Good morning. My name is [indiscernible] and I will be your conference facilitator today. At this time, I would like to welcome everyone to the American Axle & Manufacturing Third Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Mr. Jason Parsons, Director of Investor Relations. Please go ahead, Ms. Parsons.

Thank you, and good morning. I would like to welcome everyone who is joining us on AAM's Third Quarter Earnings Call. Earlier this morning, we released our third quarter of 2020 earnings announcement. You can access this announcement on the Investor Relations page of our website, www.aam.com and through the PR Newswire services. You can also find supplemental slides for this conference call on the Investor web page of our website as well. To listen to a replay of this call, you can dial 1 (877) 344-7529. Replay access code 10147154. This replay will be available beginning at 1:00 p.m. today through 11:59 p.m. Eastern Time, November 6. Before we begin, I would like to remind everyone that the matters discussed in this call may contain comments and forward-looking statements subject to risks and uncertainties which cannot be predicted or quantified and which may cause future activities and results of operations to differ materially from those discussed. For additional information, we ask you to refer to our filings with the Securities and Exchange Commission. Also during this call, we may refer to certain non-GAAP financial measures. Information regarding these non-GAAP measures as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website. With that, let me turn things over to AAM's Chairman and CEO, David Dauch.

Thank you, Jason, and good morning, everyone. Joining me on the call today are Mike Simonte, AAM's President; and Chris May, AAM's Vice President and Chief Financial Officer. To begin my comments today, I'll provide some color on AAM's third quarter results. AAM's strong third quarter operating and financial results and free cash flow generation reflects the benefits of recovering global production volumes and our cost saving actions. AAM sales were $1.41 billion for the third quarter of 2020 compared to $1.68 billion in the third quarter of 2019. We estimate that sales were negatively impacted by COVID-19 during the third quarter of 2020 by approximately $87 million. In addition, our third quarter of 2019 sales included $155 billion (sic) [ $155 million ] related to our U.S. iron casting operations. This business was sold in December of 2019 and is therefore no longer part of our sales base in 2020. Adjusted EBITDA for the third quarter of 2020 was $297.1 million or 21% of sales. This compared to an adjusted EBITDA of $265.8 million or 15.8% of sales in the third quarter of 2019. We estimate that adjusted EBITDA was negatively impacted by the lower sales of COVID-19 by approximately $16 million during the third quarter of 2020. Despite these challenges, AAM benefited from strong sales mix, our aggressive cost-reduction actions and the timing of customer reimbursement items to achieve a record quarterly EBITDA margin. Adjusted earnings per share for the third quarter of 2020 was $1.15, nearly double compared to $0.58 in the third quarter of 2019. From a cash flow perspective, AAM generated over $217 million of adjusted free cash flow in the third quarter of 2020. This also represents a quarterly record for AAM. Despite the significant challenges we faced this year, AAM has generated over…

Thank you, David, and good morning, everyone. I will cover the financial details of our third quarter of 2020 results with you today. I will also refer to the earnings slide deck as part of my prepared comments. So let's go ahead and start with sales. Sales in the third quarter of 2020 were $1.41 billion compared to $1.68 billion in the third quarter of 2019. Slide 6 shows a walk down of third quarter 2019 sales to the third quarter of 2020 sales. First, we stepped down our third quarter 2019 sales by $155 million to reflect the sale of the U.S. casting business unit that was completed in December of 2019. Next, we add back the impact of the GM work stoppage from the third quarter of last year. Then we account for the unfavorable impact of COVID-19 on third quarter 2020 sales, which we estimate to be approximately $87 million. One note about the estimated COVID-19 impact, nearly 2/3 of it related to lower than expected sales in Brazil and India. While these markets are relatively small for AAM, they still were significantly impacted by the global pandemic during the quarter. On a year-over-year basis, we are also impacted by or by AAM -- by GM's exit of its Thailand operations by approximately $15 million. And the transition from a rear beam axle to a new lightweight and highly efficient independent rear drive axle for GM's new full-size SUV impacted sales by approximately $55 million. Other volume and mix was positive by $17 million, mainly driven by strong light truck mix in North America. Pricing came in at $10 million year-over-year impact and metal market pass-throughs and foreign currency accounted for a decrease in sales of approximately $15 million year-over-year. Now let's move on to profitability. Gross…

Thank you, Chris and David. We have reserved some time to take questions. I would ask that you please limit your questions to no more than 2. So at this time, please feel free to proceed with any questions you may have.

