Dana Incorporated August 8, 2017 Jonathan Collins James Kamsickas Jonathan Collins Executive Vice President and Chief Financial Officer
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Dana Incorporated
J.P. Morgan
Wolfe Research
Global Auto Industry Conference
Auto Conference
January 15, 2019
August 8, 2017
Jonathan Collins
James Kamsickas
Executive Vice President
President and
& Chief Financial
Chief Officer
Executive Officer
Jonathan Collins
Executive Vice President and Chief Financial Officer
© Dana 2019
2017 1
Safe Harbor Statement
Certain statements and projections contained in this presentation 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,” 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 presentation speak only as of
this date. Dana does not undertake any obligation to revise or update publicly any
forward-looking statement for any reason.
© Dana 2019 2
Dana Snapshot
Founded in 1904
2018 preliminary sales:
$8.1 billion
136 major facilities
33 countries
6 continents
customers in
~30,000 21 143 countries
people technical centers
© Dana 2019 3
Business Overview
Markets Segments Regions Technologies Products
Light Vehicles Light Vehicle Driveline North America Axles, driveshafts, transmissions, hydraulic
Technologies
Drive wheel and track drives, drive units for electric and
40% 46%
hybrid vehicles
51%
Winches, slew drives, planetary gearboxes,
Motion hydraulic pumps, motors and valves,
Commercial Vehicle Europe electronic controls
Driveline Technologies
Heavy Vehicles 27% 28%
e-Motors, generators, power electronics,
Electrodynamic controls and software
Off-Highway Drive and South America Transmission and engine oil cooling, battery
28%
Motion Technologies Thermal and electronics cooling, charge air cooling,
21% 6% and exhaust-gas and heat recovery
Off-Highway Gaskets and seals, transmission separator
Sealing plates, cam covers and oil pan modules, heat
Power Technologies Asia Pacific shields, and fuel cell plates
12% 20% Active and passive system controls, Software
Digital
21%
as a Service including descriptive and
predictive analytics
2018 preliminary sales including 100% of DDAC © Dana 2019 4
© Dana 2019 5
Acquisition Benefits
Completes in-house Establishes European
electrodynamic e-Technology center of
capabilities excellence
Augments breadth of Strengthens Asia new
e-Drive systems offerings energy market presence
© Dana 2019 7
Snapshot
Sales by End Market Sales by Region
4 Americas
Global
Heavy 10%
Vehicles
25% Off-Highway
Locations 55%
$
2019T Sales: Europe
~$30M 2
40%
Other 20% Asia-Pacific
50%
Purchase Price: Engineering
$88M Centers
Key Customers
Manufacturing
in Europe and China
A Leader in Low Voltage Electrodynamic Components
© Dana 2019 8
Electrodynamic Technology
Business Brands Motors Inverters / Controls
High
Permanent
Magnet
Voltage
Range
Induction
Low
Acquisition establishes complete suite of electrodynamic technology
© Dana 2019 9
e-Propulsion Product Portfolio
Technology Solutions
Mild hybrid Primary Axle Hybrid Drive (P/HEV) Battery Electric Vehicle (BEV)
Power Hybrid Hybrid Independent Direct e-Drive Rigid Wheel
Electronics Drive Unit Axle e-Axle Drive Unit e-Axle Drives
Vehicle Applications
Recreational Utility Passenger Car Material Handling City Delivery Light Truck Medium Duty Heavy Duty/Bus Mining Truck
Club Car Taylor Dunn Bolloré Blue Car BYD 1.6T & 2.5T Zenith Electric Van [Under Development] Workhorse Karsan ATAK midibus Sandvik DD422iE
© Dana 2019 10
e-Propulsion Content Growth
Full-Frame Light Trucks Medium-Duty Trucks Off-Highway Equipment
ICE
>2x >2x ≈
CPV CPV CPV
Electric
Significant content per vehicle expansion opportunity
© Dana 2019 11e-Propulsion Market Outlook
Full-Frame Light Trucks Medium-Duty Trucks Off-Highway Equipment*
Internal Internal Internal
Battery Combustion
Combustion Combustion
Electric 92%
99% 95%
0% Battery
Hybrid Electric Battery
1% 1% Electric
2018 Hybrid 8%
4%
43% 22% 25%
CAGR CAGR CAGR
Internal Internal
Combustion Combustion Internal
92% 84% Combustion
Battery 73%
Battery
Electric
Electric Battery
3%
