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| Third, in the bottom left corner, ongoing inflation recoveries from customers, as well as more efficient supply chain management and product engineering have helped us lower our cost and improve profit |
| As you can see on this page, we continue to successfully scale our electrodynamic components and systems across multiple mobility markets |
| Moving to the center of the slide, a few key highlights of the year include our sales improved by 4% over the prior year, more than an 80% increase since 2016 |
| But as you saw, what we put out for next year, we do continue to see improvement in the cash flow conversion over the next few years as we continue to grow the business and move through the investment time line for the end markets and the products |
| We are on a solid trajectory in 2024 to achieve approximately a 32% improvement or $225 million of additional profit over a two-year period |
| Starting on the left side, I'm pleased to report that Dana achieved strong sales in 2023 of $10.6 billion and nearly $400 million increase over last year, driven by strong customer demand, the rollout of our new business backlog across all end markets, including traditional ICE and e-programs, market share gains, and cost inflation recoveries |
| Our continuous year-over-year sales growth demonstrates the confidence and trust our customers have in Dana |
| Moving down to the center box, the two most relevant factors in improving profitability have been the roll-on of new and replacement programs at stronger margins and our ability to drive greater efficiencies across the entire organization |
| For example, we have been able to achieve fixed cost savings, increased asset utilization by ensuring that we are leveraging our resources in the most efficient way possible |
| Beginning on the top left, as we have seen less volatility in customer bill patterns, thus we have been able to accelerate actions to improve the overall efficiency of the business, driving increased profitability |
| Profit growth was up 20% year-over-year, leveraging organic incrementals of more than 40%, driven by the roll-on of new and replacement programs, improved efficiencies across the company, as customer order volatility continued to decrease |
| As I mentioned a few moments ago, the EV business contributes positive profit |
| Additionally, we continued to strengthen our capabilities across the company to improve our process technology and manufacturing capabilities |
| Simultaneously, we organically completed the build-out of our balanced product portfolio, including our complete in-house electrification capabilities that solidified Dana as an energy source agnostic supplier, providing class-leading products and systems to support ICE, hybrid and EV manufacturers |
| Our efforts continue to strengthen our foundation, which is driving strong momentum going into 2024 |
| A key point this year is that we expect higher sales, profits and free cash flow, driven by improved operating environment as supply chains and customer production schedules return to more normal conditions |
| We are continuing to drive synergies across the business, resulting in robust efficiency improvements |
| Not only did this positively impact our financial performance, but these actions also allowed us to differentiate in customer satisfaction, leading to a record sales backlog of $950 million over the next three years |
| I'm very proud of the collective Dana team's efforts in leveraging our core, meaning implementing synergies across the organization to drive earnings expansion and strongly positioning us towards our long-term sales and profit targets of over $1 billion of adjusted EBITDA in 2025 |
| Higher sales were primarily driven by improved demand in all of our end markets and recovery of cost inflation, primarily offset by lower volume due to the UAW strike |
| Our more efficient operations will allow us to capitalize on a more stable and predictable customer order patterns that we expect to see throughout 2024 |
| By driving natural synergies across our company, Dana is more capable than ever to continue to deliver profitable growth |
| As we look to 2024, we anticipate Dana's overall operating environment to improve due to the refreshed programs, our record new business backlog and ongoing company-wide efficiency improvements driving profitable growth |
| The higher profit and margin increase of about 110 basis points is a continuation of the improved efficiency and cost-saving actions that we began in 2023 |
| Consistent with our commercial vehicle and off-highway customers, our light vehicle customers recognize and are benefiting from Dana's complete in-house e-Propulsion capability |
| Finally, on the right of the page, as customer production stability continues to improve, it enables us to avoid numerous inefficiencies, eliminate waste and acutely leverage cost synergies across the company |
| This, coupled with the return to a more normalized number of new program launches after our record year in 2023 will enable us to lower launch costs |
| Full year adjusted EBITDA was $845 million, that is a $145 million higher than the previous year, primarily due to improved efficiencies aided by more stable customer order patterns and cost improvements across the company |
| As we will share with you a little later, Dana is gaining market share in commercial vehicle, which will help offset lower production levels in this market |
| Our collaborative approach and operational execution are appreciated by our customers, which I believe will continue to drive growth now and in the future |
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| Beginning with the fourth quarter, sales were $2.5 billion, $61 million lower than last year, driven by the impact of the UAW strike at several of our key customers |
| Finally, our commodity outlook is expected to be a headwind to sales of about $70 million due to lower recoveries, driven by falling steel and other commodity prices |
| Beginning on the left, traditional organic sales were $132 million lower, driven by the impact of the UAW strike at several of our light vehicle customers |
| Adjusted EBITDA on organic sales was $7 million lower than the fourth quarter of last year |
| Operationally, taking on significant market share on short notice in a stable market is difficult to accomplish |
| And while the restart of production occurred in an orderly fashion, the ramp-up in unit volume was a bit slower than expected |
| The net loss attributable to Dana was $39 million for the fourth quarter of 2023, due primarily to the impact of the UAW strike, lower earnings from equity method affiliates and the devaluation of the Argentine peso |
| Finally, due to falling commodity prices, commodity cost recovery in the fourth quarter was $8 million lower than last year |
| However, we expect EV adjusted EBITDA to be a headwind of about $20 million this year due to continued spending on engineering and associated costs for new EV programs |
| Second, the timing of the UAW strike drove lower sales in the early part of the fourth quarter, which drove lower cash collections later in the quarter |
| And finally, free cash flow was $136 million for the quarter and a use of $25 million for the full year, 235 -- or excuse me, $234 million lower than 2022 |
| Some of that's due to some of the production lost in the LV business last year from the UAW strike |
| It was very difficult to execute, but the entire Dana team pulled together, resulting in a near-flawless shutdown and restart across the company |
| Moving to the center of the page, the market for heavy vehicles will be lower compared to last year after several years of growth |
| We expect a $25 million profit headwind due to the true-up in pricing governed by our two-way commodity recovery -- that we have with our customers |
| Being on the left side of the slide, we expect commodities to be a slight headwind to sales and profit in 2024 |
| Higher engineering investment for EV programs drove the lower profit, offsetting the positive contribution from the higher sales |
| Finally, for this section, foreign currencies, as translated to the United States dollars will continue to be a slight headwind due to the relative strength of the dollar |
| Foreign currency translation on sales is expected to be a headwind of approximately $70 million with a profit impact of about $10 million |
| The other issue with sort of dimensioning that is it's a competitive issue for us |
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