Dana Incorporated Reports Third-quarter 2019 Financial Results

MAUMEE, Ohio, Oct. 30, 2019 /PRNewswire/ —

Highlights

  • Sales of $2.16 billion
  • Net income attributable to Dana of $111 million; diluted EPS of $0.77
  • Adjusted EBITDA of $250 million, increase of $10 million; margin of 11.6 percent
  • Diluted adjusted EPS of $0.74
  • Operating cash flow of $231 million; adjusted free cash flow of $125 million
  • Amended credit agreement to further strengthen balance sheet and liquidity position
  • Announced acquisition of Nordresa, further enhancing electrification integration capabilities
  • Awarded new electric-vehicle business across all mobility markets, including $200 million medium-duty truck program with major OEM
  • Secured new business with Lonestar Specialty Vehicles to supply fully electric powertrain system
  • Announced collaboration with Valeo to supply complete 48-volt electric-vehicle systems; launches with major European customer in early 2020

Dana Incorporated (NYSE: DAN) today announced financial results for the third quarter of 2019.

“Despite the rapid onset of high volatility in our heavy-vehicle markets, Dana again achieved record sales in the third quarter, resulting in our twelfth consecutive quarter of year-over-year sales growth. This continued growth trend is being driven by exceptional customer satisfaction and execution of our strong new business backlog, in addition to our recent acquisitions,” said James Kamsickas, Dana president and chief executive officer. “As our recent announcement of new electrification business highlights, Dana’s disciplined strategy to fill out our e-Powertrain portfolio to offer our customers a complete range of solutions for the quickly evolving mobility market is providing immediate benefits to our net new business backlog.”

Third-quarter 2019 Financial Results

Sales for the third quarter of 2019 totaled $2.16 billion, compared with $1.98 billion in the same period of 2018, representing a $186 million improvement.  The increase was attributable to the benefit of recent acquisitions and backlog conversion, partially offset by lower end-market demand for heavy vehicles and unfavorable currency translation.

Dana reported a net income of $111 million for the third quarter of 2019, compared with net income of $95 million in the same period of 2018.  The improvement was primarily due to lower tax expenses offsetting higher interest expense and one-time costs related to acquisitions.

Reported diluted earnings per share were $0.77, compared with diluted earnings per share of $0.65 in the third quarter of 2018.

Adjusted EBITDA for the third quarter of 2019 was $250 million, compared with $240 million for the same period last year.  Profit in the third quarter of 2019 benefited from both organic and inorganic growth, partially offset by higher commodity costs and the impact of unfavorable currency translation related to the strengthening of the U.S. dollar. Diluted adjusted earnings per share were $0.74 in the third quarter of 2019, compared with $0.77 in the same period last year.  The lower year-over-year comparison was primarily due to higher depreciation and interest expenses offsetting higher operating earnings.

Operating cash flow in the third quarter of 2019 was $231 million, compared with $124 million in the same period of 2018. 

Adjusted free cash flow was $125 million, compared with $34 million in the third quarter of 2018.  Higher earnings combined with lower cash taxes and working capital requirements more than offset elevated investment to support new program launches.

Revised 2019 Guidance Ranges
“While we fully expect Dana to deliver continued sales and profit growth in 2019 for a third consecutive year, we have made necessary adjustments to our guidance due to  recent demand volatility in our off-highway markets, as well slowing economic growth in India and China,” said Jonathan Collins, Dana executive vice president and chief financial officer. “We remain keenly focused on delivering profitable growth in 2020 as our new business backlog, acquisition synergies, and lower capital requirements will buffer the effects of expected weaker end markets.”

2019 Full-year Financial Targets1

  • Sales of $8.550 to $8.850 billion;
  • Adjusted EBITDA of $1.00 billion to $1.07 billion, an implied adjusted EBITDA margin of approximately 11.9 percent at the midpoint of the range;
  • Diluted adjusted EPS of $2.85 to $3.25;
  • Operating cash flow of approximately 7 percent; and
  • Adjusted free cash flow of approximately 3 percent.

