Dana (DAN) 30 Apr 242024 Q1 Earnings call transcript

Good morning, and welcome to Dana Incorporated's First Quarter 2024 Financial Webcast and Conference Call. My name is Regina, and I will be your conference facilitator. Please be advised that our meeting today, both the speakers' remarks and Q&A session will be recorded for replay purposes. [Operator Instructions] At this time, I would like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations and Corporate Communications, Craig Barber. Please go ahead, Mr. Barber.

good today on XXXX for and for call. earnings Regina, us joining our you, morning, the everyone, Thanks call. Thank first quarter

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are Officer; Jim Chief President morning and Jim? Vice Senior this and Kraus, Chief Chairman Executive Financial and Officer. Kamsickas, call the Timothy On

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year on is quarter. a of our strong for talented result and page, above very trajectory sales and rate our Dana historical conversion improvement first level performance the on This in functions, organic to Dana products regions, positions the systematically continuous As the well a all first a stated conversion XX% company achieve on driving this the progress achieved full cohesive of quarter end and is synergies markets. team traditional across geographical and targets. Achieving

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normalize. further as continue we business first, stated, their customer stabilization to supply continue of we chains improving to: schedules to the As anticipate due Dana's the overall environment production

in across on growth. greater productivity lower enterprise. improved actions of customer launch third, and Second, the cross-company cost, and which drive production all the the slide, are the production stability of execution of has profitable programs efficiency Beginning that continued coming efficiency and greater side left of online, in new refreshed Dana's areas continued resulted

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the a and year, We the production by production refreshed in vehicle to of for recently years full stable production. volumes see to estimates. key growth, normalize vehicle heavy slight low lower continue demand single-digit vehicles After third-party seeing although for up are light several remains last improvement percentages trending be we compared still frame market to as we platforms customer anticipate and

to production industry cost key bottom Moving moderating which of takeaways labor production is inflation are the driving despite the continue show to OEM improvements seeing our globally. cost that stabilize, the overall increasing schedules efficiency. across we slide, in

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a heavy-duty distributor independent services. earned largest partnership is America's aftermarket we which FleetPride, of Inc., and supplier Additionally, award from parts

continue reason, that very that select a We fortunate to our recognize also commitment for customers partner. are supplier Dana our as and preferred

in Spicer Top Trucking award the Products innovation, of addition Dana area and the in Magazine's was honored to with Electrified XX Heavy Award technology for XXXX Third, PACE announced, just I e-Axles. Zero-X Duty the

Our so who like is are through committed way. Thank Class wide variety it was will full-scale a electric to fuel financials. for over Dana vehicles. full it gratifying time tandem the today. all e-Axles designed the most a of What adoption you to are right suite for company of and to running single cell the and be of how Tim, you hydrogen I'd your here. lot to battery across women both the applications There's men and of walk of X X proud and amazingly turn

and loss commercial is difference within and Slide and Higher cost EBITDA our than the from working previously lower demand segment. turn driven $XX sales. the approximately and $X.XX was share. to programs and sales million Europe. On order sell. The the points sale held newly Incremental partially a of company. million X higher, were year. hydraulics and above X.X%, EBITDA an also cash will first $XX estimated increased drove improved to the $X now organic our by see due Commercial Operating $XX the customer less allowance The lower to offset as $X and the me per of improvements value finally, was $X.X Please a year margin And left, attributable cost business the on Jim, was the the million investment to for by for line. in transaction of million, conversion announced improved margin. company driven first capital last battery than is previous by sales to programs combined headwind. transaction business a $X was more the to first of fair a Adjusted year, market in demand benefit the segment, points on tax the million million you by margin profit EV cooling good offsetting of lower products. off-highway was engineering $XX the change. Beginning traditional million as program segment. billion, was our $XX is for of last organic for share over This in million $XX was aided turn better to on profit, entire strong a market platforms EV end entire expected The due renewed valuation to across basis $XXX triggered basis organic income growth tax higher this first $X improvement million you, noncore during primarily efficiencies, million vehicle Slide XX vehicle Vehicle driven points second close efficiencies and a or our with sales loss requirements. due million contribution of lower strong profit was X, our This adjust $XX last primarily use Net by higher million Slide Sales in for assets income vehicle. EBITDA XXXX. net recognized to $XX classified carrying gains end of related to our XX and the XX XX stable yielded year, share in demand and sales entirely impact the growth of with positive basis drivers of refreshed of across normally morning. Dana market market $XX Thank the of were adjusted compared million off-Highway to for for to the sale patterns is million results. XXXX due sales Please the value of and in EBIT, the case divestiture Adjusted quarter $XXX quarter This flow a was of cost gains quarter the million. increased of margin review was agriculture quarter quarter

