2019 Dana Annual Report Financial Highlights
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LEADING THE CHARGE For 115 years, Dana has led the charge. We have proven time and again that we not only evolve in tandem with the industry, but also remain a step ahead. We continually build upon our foundation of success to support new applications as they emerge, and partner with customers as they develop tomorrow’s vehicles. Established in1904 36,000 Employees Presence in 34 Countries 150 Major Facilities Million in Invested $271Engineering Ship to 136 Countries 10,000+ Patents 50 Years of Electrification Expertise Dana at a Glance Business Units MISSION Light Vehicle Drive Systems Our talented people power a Dana is a leading supplier of fully integrated drivetrain and electrified propulsion systems for all passenger vehicles. Working collaboratively customer-centric organization with original-equipment manufacturers and the aftermarket, we focus that is continuously improving on delivering best-in-class efficiency, maximum durability, and superior ride and handling across the globe. the performance and efficiency of vehicles and machines around the globe. We will consistently deliver superior products and Commercial Vehicle Drive and Motion Systems services to our customers and Dana is an industry leader in the supply of traditional and electrified systems for medium- and heavy-duty commercial vehicles. We help will generate exceptional value for original-equipment manufacturers and end-market customers achieve the best weight, performance, and efficiency, as well as the lowest cost our shareholders. This mission is of ownership, no matter the powertrain configuration. embodied in our company theme: Off-Highway Drive and Motion Systems Dana delivers mobile drivetrain and motion solutions for construction, VISION agriculture, material handling, and mining equipment, as well as motion systems for a wide variety of mobile and stationary industrial To be the global technology leader applications. These customized solutions support vehicles and in efficient power conveyance and machines with both conventional and electrified power sources and are designed to deliver innovative technologies that meet customer energy-management solutions that demands and goals worldwide. enable our customers to achieve their sustainability objectives. Power Technologies VALUES Dana provides advanced sealing and thermal-management solutions to all end markets in support of both conventional and electrified ¢ Honesty and Integrity platforms. Leveraging the most cutting-edge technology and ¢ Good Corporate Citizenship manufacturing processes, we deliver custom-engineered solutions designed to optimize vehicle efficiency and performance. ¢ Open Communication ¢ Continuous Improvement 1 | 2019 Dana Annual Report Financial Highlights RECORD SALES RECORD ADJUSTED EBITDA1 MARGIN $8.6 Billion $1.02 Billion 11.8% 6% increase from $8.1 billion in 2018 6% increase from $957 million in 2018 Comparable to 2018 ADJUSTED FREE CASH FLOW1 RECORD DILUTED ADJUSTED EPS2 2019 CASH DIVIDENDS DECLARED $272 Million $3.06 $0.40 Per Share 3% of sales, which is a 12% increase Up from $3.02 in 2018 13% of diluted adjusted EPS returned from $243 million in 2018 to shareholders All figures as of year-end December 31, 2019. 1 See pages 34-35 of Dana’s 2019 Form 10-K, included herein, for explanation and reconciliation of non-GAAP financial measures. 2 Diluted adjusted EPS is a non-GAAP financial measure, which we have defined as adjusted net income divided by adjusted diluted shares. See the “Quarterly Financial Information and Reconciliations of Non-GAAP Information” on Dana’s Investor Relations website at dana.com/investors for explanation and calculation of diluted adjusted EPS. Sales 12% 6% Sales by Business Unit 12% Sales by Region 19% 42% Light Vehicle 42% North America 52% Off-Highway 27% 52% Europe 30% Commercial Vehicle 19% Asia Pacific 12% 30% Power Technologies 12% South America 6% 27% Sales by Customers 20% Ford 20% 20% FCA* 11% Sales by End Market 45% PACCAR 5% 11% Light Vehicle 52% Toyota 3% 52% Off-Highway 28% 5% Volkswagen 3% 28% Commercial Vehicle 20% General Motors 3% Renault/Nissan/Mitsubishi 3% Deere 3% Daimler 2% * Includes sales to system Tata 2% integrators for driveline products 2019 Dana Annual Report | 2 that support FCA vehicles. Others 45% Dear Fellow Shareholders, The Dana of today is much different than what some long-term shareholders may remember. While our customer-centric culture and expertise in bringing JAMES K. innovative technologies to market remain the KAMSICKAS Chairman and CEO same, we have taken strategic steps to transform the company and position Dana as a leader in vehicle electrification across all mobility markets and geographies. The investments we made over the last