Feb 20, 2014
Executives
Craig Barber Roger J. Wood - Chief Executive Officer, President, Director, Member of Strategy Board and Member of Series A Nominating Committee William G.
Quigley - Chief Financial Officer, Executive Vice President and Member of Strategy Board Mark E. Wallace - Executive Vice President, President of Light Vehicle Driveline Technologies and Member of Strategy Board
Analysts
Patrick Archambault - Goldman Sachs Group Inc., Research Division Brian Arthur Johnson - Barclays Capital, Research Division Colin Langan - UBS Investment Bank, Research Division Patrick Nolan - Deutsche Bank AG, Research Division Joseph Spak - RBC Capital Markets, LLC, Research Division Brett D. Hoselton - KeyBanc Capital Markets Inc., Research Division John Lovallo - BofA Merrill Lynch, Research Division Ryan J.
Brinkman - JP Morgan Chase & Co, Research Division
Operator
Good morning, and welcome to Dana Holding Corporation's Fourth Quarter and Full Year 2013 Webcast and Conference Call. My name is Brent, 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 Director of Investor Relations, Craig Barber.
Please go ahead, Mr. Barber.
Craig Barber
Thanks, Brent, and thank you all for joining us today for our fourth quarter and full year 2013 earnings review. Presenting this morning will be Roger Wood, President and Chief Executive Officer; Bill Quigley, Executive Vice President and Chief Financial Officer; and Mark Wallace, Executive Vice President and Group President of On-Highway Driveline Technologies.
As always, copies of our earnings release and presentation have been posted on Dana's investor website. Today's call is being recorded, and the supporting materials are the property of Dana Holding Corporation.
They may not be recorded, copied or rebroadcast without our written consent. Today's call will include a Q&A session.
[Operator Instructions] Today's presentation includes some forward-looking statements about our expectation for Dana's future performance. Actual results could differ from those suggested by our comments here.
Additional information about the factors that could affect our future results are summarized in our Safe Harbor statement. These risk factors are also detailed in our public filings, including our annual, quarterly and current reports with the SEC.
I will now turn the call over to Roger Wood.
Roger J. Wood
Thank you, Craig, and good morning, everyone. I'm pleased to report that 2013 was another great year of operating performance for Dana.
As we pick up momentum in our business wins and product launches in 2014 and beyond, I'm really excited about the future. For 2013, we recorded sales of $6.8 billion, while net income for the year $244 million.
And diluted adjusted earnings per share were $1.77, about $0.01 per share better than our guidance. We improved our adjusted EBITDA margin to a record 11%, and this marks our fifth consecutive year of margin growth.
We also generated record free cash flow of $368 million, and we executed decisively on our $1 billion share repurchase program by returning $829 million to our shareholders in a little over 12 months. We've continued to execute on our remaining authorization thus far in 2014.
2013 was another year of innovation and new product development that culminated in Dana products being nominated for industry-coveted awards. Award-winning vehicles that our products help drive are being recognized as best in class.
Turning to Slide 5, I want to highlight a few of these award-winning applications. I won't go through the entire list, but you can see that Dana products are helping to drive award-winning vehicles in each of our end markets.
For example, the Motor Trend Truck of the Year, the 2014 Ram 1500 EcoDiesel, features a Spicer rear driveshaft, Victor Reinz exhaust gaskets and Long active warm-up technology, all of which significantly lowers fuel consumption and emissions by enabling engines to quickly reach optimum operating temperatures. The Chevrolet's Corvette Stingray, the 2014 North American Car of the Year, includes of variety of Dana technologies.
In addition to Victor Reinz exhaust gaskets, our heat shields suppress noise and protect from extreme heat with improved durability. Also, our Long brand oil coolers help to manage heat and ensure optimum operating conditions and long-term durability.
Spicer axles and driveshafts are the preferred spec in OEM data books for the 2014 medium-duty Commercial Truck of the Year, the International TerraStar 4x4. And Spicer front drive axles are featured on the CLAAS AXION 800, named the 2014 Tractor of the Year and Machine of the Year at Automechanica.
Dana also supplies technologies to 6 of Ward's magazine's 10 Best Engines, including the Fiat 83-kilowatt electric motor, where our battery cooler helps minimize temperature variation and improve battery operation. In addition to our award-winning products, Slide 6 highlights some of the often overlooked strengths of Dana, that is, our market reach, our regional diversity and our customer mix.
Ending 2013, our markets are very well balanced with about half of our sales coming from light vehicles, 1/3 from heavy vehicles and the remainder from off-highway vehicles. This breadth allows us to use our core technology across multiple end markets.
Regionally, we retain a very healthy split around the world in terms of where our sales are coming from: 12% in Asia Pacific, 15% in South America, 29% in Europe and 43% in North America. This diversity of markets, regions and customers gives Dana the scale and the reach necessary to serve the global marketplace.
So turning to Slide 7, let's review how those markets are shaping up for us in this year, 2014. As we look to 2014, we expect some incremental growth in our key end markets.
And we also expect that currency will remain a significant headwind, particularly in South America. Working our way around the world first, starting in North America, we expect continued solid demand for full-frame trucks and improving demand in Class 8 commercial truck production.
Europe, mostly impacting our Off-Highway and Power Technologies groups, we expect flat production for Off-Highway equipment compared to last year, while Power Technologies should benefit from a stable to slightly increased light vehicle production. Moving to Asia, Light Vehicle Driveline has our largest consolidated sales impact there, mostly in India and Thailand, and we expect some improvement in the production on a year-over-year basis.
In South America, the majority of our sales comes from Light Vehicle Driveline and Commercial Vehicle Driveline. We expect stable to slightly down year-to-year demand for heavy trucks and buses, principally in Brazil, and an increase in light truck production in the region benefiting, again, the Light Vehicle Driveline business.
We certainly expect 2014 to provide another year of currency and inflationary pressures in South America, with Venezuela again leading the way. As you all know, in the last several weeks in Venezuela, there have been changes in monetary policy and reduced access to hard currency, as well as increasing uncertainty and unrest.
Venezuela has recently announced a new multi-tier currency control system. And we're waiting to see how the automotive industry will be treated and what FX rate we'll be allowed to trade at.
What is clear, though, is that the automotive production is suffering from a lack of hard currency. We continue to work closely with our customers and suppliers as we move forward in evaluating our alternatives there.
To provide some sizing of the business for you in Venezuela, our 2013 sales totaled about $160 million, and our net assets in Venezuela are about $65 million. Overall, we see 2014 markets shaping up to be stable and providing some incremental growth for us, some of that mitigated by continued currency headwinds.