1Net income and diluted EPS guidance are not provided, as discussed below in Non-GAAP Financial Information.

Dana Continues to Win New Electric-vehicle Business

Dana recently announced it secured electric powertrain programs with two leading medium-duty truck manufacturers.  For the first program, the company is partnering with a major North American commercial-vehicle manufacturer to supply complete

e-Powertrain systems for a medium-duty vehicle program beginning next year.  The three-year program is expected to generate approximately $200 million in incremental sales to Dana, with vehicles available for order from the manufacturer in the second half of 2020. Separately, Dana secured a new e-Powertrain development project with a leading truck manufacturer, which will incorporate a Dana TM4® SUMO™ HP motor that is purposely developed for both hybrid and battery electric configurations.

During the quarter, the company also secured new business with Lonestar Specialty Vehicles, a leading manufacturer of fully electric and diesel-powered refurbished commercial vehicles. Dana will be providing its Spicer® Electrified™ e-Powertrain system, which will drive a new line of fully electrified terminal trucks. The Lonestar SV T22 and S22 models allow for 22 hours of continuous operation with only two hours required for a full battery recharge.  The T12 and S12 models allow for 12 hours of continuous operation and are equipped with DC fast-charging capability.

In the light-vehicle segment, Dana announced a global collaboration to develop and supply 48-volt electric-vehicle systems for new-mobility applications, including low-speed electric and hybrid e-AWD vehicles. The first system is scheduled to launch in early 2020 with a major European automaker on series-produced cars.

Dana to Host Conference Call at 9 a.m. Wednesday, Oct. 30
Dana will discuss its third-quarter results in a conference call at 9 a.m. EDT on Wednesday, Oct. 30.  Participants may listen to the audio portion of the conference call either through audio streaming online or by telephone.  Slide viewing is available online via a link provided on the Dana investor website: www.dana.com/investors.  U.S. and Canadian locations should dial 1-888-311-4590 and international locations should call 1-706-758-0054.  Please enter conference I.D. 8584377 and ask for the “Dana Incorporated’s Financial Webcast and Conference Call.”  Phone registration will be available starting at 8:30 a.m. EDT.

An audio recording of the webcast will be available after 5 p.m. EDT on Oct. 30 by dialing 1-855-859-2056 (U.S. or Canada) or 1-404-537-3406 (international) and entering conference I.D. 8584377.  A webcast replay will also be available after 5 p.m. EDT and may be accessed via Dana’s investor website.

Non-GAAP Financial Information
This release refers to adjusted EBITDA, a non-GAAP financial measure which we have defined as net income before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefit costs, and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors, and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for income before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Diluted adjusted EPS is a non-GAAP financial measure, which we have defined as adjusted net income divided by adjusted diluted shares.  We define adjusted net income as net income (loss) attributable to the parent company, excluding any nonrecurring income tax items, restructuring charges, amortization expense, and other adjustments not related to our core operations (as used in adjusted EBITDA), net of any associated income tax effects.  We define adjusted diluted shares as diluted shares as determined in accordance with GAAP based on adjusted net income.  This measure is considered useful for purposes of providing investors, analysts, and other interested parties with an indicator of ongoing financial performance that provides enhanced comparability to EPS reported by other companies.  Diluted adjusted EPS is neither intended to represent nor be an alternative measure to diluted EPS reported under GAAP.

