- Sales of $7.2 billion for 2012
- Record net income of $300 million compared with $219 million in 2011
- Diluted Adjusted Earnings Per Share of $1.75 compared with $1.66 in 2011
- Adjusted EBITDA of $781 million; Adjusted EBITDA margin increased to 10.8 percent, 70 basis points higher than 2011, reflecting continued cost discipline and margin improvement actions
- Record free cash flow of $325 million, excluding voluntary pension contributions, $151 million or 87 percent higher than 2011
- Initiated common dividend
- Announced $250 million common share repurchase program
- Dana technologies featured on 2013 North American Car and Truck of Year, 2013 Green Car of Year, 2013 Heavy Duty Commercial Truck of Year, six of Ward's 10 Best Engines for 2013
Dana Holding Corporation (NYSE: DAN) announced its fourth-quarter and full-year 2012 results. Sales for the year totaled $7.2 billion compared with $7.5 billion for 2011.
The impact of currency lowered sales by $322 million compared with last year. Excluding currency, Dana sales increased in most of its segments although this growth was offset by a decline in Commercial Vehicle sales of $169 million, principally reflecting weak end-market demand.
The company's execution of profitability actions continued to improve margin performance despite lower sales in 2012 compared with the prior year. Net income for the full-year was a record $300 million, compared with $219 million in the previous year. Driven by continued improvement in operating results, net income in both 2012 and 2011 included income tax benefits related to lower valuation allowances for certain foreign jurisdictions. In 2012, these tax benefits totaled $54 million, compared with $8 million in 2011. Diluted adjusted earnings per share, which excludes these tax benefits, was $1.75 for 2012 compared with $1.66 in 2011.
Dana reported adjusted EBITDA of $781 million for 2012, $16 million higher than 2011. Adjusted EBITDA as a percent of sales for 2012 increased 70 basis points to 10.8 percent, compared with 10.1 percent in 2011.
Adjusting for a $150 million voluntary contribution to the company's U.S. pension plans in early 2012, Dana generated strong free cash flow of $325 million for the full-year, an increase of $151 million compared with 2011. Capital spending in 2012 was $164 million, demonstrating a continued focus on investment discipline and utilization across each of Dana's business segments.
Sales for the fourth-quarter were $1.6 billion compared with $1.9 billion for the same period in 2011, reflecting the impact of unfavorable currency of $41 million; program roll offs of $95 million; and lower end-market demand of $155 million, principally impacting Dana's Commercial Vehicle and Off-Highway business segments. Dana's net income of $88 million in the fourth quarter of 2012 compares with $71 million in 2011, including the benefit of income tax valuation allowance releases.
Adjusted EBITDA for the quarter was $154 million, compared with $183 million in 2011. Continued cost-structure actions in the fourth quarter of 2012 reduced the impact of significantly lower sales on adjusted EBITDA performance compared with a year ago. Free cash flow for the fourth quarter was $167 million, $52 million higher than 2011, driven principally by improved working capital performance and lower capital spending.
"I am pleased with Dana's performance for 2012, despite end-market volatility in almost every region of the world," said company President and Chief Executive Officer Roger J. Wood. "Our full-year results demonstrate a continued focus and execution on controllable levers across each of our business segments to adjust our cost structure in light of the market environment as well as disciplined investment, resulting in strong margin expansion and cash flow generation."
Common Share Repurchase Program Update
In October, Dana's Board of Directors approved a share repurchase program for up to $250 million of its currently outstanding shares of common stock. Dana is repurchasing its shares either in the open market or through privately negotiated transactions. During the quarter, the company repurchased 1.07 million shares at a cost of approximately $15 million.
The share repurchases are subject to prevailing market conditions and other considerations. The company has sufficient liquidity to support this initiative and is utilizing its excess cash for the program.
Recognition of Dana Innovation and Technology
Dana's driveline, sealing, and thermal-management solutions were featured on both the 2013 North American Car and Truck of the Year, the 2013 Heavy Duty Commercial Truck of the Year, six of Ward's 10 Best Engines, and the 2013 Green Car of the Year.
The North American Truck of the Year, the 2013 Ram 1500, features a Spicer® rear driveshaft on all models, as well as cam covers, exhaust gaskets, and active warm up units on some models. The Cadillac ATS, which is the 2013 North America Car of the Year, includes a variety of Dana technologies, such as cylinder-head gaskets, exhaust gaskets, cam cover gaskets, valve stem seals, thermal-acoustical protective shielding (TAPS), and engine oil coolers, depending on engine variations.
