Dana Incorporated

Good morning and welcome to Dana Incorporated's third 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 speaker's remarks and Q&A session will be recorded for replay purposes. For those participants who would like to access the call from the webcast, please reference the URL on our website and sign in as a guest. There will be a question and answer period after the speaker's remarks And we will take questions from the telephone only. 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 Corporate Communications, Craig Barber. Please go ahead, Mr. Barber.

Thank you, Regina. Good morning, everyone. Thank you for joining us today for Dana Incorporated's third quarter 2024 earnings call. Today's presentation includes forward-looking statements about our expectation for Dana's future performance. Actual results could differ from what we discussed today. For more details about the factors that could affect future results, please refer to our safe harbor statement on our public filings and our reports with the FCC. Before we proceed, I encourage you to visit our investor website, where you'll find this morning's press release and presentation. As a reminder, today's call is being recorded. supporting materials on the property of Dana Incorporated. They may not be recorded, copied, or rebroadcast without our written consent. On the call this morning, we have Jim Kamciskis, Chairman and Chief Executive Officer, and Timothy Krause, Senior Vice President and Chief Financial Officer. Now we'll get started. I'll turn the call over to Jim.

Good morning, and thank you for joining us today. Please turn with me to page four, where I'll discuss the highlights from the third quarter of 2024. Dana reported sales of $2.5 billion in the third quarter, lower than the prior year due to softening demand of electric vehicles across markets and reduced internal combustion engine vehicle sales for commercial trucks, off-highway equipment, and certain light truck programs. Adjusted EBITDA for the quarter was $232 million, down slightly from last year, despite the significant and rapid sales reductions across all mobility markets. Importantly, despite the reduced sales, Dana achieved 30 basis points of profit margin expansion, delivering 9.4%, in the third quarter. The strong profit performance was a direct result of outstanding operating and business system execution across all areas of the company. We continue to strengthen the business by leveraging core operations, new technology, and our exceptional people. Moving to the upper right of the slide, I'll walk you through a few key highlights for the quarter and the remainder of the year. We see further weakening demand for ICE, hybrid, and electric vehicles across most mobility markets, including commercial trucks, off-highway equipment, and certain light truck programs as a result of ongoing inflationary pressure, global uncertainty, and higher vehicle inventory levels, which have driven down production. Within our off-highway segment specifically, we saw lower demand, particularly in Europe, especially within the construction and agriculture equipment markets. Yet again this quarter, the company continued to achieve company-wide efficiency improvements, resulting in increased profit margin, all while overcoming the softening demand impacting our markets. Our team has done a remarkable job efficiently flexing manufacturing-related cost drivers. At the same time, the entire organization continues to achieve price and other fixed and variable cost improvements across Dana and throughout our value chain. Lastly, as stated in the bottom right-hand corner of the page, Dana remains within our full-year profit, profit margin, and free cash flow ranges as a result of, one, profit conversion on traditional organic sales, two, strong working capital performance, and three, prompt and efficient capital investment spending adjustments as OEMs rapidly modify vehicle development plans and timelines for future ICE, hybrid, and electric vehicles. Please turn with me to slide 5 to review how Dana consistently improved profit margin despite the challenging operating environment. Over Dana's 120-year history, the company has been a leader in highly engineered internal combustion engine powertrain, sealing, and thermal management solutions. However, over the past several years, Dana did what many said could not be done. We disrupted ourselves by establishing industry-leading in-house hybrid and electric vehicle e-propulsion and e-thermal capabilities. The Dana team has proven it could be done. Today, our vertically integrated ICE, PHEV, and EV strategy serves as a differentiator to winning replacement and new programs from our customers across all mobility markets. As challenging as this technological transformation was, As slide 5 illustrates, this was accomplished while simultaneously expanding profit and facing the most volatile demand, unprecedented inflation, and supply chain disruptions that we've experienced in our lifetimes. Today, we have strong momentum due to our disciplined approach and the execution of our outstanding