Free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities less purchases of property, plant, and equipment.  Adjusted free cash flow is a non-GAAP financial measure which we have defined as net cash provided by (used in) operating activities excluding voluntary pension contributions less purchases of property, plant, and equipment.  We believe these measures are useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations.  Free cash flow and adjusted free cash flow are not intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported under GAAP.  Free cash flow and adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

We have not provided reconciliations of preliminary and projected adjusted EBITDA and diluted adjusted EPS to the most comparable GAAP measures of net income and diluted EPS. Providing net income and diluted EPS guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items that are included in net income and diluted EPS, including restructuring actions, asset impairments, and income tax valuation adjustments. Reconciliations of these non-GAAP measures with the most comparable GAAP measures for historical periods are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance. Please reference the “Non-GAAP Financial Information” accompanying our quarterly earnings conference call presentations on our website at www.dana.com/investors for our GAAP results and the reconciliations of these measures, were used, to the comparable GAAP measures.

Forward-Looking Statements

Certain statements and projections contained in this news release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on our current expectations, estimates, and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change.  Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” and similar expressions, and variations or negatives of these words.  These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties, and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

Dana’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition.  The forward-looking statements in this news release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.

About Dana Incorporated

Dana is a world leader in providing power-conveyance and energy-management solutions for vehicles and machinery.  The company’s portfolio improves the efficiency, performance, and sustainability of light vehicles, commercial vehicles, and off-highway equipment.  From axles, driveshafts, and transmissions to electrodynamic, thermal, sealing, and digital solutions, the company enables the propulsion of conventional, hybrid, and electric-powered vehicles by supplying nearly every vehicle manufacturer in the world.

Founded in 1904, Dana employs more than 36,000 people who are committed to delivering long-term value to customers.  Based in Maumee, Ohio, USA, and with locations in 33 countries across six continents, the company reported sales of $8.1 billion in 2018.  Having established a dynamic, high-performance culture, the company has been recognized globally as a top employer, with significant honors in Asia, India, Italy, Mexico, and the United States.  Learn more at www.dana.com.

 DANA INCORPORATED 






 Consolidated Statement of Operations (Unaudited) 






 For the Three Months Ended September 30, 2019 and 2018 
















Three Months Ended

 (In millions, except per share amounts) 



September 30,





2019


2018

 Net sales



$   2,164


$   1,978

 Costs and expenses 






 Cost of sales 



1,882


1,692

 Selling, general and administrative expenses 



128


119

 Amortization of intangibles 



2


2

 Restructuring charges, net 



5


9

 Pension settlement charge 



(2)



 Other expense, net 



(8)


(9)

 Earnings before interest and income taxes 



137


147

 Interest income 



3


3

 Interest expense 



31


24

 Earnings before income taxes 



109


126

 Income tax expense 



5


31

 Equity in earnings of affiliates 



8


1

 Net income 



112


96

 Less: Noncontrolling interests net income 



3


1

 Less: Redeemable noncontrolling interests net loss 


(2)



 Net income attributable to the parent company 



$    111


$       95








 Net income per share available to common stockholders 





 Basic 




$   0.77


$   0.66

 Diluted 



$   0.77


$   0.65








 Weighted-average common shares outstanding – Basic 


144.0


144.7

 Weighted-average common shares outstanding – Diluted 


144.8


145.9

 DANA INCORPORATED 






 Consolidated Statement of Operations (Unaudited) 





 For the Nine Months Ended September 30, 2019 and 2018 
















Nine Months Ended

 (In millions, except per share amounts) 



September 30,





2019


2018

 Net sales 




$   6,633


$    6,170

 Costs and expenses 






 Cost of sales 



5,725


5,269

 Selling, general and administrative expenses 



404


383

 Amortization of intangibles 



8


6

 Restructuring charges, net 



23


17

 Impairment of indefinite-lived intangible asset 





(20)

 Adjustment in fair value of disposal group held for sale 




3

 Pension settlement charge 



(260)



 Other expense, net 



(31)


(19)

 Earnings before interest and income taxes 



182


459

 Interest income 



8


8

 Interest expense 



92


71

 Earnings before income taxes 



98


396

 Income tax expense (benefit) 



(27)


