EX-99.1 2 d695159dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

IMMEDIATE

Dana Incorporated Achieves

Record Annual Sales, Profit, and Margin

Full-Year Highlights

 

  •  

Record sales of $8.143 billion, an increase of $934 million or growth of 13 percent, compared with 2017

 

  •  

Net income attributable to Dana of $427 million; diluted EPS of $2.91

 

  •  

Record adjusted EBITDA of $957 million, an increase of $122 million, or growth of 15 percent

 

  •  

Record margin of 11.8 percent of sales, an expansion of 20 basis points

 

  •  

Record diluted adjusted EPS of $2.97, an improvement of 18 percent over 2017

 

  •  

Operating cash flow of $568 million

 

  •  

Cash dividends of $0.40 per share declared in 2018, a 67 percent increase over dividends declared in 2017

 

  •  

Adjusted free cash flow of $243 million, a 51 percent improvement over 2017

 

  •  

Second consecutive year of double-digit sales growth, adjusted EBITDA, and adjusted free cash flow growth

 

  •  

Company expects to achieve nearly $1 billion in sales growth for third consecutive year in 2019; strong sales backlog of $700 million through 2021

 

  •  

Acquisition of SME Group enhances electromobility capabilities

 

  •  

Company expects to complete acquisition of Oerlikon Drive Systems by March 1, 2019

MAUMEE, Ohio, USA, Feb. 15, 2019 – Dana Incorporated (NYSE: DAN) today 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 chief executive officer. “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 one billion dollars 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 increase was primarily due to a $186 million charge related to the enactment of U.S. tax reform in the fourth quarter 2017, and increased operating earnings associated with higher sales in the fourth quarter of 2018.

 

1

Reported diluted earnings per share were $0.69, compared with a loss of $0.74 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 $0.71 in the fourth quarter of 2018, compared with $0.62 in the same period last year.

Operating cash flow in the fourth quarter of 2018 was $331 million, compared with $193 million in the same period of 2017. Adjusted free cash flow was $241 million, compared with $51 million in the fourth quarter of 2017, driven by higher earnings and lower capital spending, partially offset by higher working capital requirements to support new program launches in 2018.

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 $0.71 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.

The company reported operating cash flow of $568 million in 2018, an improvement of $14 million compared with 2017. Adjusted free cash flow was $243 million, or 3 percent of sales, compared with $161 million, or 2 percent of sales in 2017. The improvement was driven by higher earnings and lower capital spending, partially offset by higher working capital requirements to support sales growth.

 

2

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 to $8.550 billion; or $8.950 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.

 

1 

Net income and diluted EPS guidance are not provided, as discussed below in Non-GAAP Financial Information.

“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 chief financial officer 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.”

Dana to Host Conference Call at 9 a.m. Today

Dana will discuss its full-year and fourth-quarter results in a conference call at 9 a.m. EST today. Participants may listen to the audio portion of the conference call either through audio streaming online or by telephone. Slide viewing is available online via a link provided on the Dana investor website: www.dana.com/investors. U.S. and Canadian locations should dial 1-888-311-4590 and international locations should call 1-706-758-0054. Please enter conference I.D. 2947329 and ask for the “Dana Incorporated’s Financial Webcast and Conference Call.” Phone registration will be available starting at 8:30 a.m. EST.

An audio recording of the webcast will be available after 5 p.m. EST on Feb. 15 by dialing 1-855-859-2056 (U.S. or Canada) or 1-404-537-3406 (international) and entering conference I.D. 2947329. 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

This release refers to adjusted EBITDA, a non-GAAP financial measure which we have defined as net income before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefit costs, and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by

 

3

securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for income before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

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.

Adjusted free cash flow is a non-GAAP financial measure, which we have defined as cash provided by (used in) operating activities excluding voluntary pension contributions, less purchases of property, plant, and equipment. We believe this measure is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Adjusted free cash flow is neither intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported under GAAP. 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, where used, to the comparable GAAP measures.

