Dana Incorporated

Good morning and welcome to Dana Incorporated's fourth quarter and full year 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 speaker's remarks and Q&A session will be recorded for replay purposes. There will be a question and answer period after the speaker's remarks and we will take questions from the telephone only. If you would like to ask a question during this time, press star then the number one on your telephone keypad. To ensure that everyone has an opportunity to participate in today's Q&A, we ask that callers limit themselves to one question at a time. If you would like to ask an additional question, please return to the queue. At this time, I would like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations and Strategic Planning, Craig Barber. Please go ahead, Mr. Barber.

Thank you, Regina, and good morning, everyone, on the call. Thank you for joining us today for our 2020 Fourth Quarter and Full Year Earnings Call. You will find this morning's press release and presentation are now posted on our investor website. Today's call is being recorded, and the supporting materials are the property of Dana Incorporated. They may not be recorded, copied, or rebroadcast without our written consent. Also, allow me to remind you that today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from those suggested by our comments today. Additional information about the factors that could affect future results are summarized in our safe harbor statement found in our public filings, including our reports with the SEC. On the call this morning as usual are Jim Kamsiskis, Chairman and Chief Executive Officer, and Jonathan Collins, Executive Vice President and Chief Financial Officer. Jim, you can start us off this morning.

Good morning, and thank you for joining us today. As we move into the new year, I think we can all agree that 2020 was unlike any year we've experienced. The challenges brought about by the global COVID-19 pandemic tested everyone's resolve to the deepest levels. I cannot be prouder of how the Dana family responded through it all. We were able to quickly pivot and take the necessary measures to ensure the long-term success of our business. As you can see on the left side of slide four, Dana achieved sales of $7.1 billion for the year, significantly impacted by the global pandemic. As a result of the extraordinary commitment from our team and their dedication to executing our plan, coupled with aggressive cost-flex actions taken during 2020, we achieved our adjusted free cash flow target of $60 million. Adjusted EBITDA was $600 million, and diluted adjusted earnings per share was $0.39. Jonathan will walk you through our results in more detail, but first I'd briefly like to recap some of the actions we deployed over the past year to ensure the safety of our people and the communities we call home, as well as our efforts to continue executing for our customers and shareholders. I will also share why I'm excited about Dana's future and will update you on our sales backlog, which includes several new EB business wins. And finally, we'll review several key achievements for the year and provide you a look at our noteworthy and arguably unique initiative as we continue to execute towards a carbon-free future. Please turn to page five as we update to you on our pandemic response and our way forward. Reflecting on 2020, Dana demonstrated the best of who we are through the incredible perseverance and dedication. The team positioned the company to do great things in 2021 and beyond. If last year illustrated anything, It displayed that Dana adapts quickly and excels when faced with a severe market downturn. The entire Dana organization did an amazing job to safely idle and restart over 100 Dana manufacturing and technical facilities around the world. Moving into 2021, we'll continue executing our strategy while maintaining our strong balance sheet, increasing shareholder value, and further strengthening Dana for the future. Turn with me now to slide six, and I'll provide you details about our updated sales backlog and talk about why I'm excited for Dana's future. On slide six, our three-year new business sales backlog is a strong $700 million, with half attributable to e-propulsion programs. Remember, our backlog is truly net new growth over and above existing sales and any market growth. We expect to realize $500 million of incremental new business in 2021, $150 million increase from our prior outlook for this year due to stronger demand for key platforms, including the new Jeep Gladiator, Ford Bronco, and Bronco Sport. We also anticipate an additional $200 million in incremental sales in 2022 driven by new programs such as the Ford Bronco and the full run rate on the medium-duty EV truck programs. As we shared with you before, we'll be rolling off production of the GM Colorado Canyon program, but as you can see on the chart, other new program wins such as the Volkswagen Amarok pickup, which is part of the strategic alliance between Volkswagen and Ford, and shares a platform with the Ford Ranger, have offset the impact of that single program. As a result, we will maintain the $700 million of cumulative new business growth through 2023. On the right of the slide, you can see a significant increase in EV sales as part of our backlog. With our full range of e-propulsion products and systems, we are providing our customers with innovative solutions they need to reach their sustainability goals and supply their customers with the most advanced capabilities available to the market. Our product portfolio and in-house capabilities supporting the EV markets in which we participate, which is in direct line with our enterprise strategy that we communicated three years ago. We recognized that electrification megatrend early on and made a series of strategic moves to position ourselves at the nexus of vehicle electrification and hybridization to serve our customers. Our investment of more than $400 million in electrodynamic capabilities has uniquely positioned Dana as a leader in this rapidly growing segment. Dana is the only supplier capable of delivering complete e-propulsion systems across all mobility markets. As we turn to the next slides, the intent is not only to provide you examples of how Dana is supporting in the three end markets in which we participate, which of course are light and commercial vehicle plus off-highway, but also to illustrate how each of our four business units are leveraging our core electrification capabilities to support their respective customer needs. Turning to slide seven, as powertrains evolve, plug-in hybrid vehicles continue to gain in popularity across the light truck segment. In addition to traditional and electric powertrain capabilities, Dana has a full range of