75

 Equity in earnings of affiliates 



22


13

 Net income 



147


334

 Less: Noncontrolling interests net income 



9


6

 Less: Redeemable noncontrolling interests net income (loss) 


(3)


1

 Net income attributable to the parent company 



$     141


$     327








 Net income per share available to common stockholders 





 Basic 




$    0.98


$    2.25

 Diluted 



$    0.97


$    2.23








 Weighted-average common shares outstanding – Basic 


144.0


145.1

 Weighted-average common shares outstanding – Diluted 


144.8


146.6

 DANA INCORPORATED 





 Consolidated Statement of Comprehensive Income (Unaudited) 





 For the Three Months Ended September 30, 2019 and 2018 


















Three Months Ended

 (In millions) 


September 30,






2019


2018

 Net income 


$   112


$   96

 Other comprehensive income (loss), net of tax: 





Currency translation adjustments


(46)


(19)

Hedging gains and losses


8


3

Defined benefit plans


5


21

Other comprehensive income (loss)


(33)


5

Total comprehensive income


79


101

Less: Comprehensive loss attributable to noncontrolling interests


9



Less: Comprehensive income attributable to redeemable noncontrolling interests


(3)



Comprehensive income attributable to the parent company


$     85


$  101

 DANA INCORPORATED 





 Consolidated Statement of Comprehensive Income (Unaudited) 





 For the Nine Months Ended September 30, 2019 and 2018 


















Nine Months Ended

 (In millions) 


September 30,






2019


2018

 Net income 


$   147


$   334

 Other comprehensive income (loss), net of tax: 





Currency translation adjustments


(16)


(65)

Hedging gains and losses


15


(11)

Defined benefit plans


365


34

Other comprehensive income (loss)


364


(42)

Total comprehensive income


511


292

Less: Comprehensive loss attributable to noncontrolling interests


4



Less: Comprehensive income attributable to redeemable noncontrolling interests


(6)



Comprehensive income attributable to the parent company


$   509


$   292

 DANA INCORPORATED 




 Consolidated Balance Sheet (Unaudited) 




 As of September 30, 2019 and December 31, 2018 










 (In millions, except share and per share amounts) 

September 30,


December 31,




2019


2018

 Assets 





 Current assets 




 Cash and cash equivalents 

$            402


$            510

 Marketable securities 

20


21

 Accounts receivable 





 Trade, less allowance for doubtful accounts of $8 in 2019 and $9 in 2018 

1,285


1,065


 Other 

198


178

 Inventories 

1,233


1,031

 Other current assets 

135


102



 Total current assets 

3,273


2,907

 Goodwill 

530


264

 Intangibles 

232


164

 Deferred tax assets 

539


445

 Other noncurrent assets 

112


80

 Investments in affiliates 

172


208

 Operating lease assets 

174



 Property, plant and equipment, net 

2,199


1,850



 Total assets 

$        7,231


$        5,918







 Liabilities and equity 




 Current liabilities 




 Short-term debt 

$            109


$                8

 Current portion of long-term debt 

13


20

 Accounts payable 

1,285


1,217

 Accrued payroll and employee benefits 

208


186

 Taxes on income 

55


47

 Current portion of operating lease liabilities 

41



 Other accrued liabilities 

279


269



 Total current liabilities 

1,990


1,747

 Long-term debt, less debt issuance costs of $27 in 2019 and $18 in 2018 

2,346


1,755

 Noncurrent operating lease liabilities 

136



 Pension and postretirement obligations 

418


561

 Other noncurrent liabilities 

289


313


 Total liabilities 

5,179


4,376

 Commitments and contingencies 




 Redeemable noncontrolling interests 

174


100

 Parent company stockholders’ equity 





 Preferred stock, 50,000,000 shares authorized, $0.01 par value, 






 no shares outstanding 



 Common stock, 450,000,000 shares authorized, $0.01 par value, 






 143,923,921 and 144,663,403 shares outstanding 

2


2


 Additional paid-in capital 

2,381


2,368


 Retained earnings 

552


456


 Treasury stock, at cost (10,103,374 and 8,342,185 shares) 

