

As we have stated before, we recovered a majority of the increase from our customers, our supply team -- our supply chain team has done an outstanding job planning for these various impacts, and we continue to actively manage our supply base and recover mechanisms. Moving to the upper right-hand side of the slide. Everyone on the call is fully aware of the semiconductor shortage causing many major OEMs to slow or idle production. So far, there's been less of an impact on many of the key light truck programs that we serve as our customers have prioritized these productions for those key vehicles. This remains a risk across the mobility industry, and it is something we continue to monitor in conjunction with our customers and adjust our output accordingly. Moving to the lower left, our sea container shortage and vessel availability also impacted global supply chains, resulting in shipping delays, bottlenecks at port facilities and inflated freight prices.

According to the industry reports, the cost of shipping a container has risen by 80% since early November and has nearly tripled over the past year. While these and other supply challenges have put cost pressures on our supply chain, we continue to implement countermeasures to limit the impact where we can while still maintaining our commitments to our customers. On the lower right side of the page, it's very clear that we are not past the challenges related to COVID pandemic in all parts of the world. That remains hotspots, such as Brazil and of course, India, that are putting added pressure on an already challenged supply chain. To mitigate the risk, we have taken a proactive approach to work with our customers and suppliers to ensure the right material and labor is available.

As we continue to be very thoughtful about the level of service we need to maintain for our customers, both within the impacted regions and outside. While we expect these issues will be a headline for the entire industry this year, our multi end market focus and global presence aids in our ability to manage these forces. We have been successful in protecting our customers and enabling demand fulfillment while we continue to launch significant new business backlog and strengthen our position in vehicle electrification. Turning to Slide 7. I'd like to update you on our new electrification facilities that will support our strategy to lead in electrification.

Vehicle electrification isn't just a far off ambition for the mobility industry, it's right here, right now, and we are investing in the infrastructure needed to meet this demand. As we continue to expand our sales backlog by winning new electric vehicle programs, we are adding manufacturing capacity in a measured fashion to ensure that we have the capability to meet and capacity to meet the specialized electrodynamic needs of our customers around the globe. By expanding our electrification manufacturing footprint, not only are we installing the capacity to support current and future volumes, we are also strengthening our electrification design, engineering and manufacturing capabilities across the globe.

The mobility industry exists on all points of the global map. Hence, it's important that we have the equipment and human capital in all regions of the world to support our customers. To date, Dana has commissioned more than 250,000 square feet of electrodynamic manufacturing capability to meet current and future demand in regions with strong EV growth. Beginning at the left side of the slide, in China, we continue to have an active and growing footprint ready to support the fast-growing vehicle electrification trend, including the new Dana Weifang Electrodynamics Manufacturing Center. The Weifang facility provides our customers a full portfolio of motors and inverters, leveraging our global systems expertise in electrification. This facility has automated production lines as well as testing capabilities for electric and hybrid drivelines. In India, Dana's New Chakan Electrodynamic Manufacturing Facilities, a world-class operations serving both the light and heavy vehicle markets domestically and for export.

The Chakan team is responsible for manufacturing integrated mechanical and electrical components for alternative propulsion applications, including low voltage, synchronous and high-voltage solution for vehicles from the smallest to the largest across our customer base. Moving to Europe. Dana's Chudleigh U.K. Facility further expands our motor manufacturing capabilities serving a variety of important customers. This facility produces electrodynamic products that are integrated seamlessly within its e-axles, gearboxes and hubs or pumps. Applications include area work platforms, excavators, teleboom handlers and many more. As the only supplier capable of delivering all elements of a complete, fully integrated electrified system across all mobility markets, we expect electrification to continue being a larger percentage of our sales backlog. To meet the growing demand, we are investing in partnering with our customers to support their electrification journey.

Moving to Slide 8. I'd like to talk about the continued progress we are making toward our sustainability and social responsibility objectives. From time to time, we're providing you an update on environmental, social and governance activities. This quarter, I thought I would mention that we recently published our annual sustainability and social responsibility report on April 22. For us, this is not just a report that we pull together each year, but rather, it helps encapsulate our vision for a better future and measure our progress as we adopt a balanced approach that considers the people we encounter, the products we develop and the planet that enables us to do our work. Highlights include Dana's commitment to reducing our total annual greenhouse gas emissions by more than 50% before the end of 2035, along with supporting vehicle electrification and other sustainability initiatives to help achieve the Paris Climate Agreement targets. In addition, we're committed to 90% of our U.S. electricity demand being addressed by wind and exceeded more than one billion customer miles driven with Dana's electric motors in 2020, equivalent to more than 275,000 metric tons of CO2 eliminated. To be clear, it all starts with people.

Our number one priority is the health and safety of our employees, customers, suppliers, visitors, contractors and the communities we call home. We practice safety first in everything that we do. And part of the safe work environment is providing a respectable and inclusive workplace where everyone can contribute, participate and thrive. We believe that listening to diverse voices and opinions give Dana's strength, enabling us to solve problems faster and drive continuous improvement and profitable growth. We are also driven by a desire to provide innovation that helps to anticipate, understand and shape market trends and fast track new products that deliver industry shaping ideas. Our strategy of leading in vehicle electrification is a key element of our sustainability objectives and ultimately helps our customers and their customers to achieve their sustainability goals.

This brings us to our planet. In addition to our commitment to reducing greenhouse gas emissions, we've established a Technology and Sustainability Committee with our Board of Directors and appointed a Chief Sustainability Officer to our executive leadership team. Last but not least, we take corporate governance very seriously at Dana, approaching everything that we do honestly and with integrity is ingrained in our strong one Dana culture, which has delivered outstanding service and unwavering commitment to ethics for more than 116 years. Thank you for your time today.

Now I'd like to turn it over to Jonathan Collins for our financial update. Please go ahead, Jonathan.

