Dana Holding Corporation announces strong results for the first quarter of 2012. Net income for the quarter was $70 million, compared to a net loss of $30 million for the same period in 2011. This is Dana's fourth consecutive quarter of positive net income. The company's diluted adjusted earnings per share (EPS) were $0.44, up nearly 30% compared to $0.34 in the first quarter of 2011. Sales increased nearly 10% year over year to about $2 billion.
The increase in first-quarter sales was driven primarily by higher vehicle production volumes, more than offsetting the effects of foreign currency, which reduced sales by nearly $40 million.
Dana reported strong adjusted EBITDA of $212 million in the quarter, a 17% increase over the prior-year period. Adjusted EBITDA as a percent of sales for the quarter was 10.7%, compared to 10.1% for the same period in 2011. Higher sales, material cost recovery and cost reductions boosted first-quarter earnings, more than offsetting currency effects and material cost increases.
During the first quarter, Dana made an incremental, voluntary contribution to its U.S. pension plans of $150 million. Excluding this contribution, free cash flow for the quarter was a usage of $37 million, in line with same period last year. The company also initiated a common stock dividend of $0.05 per share in the first quarter. With net debt of about $100 million and $1.3 billion of liquidity at March 31, 2012, Dana continues to have a strong financial position.
"The Dana team is off to a solid start in 2012," says company President and Chief Executive Officer Roger J. Wood. "Our earnings growth far outpaced our sales growth. The fundamentals, including a very strong balance sheet, position us to continue to leverage our core areas of expertise across our markets to attract new business and drive shareholder value."
New Product Technologies
Dana focuses on technology solutions that target specific market-value drivers, such as fuel economy, emissions control and cost of ownership. This past quarter, the company introduced a number of new products aimed at these value drivers, including:
- Spicer SelecTTrac housing, an option on Dana's Pro-40 tandem axle, which enables heavy truck customers to benefit from the weight and fuel savings of wide-based single tires (versus standard dual wheels). Dana's award-winning Pro-40 tandem axle already offers nearly 100 lbs. in weight savings compared to competitive products;
- Spicer TZL Series powershift transmissions for premium front-end loaders manufactured in China – produced at Dana's plant in Wuxi, Jiangsu; and
- Additional SVL aftermarket drivetrain components for both heavy- and light-duty axle applications; the SVL line offers quality replacement parts for older, post-warranty vehicles.
At the Mid-America Truck Show in March, Dana's Commercial Vehicle team introduced a new value calculator that enables customers to quantify the measurable savings and benefits associated with specifying Dana products. For commercial vehicle customers, these measurable benefits include:
- Reduced weight for increased freight-hauling capacity;
- Greater fuel economy;
- Serviceability improvements and reduced maintenance costs; and
- Improved vehicle efficiency.
2012 Financial Guidance
Dana revised its sales growth forecast for the year to 3% or more over 2011 while affirming its full-year adjusted EBITDA, diluted adjusted EPS, capital spending and free cash flow guidance. The reduced sales outlook largely reflects the effect of currency in the coming quarters. Other financial targets are unchanged, as follows:
- Adjusted EBITDA is projected to be $845 million to $865 million; adjusted EBITDA as a percent of sales is forecast to be 10.5% to 11%;
- Diluted adjusted EPS is expected to total $1.95 to $2.05 per share;
- Capital spending is expected to total $225 million to $250 million; and
- Free cash flow for the year is projected at more than $200 million, excluding the special one-time $150 million pension contribution.