(150)


(119)


 Accumulated other comprehensive loss 

(994)


(1,362)



 Total parent company stockholders’ equity 

1,791


1,345

 Noncontrolling interests 

87


97



 Total equity 

1,878


1,442



 Total liabilities and equity 

$        7,231


$        5,918

 DANA INCORPORATED 






 Consolidated Statement of Cash Flows (Unaudited) 





 For the Three Months Ended September 30, 2019 and 2018 















Three Months Ended

 (In millions) 


September 30,




2019


2018

 Operating activities 





 Net income 


$         112


$            96

 Depreciation 


82


63

 Amortization 


4


3

 Amortization of deferred financing charges 


2


1

 Earnings of affiliates, net of dividends received 


(6)



 Stock compensation expense 


5


4

 Deferred income taxes 


(15)


(2)

 Pension expense, net 




1

 Change in working capital 


50


(37)

 Other, net 


(3)


(5)

 Net cash provided by operating activities 


231


124







 Investing activities 





 Purchases of property, plant and equipment 


(108)


(90)

 Acquisition of businesses, net of cash acquired 


(12)



 Purchases of marketable securities 


(12)


(7)

 Proceeds from maturities of marketable securities 


7


7

 Proceeds from sale of subsidiary, net of cash disposed 


1


(6)

 Settlements of undesignated derivatives 


(1)



 Other, net 


(7)


(2)

 Net cash used in investing activities 


(132)


(98)







 Financing activities 





 Net change in short-term debt 


95


(8)

 Repayment of long-term debt 


(102)


(6)

 Deferred financing payments 


(4)



 Dividends paid to common stockholders 


(14)


(14)

 Distributions to noncontrolling interests 


(2)


(3)

 Sale of interest to noncontrolling shareholder 


53



 Contributions from noncontrolling interests 


2


22

 Payments to acquire redeemable noncontrolling interests 




(43)

 Net cash provided by (used in) financing activities 


28


(52)







 Net increase (decrease) in cash, cash equivalents and restricted cash 


127


(26)

 Cash, cash equivalents and restricted cash – beginning of period 


298


343

 Effect of exchange rate changes on cash balances 


(13)



 Less: Cash contributed to disposal group 




10

 Cash, cash equivalents and restricted cash – end of period 


$         412


$         327

 DANA INCORPORATED 






 Consolidated Statement of Cash Flows (Unaudited) 





 For the Nine Months Ended September 30, 2019 and 2018 















Nine Months Ended

 (In millions) 


September 30,




2019


2018

 Operating activities 





 Net income 


$         147


$         334

 Depreciation 


235


187

 Amortization 


12


8

 Amortization of deferred financing charges 


5


3

 Earnings of affiliates, net of dividends received 


(3)


5

 Stock compensation expense 


15


13

 Deferred income taxes 


(120)


(47)

 Pension expense, net 


207


2

 Impairment of indefinite-lived intangible asset 




20

 Adjustment in fair value of disposal group held for sale 




(2)

 Change in working capital 


(197)


(269)

 Other, net 


(13)


(17)

 Net cash provided by operating activities 


288


237







 Investing activities 





 Purchases of property, plant and equipment 


(298)


(235)

 Acquisition of businesses, net of cash acquired 


(666)


(151)

 Proceeds from previous acquisition 




9

 Purchases of marketable securities 


(24)


(36)

 Proceeds from sales of marketable securities 


6


6

 Proceeds from maturities of marketable securities 


19


30

 Proceeds from sale of subsidiary, net of cash disposed 


1


(6)

 Settlements of undesignated derivatives 


(20)



 Other, net 


(13)


(2)

 Net cash used in investing activities 


(995)


(385)







