Dana Incorporated

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'll 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'd 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. Good morning. Welcome to Dana Incorporated's earnings call for the second quarter of 2025. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we discussed today. For more details about the factors that could affect our future results, please refer to our safe harbor statement found in our public filings and our reports at the SEC. I also encourage you to visit our investor website where you'll find this morning's press release and presentation. As stated, 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. With me this morning is Bruce McDonald, Dana Chairman and Chief Executive Officer, and Timothy Krause, Senior Vice President and Chief Financial Officer. I will now turn the call over to Bruce.

Thank you, Craig, and thank you all for joining Craig, Tim, and myself for our second quarter earnings call. You know, there is a lot of noise in our numbers as we've got to reclassify us highly as a discontinued operation. And so in our earnings deck and in our comments, we'll sort of talk intermittently between new data, i.e., data from continuing operations and the full data, which obviously is the basis of our previous guidance and things like that. I guess I'd sort of characterize the second quarter as another quarter of the Dana team delivering on our commitments with a solid Q2 beat, double digit margins and accelerating free cash flow. In terms of some of the highlights here on slide four, as everyone knows, we did announce in the quarter our agreement to sell. the off highway business to Allison for just over $2.7 billion with net cash proceeds expected to be about $2.4 billion. That closing is expected to occur here late in the fourth quarter. I think substantially all of the regulatory filings have been submitted and the teams are working hard, both ours and Allison's, on effecting a smooth transition of the business over to Allison. In terms of our Use of proceeds. We previously announced that we were going to take the proceeds from from the sales off highway business and return about $1 billion to our shareholders, as well as reduce our overall debt by a couple billion dollars. I'm pleased to announce this morning that as a result of strong free cash flow and our higher guide here for the year, we're raising the amount of capital return to our shareholders to 600 million from what was 550 previously. As things stand now, we anticipate using all of that to reduce our shares outstanding, and we're forecasting that we'll end the year with a share count of around 110 million, which would be about 25% year-over-year reduction. In the quarter, we did buy back just over 10% of our shares, returning $257 million to our shareholders. And as we look here into the third quarter, We anticipate buying back another 100 to 150 million shares. In terms of our cost reduction initiatives, this is where we sort of committed to a goal of 300 million run rate by 2026. We're upping that to 310 as a result of some of the projects coming in better than Tim and I had expected. In the quarter, we delivered nearly $60 million of cost reduction and $110 million to date. And so I think we can kind of tie a ribbon around cost reduction. I think we're highly, highly, highly confident in the $300 million. And we don't really have a long way to go to get to that runway here by the fourth quarter. In terms of tariffs and the tariff landscape, I mean, a lot's uh moving around lately here but i'd say the bottom the takeaway on tariffs is we're in great shape in terms of tariff mitigation uh and tariff recoveries uh right now we're we we have some headwind here in the second quarter about 80 basis points um that's that's worse than we expect is going to be the impact for the full year because we have some timing related catch-ups that we didn't get um customer agreements in place um by the end of the quarter overall we expect over an 80% recovery for the year. More importantly is the work that the teams are doing with our customers to mitigate the impact of the tariffs. This is critical for our industry because we don't want to just pass these costs along. We need to make them go away so that we don't impact end vehicle demand. In terms of our balance of the year outlook, I think when we were on a call at the end of the first quarter, In other words, considerable uncertainty around the impact of tariffs in terms of volumes. I guess what we've seen is very strong schedules holding up in the light vehicle side of our business. We have seen some softening in North America CV, which has been partially offset by a bit of better volumes coming out of South America and Europe. In terms of our profit guide, and here I'm referring only to New Dana, We're up in our profits guidance for the year by 35 million. And if you look at the whole company, it's up 15 million because off-highway is down 20. And on a free cash flow basis, we're up in our target by $50 million to about 275 at the midpoint of our guidance. So overall, a really strong quarter. I couldn't be more pleased with the results of the team. In terms of what new data looks like going forward, I mean, here's kind of an overall snapshot reflecting 2024 numbers, but we'll be much more of a light vehicle company. We'll be much more of a North American-centric company. We do have a nice split between commercial and light vehicle. Within commercial, we have a very strong aftermarket business. And, you know, we don't talk a lot about it, but our thermal and our sealing side of our business that we integrated into light vehicle continues to be a source of profit improvement going forward. In terms of the full year guide, we just want to spend a kind of a minute, a few minutes on this page, because this is the first time we're sort of showing our numbers with and without the discontinued operations. So our guidance, and as we talked at the end of the first quarter, we had indicated our sales were trending towards the higher end of our previous range. So we're saying right now on an old, on a total data basis, our sales would have been about 9.9 billion. You can see on the discontinued operations side, sales down 125. There we have seen softness in terms of the tariffs particularly European product that's imported into the United States that's bearing a tariff, we've seen those volumes drop off. However, on the continuing operations side, we see sales being up 250 million. In terms of the guidance for the two parts of the business, if you think about the original guide at 975, you can kind of see the split. 600 million for continuing operations and 375 for off-highway. Our revised guidance that I touched on in my previous slide, up 35 for New Dana, down 20 million for off-highway for a net positive 15. And then stranded costs are just a pocket switch between discontinued operations. Those are costs that we currently allocate to off-highway that remain with new dana just a point to note that number is higher than the sort of 40 million 30 to 5 to 40 million that we've previously guided to um the reason is in within that 60 million are variable costs allocated to off highways that will go away upon the sale those are 20 to 25 million and that's how you get back down to the range that we've talked about before and then In terms of cash flow, and I've seen a few notes where there's maybe a little bit of confusion about what's the cash flow split between disc ops and container ops. Under GAAP, we're required to report total cash flow inclusive of both pieces, and so that's what we're guiding here today. What you will see when we publish our queue is cash flow split by operating, investing, and earnings split between the two. and that'll get us to the year-to-date actuals. With that, Tim, I'm going to turn it over to you to go through the financials in more detail.