MAUMEE, Ohio – Dana Holding Corp. has announced its fourth-quarter and full-year results for 2014.
Sales for the fourth-quarter of 2014 totaled $1.58 billion, compared with $1.62 billion for the same period a year ago, with unfavorable currency lowering sales by $106 million. Adjusting for the effects of currency, sales increased $64 million or 4 percent, driven by higher end-market demand and cost-recovery initiatives.
In the fourth quarter of 2014, Dana says it completed a number of important initiatives to further enhance shareholder value. In December 2014, the company entered into an agreement to divest its Venezuela operations to an independent and locally operated company. This transaction was successfully completed in January 2015, addressing the economic volatility and on-going uncertainty associated with operating in that country. A net charge of $77 million was recognized in the fourth quarter of 2014 relating to this divestiture.
During the quarter, the company also completed a voluntary settlement program with deferred vested salaried participants in its U.S. pension plans that reduced pension benefit obligations by approximately $170 million. This program, along with other actions, resulted in $42 million of pension settlement charges in the fourth quarter.
Finally, Dana completed a refinancing of long-term debt obligations, extending the company’s debt maturities and lowering annual interest costs. Following this refinancing, the company’s next significant debt maturity is in the year 2021. The fourth-quarter 2014 financial results include a loss on debt extinguishment of $19 million associated with this action.
Net income attributable to Dana for the fourth quarter of 2014 was $109 million, compared with $42 million in 2013. The company’s 2014 results included a $179 million tax benefit from the release of certain U.S. deferred tax valuation allowances, partially offset by the $138 million of non-recurring charges highlighted above. These items are excluded from Dana’s adjusted EBITDA and diluted adjusted earnings per share.
Adjusting for these non-recurring items, net income attributable to Dana for the fourth quarter of 2014 was $68 million, an increase of$26 million compared with a year ago. The company said this increase in net income was principally driven by improved gross profit and lower SG&A, restructuring, amortization, and income tax expenses in the quarter. Partially offsetting these improvements was a higher loss from discontinued operations.
Diluted adjusted earnings per share in the fourth quarter of 2014 were 53 cents, an increase of 8 percent, four cents higher than the same period last year.
Full-Year 2014 Financial Results
Sales for the year were $6.6 billion, $152 million lower compared with a year ago, with unfavorable currency accounting for more than $200 million of the change. Cost-recovery actions increased sales by $65 million. Volume and mix was largely neutral compared with last year, as stronger demand in North American and European light- and commercial-vehicle markets were more than offset by weaker demand in global off-highway and South American medium- and heavy-truck markets.
Net income attributable to Dana for the full-year 2014 was $319 million, which included a net benefit of $41 million from the fourth quarter’s non-recurring items previously highlighted. Adjusting for the effect of these non-recurring items, net income attributable to Dana was $278 million, compared with $244 million in 2013. Dana said the increase in net income was principally driven by improved gross profit and lower amortization, restructuring, and income tax expenses, partially offset by higher interest expense and loss from discontinued operations.
Diluted adjusted earnings per share for 2014 increased 12 percent to $1.99, compared with $1.77 in 2013, reflecting mostly a lower share count from the continued execution of the company’s share repurchase program.
“We are pleased with our 2014 results, especially given a number of end-market challenges and currency volatility we encountered during the course of the year. Once again, we ended the year with record adjusted EBITDA margins, making it our sixth consecutive year of margin growth. We continue to generate strong free cash flow, providing us the ability to continue to invest in the business for the future and return shareholder value through execution of our share repurchase and dividend programs,” said President and CEO Roger Wood.
“As we look forward in 2015, we’re excited about the future and continue to execute initiatives to maintain our flexibility and minimize risk – the successful divestiture of the business in Venezuela being one recent example. We remain focused on and investing in technology and innovation, and our value-added products and global capabilities are driving our increasing sales backlog. While currency volatility is likely to remain front and center for the foreseeable future, we believe our efforts and focus will allow Dana to continue to grow its top line in excess of market demand over the long term,” he added.
