Dana Holding Corporation Announces Fourth-Quarter, Full-Year 2014 Financial-Results
Last update: 19/02/2015 7:00:31 am
Dana Holding Corporation Announces Fourth-Quarter, Full-Year 2014 Financial Results
PR Newswire
MAUMEE, Ohio, Feb. 19, 2015
MAUMEE, Ohio, Feb. 19, 2015 /PRNewswire/ --
Full-Year Highlights
-- Sales of $6.6 billion
-- Net income attributable to Dana of $319 million
-- Adjusted EBITDA of $746 million, providing a record margin of 11.3 percent, sixth consecutive year of margin expansion
-- Diluted adjusted EPS increased 12 percent to $1.99, higher than last year by $0.22
-- Strong free cash flow of $276 million, including $234 million of capital investment for future growth
-- Significant shareholder return; repurchased $260 million of common stock in 2014, totaling more than $1 billion since program inception
-- Continued capital structure actions, including conversion of all outstanding preferred shares, refinancing of senior unsecured notes, reduction of U.S. pension obligations.
-- $730 million sales backlog over next three years, providing top-line growth in excess of market factors; an increase of $170 million, or 30 percent, compared with last year's backlog
Dana Holding Corporation (NYSE: DAN) today announced its fourth-quarter and full-year results for 2014.
Fourth-Quarter 2014 Financial Results
Sales for the fourth-quarter of 2014 totaled $1.58 billion, compared with $1.62 billion for the same period a year ago, with unfavorable currency lowering sales by $106 million. Adjusting for the effects of currency, sales increased $64 million or 4 percent, driven by higher end-market demand and cost-recovery initiatives.
In the fourth quarter of 2014, Dana completed a number of important initiatives to further enhance shareholder value. In December 2014, Dana entered into an agreement to divest its Venezuela operations to an independent and locally operated company. This transaction was successfully completed in January 2015, addressing the economic volatility and on-going uncertainty associated with operating in that country. A net charge of $77 million was recognized in the fourth quarter of 2014 relating to this divestiture.
During the quarter, the company also completed a voluntary settlement program with deferred vested salaried participants in its U.S. pension plans that reduced pension benefit obligations by approximately $170 million. This program, along with other actions, resulted in $42 million of pension settlement charges in the fourth quarter.
Finally, Dana completed a refinancing of long-term debt obligations, extending the company's debt maturities and lowering annual interest costs. Following this refinancing, the company's next significant debt maturity is in the year 2021. The fourth-quarter 2014 financial results include a loss on debt extinguishment of $19 million associated with this action.
Net income attributable to Dana for the fourth quarter of 2014 was $109 million, compared with $42 million in 2013. The company's 2014 results included a $179 million tax benefit from the release of certain U.S. deferred tax valuation allowances, partially offset by the $138 million of non-recurring charges highlighted above. These items are excluded from Dana's adjusted EBITDA and diluted adjusted earnings per share.
Adjusting for these non-recurring items, net income attributable to Dana for the fourth quarter of 2014 was $68 million, an increase of $26 million compared with a year ago. The increase in net income was principally driven by improved gross profit and lower SG&A, restructuring, amortization, and income tax expenses in the quarter. Partially offsetting these improvements was a higher loss from discontinued operations.
Diluted adjusted earnings per share in the fourth quarter of 2014 were $0.53, an increase of 8 percent, four cents higher than the same period last year.
Adjusted EBITDA for the fourth quarter of 2014 was $178 million, compared with $174 million in 2013, the favorable impact of higher volumes and net cost performance more than offsetting the effects of unfavorable currency. Adjusted EBITDA margin of 11.3 percent increased 60 basis points when compared with the same period a year ago.
Free cash flow for the fourth quarter totaled $118 million, $80 million lower when compared with 2013, principally reflecting lower working capital inflows as the company continued to maintain net working capital investment efficiencies achieved through 2013.