[Operator Instructions] Your first question comes from John Murphy from Bank of America.

Just a first question, there's obviously a lot of moving parts around COVID and then some of your rationalization activities. You've got MPG back on track here. It seems like just based on what we can see. You're applying 15.6% to 16.7% on EBITDA margin in the fourth quarter after what seems to be like a 19% plus even adjusted number in the third quarter. So I'm just curious, David, as you think about the EBITDA margin going forward, is there any reason that you could maybe get back to the 16% to 17% range you had in '18 and '19 pre the trouble with MPG and once we're through the COVID noise.

John, no, I mean, listen, obviously, this was an unprecedented year for us. And we've taken the structural changes that we need to make to our overall cost structure. We've resized the business to a lower market demand. We're letting buy-in be our friend as volumes continue to pick up globally around the world. We're clearly hopeful to be able to perform at that level that you've outlined. But we're not giving any guidance today, we'll give that in early next year. But clearly, we are comfortable in regards to the changes that we made to our business that we'll continue to generate industry-leading financial performance.

Yes, John, this is Chris. I'd also point you to our first quarter performance here this year, where we posted nearly 16% as COVID was starting to settle in. You see the cost savings actions we've taken really in the last 3 quarters, nearly $60 million, and you see a favorable truck mix and volume ahead of us. So we think we're lining up really nice. We're very focused on continuing to deliver that $60 million here yet this year. And as you know, some of those were temporary in nature, but we're looking to convert those to more fixed in nature in terms of cost improvements. So we're excited for next year, and we're excited to deliver strong margins.

Okay. That's very helpful. And then just a second question. Any update on backlog on the bidding process what you've won, any news you can give us there?

The only thing we can say now is we've got 2 vehicle programs in production today. We've got 2 additional electrification programs that will be launching next year as well as some component support for the electrification. Our market basket is about $1.5 billion of new opportunities, of which nearly half of that is tied to electrification, the [indiscernible] on traditional products. We're very comfortable with where we are with our technology advancement and where our backlog sits at this point in time. I mean, clearly, there's a shift from the traditional product to more of the electrification product, and we're just trying to position ourselves in the marketplace to win our fair share of the business. We clearly need to sort out what portion of the business will the OEMs want to do themselves internally versus what will be outsourced and then make sure that we have a value proposition to support that growth.

David, it's fair to say amidst the mayhem, there's still progress being made on bidding and everything you're going after, right? It's not like we're seeing things that are stalled and there'll be delays in the backlog build. There's -- the activity is still relatively normal on that side. Is that a fair statement?

Yes. I mean, we're seeing a reduction in some of our traditional and conventional business opportunities as OEMs are looking to carry over more product going forward, but we're seeing an uptick in regards to electrification opportunities. So they'll balance themselves out going forward.

And our next question comes from Joe Spak with RBC Capital.

Chris, maybe I just want to first clarify something. R&D, I think it was $18 million. But is that -- was that -- did you say that was netted against the $22 million settlement? So it was really more like $40 million. Because I think you had talked about it being at a higher rate in the back half of this year.

Yes. Yes, the concept is right. That $22 million is ED&D recovery as well as a commercial settlement. About 2/3 of that is ED&D related in terms -- and that would be netted into that. So you'd have to gross it up for that. So closer to the $35 million range.

$35 million. And is that the right way to think about the quarterly spend on a go-forward basis?

