8-K
DANA INC false 0000026780 0000026780 2023-10-27 2023-10-27

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2023

 

 

Dana Incorporated

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-1063   26-1531856

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

3939 Technology Drive, Maumee, Ohio 43537

(Address of principal executive offices) (Zip Code)

(419) 887-3000

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Title of Each Class

 

Trading

Symbol

 

Name of Each Exchange

on which Registered

Common Stock, $.01 par value   DAN   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

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 September 30, 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 October 27, 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: October 27, 2023     By:  

/s/ Douglas H. Liedberg

    Name:   Douglas H. Liedberg
    Title:   Senior Vice President, General Counsel and Secretary

 

3

EX-99.1

Exhibit 99.1

 

LOGO

IMMEDIATE

Dana Incorporated Reports 2023 Third-quarter Financial Results,

Achieves Robust Sales and Profit Growth

Maintains Full-year Sales and Proft Guidance

Key Highlights

 

   

Sales of $2.7 billion, an increase of $134 million or 5 percent over last year

 

   

Net income attributable to Dana of $19 million, an increase of $107 million over last year

 

   

Diluted EPS of $0.13; diluted adjusted EPS of $0.30, an increase of $0.06 per share over last year

 

   

Adjusted EBITDA of $242 million, an increase of $50 million or 26 percent over last year

 

   

Adjusted EBITDA margin of 9.1 percent, a 150 basis points improvement compared with last year

MAUMEE, Ohio, Oct. 27, 2023 – Dana Incorporated (NYSE: DAN) today announced financial results for the third quarter of 2023.

“Dana had strong sales of $2.7 billion, and we improved our margin by 150 basis points in the third quarter despite the impact of the UAW strike on two of our key customers in our North American Light Vehicle business late in the quarter. The Dana team continues to execute well across our operations as customer recoveries and more consistent build patterns have helped to offset inflation pressure, said James Kamsickas, Dana chairman and chief executive officer.

“The business continues to strengthen due to our broad global customer base and cross-mobility market balance as we successfully execute numerous new-program launches and win new business.”

Third-quarter 2023 Financial Results

Sales for the third quarter of 2023 totaled $2.67 billion, compared with $2.54 billion in the same period of 2022, representing a $134 million increase driven by higher market demand, cost-recovery actions, and conversion of our sales backlog partially offset by the lower demand due to the UAW strike at two of our key customers.

Adjusted EBITDA for the third quarter of 2023 was $242 million, compared with $192 million for the same period in 2022. The 150 basis points of margin improvement in the third quarter of 2023 was primarily driven by higher sales volume and beneficial mix, net customer pricing and recovery actions, improved customer order patterns driving higher manufacturing efficiency, and lower net commodity costs. These improvements were partially offset by continued inflationary cost pressures.

Net income attributable to Dana was $19 million, or $0.13 per share, compared with a net loss of $88 million, or $0.61 per share, in the third quarter of 2022. Last year’s third-quarter loss was driven by a $191 million non-cash goodwill impairment charge.

Adjusted net income attributable to Dana was $43 million, and diluted adjusted earnings per share were $0.30 for the third quarter of 2023, compared with adjusted net income of $34 million and $0.24 per share in 2022.

 

1


Cash flow from operations in the third quarter of 2023 was $112 million, compared with $171 million in the same period of 2022. Free cash flow was a use of $5 million, compared with free cash flow of $77 million in the third quarter of 2022. The use of cash in this year’s third quarter was driven by higher working capital requirements related to program launches and higher capital spending for new business backlog.

Dana Provides Update on Outlook

“The UAW strike is significantly impacting a number of our operations in North America while our heavy-vehicle business and operations in the rest of the world are largely unaffected,” said Timothy Kraus, Dana’s senior vice president and chief financial officer.

“Dana remains fundamentally strong due to the strength of our balance sheet and capital structure. If all the UAW strikes are resolved by the end of October, Dana expects sales and profit to be maintained at the midpoint of our previous guidance range. If no resolution is reached by year’s end at all our Detroit 3 customers, including Ford, we anticipate our sales to be approximately $500 million lower.”