On Slide 8, we look beyond 2014 to our 3-year sales backlog, which provides our expectation of how Dana sales will evolve from 2013 to 2016 for the awarded business, which will come online during this 3-year period. Holding constant other factors like market demand, currency or pricing, and on a cumulative basis, we expect our 2013 sales to grow by about $560 million with awarded new business.
It's also important to note that this backlog is net of any known losses and excludes any replacement business wins. Our new products are driving these wins.
And just as our products have been recognized as part of award-winning vehicles, this new business backlog represents our customers' recognition of Dana's value proposition, and we remain diligent in ensuring that we continually meet and exceed their expectations. So on Slide 9, we summarize the Dana advantage.
As we continue our margin expansion and strong cash flow generation, we continue adding new business and investing in the future through technology and innovation. We're focused on providing superior returns to our shareholders.
With that, I'd like to turn the call over to Bill for a review of last year's numbers and, more importantly, where we expect to go this year and beyond. Thank you.
William G. Quigley
Thanks, Roger, and good morning, everyone. As you know, we announced our preliminary 2013 financial results in mid-January during the North American International Auto Show activities.
Our final results, which we'll review here, remain in line with that announcement. So let's move to our fourth quarter 2013 financial results.
As highlighted here, Dana's fourth quarter 2013 sales totaled $1.6 billion, about $15 million higher when compared to last year. This is the first quarter of 2013 where the comparison to 2012 is not impacted by Light Vehicle Driveline program roll-offs, nor of the Off-Highway divestiture of 1 year ago.
As I will highlight in the coming slide, volume increases and the effects of our recovery actions in the current quarter more than offset persistent currency headwinds. Adjusted EBITDA for the quarter was $174 million compared with $154 million last year.
Adjusted EBITDA margin for the quarter was 10.7%, representing a 110-basis-point improvement compared to 1 year ago. Net income totaled $42 million compared to $88 million 1 year ago, a decrease of $46 million.
But if you recall, Dana's 2012 fourth quarter results included a nonrecurring tax benefit of $54 million from the release of foreign income tax valuation allowances, which more than accounted for the comparison. Diluted adjusted EPS, which adjusts for restructuring, amortization and nonrecurring tax and other items, totaled $0.49 in the quarter compared with $0.38 1 year ago, the comparison benefiting from both increased earnings and a lower diluted share count, reflecting significant execution under our share repurchase program.
Capital spending for the quarter was $86 million, $35 million higher compared to 1 year ago as we head into a year of new business launch preparation. Free cash flow for the quarter was $198 million, $31 million higher than 2012, a result of higher adjusted EBITDA, improved working capital and lower pension funding, partially offset by higher capital investment.
Slide 12 presents the key drivers of Dana's fourth quarter sales and adjusted EBITDA performance compared with last year. As just noted, our fourth quarter sales and adjusted EBITDA results were higher by $15 million and $20 million, respectively, compared with 2012.
As highlighted here as well, each of our business segments contributed to the year-over-year margin improvement of 110 basis points. On the sales front, unfavorable currency of $45 million was mostly offset by higher volume and mix of $43 million.
We benefited from volume increases in all of our segments except Off-Highway, which continued to be dampened by soft mining demand and the effects of a customer in-sourcing compared to last year. We also released -- realized $16 million in pricing recovery actions in the fourth quarter, mostly in our Light Vehicle Driveline segment, to offset currency and inflationary pressures in South America.
The drivers of the increase in adjusted EBITDA of $20 million are highlighted on the lower right of the slide. Unfavorable currency of $1 million was offset by recoveries related to the devaluation of the bolivar earlier this year.
Volume and mix contributed an additional $7 million with a slightly lower incremental margin benefit, principally due to the effect of lower Off-Highway sales in the quarter. Performance, which included pricing and recovery initiatives as well as net cost efficiencies across all of the business segments, provided an additional benefit of $13 million.
In summary, we were very pleased with our fourth quarter results and the performance of each of our businesses. Now let's move to our full year 2013 results.
2013 sales totaled about $6.8 billion, $450 million lower than last year. As we have discussed throughout the course of 2013, the impact of Light Vehicle Driveline program roll-offs and the 2012 divestiture of the Off-Highway leisure products business were significant contributors to this comparison.
Unfavorable currency also provided a significant headwind during the course of the year. These 3 factors alone accounted for $377 million or over 80% of the comparison.
Adjusted EBITDA for the year totaled $745 million compared to $781 million last year. Adjusted EBITDA margin for the year was 11%, a 20 basis point improvement compared to 1 year ago.
This improvement reflects the success of our operations flexing our manufacturing cost structure and driving further efficiencies throughout the business, as well as the realization of actions to offset the impact of significant inflationary pressures in a number of geographies. Net income totaled $244 million compared to $300 million 1 year ago.
Yet, as we just covered for the quarter, $54 million of this comparison was attributable to nonrecurring tax benefits realized in the fourth quarter of 2012. Adjusting for this benefit, lower restructuring charges, higher equity earnings and other income provided an offset to lower adjusted EBITDA, as well as higher interest expense attributable to our 2013 capital market activities and a slightly higher effective tax rate.
Diluted adjusted EPS of $1.77 for 2013 compares with $1.75 1 year ago, as a lower diluted share count from execution of our repurchase program offset lower adjusted net income. Capital spending was $209 million, $45 million higher compared to 1 year ago.
And we continued to generate strong free cash flow, posting $368 million for the full year. Slide 14 provides a comparison of our consolidated sales and the change by business segment, as well as the key drivers of the year-over-year change for the full year.
On the regional front, North America's sales totaled just over $2.9 billion and represented 44% of total sales compared to 47% 1 year ago. Sales were lower than 1 year ago by about $413 million, with Light Vehicle Program roll-offs and the leisure products divestiture accounting for $218 million of that comparison.
While North America light vehicle volumes were higher in the year, benefiting both Light Vehicle Driveline and Power Technologies, lower commercial vehicle and off-highway end-market demand more than offset this favorability. Europe represented about 29% of total sales, or about $2 billion for the year, slightly lower than last year by $27 million, principally driven by lower volumes in our Off-Highway business.
South America sales totaled $983 million, or about 15% of sales, about $58 million higher than last year. Currency movements in Venezuela, Argentina and Brazil significantly impacted the comparison, lowering sales by about $161 million.
