UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: June 30, 2023

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From to

Commission File Number: 1-1063

Dana Incorporated

(Exact name of registrant as specified in its charter)

Delaware	26-1531856
(State of incorporation)	(IRS Employer Identification Number)

3939 Technology Drive, Maumee, OH	43537
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (419) 887-3000

Securities registered pursuant to Section 12(b) of the Act:

Common stock $0.01 par value	DAN	New York Stock Exchange
(Title of each class)	(Trading Symbol)	(Name of exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes  ☐    No  ☑

There were 144,336,808 shares of the registrant’s common stock outstanding at July 14, 2023.

DANA INCORPORATED – FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

TABLE OF CONTENTS

		10-Q Pages
PART I – FINANCIAL INFORMATION
Item 1	Financial Statements	3
	Consolidated Statement of Operations (Unaudited)	3
	Consolidated Statement of Comprehensive Income (Unaudited)	4
	Consolidated Balance Sheet (Unaudited)	5
	Consolidated Statement of Cash Flows (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4	Controls and Procedures	38
PART II – OTHER INFORMATION
Item 1	Legal Proceedings	39
Item 1A	Risk Factors	39
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 5	Other Information	39
Item 6	Exhibits	39
Signatures		40

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Dana Incorporated

Consolidated Statement of Operations (Unaudited)

(In millions, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net sales	$	2,748		$	2,586		$	5,392		$	5,066
Costs and expenses
Cost of sales		2,477			2,403			4,892			4,686
Selling, general and administrative expenses		144			130			284			260
Amortization of intangibles		4			3			7			7
Restructuring charges, net		3			1			4
Other income (expense), net		4			10			9			12
Earnings before interest and income taxes		124			59			214			125
Loss on extinguishment of debt		(1	)					(1	)
Interest income		5			2			9			4
Interest expense		39			32			73			63
Earnings before income taxes		89			29			149			66
Income tax expense		55			18			85			36
Equity in earnings (loss) of affiliates		2			(1	)		3
Net income		36			10			67			30
Less: Noncontrolling interests net income		5			3			9			7
Less: Redeemable noncontrolling interests net income (loss)		1			(1	)					(2	)
Net income attributable to the parent company	$	30		$	8		$	58		$	25
Net income per share available to common stockholders
Basic	$	0.21		$	0.06		$	0.40		$	0.17
Diluted	$	0.21		$	0.06		$	0.40		$	0.17
Weighted-average common shares outstanding
Basic		144.3			143.4			144.1			143.8
Diluted		144.4			143.7			144.3			144.6

The accompanying notes are an integral part of the consolidated financial statements.

3

Dana Incorporated

Consolidated Statement of Comprehensive Income (Unaudited)

(In millions)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net income	$	36		$	10		$	67		$	30
Other comprehensive income (loss), net of tax:
Currency translation adjustments		(7	)		(91	)		18			(52	)
Hedging gains and losses		3			1			18			(3	)
Defined benefit plans					3			1			4
Other comprehensive income (loss)		(4	)		(87	)		37			(51	)
Total comprehensive income (loss)		32			(77	)		104			(21	)
Less: Comprehensive income attributable to noncontrolling interests		(5	)		(1	)		(9	)		(5	)
Less: Comprehensive loss attributable to redeemable noncontrolling interests					7						8
Comprehensive income (loss) attributable to the parent company	$	27		$	(71	)	$	95		$	(18	)

The accompanying notes are an integral part of the consolidated financial statements.

4

Dana Incorporated

Consolidated Balance Sheet (Unaudited)

(In millions, except share and per share amounts)

	June 30,			December 31,
	2023			2022
Assets
Current assets
Cash and cash equivalents	$	484		$	425
Accounts receivable
Trade, less allowance for doubtful accounts of $12 in 2023 and $11 in 2022		1,581			1,374
Other		288			202
Inventories		1,731			1,609
Other current assets		247			219
Total current assets		4,331			3,829
Goodwill		262			259
Intangibles		192			201
Deferred tax assets		425			397
Other noncurrent assets		106			123
Investments in affiliates		135			136
Operating lease assets		326			311
Property, plant and equipment, net		2,269			2,193
Total assets	$	8,046		$	7,449
Liabilities, redeemable noncontrolling interests and equity
Current liabilities
Short-term debt	$	35		$	52
Current portion of long-term debt		32			8
Accounts payable		1,966			1,838
Accrued payroll and employee benefits		256			214
Taxes on income		95			54
Current portion of operating lease liabilities		35			36
Other accrued liabilities		301			277
Total current liabilities		2,720			2,479
Long-term debt, less debt issuance costs of $26 in 2023 and $22 in 2022		2,587			2,348
Noncurrent operating lease liabilities		287			277
Pension and postretirement obligations		306			298
Other noncurrent liabilities		252			249
Total liabilities		6,152			5,651
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests		213			195
Parent company stockholders' equity
Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding		—			—
Common stock, 450,000,000 shares authorized, $0.01 par value, 144,334,974 and 143,366,482 shares outstanding		2			2
Additional paid-in capital		2,244			2,229
Retained earnings		349			321
Treasury stock, at cost (449,505 and zero shares)		(8	)
Accumulated other comprehensive loss		(964	)		(1,001	)
Total parent company stockholders' equity		1,623			1,551
Noncontrolling interests		58			52
Total equity		1,681			1,603
Total liabilities, redeemable noncontrolling interests and equity	$	8,046		$	7,449

