Dana Incorporated : Q2 2020 Dana Incorporated Earnings Conference Call

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

2020 Second-quarter Earnings Conference Call

July 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

Business Overview

Second Quarter Results

sales

$1.1 Pandemicadjusted EBITDA

billion Impact ~Breakeven

	monthly sales progression			diluted adjusted EPS
		+83%	+85%		Growth	$(0.69)
				Sequential
	Apr	May	Jun

Key Highlights

• Reopening completed
• New electric truck program win
• Acquired EV software capabilities
• Hyliion partnership
• Ford Bronco reveal

© 2020 Dana

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Return to Growth

Operations and

ManufacturingCustomers

RESTART	RE ENGAGE	RE NEW

Supply Chain	Employees	Launch
Backlog

© 2020 Dana	5

New Business: European Electric Truck

Dana's 3rd Significant Electric Truck Program

Complete Dana e-Powertrain:

• Electrodynamic components
• Complete vehicle integration
• Embedded software and controls

Power Cradle	Power Pack	e-Drive
Electric Charger,	Battery Modules, Thermal	Electric Motor,
Converter, & Auxiliaries Management, & Battery	Inverter, & Axle
	Management System

e-Power	e-Propulsion
System	System

• Major European manufacturer
• Multi-yearprogram
• Launching in 2021

© 2020 Dana	6

Rational Motion Acquisition

Centrally located in

Europe

C A PA B I L I T I E S

• Electric vehicle system integration
• Embedded software
• Electric powertrain testing
• Hardware and software in the loop
• Battery simulation
• Electric vehicle in-house driver simulator

10+ years of expertise

Proven technical expertise in software, controls, integration,

and engineering services for electric vehicles

© 2020 Dana	7

Hyliion Partnership

Hybrid Electric: Class 8 Truck Application

e-Power

System

e-Propulsion

System

• Converts a traditional 6x2 truck into a hybrid by adding a Dana e-Propulsion system including a Spicer electric rear axle
• Dana thermal management integrated in e-Power system
• High value proposition to fleets due to lower:
• • Fuel costs
  • Emissions
  • Maintenance costs
• Dana has a strategic partnership and equity-linked investment

© 2020 Dana

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Ford Bronco Family

Off-Road Capabilities and Proven Durability

c

with Spicer® SmartConnect™	with CV33 Joints

2020 Launch

2021 Launch

© 2020 Dana	9

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

Financial Review

Near-term Financial Priorities

• Actions taken to reduce inventory by $77 million in H1 as production demand declined due to shutdowns
• Through shutdown period, reduced hourly and salary labor costs and reduced operating costs inline with lower volumes
• Capital spending reductions continued in second quarter (~35%) YOY
• Temporary dividend suspension preserves additional flexibility
• Issued $500 million in new senior unsecured notes
• Terminated undrawn bridge facility
• Repaid $300 million drawn on revolver

Conserved Cash

Reduce Flex

Material Conversion

Orders Costs

Scale Back	Suspend
Capital	Shareholder
Spend	Dividend

Maximized Liquidity

Cash Balance1

$708 M

Revolver Capacity

$979 M

Bridge Facility

Terminated

Q2 Liquidity

$1.7 B

1 Available cash and marketable securities as of 6/30/2020

Significant progress on conserving cash and maximizing liquidity

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

© 2020 Dana

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2020 Q2 Financial Results

 Sales and profit declines due

to production shutdowns

Changes from Prior Year

associated with the global

COVID-19 pandemic

 Lower diluted adjusted EPS

primarily due to lower

earnings

 Capital expenditures flexed

down to lower rate while

protecting new product

launch capabilities

 Adj. FCF lower compared to

prior year as lower profit was

partially offset by lower

working capital requirements,

taxes, and capital spending

($ in millions except EPS)
Sales	$
Adjusted EBITDA
Margin
EBIT
Interest Expense, Net
Income Tax Expense (Benefit)
Net Income (Loss) (attributable to Dana)
Diluted Adjusted EPS	$
Operating Cash Flow
Capital Spending
Adjusted Free Cash Flow

