EX-99.1 2 d924873dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

DANA INCORPORATED

Quarterly Financial Information and Reconciliations of Non-GAAP Financial Measures

Non-GAAP Financial Measures

Adjusted EBITDA is 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 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 earnings 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 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 in accordance with 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 discretionary 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 in accordance with GAAP. Free cash flow and adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

The accompanying financial information provides reconciliations of adjusted EBITDA, diluted adjusted EPS, free cash flow and adjusted free cash flow to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income (loss) and diluted EPS. Providing net income (loss) 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 (loss) and diluted EPS, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months
Ended		  
(In millions, except per share amounts)    March 31,  
     2020     2019  

Net sales

    $ 1,926     $ 2,163  

Costs and expenses

     

Cost of sales

      1,720       1,863  

Selling, general and administrative expenses

      106       136  

Amortization of intangibles

      3       2  

Restructuring charges, net

      3       9  

Impairment of goodwill

      (51 )   

Other income (expense), net

      4       (13 ) 
  

 

 

    

 

 

  

Earnings before interest and income taxes

      47       140  

Interest income

      2       2  

Interest expense

      29       27  
    

Earnings before income taxes

      20       115  

Income tax expense (benefit)

      (16 )      20  

Equity in earnings of affiliates

      2       6  
  

 

 

    

 

 

  

Net income

      38       101  

Less: Noncontrolling interests net income

      2       4  

Less: Redeemable noncontrolling interests net loss

      (2 )      (1 ) 
  

 

 

    

 

 

  

Net income attributable to the parent company

    $ 38     $ 98  
  

 

 

    

 

 

  

Net income per share available to common stockholders

     

Basic

    $ 0.26     $ 0.68  

Diluted

    $ 0.26     $ 0.68  

Weighted-average shares outstanding—Basic

      144.2       143.9  

Weighted-average shares outstanding—Diluted

      144.8       144.8  

DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months
Ended		  
(In millions)    March 31,  
     2020     2019  

Net income

    $ 38     $ 101  

Other comprehensive income (loss), net of tax:

     

Currency translation adjustments

      (154 )      27  

Hedging gains and losses

      29       5  

Defined benefit plans

      3       5  
  

 

 

    

 

 

  

Other comprehensive income (loss)

      (122 )      37  
  

 

 

    

 

 

  

Total comprehensive income (loss)

      (84 )      138  

Less: Comprehensive (income) loss attributable to noncontrolling interests

      17       (2 ) 

Less: Comprehensive income attributable to redeemable noncontrolling interests

      (6 )      (4 ) 
  

 

 

    

 

 

  

Comprehensive income (loss) attributable to the parent company

    $ (73 )    $ 132  
  

 

 

    

 

 

  

DANA INCORPORATED

Consolidated Balance Sheet (Unaudited)

As of March 31, 2020 and December 31, 2019

 

(In millions, except share and per share amounts)    March 31,     December 31,  
     2020     2019  

Assets

     

Current assets

     

Cash and cash equivalents

    $ 628     $ 508  

Marketable securities

      23       19  

Accounts receivable

     

Trade, less allowance for doubtful accounts of $7 in 2020 and $9 in 2019

      1,109       1,103  

Other

      192       202  

Inventories

      1,213       1,193  

Other current assets

      142       137  
  

 

 

    

 

 

  

Total current assets

      3,307       3,162  

Goodwill

      441       493  

Intangibles

      230       240  

Deferred tax assets

      603       580  

Other noncurrent assets

      133       120  

Investments in affiliates

      178       182  

Operating lease assets

      171       178  

Property, plant and equipment, net

      2,172       2,265  
  

 

 

    

 

 

  

Total assets

    $ 7,235     $ 7,220  
  

 

 

    

 

 

  

Liabilities and equity

     

Current liabilities

     

Short-term debt

    $ 312     $ 14  

Current portion of long-term debt

      28       20  

Accounts payable

      1,181       1,255  

Accrued payroll and employee benefits

      166       206  

Taxes on income

      44       46  

Current portion of operating lease liabilities

      42       42  

Other accrued liabilities

      294       262  
  

 

 

    

 

 

  

Total current liabilities

      2,067       1,845  

Long-term debt, less debt issuance costs of $26 in 2020 and $28 in 2019

      2,335       2,336  

Noncurrent operating lease liabilities

      134       140  

Pension and postretirement obligations

      440       459  

Other noncurrent liabilities

      224       305  
  

 

 

    

 

 

  

Total liabilities

      5,200       5,085  
  

 

 

    

 

 

  

Commitments and contingencies

     

Redeemable noncontrolling interests

      175       167  

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,

     

144,480,975 and 143,942,539 shares outstanding

      2       2  

Additional paid-in capital

      2,391       2,386  

Retained earnings

      644       622  

Treasury stock, at cost (10,432,777 and 10,111,191 shares)

      (156 )      (150 ) 

Accumulated other comprehensive loss

      (1,098 )      (987 ) 
  

 

 

    

 

 

  

Total parent company stockholders’ equity

      1,783       1,873  

Noncontrolling interests

      77       95  
  

 

 

    

 

 

  

Total equity

      1,860       1,968  
  

 

 

    

 

 

  

Total liabilities and equity

    $ 7,235     $ 7,220  
  

 

 

    

 

 

  

DANA INCORPORATED

Consolidated Statement of Cash Flows (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months
Ended		  
(In millions)    March 31,  
     2020     2019  

Operating activities

     

Net income

    $ 38     $ 101  

Depreciation

      85       74  

Amortization

      4       3  

Amortization of deferred financing charges

      2       1  

Earnings of affiliates, net of dividends received

      (2 )      (5 ) 

Stock compensation expense

      4       5  

Deferred income taxes

      (35 )      (14 ) 

