UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Items 2.02 and 7.01 Results of Operations and Financial Condition and Regulation FD Disclosure
Dana Incorporated today issued a news release announcing its results for the quarter ended March 31, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this report is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following item is furnished with this report.
| Exhibit No. |
Description | |
| 99.1 | Dana Incorporated Press Release dated April 28, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL | |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DANA INCORPORATED | ||||||
| Date: April 28, 2023 | By: | /s/ Douglas H. Liedberg | ||||
| Name: Douglas H. Liedberg | ||||||
| Title: Senior Vice President, General Counsel and Secretary | ||||||
3
Exhibit 99.1
IMMEDIATE
Dana Incorporated Reports 2023 First-quarter Financial Results with
Record Sales and Higher Profit
Key Highlights
| • | Sales of $2.64 billion, an increase of $164 million or 7 percent over last year |
| • | Net income attributable to Dana of $28 million, an increase of $11 million over last year |
| • | Diluted EPS of $0.19; diluted adjusted EPS of $0.25, an increase of $0.09 per share |
| • | Adjusted EBITDA of $204 million, an increase of $34 million or 20 percent over last year |
| • | Adjusted EBITDA margin improved by 80 basis points compared with last year |
| • | Leveraging cutting-edge 4-in-1 e-Propulsion Systems across all end markets |
MAUMEE, Ohio, April 28, 2023 – Dana Incorporated (NYSE: DAN) today announced financial results for the first quarter of 2023.
“Dana achieved strong sales of $2.64 billion in the first quarter, with significantly improved profit margin over the previous year, driven by healthy customer demand in all our end markets, as well as new and replacement business rolling-on,” said James Kamsickas, Dana chairman and chief executive officer.
“Operationally, we executed very well in the quarter, overcoming the pervasive challenges that continue to impact the mobility industry, including inflationary pressures, customer-demand volatility, supply-chain disruptions, and currency fluctuations. Our team has done an outstanding job remaining focused on our enterprise-wide transformation to a frontrunning e-Propulsion mobility supplier. We are capitalizing on the strength of our sales backlog and launching a record number of new programs for both traditional and electric-vehicle solutions, positioning us well for the future.”
First-quarter 2023 Financial Results
Sales for the first quarter of 2023 totaled $2.64 billion, compared with $2.48 billion in the same period of 2022, representing a $164 million increase driven by improved demand, cost-recovery actions, and conversion of the sales backlog, partially offset by the translation of foreign currencies.
Adjusted EBITDA for the first quarter of 2023 was $204 million, compared with $170 million for the same period in 2022. The 80 basis points of margin improvement in the first quarter of 2023 was primarily driven by higher sales volume, net customer pricing and recovery actions, and lower periodic spending on development for electric-vehicle products. It was partially offset by production inefficiencies driven by volatile customer demand schedules and negative exchange-rate impacts.
The net income attributable to Dana was $28 million, or $0.19 per share, compared with net income of $17 million, or $0.12 per share, in the first quarter of 2022.
Adjusted net income attributable to Dana was $36 million, and diluted adjusted earnings per share were $0.25 for the first quarter of 2023, compared with adjusted net income of $23 million and $0.16 per share in 2022.
1
Operating cash flow in the first quarter of 2023 was a use of $170 million, compared with a use of $121 million in the same period of 2022. Free cash flow was use of $290 million, compared with a use of $237 million in the first quarter of 2022. The increased use was due to higher working capital requirements primarily driven by increased inventory to support program launches and higher demand in heavy-vehicle markets.
“Dana is off to a good start to the year, which gives us added confidence in our full-year guidance,” said Timothy Kraus, Dana senior vice president and chief financial officer. “As we progress through the year, we now expect a mostly steady improving trajectory as our program launch cadence ramps up. We remain focused on offsetting key external cost drivers such as customer production volatility, inflation, currency fluctuations, and commodity prices.”
