Dana Holding First Quarter Results

Dana Holding Corporation reported its first-quarter 2011 financial results, including adjusted EDITDA of $181 million. The company had a net loss of $30 million in the quarter, which included $53 million of one-time charges associated with the refinancing and restructuring of debt in January. Excluding these charges, Dana posted first-quarter net income of $23 million.  

Strong sales of $1.8 billion – up nearly 20% over the first quarter of 2010 – and continued operating improvements enabled the company to achieve an adjusted EBITDA margin of 10.1%. Diluted adjusted earnings per share in the quarter were $0.34, compared to $0.06 in the prior-year period.

"Dana had another strong quarter as we took decisive steps to expand our global footprint and product offerings," says Dana Executive Chairman John Devine. "We have significantly improved the building blocks for continued growth by reaching an early agreement with our labor unions, restructuring our balance sheet, and strategically investing in key markets."

Free cash flow use of $35 million in the quarter was driven by increased working capital requirements associated with the higher level of sales. Global liquidity continues to exceed $1.1 billion. The company's strong balance sheet, cash position, and financial flexibility are supporting its aggressive, long-term growth plans in emerging markets and the development of new drivetrain, sealing, and thermal technologies.

Recovering Markets

The light and commercial vehicle markets continue to improve. Light vehicle production was up 5% globally and 14% in North America compared to the same period last year. Commercial vehicle production in the quarter was up 41% in North America.

The off-highway market also reflects growth year-over-year. Strength in mining and construction equipment continues, and agriculture equipment production has benefited from strong commodity prices and increasing farm income.

Growing Presence in Emerging Markets

Dana recently announced it has signed a definitive agreement with Axles India, Ltd. (AIL), to acquire select assets of AIL's commercial truck axle business. This $13 million transaction is consistent with the company's growth objectives for Asia, and is expected to generate approximately $50 million in annual revenue in India's commercial vehicle market, which is growing at a compound annual rate of 8%. Key customers of this business are Ashok Leyland and Mahindra & Mahindra.  

In January, Dana agreed to increase ownership of its joint venture, Dongfeng Dana Axle Co., Ltd. (DDAC), to 50%, pending government approval, in the rapidly growing Chinese market. In February, Dana completed a strategic agreement with SIFCO S.A., adding front steer axles to its product portfolio in South America, bringing its total annual sales in the region to more than $1 billion.

New Labor Agreements Reached Early

As previously announced, Dana reached new three-year international labor agreements with the United Auto Workers (UAW) and United Steel Workers (USW), effective June 1, 2011. The agreements were ratified in late March by members of both unions at 20 facilities in the United States and support the company's continued drive for leaner, more competitive operations.  

Reaching new agreements nearly 10 weeks before the current contracts expire has also enabled the company and its employees to remain focused on the needs of customers.

Product Technology and Quality

Other product-related highlights from the first quarter that support Dana's growth objectives include: