Dana Incorporated Q4 FY2025 earnings call

• Final results for fourth quarter came in higher than preliminary estimates. Margin at 11.1%, 40 basis points higher. Full-year cash flow at $331 million, highest since 2013. - Completed sale of Off-Highway business on January 1 and used proceeds to repay debt. - Cost reduction: originally committed to $200 million run rate, upped to $300 million, delivered $248 million in the year with a run rate of $325 million going into 2026. - Confident in substantially eliminating stranded costs next year. - Backlog at $750 million with $200 million flowing through in 2026. - Capital return: returned just over $700 million to shareholders last year, upped share repurchase to $2 billion through 2030, bought back over 34 million shares in 2025 at an average cost of $18.96, paid $54 million in dividends, and upped dividend by 20% to $0.12 a quarter. - Market outlook: light truck market steady, commercial vehicle side has some optimism for improved volumes in the back half. - New business pursuit activities: trend has pivoted from 80% EV-level activity to heavy mix toward traditional ICE powertrain types of vehicles.

Fourth quarter sales were $1,867 million, an increase of $93 million compared with last year. Adjusted EBITDA for the quarter was $208 million, resulting in an 11.1% margin. Full-year 2025 sales were $7,500 million, down $234 million from 2024. Full-year adjusted EBITDA was $610 million, an improvement of $215 million from the prior year, resulting in an 8.1% margin. Light truck market holding steady with flat volume year over year from 2025 levels. Commercial vehicle side built around flat volumes to 2025 levels with some optimism for improved volumes in the back half of the year. New business backlog at $750 million with $200 million flowing through in 2026.

• 2026 revenue expected to be approximately $7,500 million, consistent with 2025. - Adjusted EBITDA expected to be around $800 million, an increase of roughly $200 million compared with 2025. - Diluted adjusted EPS expected to be $2.50 a share at the midpoint of the range. - Adjusted free cash flow expected to be around $300 million, in line with 2025 performance. - 2030 financial targets: targeting close to $10 billion of sales, EBITDA margins to increase by close to 400 basis points to 14% to 15%, adjusted free cash flow at 6%.

Q: Colin Langan from Wells Fargo asked about the $10 billion sales target by 2030, including where the other $2 billion comes from, and about EV recovery impacts.

A: Bruce McDonald said of the $2.5 billion growth over five years, backlog for 2027-2028 is $550 million, normalization in North America CV market is worth another $2.3 billion, and there are five growth strategies including ICE, CV, aftermarket, EV, and applied technologies. Tim Kraus said EV recoveries were a net coverage of costs and not a big tailwind in short term.

Q: Tom Narayan from RBC Capital Markets asked about EBITDA margin breakdown to 2030.

A: Bruce McDonald said margin enhancement is from structural cost reduction and systems investments, and to see at Capital Markets Day.

Q: Edison Yu from Deutsche Bank asked about cash position and potential investments.

A: Tim Kraus said there could be opportunities for acquisitions or other investments, and they are focused on executing the plan.

Q: James Picariello from BNP Paribas asked about cash deployment and noncore operations.

A: Tim Kraus said they are looking at smaller noncore operations.

Q: Emmanuel Rosner from Wolfe Research asked about drivers of 400 bps margin expansion.

A: Timothy Kraus said to see at Capital Markets Day, and Bruce McDonald said margin expansion is from investments in manufacturing operations and automation.