Zinger Key Points
- Dana reports FY24 sales of $10.3B, EBITDA margin up to 8.6%, and $70M free cash flow improvement.
- FY25 outlook projects up to $10.025B sales, 10% EBITDA margin, and $275M max free cash flow.
- Get the Real Story Behind Every Major Earnings Report
Dana Incorporated DAN shares traded higher on Friday after the company disclosed FY24 preliminary results, FY25 outlook and provided a business update.
FY24 Preliminary Results: The company reported sales of around $10.3 billion (vs. consensus of $10.29 billion), in line with prior guidance but down from $10.6 billion in 2023.
This was due to weaker demand for electric vehicles, commercial trucks, and off-highway equipment, along with higher light truck inventory.
Also, adjusted EBITDA rose to about $885 million and 8.6% margin from $845 million and 8.0% margin in 2023, led by efficiency gains. Moreover, Dana’s free cash flow stood at $70 million versus an outflow of $25 million in 2023.
R. Bruce McDonald, chairman and chief executive officer, said, ”Our cost-savings actions are well underway, and we are pleased to increase our total cost reduction target to $300 million through 2026.”
”Our 2025 outlook reinforces the impact of these actions, which will help solidify Dana’s leadership position and enable us to capitalize on the strength of our traditional on-highway businesses while remaining a leader in the EV transition.”
Apart from this, the company plans to restructure its business segments in the first quarter of 2025.
The new segments will be Light Vehicle Systems and Commercial Vehicle Systems. The company integrated Power Technology’s OEM units into Light Vehicle Drive Systems and its aftermarket business into Commercial Vehicle Drive and Motion Systems.
The reorganization aligns with its plan to sell the Off-Highway business, announced in November 2024.
While a strong interest in the business suggests a potential deal by first-quarter earnings, there is no guarantee of a transaction. The Off-Highway segment will be classified as discontinued operations once an agreement is reached.
FY25 Outlook: Dana expects sales of $9.525 billion- $10.025 billion (vs. consensus of $9.83 billion), adjusted EBITDA of $925 million-$1.025 billion (10.0% margin at the midpoint), and free cash flow of $175 million-$275 million.
Timothy Kraus, senior vice president and chief financial officer, said, “While sales are expected to be lower for the year, mainly driven by lower demand for off-highway equipment and translation of foreign currency, the impact of our cost-savings actions totaling $175 million in 2025 and efficiency improvements will drive higher margins.”
Investors can gain exposure to the stock via LeaderShares Activist Leaders ETF ACTV and Invesco S&P Smallcap 600 Pure Value ETF RZV.
Price Action: DAN shares are up 18.4% at $15.66 at last check Friday.
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