MAUMEE, Ohio - Dana Incorporated (NYSE: DAN), a global leader in drivetrain and e-Propulsion systems, announced today the appointment of R. Bruce McDonald as its new Chairman and Chief Executive Officer. McDonald, who has been a member of Dana's Board of Directors since 2014, steps into the role following the retirement of former CEO James Kamsickas. Kamsickas will continue to serve as an advisor until March 2025 to ensure a smooth transition.
The company is also embarking on a strategic shift with plans to sell its Off-Highway business, which specializes in drive and motion systems for heavy-duty vehicles in various industries. Dana has engaged Goldman Sachs & Co. LLC and Morgan Stanley (NYSE:MS) & Co. LLC as financial advisors for the sale, aiming to streamline operations and focus on light and commercial vehicle markets. The sale is expected to strengthen Dana's balance sheet and provide capital to shareholders, though the company noted the sale process's outcome remains uncertain with no set timeframe for completion.
In response to current industry challenges, Dana is initiating a $200 million cost reduction plan to improve profitability and cash flow. The plan targets a reduction in selling, general, and administrative costs, as well as engineering expenses, reflecting the slower-than-expected adoption of electric vehicles. Dana anticipates annualized savings of approximately $200 million by 2026 and plans to adjust capital spending accordingly.
McDonald emphasized the company's commitment to creating value and generating efficiencies amidst current market conditions. He expressed confidence in the company's technology leadership and the opportunities presented by the transition to electric vehicles.
Despite the changes, Dana reaffirms its full-year 2024 guidance, with sales projected between $10.2 and $10.4 billion, adjusted EBITDA of $855 to $895 million, and free cash flow of $90 to $110 million.
This news comes as part of a press release statement, detailing Dana's strategic moves and leadership changes as it navigates the evolving mobility industry landscape.
In other recent news, Dana Holding (NYSE:DAN) experienced mixed results in its third-quarter earnings report. The company reported third-quarter revenue of $2.476 billion, falling short of the Bloomberg consensus of $2.573 billion. However, the adjusted EBITDA for the quarter stood at $232 million, surpassing the consensus of $220 million. Despite a year-over-year decline in EBITDA of $7 million and a $193 million drop in sales, Dana's limited decremental margin performance of just 3.6% reflects effective cost-saving actions and strong execution.
JPMorgan, in response to these developments, adjusted its financial outlook for Dana Holding, reducing the price target to $14.00 from the previous $16.00 but maintained an Overweight rating on the stock. JPMorgan has updated its own EBITDA forecasts for Dana, projecting $875 million for 2024, down from the prior estimate of $882 million.
These recent developments come amidst challenging market conditions, including those affecting the electric vehicle sector, which led Dana's management to revise its full-year revenue and EBITDA forecast to figures that fall below market expectations. Despite these challenges, Dana Holding continues to focus on operational efficiency and cost management.
InvestingPro Insights
Dana Incorporated's strategic shifts and leadership changes come at a crucial time for the company, as reflected in recent financial data and market performance. According to InvestingPro, Dana's market capitalization stands at $1.3 billion, with a revenue of $10.44 billion in the last twelve months as of Q3 2024. However, the company faces challenges, as evidenced by its negative earnings per share of -$0.11 over the same period.
The announced $200 million cost reduction plan aligns with an InvestingPro Tip indicating that Dana "suffers from weak gross profit margins." This is supported by the data showing a gross profit margin of 8.69% in the last twelve months. The cost-cutting measures aim to address this issue and improve profitability.
Despite recent struggles, there are positive indicators. An InvestingPro Tip suggests that "net income is expected to grow this year," which could be bolstered by the strategic changes announced. Additionally, Dana has "maintained dividend payments for 13 consecutive years," demonstrating a commitment to shareholder returns even in challenging times. The current dividend yield stands at an attractive 4.68%.
Investors should note that Dana's stock has experienced significant volatility, with the price falling 37.72% over the past six months. However, with a price-to-book ratio of 0.87, the stock may be undervalued relative to its assets.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Dana Incorporated, providing deeper insights into the company's financial health and market position.
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