Dana Incorporated : Q1 2020 Earnings Conference Call

Honesty and Integrity | Good Corporate Citizenship | Open Communication | Continuous Improvement

S e p a r a t e d Together

2020 First-quarter

Earnings Conference Call

April 30, 2020

Safe Harbor Statement

Certain statements and projections contained in this presentation are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Dana's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this presentation speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.

© 2020 Dana	2

Agenda

Introduction	Craig Barber
	Senior Director,
	Investor Relations and
	Strategic Planning

Business Review	James Kamsickas
	Chairman and
	Chief Executive Officer

Financial Review	Jonathan Collins
	Executive Vice President
	and Chief Financial Officer

© 2020 Dana	3

Pandemic Response Priorities

Employees Communities

Protecting our…

Customers Future

© 2020 Dana	4

Protecting Our Employees

Ensuring Safe Workplaces

© 2020 Dana	5

Protecting Our Communities

Dana People Making a Difference

Dana utilizes engineering expertise and 3D printing capability to develop needed protective equipment and provide it as open source

Reusable	Improved light-weight	CPAP mask
patient enclosures	face shields for	adapter
for hospitals	frontline responders

© 2020 Dana	6

Protecting Our Customers

Customer Support in the Most Challenging of Times

Supporting continued production	Ongoing engineering support

Managing supply chain	Ramping for restart

© 2020 Dana

7

Protecting Our Future

Financial Strength	Technology Development

Cash

Conservation

Access to

Liquidity

© 2020 Dana	8

Current Customer Status1

	Light-Duty Market	Heavy-Duty Markets
50%		50%
	of Sales*	of Sales*

Light Vehicle	Commercial Vehicle		Off-Highway
	Idle through April		Idle through April		Mixed by end market
	Limited production		Limited production		Limited production
	Idle through April		Idle through April		Idle through April
	Idle through April		Limited production		Limited production
	Solid production		Solid production		Solid production

• Aftermarket, agriculture, and mining remained mostly operational as "essential businesses"
• Supply base assessment: stable but with focused monitoring
• Customer new program development delays remain minimal
• Most European customers are in restart mode
• Remaining customers expected to return to some level of production in May

1Statuses based on an aggregation of publicly available information regarding customer production and restart plans and are subject to change * 2019 Dana sales including 100% of DDAC Joint Venture

© 2020 Dana

9

Honesty and Integrity | Good Corporate Citizenship | Open Communication | Continuous Improvement

Financial Review

Near-Term Financial Priorities

	Significant opportunity to
	generate cash by reducing
	inventory as production
	demand declines
	Pulling all levers to flex

Conserve Cash

Maximize Liquidity

	hourly and salary labor costs
	including temporary lay-offs
	and pay reductions (50%
	CEO, 20% board and
	management, 4-day work
	week in US, intermittent TLO
	in EU, etc.)
	Capital spending reductions
	initiated in first quarter (35%)
	Temporary dividend
	suspension preserves
	additional flexibility
Carrying more of liquidity in
	the form cash
Secured $0.5B of additional
	liquidity in form of bridge
	facility

Reduce Flex

Material Conversion

Orders Costs

Scale Back	Suspend
Capital	Shareholder
Spend	Dividend

Cash Balance1

$646 M

Revolver Capacity

$679 M

Bridge Facility

$500 M

Q1 PF Liquidity2

>$1.8 B

1. Available cash and marketable securities as of 3/31/2020
2. 3/31 liquidity pro forma for subsequent event bridge facility

Laser focus on conserving cash and maximizing liquidity

See appendix for comments regarding the presentation of non-GAAP measures	© 2020 Dana	11

2020 Q1 Financial Results

• Sales and profit declines primarily attributed to production shutdowns associated with the globalCOVID-19 pandemic
• Lower diluted adjusted EPS primarily due to lower earnings
• Adj. FCF use comparable with prior year as first quarter is typically a use of cash due to seasonal working capital requirements
• Capital expenditures rapidly flexed down to lower rate in expectation of lowerfull-year production demand

Changes from Prior Year

($ in millions except EPS)		Q1 '20		Q1 '19		Change
	Sales	$	1,926	$	2,163	$	(237)
	Adjusted EBITDA		205		257		(52)
	Margin		10.6%		11.9%		(130) bps
EBIT		47		140		(93)
	Interest Expense, Net		27		25		2
	Income Tax Expense (Benefit)		(16)		20		(36)
	Net Income(attributable to Dana)		38		98		(60)
	Diluted Adjusted EPS	$	0.47	$	0.78		$ (0.31)
	Operating Cash Flow		(51)		(16)		(35)
	Capital Spending		63		98		(35)
	Adjusted Free Cash Flow		(114)		(114)		flat

