Dana at Wolfe Research Summit: Strategic Changes and Future Plans

On Tuesday, 18 March 2025, Dana Inc. (NYSE: DAN) participated in the Wolfe Research Virtual Autos Summit. During the conference call, CFO Tim Kraus and Investor Relations Craig Barber outlined the company’s strategic plans, including cost-saving measures and divestiture processes. Despite mixed market conditions, Dana remains optimistic about achieving its financial targets and enhancing shareholder value.

Key Takeaways

• Dana aims for an 8% EBITDA margin in Q1 2025 and expects to improve to double digits by year-end.
• The company targets $175 million in cost savings for 2025, with $300 million in run-rate savings by 2026.
• An off-highway divestiture announcement is anticipated in early to mid-Q2 2025.
• Dana is pursuing customer recoveries for tariff costs and focusing on selective EV investments.
• The company expects a rebound in the second half of 2025, following initial market weaknesses.

Financial Results

• EBITDA Margin: Tracking to achieve an 8% margin in Q1 2025, with an improvement to low double digits expected in the second half.
• Cost Savings: $175 million in savings targeted for 2025, with a build-up of $35-40 million in Q1. A total of $300 million in run-rate savings is anticipated by 2026.
• Free Cash Flow: Dana anticipates a 35% free cash flow conversion rate for the new company structure post-divestiture.

Operational Updates

• End Market Conditions: Mixed performance across markets, with light vehicle production expected to be weak in the first half due to inventory adjustments and past UAW strikes. A recovery is anticipated in the latter half of the year.
• Off-Highway Divestiture: The divestiture process is progressing well, with high-quality bidders involved and an announcement expected soon.
• Tariff Mitigation: Dana is actively seeking customer recoveries for tariff-related costs and has contractual agreements for metal price fluctuations.

Future Outlook

• Strategic Direction: Post-divestiture, Dana will focus more on the light vehicle market, maintaining leverage at approximately one turn over the business cycle.
• EV Investments: The company is prioritizing investments where it is the incumbent on an ICE program and requiring customer contributions for engineering and CapEx.
• Capital Allocation: Dana plans to reinvest in the business and return excess capital to shareholders, emphasizing its commitment to delivering value.

Q&A Highlights

• Tariff Exposure: Dana ships goods across North American borders and seeks customer recoveries for tariff costs, with a recovery rate of 75-80% and a lag of 2-5 months.
• Cost Savings Sources: Savings are primarily from segments remaining after the off-highway divestiture, focusing on EV cost reductions and organizational efficiencies.
• Off-Highway Divestiture Details: The industrial side of the business is valued at $400-500 million, with the remainder in mobility sectors like agriculture and construction.

Readers are encouraged to refer to the full transcript for more detailed insights into Dana’s strategic initiatives and financial outlook.

Full transcript - Wolfe Research Virtual Autos Summit:

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Auto Summit. I’m Emmanuel Rosner and I’m the Lead Autos Analyst here at, Wolf Research. For our next discussion we’re very happy to welcome Dana, a leader in propulsion and motion systems for light, commercial and off highway application and the best performing stock in our coverage since late November when management announced plans to divest the off highway business and implement significant restructuring actions that the company expects will eventually yield $300,000,000 in savings including $175,000,000 this year. So to discuss this exciting and transformational steps, as well as the company’s fundamental outlook, we’re very pleased to welcome CFO, Tim Kraus, and Craig Barber, who runs Investor Relations. Thank you so much for being with us.

Tim Kraus, CFO, Dana: Thanks, Manel.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: So maybe starting with the near some of the near term dynamics. We’re most of the way through the first quarter. Any update on how business conditions or industry conditions are tracking? Are you still on pace for your 8% EBITDA margins in the quarter?

