Dana Inc (DAN) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic Cost ...
Sales: $2.4 billion, $383 million lower than last year.
Adjusted EBITDA: $188 million, profit margin of 8%.
Net Income: $25 million, compared to $3 million last year.
Operating Cash Flow: Use of $37 million, an improvement of $65 million year-over-year.
Free Cash Flow: Use of $101 million, $67 million higher than last year.
Cost Savings: $41 million in profit from cost-saving actions.
Tariff Impact: $6 million in the quarter, with expected recoveries throughout the year.
Foreign Currency Impact: Decreased sales by $53 million, profit lower by $4 million.
2025 Full Year Sales Guidance: Expected to be above the midpoint of the range.
2025 Adjusted EBITDA Guidance: $975 million at midpoint, 10% profit margin.
2025 Adjusted Free Cash Flow Guidance: $225 million at midpoint.
2025 Adjusted EPS Guidance: $1.40 per share at midpoint.
Warning! GuruFocus has detected 5 Warning Signs with DAN.
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Dana Inc (NYSE:DAN) is accelerating its cost reduction program, increasing the target from $175 million to $225 million for 2025.
The integration of the Power Technologies segment into Light Vehicle and Commercial Vehicle segments is expected to yield $30 million to $35 million in cost savings.
Dana Inc (NYSE:DAN) reported a year-over-year improvement in free cash flow by $67 million in Q1 2025.
The company won its 10th PACE Award for its hybrid transmission, which is expected to grow sales significantly over the next few years.
Dana Inc (NYSE:DAN) is confident in recovering 100% of the tariffs imposed, with processes in place to ensure timely recovery from customers.
Dana Inc (NYSE:DAN) faced a $6 million headwind from tariffs in Q1 2025, impacting margins.
Sales were $383 million lower than the previous year, driven by reduced demand across all end markets.
The company is experiencing a reduction in schedules for North American commercial vehicle customers, posing a potential headwind.
Foreign currency translation negatively impacted sales by $53 million, primarily due to the lower value of the euro, real, and rupee compared to the US dollar.
Dana Inc (NYSE:DAN) is cautious about potential risks in the light vehicle market in the second half of the year, which could affect future guidance.
Q: Can you provide an update on the guidance for Dana's new business versus the off-highway segment, considering the various factors like tariffs and cost savings? A: Timothy Kraus, CFO, stated that the Commercial Vehicle segment is expected to be lower than previously anticipated, but this is offset by improvements in Light Vehicle and off-highway segments, as well as tariff offsets. Bruce McDonald, CEO, added that the incremental cost reduction target is small relative to corporate sales, and the path to achieving the 2026 margin targets for the new Dana is on track.
Q: What is the exposure to tariffs, and how long do you expect the recovery process to take? A: Timothy Kraus, CFO, explained that while he couldn't disclose the overall exposure, the recovery process is expected to take less than a quarter. Most large customers have set up processes to handle tariff recoveries, and Dana has already started providing the necessary documentation to facilitate this.
Q: How confident are you in achieving the $225 million cost savings target for 2025, and what are the main sources of these savings? A: Timothy Kraus, CFO, expressed strong confidence in achieving the $225 million target, noting that 70% of the savings are from headcount and engineering reductions. The company has already actioned over 70% of the planned headcount reductions, with further actions planned throughout the year.
Q: With the integration of Power Technologies into other segments, does this mean the business is no longer for sale? A: Bruce McDonald, CEO, confirmed that Power Technologies is not for sale and emphasized that the integration is aimed at running the business more efficiently. The consolidation is expected to yield $30 million to $35 million in savings, with further operational improvements anticipated.
Q: How does Dana plan to address the potential impact of tariffs on its operations and supply chain? A: Bruce McDonald, CEO, mentioned that while the rules around tariffs have been volatile, Dana is having discussions about potential mitigation strategies, such as reshoring and changing suppliers. However, some issues, like castings from India, cannot be addressed in the short term.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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