Financial impact of COVID-19 pandemic experienced in last couple weeks of March

See appendix for comments regarding the presentation of non-GAAP measures	© 2020 Dana	12

2020 Q1 Sales and Profit Changes

• Organic decline primarily driven by production shutdowns across the globe due to theCOVID-19 pandemic
• January and February sales associated with the Graziano and Fairfield businesses acquired on Feb 28thof 2019 drove inorganic sales increase
• Currency translation was a headwind to sales primarily due to the weakening of the euro and Brazilian real to the U.S. dollar
• Lower commodity costs modestly increased profit margins

QuarterPositive Negative

Change Change

Sales

Adjusted

EBITDA

$2,163M

$257M

11.9%

21%
Decremental				$1,926M
$(64)M	$112M	$(4)M	$2M
$14M
	$(34)M	$(16)M
$(299)M				$205M
(150) bps	Flat	Flat	20 bps	10.6%

2019

Organic

Inorganic

Currency

Commodities

2020

See appendix for comments regarding the presentation of non-GAAP measures

Decremental margin of 21% on lower production due to COVID-19 global pandemic

© 2020 Dana	13

2020 Q1 Cash Flow

• Adj. FCF flat v. prior year as lower profit was offset by lowerone-time costs and capital expenditures
• Adj. FCF is typically a use of cash in Q1 due to seasonal working capital requirements
• No stock repurchased in Q1 2020
• Cash flow increase due to revolver draw of $300M shifting liquidity mix to ~ 50 / 50 between cash and committed financing
• Strengthening of the USD against foreign currencies decreased the value of foreign denominated cash balances

Changes from Prior Year

($ in millions)	Q1 '20	Q1 '19	Change
Adjusted EBITDA	$	205	$	257	$	(52)
One-time Costs1		(11)		(25)		14
Interest, net		(6)		(11)		5
Taxes		(17)		(19)		2
Working Capital / Other2		(222)		(218)		(4)
Capital Spending		(63)		(98)		35
Adj. Free Cash Flow	$	(114)	$	(114)	$	-
Dividends		(15)		(14)		(1)
Share Repurchases		-		(25)		25
Revolver Draw		300		-		300
Currency Effect on Cash		(29)		5		(34)
All Other3		(24)		23		(47)
Total Cash Flow	$	118	$	(125)	$	243

1Includes costs associated with business acquisitions and divestitures and restructuring. 2Changes in working capital relating to interest, taxes, restructuring, and transaction costs are included in those respective categories. 3Includes other financing and investing activities. See appendix for comments regarding the presentation of non-GAAP measures.

Q1 Adj. FCF flat from prior year as lower capital spending offset earnings decline

© 2020 Dana	14

Flexible Cost Structure

Cost of Goods Sold1

Material Cost	2/3

• Limited vertical integration
• Best-of-bestsupply base
• Centralized global commodity purchasing
• Rapid response to customer demand changes
• Inbound freight and logistics optimization

Conversion Cost	1/3

• Hourly labor flexibility / subsidy programs
• Eliminatehigh-volume premium costs
• Maintenance and repair efficiencies
• Salary cost actions and austerity measures
• Manufacturing footprint optimization

Sales

Composition2

Engineering ~3%

COGS <80%

SG&A ~6%

Profit ~12%

Engineering Spend

• Acceleration and scope of commercial recoveries
• Research and development prioritization
• Rate of investment in electrified technology
• De-prioritizeinvestments in legacy products

SG&A / Other1

• Complete cost synergies from recent acquisitions
• Leverage synergies across all mobility markets
• Lean principles and process consolidation
• Global shared services and automation

Other Free Cash Flow Impacts

• Capital expenditure delay or deferrals
• Working capital source of cash

2019A

1 Adjusted to remove engineering expense

2 Based on 2019 full year results, adjusted for depreciation, amortization, restructuring, and non-recurring items as defined in Adjusted EBITDA See appendix for comments regarding the presentation of non-GAAP measures

Continued focus on cost reduction required to manage through market downturn

© 2020 Dana	15

Cash Flow Sensitivity Analysis

• Originalfull-year financial guidance has been withdrawn due to abnormally high level of uncertainty regarding end- market demand
• April sales expected to be down ~75% from prior year with widespread production shutdowns; however, aftermarket and some OEM demand remained
• Most OEM customers communicating resumption of production in May leading to a Q2 sales decline of ~50% from prior year, nearly breakeven adj. EBITDA, and modest use of adj. FCF
• Estimated breakeven point for FY adj. FCF is ~$6B, a YoY sales decline of ~30%
• Strong YE liquidity under illustrative scenario