Yes. In the near term, yes, obviously, we continue to; one, deploy resources in converting from traditional product into the electrification space, which will be cost neutral, but obviously deploying towards development and design of our next-generation product; and we'll probably continue to spend into 2021, probably step it up a little bit in terms of some R&D spend related to electrification. And you may recall some of our previous commentary if you rewind about a year ago, right, our range was in that $35 million to $40 million range. We're pressing closer to $40 million as we are investing in electrification. A lot of our cost savings initiatives that we put in place now have allowed us to redeploy existing cost into electrification, and we won't have to probably add as much as we've previously done.

Okay. And then my second question is just -- and David, I realize you indicate you sort of need to see what your customers plan to do in-house versus externally as you move to electrification. I am wondering just on structure, whether you're seeing any changes in development as to sort of how customers are thinking about some of the larger vehicles, where we've seen maybe some of these vehicles have motors closer to the wheel versus on like a model 3 or ID 3 or even on the I-PACE you do or which has the EDU sort of more in the center of the vehicle? And if you think that's right for the larger, more capable vehicles? And if you're investing there, and what's your really capability if that structure evolves?

Joe, the best cost solution from an electric drive utilization standpoint is still a center differential with motors and power electronics integrated into them, not necessarily out in the wheel lens. We recognize that some OEMs are evaluating that technology. We ourselves are developing some of that technology as well. But we still feel that the best value proposition is more of a center differential with the integrated motor and power electronics with that -- or inverter.

Our next question comes from Rod Lache of Wolfe Research.

Can you hear me?

Yes.

So I'm just trying to think about what does the number that we just saw kind of mean? So if we ex-ed out the reimbursement and commercial settlement timing, you would have done $275 million of EBITDA. You'd be annualizing at about $1.1 billion on that. How should we be thinking about that number? Is it realistic that you could be doing $1 billion or more of EBITDA, if you were able to sustain, I guess, an annualized run rate of revenue of $5.64 billion?

Yes, Rod, this is Chris. Look, a couple of other things I would think about in what you're trying to articulate there. We did have some favorable FX and metals sort of run through the quarter, right? And you see that spiked out also on our walk. I don't know that that's a number you would try to annualize, right? It happens from time to time just based on currency. So that's a little bit discrete inside the quarter. I would also tell you, our cost reduction actions at $24 million. Our objective was to be on pace for $60 million for the full year this year. And as we mentioned, some of that cost save is temporary, right, that will come out a little bit in the fourth quarter. So think of temporary wage reductions such as that. But we'll level out probably a little bit lower than that on a quarterly basis. So you had a very strong third quarter element to that, but so you'll have a little bit of leveling from that perspective. But the rest will then depend on your sales level, right? We still see nice strong mix from the truck side, and we'll continue to obviously work on the productivity side. We'll focus on the cost side a little bit too, maybe R&D spend and things like that, that we were talking about on a previous question.

Okay. But we're talking about that -- it's just that $8 million, maybe $30 million annualized or something there and some portion of that $24 million that you would say is something that we wouldn't want to run rate. Is that clear? There's nothing...

Yes, I wouldn't run rate that on a quarterly basis, right? You would just annualize this quarter. You have to look at overall...

Okay. So -- but you don't -- I mean, we're not really dramatically lowering the EBITDA here. I mean, it looks like you're at least $1 billion, right, at that level. Or are you -- is there anything else that you'd say, look, keep this in mind, there's a benefit here that is not going to be sustained beyond what we're seeing right now? Like the other markets you pointed out, like you've pointed out, Brazil is not that great. You've pointed out a number of other things that are not -- and we were operating with like a $15 million SAAR on average for the quarter.

Yes. You do -- when you look at the third quarter discretely, right, you have to look at the number of production days, you also have to take a look at the fact that our customers ran during what they would typically have is shut down at the beginning of the quarter, which was even above and beyond normal production days inside the quarter, and you'll have seasonality throughout other quarters of the year. So just extrapolating 1 quarter, you have to take that into consideration as well.