2023 Financial Targets Remain Unchanged1
| • | Sales of $10.35 to $10.85 billion; |
| • | Adjusted EBITDA of $750 to $850 million, an implied adjusted EBITDA margin of approximately 7.5 percent at the midpoint of the range; |
| • | Diluted adjusted EPS of $0.25 to $0.75; |
| • | Operating cash flow of approximately, $510 to $560 million; and |
| • | Free cash flow of breakeven to $50 million |
| 1 | Net income and diluted EPS guidance are not provided, as discussed below in Non-GAAP Financial Information. |
Dana to Host Conference Call at 9 a.m. Friday, April 28
Dana will discuss its fourth-quarter and full-year results in a conference call at 9 a.m. EDT on Friday, April 28. The conference call can be accessed by telephone from both domestic and international locations using the information provided below:
Conference ID: 9943139
Participant Toll-Free Dial-In Number: 1 (888) 440-5873
Participant Toll Dial-In Number: 1 (646) 960-0319
Audio streaming and slides will be available online via a link provided on the Dana investor website: www.dana.com/investors. Phone registration will be available beginning at 8:30 a.m. EDT.
A webcast replay can be accessed via Dana’s investor website following the call.
Non-GAAP Financial Information
Adjusted EBITDA is a non-GAAP financial measure which we have defined as net income (loss) before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefit costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
2
Adjusted net income (loss) attributable to the parent company is a non-GAAP financial measure which we have defined as net income (loss) attributable to the parent company, excluding any discrete income tax items, restructuring charges, amortization expense and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to net income attributable to the parent company reported by other companies. Adjusted net income (loss) attributable to the parent company is neither intended to represent nor be an alternative measure to net income (loss) attributable to the parent company reported in accordance with GAAP.
Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net income (loss) attributable to the parent company divided by adjusted diluted shares. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income (loss) attributable to the parent company. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported in accordance with GAAP.
Free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment. We believe free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported in accordance with GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies.
The accompanying financial information provides reconciliations of adjusted EBITDA, diluted adjusted EPS and free cash flow to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income (loss) and diluted EPS. Providing net income (loss) and diluted EPS guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income (loss) and diluted EPS, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.
Forward-Looking Statements
Certain statements and projections contained in this news release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates, and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” and similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties, and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
3
Dana’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this news release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
About Dana Incorporated
Dana is a leader in the design and manufacture of highly efficient propulsion and energy-management solutions that power vehicles and machines in all mobility markets across the globe. The company is shaping sustainable progress through its conventional and clean-energy solutions that support nearly every vehicle manufacturer with drive and motion systems; electrodynamic technologies, including software and controls; and thermal, sealing, and digital solutions.
Based in Maumee, Ohio, USA, the company reported sales of $10.2 billion in 2022 with 42,000 people in 31 countries across six continents. Dana, with a history dating to 1904, was named among the “World’s Most Ethical Companies” for 2023 by Ethisphere and as one of “America’s Most Responsible Companies 2023” by Newsweek. The company is driven by a high-performance culture that focuses on valuing others, inspiring innovation, growing responsibly, and winning together, earning it global recognition as a top employer. Learn more at dana.com.