Full-Year 2014 Financial Results
Sales for the year were $6.6 billion, $152 million lower compared with a year ago, with unfavorable currency accounting for more than $200 million of the change. Cost-recovery actions increased sales by $65 million. Volume and mix was largely neutral compared with last year, as stronger demand in North American and European light- and commercial-vehicle markets were more than offset by weaker demand in global off-highway and South American medium- and heavy-truck markets.
Net income attributable to Dana for the full-year 2014 was $319 million, which included a net benefit of $41 million from the fourth quarter's non-recurring items previously highlighted. Adjusting for the effect of these non-recurring items, net income attributable to Dana was $278 million, compared with $244 million in 2013. The increase in net income was principally driven by improved gross profit and lower amortization, restructuring, and income tax expenses, partially offset by higher interest expense and loss from discontinued operations.
Diluted adjusted earnings per share for 2014 increased 12 percent to $1.99, compared with $1.77 in 2013, reflecting mostly a lower share count from the continued execution of the company's share repurchase program.
While sales were lower than a year ago on significant currency impacts and a mixed demand environment, Dana's adjusted EBITDA for 2014 was $746 million, slightly higher than 2013. Adjusted EBITDA margin for full-year 2014 rose by 30 basis points over 2013 to 11.3 percent of sales, representing a record performance and the sixth consecutive year of improvement.
The company also reported strong free cash flow of $276 million in 2014. Compared with 2013, restructuring outlays, pension contributions, and cash taxes were all lower, with increased capital spending principally for new business launches and increased interest as partial offsets. Working capital was a slight use in 2014 compared with 2013, as the company continued to maintain achieved efficiencies. At Dec. 31, 2014, cash balances, including marketable securities, totaled $1.29 billion, and total liquidity stood at $1.57 billion, including $303 million of availability under the company's undrawn U.S. credit facility.
Share Repurchase Program
In 2014, Dana's Board of Directors approved the expansion of its existing share repurchase program from $1.0 billion to $1.4 billion. During 2014, the company completed $260 million of share repurchases, and since inception of the program in late 2012, the company has repurchased or redeemed the equivalent of 51 million common shares, returning more than $1 billion to shareholders. At the end of 2014, $311 million of authorization remained under this program.
"We are pleased with our 2014 results, especially given a number of end-market challenges and currency volatility we encountered during the course of the year. Once again, we ended the year with record adjusted EBITDA margins, making it our sixth consecutive year of margin growth. We continue to generate strong free cash flow, providing us the ability to continue to invest in the business for the future and return shareholder value through execution of our share repurchase and dividend programs," said President and Chief Executive Officer Roger Wood.
"As we look forward in 2015, we're excited about the future and continue to execute initiatives to maintain our flexibility and minimize risk -- the successful divestiture of the business in Venezuela being one recent example. We remain focused on and investing in technology and innovation, and our value-added products and global capabilities are driving our increasing sales backlog. While currency volatility is likely to remain front and center for the foreseeable future, we believe our efforts and focus will allow Dana to continue to grow its top line in excess of market demand over the long term," he added.
Business Unit Performance -- Full-Year 2014 Results
Light Vehicle Driveline Technologies
Sales were $2.50 billion for 2014, compared with $2.55 billion last year, a $53 million decrease year over year. Unfavorable currency effects lowered sales by $148 million. Volume and mix provided a partial offset to the effects of currency, reflecting continued strength in full-frame light-truck production in North America along with incremental volume from several new program launches in the region. Lower end-market demand in Asia tempered the strong performance in North America. Pricing actions to recover inflation and certain currency impacts in emerging markets increased sales by about $60 million in 2014 compared with last year.
Segment EBITDA for 2014 was $250 million, $8 million higher than 2013, with EBITDA margin of 10.0 percent representing an increase of 50 basis points when compared with 2013. The effects of higher volume, pricing, and cost-reduction actions offset the impacts of significant currency headwinds and emerging market inflationary pressures, resulting in both improved EBITDA and margin performance compared with last year.
Commercial Vehicle Driveline Technologies
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