However, this headwind was more than offset by both recovery actions and improved commercial and light vehicle end-market demand totaling about $219 million. Asia Pacific sales totaled $834 million, or 12% of total sales, about $73 million lower than 1 year ago, reflecting unfavorable currency of about $23 million, principally attributable to the weakening of the Indian rupee and continued light and commercial vehicle weakness, mostly in India and Thailand.
The chart to the bottom left highlights the change in sales by business segment, while the chart to the right highlights the key drivers of the change. Currency lowered sales by $159 million, primarily impacting our Light and Commercial Vehicle Driveline businesses, $65 million of which was due to the Venezuelan bolivar.
For the full year, commercial vehicle recoveries -- or commercial recoveries related to the first quarter of 2013 Venezuela devaluation increased sales by about $5 million. Program roll-offs in Light Vehicle Driveline of $186 million and the Off-Highway divestiture in 2012 of $32 million accounted for $218 million of the year-over-year change in sales.
Volume and mix lowered sales by about $141 million. Volume increases in Light Vehicle Driveline and Power Technologies were more than offset by weaker OE and aftermarket mining demand and the impact of a customer in-sourcing action, which contributed to lower Off-Highway sales of about $179 million.
Similar to the sales review, Slide 15 provides a comparison of adjusted EBITDA, with the year-over-year change by business segment presented at the bottom left and the key drivers of the change presented to the right. In the fourth quarter, we recovered an additional $1 million of the Venezuela currency devaluation that occurred in the first quarter of 2013.
For the full year, we recovered about $10 million of the $11 million devaluation impact. Our South American team has done a great job in a certainly difficult operating environment.
As with the fourth quarter, the impact on adjusted EBITDA of lower volume and mix reflected lower sales in our Off-Highway business, which, as you know, has a relatively high contribution margin. Performance, which includes the impact of our pricing, cost performance and recovery actions, improved adjusted EBITDA by $37 million compared to 1 year ago.
The next 2 slides highlight the sales and EBITDA performance of each of our business segments, starting with Light Vehicle Driveline and Commercial Vehicle Driveline on Slide 16. Light Vehicle Driveline sales of about $2.55 billion were lower by $194 million or about 8% compared with last year.
Currency and program roll-offs lowered sales by $127 million and $186 million, respectively. Partially offsetting these factors were higher sales volumes in North America, the United Kingdom and Argentina, as well as pricing actions principally related to recovery of inflation in Venezuela and Argentina.
Segment EBITDA was $242 million in the quarter, $21 million lower than 1 year ago. Segment EBITDA margins for the year was 9.5%, down slightly from last year, strong performance given the inflation and currency movements experienced during the course of the year.
And lastly, on the performance line, pricing and other actions increased sales by about $70 million, largely driven by the recovery of inflation in our South American operations. The performance impact on EBITDA was slightly negative due, in part, to the timing of inflation recoveries.
Commercial Vehicle Driveline sales of $1.86 billion were lower by $100 million or about 5% compared to 1 year ago. Currency lowered sales by $51 million mostly due to the weakening of the Brazil real and India rupee.
Volume was lower by about $40 million, reflecting lower demand in North America and India, partially offset by improved demand in South America. Segment EBITDA was $194 million, $5 million lower than last year.
Due to some gains on currency transactions in Argentina, which more than offset currency translation effects, currency was a positive $2 million, while lower volume in North America and mix in Europe lowered EBITDA by about $9 million. Performance, largely driven by net material savings, was a positive $2 million.
Segment EBITDA margin of 10.4% improved 20 basis points compared to 1 year ago. Turning to Slide 17.
Off-Highway Driveline 2013 sales totaled about $1.33 billion, lower than last year by $179 million or about 12%. Favorable currency of $27 million and pricing of $5 million offset the impact of the 2012 leisure products divestiture, while volume and mix was $179 million lower, principally driven by lower mining equipment and related aftermarket demand, as well as the impact of an in-sourcing action by a customer completed earlier in the year.
Off-Highway posted segment EBITDA of $163 million, or a margin of 12.3%, just slightly lower when compared to 2012. Net cost efficiencies totaled $27 million, significantly tempering the margin impact of lower volumes.
Power Technologies sales of $1.03 billion were higher than 1 year ago by about $18 million, driven by increased volume in North America as well as in Europe. Segment EBITDA of $150 million was $13 million higher when compared to 1 year ago, reflecting the impact of higher volumes and improved cost performance.
Segment EBITDA margin was strong, ending the year at 14.6%, a 110-basis-point improvement compared to last year. Free cash flow was a record $368 million for 2013 and $193 million higher than last year, still $43 million higher if you take into account the $150 million voluntary pension contribution we made earlier in 2012.
Working capital generated about $116 million in 2013 compared to a slight use of $10 million 1 year ago, reflecting each business' continued focus and execution of inventory reduction, supply chain and customer account management initiatives. Capital spending was $209 million, $45 million higher than 1 year ago, as we ramped up investments to support new programs and add gear manufacturing capacity in Asia.
Net cash interest was $33 million for the year, $31 million lower than last year, reflecting $26 million of previously accrued interest income on a note receivable payment received in the second quarter of 2013. Cash taxes were $136 million, about $38 million higher than 1 year ago, largely reflecting the timing of estimated tax payments as well as jurisdictional profitability.
Restructuring cash outflows totaled $40 million, about equal to last year. And the pension contributions in 2013 were $60 million compared with $220 million 1 year ago, which included the $150 million voluntary contribution to our U.S.
pension plans. Of this year's contribution, about $40 million was directed to the U.S.
plans. At the end of 2013, the funded status of our U.S.
plans stood at about 91%. Slide 19 highlights our cash, debt and liquidity positions at the end of 2013.
Cash and marketable securities totaled $1.366 billion, while outstanding debt was $1.624 billion, resulting in a net debt position of about $258 million. The increase in debt compared to last year reflects the issuance of $750 million of senior unsecured notes in August of 2013, the proceeds of which were used to accelerate our $1 billion share repurchase program.
At the end of 2013, total liquidity stood at $1.57 billion, including $231 million of availability under our U.S. credit facility.
As noted here as well, in 2013, we returned $872 million in capital to our shareholders via dividends, share redemptions and repurchases. As you all know, 2013 was a very active year on the capital structure front, and the next slide highlights the results of our initiatives.
Post increasing our share repurchase program to $1 billion in June of 2013, we returned $814 million to our shareholders in the form of repurchases and redemptions. Since the inception of our share repurchase authorization in late October 2012, we have returned $829 million of capital and have lowered our diluted share count by 39 million shares, including the redemption of all of our Series A preferred shares.