 Financing activities 





 Net change in short-term debt 


92


(13)

 Proceeds from long-term debt 


675



 Repayment of long-term debt 


(121)


(8)

 Deferred financing payments 


(16)



 Dividends paid to common stockholders 


(43)


(43)

 Distributions to noncontrolling interests 


(14)


(7)

 Sale of interest to noncontrolling shareholder 


53



 Contributions from noncontrolling interests 


4


22

 Payments to acquire redeemable noncontrolling interests 




(43)

 Repurchases of common stock 


(25)


(25)

 Other, net 




(5)

 Net cash provided by (used in) financing activities 


605


(122)







 Net decrease in cash, cash equivalents and restricted cash 


(102)


(270)

 Cash, cash equivalents and restricted cash – beginning of period 


520


610

 Effect of exchange rate changes on cash balances 


(6)


(13)

 Cash, cash equivalents and restricted cash – end of period 


$         412


$         327

 DANA INCORPORATED 







 Reconciliation of Net Cash Provided by Operating Activities to 

   Free Cash Flow and Adjusted Free Cash Flow (Unaudited) 
















Three Months Ended


 (In millions) 


September 30,




2019


2018


 Net cash provided by operating activities 


$         231


$       124


 Purchase of property, plant and equipment 


(108)


(90)


 Free cash flow 


123


34


 Discretionary pension contributions 


2



 Adjusted free cash flow 


$         125


$         34











Nine Months Ended


 (In millions) 


September 30,




2019


2018


 Net cash provided by operating activities 


$         288


$       237


 Purchase of property, plant and equipment 


(298)


(235)


 Free cash flow 


(10)


2


 Discretionary pension contributions 


64



 Adjusted free cash flow 


$           54


$            2









 (In millions) 


2019






Guidance




 Net cash provided by operating activities 


 ~ 

$  620




 Purchase of property, plant and equipment 


 ~ 

(425)




 Free cash flow 



195




 Discretionary pension contributions 


 ~ 

65




 Adjusted free cash flow 


 ~ 

$  260




 DANA INCORPORATED 






 Segment Sales and Segment EBITDA (Unaudited) 



 For the Three Months Ended September 30, 2019 and 2018 















Three Months Ended

 (In millions) 



September 30,




2019


2018

 Sales 






Light Vehicle



$           930


$           879

Commercial Vehicle



398


406

Off-Highway



582


425

Power Technologies



254


268

 Total Sales 



$        2,164


$        1,978







 Segment EBITDA 






Light Vehicle



$           113


$           102

Commercial Vehicle



33


39

Off-Highway



79


69

Power Technologies



28


33

 Total Segment EBITDA 



253


243

 Corporate expense and other items, net 



(3)


(3)

 Adjusted EBITDA 



$           250


$           240

 DANA INCORPORATED 






 Segment Sales and Segment EBITDA (Unaudited) 



 For the Nine Months Ended September 30, 2019 and 2018 















Nine Months Ended

 (In millions) 



September 30,




2019


2018

 Sales 






Light Vehicle



$        2,763


$        2,702

Commercial Vehicle



1,266


1,217

Off-Highway



1,808


1,402

Power Technologies



796


849

 Total Sales 



$        6,633


$        6,170







 Segment EBITDA 






Light Vehicle



$           333


$           297

Commercial Vehicle



115


114

Off-Highway



264


220

Power Technologies



90


117

 Total Segment EBITDA 



802


748

 Corporate expense and other items, net 



(9)


(14)

 Adjusted EBITDA 



$           793


$           734

 DANA INCORPORATED 





 Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited) 


 For the Three Months Ended September 30, 2019 and 2018 

















Three Months Ended

 (In millions) 


September 30,



2019


2018

 Segment EBITDA 


$           253


$           243

Corporate expense and other items, net


(3)


(3)

 Adjusted EBITDA 


250


240

Depreciation


(82)


(63)

