UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
|
|
|
|
||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
|
Title of Each Class |
Trading Symbol |
Name of Each Exchange on which Registered |
||
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Items 2.02 and 7.01 Results of Operations and Financial Condition and Regulation FD Disclosure
Dana Incorporated today issued a news release announcing its results for the quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this report is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits. The following item is furnished with this report.
|
Exhibit
|
Description |
|||
|
99.1 |
||||
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
DANA INCORPORATED |
|||
|
Date: April 30, 2020 |
|
By: |
/s/ Douglas H. Liedberg |
|||
|
|
|
Name: |
Douglas H. Liedberg |
|||
|
|
|
Title: |
Senior Vice President, General Counsel and Secretary |
3
Exhibit 99.1
DANA INCORPORATED
Quarterly Financial Information and Reconciliations of Non-GAAP Financial Measures
Non-GAAP Financial Measures
Adjusted EBITDA is 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 earnings 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 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 in accordance with 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 discretionary 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 in accordance with GAAP. Free cash flow and adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.
The accompanying financial information provides reconciliations of adjusted EBITDA, diluted adjusted EPS, free cash flow and adjusted free cash flow to the most directly comparable financial measures calculated and presented in accordance with GAAP. We have not provided a reconciliation of our adjusted EBITDA and diluted adjusted EPS outlook to the most comparable GAAP measures of net income (loss) and diluted EPS. Providing net income (loss) 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 (loss) and diluted EPS, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.
DANA INCORPORATED
Consolidated Statement of Operations (Unaudited)
For the Three Months Ended March 31, 2020 and 2019
|
Three Months
Ended |
||||||||
| (In millions, except per share amounts) | March 31, | |||||||
| 2020 | 2019 | |||||||
|
Net sales |
$ | 1,926 | $ | 2,163 | ||||
|
Costs and expenses |
||||||||
|
Cost of sales |
1,720 | 1,863 | ||||||
|
Selling, general and administrative expenses |
106 | 136 | ||||||
|
Amortization of intangibles |
3 | 2 | ||||||
|
Restructuring charges, net |
3 | 9 | ||||||
|
Impairment of goodwill |
(51 | ) | ||||||
|
Other income (expense), net |
4 | (13 | ) | |||||
|
|
|
|
|
|||||
|
Earnings before interest and income taxes |
47 | 140 | ||||||
|
Interest income |
2 | 2 | ||||||
|
Interest expense |
29 | 27 | ||||||
|
Earnings before income taxes |
20 | 115 | ||||||
|
Income tax expense (benefit) |
(16 | ) | 20 | |||||
|
Equity in earnings of affiliates |
2 | 6 | ||||||
|
|
|
|
|
|||||
|
Net income |
38 | 101 | ||||||
|
Less: Noncontrolling interests net income |
2 | 4 | ||||||
|
Less: Redeemable noncontrolling interests net loss |
(2 | ) | (1 | ) | ||||
|
|
|
|
|
|||||
|
Net income attributable to the parent company |
$ | 38 | $ | 98 | ||||
|
|
|
|
|
|||||
|
Net income per share available to common stockholders |
||||||||
|
Basic |
$ | 0.26 | $ | 0.68 | ||||
