Dana Incorporated

Good morning and welcome to Dana Incorporated's third quarter financial webcast and conference call. My name is Holly and I'll 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 do 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, Holly, and good morning to everyone on the call. Thank you for joining us today for our third quarter of 2021 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. 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 are Jim Camsiscus, Chairman and Chief Executive Officer, and Jonathan Collins, Executive Vice President and Chief Financial Officer. Jim will start us off this morning. Jim?

Good morning, and thank you for joining us today. As we jump right in, I'd like to share a quick overview of our results for the third quarter. Dana delivered $2.2 billion in sales, representing an increase of $210 million over this time last year, as our customers continue to see strong demand despite several headwinds. Diluted adjusted EBITDA for the quarter was $210 million, a $9 million improvement over last year. Free cash flow was the use of $170 million as the semiconductor shortage drove significant and unplanned OEM demand reductions, which, of course, led to substantial downstream component inventory accumulation across the company. Diluted adjusted earnings per share was up slightly compared with last year at 41 cents for the quarter. Moving to the key highlights on the upper right-hand side of the page today. We will provide you with an update on how we're navigating through unprecedented supply chain constraints, raw material cost inflation, and labor shortages that are impacting the entire global mobility industry. We'll also outline how Dana is well-positioned to capitalize on long-term cyclical growth as near-term issues begin to subside. Finally, I'll provide a recap on a recent Capital Markets Day that we conducted last month at our world headquarters in Maumee, Ohio. This event was intentionally focused on vehicle electrification and more specifically, the tremendous progress we've achieved by executing the strategy that we initially announced in 2016 and refreshed in 2019. Very clearly, our success in e-propulsion continues to accelerate across all mobility markets as Dana's cohesive and streamlined global team is generating significant value for our customers around the globe. Please turn to page five and we'll begin our discussion with the ongoing supply chain challenges and how it is impacting our markets. Whether it's the semiconductor shortages causing OEMs to idle vehicle manufacturing or dramatic shortages of labor, sea containers, truck drivers, raw materials, or numerous other issues resulting from the global pandemic, companies across the mobility industry are having to navigate through unprecedented manufacturing constraints. As we all know too well, supply chain disruptions have significantly reduced Global auto production as OEMs are challenged to procure chips required to produce their vehicles and meet robust consumer demand. This reduced vehicle output has led to historically low finished vehicle inventories in the light vehicle segment. The commercial vehicle and off-highway segments are largely experiencing similar high demand. For example, the current Class 8 truck sales backlogs have reached pre-pandemic levels. and finished vehicle inventory levels for construction and agriculture equipment are at the lowest levels in the last three years, resulting in unfulfilled end customer demand. On the right side of the page, we are illustrating the issues constraining supply. The disruptions we are seeing continue to cause component raw material shortages and escalating prices across all of our end markets. In addition to the chip shortages I mentioned, shipping congestion at the ports around the world is translating to delays, container shortages, and increased logistic costs, resulting in overall higher input costs. Labor shortages, particularly in the United States, are also leading to production inefficiencies, plant downtime, and higher labor costs. All of this has led to customers struggling to meet the strong end market demand. We're actively navigating through the unprecedented and challenging market dynamics by working to offset and recover higher input costs for commodities such as steel through our established mechanisms. Though, due to the ongoing price inflation and inherent lag in recoveries, we continue to see a substantial margin headwind that will remain until the input costs stabilize and turn the other way. While we do expect these challenges to continue in the near term, when supply chain issues do finally lessen, We anticipate a sustained recovery period as suppressed end-market inventory levels combined with high consumer demand for our key platforms provides the opportunity for a strong volume tailwind for us. We are seeing the dynamic across all three of our end markets. The alignment of these three will provide further demand momentum across our entire mobility landscape, and Dana remains well-positioned to capitalize on these cyclical growth opportunities. Moving to slide six, I'd like to share a recap with you of our recent Capital Markets Day. Last month, many of you participated, either in person or virtually, in our 2021 Capital Markets Day, which we hosted at our Sustainable Mobility Center on the campus of our world headquarters. The goal of this event was to share our perspective on how electrified mobility will evolve in the coming years and how Dana's class-leading innovation and global presence will help to drive outsized growth and financial returns for our shareholders. As many of you may recall, we introduced eight key elements that we believe showcase how Dana has successfully built a substantial EV franchise. First is our guiding vision towards a zero-admissions future that is at the heart of everything we do and is the overarching theme of our electrification pursuits. We examined how our total addressable market is going to rise dramatically over the next decade as electrification becomes commonplace in each of the markets we serve. Third, we presented Dana's industry-leading technical competencies in e-propulsion systems. More specifically, we illustrated how we were leveraging our design, engineering, and manufacturing team members' depth and capabilities to provide the most advanced three-in-one electrified drivelines in-house across all mobility markets. Fourth, we discussed that as the use of batteries and electrodynamics accelerate in the mobility markets, the driver line will remain, and Dana will be a clear beneficiary of this megatrend. The combination of electrodynamics and mechanical systems will increase our content per vehicle potential by three times compared to our historical ICE product portfolio. Fifth, this migration of mechanical powertrains to smart electrodynamic systems requires embedded software controls. Designing and integrating these into the driveline, along with in-house production of high-value subcomponents, will create a significant margin expansion opportunity for Dana in the future. Sixth, Dana is a unique and compelling investment because we serve both the established OEMs transforming their businesses and the emerging OEMs are just getting started. Our e-propulsion systems are on a vast array of vehicles and, as a result, we are well positioned to capitalize on our broad base of new and existing customers. Seventh, we utilize our existing global footprint and asset base, established operating system, and deep industry know-how that most other competitors do not have and will require decades to build. We view this as a significant cost and strategic advantage for Dana. And finally, Dana's financial profile will remain robust throughout our electrification journey because our core ICE product will remain in demand through the transition, thus generating significant cash flow to the power EV growth. Our core business is not in a state of secular decline, but rather grows through the transition with assets that will remain largely relevant. The combination of these factors tells the story of how the ICE to EV transition is positioning us for above-market secular growth and demonstrating that Dana is a great investment within the EV growth landscape. Turning to slide seven, I'd like to share some evidence of how and where this is already happening. During our Capital Markets Day, we highlighted a significant number of electrification new business wins. As the saying goes, the scoreboard always tells the truth, and our electrification strategy is working. We're immensely thankful and proud that our customers across all mobility markets are choosing Dana as their electrification supply partner. Our EV solutions are being utilized by our off-highway customers in construction, underground mining, material handling, and even some green shoots in the agriculture applications. In commercial vehicle, it's not my accident that we've achieved a market-leading position as Dana's initial focus and commitment was to medium and heavy-duty trucks and buses. In the light vehicle market, We're extremely active, supporting full-frame electric truck OEMs with both rigid and independent e-axle concepts and potential solutions, leveraging not only our complete in-house e-propulsion capabilities, but also significant experience we have from markets that were early electrification adopters, such as buses, material handling, and last-mile delivery vehicle solutions. And while... We are on the topic of the light vehicle market. We also announced for the first time, in addition to significant battery and electrification cooling wins, a major new business win for our hydrogen fuel cell metallic bipolar plates. The combination of our past successes, present capabilities, application know-how, and clearly defined strategy for the future enables us to partner with and create value for our customers at any stage of their electrification progression, ultimately leading to us winning our share of nearly a $19 billion addressable market by the end of the decade. Thank you for your time today. Now I'd like to hand it over to Jonathan to walk you through our financials.