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Thank you, Jim. Good morning, everyone. Slide 10 provides an overview of our first quarter results of 2021 compared to the prior year. In the first quarter of this year, sales approached $2.3 billion, delivering growth of 17% and exceeding the expectations we outlined in February, as heavy vehicle demand accelerated and light vehicle demand was negligibly impacted by the chip shortage. Adjusted EBITDA was $234 million, for a profit margin of 10.3%, which fell just short of last year and our expectations as commodity costs rose sharply, and we incurred premium costs as the result of the supply chain challenges that Jim outlined a few moments ago.

Adjusted free cash flow this quarter was a use of $26 million, an improvement of $88 million over the first quarter of last year on higher profit and lower working capital requirements. Net income attributed to Dana was $71 million in this year's first quarter compared to $58 million last year. The difference was primarily higher earnings this year and lower impairment charges, partially offset by changes in the valuation of marketable securities and higher income tax expense compared to the first quarter of 2020. On an adjusted basis, net income in the first quarter of this year was $97 million, $29 million higher than in the same period of 2020. Diluted adjusted EPS was $0.66, a $0.19 improvement from the prior year due to higher adjusted EBITDA. Please turn with me now to Slide 11 for a closer look at the drivers of the sales and profit changes for the first quarter. The changes in first quarter sales and adjusted EBITDA compared to the same period last year is driven by the key factors shown here. First, organic sales were more than $0.25 million higher than last year as all our segments benefited from stronger end market demand.

The profit conversion on incremental sales was constrained by premium costs resulting from supply chain challenges. Second, foreign currency translation increased sales by nearly $50 million, but with no margin impact as the dollar weakened against the basket of currencies, namely the euro. Finally, the recent spike in steel costs compressed profit margins by 90 basis points. Gross commodity costs increased by $35 million, but only about half of the cost was recovered from customers in the form of higher selling prices in the quarter due to the typical lag we see during a rapid run-up in cost. Please turn with me to Slide 12 for a closer look at how adjusted EBITDA converted to cash flow. Free cash flow was far closer to neutral than our historical first quarter precedence, despite the typical seasonal buildup of working capital at a use of $26 million.

This was an improvement of $88 million compared to the same period last year due to higher profit lower working capital requirements and slightly lower capital spending. Please turn with me now to Slide 13 for a look at our revised full year guidance for 2021. We are raising our full year financial guidance ranges that we provided just a couple of months ago as end market demand continues to exceed our expectations. The revised guidance is bolstered by our strong first quarter sales results and a relatively clear line of sight for second quarter sales. However, we remain cautious on the second half of the year, given the uncertainty surrounding the ongoing supply chain disruptions and regional pandemic containment actions. We now expect full year sales to be approximately $8.75 billion at the midpoint of our range, which is an increase of nearly $500 million over our prior guidance.

We now anticipate adjusted EBITDA to be approximately $960 million at the midpoint of our range, with an implied profit margin of about 11%, which remains unchanged from our prior guidance as we anticipate higher commodity cost and premium costs from supply chain challenges will continue to temper our margins in the short term. Adjusted free cash flow margin is expected to improve modestly between 3% and 3.5%, which is 25 basis points higher at the midpoint compared to our previous guidance. Diluted adjusted EPS is now expected to be approximately $2.35 per share at the midpoint of the range, an increase of $0.20 per share.

Please turn with me now to Slide 14, where I will highlight the drivers of our expected sales and profit changes for the full year. As with our earlier comparison, this chart highlights the key factors driving the change in expected sales and profit for 2021 compared to last year. First, organic growth is now expected to add nearly $1.5 billion in sales, including our new business backlog of $500 million and the end market volume increase, which is approaching $1 billion. Incremental margins are expected to remain strong in the mid-20s, providing more than 300 basis points of margin expansion. Second, we're updating our outlook for the timing of closing the pending acquisition of Modine's automotive liquid cooling business. We originally expected the transaction to close in the first half of the year, but based on the status of the regulatory approval process in Germany and Austria, we do not expect the transaction to close until later this year. We continue to exclude the impact of this acquisition from our guidance, and we'll provide further updates as the process unfolds.

Third, we anticipate the impact of foreign currency translation to now be a benefit of approximately $100 million to sales and about $10 million to profit with no impact to margin. Finally, we now expect gross commodity cost increases of about $125 million as steel prices have continued to rise. We anticipate recovering about $95 million of the increase from our customers in the form of higher selling prices, leaving a net profit impact of $30 million, which will compress margins by about 50 basis points.

It's also worth acknowledging that an 11% margin is 80 basis points lower than 2019 despite comparable sales.

This is driven by three factors: one, gross commodity costs are nearly $100 million higher than 2019. And even though we will recover a majority of these costs, this compresses margins by 40 basis points; two, we've elevated our investment in electrified products by more than $20 million, holding back another 20 basis points as there are limited abilities to offset these investments with cost efficiencies given the current condition of the supply chain; and three, the retroactive recovery of indirect taxes in Brazil in 2019 will not recur this year, resulting in another 20 basis point headwind. Regardless, we remain confident in our ability to expand our margins to over 12% in the next few years as we prosecute our plan to achieve more than $1 billion of sales growth and the supply chain challenges abate. Please turn with me now to Slide 15 for more detail on how we expect this year's adjusted EBITDA will convert to cash flow. Our full year outlook for adjusted free cash flow margin has increased to a range of 3% to 3.5% of sales, representing approximately a $220 million improvement over last year.

The growth is entirely driven by the increased profit I just outlined on the prior page, which is partially offset by higher working capital requirements to deliver this year's sales growth, higher capital expenditures to fuel future sales growth and slightly higher cash taxes as a result of the profit growth. Please turn with me now to Page 16 for our perspectives on the major issues we will navigate through the remainder of the year. As Jim outlined earlier in the call, in keeping with the core tenet of our strategy, customer centricity, we remain laser-focused on the quality and delivery of our products as we manage external factors that are pressuring the entire mobility industry. Our cost recovery mechanisms are working effectively to mitigate the economic impact of the rapid increase in raw material prices, so we expect to see higher recovery ratios through the remainder of the year as the lag effect debates.