###
| Media Contact: | Jeff Cole +1-419-887-3535 jeff.cole@dana.com | |
| Investor Contact: | Craig Barber +1-419-887-5166 craig.barber@dana.com | |
4
DANA INCORPORATED
Consolidated Statement of Operations (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
| Three Months Ended | ||||||||
| (In millions, except per share amounts) | March 31, | |||||||
| 2023 | 2022 | |||||||
| Net sales |
$ | 2,644 | $ | 2,480 | ||||
| Costs and expenses |
||||||||
| Cost of sales |
2,415 | 2,283 | ||||||
| Selling, general and administrative expenses |
140 | 130 | ||||||
| Amortization of intangibles |
3 | 4 | ||||||
| Restructuring charges, net |
1 | (1 | ) | |||||
| Other income (expense), net |
5 | 2 | ||||||
|
|
|
|
|
|||||
| Earnings before interest and income taxes |
90 | 66 | ||||||
| Interest income |
4 | 2 | ||||||
| Interest expense |
34 | 31 | ||||||
|
|
|
|
|
|||||
| Earnings before income taxes |
60 | 37 | ||||||
| Income tax expense |
30 | 18 | ||||||
| Equity in earnings of affiliates |
1 | 1 | ||||||
|
|
|
|
|
|||||
| Net income |
31 | 20 | ||||||
| Less: Noncontrolling interests net income |
4 | 4 | ||||||
| Less: Redeemable noncontrolling interests net loss |
(1 | ) | (1 | ) | ||||
|
|
|
|
|
|||||
| Net income attributable to the parent company |
$ | 28 | $ | 17 | ||||
|
|
|
|
|
|||||
| Net income per share available to common stockholders |
||||||||
| Basic |
$ | 0.19 | $ | 0.12 | ||||
| Diluted |
$ | 0.19 | $ | 0.12 | ||||
| Weighted-average shares outstanding - Basic |
143.9 | 144.2 | ||||||
| Weighted-average shares outstanding - Diluted |
144.3 | 145.3 | ||||||
5
DANA INCORPORATED
Consolidated Statement of Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
| (In millions) | Three Months Ended March 31, |
|||||||
| 2023 | 2022 | |||||||
| Net income |
$ | 31 | $ | 20 | ||||
| Other comprehensive income (loss), net of tax: |
||||||||
| Currency translation adjustments |
25 | 39 | ||||||
| Hedging gains and losses |
15 | (4 | ) | |||||
| Defined benefit plans |
1 | 1 | ||||||
|
|
|
|
|
|||||
| Other comprehensive income |
41 | 36 | ||||||
|
|
|
|
|
|||||
| Total comprehensive income |
72 | 56 | ||||||
| Less: Comprehensive income attributable to noncontrolling interests |
(4 | ) | (4 | ) | ||||
| Less: Comprehensive loss attributable to redeemable noncontrolling interests |
1 | |||||||
|
|
|
|
|
|||||
| Comprehensive income attributable to the parent company |
$ | 68 | $ | 53 | ||||
|
|
|
|
|
|||||
6
DANA INCORPORATED
Consolidated Balance Sheet (Unaudited)
As of March 31, 2023 and December 31, 2022
| (In millions, except share and per share amounts) | March 31, 2023 |
December 31, 2022 |
||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 401 | $ | 425 | ||||
| Accounts receivable |
||||||||
| Trade, less allowance for doubtful accounts of $13 in 2023 and $11 in 2022 |
1,624 | 1,374 | ||||||
| Other |
248 | 202 | ||||||
| Inventories |
1,723 | 1,609 | ||||||
| Other current assets |
237 | 219 | ||||||
|
|
|
|
|
|||||
| Total current assets |
4,233 | 3,829 | ||||||
| Goodwill |
262 | 259 | ||||||
| Intangibles |
197 | 201 | ||||||
| Deferred tax assets |
405 | 397 | ||||||
| Other noncurrent assets |
106 | 123 | ||||||
| Investments in affiliates |
138 | 136 | ||||||
| Operating lease assets |
319 | 311 | ||||||
| Property, plant and equipment, net |
2,233 | 2,193 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 7,893 | $ | 7,449 | ||||
|
|
|
|
|
|||||
| Liabilities, redeemable noncontrolling interests and equity |
||||||||
| Current liabilities |
||||||||
| Short-term debt |
$ | 321 | $ | 52 | ||||
| Current portion of long-term debt |
32 | 8 | ||||||
| Accounts payable |
1,919 | 1,838 | ||||||
| Accrued payroll and employee benefits |
210 | 214 | ||||||
| Taxes on income |
72 | 54 | ||||||
| Current portion of operating lease liabilities |
35 | 36 | ||||||
| Other accrued liabilities |
287 | 277 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
2,876 | 2,479 | ||||||
| Long-term debt, less debt issuance costs of $21 in 2023 and $22 in 2022 |
2,328 | 2,348 | ||||||