The accompanying notes are an integral part of the consolidated financial statements.

5

Dana Incorporated

Consolidated Statement of Cash Flows (Unaudited)

(In millions)

	Six Months Ended
	June 30,
	2023			2022
Operating activities
Net income	$	67		$	30
Depreciation		186			182
Amortization		11			11
Amortization of deferred financing charges		3			3
Write-off of deferred financing costs		1
Earnings of affiliates, net of dividends received		(3	)		29
Stock compensation expense		14			8
Deferred income taxes		(30	)		(42	)
Pension expense, net		2
Change in working capital		(172	)		(84	)
Other, net		7			(1	)
Net cash provided by operating activities		86			136
Investing activities
Purchases of property, plant and equipment		(242	)		(206	)
Proceeds from sale of property, plant and equipment		2
Acquisition of business, net of cash acquired					(1	)
Purchases of marketable securities					(13	)
Proceeds from sales of marketable securities					10
Settlements of undesignated derivatives		(4	)		(7	)
Other, net		(1	)		2
Net cash used in investing activities		(245	)		(215	)
Financing activities
Net change in short-term debt		(17	)		214
Proceeds from long-term debt		458			2
Repayment of long-term debt		(204	)		(5	)
Deferred financing payments		(9	)
Dividends paid to common stockholders		(29	)		(29	)
Repurchases of common stock					(25	)
Distributions to noncontrolling interests		(3	)		(2	)
Contributions from redeemable noncontrolling interests		17			7
Payments to acquire noncontrolling interests					(4	)
Other, net		(4	)		(6	)
Net cash provided by financing activities		209			152
Net increase in cash, cash equivalents and restricted cash		50			73
Cash, cash equivalents and restricted cash – beginning of period		442			287
Effect of exchange rate changes on cash balances		11			(20	)
Cash, cash equivalents and restricted cash – end of period (Note 4)	$	503		$	340
Non-cash investing activity
Purchases of property, plant and equipment held in accounts payable	$	75		$	69

The accompanying notes are an integral part of the consolidated financial statements.

6

Dana Incorporated

Index to Notes to Consolidated Financial Statements

1.	Organization and Summary of Significant Accounting Policies
2.	Goodwill and Other Intangible Assets
3.	Restructuring of Operations
4.	Supplemental Balance Sheet and Cash Flow Information
5.	Stockholders' Equity
6.	Redeemable Noncontrolling Interests
7.	Earnings per Share
8.	Stock Compensation
9.	Pension and Postretirement Benefit Plans
10.	Financing Agreements
11.	Fair Value Measurements and Derivatives
12.	Commitments and Contingencies
13.	Warranty Obligations
14.	Income Taxes
15.	Other Income (Expense), Net
16.	Revenue from Contracts with Customers
17.	Segments
18.	Equity Affiliates

7

Notes to Consolidated Financial Statements (Unaudited)

(In millions, except share and per share amounts)

Note 1. Organization and Summary of Significant Accounting Policies

General

Dana Incorporated (Dana) is headquartered in Maumee, Ohio and was incorporated in Delaware in 2007. As a global provider of high technology driveline (axles, driveshafts and transmissions); sealing and thermal-management products; and motors, power inverters, and control systems for electric vehicles our customer base includes virtually every major vehicle manufacturer in the global light vehicle, medium/heavy vehicle and off-highway markets.

The terms "Dana," "we," "our" and "us," when used in this report, are references to Dana. These references include the subsidiaries of Dana unless otherwise indicated or the context requires otherwise.

Summary of significant accounting policies

Basis of presentation — Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. These statements are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The results reported in these consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the consolidated financial statements in Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 (the 2022 Form 10-K). Certain prior year amounts have been reclassified to conform to the current presentation.