|
Diluted |
$ | 0.26 | $ | 0.68 | ||||
|
Weighted-average shares outstanding—Basic |
144.2 | 143.9 | ||||||
|
Weighted-average shares outstanding—Diluted |
144.8 | 144.8 | ||||||
DANA INCORPORATED
Consolidated Statement of Comprehensive Income (Unaudited)
For the Three Months Ended March 31, 2020 and 2019
|
Three Months
Ended |
||||||||
| (In millions) | March 31, | |||||||
| 2020 | 2019 | |||||||
|
Net income |
$ | 38 | $ | 101 | ||||
|
Other comprehensive income (loss), net of tax: |
||||||||
|
Currency translation adjustments |
(154 | ) | 27 | |||||
|
Hedging gains and losses |
29 | 5 | ||||||
|
Defined benefit plans |
3 | 5 | ||||||
|
|
|
|
|
|||||
|
Other comprehensive income (loss) |
(122 | ) | 37 | |||||
|
|
|
|
|
|||||
|
Total comprehensive income (loss) |
(84 | ) | 138 | |||||
|
Less: Comprehensive (income) loss attributable to noncontrolling interests |
17 | (2 | ) | |||||
|
Less: Comprehensive income attributable to redeemable noncontrolling interests |
(6 | ) | (4 | ) | ||||
|
|
|
|
|
|||||
|
Comprehensive income (loss) attributable to the parent company |
$ | (73 | ) | $ | 132 | |||
|
|
|
|
|
|||||
DANA INCORPORATED
Consolidated Balance Sheet (Unaudited)
As of March 31, 2020 and December 31, 2019
| (In millions, except share and per share amounts) | March 31, | December 31, | ||||||
| 2020 | 2019 | |||||||
|
Assets |
||||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ | 628 | $ | 508 | ||||
|
Marketable securities |
23 | 19 | ||||||
|
Accounts receivable |
||||||||
|
Trade, less allowance for doubtful accounts of $7 in 2020 and $9 in 2019 |
1,109 | 1,103 | ||||||
|
Other |
192 | 202 | ||||||
|
Inventories |
1,213 | 1,193 | ||||||
|
Other current assets |
142 | 137 | ||||||
|
|
|
|
|
|||||
|
Total current assets |
3,307 | 3,162 | ||||||
|
Goodwill |
441 | 493 | ||||||
|
Intangibles |
230 | 240 | ||||||
|
Deferred tax assets |
603 | 580 | ||||||
|
Other noncurrent assets |
133 | 120 | ||||||
|
Investments in affiliates |
178 | 182 | ||||||
|
Operating lease assets |
171 | 178 | ||||||
|
Property, plant and equipment, net |
2,172 | 2,265 | ||||||
|
|
|
|
|
|||||
|
Total assets |
$ | 7,235 | $ | 7,220 | ||||
|
|
|
|
|
|||||
|
Liabilities and equity |
||||||||
|
Current liabilities |
||||||||
|
Short-term debt |
$ | 312 | $ | 14 | ||||
|
Current portion of long-term debt |
28 | 20 | ||||||
|
Accounts payable |
1,181 | 1,255 | ||||||
|
Accrued payroll and employee benefits |
166 | 206 | ||||||
|
Taxes on income |
44 | 46 | ||||||
|
Current portion of operating lease liabilities |
42 | 42 | ||||||
|
Other accrued liabilities |
294 | 262 | ||||||
|
|
|
|
|
|||||
|
Total current liabilities |
2,067 | 1,845 | ||||||
|
Long-term debt, less debt issuance costs of $26 in 2020 and $28 in 2019 |
2,335 | 2,336 | ||||||
|
Noncurrent operating lease liabilities |
134 | 140 | ||||||
|
Pension and postretirement obligations |
440 | 459 | ||||||
|
Other noncurrent liabilities |
224 | 305 | ||||||
|
|
|
|
|
|||||
|
Total liabilities |
5,200 | 5,085 | ||||||
|
|
|
|
|
|||||
|
Commitments and contingencies |
||||||||
|
Redeemable noncontrolling interests |
175 | 167 | ||||||
|
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, |
||||||||
|
144,480,975 and 143,942,539 shares outstanding |
2 | 2 | ||||||
|
Additional paid-in capital |
2,391 | 2,386 | ||||||
|
Retained earnings |
644 | 622 | ||||||
|
Treasury stock, at cost (10,432,777 and 10,111,191 shares) |
(156 | ) | (150 | ) | ||||
|
Accumulated other comprehensive loss |
(1,098 | ) | (987 | ) | ||||
|
|
|
|
|
|||||
|
Total parent company stockholders’ equity |
1,783 | 1,873 | ||||||
|
Noncontrolling interests |
77 | 95 | ||||||
|
|
|
|
|
|||||
|
Total equity |
1,860 | 1,968 | ||||||
|
|
|
|
|
|||||
|
Total liabilities and equity |
$ | 7,235 | $ | 7,220 | ||||
|
|
|
|
|
|||||
DANA INCORPORATED
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended March 31, 2020 and 2019
|
Three Months
Ended |
||||||||
| (In millions) | March 31, | |||||||
| 2020 | 2019 | |||||||
|
Operating activities |
||||||||
|
Net income |
$ | 38 | $ | 101 | ||||
|
Depreciation |
85 | 74 | ||||||
|
Amortization |
4 | 3 | ||||||
|
Amortization of deferred financing charges |
2 | 1 | ||||||
|
Earnings of affiliates, net of dividends received |
(2 | ) | (5 | ) | ||||
|
Stock compensation expense |
4 | 5 | ||||||
|
Deferred income taxes |
(35 | ) | (14 | ) | ||||
|
Pension expense, net |
1 | 4 | ||||||
|
Impairment of goodwill |
51 | |||||||
|
Change in working capital |
(183 | ) | (175 | ) | ||||
|
Other, net |
(16 | ) | (10 | ) | ||||
|
|
|
|
|
|||||
|
Net cash used in operating activities |
(51 | ) | (16 | ) | ||||
|
|
|
|
|
|||||
|
Investing activities |
||||||||
|
Purchases of property, plant and equipment |
(63 | ) | (98 | ) | ||||
|
Acquisition of businesses, net of cash acquired |
(8 | ) | (606 | ) | ||||
|
Purchases of marketable securities |
(12 | ) | (5 | ) | ||||
|
Proceeds from sales and maturities of marketable securities |
6 | 6 | ||||||
|
Settlements of undesignated derivatives |
(3 | ) | (20 | ) | ||||
|
Other, net |
(5 | ) | (1 | ) | ||||
|
|
|
|
|
|||||
|
Net cash used in investing activities |
(85 | ) | (724 | ) | ||||
|
|
|
|
|
|||||
|
Financing activities |
||||||||
|
Net change in short-term debt |
298 | (2 | ) | |||||
|
Proceeds from long-term debt |
4 | 675 | ||||||
|
Repayment of long-term debt |
(1 | ) | (9 | ) | ||||
|
Deferred financing payments |
(12 | ) | ||||||
|
Dividends paid to common stockholders |
(15 | ) | (14 | ) | ||||
|
Distributions to noncontrolling interests |
(1 | ) | (1 | ) | ||||
|
Contributions from noncontrolling interests |
2 | 1 | ||||||
|
Repurchases of common stock |
(25 | ) | ||||||
|
Other, net |
(4 | ) | (3 | ) | ||||
|
|
|
|
|
|||||
|
Net cash provided by financing activities |
283 | 610 | ||||||
|
|
|
|
|
|||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
147 | (130 | ) | |||||
|
Cash, cash equivalents and restricted cash - beginning of period |
518 | 520 | ||||||
|
Effect of exchange rate changes on cash balances |
(29 | ) | 5 | |||||
|
|
|
|
|
|||||
|
Cash, cash equivalents and restricted cash - end of period |
$ | 636 | $ | 395 | ||||
|
|
|
|
|
|||||
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) | March 31, | |||||||
| 2020 | 2019 | |||||||
|
Net cash used in operating activities |
$ | (51 | ) | $ | (16 | ) | ||
|
Purchases of property, plant and equipment |
(63 | ) | (98 | ) | ||||
|
|
|
|
|
|||||
|
Free cash flow |
(114 | ) | (114 | ) | ||||
|
Discretionary pension contributions |
— | — | ||||||
|
|
|
|
|
|||||
|
Adjusted free cash flow |
$ | (114 | ) | $ | (114 | ) | ||
|
|
|
|
|
|||||
DANA INCORPORATED
Segment Sales and Segment EBITDA (Unaudited)
For the Three Months Ended March 31, 2020 and 2019
| Three Months Ended | ||||||||
| (In millions) | March 31, | |||||||
| 2020 | 2019 | |||||||
|
Sales |
||||||||
|
Light Vehicle |
$ | 808 | $ | 906 | ||||
|
Commercial Vehicle |
333 | 431 | ||||||
|
Off-Highway |
532 | 552 | ||||||
|
Power Technologies |
253 | 274 | ||||||
|
|
|
|
|
|||||
|
Total Sales |
$ | 1,926 | $ | 2,163 | ||||
|
|
|
|
|
|||||
|
Segment EBITDA |
||||||||
|
Light Vehicle |
$ | 83 | $ | 102 | ||||
|
Commercial Vehicle |
21 | 41 | ||||||
|
Off-Highway |
72 | 82 | ||||||
|
Power Technologies |
30 | 34 | ||||||
|
|
|
|
|
|||||
|
Total Segment EBITDA |
206 | 259 | ||||||
|
Corporate expense and other items, net |
(1 | ) | (2 | ) | ||||
|
|
|
|
|
|||||
|
Adjusted EBITDA |
$ | 205 | $ | 257 | ||||
|
|
|
|
|
|||||
DANA INCORPORATED
Reconciliation of Segment and Adjusted EBITDA to Net Income (Unaudited)
For the Three Months Ended March 31, 2020 and 2019
| Three Months Ended | ||||||||
| (In millions) | March 31, | |||||||
| 2020 | 2019 | |||||||
|
Segment EBITDA |
$ | 206 | $ | 259 | ||||
|
Corporate expense and other items, net |
(1 | ) | (2 | ) | ||||
|
|
|
|
|
|||||
|
Adjusted EBITDA |
205 | 257 | ||||||
|
Depreciation |
(85 | ) | (74 | ) | ||||
|
Amortization |
(4 | ) | (3 | ) | ||||
|
Non-service cost components of pension and OPEB costs |
(2 | ) | (6 | ) | ||||
|
Restructuring charges, net |
(3 | ) | (9 | ) | ||||
|
Stock compensation expense |
(4 | ) | (5 | ) | ||||
|
Strategic transaction expenses, net of transaction fee breakup income |
(6 | ) | (13 | ) | ||||
|
Impairment of goodwill |
(51 | ) | ||||||
|
Acquisition related inventory adjustments |
(4 | ) | ||||||
|
Non-income tax legal judgment |
6 | |||||||
|
Other items |
(3 | ) | (9 | ) | ||||
|
|
|
|
|
|||||
|
Earnings before interest and income taxes |
47 | 140 | ||||||
|
Interest income |
2 | 2 | ||||||
|
Interest expense |
29 | 27 | ||||||
|
|
|
|
|
|||||
|
Earnings before income taxes |
20 | 115 | ||||||
|
Income tax expense (benefit) |
(16 | ) | 20 | |||||
|
Equity in earnings of affiliates |
2 | 6 | ||||||
|
|
|
|
|
|||||
|
Net income |
$ | 38 | $ | 101 | ||||
|
|
|
|
|
|||||
DANA INCORPORATED
Diluted Adjusted EPS (Unaudited)
For the Three Months Ended March 31, 2020 and 2019
(In millions, except per share amounts)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2020 | 2019 | |||||||
|
Net income attributable to parent company |
$ | 38 | $ | 98 | ||||
|
Items impacting income before income taxes: |
||||||||
|
Restructuring charges |
3 | 9 | ||||||
|
Amortization |
4 | 4 | ||||||
|
Strategic transaction expenses, net of transaction breakup fee income |
6 | 13 | ||||||
|
Acquisition related inventory adjustments |
4 | |||||||
|
Non-income tax legal judgment |
(6 | ) | ||||||
|
Impairment of goodwill |
51 | |||||||
|
Loss on deal contingent forward |
13 | |||||||
|
Other items |
(1 | ) | ||||||
|
Items impacting income taxes: |
||||||||
|
Net income tax expense on items above |
(3 | ) | (5 | ) | ||||
|
Tax benefit attributable to utilization of federal tax credits, state tax law changes and valuation allowance adjustments |
(31 | ) | (16 | ) | ||||
|
|
|
|
|
|||||
|
Adjusted net income |
$ | 68 | $ | 113 | ||||
|
|
|
|
|
|||||
|
Diluted shares - as reported |
144.8 | 144.8 | ||||||
|
|
|
|
|
|||||
|
Adjusted diluted shares |
144.8 | 144.8 | ||||||
|
|
|
|
|
|||||
|
Diluted adjusted EPS |
$ | 0.47 | $ | 0.78 | ||||