| Noncurrent operating lease liabilities |
282 | 277 | ||||||
| Pension and postretirement obligations |
301 | 298 | ||||||
| Other noncurrent liabilities |
242 | 249 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
6,029 | 5,651 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Redeemable noncontrolling interests |
206 | 195 | ||||||
| Parent company stockholders’ equity |
||||||||
| Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding |
— | — | ||||||
| Common stock, 450,000,000 shares authorized, $0.01 par value, 144,330,117 and 143,366,482 shares outstanding |
2 | 2 | ||||||
| Additional paid-in capital |
2,237 | 2,229 | ||||||
| Retained earnings |
333 | 321 | ||||||
| Treasury stock, at cost (447,594 and zero shares) |
(8 | ) | — | |||||
| Accumulated other comprehensive loss |
(961 | ) | (1,001 | ) | ||||
|
|
|
|
|
|||||
| Total parent company stockholders’ equity |
1,603 | 1,551 | ||||||
| Noncontrolling interests |
55 | 52 | ||||||
|
|
|
|
|
|||||
| Total equity |
1,658 | 1,603 | ||||||
|
|
|
|
|
|||||
| Total liabilities, redeemable noncontrolling interests and equity |
$ | 7,893 | $ | 7,449 | ||||
|
|
|
|
|
|||||
7
DANA INCORPORATED
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
| (In millions) | Three Months Ended March 31, |
|||||||
| 2023 | 2022 | |||||||
| Operating activities |
||||||||
| Net income |
$ | 31 | $ | 20 | ||||
| Depreciation |
92 | 91 | ||||||
| Amortization |
5 | 6 | ||||||
| Amortization of deferred financing charges |
1 | 1 | ||||||
| Earnings of affiliates, net of dividends received |
(1 | ) | (1 | ) | ||||
| Stock compensation expense |
6 | 4 | ||||||
| Deferred income taxes |
(8 | ) | (25 | ) | ||||
| Pension expense, net |
(1 | ) | ||||||
| Change in working capital |
(304 | ) | (211 | ) | ||||
| Other, net |
8 | (5 | ) | |||||
|
|
|
|
|
|||||
| Net cash used in operating activities |
(170 | ) | (121 | ) | ||||
|
|
|
|
|
|||||
| Investing activities |
||||||||
| Purchases of property, plant and equipment |
(120 | ) | (116 | ) | ||||
| Proceeds from sale of property, plant and equipment |
2 | 2 | ||||||
| Purchases of marketable securities |
(5 | ) | ||||||
| Proceeds from sales and maturities of marketable securities |
2 | |||||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(118 | ) | (117 | ) | ||||
|
|
|
|
|
|||||
| Financing activities |
||||||||
| Net change in short-term debt |
269 | 278 | ||||||
| Proceeds from long-term debt |
2 | |||||||
| Repayment of long-term debt |
(2 | ) | (3 | ) | ||||
| Deferred financing payments |
(2 | ) | ||||||
| Dividends paid to common stockholders |
(15 | ) | (14 | ) | ||||
| Distributions to noncontrolling interests |
(1 | ) | (1 | ) | ||||
| Contributions from redeemable noncontrolling interests |
10 | 2 | ||||||
| Payments to acquire noncontrolling interests |
(3 | ) | ||||||
| Repurchases of common stock |
(25 | ) | ||||||
| Other, net |
(4 | ) | (7 | ) | ||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
255 | 229 | ||||||
|
|
|
|
|
|||||
| Net decrease in cash, cash equivalents and restricted cash |
(33 | ) | (9 | ) | ||||
| Cash, cash equivalents and restricted cash – beginning of period |
442 | 287 | ||||||
| Effect of exchange rate changes on cash balances |
10 | 2 | ||||||
|
|
|
|
|
|||||
| Cash, cash equivalents and restricted cash – end of period |
$ | 419 | $ | 280 | ||||
|
|
|
|
|
|||||
8
DANA INCORPORATED
Reconciliation of Net Cash Provided By (Used In) Operating Activities to Free Cash Flow (Unaudited)
| (In millions) | Three Months Ended March 31, |
|||||||
| 2023 | 2022 | |||||||
| Net cash used in operating activities |
$ | (170 | ) | $ | (121 | ) | ||
| Purchase of property, plant and equipment |
(120 | ) | (116 | ) | ||||
|
|
|
|
|
|||||
| Free cash flow |
$ | (290 | ) | $ | (237 | ) | ||
|
|
|
|
|
|||||
9
DANA INCORPORATED
Segment Sales and Segment EBITDA (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
| (In millions) | Three Months Ended March 31, |
|||||||
| 2023 | 2022 | |||||||
| Sales |
||||||||
| Light Vehicle |
$ | 962 | $ | 985 | ||||
| Commercial Vehicle |
522 | 463 | ||||||
| Off-Highway |
842 | 744 | ||||||
| Power Technologies |
318 | 288 | ||||||
|
|
|
|
|
|||||
| Total Sales |
$ | 2,644 | $ | 2,480 | ||||
|
|
|
|
|
|||||
| Segment EBITDA |
||||||||
| Light Vehicle |