Amortization


(4)


(3)

Non-service cost components of pension and OPEB costs


(4)


(3)

Pension settlement charge


(2)



Restructuring charges, net


(5)


(9)

Stock compensation expense


(5)


(4)

Strategic transaction expenses


(8)


(6)

Acquisition related inventory adjustments


(3)



Other items




(5)

 Earnings before interest and income taxes 


137


147

Interest expense


31


24

Interest income


3


3

 Earnings before income taxes 


109


126

 Income tax expense 


5


31

 Equity in earnings of affiliates 


8


1

Net income


$           112


$             96

 DANA INCORPORATED 





 Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited) 


 For the Nine Months Ended September 30, 2019 and 2018 












Nine Months Ended

 (In millions) 


September 30,



2019


2018

 Segment EBITDA 


$           802


$           748

Corporate expense and other items, net


(9)


(14)

 Adjusted EBITDA 


793


734

Depreciation


(235)


(187)

Amortization


(12)


(8)

Non-service cost components of pension and OPEB costs


(19)


(10)

Pension settlement charge


(260)



Restructuring charges, net


(23)


(17)

Stock compensation expense


(15)


(13)

Strategic transaction expenses, net of transaction breakup fee income


(32)


(13)

Acquisition related inventory adjustments


(12)



Non-income tax legal judgment


6



Other items


(9)


(10)

Impairment of indefinite-lived intangible asset




(20)

Adjustment in fair value of disposal group held for sale




3

 Earnings before interest and income taxes 


182


459

Interest expense


92


71

Interest income


8


8

 Earnings before income taxes 


98


396

 Income tax expense (benefit) 


(27)


75

 Equity in earnings of affiliates 


22


13

Net income


$           147


$           334

 DANA INCORPORATED 





 Diluted Adjusted EPS (Unaudited) 





 For the Three Months Ended September 30, 2019 and 2018 











 (In millions, except per share amounts) 








Three Months Ended




September 30,




2019


2018

 Net income attributable to parent company 


$           111


$             95

 Items impacting income before income taxes: 






 Restructuring charges 


5


9


 Amortization of intangibles 


4


3


 Strategic transaction expenses 


8


6


 Acquisition related inventory adjustments 


3




 Pension settlement charge 


2




 Other items 


2


5

 Items impacting income taxes: 






 Net income tax expense on items above 


(5)


(5)


 Net tax benefit attributable to valuation allowance adjustments, 






     federal tax credit adjustments and state tax law changes 


(22)



 Adjusted net income 


$           108


$           113







 Diluted shares – as reported 


144.8


145.9

 Adjusted diluted shares 


144.8


145.9







 Diluted adjusted EPS 


$          0.74


$          0.77

 DANA INCORPORATED 





 Diluted Adjusted EPS (Unaudited) 





 For the Nine Months Ended September 30, 2019 and 2018 











 (In millions, except per share amounts) 








Nine Months Ended




September 30,




2019


2018

 Net income attributable to parent company 


$           141


$           327

 Items impacting income before income taxes: 






 Restructuring charges 


23


17


 Amortization of intangibles 


12


8


 Strategic transaction expenses, net of transaction breakup fee income 


32


13


 Loss on deal contingent forward 


13




 Acquisition related inventory adjustments 


12




 Non-income tax legal judgment 


(6)




 Pension settlement charge 


260




 Impairment of indefinite-lived intangible asset 




20


 Other items 




3

 Items impacting income taxes: 






 Net income tax expense on items above 


(24)


(15)


 Net tax benefit attributable to valuation allowance adjustments, 






     federal tax credit adjustments and state tax law changes 


(116)


(41)

 Adjusted net income 


$           347


$           332







 Diluted shares – as reported 


144.8


146.6

 Adjusted diluted shares 


144.8


146.6







 Diluted adjusted EPS 


$          2.40


$          2.26

SOURCE Dana Incorporated

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