And at the end of 2013, we had $171 million remaining under our authorization, and we continue to be in the market in a consistent and disciplined manner. As part as our capital structure actions, we refinanced our undrawn U.S.
ABL, issued $750 million in unsecured notes at favorable rates and, at the end of the year, retired our European credit facility, lowering our overall borrowing cost as well as improving our flexibility. The result of all these actions is that our balance sheet remains very strong, providing us the continued flexibility to continue to invest in the business as well as drive further shareholder value.
Leaving 2013 behind, Slide 21 provides our full year financial targets for 2014. Our guidance is unchanged from what we presented in mid-January, other than an increase in our free cash flow range, which I'll address in a moment.
We expect sales for 2014 to be in the range of $6.8 billion to $6.9 billion, reflecting the market expectations that Roger highlighted in his comments, as well expected currency impacts. We expect adjusted EBITDA to be in a range of $760 million to $770 million, providing a margin of 11.2%.
We expect diluted adjusted EPS of about $1.82 to $1.86 based on about 179 million of diluted common shares outstanding, which does not factor in any further share repurchases that we execute in 2014. Capital spending of $210 million to $230 million reflects a slightly higher level for new program investment.
And we expect to generate free cash flow in a range of $275 million to $295 million, which, I'll note here, is an increase to the guidance we presented in January, as we concluded the sale of our remaining interest in an outstanding note receivable in the latter part of January, the proceeds of which included previously accrued interest of $40 million. We have highlighted at the bottom of the slide several additional cash flow drivers, which, other than lower net cash interest, remain unchanged from our January update.
Our currency assumptions remain unchanged and represent about a $220 million headwind compared to 2013 on the sales front. And we certainly will continue to monitor recent currency movements and will make the necessary revisions to our expectations when we report our first quarter earnings later in April.
Our targets by business segment are listed on the right as well. While we expect the top line to be fairly stable year-to-year, taking into account currency and market growth, we do expect each of our business segments to either maintain or improve margins during the course of 2014, reflecting continued execution of productivity actions, which will serve us well in the event end markets perform above our expectations during the course of the year.
We view 2014 as a very solid year as we begin our ramp-up to new program launches, and further solidifying our position as we look to the future. And finally, turning to Slide 22, we are reiterating our 2016 sales and adjusted margin targets that we provided in mid-January.
During this period of time, we expect sales to grow by about $1 billion to around $8 billion, fueled by our sales backlog Roger spoke to coming online, as well as expected market demand and other factors. And as you also know, over the last several years, Dana has increased its margin performance year in and year out, even in circumstances of lower sales, by continuing to focus on product realignment and cost efficiencies, and we expect to capitalize upon this foundation as sales increase during this period of time.
We expect our sales backlog to come online at higher margins. And as our end markets expand, we expect our operating leverage to provide further margin expansion moving forward, all the while continuing to work our manufacturing materials efficiencies to both offset inherent inflation in the business as well as to further our margin targets.
Given these factors, we expect an exit margin rate in 2016 of between 13% and 14% as we execute against our objectives during this time period. I'd like to thank you all for our comments.
And now I'd like to return the call to the operator for any questions.
Operator
[Operator Instructions] Your first question comes from the line of Patrick Archambault with Goldman Sachs.
Patrick Archambault - Goldman Sachs Group Inc., Research Division
Yes, I'm sorry. I missed the first 5 minutes of the call.
But actually, I had one question on Brazil. One of the things that we've been hearing is that the mix of vehicles is kind of shifting around based on regulations that have changed, I think, regarding the medium-sized trucks and where they can operate, all that stuff.
Can you comment a little bit on that and the impact on you guys, just given how you're positioning there? And then I have one sort of housekeeping one on FX on Slide 12 afterwards.
Roger J. Wood
Sure. Why don't you take a shot first?
Mark E. Wallace
It's Mark Wallace. Year-over-year, we're still expecting a slightly lower market in Brazil.
So therefore, we haven't seen anything significantly changing our outlook at this stage in Brazil, but we are expecting it to be lower than 2013.
William G. Quigley
Yes. And probably from a mix perspective, Patrick, I think we'd still see probably an uptick in bus sales.
I'm not sure if that's the mix item that you were referring to. But certainly, I think the financing environment remains pretty strong in Brazil, so we're not really seeing much of a change currently, obviously, with respect to that market in particular.
Patrick Archambault - Goldman Sachs Group Inc., Research Division
Okay. No, I was just -- I think the stuff that's been growing fastest, I think, has been sort of the heavier and the lighter side, and I don't know if that impacts you in any way.
I mean, maybe, you do it all, right?
William G. Quigley
We do.
Patrick Archambault - Goldman Sachs Group Inc., Research Division
So perhaps, yes. And just on Slide 12, I guess as we're going through the walk for the fourth quarter performance on an aggregate basis, you have this fairly significant tailwind from a revenue perspective from FX, but the drag from an EBITDA perspective was kind of small.
Maybe can you kind of walk us through why that is? And then maybe also, just piggybacking on that, like maybe talking a little bit about -- not to make this entirely focused on Brazil but the real, right, which was devalued.
Now what's -- how much of that is transactional? How much of that is translational?
When you see those kinds devaluations, like sort of what sort of margins should we be thinking about for that particular region? That kind of color would be helpful.
William G. Quigley
Sure. And really kind of pointing to Slide 12, Patrick, you can see the impact on the sales side was a downdrift of about $45 million, and I think your question is around the impact from an FX perspective of about $1 million.
That's obviously net translation as well as offset by some transaction gains in Argentina that we executed during the course of the quarter with respect to funding. So that did mute the impact, if you will, a bit on the currency front, probably about $2 million or $3 million or so in that period of time.
So that's a net number, both the impacts of transaction as well as translation. And I think the flow-through on the pricing recovery front to the performance front, as you know, Light Vehicle Driveline in particular has been executing in a recovery action with respect to inflation in South America.
And you see basically, if not entirely, or all that pricing relates to Light Vehicle Driveline. And it is flowing through into the performance line, but it's basically offsetting inflation inherent in that region of about $14 million.
With respect to your last question on the movements in currency, we've certainly seen some movements not only in Brazil, but certainly in Argentina as well as Venezuela. The impact from an EBITDA perspective, if you think about it, is going to be in line with the performance of our business overall in that region, largely in commercial vehicle.