On January 1, 2023 we adopted Accounting Standards Update (ASU) 2022-04, Supplier Finance Programs which requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. Adoption of this new standard did not affect the recognition, measurement or financial statement presentation of supplier finance program obligations. Certain of our subsidiaries have entered into paying agency agreements with third-party administrators. These voluntary supply chain finance programs generally give participating suppliers the ability to sell, or otherwise pledge as collateral, their receivables from Dana to the participating financial institutions, at the sole discretion of both the suppliers and financial institutions. Dana is not a party to the arrangements between the suppliers and the financial institutions. Dana’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to sell, or otherwise pledge as collateral, amounts under these arrangements. Dana's payment terms to the financial institutions, including the timing and amount of payments, are based on the original supplier invoices. As of  June 30, 2023 and December 31, 2022, we had $65 and $81, respectively, of confirmed obligations presented as accounts payable within total current liabilities on the consolidated balance sheet. 

We also adopted the following standard during the first six months of 2023, which did not have a material impact on our financial statements or financial statement disclosures:

Standard		Effective Date
ASU 2021-08	Accounting for Contract Assets and Contract Liabilities from Contracts with Customers	January 1, 2023

8

 

Note 2. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill by segment — 

	Off-Highway
Balance, December 31, 2022	$	259
Currency impact		3
Balance, June 30, 2023	$	262

Components of other intangible assets — 

		June 30, 2023							December 31, 2022
	Weighted Average Useful Life (years)	Gross Carrying Amount		Accumulated Impairment and Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Impairment and Amortization			Net Carrying Amount
Amortizable intangible assets
Core technology	8	$	158	$	(121	)	$	37	$	156	$	(116	)	$	40
Trademarks and trade names	13		29		(15	)		14		29		(13	)		16
Customer relationships	8		501		(433	)		68		498		(425	)		73
Non-amortizable intangible assets
Trademarks and trade names			73					73		72					72
		$	761	$	(569	)	$	192	$	755	$	(554	)	$	201

The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at  June 30, 2023 were as follows: Light Vehicle — $15, Commercial Vehicle — $63, Off-Highway — $110 and Power Technologies — $4.

Amortization expense related to amortizable intangible assets — 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Charged to cost of sales	$	2	$	2	$	4	$	4
Charged to amortization of intangibles		4		3		7		7
Total amortization	$	6	$	5	$	11	$	11

9

 

Note 3. Restructuring of Operations

Our restructuring activities have historically included rationalizing our operating footprint by consolidating facilities, positioning operations in lower cost locations and reducing overhead costs. Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs.

Accrued restructuring costs and activity —

	Employee Termination Benefits			Exit Costs			Total
Balance, March 31, 2023	$	2		$	—		$	2
Charges to restructuring		2			1			3
Cash payments		(2	)		(1	)		(3	)
Balance, June 30, 2023	$	2		$	—		$	2
Balance, December 31, 2022	$	2		$	—		$	2
Charges to restructuring		2			2			4
Cash payments		(2	)		(2	)		(4	)
Balance, June 30, 2023	$	2		$	—		$	2

At June 30, 2023, the accrued employee termination benefits include costs to reduce less than approximately 100 employees to be completed over the next year.

Note 4. Supplemental Balance Sheet and Cash Flow Information

Inventory components at —

	June 30, 2023		December 31, 2022
Raw materials	$	710	$	679
Work in process and finished goods		1,021		930
Total	$	1,731	$	1,609

Cash, cash equivalents and restricted cash at —

	June 30, 2023		December 31, 2022		June 30, 2022		December 31, 2021
Cash and cash equivalents	$	484	$	425	$	321	$	268
Restricted cash included in other current assets		8		7		8		9
Restricted cash included in other noncurrent assets		11		10		11		10
Total cash, cash equivalents and restricted cash	$	503	$	442	$	340	$	287

Note 5. Stockholders’ Equity

Common stock — Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first and second quarters of 2023. Dividends accrue on restricted stock units (RSUs) granted under our stock compensation program and will be paid in cash or additional units when the underlying units vest.

Share repurchase program — On February 16, 2021 our Board of Directors approved an extension of our existing common stock share repurchase program through December 31, 2023. Under the program, we spent $25 to repurchase 1,483,742 shares of our common stock during the first quarter of 2022 through open market transactions. Approximately $102 remained available for future share repurchases as of June 30, 2023.

