Dana Incorporated announces preliminary financial results for 2018 and guidance for 2019. Preliminary sales and adjusted EBITDA for 2018 are within the previous guidance ranges. Significant organic and inorganic growth are expected to drive higher sales, earnings, and free cash flow in 2019.
Preliminary 2018 Financial Results
- Sales of $8.143 billion, an increase of $934 million, or growth of 13%, compared with 2017;
- Adjusted EBITDA of $957 million, an increase of $122 million or growth of 15%; and
- Margin of 11.8% of sales, an expansion of 20 basis points.
Preliminary sales for the year approximated $8.143 million, about 13% higher than 2017, primarily due to strong end-market demand, conversion of sales backlog, and to a lesser extent acquisitions and recovery of material inflation.
Preliminary adjusted EBITDA for 2018 approximated $957 million, a $122 million improvement over 2017. This improvement was driven principally by higher end-market demand, conversion of sales backlog, and acquisition synergies, which were partially offset by higher commodity costs.
Adjusted EBITDA margin was 11.8% of sales, a 20 basis-point improvement over 2017. Stronger end-market demand and operational performance more than offset the margin headwind attributable to the effects of higher raw material prices and the associated material recovery reflected in sales.
"For the second consecutive year Dana achieved double-digit sales growth, adding nearly $1 billion in incremental sales, while again improving our margin profile," says James Kamsickas, Dana President and Chief Executive Officer. "Through investment in new technologies and strategic acquisitions, Dana has evolved the business to be energy-source agnostic. Regardless of the vehicle powertrain design, Dana is well-positioned to address the needs of our customers across vehicle architectures in the light-vehicle, commercial-vehicle, and off-highway segments."
Company Updates Sales Backlog
Dana's 3-year sales backlog remains strong with $700 million of incremental sales expected from 2019 through 2021. This includes $350 million in incremental new business in 2019, an increase of $50 million compared with the prior 3-year backlog.
2019 Guidance
The company is issuing guidance for Dana as currently consolidated, as well as guidance resulting from the completion of the acquisition of the Drive Systems segment of the Oerlikon Group (ODS), expected to close by the end of February of 2019. Guidance ranges are:
- Sales of $8.250 to $8.550 billion; or $8.950 to $9.350 including ODS
- Adjusted EBITDA of $995 million to $1.055 billion, an implied adjusted EBITDA margin of approximately 12.2% at the midpoint of the range; $1.085 billion to $1.165 billion including ODS, an implied adjusted EBITDA margin of approximately 12.3% at the midpoint of the range;
- Diluted adjusted EPS1 of $2.90 to $3.30; $2.95 to $3.45 including ODS;
- Operating cash flow of approximately 8.0% of sales; 7.0%, including ODS; and
- Free cash flow of approximately 4.0% of sales; 3.0% including ODS.
"Continued high customer demand, combined with execution of our sales backlog and recent inorganic actions, enabled us to deliver strong performance in 2018," says Jonathan Collins, Executive Vice President and Chief Financial Officer of Dana. "We look to carry this momentum into 2019 with stable end markets, strong sales backlog, and the accretive benefits of our strategic acquisitions, all of which are providing us tremendous growth potential in both the traditional sectors of our markets, as well at the fast-growing vehicle electrification segment."
Dana Acquires SME Group
On January 15, Dana announced that it has completed the acquisition of the SME Group, a global developer and manufacturer of low-voltage AC induction and synchronous reluctance motors, inverters, and controls for a wide range of off-highway electric vehicle applications, including material handling, agriculture, and automated-guided vehicles. It employs more than 100 people and operates manufacturing and engineering centers in Canada, China, Germany, and Italy.