There's also the potential for cost to moderate later this year as more steel capacity comes online. We remain cautious regarding the uncertain resolution to the microchip shortage and resulting production slowdowns at our customers. As we mentioned previously, in the first quarter, we were impacted to a lesser extent than many of the industry due to our beneficial end market mix of full frame trucks and heavy vehicles, but we are seeing a more meaningful impact in the second quarter in our light vehicle businesses, which is reflected in our guidance. We are also actively managing our global supply chain to buffer many of the logistics constraints and higher costs associated with access to shipping capacity and port bottlenecks. We expect to see higher costs continue into the second quarter, but moderate in the second half of the year. Our operations in regions still facing the impact of the global pandemic continue to prioritize the safety of our people while serving our customers through heightened restrictions and resource constraints. As we step back and survey the landscape of the global mobility markets, we're extremely encouraged by the demand fundamentals driving a definitive cyclical upswing in all the markets we serve.

We're clearly cautious about the supply required to fully meet this demand in the coming months, but are prepared to take all the necessary steps to capitalize on this opportunity. We're also incredibly encouraged by the long-term secular trend toward vehicle electrification and the significant opportunity this creates to grow our business. And as a result, have taken meaningful steps to put the capacity in place across the globe to deliver these new products to our customers. I'd like to use this opportunity to thank the entire Dana team for your tireless work and commitment to support our customers.

And thanks to all of you for listening in this morning, and I'll now turn the call back over to Regina so that we can take your questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question will come from the line of Colin Langan with Wells Fargo.

Colin M. Langan -- Wells Fargo Securities, LLC, Research Division -- Senior Equity Analyst

Great, thanks for taking my question. Last quarter, you had indicated sort of Q2, Q3 would be the higher margin. I noticed that slide wasn't in here. Any color on the cadence? It does seem like some of the key platforms are going to be a bit weaker in Q2. So is that now a much weaker quarter? How should we think about sort of the progression through the rest of the year?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Sure. Well, Colin, I just want to start by welcoming you back to Dana. Thanks for joining this morning. And just a little color on the margin color. The second quarter, we think, will -- has the opportunity to be modestly improved from Q1, primarily because of commodity recoveries. So the lag effect should start to catch up in Q2. We are going to continue to see some premium cost. So that original curve we indicated where margins get better in the middle of the year will likely continue. As for the second half of the year, essentially, our outlook is relatively unchanged from what we showed you just a couple of months ago. We'll continue to see how all of these factors shape up in the next 60 days, and then we'll have a little better sense on the second half of the year when we're together in July.

Colin M. Langan -- Wells Fargo Securities, LLC, Research Division -- Senior Equity Analyst

Great. That's helpful. And just maybe one quick follow-up. There's a lot of headlines around the Infrastructure Bill. I know a lot of your off-highway business is in Europe. Any sort of color on what kind of tailwind if that goes through, we could be expecting how much of your business could be benefiting from something like that?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. A lot of the benefit that we're seeing in off-highway right now is from the ag market. So there's still quite a bit of room for construction to improve. As you noted, even though we do a lot of our production in Europe, that's for equipment that's used around the world. So certainly, any of these stimulus catalysts that could help to increase demand could benefit our business. And that could be a real margin benefit for the off-highway segment as well as Dana because construction and mining are our more profitable segments within that business. So yes, we're certainly encouraged by that.

Colin M. Langan -- Wells Fargo Securities, LLC, Research Division -- Senior Equity Analyst

Great. Thanks for taking my question.

Operator

Our next question comes from the line of Emmanuel Rosner with Deutsche Bank.

Emmanuel Rosner -- Deutsche Bank AG, Research Division -- Director & Research Analyst

Hi, good morning. Apologies, if I missed that. Could you quantify the impact from the supply chain inefficiencies in the first quarter? And maybe how to think about it in the second quarter or over the rest of the year?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Sure. In Q1, it was significant for us, while we didn't put a specific number on it. Just to give you a sense, it had a meaningful impact on our margins in the form of a couple of areas. Number one, we still continue to see quite a bit of expedited freight. We have suppliers that have gotten behind. And then with the slowdowns in the global logistics chain that Jim talked about just a few moments ago, we ended up having to continue to incur some premium freight at a rate that's well above what we normally would. Secondly, our operations are less efficient when they're sitting around waiting for parts. So you can imagine running over time and other factors that drive that as well, too. So in terms of how we see that progressing, unfortunately, we do see it continuing into the second quarter. We are seeing improvement in some areas. So we're cautious that we may see a little bit of a tailwind there in Q2, but we certainly expect later in the year that we would start to gravitate more toward normal levels, and we'll have more to share on that when we're together again in just a few months.

Emmanuel Rosner -- Deutsche Bank AG, Research Division -- Director & Research Analyst

Okay. That's helpful. And then just a point of clarification on some earlier comments. So I think you indicated the increase from the prior guidance at the top line is mostly reflective of the strength in the first half of the year, but you remain cautious in the second half. Just to be clear, are you seeing any sort of risk factors, specifically in the second half? Or are you saying that this is too early now to get more positive on the second half outlook?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. I really think it's more of the latter, Emmanuel. It's that we have pretty good line of sight into the next few months from customer releases. We can see the downtime that they're expecting to have due to the chip shortage. We're starting to see continued encouraging signs in our heavy vehicle segments as those orders go up. But we're in a position where with all the uncertainty in the supply chain and in particular with the chip shortage, we're just reluctant to call the second half of the year up yet. So I would characterize it as more of the latter. We just want to get through a few more months before we have greater confidence in the higher demand sustaining through the balance of the year.