Okay. And I know that, David, you'd been talking about savings opportunities even beyond the $60 million that you had originally laid out. Any updated views on that? Or should we be thinking, look, at this point, you really want to crank up the investment in some new areas like electrification. So we should be thinking that the cost structure we see today is something that you'd want to maintain?

Yes, Rod, again, this is David. We've done a tremendous job as an organization to optimize our capacity, structurally reduce our costs, rightsize our business to the new market demand. But at the same time, as we've said for multiple quarters now, we're going to continue to invest in electrification and advanced developments. So the answer is, yes, we're going to continue to focus on that and make sure that we can still be an industry leader on the traditional and conventional products and generate those industry-leading margins like we talked about, while at the same time, position ourselves to win our fair share of electrification as the market starts to transition there. The big question is, when? And I still feel -- I'm still long on the IC engine for a period of time. But also recognize that electrification is here today and will grow. It's just a matter of how fast does it grow, which segments does it grow and which regions does it grow around the world. But we feel that we've really optimized our cost structure. We'll continue to look at other things that we can do to drive capacity utilization. Obviously, with this Malvern fire that we experienced. We've had to shift a lot of product, which has driven up the utilization of some of the other facilities, but we've been able to protect our customers that way. So we've tried to turn a negative into a positive that way. Other than that, we see, as we said earlier, volume is really starting to recover in most of the major regions of the world, which bodes well for us, especially with the way that our products are positioned in the marketplace too.

And our next question comes from Brian Johnson, Barclays.

Two questions. One, we're all kind of going after the same issue. But could you maybe help us with the walk from 3Q to 4Q? Looks like if you back out the $22 million reimbursement in the FX metals, it's still a 48% decremental margin. Does that imply there are other costs coming back? Or is it just typical seasonality?

Yes. Brian, this is Chris. Yes. Let me give a little bit of insight as we think about walking from Q3 into Q4. And my commentary will center, basically, around, call it, the midpoint of our EBITDA guidance for the full year, as I think about what that equates to in Q4. You did talk about the onetime items associated with the $22 million. Obviously, that will come out. Again, I would think of very similar to the FX and metal market element associated with that as well, which is the $8 million. But the other thing you need to really step into first and foremost is you have lower production days, while our sales per day is very similar, if you extrapolate out our full year sales, very similar year-over-year, but you have 4 to 6 less production days. So call that nearly $100 million of revenue based on our guide, and you'll drop that at a 30% decremental into the fourth quarter, like you see our profits when they go up or down associated with our revenue. So that is a key piece as well. You do have a little bit of that performance leveling I talked about in terms of $24 million, you saw come through in the third quarter, a little bit, that will settle down a little bit into the fourth quarter. And then we do have a little bit of pricing that's a little bit tail weighted this year towards the back half in terms of the back half of the fourth quarter versus the full year. So you'll have a little bit of a piece associated with that. And I would say around the horn, you got a little bit -- some of our project expense and launch activity starting to kick back up as all these activities restarting into the balance of next year.

Okay. Secondly, can you give us maybe more of an update on your electrification efforts, which you did discuss in 2Q? But since then, there's been a number of announcements, certainly a number of start-up packs with getting into the EV market, GM announcing its LTM skateboard and which, as you ae painfully aware sent your stock down the day they announced their plans to largely in-source that. So we know your 3 platforms that you're pursuing. But just as you think about your core large SUV pickup truck market, how do you see; a, participating in that on the electrification side; and b, the threat to the kind of solid beam axle driveshaft, traditional business as well as what you've gotten from Metaldyne should more of that go into the all-electric route?