Q2 '20		Q2 '19	Change
1,078	$	2,306	$	(1,228)
(5)		286		(291)
(0.5)%		12.4%	(1,290) bps
(112)		(95)		(17)
30		31		(1)
34		(52)		86
(174)		(68)		(106)
(0.69)	$	0.87	$	(1.56)
(75)		73		(148)
58		92		(34)
(133)		43		(176)

Financial impact of COVID-19 pandemic shutdown in April

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

© 2020 Dana

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2020 Q2 Sales and Profit Changes

• Organic decline driven by global production shutdowns due to the COVID-19 pandemic
• Targeted cost management actions and a successful restart of operations helped mitigate margin impact
• Currency translation was a headwind to sales primarily due to the weakening of the Brazilian real, euro, and Chinese renminbi to the U.S. dollar
• Lower commodity costs modestly increased profit margins

QuarterPositive Negative

Change Change

Sales

Adjusted

EBITDA

24%

Decremental

$2,306M$(1,197)M

$286M

	$(292)M
12.4%					$1,078M
		Flat	$(27)M
				$(4)M	($5M) (0.5)%
				$1M
2019	Organic Growth	Inorganic	Currency	Commodities	2020

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

Decremental margin of 24% on lower production due to COVID-19 global pandemic

© 2020 Dana	13

2020 Q2 Cash Flow

• Adj. FCF lower compared to prior year as lower profit was partially offset by lower working capital requirements, taxes, and capital spending
• No share repurchases or dividends paid in Q2 2020
• Adj. FCF use was offset by the net proceeds of the senior unsecured notes issued in Q2

Changes from Prior Year

($ in millions)	Q2 '20	Q2 '19	Change
Adjusted EBITDA	$	(5)	$	286	$	(291)
One-time Costs1		(10)		(22)		12
Interest, net		(47)		(40)		(7)
Taxes		(5)		(39)		34
Working Capital / Other2		(8)		(50)		42
Capital Spending		(58)		(92)		34
Adj. Free Cash Flow	$	(133)	$	43	$	(176)
Dividends		-		(15)		15
Acquisitions		2		(48)		50
Senior Notes Issuance		500		-		500
Revolver Repayment		(300)		-		(300)
All Other3		(3)		(77)		74
Total Cash Flow	$	66	$	(97)	$	163

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

Lower Q2 adj. FCF driven by pandemic-related earnings decline

© 2020 Dana	14

Business Outlook

Light

Vehicle

Market

Commercial

Vehicle

Market

Off-Highway

Equipment

Market

• Strong light-truck demand
• Key vehicle inventories remain low
• N.A. and China seeing fastest recovery
• • Class 8 demand soft; order rates improving
  • Medium duty demand remains challenged
  • Indian OEM production restarting slowly
• Agriculture equipment market outperforming
• Construction equipment demand remains weak
• China demand recovery accelerating