And if you think about that with the capability that we have in Brazil, and I'll just kind of point to the SIFCO arrangement, it's a lower margin business in general because of the value-add that we provide there. So it doesn't have really a significant impact, but we're certainly focused on the movements of currency not only in Brazil, but certainly overall in South America.
But it won't have the same type of impact as the overall commercial vehicle EBITDA margin.
Patrick Archambault - Goldman Sachs Group Inc., Research Division
Okay, great. And if I can sneak one more.
Obviously, with your leverage where it is, and your cash flow guidance raised, you've got a good amount of balance sheet optionality. Can you tell us a little bit more about where your kind of cash liquidity uses are in terms of priorities?
And maybe just touching on a topic that came up before, is there kind of an overall target leverage number that you might throw out there, where you might be comfortable? Because clearly 0.3x is fairly low.
William G. Quigley
Yes, just -- this is Bill again, Patrick. To -- probably to your last point with respect to a target, we've been pretty open about that with respect to not establishing a formal target externally.
We certainly feel very comfortable with respect to our financial position from a liquidity perspective and from a net leverage perspective. Currently, we're going to continue to execute upon the remaining authorization we have from a share repurchase perspective.
And I think as we move forward during the course of 2014, to your point, we're going to continue to invest in the business, but we're also going to continue to generate significant cash in excess of that investment. We continue to evaluate how we move forward here with respect to that cash flow.
And I think as we continue to move into 2014, all I can say is it's top of mind, not only from a management perspective but from a board level, and we'll continue to do the right things from a shareholder value perspective. And we've made this comment many times in the past.
If we don't have a higher and better value proposition for that capability, we certainly have the means now with respect to either dividends or share repurchases to return value to the shareholders.
Operator
Your next question comes from the line of Brian Johnson with Barclays.
Brian Arthur Johnson - Barclays Capital, Research Division
I just want to hit a couple more, 2 or 3 more strategic areas. First, what are you expecting vis-à-vis the CAFE-like regulations for on-road trucks?
And is the reality, we've all been expecting this, beginning to set in on your customers and affecting some of the order rates for things like the Spicer axles?
Roger J. Wood
Yes. So Brian, this is Roger.
I -- if I heard your question correctly, it's about the CAFE regulations and the fuel economy requirements that are coming down the road. As we look at 2016 and beyond in 2017, they received actually just the other day a heightened focus on it, if you will, from the government, if you will.
And we see that as positive, not only because of the impacts of better fuel economy and cost savings for the operators of the vehicles, but good motivators, if you will, for the deployment of the technologies that we've been focusing on over the last several years. We focus our engineering investments specifically targeted toward the value it can bring by increasing the fuel economy of these vehicles.
And the backlog that we've talked about here that we're launching into the market, predominantly all of those products that we are launching to effect that above-market growth rate, if you will, are because of fuel economy and emissions reductions. So we see them tightening, and we also see a continued greater and greater interest, on our customers' level and their customers' level, to make sure that they have the technologies, if you will, to meet them.
Brian Arthur Johnson - Barclays Capital, Research Division
So this would be more of a midterm driver clearly?
Roger J. Wood
One more, sorry.
Brian Arthur Johnson - Barclays Capital, Research Division
This -- would this be kind of reflected in your 2016 guidance? Or it's really beyond that window?
Roger J. Wood
Well, it's -- yes, the 2016 target that we have out there certainly does have these technologies in it. And that's what's allowing us to start to break away from the market that we talked about at the conference in Detroit.
But also, that will be a continuing trend as we move forward, not only in the commercial trucks as we move forward but, as you know, on the pass cars, business people are really gearing up for the 2025 requirements and needing to implement those things later in this decade.
Brian Arthur Johnson - Barclays Capital, Research Division
Second question, on pickup trucks. Ford has announced a capacity increase in Kentucky truck, which I believe is a plant you serve for the Super Duty platform, yet you kept your full-frame truck forecast flat.
Are you optimistic that there's upside there?
Mark E. Wallace
It's Mark Wallace. That number is all full-frame vehicles.
But when you look at our specific platforms, we are expecting the Super Duty production to be up quarter-over-quarter and year-over-year as well.
Brian Arthur Johnson - Barclays Capital, Research Division
And -- okay, so that's -- and so that's already -- was that capacity increase contemplated in your guidance you just gave us?
Mark E. Wallace
Yes, basically we had that already contemplated because Ford, last year, had let the supply base know there was an expectation of uplift coming in, in Q1 and Q2 with the Super Duty.
Brian Arthur Johnson - Barclays Capital, Research Division
And similarly, the Colorado Canyon is reflected in your guidance?
Mark E. Wallace
Yes, that will launch later this year, in Q3.
Roger J. Wood
Yes.
Brian Arthur Johnson - Barclays Capital, Research Division
And a final question. You made a comment in an earlier Q about stepping up your focus on aftermarket.
Can you maybe kind of just recap what percent it is now, where you expect that to go and kind of the margin and, to some extent, the working capital profile of that?
William G. Quigley
Yes, Brian, it's Bill. I mean, the aftermarket continues to be an important element really across all the business units with respect to not only margin profile current but also, I think, expectation moving forward.
The total number right now, let's say, is about $950 million in total sales, most dominantly, obviously, if you'll think about it from a PT perspective,,then into Off-Highway and the Commercial Vehicle, not so much in Light Vehicle Driveline, just given the products. So that certainly is a continued focus for the company moving forward.
And quite frankly, I think over that 2014 to 2016 performance period, our expectation is that market in particular will also provide some bolstering not only from just overall sales, but from a margin perspective. As you know, from watching other aftermarket -- or suppliers in the market, those margins tend to be higher, and that certainly is the case for Dana.
And it will certainly be a margin contributor moving forward.
Roger J. Wood
So to build on what Bill was saying, Brian, on the aftermarket for the future, we would expect that the aftermarket percentage of our business will keep pace with the growth that we see in the business. So we wouldn't see it materially change, but it certainly wouldn't fall backwards.
It would continue on the same path.
Operator
Your next question comes from the line of Colin Langan with UBS.
Colin Langan - UBS Investment Bank, Research Division
Any color on the quarter-over-quarter decline in Commercial Vehicle margins? Sales seem to be slightly up.
Well, why did margins sort of deteriorate a bit?
William G. Quigley
Yes, Colin, this is Bill. Let me take a quick look for you and take a look at the quarter-over-quarter you're looking at, right?
