Dana plans to sell off-highway business

Dana Inc. has announced the appointment of R. Bruce McDonald, a member of the Dana Board of Directors, as Chairman and Chief Executive Officer (CEO), effective immediately. The company also said it intends to sell its off-highway business.

McDonald’s appointment follows the retirement of James Kamsickas as CEO and his departure from the Board. Kamsickas will remain as an advisor to the company through March 2025 to support the transition. The Board has retained a leading executive search firm to identify its next permanent CEO.

Dana’s electrified driveline for compact construction machinery. (Photo: Dana)

“Jim is an exceptional leader with more than 18 years as a CEO in the industry,” said Keith Wandell, Dana’s lead independent director. “He led Dana through one of the industry’s most challenging periods while successfully building a high-performance culture, enabling a world-class manufacturing company and assembling a portfolio of leading products and technologies. The Board and Jim agreed that now is the right time to transition the leadership of Dana, and we thank Jim for his many contributions over his nine years leading the company and wish him all the best.”

Plan to sell off-highway business

Dana has engaged financial advisors Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC to sell its off-highway business, which the board believes will unlock substantial value for shareholders. The business provides drive and motion systems for heavy-duty vehicles in markets such as agriculture, materials handling, mining, construction and forestry.

“We continue to have confidence in the long-term opportunity in the mobility industry, however it is undergoing a significant transformation, including protracted cost pressures and demand uncertainty,” said Wandell. “To address these challenges and deliver more value to customers and shareholders, Dana is taking action to streamline the business, unlock the value of its off-highway business and further reduce costs. Bruce is an experienced public company CEO in our industry with significant M&A expertise, and we are confident that he is the right person to oversee this transformation while the Board conducts a search for a permanent successor.”

Dana said it expects the sale of its heavy-duty component business will position it with a “streamlined go-to-market approach focused on serving its light and commercial vehicle customers, with traditional and electrified products that are largely shared across the remaining portfolio.” Proceeds from the potential sale are expected to enable Dana to strengthen its balance sheet through substantially reduced leverage, and to return capital to shareholders.

While the company and its advisors said they believe there is strong interest in the Off-Highway business, they also warned that there can be no assurance that the sale process will result in a transaction. There is no timeframe for the conclusion of the process, and the company does not intend to comment further regarding this matter unless and until further disclosure is determined to be appropriate.

Cost reduction actions

While Dana said it has continued to improve its profitability in a challenging operating environment, the company announced further actions to support sustained long-term profitability and enhanced cash flow generation. This includes substantial reductions in selling, general and administrative costs across all the company’s businesses and engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles.

The company expects to deliver annualized savings of approximately $200 million by 2026. Furthermore, the company plans to reduce capital spending to reflect the revised market demand for electric vehicles.

“Dana is committed to a strategy that accelerates value creation and has taken action to flex its cost structure and generate efficiencies by leveraging its core strengths through current market conditions,” said McDonald. “It is clear that further actions are needed, and I am confident that the new incremental cost reductions, paired with the benefits of a potential off-highway sale, will enhance shareholder value. Following the Off-Highway business sale, we believe Dana will have an adjusted EBITDA margin and free cash flow margin in excess of current levels.

“Dana is differentiated by leading technology innovation and a track record of continuous improvement. My conviction in our businesses, the team and the opportunities to capitalize on the EV transition over the long term remain strong. I look forward to stepping into my new role as CEO at such an important time for Dana and will work diligently alongside the Board and management team to deliver on these actions and drive value for Dana shareholders.”