Emmanuel Rosner -- Deutsche Bank AG, Research Division -- Director & Research Analyst

Okay. And just one quick follow-up on this one. So your contribution from market factors to the top line, I think, increased by about $350 million for the year. Any way to split that between your various end market?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

It's pretty evenly spread. So in the first quarter, as an example, we had contemplated more downtime due to the chip shortage than actually occurred. Jim touched on the fact that we saw our customers diverting chips toward the key truck platforms that we produce. So even light vehicle was a bit better for us than the first quarter than we thought. But also we saw encouraging signs or higher demand in the heavy vehicle markets. Ag really picked up in the off-highway segment. And we saw both heavy- and medium-duty vehicles and commercial vehicle do a bit better than we had anticipated. So it was pretty evenly distributed across the board. As we move to the second quarter, we see that continued strong demand in heavy vehicle, but just a little bit of a headwind on the light vehicle side due to the chip shortage. So broadly speaking, it's pretty well distributed across all three of our end markets.

Emmanuel Rosner -- Deutsche Bank AG, Research Division -- Director & Research Analyst

Great, thank you.

Operator

Your next question will come from the line of Brian Johnson with Barclays.

Brian Arthur Johnson -- Barclays Bank PLC, Research Division -- MD & Senior Equity Analyst

I just want to start. I know we don't -- you don't discuss the segments except in the appendix. So if I look at commercial vehicle and drive motion systems, typically a lower margin segment. But in particular, it was negative incrementals on that $50 million. Can you talk a little bit more about that segment? Is that where some of these supply chain pressures are most concentrated? And then I've got a follow-up around kind of the longer term.

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. So on the -- I'll take the first part. On the CV margins, you nailed it. It is the supply chain was more acutely impacted in CV. That is a longer supply chain. And some of the challenges we ran into affected them incurring more premium freight. That was the biggest driver why we didn't see incremental profit on those incremental sales. The other undertone is that's the business where we're seeing most of our growth in electrification early on. So when I highlighted that higher EV spending compared to 2019 as an example, CV is one of those areas where you're really starting to see it. So they've made some progress on the supply chain. We see line of sight into that improvement, but that was the biggest driver in Q1.

Brian Arthur Johnson -- Barclays Bank PLC, Research Division -- MD & Senior Equity Analyst

Second question, it's not going to be around electrification. It's just around midterm, if we are moving globally into a more of an inflationary environment, at least in North, at least in the U.S. and it's not just commodities where as you pointed out, you do have contractual recovery mechanisms, but kind of everything, labor, electricity costs, freight costs and so forth. To what extent did you think about either your formal recovery mechanisms or the pace at which you can reprice the business contractually shorter cycle, say, versus light vehicle programs that might have pricing locked in for multi years? How do you feel about an inflationary scenario and that's impact on data and the ability to pass on a broad range of input cost increases?

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Hey, good morning Brian. This is Jim. Really good question. You already said it, but I'm going to reiterate the point. Yes, there's hard structured programs much more so on the commodity side of it, OK? So we in-place hold that one for a minute. The second one would certainly be out of the box. But I would start with from, unfortunately, somebody that was running a company in the middle of the crisis in '08 and '09, that our customers are a different customer base, in my opinion, than they were say, 10 to 20 years ago, and that they need a healthy supply base. They'd be the first one to tell you that they need a healthy supply base, especially a supplier like Dana that put so much focus and commitment and money into electrification and providing solutions for the future and where things are at.

So the discussions would have to be had, but I think they'd be at different level of black and white. This is what the contract says, this isn't what the contract says in the event that what you said holds true as it relates to inflationary pressures around the world. I'm not there yet. I know what you're saying. I'm not there yet, but the inflationary pressures are going to be as extreme as maybe others are. But at the end of the day, again, I think, between a combination of our ability to take out costs, the ability to have a global supply chain where necessary as well as a much more reasonable and understanding customers of the supply base being critical. I think we'll get there. And if there's no better evidence than that, I mean, just think about the challenges and the OEMs are having right now as it relates to supply. They're going to want to make sure that they have sophisticated capable global suppliers such as Dana to be there for them to continue to create value for their customers.

Brian Arthur Johnson -- Barclays Bank PLC, Research Division -- MD & Senior Equity Analyst

Right. And they're benefiting from price inflation in the ATP. Just a quick follow-up. In the commercial vehicle drive because that's fleet selected, is the pricing there a bit more flexible? Is it on an annual basis? Or is it similar to light vehicle procurement contracts where there's kind of a fixed glide path for pricing?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. There are some similarities and differences. So I would say it's a mixed bag. But in principle, there are some opportunities over time to address that, but there's certainly some structure as well. But yes, I think you characterized it right, it's a bit more flexible than LV.

Brian Arthur Johnson -- Barclays Bank PLC, Research Division -- MD & Senior Equity Analyst

Alright, thank you.

Operator

Your next question will come from the line of Noah Kaye with Oppenheimer.

Noah Kaye -- Oppenheimer -- Analyst

This is on for Noah Kaye. Appreciate the color on the supply chain. Can you just talk a little bit about any strategic initiatives you're pursuing to better track suppliers and their inventory levels? And what you're doing to diversify the supply base?

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Good question, and welcome to the call. I appreciate that. I mean there's -- we don't have enough time on the day right now to go through every initiative that we're doing to be able to kind of work us through that, but there are many. There are those, like you said, we've done anything from multi-dual sourcing to reengineering products to be able to produce them closer to home country. And I don't mean just for American manufacturing, but around the world and the list is long. One thing but it's -- fortunately for us, it's not a journey that we just said, oh, my goodness, we're in the middle of a pandemic, let's do that. That's something that we've been working on for at least three to four years in terms of having flexibility and supply. And I'll even speak with an example. We're not a believer that everything has to be vertically supplied for sake of vertical supply. But instead, making sure that we have balance in terms of what we do for a living. So getting back to an example form. Back three or four years ago, many of you may recall, we acquired the largest independent forging company in Brazil to give us more flexibility out of country, etc. So again, I could go on and on and on, but all those are in place, and we'll continue to see continuous improvement as we go through on the supply chain, in my view, because why? One, everything I just talked about; and two, as we came back from that V-shape recovery, some may argue it was U, but whatever the case, as you go through that, you're certainly going to have to do -- it takes time to get some things in place, and many of those things are, in fact, in place now.

