Dana Incorporated (DAN) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reflects strong financial performance with significant cost reductions and improved margins, despite some market challenges. The Q&A indicates a positive strategic outlook with ambitious sales and margin targets by 2030, supported by structural cost reductions and operational efficiencies. Shareholder returns and a substantial share repurchase program further enhance sentiment. Although there are concerns about EV cancellations and management's lack of detailed guidance, the overall positive indicators outweigh these issues, suggesting a likely positive stock price movement in the short term.
Key Financial Performance
Fourth Quarter Margins 11.1%, $10 million higher than preannouncement numbers, reflecting better mix and continued benefit of cost improvement actions.
Full Year Cash Flow $331 million, $16 million higher year-over-year, the highest since 2013, driven by improved earnings and disciplined working capital management.
Cost Reduction $248 million delivered in the year, with a run rate of $325 million going into 2026, exceeding the original $200 million commitment.
New Business Backlog $750 million, $200 million to flow through in 2026, despite turmoil in the EV side of the business.
Capital Return Over $700 million returned to shareholders, including $54 million in dividends and $34 million in share buybacks at an average cost of $18.96 per share.
Fourth Quarter Sales $1.867 billion, an increase of $93 million year-over-year, driven by customer recoveries and currency translation.
Fourth Quarter Adjusted EBITDA $208 million, 11.1% margin, a 640 basis points improvement year-over-year, driven by better mix and cost improvement actions.
Full Year Sales $7.5 billion, down $234 million year-over-year, reflecting weakening market demand across light and commercial vehicle sectors.
Full Year Adjusted EBITDA $610 million, an improvement of $215 million year-over-year, resulting in an 8.1% margin, driven by cost savings and operational efficiencies.
Operating Cash Flow $512 million for the full year, a $62 million increase year-over-year, supported by improved earnings and working capital discipline.
Interest Expense $171 million for the full year, up $26 million year-over-year, due to higher average borrowing costs tied to capital return initiatives.
Adjusted Free Cash Flow $331 million for the full year, a $250 million improvement year-over-year, driven by higher profitability and reduced capital spending.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Business Backlog: Secured a backlog of $750 million, with $200 million expected to flow through in 2026.
Shift in Business Pursuit Activities: The focus has shifted from 80% EV-related activities to a heavier mix of traditional ICE powertrain vehicles, hybrids, and some BEVs.
Market Outlook for Light Trucks: The light truck market is expected to remain steady with flat volumes year-over-year from 2025 levels.
Market Outlook for Commercial Vehicles: Flat volumes are expected for 2025, with potential optimism for improved volumes in the latter half of the year.
Cost Reduction Achievements: Delivered $248 million in cost savings for 2025, with a run rate of $325 million going into 2026.
Margin Expansion: Achieved an 11.1% margin in Q4 2025, a 640 basis points improvement over the prior year.
Free Cash Flow: Generated $331 million in free cash flow for 2025, the highest since 2013.
Capital Return Plan: Increased share repurchase plan to $2 billion through 2030, with $700 million returned to shareholders in 2025.
Dividend Growth: Increased quarterly dividend by 20% to $0.12 per share.
Deleveraging Actions: Reduced total debt by $1.9 billion post the Off-Highway divestiture, achieving less than 1x net leverage for 2026.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Market Demand: Weakening market demand across both light vehicle and commercial vehicle sectors, impacting sales and revenue.
Electric Vehicle (EV) Market: Turmoil in the EV side of the business, with a pivot away from EV activity to traditional ICE powertrains, reflecting changing consumer demand and market conditions.
Volume and Mix: Lower demand and unfavorable mix early in the year, reducing sales and profit.
Interest Expense: Higher borrowing costs due to capital return initiatives, increasing financial pressure.
Commodity Costs: Potential headwinds from timing of recoveries and material cost changes.
Regulatory and Tariff Environment: Dependence on tariff recoveries and potential timing mismatches, creating financial uncertainty.
Supply Chain and Operational Costs: Higher conversion costs and ongoing restructuring expenses, impacting profitability.
Economic Uncertainty: Challenging demand environment and market volatility, affecting operational and financial performance.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Expectations: 2026 revenue is expected to be approximately $7.5 billion, consistent with 2025 levels. By 2030, the company targets close to $10 billion in sales, representing a 33% increase from the 2026 guidance midpoint.
Margin Projections: Adjusted EBITDA for 2026 is expected to be around $800 million, representing a margin of 10.6%, an improvement of approximately 250 basis points over 2025. By 2030, margins are targeted to increase to 14%-15% at the EBITDA level.
Capital Expenditures: Net capital spending for 2026 is expected to be about $325 million, which is $70 million higher than 2025, to support efficiency improvements and new business backlog.
Market Trends and Business Segment Performance: The light truck market is expected to remain steady with flat volumes year-over-year from 2025 levels. Commercial vehicle volumes are also expected to remain flat, with potential improvement in the latter half of 2026. The company anticipates a shift in customer demand towards traditional ICE vehicles and hybrids, with reduced emphasis on EVs.
Strategic Plans: Dana plans to return $2 billion to shareholders through stock buybacks by 2030, with $300 million targeted for 2026. The company also aims to grow its dividend as share count declines. The Dana 2030 strategy includes growth in aftermarket business, traditional light and commercial vehicle segments, EV and Applied Technologies, and efficiency improvements in manufacturing and structural costs.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividend Growth: The company increased its dividend by 20% to $0.12 per quarter.