Tim Kraus, CFO, Dana: Yeah. I mean, we’re we’re we continue to to track, for the most part on plan. I mean, we’re we’re we’re seeing it’s a it’s a bit of a mixed bag out there in terms of the end markets, but generally speaking, we’re we’re where we thought we would be. And yes, right now, we we see, that we’ll we’ll be able to deliver the the 8% margins in the in in the first quarter.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Would you wanna elaborate on the, on the mixed bag in terms of industry condition? Is that by end market or region or

Tim Kraus, CFO, Dana: Yeah. So we’re we’re we’re, you know, we’re seeing the the softness we expected in in most there’s a there’s a few, a a few little pockets here and there where we’re starting to see, you know, some maybe flattening out of some of the some of the the degradation on the markets, but, we remain, cautiously optimistic that it’s the start. But, right now we’re we’re we’re pretty much where we, we figured we would be this part in, in the first quarter.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Now the, on the light vehicle side, you you guided light vehicle production to be, you know, flat year over year in 2025. But, you know, Ford built significant inventory last year, which certainly creates a difficult volume comp at least in the first half of the year. And then Stellantis volumes off to pretty slow start this year as well. So what are your assumptions around key customer volumes? And are you factoring or expecting a big second half improvement?

Tim Kraus, CFO, Dana: Yeah. So we would expect, you know, if you think about our story here, first half versus second half. So for the reasons you you just mentioned, you know, we’re expecting a continued weakness in the in the first half relative to to where, you know, where they were coming out of, in, in the fourth quarter. That’s generally due to, you know, they build a lot of inventory. And then when you compare our first half, especially our first quarter this year, especially in light vehicle versus last year.

So last year in the first quarter, we were coming off of a a pretty significant fourth quarter twenty twenty three event around the North American, UAW strike, which disproportionately impacted, you know, Dana. So you think about it, we’re on Super Duty, Wrangler, Ranger, and Bronco. All of those were impacted, by the UAW actions with our customers. So, the the comps for us, especially in the first quarter, but but certainly in the first half, are are difficult ones. So we expect, this to be a down first half when you’re thinking about first half of twenty four to first half of of of twenty five.

And then, we do see growth in the back half as, as the, the inventory situation stabilizes and production volumes begin to come back to something more normalized.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And then shifting to, the off highway and the commercial markets, how are they shipping up this year? Any additional color on the regional or, you know, end market dynamics?

Tim Kraus, CFO, Dana: No. I mean, we we we were expecting a weakness slightly some slight weakness in the commercial vehicle. We’re we’re seeing that, you know, we we continue to our eye on the markets, there. Off highway, we we were expecting continued weakness, especially in the in the first half. I think that much like the, the, the, the light vehicle business, we we we see that being, down in the first half and then, then the rebound coming through in in the second half of the year.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And, in the your outlook for the year, it implies margins improving from that 8% level we just discussed in Q1 to something that would be low double digits, maybe in the second half. What’s driving the improvement?

Tim Kraus, CFO, Dana: Well, I think there’s a couple of things. Obviously, as we move through the year, we’ll we’ll we’ll we’ve got a hundred and $75,000,000 of incremental cost savings as you you mentioned in your opening remarks. That’ll obviously flow through as we move through the year, in in larger amounts, given, you know, the timing on those actions. And then, obviously, as as volume increases, you know, first half over second half, that contribution margin will will help the overall all margins for the for the company as well.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And just on these, on these cost elements, how should we think about the, the cadence of it in terms of the savings?

Tim Kraus, CFO, Dana: So, obviously, we started the we started taking the costs out in the fourth quarter last year. You saw that in our walk, when we reported here last month. About 10,000,000 of that came in. Hundred and 75 this year. So so much of what we did last year, a lot of that’s flowing through through here early and and and through the the balance of the year.

We continue to take actions in, in in, the first half of the year, really throughout the year. And so we’ll see this building from a a 35 to 40,000,000 in the first quarter and and and building up through the year, delivering that hundred and 75. But, you know, from our perspective, we are on track to deliver run rate savings of that 300,000,000 as we move into 2026.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: I think we have to speak about tariffs. Definitely a topic for sure. We don’t have to. I mean Yeah, no. It’s, it would be unprofessional not to.