Brian, this is David. First of all, the GM announcement wasn't a surprise to us. We've been working very closely with GM ever since our company started back in 1994. We have a close working relationship with them. We clearly understood what they were doing from an LTM battery standpoint and some of the supporting EDUs and the different product lines that they're looking to support from a vehicle standpoint. Clearly, they've made investments there. They made a strategic decision to in-source that work. Where OEMs are in-sourcing work, whether it be GM or others, we're still in the game in regards to supplying components and subsystems. Where OEMs will outsource work, we clearly are wanting to go after the full integrated EDU units. So we'll continue to focus on that. We have those units developed today. At the same time, we're working on advanced technology that we think will bring greater power density, greater cost competitiveness and greater overall performance in a smaller packaging space. When it's all said and done, it's about providing the value proposition to our customers. We're not going to let -- we're going to defend our space and make sure we put forward the right value proposition for pickups, SUVs and crossovers, while at the same time, developing product that's modular and scalable that allows us to go after the front-wheel drive market that we, quite honestly, really don't support a whole lot today. We picked up some business when we picked up MPG in the front-wheel drive passenger car market. So we see growth opportunity there. At the same time, we're positioning ourselves to defend our current business. As I stated earlier, I'm still long on the IC engine for pickups. I think it'll be around for a longer period of time than people think. But I also recognize that there's new entrants from a vehicle standpoint that are bringing electrification. GM and Ford and Chrysler or FCA are all going to do what they need to do to protect their truck market. And like any good supplier, we're going to offer them value propositions to help them protect their market share going forward. So we feel very good about our products in the market today that are in production. We feel good about the new products that we will be launching next year, and we also feel real good about where we are in regards to our advanced developments or next-generation products, which we're accelerating the development of those, improving those capabilities out. And we're meeting actively with various customers with respect to that technology.

Okay. And anything -- any wins in the sort of the heavier duty light truck marketplace? Or is there anything in the pipeline there?

As I said, we're in discussion with customers right now but nothing to announce at this time. I don't know of anything that's really been sourced from the traditional Detroit 3, other than what GM has decided to do internally with their announcement. And Ford's identified that they're going to have F-Series product that will be electrified as well. Again, the volumes are lower than compared to the bigger platform that pays all the bills today for their development, not only on electrification, but other things that they need to do. There is activity with, as I said, the upstarts or the new entrants, and we are in a position where we're supplying componentry in some of those cases.

Our next question comes from Itay Michaeli from Citi.

Just was hoping to maybe talk about, as you think about the next, let's say, 2 or 3 years for the company, your latest thoughts on how we should think about revenue relative to end markets, so growth over market and whatnot. As well as, Chris, maybe on the deleveraging front, hoping you can give us an update on kind of how you see that progressing over the next couple of years and when you expect to hit some of your prior leverage targets?

Yes. Look, Itay, look, obviously one of the key -- kind of working reverse, one of the key objectives of the company is to continue to delever. You saw us do it this quarter, while we're still obviously a little bit high from a leverage perspective, but our cash flow generation, our continued very strong focus on strong cash flow generation with lower CapEx, strong operating performance and then obviously, building EBITDA will allow us to continue to delever. So that path to delever is still, we think, very favorable for us, and it's a top priority for the company. As we think about our growth markets, look, I think you see a couple of things going on inside of that over the next couple of years per se. You see and think of our core product, for example, you see light truck vehicles, whether they be pickup or crossover vehicles continuing to gain share in that market, which obviously is a sweet spot for us, which we continue to supply into and enjoy the benefits of providing consumer interest in that product set. You heard David articulate a lot of the areas we have working now in the electrification space, where from a component side, from a full EDU side, we continue to invest in and win business in. That's an area of growth for us. All is on our even more traditional component side, metal forming, powdered metals, such as those areas, we continue to see interest growth in that segment. And then lastly, on our VCS business, which supports the downsize hyper type engines, a lot of opportunity in that space, winning business there as well. We see that growth continuing.

That's helpful. And then just a second question. With the COVID cases unfortunately rising in the last couple of weeks, are you seeing any additional risk in the fourth quarter of supply chain disruptions? I'm just curious if any of that risk is embedded into your fourth quarter guidance.

