Dana Achieves Record Annual Sales, Profit And Margin

Dana Inc. has announced strong financial results for 2018 and affirmed 2019 guidance.

“Dana achieved record annual sales, profit and profit margin performance in 2018, and we increased adjusted free cash flow by more than 50 percent. At the same time, we organically and inorganically established complete e-Propulsion capability to support all our end markets,” said James Kamsickas, Dana president and CEO. “Through the outstanding efforts and commitment of our associates and the support of our customers, we have achieved exceptional results and expect to continue this strong trajectory in 2019, including increasing sales by nearly $1 billion for the third consecutive year.”

Fourth-quarter 2018 Financial Results

Sales for the fourth quarter of 2018 totaled $1.973 billion, compared with $1.837 billion in the same period of 2017, representing a 7 percent improvement. The increase was largely attributable to higher end-market demand in all business units, conversion of sales backlog and favorable currency translation.

Dana reported net income of $100 million for the fourth quarter of 2018, compared with a net loss of $104 million in the same period of 2017. The company said the increase was primarily due to a $186 million charge related to the enactment of U.S. tax reform in the fourth quarter of 2017 and increased operating earnings associated with higher sales in the fourth quarter of 2018.

Reported diluted earnings per share were 69 cents, compared with a loss of 74 cents in the fourth quarter of 2017.

Adjusted EBITDA for the fourth quarter of 2018 was $223 million, compared with $197 million for the same period last year. Profit in the fourth quarter of 2018 benefited from higher end-market demand, conversion of the sales backlog, and acquisition synergies, partially offset by higher commodity costs.

Diluted adjusted earnings per share were 71 cents in the fourth quarter of 2018, compared with 62 cents in the same period last year.

Full-year 2018 Financial Results

Sales for 2018 were $8.143 billion, $934 million higher than 2017, primarily due to strong end-market demand, conversion of sales backlog, and to a lesser extent, acquisitions and recovery of material inflation.

Net income in 2018 was $427 million, compared with net income of $111 million in 2017, which included the fourth-quarter non-recurring tax item in 2017 referenced above.

Reported diluted earnings per share were $2.91, compared with 71 cents in 2017.

Adjusted EBITDA for 2018 was $957 million, or 11.8 percent of sales, 20 basis points higher than 2017. Stronger end-market demand more than offset the margin headwind attributable to the effects of higher raw material prices and the associated material recovery reflected in sales.

Diluted adjusted earnings per share for 2018 were $2.97, compared with $2.52 in 2017, an 18 percent increase, primarily reflecting higher year-over-year earnings improvement.

Company Affirms 2019 Full-year Financial Targets

The company affirmed guidance for Dana as currently consolidated, as well as guidance resulting from the completion of the acquisition of the Drive Systems segment of the Oerlikon Group (ODS), which is expected to close by March 1. Guidance ranges are:

Sales of $8.250 billion to $8.550 billion; or $8.950 billion to $9.350 billion including ODS;
Adjusted EBITDA of $995 million to $1.055 billion, an implied adjusted EBITDA margin of approximately 12.2 percent at the midpoint of the range; $1.085 billion to $1.165 billion including ODS, an implied adjusted EBITDA margin of approximately 12.3 percent at the midpoint of the range;
Diluted adjusted EPS1 of $2.90 to $3.30; $2.95 to $3.45 including ODS;
Operating cash flow of approximately 6.5 percent of sales; 5.5 percent including ODS; and
Adjusted free cash flow of approximately 4.0 percent of sales; 3.0 percent including ODS.

“Strong customer demand and delivery of our sales backlog, combined with our recent acquisitions, allowed us to achieve a record performance in 2018,” said Jonathan Collins, executive vice president and CFO of Dana. “We have a positive outlook for 2019 due to stable end-markets, our solid sales backlog and accretive acquisitions, all of which we expect to provide us a third consecutive year of double-digit sales and profit growth.”