Dana Incorporated Reports 2020 Financial Results, Including Strong New Business Backlog of $700 million; Issues Guidance for 2021
February 18, 2021 at 06:59 AM EST
MAUMEE, Ohio, Feb. 18, 2021 /PRNewswire/ --
Dana Incorporated (NYSE: DAN) today announced financial results for the fourth quarter and full-year 2020.
"Reflecting on 2020, it was truly a unique year and challenging environment. As a result of the hard work and dedication of the Dana team, we proved we could adapt and excel when faced with the most severe of business environments, delivering strong sales and rebounding margins as we ended the year with positive free cash flow," said James Kamsickas, Dana chairman and CEO. "We also further secured our leadership position in the e-Mobility space with 50 percent of our $700 million new business backlog coming from electric or hybrid programs, demonstrating our promise to lead in this fast-growing segment. Our success in rapidly penetrating the electric-vehicle market is a direct result of our strategy and the investments we have made over the past several years. As we move forward, we are well-positioned to capitalize on our momentum and realize the potential of our business."
Fourth-quarter 2020 Financial Results
Net income attributable to Dana was $40 million for the fourth quarter of 2020, compared with $85 million in the same period of 2019. The difference was primarily due to higher interest expense, one-time costs, and taxes. Partially offsetting these higher expenses was a $33 million gain on investments.
Reported diluted earnings per share was $0.27, compared with diluted earnings per share of $0.58 in the fourth quarter of 2019.
Adjusted EBITDA for the fourth quarter of 2020 was $192 million, compared with $226 million for the same period in 2019. This was a result of higher incremental costs associated with elevated demand and the nonrecurrence of a $17 million indirect tax expense recovery in Brazil in 2019, along with accelerated investments in electrification.
Diluted adjusted earnings per share were $0.24 in the fourth quarter of 2020, compared with $0.67 in the same period of the prior year. The lower year-over-year comparison was primarily due to lower earnings.
Operating cash flow in the fourth quarter of 2020 was $191 million, compared with $349 million in the same period of 2019.
Adjusted free cash flow was $46 million, compared with $218 million in the fourth quarter of 2019. Lower cash generation was driven by lower earnings, higher cash income taxes and interest, and lower cash generated from working capital as sales continued to recover from the COVID-related shutdowns.
Full-year 2020 Financial Results
The net loss attributable to Dana was $31 million, compared with net income of $226 million in 2019. The loss resulted mainly from the goodwill impairment charge recorded during the onset of the global pandemic. Reported diluted earnings per share was a loss of $0.21, compared with $1.56 in 2019.
Adjusted EBITDA for 2020 was $593 million, or 8.3 percent of sales. Margin variance to the prior year was driven by the rapid reduction in sales due to pandemic-related shutdowns in the second quarter outpacing cost-reduction actions and higher incremental costs to meet elevated demand during the rapid restart of operations in the third quarter.
Diluted adjusted earnings per share for 2020 were $0.39, compared with $3.06 in 2019, primarily reflecting lower year-over-year earnings and higher depreciation and interest.
The company reported operating cash flow of $386 million in 2020. Adjusted free cash flow was $60 million, or about 1 percent of sales, compared with $272 million, or 3 percent of sales in 2019. The impact of lower profit in 2020 was partially offset by targeted cash conservation measures, lower cash taxes, and lower capital expenditures.
2021 Guidance Ranges
2021 Financial Targets1
1Net income and diluted EPS guidance are not provided, as discussed below in Non-GAAP Financial Information.
Company Reinstates Quarterly Dividend and Extends Share Repurchase Authorization
Strategically Leveraging Renewable Energy Sources
To help meet this goal, Dana has signed a long-term agreement to add 300,000 megawatt-hours annually in renewable electricity to the grid beginning in 2022. In return, Dana will receive the equivalent quantity of renewable energy credits to address approximately 90 percent of the company's annual U.S. electricity consumption.
Dana to Host Conference Call at 9 a.m. Thursday, Feb. 18
An audio recording of the webcast will be available after 5 p.m. EST on Feb. 18 by dialing 1-855-859-2056 (U.S. or Canada) or 1-404-537-3406 (international) and entering conference I.D. 9259583. A webcast replay will also be available after 5 p.m. EST and may be accessed via Dana's investor website.
Non-GAAP Financial Information
Diluted adjusted EPS is a non-GAAP financial measure, which we have defined as adjusted net income divided by adjusted diluted shares. We define adjusted net income as net income (loss) attributable to the parent company, excluding any nonrecurring income tax items, restructuring charges, amortization expense, and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects. We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income. This measure is considered useful for purposes of providing investors, analysts, and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies. Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported under GAAP.
Free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities less purchases of property, plant, and equipment. Adjusted free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities excluding voluntary pension contributions less purchases of property, plant, and equipment. We believe these measures are useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Free cash flow and adjusted free cash flow are not intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported under GAAP. Free cash flow and adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.
We have not provided reconciliations of preliminary and projected adjusted EBITDA and diluted adjusted EPS to the most comparable GAAP measures of net income and diluted EPS. Providing net income and diluted EPS guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items that are included in net income and diluted EPS, including restructuring actions, asset impairments, and income tax valuation adjustments. Reconciliations of these non-GAAP measures with the most comparable GAAP measures for historical periods are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance. Please reference the "Non-GAAP Financial Information" accompanying our quarterly earnings conference call presentations on our website at www.dana.com/investors for our GAAP results and the reconciliations of these measures, were used, to the comparable GAAP measures.
Dana's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this news release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
About Dana Incorporated
Based in Maumee, Ohio, USA, the company reported sales of $7.1 billion in 2020 with 38,000 associates in 33 countries across six continents. Founded in 1904, Dana was named one of "America's Most Responsible Companies 2021" by Newsweek for its emphasis on sustainability and social responsibility. The company is driven by a high-performance culture that focuses on its people, which has earned it global recognition as a top employer, including "World's Best Employer" from Forbes magazine. Learn more at dana.com.
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