Itay, this is David. Clearly, the risk with our supply base started back in January. We've been able to manage that risk successfully through the first quarter and the third quarter when we were actively running production, obviously, the second quarter when our operations were down, mainly here in North America and part of Europe. There wasn't as big of a concern. But clearly, we have to watch that just because of country announcements or government announcements or regional announcements in regards to where our supply base is. So there are some challenges that are out there with respect to that. But at this time, they've all been very manageable. We've had nothing that's interrupted our continuity of supply to ourselves or ourselves to our customer as a result of the COVID issues right now.

Yes. Itay, as it relates to your question on our guidance, we -- embedded in our guidance is a little bit of cost as we talked about $15 million for the full year, of which we -- year-to-date incurred about $9 million. No significant impacts beyond that have been included in that associated with COVID through the balance of this year.

Yes. Itay, this is David, again. I mean the biggest thing that we're watching is volumes are picking back up and accelerating going forward. We're watching the financial health of the supply base right now to make sure that they can financially stomach the working capital demands that are going to be placed on them. And so we're keeping a watchful eye on the entire supply base and right now, that's a very manageable list for us at this time. As far as .

Our next question comes from Dan Levy of Crédit Suisse.

First, just want to ask a follow-up on debt pay down and sort of how you view that relative to R&D. I mean, to what extent is if you do incremental EBITDA generation next year beyond, let's say, there's continued cycle recovery, what the opportunity is for incremental debt paydown? And then how do you view deleveraging relative to R&D? Because, obviously, deleveraging is a key priority. But at the same time with the wave of EV there's probably increased desire on your end to boost R&D to enhance your EV offering. So tell me -- if you could just tell us how do you view the 2 relative to each other? Is there any incremental benefit to elevating your R&D expense, perhaps, missing out on the opportunity to pay down additional debt or is the very clear priority you have to deleverage first and then you can't do -- if we have to start there?

Yes. Dan, this is Chris. First, I would tell you from ability to pay down debt. Look, our debt instruments are very flexible. We can pay those down. We have prepayable debt at any time. So we're in a good position from that standpoint. But I think the crux of your question is, do you reallocate capital from debt pay down to R&D? I guess what I would tell you is embedded in our performance now is a sizable amount of R&D, we believe, is the appropriate amount to support the growth that we see in front of us and continue to support the next-generation of product we're getting ready to launch. And obviously, investment in our future and investment in growth areas such as that are critical to our long-term success. We will continue to support those. If we need -- if we felt at a point in time in the future that opportunities continue to expand and present themselves, we would obviously continue to invest in our R&D space to drive our product set, to drive our growth, to expand our customer base. That being said, if you look at the amount of free cash flow that we're generating as a company, we can clearly support debt paydown, and we can clearly support the investment in our product that we need to do.

Great. And then just to clarify on the -- your initial comment that you have flexibility in the debt paydown. Do you need to see a sort of certain sustainability of the end markets to go forward on paying down debt? Or is it just as you achieve that upside, we should expect you to be pretty quick about taking advantage of paying down that debt?

Yes. When we think about -- yes, from a gross pay down, obviously, if you pulled cash, your net debt would come down. But from a gross debt paydown, certainly, time and circumstances are always considered a factor, when we think about it. You think about forward trajectory of the business, you think about timing and seasonality within the year. First quarter is usually an outflow use of cash flow, for example, for us. You want to think about the macro environment. But again, we have 4 years of no debt maturities being 2020 to 2024. So we have a lot of flexibility in how we handle it.

Okay. Great. And then as a second question. I wanted to ask actually about your, what we'll call, Powertrain 1.0 content. And I think we know, obviously, all of your customers are accelerating on EV development. And within that, there's significant deallocation of your own customers' resources away from current combustion vehicles. But obviously, at the same time, there is this dynamic that while this massive deallocation of resources, we still know what the mix of combustion vehicle is, and especially for your core markets, North America, combustion vehicles are still 98%. So is it possible that customer are shifting their focus to more EV that you could arguably gain more Powertrain 1.0 content that you could gain more, I guess, outsourcing has automakers have to rely more heavily on the supply chain as they shift thereafter?