Forward-Looking Statements

Certain statements and projections contained in this news release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,”

 

4

“plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

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

Dana is a world leader in highly engineered solutions for improving the efficiency, performance, and sustainability of powered vehicles and machinery. Dana supports the passenger vehicle, commercial truck, and off-highway markets, as well as industrial and stationary equipment applications. Founded in 1904, Dana employs more than 30,000 people in 33 countries on six continents who are committed to delivering long-term value to customers. The company reported sales of $8.1 billion in 2018. Based in Maumee, Ohio, USA, the company’s operations in Northwest Ohio and Southeast Michigan were selected as a Top Workplace for the last three years by The (Toledo) Blade and its research partner, Energage. For more information, please visit www.dana.com. ###

 

Media Contact:    Jeff Cole
   +1-419-887-3535
   jeff.cole@dana.com
Investor Contact:    Craig Barber
   +1-419-887-5166
   craig.barber@dana.com

 

5

DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Three Months Ended December 31, 2018 and 2017

 

(In millions, except per share amounts)    Three Months Ended
December 31,		  
     2018     2017  

Net sales

    $ 1,973     $ 1,837  

Costs and expenses

     

Cost of sales

      1,717       1,581  

Selling, general and administrative expenses

      116       131  

Amortization of intangibles

      2       2  

Restructuring charges, net

      8    

Loss on disposal group held for sale

        (27 ) 

Other expense, net

      (10 )      (4 ) 
  

 

 

    

 

 

  

Earnings before interest and income taxes

      120       92  

Interest income

      3       3  

Interest expense

      25       23  
  

 

 

    

 

 

  

Earnings before income taxes

      98       72  

Income tax expense

      3       189  

Equity in earnings of affiliates

      11       7  
  

 

 

    

 

 

  

Net income (loss)

      106       (110 ) 

Less: Noncontrolling interests net income (loss)

      7       (3 ) 

Less: Redeemable noncontrolling interests net loss

      (1 )      (3 ) 
  

 

 

    

 

 

  

Net income (loss) attributable to the parent company

    $ 100     $ (104 ) 
  

 

 

    

 

 

  

Net income (loss) per share available to common stockholders

     

Basic

    $ 0.69     $ (0.74 ) 

Diluted

    $ 0.69     $ (0.74 ) 

Weighted-average shares outstanding - Basic

      144.8       145.4  

Weighted-average shares outstanding - Diluted

      145.8       145.4  

DANA INCORPORATED

Consolidated Statement of Operations

For the Year Ended December 31, 2018 and 2017

 

(In millions, except per share amounts)    Year Ended
December 31,		  
     2018     2017  

Net sales

    $ 8,143     $ 7,209  

Costs and expenses

     

Cost of sales

      6,986       6,143  

Selling, general and administrative expenses

      499       508  

Amortization of intangibles

      8       11  

Restructuring charges, net

      25       14  

Impairment of indefinite-lived intangible asset

      (20 )   

Gain (loss) on disposal group held for sale

      3       (27 ) 

Other expense, net

      (29 )      (16 ) 
  

 

 

    

 

 

  

Earnings before interest and income taxes

      579       490  

Loss on extinguishment of debt

        (19 ) 

Interest income

      11       11  

Interest expense

      96       102  
  

 

 

    

 

 

  

Earnings before income taxes

      494       380  

Income tax expense

      78       283  

Equity in earnings of affiliates

      24       19  
  

 

 

    

 

 

  

Net income

      440       116  

Less: Noncontrolling interests net income

      13       10  

Less: Redeemable noncontrolling interests net loss

        (5 ) 
  

 

 

    

 

 

  

Net income attributable to the parent company

    $ 427     $ 111  
  

 

 

    

 

 

  

Net income per share available to common stockholders

     

Basic

    $ 2.94     $ 0.72  

Diluted

    $ 2.91     $ 0.71  

Weighted-average shares outstanding - Basic

      145.0       145.1  

Weighted-average shares outstanding - Diluted

      146.5       146.9  

DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Three Months Ended December 31, 2018 and 2017

 

(In millions)    Three Months Ended
December 31,		  
     2018     2017  

Net income (loss)

    $ 106     $ (110 ) 

Other comprehensive income (loss), net of tax:

     

Currency translation adjustments

      2       (12 ) 

Hedging gains and losses

      21       (17 ) 

Investment and other gains and losses

        2  

Defined benefit plans

      (11 )      (35 ) 
  

 

 

    

 

 

  

Other comprehensive income (loss)

      12       (62 ) 
  

 

 

    

 

 

  

Total comprehensive income (loss)

      118       (172 ) 

Less: Comprehensive (income) loss attributable to noncontrolling interests

      (7 )      1  

Less: Comprehensive loss attributable to redeemable noncontrolling interests

      6       2  
  

 

 

    

 

 

  

Comprehensive income (loss) attributable to the parent company

    $ 117     $ (169 ) 
  

 

 

    

 

 