Expect Q3 sequential sales growth of >50%; positive adj. EBITDA and adj. FCF

© 2020 Dana	15

© 2020 Dana	16

Appendix

2020 Q2 Sales and Profit Change by Segment

Light Vehicle Drive Systems

Commercial Vehicle Drive and Motion Systems

$927M

$437M

$(582)M

$(230)M

$337

$200M

$118M

$(151)M

$41M

$(46)M

12.7%

$(6)M

$(2)M

$(32)M

9.4%

$3M

$(9)M

$(1)M

($3)M

$(8)M

$1M

(9.5)%

(4.0)%

Q2 2019

Organic

Inorganic

Currency

Commodities

Q2 2020

Q2 2019

Organic

Inorganic

Currency

Commodities

Q2 2020

$674M

Off-Highway Drive and Motion Systems

Power Technologies

$(262)M

$268M

$103M

$(64)M

$401M

$(126)M

$(1)M

$140M

15.3%

$38M

$28M

$(29)M

$(10)M

$(1)M

Quarter

Positive Negative

$(2)M

9.5%

Change Change

10.4%

Q2 2019

Organic

Inorganic

Currency

Commodities

Q2 2020

Sales

$(1)M

(0.7)%

Segment

Q2 2019

Organic

Inorganic

Currency

Commodities

Q2 2020

EBITDA

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

© 2020 Dana

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Segment Profiles

Light Vehicle Drive Systems

Year to Date 6/30/2020

Commercial Vehicle Drive

and Motion Systems

Year to Date 6/30/2020

Off-Highway Drive and Motion Systems

Year to Date 6/30/2020

Deere

Power Technologies

Year to Date 6/30/2020

Ford

Customer Sales

Regional Sales

Other

18%

Renault/

Nissan

5%

GM 5%

Toyota

6%

FCA *

25%

Asia Pacific

12%

Europe

12%

South

America

4%

$ Millions

Ford 41%

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

North America

72%

Other 50%

Asia Pacific

7%

Europe

16%

South

America

17%

Paccar

20%

Volkswagen

8%

Volvo

8%

Navistar

8%

Daimler

6%

$ Millions

North America

60%

11%

Agco

7%

CNH 6%

Oshkosh

5%

Manitou

4%

Other

67%

Asia Pacific	North America
19%	14%
	South America
	2%

$ Millions

	14%
	GM
	5%
	Volkswagen
	5%
	Cummins
	5%
Other	Caterpillar
66%	5%

Asia Pacific 6%

North America

47%

Europe

45%

Performance

$ Millions	Q2			Year to Date		Q2			Year to Date
	2020	2019		2020	2019		2020	2019		2020	2019
Sales	$337	$927	$1,145	$1,833	Sales	$200	$437	$533	$868
Segment	($32)	$118	$51	$220	Segment	$(8)	$41	$13	$82
EBITDA	EBITDA
EBITDA	(9.5)%	12.7%	4.5%	12.0%	EBITDA	(4.0)%	9.4%	2.4%	9.4%
Margin	Margin

Sales

Segment

EBITDA

EBITDA

Margin

			Europe
		65%
Q2			Year to Date
2020	2019		2020	2019
$401	$674	$933	$1,226
$38	$103	$110	$185
9.5%	15.3%	11.8%	15.1%

			South America 2%
	Q2				Year to Date
	2020	2019			2020	2019
Sales	$140	$268	$393	$542
Segment	$(1)	$28	$29	$62
EBITDA
EBITDA	(0.7)%	10.4%	7.4%	11.4%
Margin
		© 2020 Dana	19

Diluted Adjusted EPS

DANA INCORPORATED						DANA INCORPORATED
Diluted Adjusted EPS (Unaudited)						Diluted Adjusted EPS (Unaudited)
For the Three Months Ended June 30, 2020 and 2019						For the Six Months Ended June 30, 2020 and 2019
(In millions, except per share amounts)						(In millions, except per share amounts)
			Three Months Ended				Six Months Ended
			June 30,					June 30,
			2020			2019				2020			2019
Net income (loss) attributable to parent company	$	(174)	$	(68)	Net income (loss) attributable to parent company	$	(116)	$	30
Items impacting income before income taxes:						Items impacting income before income taxes:
Restructuring charges		15			9	Restructuring charges		18			18
Amortization		4			4	Amortization		8			8
Strategic transaction expenses		5			11	Strategic transaction expenses		11			24
Acquisition related inventory adjustments					5	Acquisition related inventory adjustments					9
Pension settlement charges					258	Non-income tax legal judgment					(6)
Write-off deferred financing costs		5				Impairment of goodwill		31
Other items					(1)	Pension settlement charges					258
Items impacting income taxes:						Write-off deferred financing costs		5
Net income tax expense on items above		(8)			(14)	Loss on deal contingent forward					13
Tax expense (benefit) attributable to utilization of federal tax credits,						Other items					(2)
state tax law changes and valuation allowance adjustments		54			(78)	Items impacting income taxes:
Adjusted net income	$	(99)	$	126	Net income tax expense on items above		(11)			(19)
							Tax expense (benefit) attributable to utilization of federal tax credits,
Diluted shares - as reported			144.5			144.8	state tax law changes and valuation allowance adjustments			23			(94)
Adjusted diluted shares			144.5			144.8	Adjusted net income		$	(31)		$	239
Diluted adjusted EPS	$	(0.69)	$	0.87	Diluted shares - as reported			144.4			144.8
							Adjusted diluted shares			144.4			144.8
							Diluted adjusted EPS	$	(0.21)	$	1.65