Noah Kaye -- Oppenheimer -- Analyst

Great, thanks. And then just a follow-up on the Modine acquisition. Could you give us any update in terms of integration planning, any incremental thoughts on the fit into the portfolio? I know you said it got delayed, but just any thoughts there.

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. The PMI work has progressed as normal. We're in a good position to be able to integrate that business. Just the regulatory process has taken a bit longer, and we should have a better update for you when we're together again in a few months.

Noah Kaye -- Oppenheimer -- Analyst

Great, thanks so much.

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Welcome.

Operator

Your next question will come from the line of Aileen Smith with Bank of America.

Aileen Elizabeth Smith -- BofA Securities, Research Division -- Analyst

Good morning everyone. Thanks for taking the questions. First one, when aggregating each of your segments, is it possible for you to quantify how we should think about content per vehicle across regions? And where I'm getting with this question is when we look at the semiconductor shortages and supply chain disruptions, North America appears to be one of the more impacted regions, which I would assume is one that has higher content per vehicle for you guys. So is this a fair characterization? And would you expect to see any regional mix headwind on revenue growth in future quarters? Or is it going to be offset by the fact that mix within regions generally continues to improve?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. It's a very fair point. Certainly, our highest CPV in the light vehicle segment would be in North America. So some of those foundational programs for us to Ford Super Duty, the Jeep Wrangler carry very high content. So you're right about that. And that is some of the downtime when we think about North America that we've reflected in our second quarter. So we think that you're right, it's going to start affecting Q2. That's true in the light vehicle businesses. Maybe the exception to that is we do have pretty comparable content across the Power Technology segment in most regions. So you won't see much of a difference there from a content regionally in Power Tech, which largely serves the light vehicle market. On the off-highway and commercial vehicle side, there's a bit more parity and the content across the region. So largely what we're producing is for a global market and is pretty comparable. But I do -- light vehicle drive systems is certainly a bit more skewed to North America. That's fair.

Aileen Elizabeth Smith -- BofA Securities, Research Division -- Analyst

Great. That's helpful. And then second question, when you look at the commentary around conversion on organic revenue, which I think excludes the impact from raw mats. Is it possible for you to bridge for us how you get from 15% conversion in 1Q to 26% for the full year in a backdrop where you've talked about supply chain disruptions that may linger through the course of the year? Is it just a function of lapping easier year-over-year comps, particularly in the second quarter? Or is there something from an operational perspective that you think is going to be resolved on a relative basis in the back half of the year?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. It's two things. You hit one of them. It's the comp in Q2. So Q2 of last year, obviously, was just approaching breakeven on a dramatic sales decline. But you also touched on the second one, which is in the second half of the year, we've indicated, we do see some of these premium costs abating. And in the second half of last year, we saw a pretty significant impact to those parts of the business for premium cost, really across all of them. And then the other factor that really is outside of the organic conversion, but helps the overall margin profile is the catch-up in raw material costs from a recovery standpoint. But just isolated to organic, it's those two items.

Aileen Elizabeth Smith -- BofA Securities, Research Division -- Analyst

Thats very helpful. Thanks for taking the questions.

Operator

Your next question comes from the line of Joseph Spak with RBC Capital Markets.

Joseph Robert Spak -- RBC Capital Markets, Research Division -- Autos and Leisure Analyst

Yes, thanks for having me around. You talked a couple of times about LVD and the mix and the light truck sort of holding up better this quarter. I'm wondering if also you guys and maybe this is difficult to quantify, but do you think there's been any benefit at least when we sort of compare versus some of the production forecast for those vehicles for your sales because a lot of these automakers sort of employed the strategy to make as much of the vehicle as they can. So you might especially if you sort of compare your results versus what was actual what was reported as produced, maybe screened a little bit better? Or is that difficult to comprehend?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. I think if it is, it's on the margin because the inventories for those vehicles haven't risen. So there's still relatively low from a historical perspective, demand remains really strong. So I don't think there's much of a dislocation there. And I would expect in Q2 that what you're going to see in our sales is likely going to be more comparable with our OE customers as well as other Tier 1s that are supplying these programs.

Joseph Robert Spak -- RBC Capital Markets, Research Division -- Autos and Leisure Analyst

Okay, thank you. And then I noticed also in the slides that you talked about the EV investment weighing by 20 basis points. I know you raised your sales guidance. So maybe you could just start to talk about more in dollar terms like is that also what was expected previously in your guidance? Or are you also taking the opportunity with maybe sales coming a little bit better to step that up a little bit?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. It's pretty close to what we thought a couple of months ago. So that 20 bp headwind or that more than $20 million increase compared to 2019 was the reference that I was giving is pretty close to what we thought. We'll continue to watch that carefully. There's a tremendous amount of advanced sales and advanced engineering work that continues to happen with key customers across all of our end markets. So we do continue to highlight that. When it's -- there's attractive opportunities to support our customers with this core technology, we're going to take advantage of that. But no, that's not been a meaningful change from the original guide to this current guide.

Joseph Robert Spak -- RBC Capital Markets, Research Division -- Autos and Leisure Analyst

Okay. Maybe just one last quick one. I'm sorry if I missed this, but anything in particular behind the strong conversion in Power Technologies this quarter?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Just those markets continuing to perform us getting past some of the launches that we saw. And obviously, most of the commodity inflation we've seen has been on the steel side. So they're having less of an impact. So really, that market is getting better and the business performing well. So we're really encouraged about the recovery we've seen in that business over the last couple of years.