$ | 49 | $ | 31 | ||||
| Commercial Vehicle |
17 | 10 | ||||||
| Off-Highway |
118 | 100 | ||||||
| Power Technologies |
23 | 29 | ||||||
|
|
|
|
|
|||||
| Total Segment EBITDA |
207 | 170 | ||||||
| Corporate expense and other items, net |
(3 | ) | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
$ | 204 | $ | 170 | ||||
|
|
|
|
|
|||||
10
DANA INCORPORATED
Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
| (In millions) | Three Months Ended March 31, |
|||||||
| 2023 | 2022 | |||||||
| Segment EBITDA |
$ | 207 | $ | 170 | ||||
| Corporate expense and other items, net |
(3 | ) | ||||||
|
|
|
|
|
|||||
| Adjusted EBITDA |
204 | 170 | ||||||
| Depreciation |
(92 | ) | (91 | ) | ||||
| Amortization |
(5 | ) | (6 | ) | ||||
| Non-service cost components of pension and OPEB costs |
(3 | ) | ||||||
| Restructuring charges, net |
(1 | ) | 1 | |||||
| Stock compensation expense |
(6 | ) | (4 | ) | ||||
| Strategic transaction expenses |
(1 | ) | (4 | ) | ||||
| Distressed supplier costs |
(8 | ) | ||||||
| Other items |
2 | |||||||
|
|
|
|
|
|||||
| Earnings before interest and income taxes |
90 | 66 | ||||||
| Interest income |
4 | 2 | ||||||
| Interest expense |
34 | 31 | ||||||
|
|
|
|
|
|||||
| Earnings before income taxes |
60 | 37 | ||||||
| Income tax expense |
30 | 18 | ||||||
| Equity in earnings of affiliates |
1 | 1 | ||||||
|
|
|
|
|
|||||
| Net income |
$ | 31 | $ | 20 | ||||
|
|
|
|
|
|||||
11
DANA INCORPORATED
Reconciliation of Net Income Attributable to the Parent Company to Adjusted Net Income Attributable to the Parent Company and Diluted Adjusted EPS (Unaudited)
For the Three Months Ended March 31, 2023 and 2022
| (In millions, except per share amounts) | ||||||||
| Three Months Ended March 31, |
||||||||
| 2023 | 2022 | |||||||
| Net income attributable to parent company |
$ | 28 | $ | 17 | ||||
| Items impacting income before income taxes: |
||||||||
| Amortization |
5 | 5 | ||||||
| Restructuring charges, net |
1 | (1 | ) | |||||
| Strategic transaction expenses |
1 | 2 | ||||||
| Distressed supplier costs |
8 | |||||||
| Loss on disposal group held for sale |
||||||||
| Other items |
(1 | ) | 2 | |||||
| Items impacting income taxes: |
||||||||
| Net income tax expense on items above |
(6 | ) | (2 | ) | ||||
|
|
|
|
|
|||||
| Adjusted net income attributable to the parent |
$ | 36 | $ | 23 | ||||
|
|
|
|
|
|||||
| Diluted shares - as reported |
144.3 | 145.3 | ||||||
| Adjusted diluted shares |
144.3 | 145.3 | ||||||
| Diluted adjusted EPS |
$ | 0.25 | $ | 0.16 | ||||
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April 28, 2023 2023 First-quarter Earnings Conference Call Company-wide Transformation Driving Customer Satisfaction and Technology Leadership Exhibit 99.1
Safe Harbor Statement Certain statements and projections contained in this presentation are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Dana’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this presentation speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
Agenda Craig Barber Senior Director, Investor Relations and Strategic Planning Introduction James Kamsickas Chairman and Chief Executive Officer Business Review Timothy Kraus Senior Vice President and Chief Financial Officer Financial Review © 2023 Dana
Company transformation driving growth and positioning us for continued success Q1 Financial Results sales $2.6 billion $164 from prior year adjusted EBITDA $204 million $34M from prior year free cash flow $(290) million $53M from prior year diluted adjusted EPS $0.25 9¢ from prior year Highlights Operating environment and outlook Leading sustainability Key launch highlights Leveraging in-house EV innovation 2023 Key Launches Key Items
Operating Environment Cost inflation continues: COLAs driving labor costs higher Higher energy costs in Europe Pricing actions muting inflation impact Strong operational execution partially offset customer production volatility Steel moderating compared to 2022 Certain grades increased slightly in Q1 Expected to be profit tailwind Commodity recoveries progressing Translation of foreign currencies to U.S. dollar to remain a headwind Demand remains strong across all end markets Disrupted customer order patterns cause supplier inefficiencies Some improvement in H2 Commercial-vehicle market share gains driving above-market growth Roll-on of new programs improving pricing Market conditions expected to improve throughout 2023 Commodity Costs & Currency Market Demand & New Business Cost Inflation & Operations Inflation