Dan, this is David. The answer is yes to that. First and foremost, as I said earlier, I'm long on the IC engine, especially here in North America, and we're in a very healthy position in regards to our market share. And when you look at the mix of the vehicles today, heavily weighted towards trucks, SUVs and crossovers, which is right in our sweet spot. So we're going to continue to perform very well, not just for a couple of years but for multiple years going forward here. At the same time, as the capital demands grow and become larger within the OEMs, they're going to have to assess how much they want to stay in the manufacturing business of 1.0 technology versus what they might want to outsource their -- they're obviously -- if they make that decision, they're going to look to companies like American Axle that have a proven operating capability, proven quality performance, proven launch performance and proven continuity of supply performance to them. Because they can't afford to have their profit pools interrupted from a financial standpoint. So we think we're in a very good position right now in regards to where our mature products are on the traditional product that -- the IC engine related products. We're investing heavily in regards to electrification to position ourselves appropriately in the various markets around the world based on what we think the timing and the adoption may be in those respective markets. And then we're just going to have to clearly monitor and stay close to our customers in regards to decisions that they make with respect to their portfolio. And every company, whether you're an OEM or supplier is evaluating our portfolios right now and deciding where we want to make our strategic bets from a financial standpoint. That's not only relevant today because it needs to pay the bills but also makes us relevant in the future for sustainability going forward. But again, the short answer to your question was yes, we think there'll be opportunity in the future there.

Right. And are you having any incremental discussions with customers on that front now or is it still just still too early in the game?

Yes. I'm not in a position to comment on that, nor should I, if I was in discussions, but nothing to announce or discuss at this time.

Your last question comes from Ryan Brinkman of JPMorgan.

Thanks for taking my question which is yet another one around the implication for out-year margin, although not specific to '21 from 3Q's big beat, cognizant, of course, that you're not going to be guiding until early next year. I think your normalized margin is maybe or hopefully, structurally increased here as a result of learning to be leaner post COVID. Firstly, if you could just confirm that that's your view also? And then secondly, in terms of trying to understand just how much normalized margin might have improved, you called out a couple of tailwinds, including FX, commercial settlement, et cetera. Even backing out those items, though, I think margin would still have been around 13% in 3Q. How would you rate the sustainability then of this $24 million in cost reduction actions? What proportion of those savings come back with volume versus being more permanent in nature? And how does that category differ from performance and other?

Yes, Brian, this is Chris. Look, in terms of that $24 million, you see flowing through the third quarter, I would think you hear our commentary. We said we would perform at $60 million for the full year of 2020, which was effectively Q2, Q3 and Q4. So you sort of had to level it out a little bit sort of more in that range. And the delta between that, and I would call core operational performance. So this would be rightsizing your overhead structures. For example, this would be limiting certain overhead spending in that area as well, manpower wise from a salary perspective. We're more, I would call, traditional productivity, traditional performance where you're increasing throughput on your lines, you're optimizing hours per part produced. Things of that nature, reducing scrap, where that will continue. Obviously, that's been a core of the company. We'll continue into the perpetuity, quite frankly. But we do those things to offset things like price downs and inflation and things of that nature. So the $60 million we talked about delivering here this year, we expect to be sticky going forward. Some of it is temporary. We're repopulating that, as I mentioned, with some more structural stuff. It'll take a quarter to build that back in. But that would be our thought process going into next year and beyond.

Okay. Very helpful. And then finally, I'd be curious if you have any content on the new Hummer EV or other electrified products at GM that you're permitted to talk about? Or maybe just more generally, if you have been awarded or what you can talk about in terms of awards for electrified full-size pickup trucks that are currently out there in development?

Yes. Ryan, this is Dave. We're not in a position to answer that question at this point in time.

Thank you, Ryan. We thank all of you who participated on the call today and appreciate your interest in AAM. We certainly look forward to talking with you in the future.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.