  

DANA INCORPORATED

Consolidated Statement of Comprehensive Income

For the Year Ended December 31, 2018 and 2017

 

(In millions)    Year Ended
December 31,		  
     2018     2017  

Net income

    $ 440     $ 116  

Other comprehensive income (loss), net of tax:

     

Currency translation adjustments

      (63 )      (14 ) 

Hedging gains and losses

      10       (30 ) 

Investment and other gains and losses

        2  

Defined benefit plans

      23       (6 ) 
  

 

 

    

 

 

  

Other comprehensive loss

      (30 )      (48 ) 
  

 

 

    

 

 

  

Total comprehensive income

      410       68  

Less: Comprehensive income attributable to noncontrolling interests

      (7 )      (17 ) 

Less: Comprehensive loss attributable to redeemable noncontrolling interests

      6       2  
  

 

 

    

 

 

  

Comprehensive income attributable to the parent company

    $ 409     $ 53  
  

 

 

    

 

 

  

DANA INCORPORATED    

Consolidated Balance Sheet    

As of December 31, 2018 and December 31, 2017    

 

(In millions, except share and per share amounts)    December 31,
2018		     December 31,
2017		  

Assets

     

Current assets

     

Cash and cash equivalents

    $ 510     $ 603  

Marketable securities

      21       40  

Accounts receivable

     

Trade, less allowance for doubtful accounts of $9 in 2018 and $8 in 2017

      1,065       994  

Other

      178       172  

Inventories

      1,031       969  

Other current assets

      102       97  

Current assets of disposal group held for sale

        7  
  

 

 

    

 

 

  

Total current assets

      2,907       2,882  

Goodwill

      264       127  

Intangibles

      164       174  

Deferred tax assets

      445       420  

Other noncurrent assets

      80       71  

Investments in affiliates

      208       163  

Property, plant and equipment, net

      1,850       1,807  
  

 

 

    

 

 

  

Total assets

    $ 5,918     $ 5,644  
  

 

 

    

 

 

  

Liabilities and equity

     

Current liabilities

     

Short-term debt

    $ 8     $ 17  

Current portion of long-term debt

      20       23  

Accounts payable

      1,217       1,165  

Accrued payroll and employee benefits

      186       219  

Taxes on income

      47       53  

Other accrued liabilities

      269       220  

Current liabilities of disposal group held for sale

        5  
  

 

 

    

 

 

  

Total current liabilities

      1,747       1,702  

Long-term debt, less debt issuance costs of $18 in 2018 and $22 in 2017

      1,755       1,759  

Pension and postretirement obligations

      561       607  

Other noncurrent liabilities

      313       413  

Noncurrent liabilities of disposal group held for sale

        2  
  

 

 

    

 

 

  

Total liabilities

      4,376       4,483  
  

 

 

    

 

 

  

Commitments and contingencies

     

Redeemable noncontrolling interests

      100       47  

Parent company stockholders’ equity

     

Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding

      —         —    

Common stock, 450,000,000 shares authorized, $0.01 par value, 144,663,403 and 144,984,050 shares outstanding

      2       2  

Additional paid-in capital

      2,368       2,354  

Retained earnings

      456       86  

Treasury stock, at cost (8,342,185 and 7,001,017 shares)

      (119 )      (87 ) 

Accumulated other comprehensive loss

      (1,362 )      (1,342 ) 
  

 

 

    

 

 

  

Total parent company stockholders’ equity

      1,345       1,013  

Noncontrolling interests

      97       101  
  

 

 

    

 

 

  

Total equity

      1,442       1,114  
  

 

 

    

 

 

  

Total liabilities and equity

    $ 5,918     $ 5,644  
  

 

 

    

 

 

  

DANA INCORPORATED

Consolidated Statement of Cash Flows (Unaudited)

For the Three Months Ended December 31, 2018 and 2017

 

(In millions)    Three Months Ended
December 31,		  
     2018     2017  

Operating activities

     

Net income (loss)

    $ 106     $ (110 ) 

Depreciation

      73       58  

Amortization of intangibles

      2       3  

Amortization of deferred financing charges

      1       1  

Earnings of affiliates, net of dividends received

      (9 )      (5 ) 

Stock compensation expense

      3       6  

Deferred income taxes

      (17 )      169  

Pension contributions, net

      1       (2 ) 

Loss on disposal group held for sale

        27  

Change in working capital

      156       72  

Change in other noncurrent assets and liabilities

      (12 )      (9 ) 

