Dana Incorporated

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.

Good morning, and welcome to Dana Incorporated's first quarter 2025 earnings call. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we discussed here today. For more details about the factors that could affect future results, please refer to our safe harbor statement found in our public filings and our reports with the SEC. I encourage you to visit our investor website, where you'll find this morning's press release and presentation. And as Regina said, the call today is being recorded, and supporting materials are the property of Dana Incorporated. They may not be reported, copied, or rebroadcast without our written consent. With me this morning is Bruce McDonald, Dana Chairman and Chief Executive Officer, and Timothy Krause, Senior Vice President and Chief Financial Officer. Bruce, now I'll turn the call over to you to get us started.

All right. Thank you, Craig, and good morning, everybody. I'll just start on slide four here in terms of some highlights for the first quarter. I know there was a lot of interest in the off-highway divestiture process, and we're really not in a position where we can say a lot. What I would tell you is the process continues to be underway. We're pleased with the progress that we've made. It's been competitive, and we have multiple bidders. If you look at the quarter, I would say pleased with Q1. Our results came in, generally speaking, in line with expectations. I would note that we did have a little bit of a headwind on tariffs of $6 million in the quarter. Absent that, we would have had comparable margins to last Q1, despite a pretty big reduction on the top line. So good result there. And we see that $6 million coming back. We just couldn't get the paperwork into our customers to get the recovery in the quarter. Real importantly for us, and we talked about this on our last earnings call, is we said we're going to look at our cost reduction plans and see what we can do to bring those forward. So I'm pleased to announce that we're accelerating the realization of our cost program here in 2025 what was $175 million to $225 million. We completed the integration of our former power technology segment and aftermarket business into light vehicle and CV, respectively. That's gone real well. Of the $300 million cost reduction, this integration is worth about $30 to $35 million of that. I think we're going to see further benefits, not sort of SG&A related benefits, as we leverage best practices across our aftermarket businesses. And I think as we bring some of the operational rigor and processes that we have in light vehicle to power technologies, I see operational improvements falling through in the back half of this year. So more to come on that. Then lastly, in free cash flow, Q1 is always a seasonal outflow, but we had a good start despite lower revenues and profitability on an absolute basis. Our Q1 cash outflow was an improvement year over year of $67 million. We continue to focus on opportunities to reduce our CapEx, and I'm hoping that we can squeeze some money out of that in the back half of the year. And then, you know, not that it's in free cash flow, but we are focused on a portfolio of non-core, non-strategic assets and things like that. We expect to deliver 50 million here in the second quarter and could see our way maybe to another 50 million in the back half of the year. Generally, a good start to the year. In terms of the outlook and what we're seeing, I guess I would start with a very dynamic situation that especially on the tariff front, changes significantly on a daily basis. But based on what we see right now, I guess I would just say our tariff situation is manageable. We can get into a lot more detail in some of the questions, but it's a manageable issue for Dana. Several mitigation actions have been completed. We've got recoveries into our customers with the right level of detail. to support our claims being processed. And I guess the other thing I would note, if you look at the steel and aluminum tariffs, we've seen North America indices move up such that we expect we substantially recover the steel and aluminum through already negotiated mechanisms that we have in place with our customers. Could be some timing issues, because those tend to work in a little bit of a lag. I would say the impact of steel and limo tariffs with the way the indices have moved would be kind of a non-issue for us as we see things right now. In terms of what we're seeing in the market, the first, I guess, thing what we are seeing is a reduction in schedules for our North American commercial vehicle customers. And you see that in some of the calls that have come out before us with people taking their assumptions for North America down. And we've reflected that in our outlook. So that's sort of been a bit of a headwind for us. And off highway, we're seeing a little bit of pre-buy interest here in the second quarter. Nothing significant, but it's nice to see we're getting a little bit of that. And we are starting to see outside of North America some green shoots in terms of improvements and orders in the second half of the year. In North America, We aren't seeing anything in terms of LV schedules, any deterioration at this point in time. If you look at the mix of vehicles that we're exposed to, you guys all know where our money is made. We feel pretty good about our customers gaining share in our space. And while we acknowledge there's some risk in the back half of the year, We're just being cautious right now. We don't see it reflected up in our schedules. We talked earlier about the $50 million of incremental cost reduction. And then I guess I would just say, absent tariffs, we'd be sitting here this morning raising our guidance by about $50 million to reflect the acceleration on the cost reduction side. We're just holding back until we get a little bit more clarity on what happens in LV, particularly in the second half. And lastly, just a little bit of a something to brag about here, but we want our 10th pace awards quite an honor and the industry this for us as a. This this hybrid transmission is kind of a niche product spoke 20 $25,000,000 of sales this year. It's product that we that we're we're we've rolled out across the highest end of the automotive spectrum. So customers like Aston Martin, Lamborghini, McLaren. We see this as a business opportunity to grow to 200, 250, maybe even up to 300 million over the next few years at a highly accretive EBITDA margin. This product pushes 20%. So not a huge item, but it's an important, I think, margin expansion arrow in our quiver. And I congratulate the technical team for winning the award. So with that, Tim, I'll turn it over to you.