2025 Hybrid
9% Electric
27%
5% Hybrid
7%
All segments offer attractive market growth
Source: Roland Berger and management estimates *Excludes forklifts and scissor lifts
© Dana 2019 12Spicer Axles Driving the Future
Light Vehicle Commercial Vehicle
Ultra-Efficient AdvanTEK® Axle System HD Single AdvanTEK® Axle System
Delivers ~2% improvement in fuel economy to the end consumer Provides 60 pounds of weight savings
The most efficient axle for automotive applications – a full Application in 4x2, 6x2, and 6x4
30% better than current best-in-class competitive products vehicle configurations
© Dana 2019 13Driving Growth
Industry-leading technology
powering growth
Significant new business
wins in all segments
Multiple end markets
provides cycle stability
Investing for the future
of mobility
© Dana 2019 142015 to 2018 Performance Improvement
Diluted Adjusted
SALES Adj. EBITDA Free Cash Flow Earnings Per Share
~$2.0 ~$300 ~$100 ~$1.15
billion million million
33% 47% 64% 67%
Outstanding performance, outstanding future…
Comparison based on 2015 results to preliminary 2018 results for sales, EBITDA and cashflow; EPS compared to latest guidance. © Dana 2019 15J.P. Morgan
Outlook and Financials
Auto Conference
August 8, 2017
Jonathan Collins
Executive
Executive
Vice
Vice
President
President
and
& Chief Financial Officer
© Dana 2019
2017 162018 Preliminary Results
Sales surpassed high end of
guidance range as Q4 Key Financial Metrics
demand exceeded
expectations; however,
conversion on the ~$8,143M
incremental sales was
negligible as premium costs Sales $7,750M $8,050M
to fill the orders offset the
added contribution margin ~$957M
and product mix was $950M $1,010M
unfavorable Adjusted EBITDA
Adjusted EBITDA landed near
low end of guidance range, Profit Margin ~11.8%
~$8M lower than prior
indication primarily due to
increased commodity costs
FCF Margin ~3.0%
Free cash flow results are in
line with prior expectation at ~$2.90
~3.0% margin
Diluted Adjusted EPS $2.75 $3.05
Delivering preliminary results within range of expectations
See appendix for comments regarding the presentation of non-GAAP measures Guidance range Preliminary Result Prior Indication
© Dana 2019 172018 Preliminary Sales and Profit Changes
Full Positive Negative
Year Change Change
Sales growth of 13%
compared with last year Sales ~$815M
driven by conversion of Adjusted
backlog, improving end- EBITDA ~$465M
market demand, a full year of Market ~$8.1B
the 2017 acquisitions, and
recovery of commodity ~65M
~$350M ~$50M Recovery
inflation ~Flat
Backlog
~$30M ~$(45)M
~85 bps of margin expansion $7.2B
as a result of organic and ~$135M
inorganic growth was largely
offset by ~65 bps margin
headwind due to commodity
cost increases, net of ~17%
recoveries conversion
$835M ~$957M
In addition to ~$110M of
commodity cost increases,
Section 232 and 301 tariffs
increasing costs by ~$10M 11.6% ~55 bps ~30 bps ~(65) bps ~11.8%
with minimal commercial
recovery
2017 Organic Growth Inorganic Growth Currency Commodities 2018 Preliminary
Delivered >$900M of sales growth and added $120M of profit
See appendix for comments regarding the presentation of non-GAAP measures
© Dana 2019 182019 – 2021 Sales Backlog: $700 Million
$ in Millions
Backlog includes
booked incremental new
business net of any lost
Key Customers
+$150
replacement business
New
Backlog is incremental to +$200 Growth
2018 sales holding both Sustained
foreign currency exchange Prior Backlog
rates and vehicle +$350 $700
production volumes +$50M $550
constant Added to
Prior Backlog $350
Delivering positive backlog
in all business units across
all major customers and 2018 Base 2019 2020 2021
regions AP Other PTG
13% 15% 10%
Navistar OH
SA 6% 8%
7%
Ford CV
Region Daimler
Customer 41% 7% Segment
EU 9%
12% NA LV
68% Nissan 75%
9%
FCA 20%
Backlog ensures outperformance of market through 2021
© Dana 2019 192019 Mobility Market Demand Outlook
Mobility Primary Core Sales North Europe South Asia Dana
Market Source Segments Dist1 America & Africa America Pacific Impact
46% 28% 6% 20% 100%
Full Frame 51%
.