2020 Full Year Illustrative Scenario

($ in millions)				2020		2020
		2019		Withdrawn		Breakeven
		Actuals		Guidance		Scenario
Sales	$	8,620	$	~8,500	$	~6,000
Adjusted EBITDA		1,019		~1,000		~400
One-time Costs1		(81)		~(30)		~(50)
Interest, net		(107)		~(95)		~(110)
Taxes		(125)		~(135)		~(90)
Working Capital / Other²		(8)		~20		~125
Capital Spending		(426)		~(385)		~(275)
Adj. Free Cash Flow	$	272	$	~375		~Breakeven
YE Liquidity	$	1,501	$	~1,500	$	~1,950

1Includes costs associated with business acquisitions and divestitures and restructuring. 2Changes in working capital relating to interest, taxes, restructuring, and transaction costs are included in those respective categories. See appendix for comments regarding the presentation of non-GAAP measures.

Full-year guidance withdrawn; sensitivity analysis demonstrates ample liquidity

© 2020 Dana	16

Continued Financial Strength

• Key credit metrics remain relatively unchanged in the first quarter with net leverage at ~2x and coverage at >9x
• Revolver draw of $300M delivers new liquidity mix of ~1/2 : ~1/2 compared to previous mix of ~1/3 : ~2/3
• No significant debt maturities for the next few years

Credit Metrics

($ in millions)
	12/31/2019	3/31/2020
Available cash & MS	$522	$646
Cash flow revolver	979	679
Total Liquidity	$1,501	$1,325
Bonds	1,500	1,500
Term loans	823	823
Cash flow revolver draw		300
Other	75		78
Total Debt	2,398	2,701
Net Debt	$1,876	$2,055
Q1 2020 LTM Adj EBITDA	1,019	967
Net Leverage	1.8x		2.1x
LTM Net Interest	$107	$102
Coverage	9.5x		9.5x

Liquidity mix		~1/3	~1/2
shifted to more	~2/3	Cash	~1/2
CFR		CFR
	Cash
cash on hand	Capacity		Capacity

Debt Maturity Profile

$1,000

						$370			$349
	$500							$400
					$425
								$375
									$300
$15	$30	$30	$30
2020	2021	2022	2023	2024		2025	2026	2027
			Bonds		Term Loans Bridge	CFR

Credit metrics remain strong, liquidity mix shifts to 50/50, and no debt maturities for years

See appendix for comments regarding the presentation of non-GAAP measures	© 2020 Dana	17

© 2020 Dana	18

Appendix

2020 Q1 Sales and Profit Change by Segment

Light Vehicle Drive Systems

Commercial Vehicle Drive and Motion Systems

$906M

$431M

$808M

($18)M

$(1)M

($12)M

$(16)M

$3M

$333M

$102M

$(5)M

$83M

$41M

$(1)M

$1M

($81)M

$(4)M

$(86)M

$(13)M

$(2)M

$21M

11.3%

10.3%

9.5%

6.3%

Q1 2019

Organic

Inorganic

Currency Commodities

Q1 2020

Q1 2019

Organic

Inorganic

Currency

Commodities

Q1 2020

Off-Highway Drive and Motion Systems

Power Technologies

$552M		$113M		$532M
	$(23)M		$(2)M	$1M
	$14M	$(12)M	$(2)M
$82M
			$72M
	$(119)M			QuarterPositive Negative
14.9%			Change Change
			13.5%

Sales

$274M		$253M
	$(4)M
$34M	$(17)M	$(4)M
$30M
12.4%		11.9%

Q1 2019 Organic Inorganic Currency Commodities Q1 2020Q1 2019 Organic Inorganic Currency Commodities Q1 2020

Segment

EBITDA

See appendix for comments regarding the presentation of non-GAAP measures

© 2020 Dana	20

Segment Profiles

Light Vehicle Drive Systems

Year to Date 3/31/2020

Commercial Vehicle Drive

and Motion Systems

Year to Date 3/31/2020

Off-Highway Drive and Motion Systems

Year to Date 3/31/2020

Power Technologies

Year to Date 3/31/2020

Customer Sales

Regional Sales

Other 18%

GM 5%

Tata 5%

Toyota

6%

FCA * 26%

Asia Pacific

11%

Europe

13%

South

America

4%

$ Millions

Ford 40%

• Includes sales to system integrators for driveline products that support FCA vehicles

Paccar 23%

Other

46%

Volvo

8%

Volkswagen

8%

Navistar

Daimler 8%

7%

Asia Pacific

6%

Europe

15%

South

America$ Millions

Deere 11%

CNH 6%

Agco 6%

Oshkosh

5%

Manitou

4%

Other

68%

^ Estimates used for acquisition customer data

North America

Asia Pacific14%

19%

South

America

1%

$ Millions

	Ford
	16%
	GM
	6%
	Cummins
	5%
	Volkswagen
Other	5%
FCA NV
64%
4%

Asia Pacific 4%

Europe

45%

North America

72%

19%

North America

60%

Europe

66%

North America

49%

South America 2%

Performance

$ Millions	Q1
	2020	2019
Sales	$808	$906
Segment	$83	$102
EBITDA
EBITDA	10.3%	11.3%
Margin

