Dana(DAN)2025-02-20 20:42Financial Performance - Total consolidated sales for 2024 were $10,284 million, a decrease of 2.6% from $10,555 million in 2023[18]. - The company's 2024 net sales were $10,284 million, a decrease of $271 million or 2% from 2023[143]. - Adjusted EBITDA for 2024 was $885 million, up from $845 million in 2023[170]. - The adjusted EBITDA outlook for 2025 is projected to be between $925 million and $1,025 million, reflecting a 140 basis-point improvement over 2024[140]. - Free cash flow improved to $70 million in 2024, compared to a negative $25 million in 2023[173]. - The company anticipates free cash flow of $225 million at the midpoint of its guidance range for 2025, benefiting from higher adjusted EBITDA and improved working capital efficiency[140]. Sales by Segment - Light Vehicle segment sales increased to $4,224 million, representing 41.1% of total sales, up from 38.2% in 2023[18]. - Commercial Vehicle segment sales decreased by 3% to $2,005 million in 2024, with EBITDA margin declining from 4.2% to 3.3%[160]. - Off-Highway segment sales decreased to $2,767 million, accounting for 26.9% of total sales, down from 30.2% in 2023[18]. - Power Technologies segment generated $1,288 million in sales, representing 12.5% of total sales, an increase from 11.8% in 2023[18]. - Sales by operating segment were Light Vehicle – 41%, Commercial Vehicle – 19%, Off-Highway – 27%, and Power Technologies – 13%[118]. Cost and Expenses - Research and development costs were $229 million in 2024, a slight decrease from $237 million in 2023[32]. - Total engineering expenses, including research and development, were $360 million in 2024, down from $369 million in 2023[32]. - The gross margin for 2024 was $876 million, maintaining 8.5% as a percentage of sales, despite a decrease of $24 million from 2023[147]. - Net restructuring charges increased significantly from $25 million in 2023 to $76 million in 2024[150]. - Interest income decreased from $17 million in 2023 to $15 million in 2024, while interest expense rose from $154 million to $161 million[155]. Market and Economic Conditions - Rising interest rates could negatively affect demand for products and the financial condition of customers[51]. - The company is exposed to risks associated with public health crises, which could disrupt operations and financial performance[49]. - The global construction equipment market declined by 5% in 2024, with a continued outlook for market weakness in 2025[134]. - South America saw a 41% increase in medium- and heavy-duty truck production in 2024 compared to 2023, driven by improved economic conditions[133]. Strategic Focus and Investments - The company is focused on enhancing the efficiency, performance, and safety of transportation solutions, investing in both internal combustion and electric vehicle technologies[33]. - The company has invested in SuccessFactors for integrated performance management and learning development[40]. - Dana plans to divest its Off-Highway business to focus on core on-highway markets and improve efficiency[122]. - The Power Technologies segment will be integrated into the Light Vehicle and Commercial Vehicle segments in Q1 2025[129]. Cash Flow and Liquidity - As of December 31, 2024, the company had consolidated debt obligations of $2.63 billion, cash and cash equivalents of $494 million, and unused revolving credit capacity of $1.14 billion[94]. - Cash provided by operating activities in 2024 was $450 million, a decrease from $476 million in 2023[180]. - The company expects to meet its cash requirements for capital expenditures, working capital, and debt obligations over the next twelve months based on current liquidity[178]. - Long-term debt obligations total $2,529 million, with $200 million due in 2025 and $1,191 million due after 2029[188]. Regulatory and Compliance - The company is subject to substantial government regulation regarding fuel economy and greenhouse gas emissions, which could impact financial performance[59]. - The company is subject to environmental laws and regulations, and compliance costs may increase, potentially impacting financial performance[76]. - The cost of environmental compliance did not have a material adverse effect on earnings or competitive position in 2024[42]. Workforce and Talent Management - The company employed approximately 39,600 people across 30 countries as of December 31, 2024[34]. - The company’s ability to attract and retain talent is critical for developing competitive products in a rapidly changing technological landscape[90]. Risks and Challenges - The company faces volatility in commodity, labor, transportation, and energy costs, which have pressured profit margins[66]. - A significant portion of the annual cost of sales is driven by the purchase of goods and services, with a dependency on single sources for some components, increasing supply chain risk[67]. - The company may experience production delays if critical components are in short supply, adversely affecting sales and profitability[68]. - Warranty costs are estimated and accrued at the time of sale, requiring significant judgment regarding potential warranty exposure[213].