Colin Langan - UBS Investment Bank, Research Division
Yes, and I think it went from 11.2% to 9.1%, so.
William G. Quigley
Yes, I think largely around that is -- if you take a look at it just from a flow-through perspective, there's some margin impact there as well as just some, I would say, kind of, I'll call them performance issues, for lack of a better word, that were kind of onetime events. We certainly include those types of events in our segment EBITDA roll forwards.
So I think it was more isolated to the quarter and not a run rate. But a slight margin impact there.
Colin Langan - UBS Investment Bank, Research Division
And when we look at other income, it seems to be up quite a bit year-over-year within the quarter, I think, by $7 million. Anything -- what is really in other income?
And what will be driving that unusual...
William G. Quigley
Yes, what's included in other income, Colin, this is Bill again, is we also include interest income in other income. So if you think about 2013 and 2012, it's about $25 million of the composition there with respect to other income.
The pickup that you're referring to is we did have some pickups from insurance recoveries in the quarter, as well as some transaction gains with respect to the discussion we had on Argentina. So that also was included in that caption.
Colin Langan - UBS Investment Bank, Research Division
Okay. I'm looking at your guidance for next year.
Your -- you raised your free cash flow guidance, but it is still down from your very strong cash flow this year, even though EBITDA is slightly up. Any reason why cash flow is not up in line with EBITDA?
William G. Quigley
Yes, it's largely around on the working capital performance. If you kind of look at it year-to-year as we move forward, we're not at least expecting to be in a position to generate as much working -- capital from working capital as we did in 2013.
We've got a number of initiatives underway with respect to, I'll say, supply chain initiatives that will require some additional working capital as we proceed the year. And as you know, working capital, at the end of the day, just ends up at the fourth quarter on how you look at those sales on a year-over-year basis.
So part of it is just the timing of sales quarter-to-quarter from Q4 2014 versus 2013. But we do have some very keen and important supply chain initiatives which will feather in some additional working capital during the course of the year.
Colin Langan - UBS Investment Bank, Research Division
Okay. And just one last question.
On the -- there's been a lot of headlines around light-weighting, particularly with the new F-150 with aluminum. And obviously, you have some lightweight axles.
I got the impression that the traction there was more on the commercial side. Any update on the potential for light-weighting on the light vehicle side?
Is that something that's in your backlog? Is there a lot more interest at this point?
Any change there based on the new focus?
Mark E. Wallace
Yes. It's Mark Wallace.
I think the demand in the passenger car market has been quite strong for light-weighting already as we continue to utilize aluminum as well as continue to reduce the actual weight of the overall axle by reducing the size of the axle and increasing the torque-carrying capability. So we're already working in that direction, and we've included that in our backlog as well.
Colin Langan - UBS Investment Bank, Research Division
I mean, is there business in the backlog won on the light vehicle side for lightweight axles?
Mark E. Wallace
Yes.
Operator
Your next question comes from the line of Patrick Nolan with Deutsche Bank.
Patrick Nolan - Deutsche Bank AG, Research Division
A couple of questions. First one, I know it's difficult to put brackets on this, the volatility you're seeing with some of the currencies.
But can you give us an idea of how you see the trajectory of margins playing throughout the year? Are you expecting a 20-basis-point improvement for the full year?
Should we think that kind of improvement is pretty consistent quarter-to-quarter? Or, I mean, the way you see the world today is, one quarter, we could see a down year-over-year margin and the rest are kind of up more than that?
Just any color you can provide would be helpful.
William G. Quigley
Yes. Sure, Patrick, it's Bill.
If you look back probably over the last 2 years, I think you see that margin kind of move from first quarter, higher second quarter, and it kind of drifts -- moves forward from there into year end. Currency certainly is going to have an impact as we move around here during the course of 2014.
But certainly, I would say almost from a volume perspective, it'll move with the volume that we have per quarter because, as you know, from a contribution margin perspective, improving sales quarter-to-quarter certainly drives up our margin. And so I don't think it's anything unusual.
I think it's probably similar to the same glide path, if you will, if you kind of compare 2013 x a devaluation in Venezuela of 2013 and what may or may not occur as we move forward here with respect to that country. But I don't think there's anything unusual with respect to the trend, if you will, of a margin improvement of 20 basis points during the course of 2014.
Patrick Nolan - Deutsche Bank AG, Research Division
That's helpful. And Roger, could you just talk about how, from a high level, you're viewing the business in Venezuela?
I mean, it's a relatively small part of the revenue, but it seems to be kind of an outsized distraction and it's impacted your results, at least the volatility, throughout the year. I mean, some of your customers have talked about potentially getting out of that market.
How do you view that business today? Is it even profitable today?
Or is it loss making?
Roger J. Wood
Yes. Well, under normal conditions, Patrick -- it's a very good question.
And under normal conditions, it's a good business for us there. Because of the way we run our business, we make sure that everywhere in the world we operate, that we operate with the intention of getting the appropriate returns for our shareholders, and it's no different in Venezuela.
Obviously, the conditions in Venezuela right now are a bit difficult because of what's going on in the country itself, both on the currency side as well as the political unrest a bit. So as we evaluate our options -- and in my comments, I did talk about the fact that we were evaluating our options, and we are.
We're working closely with our customers and suppliers to make sure that our global customers can be served from either inside the country or outside the country if their desire is to continue building in the country. So our main motivation is to make sure that we can take care of our customers.
Whether we do it from inside or outside is something that we're evaluating right now, and that evaluation is going to be predicated on the fact that we're going to run a good, sustainable business from wherever we supply from. So that's how I think about it.
We're obviously watching the day-to-day events unfold, and we are in active discussions with all the parties involved to make sure that we end up in a place that it remains to be a good business, again either inside or outside.
Operator
Your next question comes from the line of Joseph Spak with RBC Capital Markets.
Joseph Spak - RBC Capital Markets, LLC, Research Division
Roger, maybe just at a high level, going back to something Brian was talking about earlier with the proposed regulations on medium- and heavy-duty trucks. Is the longer term opportunity there mostly on the light-weighting side, weight reduction?
Or do you see an opportunity there to potentially be maybe even a little bit acquisitive for some other technologies, whether it be engine or powertrain efficiency or some other accessories or something else to sort of help customers meet those goals?
Roger J. Wood
Yes, yes, a great question, Joe. So we think about it on a number of fronts.
Certainly, light-weighting is an opportunity for us because the products that we supply to our customers are relatively heavy products. And so there's a big opportunity for us to utilize our technologies, and as Mark had alluded to earlier, gearing technologies, which allow us to supply a smaller package with the same or greater torque-carrying capacity.