Major Launch Highlights Launch on track and nearing completion Pre-production beginning Battery cooling production ramp-up Roll-on of latest models of traditional and EV platforms Late fourth-quarter launch Q1 Q3 Q2 Q4 2023 Key Launches
Sustainability: Climate Action 75% Reduction of Scope 1 and Scope 2 GHG emissions by 2030 25%+ Reduction in Scope 3 GHG emissions by 2030 2040 Net zero Managing with Science Based Targets
Technology Expertise: Performance e-Transmissions Dana EV technologies drive the most advanced performance cars in the world
Advanced Clean Transportation (ACT) Expo Look for our press release on Tuesday, May 2, 2023 Unveiling our latest electric drive system for medium-duty trucks
Financial Review
See appendix for comments regarding the presentation of non-GAAP measures Sales growth primarily due to increased demand and recovery of cost inflation, offset by currency headwinds Improved profit driven by lower net manufacturing costs, EV investment, and commodity costs Higher income tax expense due to increased profit and jurisdictional mix Lower FCF driven by increased working capital requirements ($ in millions, except EPS) 2023 Q1 Financial Results Strong demand and improved profit Changes from Prior Year Q1 ‘23 Q1 ‘22 Change Sales $2,644 $2,480 $164 Adjusted EBITDA 204 170 34 Margin 7.7% 6.9% 80 bps EBIT 90 66 24 Interest Expense, Net 30 29 1 Income Tax Expense 30 18 12 Net Income (attributable to Dana) 28 17 11 Diluted Adjusted EPS $0.25 $0.16 $ 0.09 Operating Cash Flow (170) (121) (49) Capital Spending (120) (116) (4) Free Cash Flow (290) (237) (53)
Organic growth driven by improved demand, pricing, and mix Strong operational execution muting cost inefficiencies from customer order volatility Cost inflation offset by customer recoveries Timing of investment in EV business driving modest margin benefit Translation of foreign currencies to U.S. dollars was a headwind to sales, profit, and margin Lower commodity costs and higher recoveries benefited sales and profit Sales Adjusted EBITDA 6.9% Margin 7.7% Margin ~50 bps ~10 bps ~50 bps ~(30) bps 2023 Q1 Sales and Profit Changes Profit improvement due to lower net manufacturing costs, EV investment, and commodity prices
2023 Q1 Free Cash Flow Free cash flow use driven by increased working capital Higher cash interest due to timing of payments Higher working capital primarily driven by increased inventory to support launches and higher sales in heavy vehicle markets 1 Includes costs associated with business acquisitions and divestitures and restructuring. 2 Changes in working capital relating to interest, taxes, restructuring, and transaction costs are included in those respective categories. See appendix for comments regarding the presentation of non-GAAP measures. Changes from Prior Year ($ in millions) Q1 ‘23 Q1 ‘22 Change Adjusted EBITDA $ 204 $ 170 $34 One-time Costs1 (2) (5) 3 Interest, Net (23) (15) (8) Taxes (23) (25) 2 Working Capital / Other² (326) (246) (80) Capital Spending (120) (116) (4) Free Cash Flow $(290) $(237) $(53) FCF use driven by higher working capital requirements
Sales Adjusted EBITDA Implied Profit Margin Free Cash Flow Diluted Adjusted EPS 2023 FY Financial Guide Sales growth supported by improved end-market demand, pricing actions, and market share gains Cost inefficiencies, driven by volatile customer production, and higher sales due to cost recoveries hindering margin Free cash flow includes significant capital investment to support accelerated EV growth and roll-on business ~60% effective tax rate included in adjusted EPS guide driven primarily by valuation allowances in U.S Guidance range ~7.2% - 7.8% ~$800M ~$10,600M ~$0.50 ±$250M ±$50M ±$0.25 Guidance Ranges Remain Unchanged Reaffirming guidance range while monitoring favorable currency movements ~$25M ±$25M +$0.25