Joseph Robert Spak -- RBC Capital Markets, Research Division -- Autos and Leisure Analyst

Thank you.

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Regina, We'll take the next question.

Craig Barber -- Senior Vice President of Purchasing and Supplier Development

All right, we're just going to pause for just a minute here while we reconnect the line with our operator, and we'll continue our Q&A, just a moment.

Operator

Your next question comes from James with KeyBanc Capital Market.

James Albert Picariello -- KeyBanc Capital Markets Inc., Research Division -- Analyst

Hey. Good morning guys. Just back to the cadence for the year. It sounds though you have decent visibility for the second quarter. So if we just think back to your prior guidance, right, which had a pretty even first half, first second half split for both revenue and EBITDA. Can you provide any color on how we should be thinking about that first half, second half breakout now within your current framework?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. I mean I think the upside would follow -- any potential upside we had in the second half would follow a comparable phasing where we're going to see typically based on workdays, higher sales toward the middle of the year, the second and the third quarter, which yields a better margin. Seasonally, Q4 is usually a little bit lighter on sales and on profit. So that's kind of how we're thinking about it. And obviously, once we get through the next couple of months and have greater clarity on the chip shortage, we'll be in a better position to give a better outlook for the second half of the year.

James Albert Picariello -- KeyBanc Capital Markets Inc., Research Division -- Analyst

Okay. And then can you provide -- I mean, is there any update on EV programs, the -- maybe the EV program pipeline? And then could you just remind us, based on what you've already communicated, what programs, what are the awards are starting to ship this year, the time frame? And then Dana's EV-related spend, is that unchanged for the year? I know that there's -- the 20 basis point impact is called out in guide. Is that a new number? Or is that...

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. So the -- great point. That one remains consistent. So not a meaningful change there. What we were just highlighting is the impact that that's having on margins compared to just a couple of years ago. And we did want to accentuate that. Typically, we would look for cost efficiencies in other areas to help offset that. But right now, with everything that's happening in the supply chain, there's limited ability to do that. As it relates to backlog, really excited about the PACCAR medium-duty programs, where we're producing vehicles today for them. As a reminder, that's the complete electrified powertrain, not only the e-Propulsion system or the electric driveline, but also the e-power system and the full embedded software and vehicle controls on that. So really encouraged about that. We highlighted some of the off-highway programs just on our last call. We have the scissor lift with JLG that's coming online, the DaVinci, we're excited about that. So those are a couple of key programs there on the electrification front. As it relates to new programs, I tried to highlight just a moment ago, there is a tremendous amount of work with all of our customers across all of our end markets on new business. So our advanced sales and advanced engineering teams are absolutely swamped right now, getting pricing and technical timing to customers for a lot of these electrified products. So we're really excited about more electrification business to talk about in the near future. But what we wanted to focus on today is all of the infrastructure work that we're doing to make sure that we can support those new programs.

James Albert Picariello -- KeyBanc Capital Markets Inc., Research Division -- Analyst

Got it. And then if I could just ask one more on off-highway markets. I think in the -- in your 10-K, you talked about industry global volumes for construction, mining, ag anywhere in the range of flat to plus 5%. And it seems as though those markets are collectively recovering more rapidly. So is that a major component of the raised market outlook of $350 million? I think you said it's fairly evenly split across the segments. But just wondering on off-highway because it does seems though the indicators are turning green fast?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. You're absolutely right, more so in the ag than the other 2. So ag has done quite a bit better than we anticipated. That caught us off guard, and that's been very encouraging. But we are seeing, particularly in construction, there are some signs that, that could do better as well too in the second quarter. Part of what affected our guidance is the fact that on the light vehicle side why it's a little bit more evenly split is in Q1, we thought we were going to see a bit more chip shortage impact in Q1 than we actually did. So -- but you're right from a pure demand standpoint, real encouraged by what we see there. And really hopeful that construction starts to pick up with some of this infrastructure spending that's planned because that's great contribution margin business for the off-highway segment as well as Dana overall.

James Albert Picariello -- KeyBanc Capital Markets Inc., Research Division -- Analyst

Thanks.

Operator

Your next question comes from Rod Lache with Wolfe Research.

Rod Avraham Lache -- Wolfe Research, LLC -- MD & Senior Analyst

Good morning everybody. I wanted to ask about electrification. Just a number of light vehicle OEMs, even the ones that are in-sourcing electric drivelines like the GMs and Fords of the world, seem to be aligning themselves with certain power electronic suppliers. And I'm wondering if you could just maybe talk a little bit about whether that has any longer-term implications for Dana or whether you think there's going to ultimately be multiple power electronic suppliers, and that would be separate from other aspects of their driveline procurement strategy?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. I think it's an interesting observation, Rod. We're certainly seeing a broad range of sourcing models in electrification from component sourcing at customers to full system sourcing. We've been engaged in conversations across all of our end markets in the ability to supply certain components or a complete system. We think it's going to continue to create content upside. So we now have offerings in the electrodynamic or in power electronics and electric motors that we didn't have just a couple of years ago. So that's a growth opportunity for us. But clearly, a lot of our early wins that are in our backlog are for the full system. But the market you highlight light vehicle is the one that's moving the slowest for our three because they focused on the smaller and lighter vehicles. But we're encouraged by the engagement that we have with our customers across all end markets and are looking forward to this unfolding in the next year or 2.

Rod Avraham Lache -- Wolfe Research, LLC -- MD & Senior Analyst

Okay. And maybe if you could just clarify for us, the degree of confidence that you have or visibility that you have on the decline in premium costs and improving incrementals in the back half. Can you size up what sort of the delta might be and whether you think that has any implications as we think about the bridges into 2022 as that recovers?