That certainly provides a great way to light-weight, and that's where a lot of our new business wins are coming from, because we believe that we are able to lead the industry in that kind of an initiative. But also, we look at being able to utilize the driveline to effect changes in the engine, if you will, in terms of downspeeding.
While we don't supply engines, we certainly supply the levers in the driveline that enable engine makers to downspeed. And that is a lot of what we're focused on as well, to look at the entire vehicle as a system and how we can effect it, using the expertise that we have on the inside of the company.
So that's another big way that we can effect and deliver value to our customers. Thirdly, you mentioned acquisitive opportunities, and that is an area that we look at.
As Bill, I think, had mentioned earlier, part of our capital deployment strategy for sure, after running and taking care of the current business, is a strong focus on M&A. And the opportunities that we look at in M&A are geared toward things like fuel economy aspects, meeting the regulations and total cost of ownership for the end customers.
And so, we would look at that. But as I've said quite a few times before, we're going to stay in our sandbox, if you will, so that any acquisition that we make, we can effect the expertise that we have in the company to provide a better value ultimately for our shareholders.
So we are looking at all those, and we have some really good opportunities in each one of those different areas.
Joseph Spak - RBC Capital Markets, LLC, Research Division
Okay, great. And then just maybe a little bit more near-term on -- I realize it's only been 2 months, but the Class 8 orders have obviously been quite strong.
And I think you would annualize to something well over 300,000 units versus your 260,000 to 270,000. I guess just maybe if you can provide a little bit more color what you're hearing, seeing here in February on what your customers are thinking as we look a little bit further out.
And what really would it take for you to get a little bit more constructive on that outlook?
Mark E. Wallace
Joe, it's Mark Wallace. Actually, volumes are remaining consistent with what we've seen in January.
At this stage, given that it's so early in the year, we're going to maintain our guidance. There's still a lot of time to go in this year and things can change significantly in the Commercial Vehicle market.
So at this stage, we're holding our full year forecast around 265,000 Class 8 vehicles.
William G. Quigley
And Joe, it's Bill. Just -- and to your point, we think the last 2 months are very positive factors, though.
But as we kind of move through a very early part of the year, we're keeping our nose to the grindstone here a little bit with respect to operating the business, in particular Commercial Vehicle Driveline, that business unit, with that kind of forecast. And when and if and hopefully will, if we see an escalation in orders, there's certainly a lot of factors pointing to that potential, we're going to be well positioned to capitalize on that with respect to production and capability.
So let's hope, as we move forward here, and -- that we're proven wrong with respect to our full year guidance. But certainly, positive factors over the last 2 months certainly points to the potential for some upside.
Joseph Spak - RBC Capital Markets, LLC, Research Division
Maybe one housekeeping, if I could just sneak it in. You usually provide the DDAC revenue.
I didn't see it in the slides this quarter. So maybe you can provide that.
And then secondly, the Venezuela figures you mentioned for 2013 in sales and net assets, is that at the 9.50 rate that you're using for your '14 guidance? Or was that at '13 rates I guess?
William G. Quigley
Yes, Joe, that would be at the official rate, which is still at 6.3, right? And then with respect to DDAC, sure we can provide that real quickly here.
It'll be in our formal SEC filings here, hopefully, later this afternoon. But 2013 sales for DDAC ended up at $839 million.
This is full year. That's a comparison to 2012 of about $683 million.
So up about 23%. And then from an equity income perspective, positive equity income.
That's equity income to Dana, obviously, the 50-50 arrangement, of about $7 million. And you'll recall 1 year ago it was at a loss of about $1 million.
So up about $8 million. So we certainly saw during the course of 2013 some uplift on the Commercial Vehicle front as well as the bus front in China, for which DDAC serves very importantly.
Operator
Your next question comes from the line of Brett Hoselton with KeyBanc.
Brett D. Hoselton - KeyBanc Capital Markets Inc., Research Division
On the acquisition front, I think you've kind of described the -- or characterized what kind of acquisition you're looking for. My question is kind of how hard would you characterize yourselves as looking for an acquisition?
And what are you finding out there? Is there something that you may -- should -- would we -- or should we be surprised if you were to consummate an acquisition in 2014 for example?
Roger J. Wood
Well, as we talked about before, Brett, an acquisition is not something -- usually not something that is something where we start the relationship 1 month and, 2 months later, consummate the deal. That's something that we usually have a relationship that is ongoing for a few years, and we have those discussions going.
They're always going all the time. So I guess I wouldn't be surprised if it happened in 2014 because the potential always exists.
We've been in some of these discussions for quite some time on some of these, and we -- the 2-year time frame is a good one that we've been in some of these discussions. So I probably wouldn't be surprised if something did happen in 2014 that fit within what we have been saying for quite some time now.
Brett D. Hoselton - KeyBanc Capital Markets Inc., Research Division
Okay. And then can you talk -- and maybe this is for you, Mark, but can you talk a little bit about the concept of downspeeding?
And what does that actually entail?
Mark E. Wallace
Yes, Brett, as you downspeed the engine, the amount of torque then going to the driveline increases significantly. So with -- basically, as you continue moving the RPMs down, as the torque increases, within reason, you would have to have a driveshaft so large it wouldn't fit on the vehicle.
So you have to optimize the rest of the driveline in order to be able to manage that torque and also provide both what I call a slow or cold start, as well as what we call fast ratios for the final drive. So there's a lot more things that we can -- that we're working on and can be done in a complete driveline in order to offer the Commercial Vehicle customers a way to get the engine downspeed down into the 900 RPM, et cetera.
Brett D. Hoselton - KeyBanc Capital Markets Inc., Research Division
And then, Bill, finally, as we think about your cash balance and so forth and your ability to deploy that, are there any particular restrictions or limitations, maybe tax-wise or otherwise, on that?
William G. Quigley
Tax-wise, probably not so many restrictions there. Obviously, we're a global company.
Obviously, we've got cash around the world. We tried to highlight the distribution of the cash on Slide 19, Brett.
Obviously, a goodly bulk are sitting in North America currently. There are some restrictions on cash.
We've highlighted those there with respect to items that we're -- that we'd hold back with respect to cash balances in certain subsidiaries around the world. We certainly have JVs, for example, that are consolidated, but there's minority interests.
But in general, no significant restrictions on the size, if you will, given the size of the cash balances, that would inhibit significantly our moves forward not only from investment in the business but, to Roger's point, if an acquisition was to present itself that made a lot of economic sense to Dana, as well as go forward with respect to capital structure actions.
