Dana(DAN)2024-02-20 16:38Financial Data and Key Metrics Changes - Adjusted EBITDA for the year was $845 million, an increase of $145 million, driven by efficient execution across the company despite challenges from the UAW strike [8][54] - Full year net income was $38 million compared to a net loss of $242 million last year, primarily due to a one-time non-cash goodwill impairment charge in 2022 [41] - Free cash flow was a use of $25 million for the full year, reflecting higher working capital requirements and capital spending [41][86] Business Line Data and Key Metrics Changes - Sales improved by 4% over the prior year, with a total of $10.6 billion for the year, driven by improved demand across all end markets [26][40] - EV product sales grew by $182 million over 2022, totaling $760 million across all end markets [84] - The company completed over 100 program launches in 2023, representing more than $2.5 billion in annual sales [28][30] Market Data and Key Metrics Changes - Light vehicle production volumes are expected to increase by 2% to 5% as customer demand remains resilient post-UAW strike [18] - The heavy vehicle market is anticipated to decline compared to last year after several years of growth, although Dana is gaining market share in this segment [19][51] - North America and Asia are expected to see growth, while Europe and South America may experience declines, resulting in a net market growth of $135 million for Dana [21] Company Strategy and Development Direction - Dana aims to achieve long-term sales targets of over $11 billion by 2025, supported by a balanced product portfolio across ICE and EV markets [30][54] - The company is focused on improving operational efficiencies and driving synergies across its business to enhance customer satisfaction and profitability [12][13] - Dana's strategy includes expanding its electrification capabilities and entering new markets, as evidenced by new business wins in the EV sector [32][34] Management's Comments on Operating Environment and Future Outlook - Management expects higher sales, profits, and free cash flow in 2024 due to improved operating conditions and a record sales backlog of $950 million [12][46] - Cost inflation is moderating, but labor costs have increased globally, and the company is monitoring logistics to navigate potential challenges [15][16] - The overall operating environment is anticipated to improve, allowing Dana to leverage efficiencies and reduce launch costs [14][16] Other Important Information - The company reported a record three-year sales backlog of $950 million, with 74% coming from EV platforms [49] - Free cash flow is expected to improve to approximately $50 million in 2024, driven by higher profits and lower capital spending [63][67] - The company is introducing a new guidance item for GAAP diluted EPS, expecting it to be approximately $0.60 for 2024 [89] Q&A Session Summary Question: What is the expected cadence for the company in 2024? - Management indicated that the profit pattern is returning to a more normalized range, with Q1 and Q4 being lighter and Q2 and Q3 being the heaviest [94] Question: How should the alignment of EV and ICE programs be viewed? - Management noted that the alignment depends on the specific program and customer strategies, with both EV and ICE programs being pursued [99][100] Question: What is driving the higher EV growth in the backlog? - Management explained that the backlog reflects a significant shift towards electrification, with sourcing influenced by customer demand over the past few years [101] Question: How will free cash flow be managed in light of potential customer plan slowdowns? - Management confirmed that there is flexibility in capital spending and that working capital is expected to unwind as the impacts of the UAW strike diminish [105][106] Question: What is the outlook for off-highway markets? - Management expects agriculture to decline slightly, while other segments like underground mining are anticipated to remain neutral compared to the previous year [120]