Dividend Strategy: The company plans to grow its dividend as the share count declines, reflecting confidence in value creation.
2025 Dividend Payment: Paid $54 million in dividends in 2025.
Share Repurchase Program: The company has increased its share repurchase plan to $2 billion through 2030.
2025 Share Buyback: Repurchased over 34 million shares at an average cost of $18.96 per share in 2025.
2026 Share Buyback Plan: Forecasts buying back another couple of hundred million dollars worth of shares in 2026.
Q1 2026 Share Buyback: Already repurchased $100 million worth of shares at over $27 per share in Q1 2026.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the target for sales by 2030 and how does Dana plan to achieve it?
A:Dana targets $10 billion in sales by 2030. The growth will come from a $2.5 billion increase over the next 5 years, with $550 million from backlog, $200-$300 million from normalization in the North American CV market, and five growth strategies: quoting activity for ICE vehicles, expanding CV business in North America, aftermarket opportunities in North America, EV opportunities with disciplined quoting, and applied technologies like powersports and defense.
Q:Will EV cancellations and recovery programs impact 2025 guidance and cash flow?
A:Recoveries from EV cancellations are mostly adjustments to ongoing sales prices rather than profit drivers. They help avoid further write-offs but do not significantly impact short-term profits or cash flow.
Q:What is the guidance for EBITDA margins by 2030 and how will it be achieved?
A:Dana is guiding to 14%-15% EBITDA margins by 2030, which is 400 basis points higher than the 2026 guide. This will be achieved through structural cost reductions, including $325 million already cut and an additional $100 million from systems investments like shared service centers and ERP standardization.
Q:Are the commercial vehicle margins achieved in Q4 sustainable?
A:Yes, the Q4 commercial vehicle margins are sustainable and expected to improve further due to operational efficiencies and a new state-of-the-art plant in Mexico. Volume tailwinds in 2023 will also contribute to margin improvements.
Q:What are Dana's plans for excess cash flow and capital deployment?
A:Dana plans to use excess cash flow for shareholder returns, potential inorganic investments, and reducing leverage. They aim to maintain flexibility for future opportunities and market conditions.
Q:Is M&A included in the $10 billion revenue target?
A:No, M&A is not included in the $10 billion revenue target. The target is based on organic growth.
Q:What is the assumed effective tax rate for 2023?
A:The assumed effective tax rate for 2023 is between 20% and 30%, depending on jurisdictional income mix.
Q:What is the CapEx guidance for 2023 and beyond?
A:CapEx is guided to be in the low 4% range of sales for 2023 and is expected to remain at this level to support growth initiatives and margin expansion.
Q:What are the drivers of the 250 basis points margin expansion in 2023?
A:The 250 basis points margin expansion in 2023 will be driven by cost savings, operational efficiencies, and performance improvements, with a balanced contribution across segments but slightly more from the CV segment.
Q:What are the high-level drivers of the 400 basis points margin expansion by 2030?
A:The 400 basis points margin expansion by 2030 will primarily come from cost-saving investments in manufacturing operations and automation, with growth contributing to a lesser extent.
Q:Review of Unclear Management Responses
A:Management avoided providing detailed breakdowns for the 14%-15% EBITDA margin guidance by 2030, stating that specifics would be shared at the Capital Markets Day. Similarly, they did not provide detailed incremental margin expectations for the $2.5 billion revenue increase or specifics on non-core operations that could be sold or shuttered.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Byron
Commodity
Interest expense
Tariff recovery
Tariffs
action program
activity
backlog
baseline
benefit cost
benefit euro
benefit margin
capital spending
contributor
cost action
currency
debt reduction
deleveraging
demand vehicle
divestiture
dividend
dollar Commodities
driver sale
efficiency cost
environment
euro dollar
flow increase
flow profile
increase capital
investment year
liquidity
loss Interest
maturity
point improvement
position
pricing
profitability
side page
timing recovery
translation
DAN Transcript
Dana Incorporated (DAN) Q4 2025 Earnings Call Transcript
Positive2-18
The earnings call summary reflects strong financial performance with significant cost reductions and improved margins, despite some market challenges. The Q&A indicates a positive strategic outlook with ambitious sales and margin targets by 2030, supported by structural cost reductions and operational efficiencies. Shareholder returns and a substantial share repurchase program further enhance sentiment. Although there are concerns about EV cancellations and management's lack of detailed guidance, the overall positive indicators outweigh these issues, suggesting a likely positive stock price movement in the short term.
Dana Incorporated (DAN) Q4 2025 Earnings Call Transcript
Positive1-21
The earnings call highlights several positive factors: strong share repurchase activity, significant debt reduction, and a confident outlook for future EBITDA growth. Despite a slight core sales decline forecast, management's confidence in cost-saving measures and strategic initiatives, such as the aftermarket focus, bolster the sentiment. The Q&A reveals management's optimism and proactive strategies, though some responses lacked clarity. Overall, the positive shareholder return plan, debt management, and growth strategies outweigh concerns, suggesting a positive stock price movement over the next two weeks.
Dana Incorporated (DAN) Presents at UBS Global Industrials and Transportation Conference Transcript
Neutral12-3
Dana Incorporated (DAN) Presents at Barclays 16th Annual Global Automotive and Mobility Tech Conference Transcript
Neutral11-19
DAN Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
