Dana Incorporated Q2 FY2025 earnings call

• Announced sale of Off-Highway business to Allison for ~$2.7 billion, net cash proceeds ~$2.4 billion, closing expected in Q4 2025.
• Raised capital return to shareholders to $600 million from $550 million, aiming to reduce share count by ~25% to ~110 million shares by year-end.
• Cost reduction initiatives: Upped cost reduction run rate to $310 million by 2026, with $60 million achieved in Q2 and $110 million to date.
• Tariff mitigation: Expecting over 80% recovery for the year, with Q2 headwinds due to timing, but working with customers to mitigate tariff impacts.
• New Dana outlook: Focused on Light Vehicle and North American-centric, with strong aftermarket and thermal/ceiling business contributing to profit improvement.

For continuing operations (new Dana), sales in Q2 2025 were $1.94 billion, with adjusted EBITDA of $145 million (7.5% margin). Discontinued operations (Off-Highway) saw sales down due to tariffs, with a $20 million reduction in profit. Revenue contribution: Continuing operations are the focus, with Off-Highway being a discontinued segment.

• Sales: Continuing operations sales expected ~$7.4 billion at midpoint, up $250 million from previous expectation.
• Adjusted EBITDA: Continuing operations expected ~$575 million at midpoint, up $35 million from previous.
• Free cash flow: Full year adjusted free cash flow expected ~$275 million at midpoint, up $50 million from previous, driven by higher profit and working capital efficiencies.
• 2026 margin: Targeting 10% to 10.5% margin, driven by annualized cost savings, backlog, and operational performance.

• Tariff uncertainties: Impact on volumes, especially for European product imported into the US facing tariffs.
• Operational challenges: Footprinting inefficiencies in previous quarters that could affect performance if not normalized.
• Market softness: Softening in North America CV partially offset by South America and Europe, but still a risk.

Q: On 2026 outlook, can you provide color on new business wins?

A: Programs with JLR launching next year, volume uplift and additional amounts on Ford Super Duty, and smaller programs across customers worldwide.

Q: What was the remainder of the cost out in Q2?

A: It was in corporate, reallocated back into the businesses.

Q: How to bridge free cash flow?

A: Help from EBITDA, reduced onetime costs, and working capital efficiencies