Updated 2023 Financial Targets1, 2

 

   

Sales of $10.7 billion assuming UAW strike through Oct. 31; $10.2 billion with strike through Dec. 31;

 

   

Adjusted EBITDA of $850 million with strike through Oct. 31; $760 million with strike through Dec. 31 for an implied adjusted EBITDA margin of approximately 8 percent at the high end of the range;

 

   

Diluted adjusted EPS of $0.80 with strike through Oct.31; $0.30 with strike through Dec. 31;

 

   

Operating cash flow of approximately, $490 with strike through Oct. 31; $375 million with strike through Dec. 31; and

 

   

Free cash flow use of $20 million with strike through Oct. 31; $135 million use with strike through Dec. 31.

 

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, Oct. 27

Dana will discuss its third-quarter results in a conference call at 9 a.m. EDT on Friday, Oct. 27. 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.

A webcast replay can be accessed via Dana’s investor website following the call.

 

2


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.

 

3


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.

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. With a history dating to 1904, Dana 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 September 30, 2023 and 2022

 

     Three Months Ended  
(In millions, except per share amounts)    September 30,  
     2023     2022  

Net sales

   $ 2,669     $ 2,535  

Costs and expenses

    

Cost of sales

     2,433       2,332  

Selling, general and administrative expenses

     126       114  

Amortization of intangibles

     3       3  

Restructuring charges, net

     17       (1

Impairment of goodwill

       (191

Other income (expense), net

     1       3  
  

 

 

   

 

 

 

Earnings (loss) before interest and income taxes

     91       (101

Interest income

     5       2  

Interest expense

     41       32  
  

 

 

   

 

 

 

Earnings (loss) before income taxes

     55       (131

Income tax expense

     33       31  

Equity in earnings (loss) of affiliates

     3       (1
  

 

 

   

 

 

 

Net income (loss)

     25       (163

Less: Noncontrolling interests net income

     8       4  

Less: Redeemable noncontrolling interests net loss

     (2     (79
  

 

 

   

 

 

 

Net income (loss) attributable to the parent company

   $ 19     $ (88
  

 

 

   

 

 

 

Net income (loss) per share available to common stockholders

    

Basic

   $ 0.13     $ (0.61

Diluted

   $ 0.13     $ (0.61

Weighted-average shares outstanding - Basic

     144.3       143.4  

Weighted-average shares outstanding - Diluted

     144.7       143.4  


DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

 

     Nine Months Ended  
(In millions, except per share amounts)    September 30,  
     2023     2022  

Net sales

   $ 8,061     $ 7,601  

Costs and expenses

    

Cost of sales

     7,325       7,018  

Selling, general and administrative expenses

     410       374  

Amortization of intangibles

     10       10  

Restructuring charges, net

     21       (1

Impairment of goodwill

       (191

Other income (expense), net

     10       15  
  

 

 

   

 

 

 

Earnings before interest and income taxes

     305       24  

Loss on extinguishment of debt

     (1  

Interest income

     14       6  

Interest expense

     114       95  
  

 

 

   

 

 

 

Earnings (loss) before income taxes

     204       (65

Income tax expense

     118       67  

Equity in earnings (loss) of affiliates

     6       (1
  

 

 

   

 

 

 

Net income (loss)

     92       (133

Less: Noncontrolling interests net income

     17       11  

Less: Redeemable noncontrolling interests net loss

     (2     (81
  

 

 

   

 

 

 

Net income (loss) attributable to the parent company

   $ 77     $ (63
  

 

 

   

 

 

 

Net income (loss) per share available to common stockholders

    

Basic

   $ 0.53     $ (0.44

Diluted

   $ 0.53     $ (0.44

Weighted-average shares outstanding - Basic

     144.2       143.6  

Weighted-average shares outstanding - Diluted

     144.5       143.6  


DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Three Months Ended September 30, 2023 and 2022

 

     Three Months Ended  
(In millions)    September 30,  
     2023     2022  

Net income (loss)

   $ 25     $ (163 ) 

Other comprehensive income (loss), net of tax:

    

Currency translation adjustments

     (24     (82

Hedging gains and losses

     (21     1  

Defined benefit plans

     (1     1  
  

 

