Colin Langan

Colin Langan inquired about the drivers behind Dana's ambitious $10 billion sales target by 2030, specifically asking if market factors or M&A were assumed beyond the existing backlog. He also asked if recovery programs for EV cancellations from the Detroit Three impacted 2025 results or were baked into 2026 guidance, and their effect on cash flow.

Answer

Chairman and CEO Bruce McDonald clarified that the target does not include M&A, detailing five growth strategies: continued new business wins in ICE, gaining share in the North American Commercial Vehicle market, expanding the aftermarket business (e.g., North America sealing and gasket opportunity), commercially sensible EV quoting, and growth in adjacent markets via applied technologies like Powersport and defense. Senior Vice President and CFO Timothy Kraus explained that while there was some recovery in Q4, it primarily involved adjustments to ongoing sales prices for volume-down programs rather than significant short-term profit tailwinds, though it helped avoid further write-offs. Bruce McDonald noted that some benefits from EV program repricing were reflected in the volume mix.

Colin Langan questioned the high conversion rate on organic sales in Magna's 2026 sales and margin outlook, after adjusting for FX and operational excellence. He also asked about assumptions for DRAM and raw material costs, particularly for the ADAS business, and potential unrecovered cost headwinds.

Answer

CFO Philip D. Fracassa and CEO Seetarama Swamy Kotagiri attributed the strong conversion to significant contributions from operational excellence, good pull-through on incremental volume, and benefits from past restructuring efforts. They noted FX pull-through is lower due to segment mix. CEO Seetarama Swamy Kotagiri stated that Magna is coordinating with customers on DRAM, included a modest amount of unrecovered cost headwinds in the guidance, and mentioned that steel and aluminum costs are typically mitigated through customer resale or contractual terms.

Colin Langan asked for a detailed breakdown of Magna's 2026 sales and margin walk, questioning the high conversion rate on organic sales. He also inquired about assumptions for DRAM and raw material costs, particularly for the ADAS business, and potential unrecovered cost headwinds.

Answer

CFO Philip D. Fracassa confirmed the FX impact on sales and highlighted Operational Excellence as a significant driver of margin expansion, noting good pull-through on incremental volume. CEO Seetarama Swamy Kotagiri added that benefits from past restructuring and efficiency efforts are flowing through. Regarding DRAM, Swamy stated Magna is coordinating with customers, has not seen disruption yet, and included a modest amount of unrecovered cost headwinds in the guidance, primarily impacting the electronics product line.

Colin Langan asked about the margin profile and CapEx requirements for BorgWarner's new data center opportunity, specifically regarding the $300 million revenue target. He also inquired about the PowerDrive Systems segment, including the size of a recent recovery, its sustainability, and growth prospects amidst an EV slowdown.

Answer

Joseph F. Fadool (CEO, BorgWarner) and Craig D. Aaron (CFO, BorgWarner) explained that the data center business is expected to have mid-teens incremental conversion and be immediately EPS accretive with a strong return on invested capital. They noted the 2026 CapEx guidance of 4.5% of sales includes investments for this system. For PowerDrive Systems, Craig D. Aaron highlighted a 100 basis point benefit in Q4 from customer recoveries, emphasizing full-year mid-teens incrementals and expecting low double-digit light vehicle e-product growth in 2026 with similar conversion.

Colin Langan inquired about the margin profile and CapEx implications of the new data center opportunity, specifically whether the $300 million target is booked. He also asked for details on the PowerDrive Systems' customer recovery in Q4, its size, and the sustainability of growth in the segment given the EV slowdown.

Answer

CEO Joseph F. Fadool and CFO Craig D. Aaron explained that the data center business is expected to have mid-teens incremental conversion, be immediately EPS accretive, and offer a strong return on invested capital. They noted that the 2026 CapEx guidance of 4.5% of sales includes investments for the turbine generator system and other launches. For PowerDrive Systems, Craig D. Aaron clarified a 100 basis point benefit in Q4 from customer recoveries, emphasizing that the full-year PDS results showed mid-teens increment on 23% e-product growth, a trend expected to continue into 2026 with low double-digit light vehicle e-product growth.