10

 

Changes in equity —

2023	Common Stock		Additional Paid-In Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Non-controlling Interests			Total Equity
Balance, December 31, 2022	$	2	$	2,229	$	321		$	—		$	(1,001	)	$	52		$	1,603
Net income						28									4			32
Other comprehensive income												40						40
Common stock dividends and dividend equivalents						(15	)											(15	)
Distributions to noncontrolling interests															(1	)		(1	)
Redeemable noncontrolling interests adjustment to redemption value						(1	)											(1	)
Stock compensation				8														8
Stock withheld for employees taxes									(8	)								(8	)
Balance, March 31, 2023		2		2,237		333			(8	)		(961	)		55			1,658
Net income						30									5			35
Other comprehensive loss												(3	)					(3	)
Common stock dividends and dividend equivalents						(14	)											(14	)
Distributions to noncontrolling interests															(2	)		(2	)
Purchase of noncontrolling interests																		—
Stock compensation				7														7
Balance, June 30, 2023		2		2,244		349			(8	)		(964	)		58			1,681

2022	Common Stock		Additional Paid-In Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss			Non-controlling Interests			Total Equity
Balance, December 31, 2021	$	2	$	2,427	$	662		$	(184	)	$	(985	)	$	53		$	1,975
Net income						17									4			21
Other comprehensive income												36						36
Common stock dividends and dividend equivalents						(14	)											(14	)
Common stock repurchases									(25	)								(25	)
Distributions to noncontrolling interests															(1	)		(1	)
Purchases of noncontrolling interests															(1	)		(1	)
Redeemable noncontrolling interests adjustment to redemption value						(1	)											(1	)
Stock compensation				4														4
Stock withheld for employees taxes									(7	)								(7	)
Balance, March 31, 2022		2		2,431		664			(216	)		(949	)		55			1,987
Net income						8									3			11
Other comprehensive loss												(79	)		(2	)		(81	)
Common stock dividends and dividend equivalents						(15	)											(15	)
Distributions to noncontrolling interests															(1	)		(1	)
Purchases of noncontrolling interests															(1	)		(1	)
Redeemable noncontrolling interests adjustment to redemption value						(1	)											(1	)
Stock compensation				4														4
Balance, June 30, 2022		2		2,435		656			(216	)		(1,028	)		54			1,903

11

 

Changes in each component of accumulated other comprehensive income (loss) (AOCI) of the parent —

	Parent Company Stockholders
2023	Foreign Currency Translation			Hedging			Defined Benefit Plans			Accumulated Other Comprehensive Loss
Balance, December 31, 2022	$	(895	)	$	21		$	(127	)	$	(1,001	)
Currency translation adjustments		24									24
Holding gains and losses					16						16
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)								1			1
Tax expense					(1	)					(1	)
Other comprehensive income		24			15			1			40
Balance, March 31, 2023		(871	)		36			(126	)		(961	)
Currency translation adjustments		(6	)								(6	)
Holding gains and losses					10						10
Reclassification of amount to net income (a)					(7	)					(7	)
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)								1			1
Tax expense								(1	)		(1	)
Other comprehensive income (loss)		(6	)		3			—			(3	)
Balance, June 30, 2023		(877	)		39			(126	)		(964	)

	Parent Company Stockholders
2022	Foreign Currency Translation			Hedging			Defined Benefit Plans			Accumulated Other Comprehensive Loss
Balance, December 31, 2021	$	(809	)	$	4		$	(180	)	$	(985	)
Currency translation adjustments		39									39
Holding gains and losses					19						19
Reclassification of amount to net income (a)					(22	)					(22	)
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)								2			2
Tax expense					(1	)		(1	)		(2	)
Other comprehensive income (loss)		39			(4	)		1			36
Balance, March 31, 2022		(770	)		—			(179	)		(949	)
Currency translation adjustments		(83	)								(83	)
Holding gains and losses					42						42
Reclassification of amount to net income (a)					(39	)					(39	)
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)								4			4
Tax expense					(2	)		(1	)		(3	)
Other comprehensive income		(83	)		1			3			(79	)
Balance, June 30, 2022		(853	)		1			(176	)		(1,028	)

(a) Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments treated as cash flow hedges are reclassified from AOCI into the same line item in the consolidated statement of operations in which the underlying forecasted transaction or other hedged item is recorded. See Note 11 for additional details.

(b) See Note 9 for additional details.

12

 

Note 6. Redeemable Noncontrolling Interests

Hydro-Québec owns a 45% redeemable noncontrolling interest in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC. The terms of the joint venture agreement provide Hydro-Québec with the right to put all, and not less than all, of its ownership interests in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC to Dana at fair value.

Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling interest balances adjusted for comprehensive income (loss) items and distributions or the redemption value. Redeemable noncontrolling interest adjustments of redemption value are recorded in retained earnings. We estimate the fair value of the redemption value using an income based approach based on discounted cash flow projections. In determining fair value using discounted cash flow projections, we make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth rates, projected EBITDA, discount rates and terminal growth rates. 

Reconciliation of changes in redeemable noncontrolling interests —

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Balance, beginning of period	$	206	$	200	$	195	$	198
Capital contribution from redeemabl