Timothy Kraus: Yes. So we can’t talk specifically about timing, but I can tell you that it would be outside of our traditional three-year backlog window. And then obviously, an award such as this does come with an increased amount of investment, both on the period cost side and on the fixed capital side. .
Operator: Your next question comes from the line of Ryan Brinkman with JPMorgan.
Ryan Brinkman: Good morning. And thanks for taking my questions. It seems like you’re winning more of these light vehicle driveline awards as opposed to a couple of years ago. I thought it looked like maybe you’d benefit more from electrification on the commercial vehicle driveline side or from hybrids or maybe battery cooling plates on the light vehicle side. So where would you say that the — either the light vehicle e-beam axle or the light vehicle, call it 3-in-1 or 4-in-1 electronic drive unit opportunity? Were those sorts of fit in kind of rank ordered in terms of the electrification opportunities for the whole company.
Jim Kamsickas: Great question. A little bit difficult to answer, to be honest with you, but I’ll give it my best shot. The best way to kind of — I hope, illustrated for to the audience today and yourself is that if you took a snapshot in time like 5 years ago, where a company like Dana would have been having the various RFI that turned into an RFQ with our customers that turned into an internal combustion engine or diesel engine type of driveline sourcing situation. It’s essentially the same thing for electrification today. Almost everything that comes at us has an element of mostly electrification, maybe some hybrid to it, but it doesn’t matter. The point I’m trying to make is it doesn’t matter anymore end market that we’re participating in.
All of them are coming. It’s just a matter of — are they — do they set up, for example, in the commercial vehicle segment did some of our commercial vehicle customers have first-mover position, get some stuff out to the market using what we call a direct drive solution, which basically is a bridge off of a traditional architecture for an ICE vehicle and they got that, and maybe that’s okay for 2 to 3 years. And therefore, no incremental new sourcing has happened since or anything that we want to talk about this happens since. In the light vehicle standpoint, there — maybe they’re going a little bit faster directly to a full e-Axle solution, which, by our definition, and e-transmission, depending on which application will be the most efficient solution.
Therefore, the sourcing pattern seems like it’s more prominent right now, but it’s really not. It’s all of the end markets are sourcing and electrification these days. That’s just how it’s going.
Ryan Brinkman: Okay. Great. Very helpful. And maybe just lastly, I’d like to ask about 2 of these kind of related comments on the slides. One is on Slide 12, pertaining to higher sales in ’23 due to cost recoveries, hindering margin? And then the other comment on Slide 13, referencing gross inflation and related recoveries are now expected to be lower than the prior estimate, but the net impact from inflation on the full year profit being the same. So with margins for the whole sector, lower — the supplier sector lower than where they were pre-pandemic in part given this phenomenon. If I to ask like, is lower inflation because we hear about these headlines about lower inflation. Is that the answer really to restoring supplier margins?
Or would that just simply be offset by lower related recoveries such that you need to rebuild margin by some other means, such as fixed cost leverage or a pivot toward intrinsically higher-margin products, et cetera? Or should investors not even be too bothered about getting back to pre-pandemic margins because margins might be structurally lower now because of all this low or no margin pass-through of higher cost and maybe inside we should focus on return on invested capital or cash and cash returns? Or just kind of how are you thinking about that? .