 

   

 

 

 

Other comprehensive loss

     (46     (80
  

 

 

   

 

 

 

Total comprehensive loss

     (21     (243

Less: Comprehensive income attributable to noncontrolling interests

     (7     (1

Less: Comprehensive loss attributable to redeemable noncontrolling interests

     4       89  
  

 

 

   

 

 

 

Comprehensive loss attributable to the parent company

   $ (24   $ (155
  

 

 

   

 

 

 


DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

 

(In millions)    Nine Months Ended
September 30,
 
     2023     2022  

Net income (loss)

   $ 92     $ (133

Other comprehensive income (loss), net of tax:

    

Currency translation adjustments

     (6     (134

Hedging gains and losses

     (3     (2

Defined benefit plans

       5  
  

 

 

   

 

 

 

Other comprehensive income (loss)

     (9     (131
  

 

 

   

 

 

 

Total comprehensive income (loss)

     83       (264

Less: Comprehensive income attributable to noncontrolling interests

     (16     (6

Less: Comprehensive loss attributable to redeemable noncontrolling interests

     4       97  
  

 

 

   

 

 

 

Comprehensive income (loss) attributable to the parent company

   $ 71     $ (173
  

 

 

   

 

 

 


DANA INCORPORATED

Consolidated Balance Sheet (Unaudited)

As of September 30, 2023 and December 31, 2022

 

(In millions, except share and per share amounts)    September 30,     December 31,  
     2023     2022  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 421     $ 425  

Accounts receivable

    

Trade, less allowance for doubtful accounts of $11 in 2023 and $11 in 2022

     1,562       1,374  

Other

     292       202  

Inventories

     1,713       1,609  

Other current assets

     232       219  
  

 

 

   

 

 

 

Total current assets

     4,220       3,829  

Goodwill

     256       259  

Intangibles

     184       201  

Deferred tax assets

     437       397  

Other noncurrent assets

     128       123  

Investments in affiliates

     135       136  

Operating lease assets

     327       311  

Property, plant and equipment, net

     2,250       2,193  
  

 

 

   

 

 

 

Total assets

   $ 7,937     $ 7,449  
  

 

 

   

 

 

 

Liabilities, redeemable noncontrolling interests and equity

    

Current liabilities

    

Short-term debt

   $ 37     $ 52  

Current portion of long-term debt

     31       8  

Accounts payable

     1,883       1,838  

Accrued payroll and employee benefits

     273       214  

Taxes on income

     85       54  

Current portion of operating lease liabilities

     38       36  

Other accrued liabilities

     323       277  
  

 

 

   

 

 

 

Total current liabilities

     2,670       2,479  

Long-term debt, less debt issuance costs of $25 in 2023 and $22 in 2022

     2,563       2,348  

Noncurrent operating lease liabilities

     287       277  

Pension and postretirement obligations

     297       298  

Other noncurrent liabilities

     263       249  
  

 

 

   

 

 

 

Total liabilities

     6,080       5,651  
  

 

 

   

 

 

 

Commitments and contingencies

    

Redeemable noncontrolling interests

     210       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, 144,337,917 and 143,366,482 shares outstanding

     2       2  

Additional paid-in capital

     2,249       2,229  

Retained earnings

     353       321  

Treasury stock, at cost (450,729 and zero shares)

     (8     —   

Accumulated other comprehensive loss

     (1,007     (1,001
  

 

 

   

 

 

 

Total parent company stockholders’ equity

     1,589       1,551  

Noncontrolling interests

     58       52  
  

 

 

   

 

 

 

Total equity

     1,647       1,603  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interests and equity

   $ 7,937     $ 7,449  
  

 

 

   

 

 

 


DANA INCORPORATED

Consolidated Statement of Cash Flows (Unaudited)

For the Three Months Ended September 30, 2023 and 2022

 

(In millions)    Three Months Ended
September 30,
 
     2023     2022  

Operating activities

    

Net income (loss)

   $ 25     $ (163

Depreciation

     101       88  

Amortization

     6       6  

Amortization of deferred financing charges

     1       1  

Earnings of affiliates, net of dividends received

     (1  

Stock compensation expense

     5       5  

Deferred income taxes

     (16     (14

Pension expense, net

     2    

Impairment of goodwill

       191  

Change in working capital

     3       63  

Other, net

     (14     (6
  

 

