# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NYSE_DAN_2017/NYSE_DAN_2017.mmd` · pages 5-11_

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Dear Fellow Shareholders,

More than a century ago, Clarence Spicer recognized a critical need in the automobile market, conceived an innovative solution, charted a course of action, and selected bright, talented people to make his vision a reality.

While vehicle applications have expanded and market needs have evolved, Dana still follows our founder's blueprint for success. We put our customers first by leveraging proven processes while continuing to develop our culture of innovation to improve the performance of vehicles and industrial equipment around the world.

The framework we follow today is an enterprise strategy that we call "Shifting into Overdrive." Announced in late 2016, it directs our attention on five primary dimensions – leveraging the core, strengthening customer centricity, expanding global markets, commercializing new technology, and accelerating hybridization and electrification. Above all, we rely on the talents, dedication, and hard work of more than 30,000 people who are motivated to continue translating our strategy into real-world solutions for our customers.

This approach has proved its value quickly. Sales in 2017 increased by nearly 24 percent to \(7.2 billion. Adjusted EBITDA improved to \)835 million, expanding margin by 30 basis points to 11.6 percent of sales. Notably, we have grown our earnings each year since 2015.

As indicators point toward further growth across all the markets we serve – passenger vehicles, commercial trucks, and off-highway equipment – we will continue to implement this strategy to best serve our customers, shareholders, employees, and the communities where we operate.

## Focused on the Customer

Dana has earned its position as a trusted, top-tier supplier by collaborating with customers to develop, integrate, and support the innovations needed to improve vehicle performance and efficiency.

We have made concrete efforts to serve our customers by positioning our assets near our customers' operations. For instance, we celebrated the grand opening of new manufacturing facilities in Toledo, Ohio, and Keysborough, Australia, that are located mere miles from customer sites.

Our success in collaborating with our customers is reflected in the awards we earned last year for commitment to quality, on-time delivery, and sustainability. Ford, Volvo, FCA, MAN, Caterpillar, and Manitou represent the dozens of customers that recognized Dana in 2017 for the contributions we make to their businesses.

This trust has led to Dana playing a key role in major upcoming program launches and new business wins. Over the next few years, Dana will deliver advanced technologies for the new Jeep \( ^{®} \)  Wrangler, Ford Ranger, Class 4 and 5 Chevy Silverado, Kalmar lift trucks, Liebherr telehandlers, and numerous other new and revitalized vehicle programs.

Our focus on customer centricity has a profound effect on our financial performance. At the start of 2018, our three-year sales backlog stood at $800 million, a 7 percent improvement over the three-year backlog from 12 months earlier.

## Committed to Innovation

Our boundless energy and ingenuity provide the spark that fills our pipeline with products that are establishing new milestones for performance, efficiency, comfort, and safety.

We operate 22 technology centers worldwide that are strategically positioned near our customers. These technology centers are fully integrated so engineers can work together to develop and test global programs with shared vehicle architectures, as well as highly tailored solutions for individual applications that meet specific market requirements.

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Engineering is at the heart of what we do, which is why we elevated our annual investment in this critical activity by 12 percent, to $220 million, in 2017. This was the eighth consecutive year we devoted increased resources to our engineering capabilities.

Last year, Dana reached the milestone of 10,000 patents issued to the company's inventors. The 10,000 \( ^{th} \)  patent is for a Long \( ^{®} \)  heat exchanger with an integrated thermal bypass valve that helps to increase fuel efficiency.

Our advanced technologies have been recognized for both their ingenuity as well as the real-world value they deliver. Dana has been selected as a finalist for the Automotive News PACE Award for seven consecutive years, most recently for a highly engineered constant-velocity joint for heavy-duty pickup trucks that improves efficiency while reducing weight.

Dana's ability to engineer is increasingly important as vehicle manufacturers are driven by market demand and regulatory pressures to develop hybrid and electric applications. Dana already has a considerable portfolio of market-ready solutions to support this trend, including a Spicer \( ^{®} \)  electric motor-driven gearbox for high-speed battery electric vehicles and an extensive range of Long \( ^{®} \) -branded thermal-management products for electric and hybrid vehicles.

We have also announced the development of Spicer \( ^{®} \)  Electrified \( ^{™} \)  e-axles for electric transit buses and city delivery vehicles, all-wheel-drive e-axles, and integrated wheel-drive and motor technologies for electric-powered aerial work platforms.

## Global Strength, Local Execution

Today, Dana has 139 major facilities located on six continents for manufacturing, distribution, and engineering support, and we are making considerable investments to broaden our global footprint to support long-term business. We broke ground on a new gear manufacturing facility in Győr, Hungary, and an axle facility in Chongqing, China, to support new business in the region.

We showed positive sales growth in all four of our global sales regions, and the company stands ready to take advantage of improving markets as they continue to show signs of rejuvenation.

## Reliance on Proven Processes

By leveraging our core principles of safety, customer focus, lean manufacturing, employee engagement, built-in quality, and continuous improvement, we ensure that we will deliver the competitive advantage our customers expect.

The success of this reasoned, consistent approach to our daily activities is most readily apparent in the integration of four recent acquisitions into our business. While they offer widely varying product lines to different markets across multiple regions, the operations we added from the Brevini Group, U.S. Manufacturing, Magnum Gaskets \( ^{®} \) , and Sifco S.A. are rapidly being assimilated into our processes and culture, adding to sales growth and showing margin improvement ahead of schedule.

## Driven to Find a Better Way

Dana has a long, proud history of supplying the vehicle and industrial markets with smart, durable solutions, and 2017 was a watershed year that will help to position us for success in the future.

We are growing faster than expected. Projected sales of \(7.6 billion in 2018 and \)7.9 billion in 2019 are forecast to provide healthy margins. We are delivering shareholder value through an increased quarterly dividend and a program to repurchase up to $100 million in common shares over the next two years.

These projections show the power of a committed, global team that employs a proven, comprehensive strategy to anticipate and drive change.

I join the Board of Directors and my colleagues around the world in thanking you for your support as we continue to provide our customers with the advanced technologies and proven solutions that are enhancing our reputation as a customer-focused engine of innovation.

Sincerely,

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James K. Kamscikas
President and Chief Executive Officer