Operator
Your next question comes from the line the John Lovallo with Bank of America Merrill Lynch.
John Lovallo - BofA Merrill Lynch, Research Division
First question would be, I mean, is it fair to assume that there's been some shift in your mix of Off-Highway revenue, perhaps away from mining and towards -- maybe towards agriculture? And if that is the case, do you anticipate any effect on profitability there?
William G. Quigley
It's Bill. There certainly has been a mix shift with respect to the current demand environment in mining.
That really kind of escalated last year, and we're expecting that to mute -- remain fairly tepid this year. So that certainly is moving into construction and the ag side of the house with respect to the current mix.
But I think we still look to the future with respect to mining is going to come back. Is it a 2014 midyear event?
Probably not. At least that's our expectation.
If it is, well positioned. But again, latter part 2014 into 2015, we don't think that's a structural and permanent mix shift.
It's just mix shift around demand environment, a certain segment, if you will, of Off-Highway. But it certainly has moved to ag and construction, given the current mining demand environment.
Roger J. Wood
This is Roger. Maybe I could just build on what Bill has said about that question, that one of the things that we're so excited about for that particular business is that team has done a really outstanding job in an environment of this mix shift.
The mix shift isn't happening in the future. It's already kind of happened because the market in mining has moved significantly in the last 1.5 years or so, and not in a good direction.
But that said, it's moved and that team has done a phenomenal job with that business unit and managing it. So we are remarkably well positioned right now because the mining market will come back.
We're just not sure whether it's going to be this year or next year. We don't think, as Bill had said, it's probably going to be in the near term.
But it will come back at some point. And when it does, that business is really well positioned to take care of it.
John Lovallo - BofA Merrill Lynch, Research Division
Okay, that's very helpful guys. Next question would be, we're hearing more and more talk about a potential slowdown in China.
I was kind of curious what you guys are seeing on the ground there.
Mark E. Wallace
John, on the passengers car front, we still see output increasing on basic passenger cars. But definitely, we will see muted volumes on -- in the commercial vehicle market on a go forward basis.
I still -- I think we're in a wait-and-see mode on what happens in the macroeconomic situation in China. But at least in the near term, we do expect passenger cars to increase and we expect Commercial Vehicle to be down slightly.
William G. Quigley
Yes. And John, it's Bill.
Just to cover the CV with Mark's comment as well. I think 2013 was a good year on the CV front from a DDA perspective -- DDAC perspective, certainly in Commercial Vehicle.
There has always been a continued kind of pushout of when Euro regulations will actually be implemented in China. So again, it's kind of a -- we're kind of calling it kind of flat to slightly maybe down, but I think that can certainly move the needle a bit with respect to when those regulations are formally instituted, or at least a timetable for formal institution of them.
John Lovallo - BofA Merrill Lynch, Research Division
Great. If I could just sneak one last one in here.
Are you guys expecting any kind of upward pressure on automotive-grade aluminum from an industry standpoint, given Ford's kind of push into more aluminum on the F-150?
William G. Quigley
Yes, I think there's certainly going to be some pressure there with respect to aluminum. That really impacts our Power Tech Group almost probably exclusively, right, with respect to that particular commodity.
But at the same time, I think our guys do a pretty good job of locking in contracts ahead of time, so on and so forth. Near term, that may be a longer term issue with respect to aluminum and related capacity in the market as GM looks to also introduce a similar vehicle.
But I'm sure the aluminum producers will also look to add capacity at the same time. So near-term pressure, probably not so much from a Power Tech perspective or a Dana perspective.
But I think over time, as that material unfolds and is proven successful in the market, I think capacity will follow demand.
Operator
Your final question comes from the line of Ryan Brinkman with JPMorgan.
Ryan J. Brinkman - JP Morgan Chase & Co, Research Division
It looks like about half of your 2014 through 2016 growth is being led by new business backlog. The general notion in the industry is that, of course, that backlog business is onboarded in its first year at a lower-than-typical incremental margin on launch costs, et cetera, although I think you point greater returns on this backlog business.
So is it true as well for the first year that the business is onboarded that you will enjoy the higher returns? And then maybe just more broadly, can you help us think about some of the ways that these products are different that they can carry structurally higher margins?
William G. Quigley
Yes, I'll let Mark talk about the structurally higher margins with respect to -- or Roger with respect to the products that were introduced in the market. I think on the front end, you're exactly right, Ryan, there are always some inefficiencies when you launch a product, a new product and a new program in the current year.
That inefficiency, if you will, over a 2-year period, we reflect that in our expectations and an exit rate. I think if you look back probably at Dana from a perspective of calling out significant inefficiencies due to program launches and so forth, it's really not been the case.
But make no doubt about it, there's always a year of production, first year, and then you get your footing, if you will, or gain your scale as you move forward. So that's already kind of in our exit rates.
It's not a significant portion of a walk from today to tomorrow, but certainly embedded in our move forward on the margin front.
Roger J. Wood
Yes, I think it's important to distinguish between normal start-up costs and the minor quirks that you sometimes see in launches from a first or second year lower-level profitability due to just volumes. I think the first one certainly plays a part, as Bill had said.
But the second one really doesn't from our perspective, because we're not -- we don't price our products in the marketplace to wait for the highest level years before we start making money. That's not the way that we approach this.
We approach this that we're going to be fair to our customers and to our shareholders throughout the cycle. Obviously, in the first few months, maybe you're only going to have a few parts.
But after the first few months of launch, you got to be in a position of getting your returns at that point in time. And so that's the way we plan our pricing products.
Ryan J. Brinkman - JP Morgan Chase & Co, Research Division
Great, that's very helpful. And then just last question.
I know we're going over. Can you talk about how we should think about the cadence of repurchases evolving in 2014?
And just given your prior accelerated share repurchase, I'm curious if you would consider doing something of that type again.
William G. Quigley
Yes, Ryan, it's Bill. I think with the remaining authorization, I think it'll be very consistent.
So back to the comments, it's $170 million-plus remaining authorization heading into the 1st of 2014. I think that'll be -- at least as we say right now or see right now, given the markets as well as our cash flows, I'd say it's going to be a fairly consistent and disciplined approach.
Roger J. Wood
Okay, thanks. This is Roger again, and I'd just like to thank everybody for joining the call today.
Thank you very much.
Operator
Thank you. This concludes today's conference call.
You may now disconnect.