Dana Incorporated today announced financial results for the third quarter of 2020.
“As our multiple end markets rebounded from the unprecedented global COVID-19 pandemic shutdown, I want to commend the Dana team for an outstanding job, first and foremost ensuring the safety of our people, while successfully bringing our global manufacturing operations back on-line to meet growing customer demand,” said Jim Kamsickas, Dana chairman and CEO. “Light truck and agriculture demand were especially strong, while many other markets, such as commercial vehicle, realized strengthened production volumes this quarter.”
“We remain intensely focused on helping our customers navigate these challenging times all while remaining diligent about safety, cost management, and strengthening our e-Propulsion capabilities,” he added.
Third-quarter 2020 Financial Results
Sales for the third quarter of 2020 totaled $1.99 billion, compared with $2.16 billion in the same period of 2019. The decrease is primarily attributable to weaker end-market demand resulting from the global pandemic shutdown and eventual restart in June. On a sequential basis, sales in the third quarter increased $916 million or 85 percent, compared with the second quarter of this year due to increased demand as customers rapidly resumed production after the pandemic related restrictions were lifted.
Dana reported net income of $45 million for the third quarter of 2020, compared with net income of $111 million in the same period of 2019, reflecting the lower operating earnings this year associated with reduced sales due to the COVID-19 pandemic.
Reported diluted earnings per share was $0.31, compared with $0.77 per share in the third quarter of 2019.
Adjusted EBITDA for the third quarter of 2020 was $201 million, compared with $250 million for the same period last year primarily due to lower sales. Targeted cost-management actions and a successful restart of operations helped to mitigate the margin impact from the sales decline and subsequent rapid recovery.
On a sequential basis, adjusted EBITDA in the third quarter was $206 million higher than in the second quarter of this year, generating a 1,060-basis point margin improvement.
Diluted adjusted earnings per share was $0.37 in the third quarter of 2020, compared with earnings of $0.74 in the same period last year. The lower year-over-year comparison was due to lower earnings in this year’s third quarter.
Operating cash flow in the third quarter of 2020 was $321 million, compared with $231 million provided in the same period of 2019.
Adjusted free cash flow was $261 million in the third quarter of 2020, compared with $125 million in 2019. The impact of lower profit in this year’s third quarter was more than offset by improved working capital efficiency, lower cash taxes and interest, and lower capital expenditures, compared with the same period last year.
The company reported it had total liquidity of approximately $2 billion as of September 30, 2020, including $976 million of available cash and marketable securities and $979 million available on its committed revolving credit facility.
Reinstates 2020 Guidance
“We were very pleased to see such a rapid recovery in global vehicle demand during the third quarter,” said Jonathan Collins, Dana’s executive vice president and chief financial officer. “The improving business conditions across all of our global end markets have enabled us to reinstate our revised, full-year financial targets. Dana remains financially strong, and we are well-positioned to capitalize on the strengthening of our businesses through the remainder of this year and into next year.”
2020 Full-year Financial Targets1
- Sales of $6.650 to $6.950 billion;
- Adjusted EBITDA of $530 million to $590 million, an implied adjusted EBITDA margin of approximately 8 percent at the midpoint of the range;
- Diluted adjusted EPS of $0.35 to $0.55;
- Operating cash flow of up to 5 percent of sales; and
- Adjusted free cash flow of up to 1 percent of sales.
1Net income and diluted EPS guidance are not provided, as discussed below in Non-GAAP Financial Information.
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