DANA Inc Q3 FY2024 earnings call

• Sales of $2.5 billion in Q3 2024, lower than prior year due to soft EV and ICE demand. - Adjusted EBITDA $232 million, 9.4% margin, with 30 basis points profit margin expansion. - Off-highway segment had lower demand, especially in Europe. - Operating priorities for 2024-2025 include maintaining disciplined approach, leveraging synergies, optimizing resources, and prudent capital use. - Dana Graziano's modular, high-performance hybrid 8-speed dual-clutch transmission selected as an Automotive News PACE Award Finalist.

Dana reported sales of $2.5 billion in the third quarter of 2024, lower than the prior year due to softening demand for electric vehicles and reduced internal combustion engine vehicle sales. Adjusted EBITDA for the quarter was $232 million, down slightly from last year but with a 30 basis points profit margin expansion to 9.4%. The off-highway segment saw lower demand, particularly in Europe within construction and agriculture equipment markets. EV organic sales declined by $54 million, while Power Technologies saw gains in battery cooling sales. Revenue contribution: Sales were $2.5 billion total, with various segments impacted by market conditions.

• Lowered sales expectation for 2024 to ~$10.3 billion and adjusted EBITDA midpoint to ~$875 million, implying 8.5% profit margin (50 basis points increase over last year). - Maintained full year free cash flow guidance at $100 million. - GAAP EPS guidance ~$0.15 per share, adjusted EPS ~$0.85 per share at midpoint of range.

• Soft end markets for EVs and ICE vehicles, impacting sales. - Failed sale of off-highway division due to buyer's financing issues. - Commodity price impacts affecting profit through timing of cost mechanisms and recoveries. - Market volatility and global uncertainty affecting production and demand.

Q: About the guidance slide, traditional organic revenue down $345 million but EBITDA only down $5 million, asking about company-wide efficiencies.

A: Tim Kraus explained traditional organic sales fall in heavy vehicle markets with quick order drops, and better cost efficiencies and mix contributing to lower EBITDA drop.

Q: About EV side, revenue down $45 million on EBITDA, asking about OEM deferrals.

A: Tim Kraus said EV demand fell dramatically with mix change and launch-related costs in battery cooling business.

Q: Comment on off-highway business sale fall-through.

A: Tim Kraus said buyer's financing fell through.

Q: About off-highway end market weakness and fourth quarter outlook.

A: Tim Kraus said market weakness across ag, construction, etc., with markets moving quickly and downturns potentially shorter.

Q: About cost performance and capital base.

A: Tim Kraus said cost savings are structural and enduring, with ability to flex capital base for EV investments based on market demand.

Q: About free cash flow seasonality and 2025 outlook.

A: Tim Kraus said strong fourth quarter cash flow due to seasonality, and 2025 working capital opportunities.

Q: About synergies between off-highway and other businesses.

A: Jim Kamsickas said Dana's businesses are interconnected with Power Techs Group supporting thermal, sealing, and electrification capabilities.

Q: About efficiency actions and runway, and EV CapEx outlook.

A: James Kamsickas said company is system-driven with incremental cost improvements, and Tim Kraus said CapEx is flexed based on EV program timing and R&D spending is adjusted for delayed programs.