 

   

 

 

 

Net cash provided by operating activities

     112       171  
  

 

 

   

 

 

 

Investing activities

    

Purchases of property, plant and equipment

     (117     (94

Purchases of marketable securities

       (2

Proceeds from sales of marketable securities

       8  

Settlements of undesignated derivatives

     (6     1  

Other, net

     (15     5  
  

 

 

   

 

 

 

Net cash used in investing activities

     (138     (82
  

 

 

   

 

 

 

Financing activities

    

Net change in short-term debt

     2       (2

Repayment of long-term debt

     (3     (14

Dividends paid to common stockholders

     (14     (14

Distributions to noncontrolling interests

     (7     (6

Contributions from redeemable noncontrolling interests

     1       23  

Other, net

     1       (1
  

 

 

   

 

 

 

Net cash used in financing activities

     (20     (14
  

 

 

   

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

     (46     75  

Cash, cash equivalents and restricted cash - beginning of period

     503       340  

Effect of exchange rate changes on cash balances

     (17     (25
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash - end of period

   $ 440     $ 390  
  

 

 

   

 

 

 


DANA INCORPORATED

Consolidated Statement of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

 

     Nine Months Ended  
(In millions)    September 30,  
     2023     2022  

Operating activities

    

Net income (loss)

   $ 92     $ (133

Depreciation

     287       270  

Amortization

     17       17  

Amortization of deferred financing charges

     4       4  

Write-off of deferred financing costs

     1    

Earnings of affiliates, net of dividends received

     (4     29  

Stock compensation expense

     19       13  

Deferred income taxes

     (46     (56

Pension expense, net

     4    

Impairment of goodwill

       191  

Change in working capital

     (169     (21

Other, net

     (7     (7
  

 

 

   

 

 

 

Net cash provided by operating activities

     198       307  
  

 

 

   

 

 

 

Investing activities

    

Purchases of property, plant and equipment

     (359     (300

Acquisition of business, net of cash acquired

       (1

Purchases of marketable securities

       (15

Proceeds from sales of marketable securities

       18  

Settlements of undesignated derivatives

     (10     (6

Other, net

     (14     7  
  

 

 

   

 

 

 

Net cash used in investing activities

     (383     (297
  

 

 

   

 

 

 

Financing activities

    

Net change in short-term debt

     (15     212  

Proceeds from long-term debt

     458       2  

Repayment of long-term debt

     (207     (19

Deferred financing payments

     (9  

Dividends paid to common stockholders

     (43     (43

Repurchases of common stock

       (25

Distributions to noncontrolling interests

     (10     (8

Contributions from redeemable noncontrolling interests

     18       30  

Payments to acquire noncontrolling interests

       (4

Other, net

     (3     (7
  

 

 

   

 

 

 

Net cash provided by financing activities

     189       138  
  

 

 

   

 

 

 

Net increase in cash, cash equivalents and restricted cash

     4       148  

Cash, cash equivalents and restricted cash - beginning of period

     442       287  

Effect of exchange rate changes on cash balances

     (6     (45
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash - end of period

   $ 440     $ 390  
  

 

 

   

 

 

 


DANA INCORPORATED

Reconciliation of Net Cash Provided By Operating Activities to

 Free Cash Flow (Unaudited)

 

     Three Months Ended  
(In millions)    September 30,  
     2023     2022  

Net cash provided by operating activities

   $ 112     $ 171  

Purchases of property, plant and equipment

     (117     (94
  

 

 

   

 

 

 

Free cash flow

   $ (5   $ 77  
  

 

 

   

 

 

 
     Nine Months Ended  
(In millions)    September 30,  
     2023     2022  

Net cash provided by operating activities

   $ 198     $ 307  

Purchases of property, plant and equipment

     (359     (300
  

 

 

   

 

 

 

Free cash flow

   $ (161   $ 7  
  

 

 

   

 

 

 


DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited)

For the Three Months Ended September 30, 2023 and 2022

 