Medium Duty
28%
Heavy Duty
Agriculture
Construction 21%
Mining
Dana Impact 100%
Legend:
YoY ∆ >+3% (3%)2019 Guidance Ranges
Guidance reflects existing
Dana business and Guidance Range Guidance Range w/ ODS
represents ~$250M or 3%
organic growth, ~$65M of
profit growth, 40 bps of profit
~$8,400M ~$9,150M
margin expansion, 100 bps of
free cash flow margin Sales +/- $150M +/- $200M
expansion, and ~$0.20 or 7%
EPS growth ~$1,025M ~$1,125M
Guidance range with Oerlikon Adjusted EBITDA +/- $30M +/- $40M
Drive Systems (ODS) reflects
10 months of activity and
assumes a March 1st close Implied Profit Margin ~12.2% ~12.3%
Guidance with ODS
represents ~$1B or 12%
sales growth, ~$165M of Implied FCF Margin ~4.0% ~3.0%
profit growth, 50 bps of profit
margin expansion, and ~$3.10 ~$3.20
~$0.30 or 10% EPS growth +/- $0.20 +/- $0.25
Diluted Adjusted EPS
ODS is expected to be a use
of cash in 2019 as transaction Guidance Range Mid Point
costs and integration
expenses are included in FCF
Expecting 3rd year of double digit sales, profit, and FCF growth
© Dana 2019 212019 Sales and Profit Changes
Higher conversion on organic Full
Year
Positive Negative
Change Change
growth due to efficiency
improvements as well as the Sales
benefit of structural costs Adjusted
actions taken in H2 of 2018 EBITDA
Overlap of Jeep Wrangler
program during H1 2018 ~$750M
~$9.2B
resulting in ~$110M of non-
recurring sales, contribution ~$8.1B ~$350M
margin loss offset by the Backlog ~$(10)M ~$90M
elimination of launch costs ~$100M ~($75)M
incurred in 2018 ~($40)M
~$115M
ODS is expected to accrete ~($110)M
~$100M of profit (10 mo.) ~$957M Wrangler
~$1,125M
including ~$10M of cost Launch
synergies >30%
conversion
Foreign currency expected to
provide modest headwind 11.8% ~100 bps ~10 bps ~(60 bps) 12.3%
primarily due to EUR/USD
Commodities costs expected
to remain higher than prior 2018 Preliminary Organic Growth Currency Commodities 2019 Target
year average albeit with
higher recovery ratio than
prior year as costs plateau Poised to deliver $1B of sales growth and add $165M of profit
© Dana 2019 22Key Financial Metrics Trends
Sales Adjusted EBITDA
$ in Billions
+$3.1
$ in Millions
~$9.2 $1,400
+$470 14%
~$8.1 ~$1,125
14%
~12.8% +200
9% ~$957
$7.2 bps
13%
CAGR $835 ~12.3% 13%
$6.1 $652 $660 ~11.8%
$5.8 11.6%
12%
11.3% 12%
10.8% 11%
$200 11%
2015A 2016A 2017A 2018P 2019T 2020T 2015A 2016A 2017A 2018P 2019T 2020T
ODS ODS Profit Margin
Free Cash Flow Diluted Adjusted EPS
$ in Millions
$450 7%
~$3.20
~$335
$400
5%
6%
$350
+300 ~$2.90*
bps 16%
~$240 ~4%
5%
$300
$250
4%
$2.52 CAGR
$200
$146 $161 ~3% $1.94
3%
~3% $1.74
$150
$100
2% $62
2%
2%
$50
1%
1% ~$(60)
$0
-$50 0%
2015A 2016A 2017A 2018P 2019T 2020T 2015A 2016A 2017A 2018T 2019T 2020T
ODS FCF Margin
ODS
2019 FCF excludes pension termination impact *As presented in the third quarter 2018 earnings release. A=Actual; P=Preliminary T=Target
See appendix for comments regarding the presentation of non-GAAP measures © Dana 2019 23Strong Balance Sheet
Pro Forma Capitalization Maturity Profile
$ in Millions
$750
($ in millions) YE 2018 YE 2019
Preliminary Pro forma
$790
Cash and Marketable Securities ~$525 ~$575
Revolver ~575 ~725 $405
$430 $405
$305
Liquidity ~$1,100 ~$1,300
Term Loan A ~$265 ~$460 $35 $35 $35