team. As of the end of the third quarter, we've achieved three consecutive years of consistent quarterly adjusted EBITDA margin improvement. There is work to be done, but the team is doing a remarkable job threading the needle by positioning Dana as a supplier of choice for ICE, PHEV, and EV growth while navigating risk and improving returns. The progress, including increasing our adjusted EBITDA margin to 9.4% in Q3, can be directly attributed to, first, providing differentiating customer satisfaction, meaning quality delivery in the most advanced technology portfolio in the history of the company. Second, leveraging synergies and scale to achieve company-wide efficiency improvements, and third, materially improving performance on every facet of the company through our overall business execution. Please turn with me to slide six, where I'll provide a brief update in our markets. As we finish out the year, we anticipate continued softening in most of our end markets. Beginning on the left side of the slide, let's look at our off-highway segment, where we're seeing lower demand, particularly in Europe. Agriculture is down compared with last year and demand for construction equipment softened in the third quarter and will likely continue for the remainder of the year. Furthermore, we anticipate mining equipment demand staying flat compared with 2023. While we expect light vehicle full frame truck production volumes to remain relatively stable for key recently refreshed vehicle platforms, we are seeing softening in some programs as dealer inventories have continued to rise. Consistent with what we shared with you last quarter, we are witnessing markets for heavy vehicles to be lower compared with 2023, with both medium duty and heavy duty truck demand softening in production throughout the remainder of the year. Moving to the right of the slide, Dana's operating priorities as we look to finish out 2024 and move into 2025 include four key priorities. Our first priority is maintaining our disciplined approach while achieving balanced growth. Dana supplies class leading conventional and clean energy solutions to nearly every vehicle manufacturer around the world, which provides stability through markets of locality. This, combined with our ability to flex our cost structure and generate efficiencies through the current adverse market conditions, enable us to remain focused on technology innovations that support future growth. Second, because Dana provides product systems and technology to customers across all end markets, we're able to leverage synergies and scales to maximize impact. Thirdly, because of the flexibility of our manufacturing capabilities and locations, we can optimize our resources across multiple markets and regions, which enables us to maintain agility to meet ICE, PHEV, and EV demand. Lastly, a prudent use of capital enables us to maximize the investment necessary to continue supporting new business growth across markets. Moving to the bottom of the slide, our early expectations for 2025 see us operating with a lower cost structure as we navigate softer end market demand, including tempered demand for electric vehicles. Please turn with me to slide seven, where I will share some exciting news with you about a first of a kind high performance transmission system innovation from Dana Graziano that is gathering deserved attention from across our industry. As I highlighted on my previous slides, Dana is very calculated where we invest regarding technology and innovation to ensure that we achieve profitable growth while providing our customers with the most advanced capabilities they require to bring their products to market. A great example of this is Dana's modular high performance hybrid eight speed dual clutch transmission, which has been selected as an Automotive News Pace Award finalist for 2025. This state of the art hybrid eight speed DCT transmission platform is unparalleled in the market. We developed this first-of-a-kind solution to enable the highest levels of power and torque density performance in its class. As you know, supercars are defined by their performance, so electrification must enhance them while at the same time delivering emissions improvements. And believe me, improved emissions does not take away from the performance of the all-new 2024 Lamborghini Revoluto, its first series-produced plug-in hybrid. The vehicle boosts an output of just over 1,000 horsepower and goes from 0 to 60 in a remarkable 2.5 seconds. Dana's solution is novel by virtue of its segment-first modular nature that includes both transversal and longitudinal variance offerings. The technology is versatile, with vehicles being able to operate in IC only, pure EV, or a variety of hybrid blended modes The key being that users can switch between these modes to amplify efficiency and performance. Whether the driver prioritizes fuel economy, craves exhilarating performance, or seeks a balanced approach, there's a mode to perfectly suit their needs. Thank you for your time today. Now I'd like to turn it over to Tim, who will walk you through the financials.