Other, net

      27       (17 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      331       193  
  

 

 

    

 

 

  

Investing activities

     

Purchases of property, plant and equipment

      (90 )      (142 ) 

Acquisition of businesses, net of cash acquired

      (2 )      (3 ) 

Purchases of marketable securities

      (1 )      (12 ) 

Proceeds from sales of marketable securities

      9    

Proceeds from maturities of marketable securities

      7       11  
  

 

 

    

 

 

  

Net cash used in investing activities

      (77 )      (146 ) 
  

 

 

    

 

 

  

Financing activities

     

Net change in short-term debt

      (8 )      6  

Repayment of long-term debt

      (5 )   

Deferred financing payments

      (1 )   

Dividends paid to common stockholders

      (15 )      (9 ) 

Distributions to noncontrolling interests

      (35 )      (5 ) 

Contributions from noncontrolling interests

      3    

Other, net

      3       1  
  

 

 

    

 

 

  

Net cash used in financing activities

      (58 )      (7 ) 
  

 

 

    

 

 

  

Net increase in cash, cash equivalents and restricted cash

      196       40  

Cash, cash equivalents and restricted cash – beginning of period

      327       568  

Effect of exchange rate changes on cash balances

      (3 )      2  
  

 

 

    

 

 

  

Cash, cash equivalents and restricted cash – end of period

    $ 520     $ 610  
  

 

 

    

 

 

  

DANA INCORPORATED

Consolidated Statement of Cash Flows

For the Year Ended December 31, 2018 and 2017

 

(In millions)    Year Ended
December 31,		  
     2018     2017  

Operating activities

     

Net income

    $ 440     $ 116  

Depreciation

      260       220  

Amortization of intangibles

      10       13  

Amortization of deferred financing charges

      4       5  

Call premium on debt

        15  

Write-off of deferred financing costs

        4  

Earnings of affiliates, net of dividends received

      (4 )      (3 ) 

Stock compensation expense

      16       23  

Deferred income taxes

      (64 )      179  

Pension contributions, net

      3       (6 ) 

Impairment of indefinite-lived intangible asset

      20    

Gain on sale of subsidiary

        (3 ) 

(Gain) loss on disposal group held for sale

      (2 )      27  

Change in working capital

      (113 )      (8 ) 

Change in other noncurrent assets and liabilities

      (12 )      (9 ) 

Other, net

      10       (19 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      568       554  
  

 

 

    

 

 

  

Investing activities

     

Purchases of property, plant and equipment

      (325 )      (393 ) 

Acquisition of businesses, net of cash acquired

      (153 )      (185 ) 

Proceeds from previous acquisition

      9    

Purchases of marketable securities

      (37 )      (35 ) 

Proceeds from sales of marketable securities

      15       1  

Proceeds from maturities of marketable securities

      37       27  

Proceeds from sale of subsidiaries, net of cash disposed

      (6 )      3  

Other, net

      (2 )      (1 ) 
  

 

 

    

 

 

  

Net cash used in investing activities

      (462 )      (583 ) 
  

 

 

    

 

 

  

Financing activities

     

Net change in short-term debt

      (21 )      (90 ) 

Proceeds from long-term debt

        676  

Repayment of long-term debt

      (13 )      (640 ) 

Call premium on debt

        (15 ) 

Deferred financing payments

      (1 )      (9 ) 

Dividends paid to common stockholders

      (58 )      (35 ) 

Distributions to noncontrolling interests

      (42 )      (12 ) 

Contributions from noncontrolling interests

      25    

Payments to acquire redeemable noncontrolling interests

      (43 )   

Repurchases of common stock

      (25 )   

Other, net

      (2 )      5  
  

 

 

    

 

 

  

Net cash used in financing activities

      (180 )      (120 ) 
  

 

 

    

 

 

  

Net decrease in cash, cash equivalents and restricted cash

      (74 )      (149 ) 

Cash, cash equivalents and restricted cash – beginning of period

      610       716  

Effect of exchange rate changes on cash balances

      (16 )      43  
  

 

 

    

 

 

  

Cash, cash equivalents and restricted cash – end of period

    $ 520     $ 610  
  

 

 

    

 

 

  

DANA INCORPORATED

Reconciliation of Net Cash Provided by Operating Activities to

  Free Cash Flow and Adjusted Free Cash Flow (Unaudited)

 

