8-K
DANA Inc (DAN)
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<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>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<br> <br>Symbol | Name of Each Exchange<br> <br>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 |
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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 |
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EX-99.1
Exhibit 99.1
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 millionor 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 ; d iluted adjusted EPS of $ 0.30, an increase of $0.06 per share overlast year |
| --- | --- |
| • | Adjusted EBITDA of $242 million, an increase of $50 million or26 percent over last year |
| --- | --- |
| • | Adjusted EBITDA margin of 9.1 percent, a 150 basis points improvement compared with lastyear |
| --- | --- |
MAUMEE, Ohio, Oct. 27, 2023 – Dana Incorporated (NYSE: DAN) today announced financial results for the third quarter of2023.
“Dana had strong sales of $2.7 billion, and we improved our margin by 150 basis points in the third quarter despite the impact ofthe 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 tooffset inflation pressure, said James Kamsickas, Dana chairman and chief executive officer.
“The business continues to strengthen due to ourbroad 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 forthe 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 backlogpartially 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 andrecovery 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 thirdquarter 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 thirdquarter 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 higherworking 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 inthe rest of the world are largely unaffected,” said Timothy Kraus, Dana’s senior vice president and chief financial officer.
“Danaremains 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. Ifno 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 Targets^1, 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; <br> |
| --- | --- |
| • | 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 inNon-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 bytelephone 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.
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Non-GAAP Financial Information
Adjusted EBITDA is a non-GAAP financial measure which we have defined as net income (loss) before interest, incometaxes, 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 coreoperations (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 adjustedEBITDA 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 ameasure 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 incometaxes, 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 definedas 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 anyassociated 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 incomeattributable 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 companyreported in accordance with GAAP.
Diluted adjusted EPS is a non-GAAP financial measure which we havedefined 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) attributableto 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 othercompanies. 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) operatingactivities 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 notintended 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 directlycomparable 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 areincluded 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 mostcomparable 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 SecuritiesLitigation 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 aresubject 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 thesewords. 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-lookingstatement.
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 ofoperations 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 inthe 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 andclean-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 ahistory 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-performanceculture 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)
Forthe 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)
Forthe 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<br>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 ofSeptember 30, 2023 and December 31, 2022
| (In millions, except share and per share amounts) | December 31, | ||||
|---|---|---|---|---|---|
| 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<br>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 |
All values are in US Dollars.
DANA INCORPORATED
Consolidated Statement of Cash Flows (Unaudited)
Forthe Three Months Ended September 30, 2023 and 2022
| (In millions) | Three Months Ended<br>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)
Forthe 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 theThree 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 theNine 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<br>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<br>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 ThreeMonths 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 NineMonths 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 |
October 27, 2023 2023 Third-quarter Earnings Conference Call “Versatility and Performance by Design”
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-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
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
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
>120 Program Launches All launches successful to-date 2023 Launch Update >70% Completed to-date Fully industrialized and ready >$2B Annual Sales From 4 of our largest programs
Financial Review
See appendix for comments regarding the presentation of non-GAAP measures Sales growth in all segments driven by higher demand, pricing, and favorable currency translation partially offset by impact of UAW labor disruption at key customers Improved profit driven by lower net manufacturing costs and commodity costs 2022 Q3 net loss related to Commercial Vehicle goodwill impairment charge Lower FCF driven by increased capital spending to support new business backlog and working capital to support launches and higher sales ($ 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)
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 $14M as customer recoveries partially offset higher input costs Beneficial mix on higher sales and deferral of engineering investments driving incremental EV profit Translation of foreign currencies, primarily the euro, rupee, renminbi to U.S. dollar, was a modest margin headwind Lower commodity costs benefited margin Sales Adjusted EBITDA 7.6% Margin 9.1% Margin ~130 bps ~20 bps ~10 bps ~(10) bps 2023 Q3 Sales and Profit Changes Profit improvement driven by beneficial mix and operational execution
2023 Q3 Free Cash Flow Higher profit offset by increased working capital requirements and higher capital investment Higher working capital requirements due to increased sales and higher launch cadence Higher capital spending to support new business backlog, replacement business, and electrification programs 1 Includes costs associated with business acquisitions and divestitures and restructuring. 2 Changes in working capital relating to interest, taxes, restructuring, and transaction costs are included in those respective categories. See appendix for comments regarding the presentation of non-GAAP measures. Changes from Prior Year ($ 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
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
Appendix
2023 Q3 Sales and Profit Change by Segment © 2023 Dana
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
Diluted Adjusted EPS
Segment Data
Segment Data Continued
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.