     Three Months Ended  
(In millions)    September 30,  
     2023      2022  

Sales

     

Light Vehicle

   $ 1,084      $ 1,047  

Commercial Vehicle

     535        505  

Off-Highway

     739        694  

Power Technologies

     311        289  
  

 

 

    

 

 

 

Total Sales

   $ 2,669      $ 2,535  
  

 

 

    

 

 

 

Segment EBITDA

     

Light Vehicle

   $ 75      $ 60  

Commercial Vehicle

     29        18  

Off-Highway

     110        91  

Power Technologies

     28        21  
  

 

 

    

 

 

 

Total Segment EBITDA

     242        190  

Corporate expense and other items, net

        2  
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 242      $ 192  
  

 

 

    

 

 

 


DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

 

     Nine Months Ended  
(In millions)    September 30,  
     2023     2022  

Sales

    

Light Vehicle

   $ 3,112     $ 3,060  

Commercial Vehicle

     1,583       1,475  

Off-Highway

     2,423       2,206  

Power Technologies

     943       860  
  

 

 

   

 

 

 

Total Sales

   $ 8,061     $ 7,601  
  

 

 

   

 

 

 

Segment EBITDA

    

Light Vehicle

   $ 190     $ 124  

Commercial Vehicle

     74       38  

Off-Highway

     359       291  

Power Technologies

     70       71  
  

 

 

   

 

 

 

Total Segment EBITDA

     693       524  

Corporate expense and other items, net

     (4  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 689     $ 524  
  

 

 

   

 

 

 


DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income (Loss) (Unaudited)

For the Three Months Ended September 30, 2023 and 2022

 

     Three Months Ended  
(In millions)    September 30,  
     2023     2022  

Segment EBITDA

   $ 242     $ 190  

Corporate expense and other items, net

       2  
  

 

 

   

 

 

 

Adjusted EBITDA

     242       192  

Depreciation

     (101     (88

Amortization

     (6     (6

Non-service cost components of pension and OPEB costs

     (4  

Restructuring charges, net

     (17     1  

Stock compensation expense

     (5     (5

Strategic transaction expenses

     (2     (1

Distressed supplier costs

     (14  

Impairment of goodwill

       (191

Other items

     (2     (3
  

 

 

   

 

 

 

Earnings (loss) before interest and income taxes

     91       (101

Interest income

     5       2  

Interest expense

     41       32  
  

 

 

   

 

 

 

Earnings (loss) before income taxes

     55       (131

Income tax expense

     33       31  

Equity in earnings (loss) of affiliates

     3       (1
  

 

 

   

 

 

 

Net income (loss)

   $ 25     $ (163
  

 

 

   

 

 

 


DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income (Loss) (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

 

     Nine Months Ended  
(In millions)    September 30,  
     2023     2022  

Segment EBITDA

   $ 693     $ 524  

Corporate expense and other items, net

     (4  
  

 

 

   

 

 

 

Adjusted EBITDA

     689       524  

Depreciation

     (287     (270

Amortization

     (17     (17

Non-service cost components of pension and OPEB costs

     (10     (3

Restructuring charges, net

     (21     1  

Stock compensation expense

     (19     (13

Strategic transaction expenses

     (4     (6

Distressed supplier costs

     (26  

Impairment of goodwill

       (191

Other items

       (1
  

 

 

   

 

 

 

Earnings before interest and income taxes

     305       24  

Loss on extinguishment of debt

     (1  

Interest income

     14       6  

Interest expense

     114       95  
  

 

 

   

 

 

 

Earnings (loss) before income taxes

     204       (65

Income tax expense

     118       67  

Equity in earnings (loss) of affiliates

     6       (1
  

 

 

   

 

 

 

Net income (loss)

   $ 92     $ (133
  

 

 

   

 

 

 


DANA INCORPORATED

Reconciliation of Net Income (Loss) Attributable to the Parent Company to

 Adjusted Net Income Attributable to the Parent Company and

 Diluted Adjusted EPS (Unaudited)

For the Three Months Ended September 30, 2023 and 2022

 

(In millions, except per share amounts)             
     Three Months Ended  
     September 30,  
     2023     2022  

