Dana Incorporated Reports 2023 First-quarter Financial Results with Record Sales and Higher Profit

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Dana Incorporated Reports 2023 First-quarter Financial Results with Record Sales and Higher Profit

Apr. 28, 2023

Key Highlights

Sales of $2.64 billion, an increase of $164 million or 7 percent over last year
Net income attributable to Dana of $28 million, an increase of $11 million over last year
Diluted EPS of $0.19; diluted adjusted EPS of $0.25, an increase of $0.09 per share
Adjusted EBITDA of $204 million, an increase of $34 million or 20 percent over last year
Adjusted EBITDA margin improved by 80 basis points compared with last year
Leveraging cutting-edge 4-in-1 e-Propulsion Systems across all end markets

MAUMEE, Ohio, April 28, 2023 /PRNewswire/ -- Dana Incorporated (NYSE: DAN) today announced financial results for the first quarter of 2023.

"Dana achieved strong sales of $2.64 billion in the first quarter, with significantly improved profit margin over the previous year, driven by healthy customer demand in all our end markets, as well as new and replacement business rolling-on," said James Kamsickas, Dana chairman and chief executive officer.

"Operationally, we executed very well in the quarter, overcoming the pervasive challenges that continue to impact the mobility industry, including inflationary pressures, customer-demand volatility, supply-chain disruptions, and currency fluctuations. Our team has done an outstanding job remaining focused on our enterprise-wide transformation to a frontrunning e-Propulsion mobility supplier. We are capitalizing on the strength of our sales backlog and launching a record number of new programs for both traditional and electric-vehicle solutions, positioning us well for the future."

First-quarter 2023 Financial Results
Sales for the first quarter of 2023 totaled $2.64 billion, compared with $2.48 billion in the same period of 2022, representing a $164 million increase driven by improved demand, cost-recovery actions, and conversion of the sales backlog, partially offset by the translation of foreign currencies.

Adjusted EBITDA for the first quarter of 2023 was $204 million, compared with $170 million for the same period in 2022. The 80 basis points of margin improvement in the first quarter of 2023 was primarily driven by higher sales volume, net customer pricing and recovery actions, and lower periodic spending on development for electric-vehicle products. It was partially offset by production inefficiencies driven by volatile customer demand schedules and negative exchange-rate impacts.

The net income attributable to Dana was $28 million, or $0.19 per share, compared with net income of $17 million, or $0.12 per share, in the first quarter of 2022.

Adjusted net income attributable to Dana was $36 million, and diluted adjusted earnings per share were $0.25 for the first quarter of 2023, compared with adjusted net income of $23 million and $0.16 per share in 2022.

Operating cash flow in the first quarter of 2023 was a use of $170 million, compared with a use of $121 million in the same period of 2022. Free cash flow was use of $290 million, compared with a use of $237 million in the first quarter of 2022. The increased use was due to higher working capital requirements primarily driven by increased inventory to support program launches and higher demand in heavy-vehicle markets.

"Dana is off to a good start to the year, which gives us added confidence in our full-year guidance," said Timothy Kraus, Dana senior vice president and chief financial officer. "As we progress through the year, we now expect a mostly steady improving trajectory as our program launch cadence ramps up. We remain focused on offsetting key external cost drivers such as customer production volatility, inflation, currency fluctuations, and commodity prices."

2023 Financial Targets Remain Unchanged¹

Sales of $10.35 to $10.85 billion;
Adjusted EBITDA of $750 to $850 million, an implied adjusted EBITDA margin of approximately 7.5 percent at the midpoint of the range;
Diluted adjusted EPS of $0.25 to $0.75;
Operating cash flow of approximately, $510 to $560 million; and
Free cash flow of breakeven to $50 million

¹	Net income and diluted EPS guidance are not provided, as discussed below in Non-GAAP Financial Information.

Dana to Host Conference Call at 9 a.m. Friday, April 28
Dana will discuss its fourth-quarter and full-year results in a conference call at 9 a.m. EDT on Friday, April 28. 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. EDT.

A webcast replay can be accessed via Dana's investor website following the call.

Non-GAAP Financial Information
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.

Adjusted net income (loss) attributable to the parent company is a non-GAAP financial measure which we have defined as net income (loss) attributable to the parent company, excluding any discrete income tax items, restructuring charges, amortization expense and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to net income attributable to the parent company reported by other companies. Adjusted net income (loss) attributable to the parent company is neither intended to represent nor be an alternative measure to net income (loss) attributable to the parent company reported in accordance with GAAP.

Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net income (loss) attributable to the parent company divided by adjusted diluted shares. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income (loss) attributable to the parent company. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported in accordance with GAAP.