2019 2020 2021 2022 2023 2024 2025 2026
Term Loan B ~445
Current Debt Pro Forma Debt Revolver
Senior Notes ~1,500 ~1,500
Other Debt ~20 ~50 No maturities in the next three years
Total Debt ~$1,785 ~$2,455
Net leverage projected to increase by
Net Debt ~$1,260 ~$1,880
< ½ a turn with ODS acquisition
Adjusted EBITDA ~$957 ~$1,125
Net Leverage ~1.3x ~1.7x Liquidity to increase by ~$200M
See appendix for comments regarding the presentation of non-GAAP measures
© Dana 2019 24Capital Allocation Priorities
Capital expenditures have
normalized at ~4% of 1 Investing to deliver backlog generates attractive returns
sales as largest program Organic
have refreshed (i.e. Ford Targeting consistent capital spend levels at ~4% of sales
Super Duty and Jeep Growth
Wrangler)
Disciplined M&A process Expand product technology
continues to deliver 2
accretive acquisitions Inorganic
position for long term
Enhance geographic presence
Growth
growth prospects related
to vehicle electrification
As free cash flows 3 Reduce debt and pension liabilities (U.S. frozen pension plan
continues to increase, Capital fund and termination planned for 2019)
excess cash will be used
to further strengthen the Structure
Drive towards investment grade credit metrics
balance sheet
4 Pay competitive dividend
Cash
Ambient level of share repurchase to mitigate dilution;
Repatriation
$200M authorized ($175M remaining for 2019)
Investing in growth and further strengthening balance sheet
© Dana 2019 25Investment Highlights
1
Global
Presence
8 Clear 2 Broad
Investment Customer
Priorities Base
7 Solid 3 Relevant
Balance Technology
Sheet Portfolio
6 Expanding 4 Significant
Profit & FCF Sales
Margins 5 Strong Backlog
Market
Demand
© Dana 2019 26Non-GAAP Financial Information
The preceding slides refer to Adjusted EBITDA, a non-GAAP financial measure which we have defined as net income before interest, taxes, depreciation,
amortization, equity grant expense, restructuring expense and, non-service cost components of pension and other postretirement benefits (OPEB) cost 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
income before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled
measures reported by other companies.
Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net income divided by adjusted diluted shares. We define
adjusted net income as net income attributable to the parent company, excluding any nonrecurring 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. We define
adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income. 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 under GAAP.
Free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities excluding voluntary pension
contributions, less purchases of property, plant and equipment. We believe this measure 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 neither intended to represent nor be an alternative to the measure
of net cash provided by (used in) operating activities reported under 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, 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 and diluted EPS. Providing net income 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 and diluted EPS,
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.
© Dana 2019 27You can also read