Pension expense, net

      1       4  

Impairment of goodwill

      51    

Change in working capital

      (183 )      (175 ) 

Other, net

      (16 )      (10 ) 
  

 

 

    

 

 

  

Net cash used in operating activities

      (51 )      (16 ) 
  

 

 

    

 

 

  

Investing activities

     

Purchases of property, plant and equipment

      (63 )      (98 ) 

Acquisition of businesses, net of cash acquired

      (8 )      (606 ) 

Purchases of marketable securities

      (12 )      (5 ) 

Proceeds from sales and maturities of marketable securities

      6       6  

Settlements of undesignated derivatives

      (3 )      (20 ) 

Other, net

      (5 )      (1 ) 
  

 

 

    

 

 

  

Net cash used in investing activities

      (85 )      (724 ) 
  

 

 

    

 

 

  

Financing activities

     

Net change in short-term debt

      298       (2 ) 

Proceeds from long-term debt

      4       675  

Repayment of long-term debt

      (1 )      (9 ) 

Deferred financing payments

        (12 ) 

Dividends paid to common stockholders

      (15 )      (14 ) 

Distributions to noncontrolling interests

      (1 )      (1 ) 

Contributions from noncontrolling interests

      2       1  

Repurchases of common stock

        (25 ) 

Other, net

      (4 )      (3 ) 
  

 

 

    

 

 

  

Net cash provided by financing activities

      283       610  
  

 

 

    

 

 

  

Net increase (decrease) in cash, cash equivalents and restricted cash

      147       (130 ) 

Cash, cash equivalents and restricted cash - beginning of period

      518       520  

Effect of exchange rate changes on cash balances

      (29 )      5  
  

 

 

    

 

 

  

Cash, cash equivalents and restricted cash - end of period

    $ 636     $ 395  
  

 

 

    

 

 

  

DANA INCORPORATED

Reconciliation of Net Cash Provided by Operating Activities to

Free Cash Flow and Adjusted Free Cash Flow (Unaudited)

 

     Three Months Ended  
(In millions)    March 31,  
     2020     2019  

Net cash used in operating activities

    $ (51 )    $ (16 ) 

Purchases of property, plant and equipment

      (63 )      (98 ) 
  

 

 

    

 

 

  

Free cash flow

      (114 )      (114 ) 

Discretionary pension contributions

      —         —    
  

 

 

    

 

 

  

Adjusted free cash flow

    $ (114 )    $ (114 ) 
  

 

 

    

 

 

  

DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended  
(In millions)    March 31,  
     2020      2019  

Sales

      

Light Vehicle

    $ 808      $ 906  

Commercial Vehicle

      333        431  

Off-Highway

      532        552  

Power Technologies

      253        274  
  

 

 

     

 

 

  

Total Sales

    $  1,926      $  2,163  
  

 

 

     

 

 

  

Segment EBITDA

      

Light Vehicle

    $ 83      $ 102  

Commercial Vehicle

      21        41  

Off-Highway

      72        82  

Power Technologies

      30        34  
  

 

 

     

 

 

  

Total Segment EBITDA

      206        259  

Corporate expense and other items, net

      (1 )       (2 ) 
  

 

 

     

 

 

  

Adjusted EBITDA

    $ 205      $ 257  
  

 

 

     

 

 

  

DANA INCORPORATED

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

For the Three Months Ended March 31, 2020 and 2019

 

     Three Months Ended  
(In millions)    March 31,  
     2020      2019  

Segment EBITDA

    $  206      $  259  

Corporate expense and other items, net

      (1 )       (2 ) 
  

 

 

     

 

 

  

Adjusted EBITDA

      205        257  

Depreciation

      (85 )       (74 ) 

Amortization

      (4 )       (3 ) 

Non-service cost components of pension and OPEB costs

      (2 )       (6 ) 

Restructuring charges, net

      (3 )       (9 ) 

Stock compensation expense

      (4 )       (5 ) 

Strategic transaction expenses, net of transaction fee breakup income

      (6 )       (13 ) 

Impairment of goodwill

      (51 )    

Acquisition related inventory adjustments

         (4 ) 

Non-income tax legal judgment

         6  

Other items

      (3 )       (9 ) 
  

 

 

     

 

 

  

Earnings before interest and income taxes

      47        140  

Interest income

      2        2  

Interest expense

      29        27  
  

 

 

     

 

 

  

Earnings before income taxes

      20        115  

Income tax expense (benefit)

      (16 )       20  

Equity in earnings of affiliates

      2        6  
  

 

 

     

 

 

  

Net income

    $ 38      $ 101  
  

 

 

     

 

 

  

DANA INCORPORATED

Diluted Adjusted EPS (Unaudited)

For the Three Months Ended March 31, 2020 and 2019

(In millions, except per share amounts)

 

     Three Months Ended  
     March 31,  
     2020      2019  

Net income attributable to parent company

    $ 38      $ 98  

Items impacting income before income taxes:

      

Restructuring charges

      3        9  

Amortization

      4        4  

Strategic transaction expenses, net of transaction breakup fee income

      6        13  

Acquisition related inventory adjustments

         4  

Non-income tax legal judgment

         (6 ) 

Impairment of goodwill

      51     

Loss on deal contingent forward

         13  

Other items

         (1 ) 

Items impacting income taxes:

      

Net income tax expense on items above

      (3 )       (5 ) 

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

      (31 )       (16 ) 
  

 

 

     

 

 

  

Adjusted net income

    $ 68      $ 113  
  

 

 

     

 

 

  

Diluted shares - as reported

      144.8        144.8  
  

 

 

     

 

 

  

Adjusted diluted shares

      144.8        144.8  
  

 

 

     

 

 

  

Diluted adjusted EPS

    $ 0.47      $ 0.78