“Dana had an excellent 2016 as the team executed our plan very effectively. We successfully launched multiple customer vehicle programs and improved our profitability through cost performance, despite having to overcome significant weakness in certain key end-markets,” said James Kamsickas, Dana president and CEO. “Our core business continues to expand while we have efficiently grown inorganically by acquiring businesses that align with our enterprise strategy.”
Fourth-Quarter 2016 Financial Results
Sales for the fourth quarter of 2016 totaled $1.45 billion, compared with $1.38 billion in same period of 2015, representing a 5 percent increase. The company said this increase was largely attributable to higher light-vehicle end-market demand in North America, Europe and Asia, as well as new business gains. The benefits from the stronger light-vehicle market were partially offset by weaker demand in the commercial vehicle and off-highway markets.
Net income attributable to Dana for the fourth quarter of 2016 was $485 million, compared with a loss of $82 million in the fourth quarter of 2015. The company’s fourth quarter 2016 results included a $490 million tax benefit compared with a tax expense of $92 million in the same period of 2015. Net income in 2016 includes a tax benefit for the release of valuation allowance against U.S. deferred tax assets of $501 million, offset in part by a $23 million net addition to valuation allowances provided in other countries. These benefits to net income were reduced by a pre-tax charge of $80 million ($52 million after-tax) from the divestiture of subsidiaries. The fourth quarter of 2015 included nonrecurring tax and equity investment impairment charges of $118 million.
Reported diluted earnings per share were $3.34 in the fourth quarter of 2016, compared with a loss per share of $0.54 in 2015.
Adjusted EBITDA for the fourth quarter of 2016 was $166 million, a $37 million increase over the same period last year. This provided an 11.5 percent margin, which was a 210 basis point improvement over the fourth quarter of 2015. Profit in 2016 benefited from higher sales volume and pricing recoveries, transactional foreign currency impacts, and improved cost performance, mainly in the Commercial Vehicle segment.
Excluding the effects of certain nonrecurring items such as the above-mentioned income tax valuation allowance adjustments, loss on divestitures, and impairment charges, diluted adjusted earnings per share in the fourth quarter of 2016 were 59 cents, compared with 34 cents in the same period last year. This was driven primarily by a year-over-year fourth-quarter 2016 earnings improvement, as well as a lower share count.
Full-Year 2016 Financial Results Sales for 2016 were $5.83 billion, $234 million lower compared with 2015, primarily due to unfavorable currency translation that lowered sales by $173 million. Strong market demand, pricing, and new business wins in the company’s Light Vehicle Driveline and Power Technologies business units provided a combined organic increase in sales of $322 million. These gains were more than offset by currency headwinds and lower demand in commercial vehicle and global off-highway markets.
Net income attributable to Dana for the full-year 2016 was $640 million, compared with $159 million in 2015. Net income in 2016 benefited from the above-mentioned $478 million fourth-quarter net release of tax valuation allowances offset in part by after-tax charges of $52 million on divestitures and loss on debt extinguishment of $11 million. Net income in 2015 was impacted by net non-recurring charges of $68 million.
Excluding the impact of these non-recurring items in both years, net income attributable to Dana was $225 million in 2016, compared with $227 million in 2015. Adjusted EBITDA for 2016 was $660 million, or 11.3 percent of sales, 50 basis points higher than 2015, as all product groups improved margins in 2016. Foreign currency effects reduced adjusted EBITDA by $20 million, with lower sales volume net of pricing reduced earnings by $19 million. Higher end-market demand, new customer programs, and cost recoveries in the Light Vehicle Driveline and Power Technologies businesses, was offset by weaker volumes in the commercial vehicle and off-highway markets. A combination of strong cost performance and gains associated with the recently divested Dana Companies subsidiary contributed $47 million to adjusted EBITDA, which more than offset the currency and volume headwinds. The benefit to net income from increased adjusted EBITDA was offset by higher restructuring expense.
Diluted earnings per share were $4.36 for 2016, compared with 99 cents in 2015, primarily reflecting a higher level of non-recurring tax benefits in 2016 discussed above. Diluted adjusted earnings per share for 2016 were $1.94, compared with $1.74 in 2015, a 12 percent increase reflecting a lower share count from execution of the company’s share repurchase program.
“We look forward to 2017, which will be another year of important transformation as we launch new programs across the company and convert our new business backlog into production,” said Kamsickas. “Separately, we are off to a great start by completing the Brevini acquisition in less than three months, after reaching a definitive agreement.”