Net income (loss) attributable to the parent company

   $ 19     $ (88

Items impacting income (loss) before income taxes:

    

Amortization

     5       5  

Restructuring charges, net

     17       (1

Strategic transaction expenses

     2       3  

Distressed supplier costs

     14    

Impairment of goodwill

       118  

Other items

     2    

Items impacting income taxes:

    

Net income tax expense on items above

     (16     (5

Income tax expense attributable to various discrete tax matters

       2  
  

 

 

   

 

 

 

Adjusted net income attributable to the parent company

   $ 43     $ 34  
  

 

 

   

 

 

 

Diluted shares - as reported

     144.7       143.4  

Adjusted diluted shares

     144.7       143.8  

Diluted adjusted EPS

   $ 0.30     $ 0.24  


DANA INCORPORATED

Reconciliation of Net Income (Loss) Attributable to the Parent Company to

 Adjusted Net Income Attributable to the Parent Company and

 Diluted Adjusted EPS (Unaudited)

For the Nine Months Ended September 30, 2023 and 2022

 

(In millions, except per share amounts)             
     Nine Months Ended  
     September 30,  
     2023     2022  

Net income (loss) attributable to the parent company

   $ 77     $ (63

Items impacting income (loss) before income taxes:

    

Amortization

     15       15  

Restructuring charges, net

     21       (1

Strategic transaction expenses

     4       8  

Distressed supplier costs

     26    

Impairment of goodwill

       118  

Other items

     2    

Items impacting income taxes:

    

Net income tax expense on items above

     (26     (10

Income tax expense attributable to various discrete tax matters

     14       2  
  

 

 

   

 

 

 

Adjusted net income attributable to the parent company

   $ 133     $ 69  
  

 

 

   

 

 

 

Diluted shares - as reported

     144.5       143.6  

Adjusted diluted shares

     144.5       144.4  

Diluted adjusted EPS

   $ 0.92     $ 0.48  


Slide 1

October 27, 2023 2023 Third-quarter Earnings Conference Call “Versatility and Performance by Design”


Slide 2

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.


Slide 3

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


Slide 4

Company-wide transformation and execution driving profitable long-term growth Q3 Financial Results sales $2.7 billion $134M from prior year adjusted EBITDA $242 million $50M from prior year free cash flow $(5) million $82M from prior year diluted adjusted EPS $0.30 6¢ from prior year Highlights Operating Environment & Strike Impact Program Launch Progress End-Market Trends Key Items 2023 Key Launches


Slide 5

Operating Environment Cost inflation moderating Pricing actions muting inflation impact Sequential improvement in customer production volatility Operational cost savings and efficiency gains benefiting margin Steel moderating compared to 2022 Expected to be profit tailwind Commodity recoveries leveling out Monitoring tier 2-4 supplier health due to UAW strike Modest margin headwinds from foreign currency Primarily impacting NA Light Vehicle business <10% of Dana plants impacted Rapid response to idle and flex operations to mitigate cost impact $65M lower sales in Q3 ~$185M lower sales in October UAW labor strike remains volatile; tailwinds from operational improvement and commodities Supply Chain & Currency OEM Labor Disruption Cost Inflation & Operations Inflation


Slide 6

Continued strong demand in heavy-vehicle markets End-market Trends 2023 NA Class 8 and medium-duty production expected to be up ~7% compared to 2022 EU heavy-truck production outlook remains strong, up ~15% SA truck / bus market down ~30% India truck / bus market up ~2% NA production significantly impacted by stoppages of key programs including Ford Super Duty, Bronco, and Ranger, and Jeep Wrangler and Gladiator Prior to strike disruption, inventory levels of key programs had shown improvement EU demand is up slightly due to strong backlog of orders and restocking Infrastructure spending supporting continued demand for construction equipment Global ag business slowing due to falling farm commodity prices Mining demand remains stable NA demand remains strong, ROW demand mixed by region and end market Light Trucks Off-highway Commercial Vehicles


Slide 7

>120 Program Launches All launches successful to-date 2023 Launch Update >70% Completed to-date Fully industrialized and ready >$2B Annual Sales From 4 of our largest programs


