Dana(DAN) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents Dana's unaudited consolidated financial statements, including key financial highlights and the Off-Highway business reclassification Consolidated Statement of Operations (Unaudited) Net income for Q2 2025 increased to $31 million from $16 million in Q2 2024, driven by improved continuing operations Net Income (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------------------------------- | :----------------- | :----------------- | :----- | | Net income | $31 | $16 | +$15 | | Net income attributable to parent | $27 | $16 | +$11 | | Basic EPS | $0.19 | $0.11 | +$0.08 | | Diluted EPS | $0.19 | $0.11 | +$0.08 | Net Income (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------------------------------- | :------------------ | :------------------ | :----- | | Net income | $61 | $16 | +$45 | | Net income attributable to parent | $52 | $19 | +$33 | | Basic EPS | $0.36 | $0.13 | +$0.23 | | Diluted EPS | $0.36 | $0.13 | +$0.23 | Net Sales (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------- | :----------------- | :----------------- | :----- | | Net sales | $1,935 | $2,047 | -$112 | Net Sales (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------- | :------------------ | :------------------ | :----- | | Net sales | $3,716 | $4,062 | -$346 | Consolidated Statement of Comprehensive Income (Unaudited) Total comprehensive income significantly improved to $96 million in Q2 2025 from a $52 million loss in Q2 2024, driven by currency translation and hedging gains Total Comprehensive Income (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------------------------- | :----------------- | :----------------- | :----- | | Total comprehensive income | $96 | $(52) | +$148 | Total Comprehensive Income (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------------------------- | :------------------ | :------------------ | :----- | | Total comprehensive income | $158 | $(73) | +$231 | Other Comprehensive Income (Loss) from Continuing Operations (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------------------------- | :----------------- | :----------------- | :----- | | Currency translation adjustments | $35 | $(45) | +$80 | | Hedging gains and losses | $23 | $(26) | +$49 | Consolidated Balance Sheet (Unaudited) Total assets increased to $8,139 million at June 30, 2025, from $7,502 million at December 31, 2024, driven by higher current assets and liabilities Total Assets (Period-end): | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change | | :---------- | :----------------------- | :---------------------- | :----- | | Total assets | $8,139 | $7,502 | +$637 | Total Liabilities (Period-end): | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change | | :------------- | :----------------------- | :---------------------- | :----- | | Total liabilities | $6,680 | $5,917 | +$763 | Key Balance Sheet Changes (June 30, 2025 vs. Dec 31, 2024): | Item | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change | | :------------------------------------ | :----------------------- | :---------------------- | :----- | | Cash and cash equivalents | $486 | $494 | -$8 | | Accounts receivable (Trade) | $1,143 | $890 | +$253 | | Inventories | $1,105 | $1,047 | +$58 | | Short-term debt | $530 | $8 | +$522 | | Current portion of long-term debt | $22 | $214 | -$192 | | Accounts payable | $1,186 | $1,120 | +$66 | Consolidated Statement of Cash Flows (Unaudited) Net cash used in operating activities was $5 million for YTD 2025, a decrease from $113 million provided in the prior year, due to increased working capital usage Cash Flow Summary (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :------------------------------------------ | :------------------ | :------------------ | :----- | | Net cash provided by (used in) operating activities | $(5) | $113 | -$118 | | Net cash used in investing activities | $(60) | $(177) | +$117 | | Net cash provided by (used in) financing activities | $1 | $(30) | +$31 | | Net decrease in cash, cash equivalents and restricted cash | $(64) | $(94) | +$30 | - Key Cash Flow Activities (YTD 2025): * Net change in short-term debt: +$522 million (vs. -$4 million in 2024) * Repayment of long-term debt: -$210 million (vs. -$30 million in 2024) * Repurchases of common stock: -$257 million (vs. $0 in 2024) * Purchases of property, plant and equipment: -$104 million (vs. -$161 million in 2024) * Proceeds from sale of investments: +$57 million (vs. $0 in 2024)[15] Notes to Consolidated Financial Statements (Unaudited) These notes detail Dana's accounting policies, Off-Highway business divestiture, restructuring, equity changes, financing, and segment reporting, including a new share repurchase program Note 1. Organization and Summary of Significant Accounting