Foreign as $X increased currency by impact million and $X million by margin lowered minimal translation had profit it sales no impact. with

refinancing $X margin. turn quarter lower our commodity a to customers prices, The cost profit lower resulting recovery recovery timing in million of XX first decrement profit partially year of last quarter to first better interest offset million, profit million the is first timing XXXX. Cash working rates were the remain receivables especially in by capital last by from million $XX higher from commodity of cash being lower was flow for than of point cost the offset quarter will falling payments compared now the to agreements driven in year's capital was first increase we free of use year. was within million for by the the $XX inventory net $XX flow working quarter on efficiency, due cash first XX to to flow. Free the million mechanisms in of $XXX prices year Finally, details of management. commodity which last $XXX quarter last actions. the than interest of commodity as a benefit I the Higher by improved Slide basis and focused requirements due the and with

updated $XX driven spending for million more by lower Finally, XX me business launch cadence than this to support capital XXXX. Slide Please normalized backlog a now with to turn year, guidance new quarter. for was an last

our are cash for expectations are and outlook for flow. free sales year, this our affirming We increasing and we profit

revised XX of at XXXX. $XXX X.X%, the midpoint of to We to million year. an is to of X.X% Profit range, over guidance EBITDA up our about a midpoint our million is of which year. midpoint the that flow increased capital first increase sales is the be million results, be which a strong now expect we range increase The $XXX outlook to $XX a quarter $XX.X be last increase expect Adjusted approximately expected at approximately approximately to expected the point cash compared is range, $XXX billion of working improved on driven at XXXX margin Building $XX over be million from basis guidance the prior $XX at the outlook improvement is efficiency. and by our last midpoint free million range. million to

now Our sales GAAP the full Slide of drivers unchanged at of from divestiture. Please full Note the guidance included me the already turn year last expected remains where $X.XX with share. guidance year and year. highlight I'll impact EPS per that XX, profit our to changes pending the

will you previously the have walk organic. divestiture note to detail is held a that under added to shown would we we and year begin, the traditional that full sale business Before have item been for

typical of increase points efficient last profit The in to The our included year. we XXX for is As with be higher allowing we traditional was a on million. sales than patterns operations profit transaction improved million actions there the growth approximately in moderate us EBITDA gains. Adjusted customer expect continuation growth order expected predictability I better in products our organic in business, to convert our of market increase in share sales our contribution and previously, February, sales about XXXX, $XXX additional anticipated original is efficiency market from stability through the margins. mentioned traditional growth guidance are basis organic organic change so the to at $XXX and no now began for higher sales margin our and cost-saving that traditional about increase is outlook. Beginning new total more and

year sales contributes anticipated positive this sales product billion. The for EV EV incremental of profit. about $X million business $XXX of a about EV expect We total

be to due EBITDA year about costs associated engineering a the programs. $XX of this change in in million the new and we However, EV headwind expect continued investment to EV for adjusted

to $XX divestiture profit and in lower Our $X expected by the by million. were million is quarter and sales close second

Foreign expected. currency $X translation headwind of about slightly be approximately previously a impact a than more on million, sales $XX million is profit expected of with to modest

prices. outlook is other to expected driven to steel due headwind commodity our sales $XX by a Finally, million to lower commodity recoveries and falling be about of

We customers. expect X-way by our with due to headwind true-up a pricing $XX our in governed million commodity mechanisms recovery the profit

year $XX for XXXX. full of cash Lastly, please outlook to Slide range. midpoint our at the million now on turn about flow the with to guidance be for me anticipate free XX We cash flow free XXXX

We to spending from I occurred million interest technology will expect of growth over customer $XX on lower capital about is $XX last be higher is and spending higher headwind joining capital be million due we us take as year, interest expected about an $XX profit due Regina, year. about sales. that timing. Thank to million now $XXX year program than lower in Working for XXXX. about $XX our we'll expected driver million sales the flex to $XX will our the to back support last million million today. use guidance better million prior this which to you and refinancing our the and call of Net to In now a is increased questions. improvement match payment rates timing and is than $XX over be which turn to

Instructions]. [Operator

Colin with question Langan come of from line will Fargo. the Wells first Our

or... guidance earnings, $X.XX of and $X.XX quickly just divestitures Can actually drag was the in the clarify contemplated you that original from

first a in is and timing to did both the day. announcing guide we it But as quarter, EPS following first it in day. hadn't in the the organic quarter, -- in was column, waters specifically and in in we it included that in Colin, announced -- because Tim. in It muddy didn't late but you the call we remember was the mentioned, we the want Q include walk, we traditional was the it but I gave. it up the this was was we if the wonky ended the the didn't little It out filed we

Got it.

to I the adjusted, I the you're onetime year's of this this year [ not your more giving I when $X.XX... for like and is know mean, guidance So very think non-repeat ] in numbers, nature

Absolutely. Correct.