products to support today's most advanced plug-in hybrid vehicles as well. One example is the all-new 2021 Jeep Wrangler 4XC plug-in hybrid. As you would expect from Jeep, this vehicle is built for the severe off-roading. Our approach to this type of hybrid is consistent with our enterprise strategy, delivering a robust mechanical solution and a P1 or P2 configuration when the e-motor is integrated into the transmission. The specially enhanced front and rear axles and prop shafts that Dana has engineered for the 4XE manage the higher output and provide additional content for vehicle for us on the platform. And may I take a moment to say that we are very honored to serve as the driveline supplier for the Jeep Wrangler 4XE, since its inception 80 years ago, and we're very proud to continue to support Stellantis in the increasingly popular off-road enthusiast market. This future demonstrates how Dana is engineering and designing innovations that enable us to grow in the existing and new segments while also enabling our customers to bring vehicles to market that meet their sustainability objectives. Moving to slide eight, I'd like to talk to you about our advancements in thermal management for electric vehicles. We are very excited to announce that ANA has been selected by General Motors to supply the battery cold plates for the Ultimum battery packs on their third-generation EV platform. The multi-year program begins this year and will be our highest content per vehicle e-thermal program. The first vehicle expected to feature this technology is the highly anticipated all-new GMC Hummer EV shown on the right side of the slide. Dana award-winning battery cold plates combine superior thermal performance, resulting in a more stabilized battery temperature and faster charge. Something you may not know is that Dana has been designing custom battery and electronic cooling solutions for more than two decades, which gives us very strong credibility in the market and further positions us to lead the charge in this new era of mobility. Moving to slide nine, I'd like to move into the medium-duty truck segment and describe a new e-truck with Daimler. Many truck fleet operators are looking to electrify delivery trucks as they seek ways to reduce energy consumption, improve performance, and increase cost savings. Daimler's custom chassis, latest medium-duty electric truck program, the MT-50E, is designed specifically to meet the fast-growing market and features Dingna's full electric propulsion system. Production for the program is slated for the third quarter of this year and will include Dana's Motor, Inverter, and Axle, which are manufactured in-house and increases their content per vehicle by more than four times, boosting both the top and bottom line growth potential. Turning to slide 10, let's transition to the Class 8 heavy-duty truck market. Here again, our team has provided our not-to-be-disclosed-at-this-time customer full e-powertrain solution required to support their full electric vehicle e-propulsion requirements. This program includes the name of e-axle, including electric motor, inverter, mechanical solutions, and embedded software and controls. We developed the new e-axle to serve the most popular heavy-duty 4x2 global market segment, meeting specific customer requirements. This program is targeted for 2024 and increases Dana's product content by approximately four times versus a typical diesel-propelled heavy-duty vehicle. Moving to slide 11, now in our off-highway segment, we're excited to share with you a new electric access equipment program for GLG Industries that features Dana's all-new electric torque hub technology combined with a state-of-the-art Dana permanent magnet AC motor and inverter. The multi-year program for North America and Europe begins production early this year with the volumes expected to ramp up steadily in 2021. Dana has been a longtime leader in hydraulic-driven scissor lifts, but now we're leveraging our core gear technology combined with the acquisitions to penetrate and expand in a newly developed electric-driven scissor lift market. Moving to slide 12, I'd like to touch briefly on recognition that we received this year from customers and international media. The graphics on the slide are a small subset of the numerous awards that Dana has received throughout 2021. However, to speak with just a few examples, we are very proud to be recognized as Supplier of the Year by General Motors in both product categories we participate. That is, of course, driveline and thermal management product and systems groups. Of course, we're equally as proud for the wins we achieved across the markets with our partner customers in those vehicle segments. All of this said, as important as customer and industry recognition is, also being recognized as one of the world's best employers by Forbes and one of America's most responsible companies by Newsweek is extremely humbling to me and the entire Dana team. It's one thing to do business. It's another to do business the right way by putting people at the center of everything we do. I'm very fortunate to work together with a global team of 38,000 strong that do this every day. Turning to slide 13, I'd like to update you on the never-ending pursuit of continuous improvement in the area of sustainability. Last quarter, we shared with you our commitment to reducing our total annual greenhouse gas emissions by at least 50% before the end of 2035. This aggressive target will result in a reduction of more than 300,000 metric tons of greenhouse gas emissions annually. We also shared a roadmap with you on how we plan to achieve our goal. This includes reducing our energy consumption and increasing efficiency of our processes, expanding our use of renewable energy, such as wind or solar, to make use of clean energy sources that will further reduce our greenhouse gas emissions, and exploring the use of renewable energy credits purchased on the open market. I'm very excited to share with you that Dana recently signed a virtual wind electricity purchase agreement with a subsidiary of NextEra Energy Resources, LLC. This agreement will result in a 300,000 megawatts of renewable electricity generated annually over a 12-year period beginning in 2022. It will also contribute to a 90% reduction of our current U.S. annual electricity and greenhouse gas emissions. The mobility industry has a unique opportunity to lead by example, not only in how we design, but in how we manufacture our products to have a positive impact on the environment. This agreement goes a long way in supporting our continued progress achieving our 2035 admissions reduction goal of 50%. Thank you very much for your time today. I'd like to turn it over to Jonathan to walk you through the financial results for the quarter.