So how are you thinking about your exposure to potential US tariff, this year? Can you remind us if you ship goods across Mexico or Canada border and the structure of your metals purchases?

Tim Kraus, CFO, Dana: Yeah. So we do obviously, we have a we have an integrated North American, both internal and and external supply chain. So we we do ship, both finished goods and and and semi finished inputs. So think of stampings or machinings across the border, both Canada and and Mexico. From a metals perspective, we don’t buy a lot of raw metal, especially in the driveline business.

A lot of the metal comes through in in semi finished goods, whether they be forged or or cast parts, which we then, we then machine and and finish and and ultimately assemble into, into axles, and and the like. So, you know, we’re exposed, obviously, like much of the supply base and and our OEM customers to, to the tariffs, both in The US and any any of the the retaliatory tariffs that might might be applied.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And so how how would you think about, mitigating actions if those were to pass? Was it largely around customer recoveries? Are there any things that would need to be done in terms of moving manufacturing around?

Tim Kraus, CFO, Dana: Yeah. So so moving manufacturing is obviously a much longer, a longer time frame. If you you have to understand, we we we supply generally safety critical parts, and, and supply into the global OEMs, whether you’re thinking about it on an o e on a light vehicle or a commercial vehicle market. Generally, those will require OEM certification and sign off on the move. So, you know, that’s generally a a a very long process or or a somewhat long process.

Doesn’t happen overnight. So generally speaking, the the tariffs that we are incurring, we’re, we’re going to seek recovery from, from our customers, for those, those costs.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And can you also remind us on on the metal side? So to the extent that, you know, these tariffs would increase the spot prices of, of some of the metals and, you know, the things that you’re the inputs that you’re purchasing, what are the mechanisms to pass this through to customers? Is it contractual? Is it, is there a lag? How should we think about that?

Tim Kraus, CFO, Dana: Yeah. So, so we we don’t we don’t we don’t measure against the spot. They’re usually a group of indexes. But to the extent tariffs or or really any other influence increases the indexes, we do have contractual by and large, especially in CV and and our light vehicle customers. We have, we have contractual agreements with our customers for, for recovery of that.

Generally, that recovery is is somewhere in the 75 or 80% range, and generally we’re on a on a lag of somewhere in, you know, the two to five months range depending on the product, the customer. A lot of the lag also occurs because we’re we’re buying the metal through our, through our suppliers of the of the the stamped or forged parts. So there there is a bit of a lag through that. But, but those those contractual mechanisms have worked very, very well if you go back over the last few years, and and we continue to to see those. Those would work in the in the same way if if tariffs were to to increase the, the indexed costs, for for these metals.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Great. Shifting gears to, you know, some of the transformation plan with the off highway divestiture and the, the cost savings initiative. So you’ve identified $300,000,000 in cost savings. You indicated earlier in this call that you feel very good about getting there, you know, as a run rate, either next year. How would you I guess, what would be drivers of upside or or or downside risk to it?

Tim Kraus, CFO, Dana: So, I I mean, obviously, in in I mean, we we we came out, said 200,000,000, you know, and then, you know, we we came out in January and and took that up to 300. Look, I I think in terms of upside, I think they’re you know, obviously, we we, we’re still early in the process. I’m guessing we’ll identify some more costs, but some of the things that, you know, a lot of things move around, I’m very, very confident in the 300,000,000, but, but make no mistake, we we continue to to wanna drive efficiency into the into the organization and into the business. So to the extent we find new opportunities, we’ll continue to action them. In terms of the downside, I, you know, I I think that, as I mentioned earlier, very, very confident.

I don’t see much downside. We continue to, you know, have the road map we’ve identified. We’ve already taken, about a hundred million dollars of those costs out, maybe a little bit more now. So we’re well on our way to delivering, the hundred and 75,000,000 that, that’s in the plan for this year and have a plan set out to to to get to the 300. So I don’t see this being, you know, a lot of risk around the plan.

