Dana (DAN) investor relations material

Business transformation and divestiture

• Completed sale of off-highway business, focusing on separation of systems and staff to ensure smooth transition by year-end.

• No shared physical facilities, but shared campuses and IT systems required detailed separation work.

• Transition Service Agreements (TSAs) are in place to support the divestiture.

• Some stranded costs remain post-deal, with plans to eliminate or offset most by year-end.

• Significant staff, especially in Europe, are moving with the transaction.

Financial strategy and capital allocation

• Targeting $2 billion in gross deleveraging and $1 billion in capital return, with accelerated stock buybacks due to perceived undervaluation.

• About $400 million remains on the buyback authorization, to be used through 2027.

• Free cash flow margin targeted at 4% of sales, with CapEx expected at 4–4.5% of sales.

• Working capital expected to improve post-divestiture, as off-highway was the most working capital-intensive segment.

Market outlook and operational focus

• Light vehicle market expected to remain flat, with upside potential from Ford programs like Super Duty, Ranger, and Bronco.

• No major CapEx needed for Ford’s Canadian expansion; increased assembly and component capacity handled in Kentucky.

• Commercial vehicle market remains weak but stable, with potential for share gains from customers like Navistar and Volvo.

• EV backlog has decreased due to program delays and cancellations, but still represents a significant portion of future business.

• Customers are increasingly accepting off-the-shelf solutions over bespoke products, reducing required investment.