Dana Incorporated Provides Business Update, Announces Preliminary Full-Year 2024 Financial Results and 2025 Guidance; Increases Expected Annualized Total Cost Reduction Savings to $300 Million

Rhea-AI Summary

Dana Incorporated (NYSE: DAN) announced preliminary unaudited financial results for 2024 and provided 2025 guidance. The company reported preliminary 2024 sales of $10.3 billion and adjusted EBITDA of $885 million, with an 8.6% margin, showing a 60-basis-point improvement from 2023.

The company is increasing its total cost reduction target to $300 million through 2026 and simplifying its organizational structure into two segments: Light Vehicle Systems and Commercial Vehicle Systems. Dana is also pursuing the sale of its Off-Highway business.

For 2025, Dana projects sales of $9.525-10.025 billion, adjusted EBITDA of $925-1,025 million (approximately 10% margin), and free cash flow of $175-275 million. The company expects 2026 adjusted EBITDA margin between 9.5-10.5%, with free cash flow targeted at approximately 4% of sales.

Positive

• Adjusted EBITDA margin improved by 60 basis points to 8.6% in 2024
• Increased cost reduction target to $300 million through 2026
• Free cash flow improved to $70 million in 2024 from -$25 million in 2023
• Projected adjusted EBITDA margin improvement to 10% in 2025

Negative

• Sales declined to $10.3 billion in 2024 from $10.6 billion in 2023
• Weakening demand for EVs, commercial trucks, and off-highway equipment
• Higher than expected working capital requirements in Q4 2024
• Projected lower sales for 2025 due to reduced off-highway equipment demand

Insights

Financial Analyst

The preliminary 2024 results and 2025 guidance from Dana showcase a compelling transformation story with notable operational improvements despite market headwinds. The 60-basis-point improvement in adjusted EBITDA margin to 8.6% demonstrates successful execution of cost-reduction initiatives, particularly impressive given the $300 million decrease in sales to $10.3 billion.

Several key developments warrant attention:

• The increased cost reduction target of $300 million through 2026 ($175 million in 2025 alone) represents a more aggressive stance on operational efficiency
• The organizational restructuring into two segments (Light Vehicle Systems and Commercial Vehicle Systems) should streamline operations and reduce organizational complexity
• Free cash flow improvement to $70 million in 2024 from negative $25 million in 2023 indicates better operational execution, despite Q4 working capital challenges

The 2025 guidance is particularly noteworthy, targeting adjusted EBITDA margins of approximately 10% at midpoint, with further expansion to 9.5-10.5% by 2026. This trajectory suggests management's confidence in sustainable margin improvement through cost reduction and operational excellence initiatives.

However, investors should monitor several risk factors:

• The projected sales decline in 2025 reflects continuing market challenges in off-highway equipment and EV adoption
• Working capital management needs improvement given Q4 2024 performance
• The pending Off-Highway business sale execution and ultimate use of proceeds will be important for shareholder value creation

MAUMEE, Ohio, Jan. 24, 2025 /PRNewswire/ -- Dana Incorporated (NYSE: DAN) today announced select, preliminary, unaudited financial results for the full year ended December 31, 2024, presented its financial outlook for 2025, and provided a business update including a simplified organizational structure and the status of the proposed sale of its Off-Highway business and cost-savings actions.

Full-Year 2024, Preliminary, Unaudited Financial Results

• Sales of approximately $10.3 billion 
• Adjusted EBITDA of approximately $885 million
• Adjusted EBITDA margin of 8.6 percent, a projected 60-basis-point improvement compared to 2023

R. Bruce McDonald, chairman and chief executive officer said, "Dana is continuing to execute on our strategic plan to accelerate value creation and today's preliminary financial results are a reflection of the early work we have done to improve our cost structure, increase our efficiency, and create a more focused and nimbler Dana."

Mr. McDonald continued, "Our Board and leadership team continue to take swift and bold action to position Dana for profitable growth and value creation in any environment. Our cost-savings actions are well underway, and we are pleased to increase our total cost reduction target to $300 million through 2026. Our 2025 outlook reinforces the impact of these actions, which will help solidify Dana's leadership position and enable us to capitalize on the strength of our traditional on-highway businesses while remaining a leader in the EV transition." 

Preliminary sales for the full year 2024 were approximately $10.3 billion in line with prior guidance, compared with $10.6 billion in 2023. Weakening market demand for electric vehicles, commercial trucks, off-highway equipment, and higher inventory of certain light truck programs drove lower sales.