Obviously, there’s a lot of things going on in the world, but we remain, you know, laser focused on delivering on the commitment to the 300,000,000.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And can you just remind us the, the sources of, the savings and and and and to what extent, you can serve, like, titles up to, you know, your specific segments?

Tim Kraus, CFO, Dana: Yeah. So, largely the 300,000,000 is in the the the three segments that all the segments non off highway. There is some of it in, but it’s very small that’s in in off highway. So largely, the 300,000,000 will be in what we’re calling New Dana or the RemainCo. That’s gonna be left after we divest of the off highway business.

So largely, you can think about that in in in in terms of being realized in 2026 post off high or or in the the the non or the ex off highway business. In terms of buckets, we haven’t really broken down the buckets, but, you know, one of the largest drivers is is, the EV cost that we’ve taken on over the last three, four, five years. So as that business has, has has, you know, experienced delays and, and volume reductions, we’ve been able to, to take a lot of the costs out. You remember just, you know, maybe twelve months ago, all these programs were kinda piled on top of each other needing to be engineered and, and, and produced and and ready for production all at the same time. That required an enormous amount of resources as as these programs are are are more sort of staged and normalized in terms of both value and our our volume and timing, that has allowed us to to really, you know, rationalize the amount of of resources we have.

And it’s not just engineering. Think about engineering, purchasing, program management, all the things you need to have in the organization to bring brand new programs from from basically design to to delivery of a manufactured good. The other big driver around if you think about the electrification is, you know, we spent the last three, four, five years developing a a group of technologies and core product capabilities, around motors, inverters, chargers, software engineering, software development, that’s largely complete. Obviously, those products will continue to need to be updated. So we think of version two, three, four, five, six, whatever it is, and then be, actioned or applied into specific products.

But that that has largely been completed, and and now we we don’t need that level of of, of investment on an ongoing basis. So that’s come out. Obviously, we’re moving a post off highway to to two segments. That’s obviously, has a a a cost takeout in it. On top of it, as we we’re going through and and thinking about an organization post off highway, we’re we’re really, you know, challenging the organization to think about, hey.

How do we do, more with less? How do we do absolutely less? Do we really need to be doing all all we’re doing? Are we doing the right things in the right places? Are we using the low cost country?

Are we centralizing what we need to centralize and keeping what we need in in the in the countries by the customer that really is value added to the customer? So really, all of those types of things really have taken a a really hard look at, in order to to generate the 300,000,000. And and one of the things is we were already down this path quite a ways when we made the announcement in, in November. So so a lot of this work had been been been been worked on. And really was part of the reason why when we moved in and and and got through this, Bruce came in and we really started to to to to sharpen the pencils and really go after it.

We’re able to take that from 200 to 300,000,000.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: I guess what’s been pretty stunning is the magnitude of it, right? Because the, I think the RemainCo, you know, ex of highway is probably earnings have probably been, sort of like moving between 400 and 6 hundred million or so a year in the last two or three. And so this is essentially a 50% boost just from, you know, essentially pulling back on a lot of the levers that you’ve described. It’s a very considerable magnitude. I think that’s what’s been quite impressive, but also a little bit hard to, you know, to get comfort on on from the outside.

But, your point is that most of those I mean, a lot of it is already well underway, and then the rest has been generally identified particularly in terms of where the savings would come from.

Tim Kraus, CFO, Dana: Yeah. No. Correct. And and and don’t don’t forget. Right?

You know you know, if you go back, you know, one of the other things we we’ve announced is is when you think about our electrification, we we were chasing a lot of electrification business with a lot of of different customers, including a lot of start up customers. Right? We’re taking a much different approach in terms of how we approach new business, especially with a lot of the the the non incumbent the the non, or the start up OEMs. Like, that there is a we had a lot of cost in the business around those types of of, of chases and, and growth strategies. Obviously, we’re not a lot of those players are are either, you know, bankrupt or or have changed strategies.