Organic growth driven by strong sales, pricing, and market share gains Gross inflation and related recoveries are now expected to be lower than prior estimate; net profit impact from inflation remains the same, as cost recovery actions are expected to offset all but ~$50M of inflation headwind Continued investment in EV business offsetting profit contribution Translation of foreign currency expected to be slightly less of a sales headwind due to the revised outlook for the relative value of the Mexican peso, Brazilian real, and Argentine peso Steel price outlook slightly elevated from prior estimate, lowering the expected margin benefit by ~20 bps Sales Adjusted EBITDA 2023 FY Sales and Profit Changes ~$10,600 ~$800M Inflation: ~($50)M 7.5% Margin ~40 bps ~(40) bps ~70 bps ~(10) bps 6.9% Margin Sales growth with improved profit due to cost recoveries and lower commodity costs
2023 FY Free Cash Flow Positive free cash flow even with increased capital spending Working capital expected to be a modest source, even with sales increase, as efficiency gains from 2022 continue Higher capital spending to support new business backlog and EV programs 1 Includes costs associated with business acquisitions and divestitures and restructuring. 2 Changes in working capital relating to interest, taxes, restructuring, and transaction costs are included in those respective categories. See appendix for comments regarding the presentation of non-GAAP measures. Changes from Prior Year ($ in millions) 2023T 2022A Change Adjusted EBITDA $ ~800 $ 700 $ ~100 One-time Costs1 ~(25) (16) ~(10) Interest, Net ~(110) (107) ~(5) Taxes ~(145) (132) ~(10) Working Capital / Other² ~15 204 ~(190) Capital Spending ~(510) (440) ~(70) Free Cash Flow $ ~25 $209 $ ~(185) Higher profit and continuing working capital efficiency allowing for increased investment
Appendix
2023 Q1 Sales and Profit Change by Segment See appendix for comments regarding the presentation of non-GAAP measures 10.3% 10.1% 6.3% 13.5% 11.9% Light Vehicle Drive Systems Commercial Vehicle Drive and Motion Systems Off-Highway Drive and Motion Systems Power Technologies Sales Adjusted EBITDA 10.3% 10.1% Sales Adjusted EBITDA Sales Adjusted EBITDA 10.3% Sales Adjusted EBITDA 3.1% 5.1% 2.2% 3.3% 13.4% 14.0% 10.1% 7.2%
Segment Profiles CUSTOMER SALES REGIONAL SALES Light Vehicle Drive Systems Commercial Vehicle Drive and Motion Systems Off Highway Drive and Motion Systems Power Technologies Year to Date 3/31/2023 Year to Date 3/31/2023 Year to Date 3/31/2023 Year to Date 3/31/2023 * Includes sales to systems integrations for driveline products that support Stellantis vehicles
Diluted Adjusted EPS
Segment Data
Cash Flow
Non-GAAP Financial Information Adjusted EBITDA is a non-GAAP financial measure which we have defined as net income (loss) before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefit costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Adjusted net income (loss) attributable to the parent company is a non-GAAP financial measure which we have defined as net income (loss) attributable to the parent company, excluding any discrete income tax items, restructuring charges, amortization expense and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to net income attributable to the parent company reported by other companies. Adjusted net income (loss) attributable to the parent company is neither intended to represent nor be an alternative measure to net income (loss) attributable to the parent company reported in accordance with GAAP. Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net income (loss) attributable to the parent company divided by adjusted diluted shares. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income (loss) attributable to the parent company. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported in accordance with GAAP. Free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment. We believe free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported in accordance with GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies. The accompanying financial information provides reconciliations of adjusted EBITDA, diluted adjusted EPS and free cash flow to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income (loss) and diluted EPS. Providing net income (loss) and diluted EPS guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income (loss) and diluted EPS, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.