year are already delivering positive results for our business. In 2019, we continued our track record of growth, achieving record sales, profit, and diluted adjusted earnings per share, while increasing our adjusted free cash flow by 12 percent over 2018. Last year, we updated our corporate strategy, as we exceeded the original targets we set for the company. The updated strategy, titled “Powering into e-Drive,” sets Dana’s ¢ Record sales, profit, and focus on maintaining a profitable growth trajectory, delivering an additional $2 billion of diluted adjusted EPS sales growth, expanding profit margin by 100 basis points, and adding approximately $200 million of adjusted free cash flow through 2023. To achieve these goals, Dana will continue ¢ $25 million in acquisition to leverage the core, drive customer centricity, expand global markets, deliver innovative cost synergies solutions, and lead electric propulsion. ¢ 5 strategic While the principles of the strategy are likely familiar, one area where shareholders may notice electrodynamic acquisitions the most change is our focus on leading the charge in electric propulsion. And leaders we have already become. Today, electrification yields more than $100 million of sales, and we ¢ 35+ customer and expect that number to grow significantly, to nearly $500 million annually by 2023. industry honors Over the past year, Dana has accelerated our capabilities in vehicle electrification, securing ¢ 6 additional facilities in Asia our position as the only supplier capable of delivering all elements of a complete, fully ¢ PACE Award winner integrated electrified system across all mobility markets in any region of the world. While our customers are at varying phases in their electrification journeys, our strategy remains ¢ First full electric powertrain focused on supporting them with industry-leading technologies and expertise for all program with complete vehicle architectures. In addition to our targeted investment in mechatronics research and Dana content development, a number of acquisitions have positioned us for success amidst this shift ¢ $700 million new business toward electrification. backlog through 2022 3 | 2019 Dana Annual Report In early 2019, Dana completed the purchase of the Oerlikon Group’s powertrain. Last year, for example, our Spicer® AdvanTEK Ultra™ axle drive systems segment, including the high-performance transmission went into production with Ford. An Automotive News PACE Award winner, capabilities of Graziano, torque-hub drive technology of Fairfield, this revolutionary axle system delivers up to a 45 percent reduction in software solutions from VOCIS, and electric motors from Ashwoods. As energy loss, compared with a typical axle. This ongoing innovation, in a result, we have added a wide range of electric propulsion technologies, combination with our exceptional delivery and quality performance, has transmission systems, custom gears, drives, and more into our product resulted in more than 35 customer and industry honors. I am proud to portfolio. We also finalized the acquisition of the SME Group, which report that we have secured multiple new programs, including the Jeep® augmented our electrodynamic offering with low-voltage electric motors, Gladiator, Sandvik TH663i underground mining truck, and the all-electric inverters, and controls. Together, these acquisitions have significantly Lion8 bus — just to name a few. increased our opportunities for added content per vehicle. In 2019, we also focused on expanding our global presence in Europe, Additionally, Dana acquired Nordresa, a recognized leader in the India, and China to capitalize on the growth of our customers in these development and integration of electric commercial vehicles. This critical markets. strategic transaction provided Dana with the in-house capabilities to deliver complete, fully integrated e-Powertrains in partnership with Despite facing softer demand in 2019, we have confidence in our ability our customers. From the battery packs that store the energy, to the to manage the company through the cyclical nature of the business to e-Propulsion systems that propel the vehicle forward, to the hardware continue delivering shareholder value through 2020 and beyond. and software that control the various functions, Dana can now offer and integrate it all. In fact, we are already collaborating with customers such We have positioned the company for significant growth as electrification as Kenworth and Peterbilt to transform traditional medium-duty chassis adoption accelerates, and we have made the acquisitions that will be key into complete e-Powertrains. These programs alone are expected to to exceeding our long-term financial targets. Our new business backlog generate approximately $200 million in incremental sales to Dana. of $700