# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NYSE_DAN_2018/NYSE_DAN_2018.mmd` · pages 5-11_

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Dear Fellow Shareholders,

Dana Incorporated has been transforming the mobility industry since its founding in 1904. From the invention of the encased universal joint, which literally unchain the industry by eliminating sprockets and chains, to the development of fully-integrated propulsion systems for today's most complex electrified powertrains, we remain a leader in revolutionizing power conveyance.

This was a landmark year of transformation for Dana. The company achieved record annual sales, profit, and margin performance in 2018, and we increased free cash flow by more than 50 percent, while at the same time organically and inorganically establishing e-Propulsion capability to support each of our end markets. Dana again reached double-digit growth in sales, up 13 percent to more than \(8.1 billion, and adjusted EBITDA of \)957 million, up 15 percent. Adjusted EBITDA margin increased to 11.8 percent, and Dana declared cash dividends of \(0.40 per share during 2018, a 67 percent increase over 2017.

This across-the-board improvement was driven by a number of factors. First and foremost was our people – and their relentless passion for providing exceptional products and service to our customers. Second, we converted on our strong sales backlog, which we secured through new business awards. And third, the continued execution and enhancement of the Dana operating model served as the catalyst for shared cross-company teamwork and goal attainment.

One of Dana's most notable achievements during 2018 was its evolution into a mobility supply company that is truly energy-source agnostic by establishing a complete portfolio of electrodynamic solutions. The development of new technologies, along with strategic acquisitions, enables us to offer in-house driveline systems to our customers as they launch internal-combustion, hybrid-electric, plug-in hybrid, and full battery-electric vehicles.

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Dana acquires a majority stake in TM4 Inc.

Dana positioned itself as a leader in e-Propulsion through a number of strategic actions. We completed a joint-venture partnership with Hydro-Québec, one of the world's largest hydroelectric power producers, by acquiring a majority share in TM4 Inc., a manufacturer of high-voltage, permanent magnet motors, inverters, power electronics, and control systems for multiple vehicle markets. With this acquisition, Dana is the only supplier with complete in-house gearbox, motor, inverter, and thermal-management capability for fully-integrated e-Drive systems.

We also laid the groundwork for the strategic acquisition of the SME Group, which we finalized in January 2019. The addition of SME's low-voltage electrodynamic components to Dana's off-highway product portfolio augments the breadth of our e-Drive offering, enabling us to address the full-spectrum of motor requirements for our customers.

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Finally, we signed a definitive agreement to purchase the Drive Systems segment of the Oerlikon Group, a leading global supplier of high-precision gearing and shifting solutions for traditional and electric vehicles. This acquisition, finalized in February 2019, expands our presence in the off-highway and light-vehicle markets, enhancing our electrification technology portfolio and increasing our footprint in key growth regions. Together, these three acquisitions added more than 5,000 talented people who are committed to excellence in serving our customers.

At the same time, the Dana team continued to innovate and develop electrified offerings, revealing a range of new products suitable for light, commercial, and off-highway vehicles, including our award-winning Long \( ^{®} \)  ThermaTEK \( ^{™} \)  insulated-gate bipolar transistor cooling solutions.

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## Insulated-Gate Bipolar Transistor (IGBT) Cooling Module

Considering that a majority of our business supports traditional driveline applications, we expanded our core offerings. In 2018, we increased our investment in engineering by nearly 15 percent and, as a result, launched a number of technologies designed to maximize efficiency and improve overall vehicle performance. Examples include our ultra-efficient AdvanTEK \( ^{®} \)  axle technology for light vehicles, the Spicer \( ^{®} \)  S172 series single drive axle for Class 7 and 8 commercial vehicles, and the Spicer \( ^{®} \)  TE50 powershift transmission for the off-highway market.
Our customers recognized these outstanding innovations and our team's commitment to collaboration, quality, on-time delivery, and sustainability with multiple supplier excellence awards. The trust we have built with our customers and our proven powertrain leadership has allowed us to play a major role in upcoming program launches for Daimler, Fiat Chrysler, Ford, General Motors, Hino, Hyster-Yale, Jaguar Land Rover, John Deere, Navistar, and PACCAR, to name a few.

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To support our growing customer base, we have continued to expand our operations. Our new facility in Yancheng, China, broadened our thermal-management presence in the region to support both conventional and electrified vehicles. In Europe, our new Gyôr, Hungary, facility gives us the ability to manufacture advanced gear technologies, as well as complete axle assemblies. Meanwhile, various acquisitions help us expand our presence in key growth markets such as China and India.

As we realize new business borne from strong customer relationships, an enhanced technology portfolio that addresses trends in electrification, geographic expansion across all mobility markets, and accretive benefits of our strategic acquisitions, Dana holds significant growth potential. As we look to 2019, we plan to build upon our momentum. With sales projected at more than \(9.1 billion, we will mark the third consecutive year of gains in revenue of nearly \)1 billion, equating to a three-year increase of more than 50 percent since 2016.

All of this is only possible through the teamwork and commitment of our people. Decades ago, Dana introduced the tagline "People Finding a Better Way." It described a culture that had been with the company from the very beginning – one that envisions partnering with customers and suppliers to solve problems and meet new challenges. It put people at the center of all we do to ensure that the spark that was ignited in 1904 continues to burn for the next 115 years. This means keeping our people safe and cultivating a high-performance culture by increasing our efforts in critical areas, including diversity and inclusion, sustainability, cybersecurity, and so much more.

Together with our Board of Directors and the global Dana team, I want to thank you for your continued support as we focus on executing on our strategy to deliver maximum shareholder value.

My personal best,

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James K. Kamsickas
President and Chief Executive Officer

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