Slide 8

Financial Review


Slide 9

See appendix for comments regarding the presentation of non-GAAP measures Sales growth in all segments driven by higher demand, pricing, and favorable currency translation partially offset by impact of UAW labor disruption at key customers Improved profit driven by lower net manufacturing costs and commodity costs 2022 Q3 net loss related to Commercial Vehicle goodwill impairment charge Lower FCF driven by increased capital spending to support new business backlog and working capital to support launches and higher sales ($ in millions, except EPS) 2023 Q3 Financial Results Strong demand converting to higher profit, driven by improved operational execution Changes from Prior Year Q3 ‘23 Q3 ‘22 Change Sales $2,669 $2,535 $134 Adjusted EBITDA 242 192 50 Margin 9.1% 7.6% 150 bps EBIT 91 (101) 192 Interest Expense, Net 36 30 6 Income Tax Expense 33 31 2 Net Income (attributable to Dana) 19 (88) 107 Diluted Adjusted EPS $0.30 $0.24 $ 0.06 Operating Cash Flow 112 171 (59) Capital Spending (117) (94) (23) Free Cash Flow (5) 77 (82)


Slide 10

Organic growth driven by improved demand, pricing, and mix, partially offset by UAW strike at key customers Strong operational execution and improved efficiency in customer order patterns, partially offset by 2 weeks of strike impact Net cost inflation of $14M as customer recoveries partially offset higher input costs Beneficial mix on higher sales and deferral of engineering investments driving incremental EV profit Translation of foreign currencies, primarily the euro, rupee, renminbi to U.S. dollar, was a modest margin headwind Lower commodity costs benefited margin Sales Adjusted EBITDA 7.6% Margin 9.1% Margin ~130 bps ~20 bps ~10 bps ~(10) bps 2023 Q3 Sales and Profit Changes Profit improvement driven by beneficial mix and operational execution


Slide 11

2023 Q3 Free Cash Flow Higher profit offset by increased working capital requirements and higher capital investment Higher working capital requirements due to increased sales and higher launch cadence Higher capital spending to support new business backlog, replacement business, and electrification 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) Q3 ‘23 Q3 ‘22 Change Adjusted EBITDA $ 242 $ 192 $50 One-time Costs1 (6) (3) (3) Interest, Net (26) (26) - Taxes (38) (47) 9 Working Capital / Other² (60) 55 (115) Capital Spending (117) (94) (23) Free Cash Flow $(5) $77 $(82) FCF use driven by higher working capital requirements and capital spending


Slide 12

Sales Adjusted EBITDA Implied Profit Margin Free Cash Flow Diluted Adjusted EPS 2023 FY Financial Guide Sales remain strong due to our broad global customer base and multiple-market presence High end of guidance assumption is that UAW strike is resolved for all Detroit 3 customers as of October 31 Low end of guidance range strikes remains at all Detroit 3 customers, including Ford, through December 31 Lower free cash flow forecast primarily driven by higher working capital requirements, including higher strike-related inventory Expect positive FCF in Q4 Free cash flow includes significant capital investment to support EV growth and roll-on business Guidance range Updated Guidance Sales and profit guidance maintained at midpoint of prior range Key Drivers Lower sales due to strike Stronger sales in heavy markets Lower profit due to strike Cost savings actions ~$10.7B ~$10.2B Through Oct 31 Through Dec 31 ~$850M ~$760M UAW Strike ~7.5% – 8.0% ~$0.80 ~$0.30 Higher inventory Lower sales driving lower collections Distressed supplier relief Incremental restructuring actions 20% decremental margin due to strike-lowered sales ~$(20)M ~$(135)M High End Low End


Slide 13

Appendix


Slide 14

2023 Q3 Sales and Profit Change by Segment © 2023 Dana


Slide 15

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 9/30/2023 Year to Date 9/30/2023 Year to Date 9/30/2023 Year to Date 9/30/2023 * Includes sales to systems integrations for driveline products that support Stellantis vehicles


Slide 16

Diluted Adjusted EPS


Slide 17

Segment Data


Slide 18

Segment Data Continued


Slide 19

Cash Flow


Slide 20


Slide 21

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.