(In millions)    Three Months Ended
December 31,		  
     2018     2017  

Net cash provided by operating activities

       $ 331        $ 193  

Purchase of property, plant and equipment

      (90 )          (142 ) 
  

 

 

    

 

 

  

Free cash flow

      241       51  

Discretionary pension contributions

      —         —    
  

 

 

    

 

 

  

Adjusted free cash flow

       $ 241        $ 51  
  

 

 

    

 

 

  
     Year Ended
December 31,		  
     2018     2017  

Net cash provided by operating activities

       $ 568        $ 554  

Purchase of property, plant and equipment

          (325 )      (393 ) 
  

 

 

    

 

 

  

Free cash flow

      243       161  

Discretionary pension contributions

      —         —    
  

 

 

    

 

 

  

Adjusted free cash flow

       $ 243        $ 161  
  

 

 

    

 

 

  
     2019 Guidance  
     Without
ODS		     With
ODS*		  

Net cash provided by operating activities

    ~ $ 520     ~ $ 525  

Purchase of property, plant and equipment

    ~ (350 )    ~ (415 ) 
  

 

 

    

 

 

  

Free cash flow

      170       110  

Discretionary pension contributions

    ~ 165     ~ 165  
  

 

 

    

 

 

  

Adjusted free cash flow

    ~ $ 335     ~ $ 275  
  

 

 

    

 

 

  

 

*

Guidance range with Oerlikon Drive Systems (ODS) assumes a March 1, 2019 transaction closing date.

DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited)

For the Three Months Ended December 31, 2018 and 2017

 

(In millions)    Three Months Ended
December 31,		  
     2018     2017  

Sales

     

Light Vehicle

    $ 873     $ 803  

Commercial Vehicle

      395       355  

Off-Highway

      442       414  

Power Technologies

      263       265  
  

 

 

    

 

 

  

Total Sales

    $ 1,973     $ 1,837  
  

 

 

    

 

 

  

Segment EBITDA

     

Light Vehicle

    $ 101     $ 86  

Commercial Vehicle

      32       25  

Off-Highway

      65       55  

Power Technologies

      32       36  
  

 

 

    

 

 

  

Total Segment EBITDA

      230       202  

Corporate expense and other items, net

      (7 )      (5 ) 
  

 

 

    

 

 

  

Adjusted EBITDA

    $ 223     $ 197  
  

 

 

    

 

 

  

DANA INCORPORATED

Segment Sales and Segment EBITDA

For the Year Ended December 31, 2018 and 2017

 

(In millions)    Year Ended
December 31,		  
     2018     2017  

Sales

     

Light Vehicle

    $ 3,575     $ 3,172  

Commercial Vehicle

      1,612       1,412  

Off-Highway

      1,844       1,521  

Power Technologies

      1,112       1,104  
  

 

 

    

 

 

  

Total Sales

    $ 8,143     $ 7,209  
  

 

 

    

 

 

  

Segment EBITDA

     

Light Vehicle

    $ 398     $ 359  

Commercial Vehicle

      146       116  

Off-Highway

      285       212  

Power Technologies

      149       168  
  

 

 

    

 

 

  

Total Segment EBITDA

      978       855  

Corporate expense and other items, net

      (21 )      (20 ) 
  

 

 

    

 

 

  

Adjusted EBITDA

    $ 957     $ 835  
  

 

 

    

 

 

  

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited)

For the Three Months Ended December 31, 2018 and 2017

 

     Three Months Ended  
(In millions)    December 31,  
     2018     2017  

Segment EBITDA

    $ 230     $ 202  

Corporate expense and other items, net

      (7 )      (5 ) 
  

 

 

    

 

 

  

Adjusted EBITDA

      223       197  

Depreciation

      (73 )      (58 ) 

Amortization of intangibles

      (2 )      (3 ) 

Non-service cost components of pension and OPEB costs

      (5 )   

Restructuring charges, net

      (8 )   

Stock compensation expense

      (3 )      (6 ) 

Strategic transaction expenses

      (5 )      (5 ) 

Other items

      (7 )      (6 ) 

Loss on disposal group held for sale

        (27 ) 
  

 

 

    

 

 

  

Earnings before interest and income taxes

      120       92  

Interest expense

      25       23  

Interest income

      3       3  
  

 

 

    

 

 

  

Earnings before income taxes

      98       72  

Income tax expense

      3       189  

Equity in earnings of affiliates

      11       7  
  

 

 

    

 

 

  

Net income (loss)

    $ 106     $ (110 ) 
  

 

 

    

 

 