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Sure, good morning. I'll let Jonathan touch on the back side of that question, if he can, without going too far into the details or weeds. But in the big picture and the competence, I want to reiterate, part of it, besides we get in the supply chain piece of it, it is just the recoveries. I don't think in my 30 plus years of being in supply manufacturing that I've seen anything like it in terms of a run up. We've seen run ups, but not like this one. So I mean, it is what it is. As it relates to supply chain, it is starting -- the world starting to come back together a little bit. So I don't know that I can give you a direct answer, but those of you that are out there that maybe don't follow it as closely as certainly you need to if you're leading a manufacturing company is when you talk about sea container delays when everybody talked about the ship that got stuck in port Suez that was small potatoes compared to all of the other sea container delays that were at port in Los Angeles or Norfolk, etc, etc. So that jam, which ultimately turned into a delay of returning of containers and vessels back to other countries of origin, was a massive issue. That's starting to sort itself out. So to quantify it exactly, Rod, that's very, very difficult. There is one million moving parts out there between -- obviously, it's a labor supply issues that any one of your calls you're going to have this quarter, you're going to hear about that from the Tier 1s, Tier 2s, Tier 3s to the supply of sea containers and vessels to so on and so forth. Very difficult to quantify. I will only say to you, and you know this, this isn't, per se, my first rodeo and being an operations guy first and something else. Second, I don't know what is that we're -- I feel comfortable that it's getting better on a day-to-day basis. But for sure, this is not something that's going to be fixed in a day or a week, it's going to take its time.

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. And just in terms of the margin profile, Rod, we're indicating, we think Q2 is going to be better than Q1. But we wouldn't expect it to be such that the first half of the year would be at 11%. So we're certainly expecting most of the improvement in the cost to happen in the second half of the year. As Jim indicated, we've still got months, not days or weeks to work through some of these issues, but we are expecting an improvement this year to get us to that 11% margin.

Rod Avraham Lache -- Wolfe Research, LLC -- MD & Senior Analyst

Thank you.

Operator

Your next question comes from the Dan Levy with Credit Suisse.

Dan Meir Levy -- dit Suisse AG, Research Division -- Director & Senior Equity Research Analyst

Thanks for taking the question. First, I just want -- and I think you sort of addressed this in the questions, but the dynamics in light vehicle, particularly where you obviously had very good revenue contribution. Your core platforms, I think, were quite good, but the contribution margin only 16%. That's just purely a function of having this outside North America exposure and that's where the supply chain issues were much more magnified. That's what underscores that lower contribution margin in light vehicles despite good core programs?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

You got it. Yes, it's these premium costs that we're incurring, not only on the logistics side, but also the operating implications in our factories due to not getting deliveries when they're needed. So you're right. And then obviously, LV's overall margin was affected by commodities in the first quarter as well, too. But just on the organic conversion, you hit the key items.

Dan Meir Levy -- dit Suisse AG, Research Division -- Director & Senior Equity Research Analyst

Okay. And then sort of just a quick follow-up on that. When your customers are seeing the same sets of pressures, what is the -- how does the tone or tenor of the commercial discussions with them shape up because they're seeing the same pressures as well, and they're trying to do what they can to mitigate the pressures on their margin side? So how does that shape the commercial discussions?

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Good question. A little bit will be redundant in my answer, so I apologize somebody else's question earlier, which is I think you needed to dimension them into two different buckets. First of all, to talk about commodity costs. Those are generally formulaic. And if they're not formulaic, there's precedence that everybody, both us and our customers, are pretty familiar with, and we just rolled down that path and we collectively work together. As it relates to the other associated costs on it, I would say it hasn't reached a pinnacle that it's become a pressure point for that. But I would say that they do have the ability, I would call it this, not saying it's easy, but they do have the ability to move price on vehicle sales. And so -- and some -- to some degree, in some fashion, they're going to have a recognition that the supplier, the Tier one supplier can't be the ham in the sandwich. And I think you can visualize the visual I'm trying to paint there. And they'll work with us on that and so on and so forth. And I would even say it all depending on end market, there's already some flexibility for extraordinary costs. And I'll just be more blunt about it on the off-highway side of the business for a multiple of different reasons that I won't get into. But we're doing some, I'll call it, extraordinary things beyond extraordinary things to ensure that our customers are protected, and they've been very fair with us. Let's put it that way.

Dan Meir Levy -- dit Suisse AG, Research Division -- Director & Senior Equity Research Analyst

Great. And then the second question, I wanted to follow-up on the EV sourcing question and specifically on the commercial vehicle side. We just saw some news of Volvo trucks investing in a company that's doing some work on batteries and mobile charging technology. So maybe we can just revisit the in-sourcing question, specifically on the EV side because I know in the past, that's where you had a different dynamic versus light vehicle where there's maybe more in-sourcing efforts. Commercial vehicle, maybe there's more of a reliance on working on suppliers. Is that evolving at all? Are you seeing that shift at all in terms of how your customers on the commercial vehicle side are looking at their sourcing decisions?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. Dan, while that's a fair characterization, our experience is that it's been pretty consistent over the past 12 to 18 months. So on the CV side, some of these early vehicles that are coming to market, they are looking for very broad system solutions. And we've been in a great position to help provide those. But as that matures, we think that it's going to take on a lot of different as volumes increase of some total systems, some subsystems and even some component level sourcing. So lots of opportunity out there, and we're engaged with our customers in all of those different models within the commercial vehicle space.