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.

The accompanying financial information provides reconciliations of adjusted EBITDA, diluted adjusted EPS 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 and diluted adjusted EPS outlook to the most comparable GAAP measures of net income (loss) and diluted EPS. Providing net income (loss) and diluted EPS 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 (loss) and diluted EPS, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented 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 $10.2 billion in 2022 with 42,000 people in 31 countries across six continents. Dana, with a history dating to 1904, was named among the "World's Most Ethical Companies" for 2023 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.

DANA INCORPORATED
Consolidated Statement of Operations (Unaudited)
For the Three Months Ended March 31, 2023 and 2022

	Three Months Ended
(In millions, except per share amounts)	March 31,
	2023	2022
Net sales	$ 2,644	$ 2,480
Costs and expenses
Cost of sales	2,415	2,283
Selling, general and administrative expenses	140	130
Amortization of intangibles	3	4
Restructuring charges, net	1	(1)
Other income (expense), net	5	2
Earnings before interest and income taxes	90	66
Interest income	4	2
Interest expense	34	31
Earnings before income taxes	60	37
Income tax expense	30	18
Equity in earnings of affiliates	1	1
Net income	31	20
Less: Noncontrolling interests net income	4	4
Less: Redeemable noncontrolling interests net loss	(1)	(1)
Net income attributable to the parent company	$ 28	$ 17

Net income per share available to common stockholders
Basic	$ 0.19	$ 0.12
Diluted	$ 0.19	$ 0.12

Weighted-average shares outstanding - Basic	143.9	144.2
Weighted-average shares outstanding - Diluted	144.3	145.3

DANA INCORPORATED
Consolidated Statement of Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2023 and 2022

		Three Months Ended
(In millions)		March 31,
		2023	2022
Net income		$ 31	$ 20
Other comprehensive income (loss), net of tax:
	Currency translation adjustments	25	39
	Hedging gains and losses	15	(4)
	Defined benefit plans	1	1
	Other comprehensive income	41	36
Total comprehensive income		72	56
	Less: Comprehensive income attributable to noncontrolling interests	(4)	(4)
	Less: Comprehensive loss attributable to redeemable noncontrolling interests		1
Comprehensive income attributable to the parent company		$ 68	$ 53

DANA INCORPORATED
Consolidated Balance Sheet (Unaudited)
As of March 31, 2023 and December 31, 2022

(In millions, except share and per share amounts)			March 31,	December 31,
			2023	2022
Assets
Current assets
Cash and cash equivalents			$ 401	$ 425
Accounts receivable
Trade, less allowance for doubtful accounts of $13 in 2023 and $11 in 2022			1,624	1,374
Other			248	202
Inventories			1,723	1,609
Other current assets			237	219
Total current assets			4,233	3,829
Goodwill			262	259
Intangibles			197	201
Deferred tax assets			405	397
Other noncurrent assets			106	123
Investments in affiliates			138	136
Operating lease assets			319	311
Property, plant and equipment, net			2,233	2,193
Total assets			$ 7,893	$ 7,449

Liabilities, redeemable noncontrolling interests and equity
Current liabilities
Short-term debt			$ 321	$ 52
Current portion of long-term debt			32	8
Accounts payable			1,919	1,838
Accrued payroll and employee benefits			210	214
Taxes on income			72	54
Current portion of operating lease liabilities			35	36
Other accrued liabilities			287	277
Total current liabilities			2,876	2,479
Long-term debt, less debt issuance costs of $21 in 2023 and $22 in 2022			2,328	2,348
Noncurrent operating lease liabilities			282	277
Pension and postretirement obligations			301	298
Other noncurrent liabilities			242	249
Total liabilities			6,029	5,651
Commitments and contingencies
Redeemable noncontrolling interests			206	195
Parent company stockholders' equity
	Preferred stock, 50,000,000 shares authorized, $0.01 par value,
		no shares outstanding	-	-
	Common stock, 450,000,000 shares authorized, $0.01 par value,
		144,330,117 and 143,366,482 shares outstanding	2	2
	Additional paid-in capital		2,237	2,229
	Retained earnings		333	321
	Treasury stock, at cost (447,594 and zero shares)		(8)	-
	Accumulated other comprehensive loss		(961)	(1,001)
		Total parent company stockholders' equity	1,603	1,551
Noncontrolling interests			55	52
		Total equity	1,658	1,603
		Total liabilities, redeemable noncontrolling interests and equity	$ 7,893	$ 7,449

DANA INCORPORATED
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2023 and 2022