Policies Dana reclassified its Off-Highway business as discontinued operations due to a June 2025 sale agreement and is evaluating new FASB ASUs on expense and income tax disclosures - Dana is a global provider of high-technology driveline, sealing and thermal-management products, and motors, power inverters, and control systems for electric vehicles[19] - In June 2025, Dana entered into a definitive agreement to sell its Off-Highway business, which has been classified as held for sale and reported as discontinued operations[22] - Dana is evaluating the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2023-09 (Improvements to Income Tax Disclosures), effective for fiscal years beginning after December 15, 2026, and December 15, 2024, respectively[24][25] Note 2. Discontinued Operations Dana agreed to sell its Off-Highway business for $2,732 million, classifying it as discontinued operations, with net sales decreasing by $63 million in Q2 2025 - Dana agreed to sell its Off-Highway business to Allison Transmission Holdings, Inc. for $2,732 million, expected to close in Q4 2025[26] Net Income from Discontinued Operations (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------- | :----------------- | :----------------- | :----- | | Net sales | $663 | $726 | -$63 | | Net income | $43 | $77 | -$34 | Net Income from Discontinued Operations (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------- | :------------------ | :------------------ | :----- | | Net sales | $1,263 | $1,484 | -$221 | | Net income | $90 | $142 | -$52 | - Incurred $14 million (Q2 2025) and $34 million (YTD 2025) in transaction-related costs for the Off-Highway business divestiture[28] Assets and Liabilities of Discontinued Operations (June 30, 2025): | Category | Amount (Millions) | | :---------------------------------- | :---------------- | | Current assets of disposal group held for sale | $1,090 | | Noncurrent assets of disposal group held for sale | $981 | | Current liabilities of disposal group held for sale | $753 | | Noncurrent liabilities of disposal group held for sale | $204 | Note 3. Disposal Group Previously Held for Sale Dana's European hydraulics business was reclassified from held for sale to held and used after its sale was not completed, resulting in a $26 million loss in 2024 - European hydraulics business reclassified from "held for sale" to "held and used" as the sale was not completed[30] - A $26 million loss was recognized in 2024 to adjust the carrying value to fair value less costs to sell[30] Note 4. Intangible Assets Net intangible assets totaled $79 million at June 30, 2025, with amortization expense remaining consistent at $3 million for Q2 2025 Net Intangible Assets: | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :---------------------- | :----------------------- | :---------------------- | | Net Carrying Amount | $79 | $80 | Amortization Expense (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | | :----------------- | :----------------- | :----------------- | | Total amortization | $3 | $3 | Amortization Expense (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | | :----------------- | :------------------ | :------------------ | | Total amortization | $6 | $7 | Note 5. Restructuring of Operations Dana continued restructuring activities in H1 2025, focusing on facility consolidation and headcount reductions, with accrued costs at $38 million as of June 30, 2025 - Restructuring activities include rationalizing operating footprint, consolidating facilities, positioning operations in lower cost locations, and headcount reduction initiatives[32] Accrued Restructuring Costs (June 30, 2025): | Metric | Amount (Millions) | | :-------------------------- | :---------------- | | Balance, June 30, 2025 | $38 | | Charges to restructuring (Q2) | $12 | | Cash payments (Q2) | $(10) | - Accrued employee termination benefits include costs to reduce approximately 700 employees over the next year[34] Note 6. Supplemental Balance Sheet and Cash Flow Information Supplier finance obligations increased to $53 million, inventories rose to $1,105 million, and total cash decreased to $501 million at June 30, 2025 - Confirmed obligations subject to supplier finance programs increased to $53 million at June 30, 2025, from $46 million at December 31, 2024[35] Inventory Components (June 30, 2025 vs. Dec 31, 2024): | Component | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :------------------------ | :----------------------- | :---------------------- | | Raw materials | $489 | $456 | | Work in process and finished goods | $616 | $591 | | Total | $1,105 | $1,047 | Cash, Cash Equivalents and Restricted Cash (June 30, 2025 vs. Dec 31, 2024): | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :------------------------------------ | :----------------------- | :---------------------- | | Cash and cash equivalents | $486 | $494 | | Total cash, cash equivalents and restricted cash | $501 | $512 | Note 7. Stockholders' Equity Dana declared a $0.10 cash dividend and repurchased $257 million of common stock under a $1,000 million program, leading to a decrease in stockholders' equity - Declared a cash dividend of ten cents per share of common stock in the first and second quarters of 2025[37] - Board of Directors approved a stock repurchase program of up to an aggregate of $1,000 million through December 31, 2027[38] - Spent $257 million to repurchase 14,607,283 shares of common stock during Q2 2025, including $251 million from the Icahn Group. Approximately $743 million remained available[38][194] Total Parent Company Stockholders' Equity: | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change | | :-------------------------------- | :----------------------- | :---------------------- | :----- | | Total parent company stockholders' equity | $1,204 | $1,333 | -$129 | - Accumulated other comprehensive loss (AOCI) improved from $(1,142) million at December 31, 2024, to $(1,047) million at June 30, 2025, driven by positive currency translation adjustments and hedging gains[13][42] Note 8. Redeemable Noncontrolling Interests Hydro-Québec holds a 45% redeemable noncontrolling interest in Dana TM4 Inc., with the balance remaining at $189 million at June 30, 2025 - Hydro-Québec owns a 45% redeemable noncontrolling interest in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC, with a put right at fair value[44] - On May 6, 2024, Hydro-Québec provided Dana with its put notice, after which Dana no longer attributes net income (loss) and other comprehensive income (loss) items of these entities to Hydro-Québec's interest[45] - The balance of redeemable noncontrolling interests was $189 million at June 30, 2025, unchanged from December 31, 2024[13][46] Note 9. Earnings per Share Basic and diluted EPS for Q2 2025 increased to $0.19 from $0.11 in Q2 2024, driven by higher net income attributable to the parent company Basic and Diluted EPS (Q2 YoY): | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------ | :------ | :------ | :----- | | Basic earnings per share | $0.19 | $0.11 | +$0.08 | | Diluted earnings per share | $0.19 | $0.11 | +$0.08 | Basic and Diluted EPS (YTD YoY): | Metric | YTD 2025 | YTD 2024 | Change | | :------------------------------------ | :------- | :------- | :----- | | Basic earnings per share | $0.36 | $0.13 | +$0.23 | | Diluted earnings per share | $0.36 | $0.13 | +$0.23 | Weighted-Average Common Shares Outstanding (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :------------------------------------ | :----------------- | :----------------- | :----- | | Basic | 143.8 | 145.0 | -1.2 | | Diluted | 143.8 | 145.0 | -1.2 | Note 10. Stock Compensation Dana granted 0.9 million RSUs and 0.4 million PSUs in H1 2025, with stock compensation expense increasing to $11 million in Q2 2025 - Granted 0.9 million RSUs (Fair Value $16.33/share) and 0.4 million PSUs (Fair Value $18.70/share) during the six months ended June 30, 2025[49] Stock Compensation Expense (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------------------------- | :----------------- | :----------------- | :----- | | Stock compensation expense | $11 | $8 | +$3 | Stock Compensation Expense (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------------------------- | :------------------ | :------------------ | :----- | | Stock compensation expense | $23 | $14 | +$9 | - Total unrecognized compensation cost related to nonvested awards was $32 million at June 30, 2025, expected to be recognized over a weighted-average period of 1.5 years[50] Note 11. Pension and Postretirement Benefit Plans Net periodic pension benefit cost was $4 million in Q2 2025, while OPEB costs were a $1 million credit, with service costs in cost of sales and SG&A Net Periodic Benefit Cost (Pension - Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------------------------- | :----------------- | :----------------- | :----- | | U.S. Pension | $1 | $0 | +$1 | | Non-U.S. Pension | $3 | $5 | -$2 | | Total Pension | $4 | $5 | -$1 | Net Periodic Benefit Cost (Pension - YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------------------------- | :------------------ | :------------------ | :----- | | U.S. Pension | $1 | $1 | $0 | | Non-U.S. Pension | $6 | $8 | -$2 | | Total Pension | $7 | $9 | -$2 | Net Periodic Benefit Cost (OPEB - Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :-------------------------- | :----------------- | :----------------- | :----- | | Non-U.S. OPEB | $(1) | $0 | -$1 | Net Periodic Benefit Cost (OPEB - YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :-------------------------- | :------------------ | :------------------ | :----- | | Non-U.S. OPEB | $(1) | $0 | -$1 | Note 12. Financing Agreements Long-term debt increased to $2,568 million at June 30, 2025, with Dana retiring April 2025 Senior Notes and establishing a $250 million Term A Facility, while remaining compliant with debt covenants Long-Term Debt (June 30, 2025 vs. Dec 31, 2024): | Metric | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change | | :------------------------------------ | :----------------------- | :---------------------- | :----- | | Long-term debt, less debt issuance costs | $2,568 | $2,387 | +$181 | - Retired its remaining April 2025 Senior Notes on April 15, 2025[57] - On July 31, 2025, amended its credit and guaranty agreement to include a $250 million Term A Facility, which was fully drawn to pay down outstanding borrowings on the Revolving Facility[60] - Had availability of $615 million at June 30, 2025, under the Revolving Facility[63] - In compliance with the covenants of its financing agreements at June 30, 2025, including a first lien net leverage ratio not to exceed 2.00 to 1.00[64] Note 13. Fair Value Measurements and Derivatives Dana uses derivatives to manage foreign currency exposure, with $1,156 million in forward contracts and $715 million in currency swaps, reporting a $15 million deferred gain in AOCI Fair Value of Financial Instruments (June 30, 2025): | Instrument | Fair Value (Millions) | Carrying Value (Millions) | | :--------------- | :-------------------- | :------------------------ | | Long-term debt | $2,471 | $2,420 | Foreign Currency Derivatives Notional Amounts (June 30, 2025 vs. Dec 31, 2024): | Derivative Type | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :------------------------------ | :----------------------- | :---------------------- | | Foreign currency forward contracts | $1,156 | $1,147 | | Foreign currency swaps | $715 | $951 | Deferred Gain (Loss) in AOCI from Cash Flow Hedges (June 30, 2025 vs. Dec 31, 2024): | Derivative Type | June 30, 2025 (Millions) | Dec 31, 2024 (Millions) | | :-------------------- | :----------------------- | :---------------------- | | Forward Contracts | $16 | $(35) | | Cross-Currency Swaps | $(1) | $(3) | | Total | $15 | $(38) | - $16 million from forward contracts expected to be reclassified to income in one year or less[73] Note 14. Commitments and Contingencies Accrued environmental liabilities were $14 million at June 30, 2025, and Dana believes legal proceedings will not materially impact its financial condition - Accrued environmental liabilities were $14 million at June 30, 2025, compared to $13 million at December 31, 2024[77] - Dana is subject to various pending or threatened legal proceedings but believes any liabilities will not have a material adverse effect on its liquidity, financial condition, or results of operations[78] Note 15. Warranty Obligations Warranty liabilities were $84 million at June 30, 2025, with accruals for current period sales at $9 million in Q2 2025 Warranty Liabilities (June 30, 2025 vs. June 30, 2024): | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | | :-------------------- | :----------------------- | :----------------------- | | Balance, end of period | $84 | $86 | Accruals for Current Period Sales (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | | :-------------------------- | :----------------- | :----------------- | | Accrued for current period sales | $9 | $8 | Accruals for Current Period Sales (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | | :-------------------------- | :------------------ | :------------------ | | Accrued for current period sales | $18 | $16 | Note 16. Income Taxes Income tax expense was $10 million in Q2 2025, with effective tax rates of (43)% for Q2 and 0% for YTD 2025, influenced by a $19 million tax benefit Income Tax Expense (Q2 YoY): | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | | :----------------- | :----------------- | :----------------- | :----- | | Income tax expense | $10 | $12 | -$2 | Income Tax Expense (YTD YoY): | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Change | | :----------------- | :------------------ | :------------------ | :----- | | Income tax expense | $0 | $5 | -$5 | Effective Tax Rates (YTD YoY): | Metric | YTD 2025 | YTD 2024 | | :------------------ | :------- | :------- | | Effective tax rate | 0% | (4)% | - Significant Tax Adjustments (YTD 2025): * Tax benefit of $19 million due to a basis difference in a foreign subsidiary * $9 million tax expense for income tax reserves associated with prior tax years in foreign jurisdictions * $6 million expense resulting from the sale of Dana's ownership interest in an equity method investment[84] - The company is currently assessing the impact of the newly enacted One Big Beautiful Bill Act (OBBBA) in the U.S. on its consolidated financial