Dana Incorporated announces strong financial results for the first quarter of 2018 and affirmed full-year 2018 guidance.
"In the first quarter, Dana's sales growth outperformed the market with 26% higher revenue, including 17% organic growth," says James Kamsickas, Dana President and Chief Executive Officer. "First-quarter sales were more than $2 billion resulting in the strongest sales quarter we have realized in nearly a decade. Our intense focus on customer satisfaction and bringing our backlog to market is helping to drive outstanding results and further position Dana for future growth."
First-quarter 2018 Financial Results
Sales for the first quarter of 2018 totaled $2.14 billion, compared with $1.70 billion in the same period of 2017, representing a 26% increase. The increase was mainly due to higher demand across all three end markets, conversion of sales backlog, and favorable foreign currency translation.
Dana reported net income of $108 million for the first quarter of 2018, compared with net income of $75 million in the same period of 2017, due to increased operating earnings associated with higher sales.
Diluted earnings per share were $0.73, compared with earnings per share of $0.51 in 2017.
Adjusted EBITDA for the first quarter of 2018 was $248 million, a $43 million increase over the same period last year, driven by higher end-market demand and conversion of the sales backlog, as well as earnings from acquisitions completed in the first quarter of 2017. The strong first-quarter earnings performance was achieved while completing the production launch for one of the company's largest programs, the new Jeep Wrangler.
Diluted adjusted earnings per share were $0.75 in the first quarter of 2018, compared with $0.63 in the same period last year, reflecting the higher year-over-year earnings improvement.
Operating cash flow in the first quarter of 2018 was a use of $28 million, compared with a source of $11 million in the same period of 2017. Higher working-capital requirements to meet increased demand and incentive compensation payouts in the quarter offset the benefit of higher earnings and lower one-time costs. With new program investment requirements beginning to dissipate, capital expenditures in this year's first three months declined by $31 million from last year's first quarter. As a result, free cash flow was a use of $93 million this quarter, compared with a use of $85 million in 2017.
Company Affirms 2018 Guidance
Improved end-market demand for key light-truck programs, off-highway equipment, and commercial vehicles, combined with sales from the new-business backlog, are driving an expected 10% growth in sales for 2018. Increased sales from the new-business backlog are expected to add approximately $300 million, and improved end-market demand is expected to accrete $200 million. Foreign currency translation will add an additional $150 million to the year-over-year sales comparison.
Adjusted EBITDA in 2018 is expected to improve by approximately $145 million from 2017, or 80 basis points. This improvement is driven primarily by higher sales levels, ongoing efficiency benefits, and enhanced acquisition synergies.
"Last month we raised our full-year guidance on the strength of our end markets and currency tailwinds. Our success this quarter is a result of those factors, as well as the conversion of our new business backlog. With the launch of the Jeep Wrangler program behind us and continued execution of our synergy plan related to recent acquisitions, we are confident in our outlook for 2018 and continued growth in 2019," says Jonathan Collins, Executive Vice President and Chief Financial Officer of Dana.
2018 Full-year Financial Targets
- Sales of $7.75 to $8.05 billion;
- Adjusted EBITDA of $950 to $1,010 million, an implied adjusted EBITDA margin of approximately 12.4%;
- Diluted adjusted EPS1 of $2.75 to $3.05;
- Operating cash flow of approximately 7.5% of sales;
- Capital spending of approximately 4.0% of sales; and
- Free cash flow of approximately 3.5% of sales.
Customers Reward Dana through Supplier Excellence Honors, New Business Sourcing
Dana was recognized in the first quarter of 2018 with 10 customer quality and operational excellence awards. This recognition is strong confirmation that Dana's customers appreciate the exceptional performance provided and their partnership with Dana is providing significant value in their efforts to produce outstanding vehicles.
Over the past several months, Dana has received significant supplier recognition, including the prestigious General Motors Supplier of the Year Award, John Deere China Supplier of the Year Award, LiuGong Supplier Quality Excellence Award, and Spartan Motors Diamond Award. In addition, the company received multiple awards from Toyota and was also named partner-level supplier by AGCO. This strong focus on customer satisfaction has resulted in the company being sourced on numerous new programs with customers, including Jaguar Land Rover, General Motors, Mecalac, and many others.