Just to make sure I'm clear.

Okay.

slightly positive the it follow-up. How about how the is down of off-Highway this? driving if sales. good. Just look The rest think I as impact $XX markets organic the through it organic that going way? year a like held the were walk, sustainable seems And the How at of And was EBITDA million, really those most $X are million. to for be down the to we margins but sales should year? What's considering up is lower end trending very flat

Yes.

is So One it's X drivers. mix.

we're more So in others. and losing ag gaining sales

within taking the is really job our and And so adjust that environment. margin lowest that typically out a the to lower costs other out And segment. is teams plants to sector BU great the mix costs did and of the on ag the flexing of sales

the comes next Your Noah line question of Oppenheimer. from Kaye with

This for on Noah. is Lydia

Could prior First, could lower organic us you stronger on versus drivers? color traditional outlook It some moving discuss the core parts incrementals. give sales looks just slightly but around the guidance? the you like

Yes.

some that pulled line. difference the in just out then is of it. that's it So of rest is And out that mix coming driving the through the divestiture really we

for the on sales of follow-up, and you how demand to year? discuss you're I balance Got you're guess through could the trends then for overall ramp programs the it. commercial EV EV And my expecting

Sure.

change So you're we're had our They're softness large the we end watch But we're with some we continuing EV and across this seeing baked is some where outlook. them, that Obviously, again, obviously, had in not to in a of pretty plan. line much our there's into why demand, seeing this. markets. in which

track So year. right now, we're the on for

Picariello of line the with Paribas. will James Your next question BNP come from

on to what truck that on specifically the of what ramping remainder your around of And the expectation might want production. is volumes the or profitability into Vehicle what segment? influence visibility your segment, EV America North Commercial year, have ask the your you for the Just

Sure.

X, X, we're XXX on seeing to to XXX and volumes, heavy-duty side for to so [ ]. American CV the on the So ] [ Class XXX Class our Class the XXX year X North

segment, in deliver healthy customer sales, a the pretty And patterns. customers. to demand products they we terms obviously, our customers sort to need their in then EV, continue to so we're still that adjusting the changing But down need as bit to of So customers react that and overall. and landscape and little it deliver to see of continue for what

then Got just light What's the inventory view those handful it. vehicle. key the key your for terms segment. Dana programs? dealers programs And is high-level of in the build on schedules on for on how levels trending that Light of Just at this color your are year on and Vehicle

our know, argue what with so the comes to on as cooling, through, basically, James, would the things this because the that -- lot of high-level Remember announcements our a probably given had to in that last out programs, of the in standpoint. years terms already I so. with later. for frame week I it you going to a last forth. battery Mary ] don't there. how most is of of I We of see more Jim. that is mentioned or full and coming know supplier -- stuff over on are some remarks, our OTM pretty in the week programs, bullish over my so prepared out [ you be But going don't add driveline OEM have as But from most relates came

such Ford. what volumes with at program communicating consistent think another they've Lightning been pretty as Ford take the I

golf the heard down of use seen a middle right say you've way OEMs. or would to I what analogy the So coming from it fair to

ICE the light on for side about how Just vehicle?

-- better so real wish calculations production and seen we've we in, many -- relates stable. some But people days on a material that. ebbs do, it's there's on as just the our outlook flows and on from for to we outlook. see forth, and leases but different stable it obviously, I all like seen I pretty I Again, so been there's really I would a stable coming think had you, use, say -- We've word hand

comes of Spak The the UBS. with next from question line Joseph

I to I sort Colin's understand prior. just book make you back versus guess, things, to to of moving want the pieces what how sure, just question, I for

in divestiture the the it breaking was but before guidance, out. So wasn't

back So we sales look now, then sort organic, prior. just you X.XX we if add into to X.XX get ] divestors versus traditional of if at [

same actually So organic business. in is is the on higher. then EBITDA, the you But of thing the conversion lower do the -- the rest

So performance I I or conversion are understand just factors to guess segment driving mix that's the related want some that. that

Joe, Tim. It's both. it's

the is segments So there. efficiencies The ag, We're some across right? And well. up. easiest performance and being further mix with obviously, think there's it about yes, there we also picking then as right, to continue is in drive down, ag one in it performance between as company. But to there's the

Okay. And some lower you the ag? what organic is mentioned about earlier of in the softening

chunk of big it. that's a Yes,

Okay.

second that quarter to And clarify, assuming you're a is closing. this sorry, just

million a effectively? half line is back impact $XX top that So number

back it's half. Yes, Correct. a

Okay.

