- Adjusted EBITDA of $190 million, 11 percent of sales
- Free cash flow of $88 million, liquidity of $1.4 billion
- Announced strategic relationship to develop continuously variable planetary transmissions
- Introduced new technologies aimed at industry-leading efficiency, reliability, and performance
- Selected as a 2013 Automotive News PACE Awards finalist for Spicer ® Diamond Series™ driveshaft
MAUMEE, Ohio, Oct. 26, 2012 /PRNewswire/ -- Dana Holding Corporation (NYSE: DAN) today announced results for the third quarter of 2012.
Sales for the quarter were $1.7 billion, a decrease of 12 percent compared with 2011. Currency lowered sales by $120 million. Softening North America demand across the company's significant commercial vehicle customers and continued weakness in South America further impacted year-to-year sales comparisons by approximately $95 million.
The company recorded third-quarter net income of $56 million. This compares with $110 million for the same period in 2011, which included a $60 million gain from the sale of certain equity affiliate investments. Year-to-date net income was $212 million, compared with $148 million for the same period last year. Net income for 2011 also included a $53 million charge for the extinguishment of debt related to refinancing activities completed early that year.
The company reported adjusted EBITDA of $190 million in the quarter, or 11 percent of sales, compared with 10.2 percent for the same period in 2011. Diluted adjusted earnings per share (EPS) were $0.37, compared with $0.45 in the third quarter of 2011. In addition to lower earnings in the current quarter, 2012 EPS was also impacted by higher tax expense reflecting jurisdictional mix.
Free cash flow for the quarter was $88 million, compared with $50 million for the same period last year. With liquidity of $1.4 billion and net cash of $68 million at Sept. 30, 2012, Dana continues to have a strong financial position.
"We are pleased to report solid financial results for the third quarter, despite choppy demand patterns and rapid softening in certain of our end markets, notably North America Class 8 commercial vehicle production," said Roger J. Wood, Dana president and chief executive officer. "Dana has continued to respond quickly to changing market conditions with disciplined cost and investment actions, generating positive cash flow and improving adjusted EBITDA margin over this time last year.
Sales for the first nine months of the year were $5.6 billion, $34 million lower than 2011. Adjusted EBITDA for the first three quarters was $627 million, or 11.1 percent of sales, representing a 90 basis point improvement over margin performance a year ago. Year-to-date, free cash flow totaled $158 million, excluding the $150 million voluntary U.S. pension plans contribution in the first quarter, $99 million higher than 2011.
Retained manufacturing activities from the 2010 sale of Dana's Structural Products business completed final operations in the third quarter of 2012. Accordingly, for financial reporting purposes, the results of operations relating to the Structural Products business have been reclassified within previously reported consolidated results of operations as a discontinued operation. Adjusted EBITDA and associated margin as a percent of sales are inclusive of sales and adjusted EBITDA of the Structural Products business.
New Strategic Relationship
While Dana continues to execute its operational improvement plan, its future strategy includes several growth initiatives directed at strengthening the competitiveness of the company's products through innovation and technology, geographic expansion, aftermarket opportunities, and selective acquisitions.
In September, Dana announced the formation of strategic relationships with Allison Transmission Holdings Inc. (NYSE: ALSN) and Fallbrook Technologies Inc. to develop, manufacture, and commercialize high-efficiency transmissions and drivetrain products for passenger vehicles, commercial vehicles, and off-highway equipment. These next-generation technologies will be designed to increase fuel efficiency, reduce emissions, and improve overall vehicle performance.
New Technologies Introduced
During the third quarter, Dana introduced several new technologies, including:
•Spicer® Model 300 axles featuring AdvanTEK® gearing. This axle is the largest yet in the series of axles for Class 1 through 5 vehicles and extends the premium benefits of these axles for use in the light commercial-vehicle market, including heavy-duty pickups.
•Tire pressure management technology for line-haul tractors. This is the first internal axle system of its kind to automatically maintain optimum inflation for drive and steer axles, significantly increasing vehicle fuel efficiency and tire life, while reducing maintenance. Dana will be the first in the market to offer fully integrated, electronically controlled systems specifically engineered for the more complex demands of tractor units.
•Efficient, robust Spicer ® Diamond Series™ driveshaft technology optimized for use on light commercial vehicles such as pick-up trucks. Using Dana's proprietary hydroforming manufacturing process, the driveshaft is shaped to have an expanded center. This allows it to run at higher speeds while offering increased strength and up to a 5 percent reduction in weight over straight aluminum tube driveshaft designs.
The Spicer Diamond Series driveshaft was recognized earlier this month as a finalist for the 2013 Automotive News PACE Awards.
2012 Financial Guidance
Dana revised its guidance for full-year sales, adjusted EDITDA, and diluted adjusted EPS largely reflecting further expected reductions in commercial vehicle production in North America as well as softening construction demand in Europe. Adjusted EBITDA as a percent of sales remains unchanged, while free cash flow and capital spending targets have also been revised.
Current guidance for the full year is as follows:
•Sales are projected at $7.2 billion to $7.3 billion, compared with previous guidance of $7.5 billion to $7.6 billion;
•Adjusted EBITDA is projected to be $780 million to $800 million, compared with previous guidance of $820 million to $840 million;
•Adjusted EBITDA as a percent of sales is forecast to be approximately 11 percent, consistent with previous guidance;
•Diluted adjusted EPS is expected to total $1.75 to $1.82 per share, compared with previous guidance of total $1.94 to $2.01 per share;
•Free cash flow for the year is projected at $240 million to $260 million, excluding the special one-time $150 million pension contribution; and
•Capital spending is expected to total $160 million to $170 million, compared with previous guidance of $210 million to $230 million.
Not a bad QTR, considering unmet expectations many other companies seem to be experiencing. A penny below what Value Line expected to see. Share buy-back is welcome news. Good to hold and/or accumulate on SP weakness.