	Q1
	2020	2019
Sales	$333	$431
Segment	$21	$41
EBITDA
EBITDA	6.3%	9.5%
Margin

Q1

	2020	2019
Sales	$532	$552
Segment	$72	$82
EBITDA
EBITDA	13.5%	14.9%
Margin

Q1

	2020	2019
Sales	$253	$274
Segment	$30	$34
EBITDA
EBITDA	11.9%	12.4%
Margin
	© 2020 Dana	21

Diluted Adjusted EPS

DANA INCORPORATED

Diluted Adjusted EPS (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

(In millions, except per share amounts)
		Three Months Ended
		March 31,
		2020			2019
Net income attributable to parent company	$	38	$	98
Items impacting income before income taxes:
Restructuring charges		3			9
Amortization		4			4
Strategic transaction expenses, net of transaction breakup fee income		6			13
Acquisition related inventory adjustments					4
Non-income tax legal judgment					(6)
Impairment of goodwill		51
Loss on deal contingent forward					13
Other items					(1)
Items impacting income taxes:
Net income tax expense on items above		(3)			(5)
Tax benefit attributable to utilization of federal tax credits, state tax
law changes and valuation allowance adjustments		(31)			(16)
Adjusted net income	$	68	$	113
Diluted shares - as reported		144.8			144.8
Adjusted diluted shares		144.8			144.8
Diluted adjusted EPS
$	0.47	$	0.78

© 2020 Dana	22

Segment Data

DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited) For the Three Months Ended March 31, 2020 and 2019

		Three Months Ended
(In millions)		March 31,
		2020			2019
Sales
Light Vehicle	$	808	$	906
Commercial Vehicle		333			431
Off-Highway		532			552
Power Technologies		253			274
Total Sales	$	1,926	$	2,163
Segment EBITDA
Light Vehicle	$	83	$	102
Commercial Vehicle		21			41
Off-Highway		72			82
Power Technologies		30			34
Total Segment EBITDA		206			259
Corporate expense and other items, net		(1)			(2)
Adjusted EBITDA	$	205	$	257

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited) For the Three Months Ended March 31, 2020 and 2019

			Three Months Ended
(In millions)		March 31,
			2020			2019
Segment EBITDA	$	206	$	259
Corporate expense and other items, net			(1)			(2)
Adjusted EBITDA		205			257
Depreciation		(85)			(74)
Amortization		(4)			(3)
Non-service cost components of pension and OPEB costs		(2)			(6)
Restructuring charges, net		(3)			(9)
Stock compensation expense		(4)			(5)
Strategic transaction expenses, net of transaction fee breakup income		(6)			(13)
Impairment of goodwill		(51)
Acquisition related inventory adjustments					(4)
Non-income tax legal judgment					6
Other items			(3)			(9)
Earnings before interest and income taxes		47			140
Interest income		2			2
Interest expense		29			27
Earnings before income taxes		20			115
Income tax expense (benefit)		(16)			20
Equity in earnings of affiliates			2			6
Net income		$	38		$	101

© 2020 Dana

23

Cash Flow

DANA INCORPORATED

Reconciliation of Net Cash Provided by Operating Activities to

Free Cash Flow and Adjusted Free Cash Flow (Unaudited)

		Three Months Ended
(In millions)		March 31,
		2020			2019
Net cash used in operating activities	$	(51)	$	(16)
Purchases of property, plant and equipment		(63)			(98)
Free cash flow		(114)			(114)
Discretionary pension contributions		-			-
Adjusted free cash flow	$	(114)	$	(114)

© 2020 Dana	24

Non-GAAP Financial Information

Adjusted EBITDA is a non-GAAP financial measure which we have defined as net income before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefit costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net income divided by adjusted diluted shares. We define adjusted net income as net income attributable to the parent company, excluding any nonrecurring income tax items, restructuring charges, amortization expense and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income. This measure is considered useful for purposes of providing investors, analysts and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported in accordance with GAAP.

Free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities less purchases of property, plant and equipment. Adjusted free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities excluding discretionary pension contributions less purchases of property, plant and equipment. We believe these measures are useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Free cash flow and adjusted free cash flow are not intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported in accordance with GAAP. Free cash flow and adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

The accompanying financial information provides reconciliations of adjusted EBITDA, diluted adjusted EPS, free cash flow and adjusted free cash flow to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income (loss) and diluted EPS. Providing net income (loss) and diluted EPS guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income (loss) and diluted EPS, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

© 2020 Dana	25