So we’re changing that strategy as well. So that’s also obviously a big driver in in terms of, of what changed, you know, sort of allowing us to to take some of these costs out. It was a change in some of the strategy.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Yeah. Any update on the off highway divestiture process? Can you provide color on the the bidding process or the bidder types or, I mean, just how is it going?

Tim Kraus, CFO, Dana: It’s it’s going, going very, very well. We’re very pleased with, with the process. We’re well down the process, at this point. We have, you know, an active list of, of bidders in the process. We continue to work.

I think sometime they’re they’re they’re they’re maybe too too involved given the amount of time that, that the teams are spending, with the bidders. But but that’s a that’s a that’s a good place to have, and, we’re we’re on track to be able to, to announce a deal, sometimes in sometime in in in early to mid, second quarter. So we’re we’re we’re very, very happy with where we’re at in the process.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Alright. And then any comments on the, the types of companies that are that are bidding?

Tim Kraus, CFO, Dana: So lot of high quality strategics in the process. So we’re very, very pleased. I think that, gives us a lot of confidence, in in both, you know, getting to that, that signing as well as, getting the value that we, we expect for the business.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Great. Now investors may not fully appreciate of Huawei’s, industrial focus. Can you clarify its end market exposures and and and the key, key players and competitors there?

Tim Kraus, CFO, Dana: Yeah. So so you gotta think about the business, in in in in two parts. So think of it as a, you know, about a 300 3 billion dollar business. You know, the, the the core industrial business is, 4 to 500,000,000 of that. The rest is what we would call the mobility side of the business.

So so the mobility side is the the classic off highway. Think of, you know, ag. So think of, you know, mid you know, field tractors. Think of construction equipment, so, rough terrain forklifts, scissor lifts, you know, skid loaders, those types of types of products on that side. Also underground mining, forestry equipment.

So really all the things you can think about that are that are very heavy duty and and and are that are are are gauged to off highway. On the industrial side, it’s a lot of the same products. So, you know, think of drivelines, shafts, gears, those types of same the same the same technologies and capabilities on the industrial side. So they’re just, you know, changing the way we we we move torque. So think of, you know, high speed drive shafts for, for industrial applications like steel mills or a high speed rail.

You know, think of drilling rigs with with shafts. So same thing. It’s a shaft. It’s being used in a different a different situation. Torque conveyance.

So for example, we we made the gearing for the Panama Canal Locks. So again, it’s power conveyance. It’s torque conveyance just on a different pod. We make, winches and and hub drives that, that go on, onto both equipment and stationary type of machines, as well as marine applications. So, really, it’s a very broad, very our our industrial business has about 15,000 customers, so very different than, say, the light vehicle driveline business.

So very diverse. Obviously, very different go to market strategy than, than the rest of the business, but, but uses the same the same technologies, the same processes that the the rest of the business does.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: How do you plan to mitigate these synergies from the divestitures over time?

Tim Kraus, CFO, Dana: So the the the of of all the businesses, it’s the one that’s that that has been least integrated, largely because of the the differences in the markets. Much lower volume, much larger in terms of the size. Obviously, there’s there’s some, you know, dis synergies around purchasing. Obviously, we we have a plan to to to mitigate that. We called out about $40,000,000 worth of stranded costs that that will be left, that were being allocated into the business that we will have to take out.

I don’t anticipate those being able to be taken out until we get into ’26. We’ll have some TSAs, so some some transact some transitional services agreements that that will need to be, dealt with. But as we move through that, we’ll we’ll then, you know, start attacking. I do believe we’ll get much of that 40,000,000 out of the business. It may just take a a little bit more time.

But some of the costs will come out, just from a smaller, having a smaller company. So if you think about it, right, just in my organization, we have, we have a global PWC audit that’s done, US GAAP audit. You know, we’re gonna be auditing a $10,000,000,000 company now. We’re doing a $7,000,000,000 company then. Obviously, the the cost of the audit will go down.