Preliminary adjusted EBITDA for 2024 was approximately $885 million or 8.6 percent of sales, compared with $845 million or 8.0 percent of sales for 2023. Efficiency improvements and cost-savings actions offset the margin impact of lower sales and inflation.

Preliminary free cash flow was approximately $70 million, compared with a use of $25 million in 2023. Higher than expected working capital requirements in the fourth quarter lowered free cash flow from our prior estimate.

Simplifying Organizational Structure with Two Business Segments

Dana today also announced changes to its reportable business segments, which will take effect in the first quarter of 2025. The company's Power Technology segment will be split, integrating the OEM-facing businesses into its Light Vehicle Drive Systems segment and the aftermarket business into its Commercial Vehicle Drive and Motion Systems segment. These changes reflect Dana's commitment to streamlining the business, enhancing its go-to market approach, and serving customers more efficiently. Dana's new reportable segments will be:

• Light Vehicle Systems
• Commercial Vehicle Systems

The new organizational structure follows the Company's November 25, 2024, announcement that it is pursuing a sale of its Off-Highway business, which continues to advance. The Board believes the sale will unlock substantial value for shareholders and that proceeds from a potential sale will enable Dana to strengthen its balance sheet through substantially reduced leverage and to return capital to shareholders. While the Company and its advisors believe there is strong interest in the business and an agreement may be announced by the reporting of first quarter earnings, there can be no assurance that the sale process for Off-Highway will result in a transaction. The Off-Highway segment will be reported as discontinued operations once an agreement is reached.

Select 2025 Financial Targets (Includes Off-Highway business for the full year)

• Sales of $9.525 to $10.025 billion;
• Adjusted EBITDA of $925 to $1,025 million, an implied adjusted EBITDA margin of approximately 10.0 percent at the midpoint of the range; and
• Free cash flow of $175 to $275 million.

"Today we are providing guidance on our sales, adjusted EBITDA, and free cash flow targets for 2025," said Timothy Kraus, senior vice president and chief financial officer. "While sales are expected to be lower for the year, mainly driven by lower demand for off-highway equipment and translation of foreign currency, the impact of our cost-savings actions totaling $175 million in 2025 and efficiency improvements will drive higher margins. Improved working capital efficiency and reduced capital expenditures will increase free cash flow. Primarily due to the annualized benefit of our cost reduction actions, we expect 2026 adjusted EBITDA margin of between 9.5 to 10.5 percent. Over the business cycle we expect free cash flow to be approximately four percent of sales and maintain one times net leverage."

Dana to Host Conference Call at 9 a.m., Friday, Jan. 24
Dana will discuss its third-quarter results in a conference call at 9 a.m. EST on Friday, Jan. 24. The conference call can be accessed by telephone 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. Phone registration will be available beginning at 8:30 a.m. EST.
A webcast replay can be accessed via Dana's investor website following the call.

Non-GAAP Financial Measures
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.

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.

Please reference the "Non-GAAP financial information" accompanying our quarterly earnings conference call presentations on our website at www.dana.com/investors for reconciliations of adjusted EBITDA 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 outlook to the most comparable GAAP measures of net income. Providing net income (loss) 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, including restructuring actions, asset impairments and income tax valuation adjustments. The reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented on our website are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

Forward-Looking Statements
Certain statements and projections contained in this news release 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," and 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 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 in the 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 and clean-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 $10.6 billion in 2023 with 42,000 people in 31 countries across six continents. With a history dating to 1904, Dana was named among the "World's Most Ethical Companies" for 2023 and 2024 by Ethisphere and as one of "America's Most Responsible Companies 2023" by Newsweek. The company is driven by a high-performance culture 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.

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FAQ

What are Dana's (DAN) preliminary financial results for 2024?

Dana reported preliminary 2024 sales of $10.3 billion, adjusted EBITDA of $885 million with an 8.6% margin, and free cash flow of approximately $70 million.

What is Dana's (DAN) cost reduction target through 2026?

Dana has increased its total cost reduction target to $300 million through 2026, with $175 million in cost savings expected in 2025.

What are Dana's (DAN) financial targets for 2025?

Dana projects 2025 sales of $9.525-10.025 billion, adjusted EBITDA of $925-1,025 million, and free cash flow of $175-275 million.

How is Dana (DAN) restructuring its business segments in 2025?

Dana is simplifying its structure into two segments: Light Vehicle Systems and Commercial Vehicle Systems, while pursuing the sale of its Off-Highway business.

What is Dana's (DAN) expected EBITDA margin for 2026?

Dana expects its 2026 adjusted EBITDA margin to be between 9.5% and 10.5%, with free cash flow approximately 4% of sales.