© 2020 Dana	20

Segment Data

DANA INCORPORATED							DANA INCORPORATED
Segment Sales and Segment EBITDA (Unaudited)			Segment Sales and Segment EBITDA (Unaudited)
For the Three Months Ended June 30, 2020 and 2019			For the Six Months Ended June 30, 2020 and 2019
		Three Months Ended			Six Months Ended
(In millions)		June 30,		(In millions)		June 30,
		2020				2019			2020			2019
Sales							Sales
Light Vehicle	$	337			$	927	Light Vehicle	$	1,145	$	1,833
Commercial Vehicle		200				437	Commercial Vehicle		533			868
Off-Highway		401				674	Off-Highway		933			1,226
Power Technologies		140				268	Power Technologies		393			542
Total Sales	$	1,078			$	2,306	Total Sales	$	3,004	$	4,469
Segment EBITDA							Segment EBITDA
Light Vehicle	$	(32)			$	118	Light Vehicle	$	51	$	220
Commercial Vehicle		(8)				41	Commercial Vehicle		13			82
Off-Highway		38				103	Off-Highway		110			185
Power Technologies		(1)				28	Power Technologies		29			62
Total Segment EBITDA		(3)				290	Total Segment EBITDA		203			549
Corporate expense and other items, net		(2)				(4)	Corporate expense and other items, net		(3)			(6)
Adjusted EBITDA	$	(5)			$	286	Adjusted EBITDA	$	200	$	543

© 2020 Dana	21

Segment Data Continued

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Loss (Unaudited) For the Three Months Ended June 30, 2020 and 2019

		Three Months Ended
(In millions)		June 30,
		2020			2019
Segment EBITDA	$	(3)	$	290
Corporate expense and other items, net		(2)			(4)
Adjusted EBITDA		(5)			286
Depreciation		(84)			(79)
Amortization		(5)			(5)
Non-service cost components of pension and OPEB costs		(3)			(9)
Restructuring charges, net		(16)			(9)
Stock compensation expense		1			(5)
Strategic transaction expenses		(5)			(11)
Acquisition related inventory adjustments					(5)
Pension settlement charges, net					(258)
Other items		5
Loss before interest and income taxes		(112)			(95)
Write-off deferred financing costs		(5)
Interest income		2			3
Interest expense		32			34
Loss before income taxes		(147)			(126)
Income tax expense (benefit)		34			(52)
Equity in earnings of affiliates		8			8
Net loss	$	(173)	$	(66)

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income (Loss) (Unaudited) For the Six Months Ended June 30, 2020 and 2019

		Six Months Ended
(In millions)		June 30,
		2020			2019
Segment EBITDA	$	203	$	549
Corporate expense and other items, net		(3)			(6)
Adjusted EBITDA		200			543
Depreciation		(169)			(153)
Amortization		(9)			(8)
Non-service cost components of pension and OPEB costs		(5)			(15)
Restructuring charges, net		(19)			(18)
Stock compensation expense		(3)			(10)
Strategic transaction expenses		(11)			(24)
Impairment of goodwill		(51)
Acquisition related inventory adjustments					(9)
Non-income tax legal judgment					6
Pension settlement charges, net					(258)
Other items		2			(9)
Earnings (loss) before interest and income taxes		(65)			45
Write-off deferred financing costs		(5)
Interest income		4			5
Interest expense		61			61
Loss before income taxes		(127)			(11)
Income tax expense (benefit)		18			(32)
Equity in earnings of affiliates		10			14
Net income (loss)	$	(135)	$	35

© 2020 Dana	22

Cash Flow

DANA INCORPORATED

Reconciliation of Net Cash Provided By (Used In) Operating Activities to

Free Cash Flow and Adjusted Free Cash Flow (Unaudited)

		Three Months Ended
(In millions)		June 30,
		2020			2019
Net cash provided by (used in) operating activities	$	(75)	$	73
Purchase of property, plant and equipment		(58)			(92)
Free cash flow		(133)			(19)
Discretionary pension contributions		-			62
Adjusted free cash flow	$	(133)	$	43
		Six Months Ended
(In millions)		June 30,
		2020			2019
Net cash provided by (used in) operating activities	$	(126)	$	57
Purchase of property, plant and equipment		(121)			(190)
Free cash flow		(247)			(133)
Discretionary pension contributions		-			62
Adjusted free cash flow	$	(247)	$	(71)

© 2020 Dana	23

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	24