Dana Holding Corporation announce its fourth-quarter and full-year results for 2013.
Full-Year 2013 Financial Results
Sales for the year totaled $6.8 billion, compared with $7.2 billion for 2012. Currency, scheduled light-vehicle program roll-offs, and a divestiture lowered sales by $377 million. Dana benefited from stronger global light-vehicle production demand in 2013 which increased sales by about $80 million. This benefit was offset by softer demand principally in the North America heavy-truck market and global off-highway markets which lowered sales by about $220 million compared with a year ago.
Dana posted net income of $244 million for 2013, compared with $300 million in the previous year that included a nonrecurring tax benefit of $54 million for the release of tax valuation allowances in certain foreign jurisdictions. Adjusting for this nonrecurring benefit, Dana's 2013 net income was slightly lower than a year ago. Lower restructuring charges, higher earnings from equity affiliates, and other income was offset by higher interest expense attributable to the company's successful 2013 capital market activities and a higher effective tax rate.
For financial reporting purposes, net income attributable to common stockholders includes adjustments related to preferred stock dividends and redemptions. During the third quarter of 2013, Dana redeemed all of its outstanding Series A preferred stock and the difference between the amount paid and the historic carrying value of this security was $232 million, which was included as an adjustment to net income attributable to common stockholders.
Diluted adjusted earnings per share, which excludes restructuring-related charges, amortization expense, and other nonrecurring items, totaled $1.77 for the full-year 2013. This includes the benefit from a reduced diluted share count as a result of the company's share repurchase and redemption activities during the course of 2013. Diluted adjusted earnings per share for 2012 totaled $1.75.
Dana reported adjusted EBITDA of $745 million for the full-year 2013, compared with $781 a year ago. The company's continued focus and execution of cost-reduction and recovery actions in light of unfavorable currency movements and lower demand in a number of served end-markets increased adjusted EBITDA margin to 11.0% in 2013, compared with 10.8% in 2012, marking the fifth consecutive year of margin expansion.
Dana generated record free cash flow of $368 million for the full-year 2013. Strong operating earnings and working capital execution offset increased capital investment and higher cash taxes. Compared with a year ago, and adjusting for a voluntary cash contribution to the company's U.S. pension plans of $150 million in 2012, free cash flow was higher by $43 million.
The company ended the year with cash and marketable securities totaling approximately $1.37 billion. During 2013, Dana increased its existing share repurchase program from $250 million to $1 billion and accessed the credit markets on favorable terms to raise additional unsecured debt of $750 million. With the second-half 2013 redemption of all outstanding Series A convertible preferred stock, completion of a $200 million accelerated common share-repurchase program, and other open-market common share repurchases, as of the end of 2013, Dana has returned $829 million to shareholders under its share-repurchase program.
Fourth-Quarter 2013 Financial Results
Sales for the fourth-quarter of 2013 totaled $1.62 billion, compared with $1.61 billion for the same period a year ago. While currency movements lowered sales by $45 million when compared with a year ago, stronger demand across light- and commercial-vehicle end markets and recovery actions increased sales by about $60 million.
Net income for the fourth quarter of 2013 was $42 million, compared with $88 million in 2012, which included the aforementioned $54 million benefit from the release of certain tax valuation allowances. Adjusted diluted earnings per share in the fourth quarter of 2013 rose to $0.49, compared with $0.38 for the same period a year ago, reflecting both improved adjusted net income as defined and a reduced diluted share count as a result of the company's share redemption and repurchase activities during the course of 2013.
Adjusted EBITDA for the fourth quarter of 2013 was $174 million, $20 million higher than the previous year. Adjusted EBITDA margin of 10.7% in the fourth quarter of 2013 increased 110 basis points when compared with the same period a year ago, reflecting the favorable impact of higher volume and net performance from cost reductions and recovery actions. Free cash flow for the fourth quarter totaled $198 million, $31 million higher than 2012. Improved earnings, positive working capital performance, and lower pension and restructuring cash outlays more than offset increased capital spending in support of future business growth.
"Dana performed very well in 2013 in nearly every region of the world," says company President and Chief Executive Officer Roger J. Wood. "Our adjusted EBITDA margin performance in 2013 set another record and provided the fifth straight year of margin expansion. Dana also posted record free cash flow in the year and, coupled with strong capital market activities, we have returned $829 million to our shareholders in the form of share redemptions and repurchases since the inception of our share repurchase program in late 2012.
"As we move into 2014 and beyond, we continue to remain focused on launching our new technologies, improving the operating and financial performance of Dana, and capitalizing on our long-term growth momentum as we further innovate and differentiate our products to meet the needs of our customers."
2014 Financial Targets
For 2014, the company expects primarily stable end-market demand across most regions, with continued strength in full-frame light trucks and improving North American commercial-vehicle demand. Worldwide mining and construction-equipment markets are expected to remain sluggish during the course of this year, while currency and economic challenges in emerging markets such as South America and India are expected to continue.
Financial targets for 2014 include:
- Sales of approximately $6.8 to $6.9 billion;
- Adjusted EBITDA of approximately $760 to $770 million;
- Adjusted EBITDA as a percent of sales of approximately 11.2% ;
- Diluted adjusted EPS of approximately $1.82 to $1.86 (excluding the impact of share repurchases after Dec. 31, 2013);
- Capital spending of approximately $210 to $230 million; and
- Free cash flow of $275 to $295 million.
