Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dana Inc (DAN, Financial) reported a profit margin expansion of 30 basis points, achieving a 9.4% margin in Q3 2024 despite reduced sales.
- The company has achieved three consecutive years of consistent quarterly adjusted EBITDA margin improvement.
- Dana Inc (DAN) continues to leverage core operations, new technology, and exceptional personnel to strengthen its business.
- The company has successfully implemented company-wide efficiency improvements, resulting in increased profit margins.
- Dana Inc (DAN) has been recognized as an Automotive News PACE Award Finalist for its innovative hybrid eight-speed dual-clutch transmission.
Negative Points
- Sales for Q3 2024 were $2.48 billion, $193 million lower than the previous year due to decreased vehicle production.
- There is a continued weakening demand for ICE, hybrid, and electric vehicles across most mobility markets.
- The off-highway segment experienced lower demand, particularly in Europe, affecting construction and agriculture equipment markets.
- Net income attributable to Dana Inc (DAN) was $4 million for Q3, about $15 million lower than last year, primarily due to higher income taxes.
- The planned divestiture of a noncore hydraulics business did not close as expected, impacting financial results.
Q & A Highlights
Q: Can you elaborate on the cost efficiencies that allowed Dana to maintain EBITDA despite a significant drop in traditional organic revenue?
A: Timothy Kraus, CFO, explained that the falloff in traditional markets, particularly heavy vehicles, was due to quick order adjustments by customers. The minimal EBITDA impact was due to improved cost efficiencies and favorable mix, allowing Dana to offset the expected contribution margin loss.
Q: Are there any plans to sell the off-highway division, and how feasible is it to separate it given shared EV technology across divisions?
A: James Kamsickas, CEO, stated that while they don't comment on media reports, any division could theoretically be spun off. He emphasized that Dana's divisions are interconnected, sharing technology and capabilities, but did not rule out the possibility of a sale.
Q: What caused the failure of the European hydraulics business sale, and what is the outlook for the off-highway market?
A: Timothy Kraus, CFO, noted that the sale fell through due to the buyer's financing issues. He mentioned that the off-highway market is experiencing weakness across all segments, but Dana is managing costs effectively to mitigate the impact.
Q: How sustainable are the cost improvements seen in Q3, and what impact do they have on long-term profitability?
A: Timothy Kraus, CFO, confirmed that the cost improvements are structural and part of Dana's continuous improvement culture. These changes are expected to enhance long-term profitability and free cash flow.
Q: With the EV market slowdown, how is Dana adjusting its capital investments and R&D spending?
A: Timothy Kraus, CFO, stated that Dana is flexing its EV investments based on market demand, reducing CapEx and adjusting R&D spending to align with program timing and customer demand, ensuring efficient use of resources.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