Like, that those costs will come out naturally. So, we’ll we’ll we’ll we’ll continue to work. We we don’t have any, any view that we’re gonna accept the fact that we’re gonna eat the the 40,000,000, but, but it may just take a little bit longer to get out. But I I it it’ll be front and center as we move into 2026.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Now if we if we think about, the RemainCo, how should we think about your growth profile, a particular between, you know, light and and commercial vehicles?

Tim Kraus, CFO, Dana: Yeah. So we’re we’re principally gonna be we’re we’re gonna be more heavily on the light vehicle side. So if you think about the three segments today that, that we have, which is light vehicle driveline, commercial vehicle, and, and PowerTech. PowerTech’s for the most part, light vehicle, business. So so we’ll be, you know, much more heavily tied as a percentage of the total business into the light vehicle.

Obviously, we still see, growth prospects in the business. Right? EV is not going away. It’s just just lower for longer, and and obviously, that helps the ICE business. So we’ll continue to work, work on the business, both improving the the the efficiency of the business and then finding, and and driving the the the places where where we have an you know, we’re we’re we’re very excited about about the prospects for, for new Dana on on the other side of off highway.

Very focused. The team is, is is is very, very focused on those end markets, and we think we can deliver a lot a lot of value for, for both our shareholders and our customers.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And, what do these structural cost reduction in the new data mean for, in a future margin potential and operating leverage at RemainCo and how would it differ between commercial vehicle and light vehicle?

Tim Kraus, CFO, Dana: Yeah, so we haven’t really broken down the 300. Obviously, we’re in the process of resegmenting the the the businesses, now, so we’ll be down at just the the light vehicle and the the commercial vehicle and off high and aftermarket businesses. So we haven’t really broken it out, but but, you know, it it’s largely probably on a on a percentage of sales basis is probably a reasonable way to think about it, in terms of a lot of these costs are are are corporate costs that that that tend to get allocated based on on sales or cost of sales, one of those types of drivers. So so typically speaking, you’ll they’ll end up in that that manner back in the, in the BUs. There are costs that are inherent in the in the BU SG and A that’s or fixed costs that are coming out, but largely that’s kind of the the the best way to think about it.

In terms of leverage, right, we we’re we’re talking about, you know, New Dana having having margins that are double digits, probably 10 and a half percent when we come out. And, obviously, as we continue to grow the business and that contribution margin comes out, we see the potential for growing, that margin as well. Look, we’re not we’re not happy at 10 and a half. We think this business can, ultimately grow into into much better double digit margins, and and that’s the focus for the team as we, we come through the transaction and move into ’26, really making sure that we’re delivering a lot of value for, for for the shareholders and and our customers.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And with this, structural cost reduction, does that mean the, any change in the incremental margin on on the volume?

Tim Kraus, CFO, Dana: Yeah. I mean, there’ll be some, but but generally, if you think about contribution margin, generally, you know, it’s very the the variable cost margin. So, you know but the base business will be more profitable. I I don’t believe that the there there’s a a large impact on the the variable cost in the business if you think about it right. Direct labor and direct material, aren’t aren’t really affected by the 300,000,000.

That’s not to say that we don’t continue to drive efficiency on conversion costs and and burden that are at the plant, but but the 300,000,000 is really focused, you know, above above the plant, so to speak.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Now how should we think about, long term free cash flow potential for the new Dana?

Tim Kraus, CFO, Dana: So it’s, it’s going to be significant. You know, depending on where we’re at in the cycle, somewhere between, you know, 35% free cash flow certainly, absolutely, potential for the business. If you think about, as we move through, right, the $300,000,000 obviously that comes through in in cost saving, that that falls all the way through to the to the bottom line in terms of free cash flow. But, you know, as we we sell off highway, we delever the business. We’re gonna sell the most profitable part of the business at least today.

