Dana Incorporated : Non-GAAP Financial Information Q2 2021

DANA INCORPORATED

Quarterly Financial Information and Reconciliations of Non-GAAP Financial Measures

Non-GAAP Financial Measures

Adjusted EBITDA is a non-GAAP financial measure which we have defined as net income (loss) 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 (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Adjusted net income (loss) attributable to the parent company is a non-GAAP financial measure which we have defined as net income (loss) attributable to the parent company, excluding any discrete 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. 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 net income attributable to the parent company reported by other companies. Adjusted net income (loss) attributable to the parent company is neither intended to represent nor be an alternative measure to net income (loss) attributable to the parent company reported in accordance with GAAP.

Diluted adjusted EPS is a non-GAAP financial measure which we have defined as adjusted net income (loss) attributable to the parent company divided by adjusted diluted shares. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income (loss) attributable to the parent company. 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.

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DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Three Months Ended June 30, 2021 and 2020

		Three Months Ended
(In millions, except per share amounts)		June 30,
		2021			2020
Net sales	$	2,205	$	1,078
Costs and expenses
Cost of sales		1,953			1,088
Selling, general and administrative expenses		126			82
Amortization of intangibles		3			3
Restructuring charges, net					16
Other income (expense), net		(10)			(1)
Earnings (loss) before interest and income taxes		113			(112)
Loss on extinguishment of debt		(24)			(5)
Interest income		2			2
Interest expense		34			32
Earnings (loss) before income taxes		57			(147)
Income tax expense		14			34
Equity in earnings of affiliates		10			8
Net income (loss)		53			(173)
Less: Noncontrolling interests net income		4
Less: Redeemable noncontrolling interests net income (loss)		(4)			1
Net income (loss) attributable to the parent company	$	53	$	(174)
Net income (loss) per share available to common stockholders
Basic	$	0.37	$	(1.20)
Diluted	$	0.36	$	(1.20)
Weighted-average shares outstanding - Basic		145.2			144.5
Weighted-average shares outstanding - Diluted		146.7			144.5

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DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Six Months Ended June 30, 2021 and 2020

		Six Months Ended
(In millions, except per share amounts)		June 30,
		2021			2020
Net sales	$	4,468	$	3,004
Costs and expenses
Cost of sales		3,965			2,808
Selling, general and administrative expenses		245			188
Amortization of intangibles		7			6
Restructuring charges, net		1			19
Impairment of goodwill					(51)
Other income (expense), net		(29)			3
Earnings (loss) before interest and income taxes		221			(65)
Loss on extinguishment of debt		(24)			(5)
Interest income		4			4
Interest expense		68			61
Earnings (loss) before income taxes		133			(127)
Income tax expense		36			18
Equity in earnings of affiliates		24			10
Net income (loss)		121			(135)
Less: Noncontrolling interests net income		5			2
Less: Redeemable noncontrolling interests net loss		(8)			(21)
Net income (loss) attributable to the parent company	$	124	$	(116)
Net income (loss) per share available to common stockholders
Basic	$	0.85	$	(0.80)
Diluted	$	0.85	$	(0.80)
Weighted-average shares outstanding - Basic		145.1			144.4
Weighted-average shares outstanding - Diluted		146.5			144.4

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DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Three Months Ended June 30, 2021 and 2020

	Three Months Ended
(In millions)		June 30,
	2021				2020
Net income (loss)	$	53	$	(173)
Other comprehensive income (loss), net of tax:
Currency translation adjustments		19			7
Hedging gains and losses		16			10
Defined benefit plans		4			4
Other comprehensive income		39			21
Total comprehensive income (loss)		92			(152)
Less: Comprehensive (income) loss attributable to noncontrolling interests		5			(9)
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests		(7)			3
Comprehensive income (loss) attributable to the parent company	$	90	$	(158)

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DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Six Months Ended June 30, 2021 and 2020

		Six Months Ended
(In millions)		June 30,
		2021			2020
Net income (loss)	$	121	$	(135)
Other comprehensive income (loss), net of tax:
Currency translation adjustments		14			(147)
Hedging gains and losses		(1)			39
Defined benefit plans		7			7
Other comprehensive income (loss)		20			(101)
Total comprehensive income (loss)		141			(236)
Less: Comprehensive loss attributable to noncontrolling interests		6			8
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests		(4)			17
Comprehensive income (loss) attributable to the parent company	$	143	$	(211)

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