Dana also provides Spicer® drive axles, steer axles, and driveshafts for the Kenworth T680, named the 2013 Heavy Duty Commercial Vehicle Truck of the Year by the American Truck Dealers. Dana's Spicer® Diamond Series™ driveshaft can also be specified as an option for this vehicle.
In addition to these award-winning vehicles, Dana supplies the following engine technologies for the 2013 Ward's 10 Best Engines:
Audi 3.0L TFSI Supercharged DOHC V-6 – cylinder-head gaskets and secondary gaskets
BMW 2.0L N20 Turbocharged DOHC I-4 – secondary gaskets
GM 2.0L Turbocharged I-4 – cylinder-head gaskets, engine oil coolers, and valve stem seals
Chrysler 3.6L DOHC Pentastar V-6 – exhaust gaskets and TAPS
Ford 2.0L EcoBoost DOHC I-4 – cylinder-head gaskets, exhaust manifold gaskets, and down stream exhaust gaskets
Honda 3.5L SOHC V-6 – cam covers
Dana technologies are also featured on the Green Car Journal's Green Car of the Year, the 2013 Ford Fusion, which was honored at the L.A. Auto Show in November. The vehicle features Dana cylinder-head gaskets, exhaust system gaskets, heat shields, transmission oil coolers, thermal bypass valves, and combo coolers.
New Product Technologies
Product innovation is the foundation for Dana's growth strategy. During 2012, Dana introduced a number of new product technologies focused on market drivers that provide both value to customers and increasing return on investment to shareholders. Examples of these product technologies include:
Next-generation Spicer® axles with AdvanTEK™ gearing and other features that reduce weight while improving performance and efficiency;
New Spicer® Pro-40™ tandem axles with a SelecTTrac™ housing option, which reduces weight and improves fuel efficiency;
Spicer® 318 hydrostatic continuously variable transmission that greatly improve fuel economy in off-highway equipment;
New multi-layer steel separator plates that improve transmission sealing, efficiency, and durability;
A new Spicer® PowerBoost™ hydraulic-hybrid powertrain concept that captures kinetic energy otherwise wasted throughout the drivetrain and work circuits, and then uses this recuperated energy to help power the vehicle;
New Spicer® Rui Ma™ drivetrain solutions that offer an optimized blend of product features, performance, dependability, and cost demanded by most purchasers of Chinese-made construction, mining, and material-handling equipment; and
Advanced tire-pressure management systems for line-haul tractors and agricultural equipment that improve fuel efficiency and reduce maintenance costs.
2013 Financial Targets
As previously announced in January, Dana has established the following financial targets for full-year 2013:
Sales of approximately $7.1 billion,
Adjusted EBITDA of $800 million to $820 million,
Adjusted EBITDA as a percent of sales of approximately 11.4 percent,
Diluted adjusted EPS of $1.88 to $1.95 (excluding the impact of Dana's share repurchase program),
Capital spending of $180 million to $200 million, and
Free cash flow of $240 million to $260 million.
Based on the profitability improvements in Dana's U.S. operations over the last three years and expected future performance, it is reasonably possible that in excess of $800 million of income tax valuation allowance will be released in 2013.
"We have and will continue to maintain our cost and investment discipline and remain flexible as 2013 unfolds," said Wood. "We are confident that we are also well-positioned to take advantage of further margin expansion opportunities in the event of a stronger production environment."
Dana to Host Conference Call at 10 a.m. Today
Dana will discuss its full-year and fourth-quarter results in a conference call at 10 a.m. EST today. Participants may listen to the conference call via audio streaming online or telephone. Slide viewing is available via Dana's investor website – www.dana.com/investors. United States and Canadian locations should dial 888-311-4590 and international locations should call 1-706-758-0054, and enter 88747411. Please ask for the "Dana Holding Corporate Financial Webcast and Conference Call." Phone registration will be available starting at 9:30 a.m.
An audio recording of the webcast will be available after 5 p.m. today; dial 855-859-2056 (U.S. or Canada) or 404-537-3406 (international) and enter 88747411. A webcast replay will be available after 5 p.m. today, and may be accessed via Dana's investor website.
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