  

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income

For the Year Ended December 31, 2018 and 2017

 

     Year Ended  
(In millions)    December 31,  
     2018     2017  

Segment EBITDA

    $ 978     $ 855  

Corporate expense and other items, net

      (21 )      (20 ) 
  

 

 

    

 

 

  

Adjusted EBITDA

      957       835  

Depreciation

      (260 )      (220 ) 

Amortization of intangibles

      (10 )      (13 ) 

Non-service cost components of pension and OPEB costs

      (15 )   

Restructuring charges, net

      (25 )      (14 ) 

Stock compensation expense

      (16 )      (23 ) 

Strategic transaction expenses, net of transaction breakup fee income

      (18 )      (25 ) 

Acquisition related inventory adjustments

        (14 ) 

Other items

      (17 )      (11 ) 

Gain (loss) on disposal group held for sale

      3       (27 ) 

Impairment of indefinite-lived intangible asset

      (20 )   

Amounts attributable to previously divested/closed operations

        2  
  

 

 

    

 

 

  

Earnings before interest and income taxes

      579       490  

Loss on extinguishment of debt

        (19 ) 

Interest expense

      96       102  

Interest income

      11       11  
  

 

 

    

 

 

  

Earnings before income taxes

      494       380  

Income tax expense

      78       283  

Equity in earnings of affiliates

      24       19  
  

 

 

    

 

 

  

Net income

    $ 440     $ 116  
  

 

 

    

 

 

  

DANA INCORPORATED    

Diluted Adjusted EPS (Unaudited)    

For the Three Months Ended December 31, 2018 and 2017    

 

(In millions, except per share amounts)             
     Three Months Ended
December 31,		  
     2018     2017  

Net income attributable to parent company

    $ 100     $  (104 ) 

Items impacting income before income taxes:

     

Restructuring charges

      8    

Amortization of intangibles

      2       3  

Strategic transaction expenses

      5       5  

Loss on disposal group held for sale

        27  

Income on sale of subsidiary

        (3 ) 

Other items

      3       5  

Items impacting income taxes:

     

Net income tax expense on items above

      (3 )      (1 ) 

U.S. tax reform legislation

        186  

Tax benefit attributable to utilization of federal tax credits, state tax law changes and valuation allowance adjustments

      (5 )      (27 ) 

Tax benefit attributable to international legal entity reorganization, retroactive application of new tax authority administrative policy and permanent reinvestment assertions

      (7 )      8  

Items impacting noncontrolling interests

        (7 ) 
  

 

 

    

 

 

  

Adjusted net income

    $ 103     $ 92  
  

 

 

    

 

 

  

Diluted shares - as reported

      145.8       145.4  

Adjustment - common stock equivalents

      —         2.2  
  

 

 

    

 

 

  

Adjusted diluted shares

      145.8       147.6  
  

 

 

    

 

 

  

Diluted adjusted EPS

    $ 0.71     $ 0.62  

DANA INCORPORATED    

Diluted Adjusted EPS (Unaudited)    

For the Year Ended December 31, 2018 and 2017    

 

(In millions, except per share amounts)             
     Year Ended
December 31,		  
     2018     2017  

Net income attributable to parent company

    $ 427     $ 111  

Items impacting income before income taxes:

     

Restructuring charges

      25       14  

Amortization of intangibles

      10       13  

Strategic transaction expenses

      18       25  

Impairment of indefinite-lived intangible asset

      20    

Loss on extinguishment of debt

        19  

Loss on disposal group held for sale

        27  

Income on sale of subsidiary

        (3 ) 

Acquisition related inventory adjustments

        14  

Other items

      6       8  

Items impacting income taxes:

     

Net income tax expense on items above

      (18 )      (18 ) 

U.S. tax reform legislation

        186  

Tax benefit attributable to utilization of federal tax credits, state tax law changes and valuation allowance adjustments

      (51 )      (27 ) 

Tax benefit attributable to international legal entity reorganization, retroactive application of new tax authority administrative policy and permanent reinvestment assertions

      (2 )      8  

Items impacting noncontrolling interests

        (7 ) 
  

 

 

    

 

 

  

Adjusted net income

    $ 435     $ 370  
  

 

 

    

 

 

  

Diluted shares - as reported

      146.5       146.9  
  

 

 

    

 

 

  

Adjusted diluted shares

      146.5       146.9  
  

 

 

    

 

 

  

Diluted adjusted EPS

    $ 2.97     $ 2.52