That generates most of the, you know, a disproportionate amount of the the cash taxes. Cash taxes will be disproportionately lower. Lower. You know, that that free cash that that turns into free cash flow on the on the RemainCo as well. So despite having lower sales and lower, you know, dollar of EBITDA, what we will be getting is a far better conversion of that, of those sales into free cash flow, by the very nature that we have one higher EBITDA, but but but significantly better, leverage and therefore lower cash interest in taxes.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And so with that free cash flow, what what will your capital allocation’s priority be? Do you first of all, do you still believe you’ll be largely debt free post the off highway sale? And then what would be sort of like the path beyond that? Would you re lever, buyback stock? How should we think about that?

Tim Kraus, CFO, Dana: So I I think, you know, we we see the business at about one turn net leverage over the business cycle. So sometimes it’ll be a little higher, sometimes it’ll be lower. So, you know and and when we when we we get to the announcement, we’ll we’ll lay out the cap structure and how we’re thinking about it. But to the to core of your your question, which is around, you know, what do you do with the free cash flow, you know, going forward? Our our view is we’re we’re gonna we’re gonna, you know, invest in the business where it makes sense, and then the rest will be available for, for return to the to the shareholder.

We’re to be focused on maintaining leverage at at our optimal rate, and then to the extent we we have excess, capital, our intent is to return that to the shareholders.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Got it. And then do you see any, value creation opportunities through inorganic growth or in the or is the opposite true where, you know, further divestitures are on the table? I guess, how how should we think about the inorganic side?

Tim Kraus, CFO, Dana: Well, so I I think we are laser focused on delivering, the commitments that we have out there. So 300,000,000 of run rate cost saving, the divestiture of our off highway business, the delevering of the business, and obviously, running the business, on a post off highway basis. And that’s really the focus for the team. It’s a lot to deal with and that’s where we’re going to continue to focus the business, continue to make it more efficient, look to to grow the business, you know, inorganically, in the areas that we think are, are are best for us. We’re we’re and and the businesses that we have post transaction, we think are really good businesses, we wanna continue to invest in them.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: And then how how are you approaching future e EV investments? You know, I think you’re you mentioned how you’re being much more discriminate now in terms of, who to partner with. Is it still is it still a priority?

Tim Kraus, CFO, Dana: Yes. Absolutely. Obviously, we, you know, EV is not going away. It’s just going to be, you know, a lot slower ramp, you know, over the next five to ten years than than perhaps the market was thinking, you know, a year or two ago. So I I think the the the focus for us around how we approach our EV, pursuits are where we’re the incumbent on a on an ICE program.

We we believe we have the technologies, the products, and the capabilities to deliver a high quality value product for the customer. We’re gonna continue to go after that. That’s we believe that’s our business. We have the right to win that business, and and we think the customer will will see us as the natural choice for that business. Where we and and we expect that to to continue to invest, in those in those businesses to to to to take that and and and capture that EV business.

Where we’re not the incumbent, you know, our our view is we’re going to be very selective about what we what we choose to in in invest in. And and largely around that, we will expect the customer to, to pay for engineering, to pay for large portions of the CapEx, right, to to to really reduce the risk to the company around the investments given the uncertain nature of of the EV market going forward. So, and then, obviously, where we have, you know, really, nascent startups, that’s not really business that we’re, we’re going to pursue in the future. We don’t believe we that’s business we need, and, we’ll continue to focus on those two other areas to to to grow the business. So we think there’s plenty of opportunity for us in the light vehicle and the commercial vehicle vehicle markets around that.

And then on the the power tech side, but if you think about battery cooling and power electronics, that’s an area where we have, a substantial presence today. We’ll continue to invest in that along with and and grow that with, not only our current customers, but with a lot of future customers. We have the the best technology. We, we make them at scale today. So that’s a business that we we believe will continue to to be a a growth area for us and we’ll continue to invest in.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Great. Well, sounds like a lot of exciting stuff going on. So, I really appreciate, all your time and insights today. Tim, thank you so much for being with us, and I wanna thank all the investors, for joining us.

Tim Kraus, CFO, Dana: Thanks, Mayo. Appreciate it.

Emmanuel Rosner, Lead Autos Analyst, Wolf Research: Hi, Greg. Thank you.

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