DANA Inc Q4 FY2024 earnings call

• Bruce mentioned sales softness in EV and off-highway, but EBITDA improved due to strong operating performance and $300 million cost reduction program with $10 million in Q4. • Focus on completing off-highway divestiture with robust process and strong interest, targeting early Q2 signing and Q2 fiscal 2025 closing. • EV approach fully implemented, derisking future capital; power technologies consolidation savings ~$15-$20 million run rate. • Targeting net leverage of one times through the cycle, aiming for 8.1%-8.6% margins in 2025 and double digits in 2026. • Market outlook: light vehicle flattish, commercial vehicle softening but expected to stabilize by end of year, off-highway showing better than feared but still with tough comps in Q1 and Q2.

For the full year, sales were down nearly $300 million, impacted by softness in EV and off-highway segments. EBITDA was up $40 million with operating margins up 60 basis points. Free cash flow improved from slightly negative in 2023 to $70 million in 2024. Backlog was $650 million, down $300 million from the previous year. Revenue contribution details: Full year sales were $10.28 billion; fourth quarter sales were $2.34 billion.

• 2025 full year sales expected ~$9.75 billion (midpoint), down ~$500 million from 2024. • Adjusted EBITDA expected ~$975 million (midpoint), ~$90 million higher than 2024, margin 10% (140 basis points higher than 2024). • Full year free cash flow expected ~$225 million, ~$155 million higher than 2024. • Adjusted EPS guidance ~$1.65 per share (midpoint). • 2025 cost savings expected $175 million, foreign currency translation headwind ~$195 million on sales, commodity headwind to sales ~$30 million with $20 million profit headwind.

• Uncertainty around tariffs on steel and aluminum, impact on costs and ability to pass through to customers. • Volatility in tax rates due to valuation allowances related to mix of income and ongoing off-highway sale. • Continued market weakness in off-highway and commercial vehicle segments posing risks to financial performance.

Q: Regarding the off-highway divestiture timeline, is it based on specific interest from bidders or general interest?

A: Timothy Kraus stated there's a robust process with multiple interested parties and they are well along in the process, expecting to sign a transaction in early Q2.

Q: How does the tax situation impact EPS guidance?

A: Timothy Kraus explained that valuation allowances cause volatility in tax rates due to mix of income, but anticipation of relieving valuation allowance after off-highway sale and cost savings program implementation.

Q: When will Powertec be folded into light vehicle and commercial vehicle?

A: Timothy Kraus said it will be done during Q1, so it will be reflected in first quarter reporting.

Q: What's the outlook for commercial vehicle turnaround?

A: Timothy Kraus mentioned there were one-time items impacting fourth quarter, with significant cost savings coming through in commercial vehicle as part of the three-year cost program, expecting turnaround to start in first quarter.

Q: How does the backlog split between light vehicle and off-highway?

A: Timothy Kraus noted the vast majority of backlog is in light vehicle and power technologies, with only a small portion in off-highway.