EV-driven. in I Technologies, little looks walk, revenue quarter, Power the It a than and on Just bit EBITDA your think stronger in both like we was look thought. it

I area where -- some and EV you the is have one -- So you're to, maybe alluding exposure. vehicle just do were light that's, think think, I as

about talk year? expect just you how can progress through you So the to that

Sure.

about on side production talking you're the current the So just investment or side? on

Well, on I basis. guess just the both business within EBITDA and a EV revenue Tech, Power

Yes.

So be to stable to up. we see it continuing

bed the our Ours [ is biggest is ]. program X --

remarks a the GM, battery first fourth production. around quarter good -- from So encouraging they EV and had

EV. you So on at walk the obviously when reflected that's Power Tech look

on year, better so terms that through volume, up of we think -- and to in continue than will We on convert last see the line. bottom

a automakers -- how should some obviously, challenges of production to sort EV maybe guess, relative on just that revenue other they've if products the like have. looking had a really, shipment pack, lot versus and And to And business? pack. time and or you lead in you're of longer at for because we're some providing Is vehicles I of that that especially

fluid precision all the Really management very as doesn't the good question. time. but stamping and lead call question. That's of longer. very times battery extend good This engineering a fluid is tied and I the is any question. It's like not good really we're it, Jim. much a it lead is would aren't It's it Jim. with. that to This No, side associated precision

So to product but further Tim's for quite the just about not and also we battery that designed they're of call point, flexible way and, cooling construct, our electronics therefore, though, the in such cooling. equipment talk that and tend this, we've engineered processes our also established to the

there's just consider So audience for to more that business. to full the

that. about with talk electrification I'll that's But IGBTs on with things so associated you required of so the electrification, mentioning You're inverters, and if cooling forth. all so other about and think

flexing I like we're from feel and we've this think it's outlook And So put numbers, relatively like we stable Tim the into year. capital. said, the an

line Our from Barclays. will Levy with final of come Dan question the

Trevor Young Dan today. for on

First, reduce conceptually, wanted with with prices on what's little I to I the clarity a would more prices there contracts get tailwind. around bit are guess general, here steel in that there leading going that than bigger I'm -- spot on your going it's in is you're that Or anything that else higher rates a holding the imply? mean ask just true-ups what you a that to guess missing? confusing it lower commodities recoveries, the just but just the I steel commodities. would I is and me to it are little on

Yes.

commodity So there's covered remember Typically, you to about we're for how XX%. when work. things only mechanisms got think the you X

to in hit get And way that. lag a that. way we recover on the tend some on of we up, tend there's then down, So to the

down, when So give to tend we the as that to to to to we see we customers. difference X come X between tend months be have have back commodity prices --

we're seeing which seeing flow that combination the not why X, top now higher is through of givebacks on having the line, all a line. you're but bottom of the right on you're So

it's So then of costs. of of fact those combination the a timing just we're it giving back that XX% only commodity lower and the

it CapEx Tim, you like a $XXX year Okay. realized All right. this $XX That's helpful. assumes looks a million million follow-up, in And the decline on guide XQ. your fully for as year-over-year

launch why costs, throughout noted shouldn't why at CapEx extent? expect related some was be least we So declines I to continue that expect year lower you shouldn't or curious I that in guess to spend XQ the to to we the

a Yes. read on versus this what year timing is the But programs. quarter-to-quarter. payment spent timing I in elements relative realized the into I million $XX too so there's to ] both of it also [ much last from year. full the of lot and -- obviously timing already how mean wouldn't it's schedule we lot a program being there because

we're $XXX year. comfortable the So million the with full still for

it Okay. wrap up. ahead Go [indiscernible] and

much just So I it time We fourth I'll I attendance quarter for [ And briefly your today. analogy, through would got and of it's the sports your you do, of to always say game. thank all, ] and very first time. first acuity use very a wrap up quarter. as that a

running me to systems go fast and job allow you you your collective accident. getting on continues least you happen say, did operating and I Dana schedules, by to excellent business leads your good think a on many efficiencies, customers about times, that technology off It the... an to focus stable start, by of start customer and heard having team having systems and other execute continued to that all your the more that it's that, at then really happens a run and benefits differentiating or from and business company-wide and execute, doesn't and strong a as recently,

does gentlemen, you that call. all and Thank for joining. today's Ladies conclude

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