James K. Kamsickas -- Chairman, President & Chief Executive Officer

I'd only add a little bit of color to it as it relates to the customers' interest in their sourcing models and stuff like that. And we always have to be a little careful not to turn every earnings call into a backlog discussion because there's so many other things that happen in the world in our business, etc. But just to reiterate, lost in my overall upfront commentary, it's not at all lost on our customer base that, that we have over one million, I said one million -- over one million miles traveled on our motors and inverters because we've been in this business for well over a decade. Okay, you could argue was that acquired, but it's the same people. It's some of the same capital. It's the same knowledge base, some of the same warranty and field issue learnings and all the other things associated with it. So our customers are very bullish on our -- basically, we don't fake it. It's one thing to go sell a program. It's another one to actually put it on the road, make sure that the total cost of ownership as well as reliability is where it needs to be. And so our customers are very bullish on it. So I think we're going to continue to be in a position of strength as our markets pull-through as they pull-through.

Dan Meir Levy -- dit Suisse AG, Research Division -- Director & Senior Equity Research Analyst

Great, thank you.

Operator

Your next question comes from Ryan Brinkman with JPMorgan.

Ryan J. Brinkman -- JPMorgan Chase & Co, Research Division -- Senior Equity Research Analyst

Great, thanks for taking my question. There's been a lot of discussion regarding the Biden administrations support for light vehicle electrification, including more funding for consumer tax credit, support for charging stations, etc. And I think a lot of the details have yet to be fleshed out, maybe we'll hear more tonight. But just curious if you are seeing, hearing or expecting any incremental support or subsidy for electrification on the commercial side of the business, where maybe the map cost benefit of subsidies might even be greater given a high amount of miles driven per vehicle, etc?

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Good question. I don't want to speak on behalf of the government or the administration or anything like that because who am I to know, number one. Number two, if I did I'd be kind of crazy for saying anything. But number two is, I don't think they're going to isolate light vehicle, the commercial vehicle or anything else. I think it's more of a Green Solution's mission, sustainability and a focus on overall where is our world tomorrow, not today. So I don't although it may seem like it in the big bold print that it's more in light vehicle for obvious reasons, I don't think that, that's going to be the case moving forward. I think you're going to make sure, you're going to hear a lot more about end markets across the board.

Ryan J. Brinkman -- JPMorgan Chase & Co, Research Division -- Senior Equity Research Analyst

Okay. Great. And then just finally, maybe on the flip side of the higher raw material input costs that you're seeing, which have been discussed at length. I'm just curious what might be happening on the ag or mining sides of the off-highway market, what sort of -- what demand might look like there? Or how you think it might track going forward just in light of the increase in revenue for the farmers and the miners around the world?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. We certainly think that, that's been one of the demand catalysts in ag performing so strong in the early part of this year. And it could be a great leading indicator of better performance in the mining segment as well, too. So that's a catalyst that we're keeping a careful eye on. And part of the reason we think there's continued opportunity for the markets to strengthen throughout the year.

Ryan J. Brinkman -- JPMorgan Chase & Co, Research Division -- Senior Equity Research Analyst

Okay. And then just final follow-up there. You did mention that Brazilian commercial truck might have been a little bit softer. And I know that sometimes the commercial truck down there can sort of benefit second derivative from the mining and ag as they transport it around the country. Just curious, I don't know if that's due to some of the headlines around COVID down there? Or what you're seeing with the Brazilian commercial truck market and how that might track going forward?

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Yes. It's a good point. The demand -- the underlying demand fundamentals are strong. So we should see a better performance there. The best indication we get from our team -- our local team and from our customers, as you're right, the pandemic containment measures have affected that country and have had a bit of a cap on the output. So we're hopeful that as they work through that, and people are more safe. One of the other benefits will be a better demand for our products and services later in the year.

Ryan J. Brinkman -- JPMorgan Chase & Co, Research Division -- Senior Equity Research Analyst

Very helpful, thanks.

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Okay. Well, thanks, everyone, for joining the call today. As always, I guess I'd put a quick stamp or summary on this one that I'm super encouraged. The business is growing. Profits are returning to normal levels. I'd almost put it into the end phrase of this is what we've been waiting for. This is what we've been preparing for. And I think the team has done a remarkable job. We're a bit of the tip of the spear here in earnings season. As many of you, obviously, you're aware of. So I feel like we might be explaining this the unexplainable to a degree. This is a bit of -- also falls into the umbrella of once in every 100-year global pandemic and all the moving parts to go along with it. So besides the fact, I hope we gave the audience some clarity on the craziness that are out there and whatever everybody is dealing with. I just take this opportunity to thank our customers for working with us as we go through things, to thank our employees for everything they're doing to navigate through the challenges of what they're doing to protect their people as well as support our customers and the list goes on and on. It is nothing like any of us have ever saw before. I will tell you this, it is dramatically tougher, in my view anyway, than anything we dealt with back in '08 and '09. So thank you, everybody, for your support. We look forward to giving you an update next quarter.

Operator

[Operator Closing Remarks]

Duration: 62 minutes

Call participants:

Craig Barber -- Senior Vice President of Purchasing and Supplier Development

James K. Kamsickas -- Chairman, President & Chief Executive Officer

Jonathan M. Collins -- Executive Vice President And Chief Financial Officer

Colin M. Langan -- Wells Fargo Securities, LLC, Research Division -- Senior Equity Analyst

Emmanuel Rosner -- Deutsche Bank AG, Research Division -- Director & Research Analyst

Brian Arthur Johnson -- Barclays Bank PLC, Research Division -- MD & Senior Equity Analyst

Noah Kaye -- Oppenheimer -- Analyst

Aileen Elizabeth Smith -- BofA Securities, Research Division -- Analyst

Joseph Robert Spak -- RBC Capital Markets, Research Division -- Autos and Leisure Analyst

James Albert Picariello -- KeyBanc Capital Markets Inc., Research Division -- Analyst

Rod Avraham Lache -- Wolfe Research, LLC -- MD & Senior Analyst

Dan Meir Levy -- dit Suisse AG, Research Division -- Director & Senior Equity Research Analyst

Ryan J. Brinkman -- JPMorgan Chase & Co, Research Division -- Senior Equity Research Analyst

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