	Three Months Ended
(In millions)	March 31,
	2023	2022
Operating activities
Net income	$ 31	$ 20
Depreciation	92	91
Amortization	5	6
Amortization of deferred financing charges	1	1
Earnings of affiliates, net of dividends received	(1)	(1)
Stock compensation expense	6	4
Deferred income taxes	(8)	(25)
Pension expense, net		(1)
Change in working capital	(304)	(211)
Other, net	8	(5)
Net cash used in operating activities	(170)	(121)

Investing activities
Purchases of property, plant and equipment	(120)	(116)
Proceeds from sale of property, plant and equipment	2	2
Purchases of marketable securities		(5)
Proceeds from sales and maturities of marketable securities		2
Net cash used in investing activities	(118)	(117)

Financing activities
Net change in short-term debt	269	278
Proceeds from long-term debt		2
Repayment of long-term debt	(2)	(3)
Deferred financing payments	(2)
Dividends paid to common stockholders	(15)	(14)
Distributions to noncontrolling interests	(1)	(1)
Contributions from redeemable noncontrolling interests	10	2
Payments to acquire noncontrolling interests		(3)
Repurchases of common stock		(25)
Other, net	(4)	(7)
Net cash provided by financing activities	255	229

Net decrease in cash, cash equivalents and restricted cash	(33)	(9)
Cash, cash equivalents and restricted cash − beginning of period	442	287
Effect of exchange rate changes on cash balances	10	2
Cash, cash equivalents and restricted cash − end of period	$ 419	$ 280

DANA INCORPORATED
Reconciliation of Net Cash Provided By (Used In) Operating Activities to
Free Cash Flow (Unaudited)

	Three Months Ended
(In millions)	March 31,
	2023	2022
Net cash used in operating activities	$ (170)	$ (121)
Purchase of property, plant and equipment	(120)	(116)
Free cash flow	$ (290)	$ (237)

DANA INCORPORATED
Segment Sales and Segment EBITDA (Unaudited)
For the Three Months Ended March 31, 2023 and 2022

	Three Months Ended
(In millions)	March 31,
	2023	2022
Sales
Light Vehicle	$ 962	$ 985
Commercial Vehicle	522	463
Off-Highway	842	744
Power Technologies	318	288
Total Sales	$ 2,644	$ 2,480

Segment EBITDA
Light Vehicle	$ 49	$ 31
Commercial Vehicle	17	10
Off-Highway	118	100
Power Technologies	23	29
Total Segment EBITDA	207	170
Corporate expense and other items, net	(3)
Adjusted EBITDA	$ 204	$ 170

DANA INCORPORATED
Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited)
For the Three Months Ended March 31, 2023 and 2022

	Three Months Ended
(In millions)	March 31,
	2023	2022
Segment EBITDA	$ 207	$ 170
Corporate expense and other items, net	(3)
Adjusted EBITDA	204	170
Depreciation	(92)	(91)
Amortization	(5)	(6)
Non-service cost components of pension and OPEB costs	(3)
Restructuring charges, net	(1)	1
Stock compensation expense	(6)	(4)
Strategic transaction expenses	(1)	(4)
Distressed supplier costs	(8)
Other items	2
Earnings before interest and income taxes	90	66
Interest income	4	2
Interest expense	34	31
Earnings before income taxes	60	37
Income tax expense	30	18
Equity in earnings of affiliates	1	1
Net income	$ 31	$ 20

DANA INCORPORATED
Reconciliation of Net Income Attributable to the Parent Company to
Adjusted Net Income Attributable to the Parent Company and
Diluted Adjusted EPS (Unaudited)
For the Three Months Ended March 31, 2023 and 2022

(In millions, except per share amounts)
		Three Months Ended
		March 31,
		2023	2022
Net income attributable to parent company		$ 28	$ 17
Items impacting income before income taxes:
	Amortization	5	5
	Restructuring charges, net	1	(1)
	Strategic transaction expenses	1	2
	Distressed supplier costs	8
	Loss on disposal group held for sale
	Other items	(1)	2
Items impacting income taxes:
	Net income tax expense on items above	(6)	(2)
Adjusted net income attributable to the parent		$ 36	$ 23

Diluted shares - as reported		144.3	145.3
Adjusted diluted shares		144.3	145.3

Diluted adjusted EPS		$ 0.25	$ 0.16

SOURCE Dana Incorporated

Media Contact: Jeff Cole, +1-419-887-3535, jeff.cole@dana.com; Investor Contact: Craig Barber, +1-419-887-5166, craig.barber@dana.com

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Dana Incorporated Reports 2023 First-quarter Financial Results with Record Sales and Higher Profit