Dana Holding Corporation Reports Solid Third-Quarter 2009 Results
Continued Cost Savings, Operational Improvements, and Successful Equity Offering Contribute to Strong Liquidity, Improved Balance Sheet
MAUMEE, Ohio, Nov. 3 -- -- EBITDA of $101 million, up $7 million over second quarter -- Sales of $1,329 million, a 12-percent increase over prior quarter -- Positive free cash flow nearly doubled to $145 million -- Successful equity offering raises $250 million -- Net debt reduced by 67% to $182 million -- Available liquidity increased by 39% to $920 million
Dana Holding Corporation today announced continued improved results for the third-quarter of 2009.
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Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) was $101 million, up $7 million from the prior quarter. The improvement was primarily driven by increased production volumes and operational improvements.
The company narrowed its third-quarter net loss to $38 million, compared to a loss of $256 million during the same period last year. Third-quarter sales of $1,329 million, while down 31 percent from the same period last year, increased by $139 million compared with the prior quarter. The increase in sales over the past quarter was the result of an improving industry across most segments and regions.
Successful Equity Offering Raises $250 Million for Debt Repayment, Growth Opportunities
Dana recently completed a successful public offering of common stock that raised approximately $250 million, including $33 million in proceeds from the sale of additional shares sold in October. The company intends to use the net proceeds from the offering for general corporate purposes, including restructuring of operations, and to maintain flexibility for future growth. Additionally, in accordance with its credit agreement, the company used approximately 50 percent of the proceeds to repay debt.
At September 30, 2009, cash balances had increased to $814 million, compared to $553 million at June 30, 2009. Total available liquidity rose by 39 percent to $920 million, while net debt was reduced to $182 million, a 67-percent decrease from the second quarter.
"We are pleased that our cost savings and operational improvements continued to take hold during the third quarter," said Dana President and CEO Jim Sweetnam. "In combination with the successful equity offering, these improvements have provided us with strong liquidity and an improved balance sheet. "While there is certainly more to do, we are well positioned for growth opportunities moving forward."
Restructuring Actions Leading to Higher Margins
Despite reduced production volumes during the first nine months of 2009, Dana's cost reductions and pricing improvements resulted in significant margin improvement over the same period one year ago. Third-quarter 2009 gross margin was 6.2 percent, compared with 2.5 percent in the same period in 2008.
The increase in positive free cash flow, $145 million compared with $73 million during the second quarter, was driven by continued improvements in EBITDA and management of working capital.
Nine-Month Results
Sales for the nine months ended September 30, 2009, were $3,735 million, which compares with $6,574 million for the same period in 2008. For the first nine months of 2009, the company reported a net loss of $195 million compared with net income of $281 million for the same period in 2008. The nine-month 2008 results include a net gain of $754 million recognized in connection with the company's emergence from bankruptcy and application of fresh start accounting. EBITDA for the first nine months of 2009 was $211 million, compared with EBITDA of $345 million during the same period in 2008.
In addition, cost reduction efforts contributed to a more than $200 million increase in year-to-date cost reductions compared with 2008.
"We remain on target to achieve our 2009 objectives for cost reductions, pricing improvements, and cash generation," Sweetnam added. "At a macro level, we are seeing a very gradual improvement in the broader economy, which supports our outlook for modest near-term recovery in the majority of our global markets."
Dana to Host Third-Quarter Conference Call at 10:30 a.m. Today
Dana will discuss its third-quarter results in a conference call at 10:30 a.m. EST today. Participants may listen to the audio portion of the conference call either through audio streaming online or by telephone. Slide viewing is only available online via a link provided on the Dana Investor Web site. To dial into the conference call, domestic locations should call 1-888-311-4590 (Conference I.D. # 36174063). International locations should call 1-706-758-0054 (Conference I.D. # 36174063). Please ask for the Dana Holding Corporation Financial Webcast and Conference Call. Phone registration will be available beginning at 10 a.m. EST. An audio recording of the call will be available after 5 p.m. To access this recording, please dial 1-800-642-1687 (U.S. or Canada) or 1-706-645-9291 (international) and enter the conference I.D. number 36174063. A webcast replay will also be available after 5 p.m. today, and may be accessed via the Dana Investor Web site.
Non-GAAP Measures
In connection with Dana's emergence from bankruptcy on January 31, 2008, and the application of fresh start accounting in accordance with the provisions of the American Institute of Certified Public Accountants' Statement of Position 90-7, the post-emergence results of the successor company for the eight months ended September 30, 2008 and the pre-emergence results of the predecessor company for the one month ended January 31, 2008 are presented separately as successor and predecessor results in the financial statements presented in accordance with generally accepted accounting principles (GAAP). This presentation is required by GAAP as the successor company is considered to be a new entity and the results of the new entity reflect the application of fresh start accounting. For the readers' convenience and interest in this earnings release, we have combined the separate successor and predecessor periods to derive combined results for the nine months ended September 30, 2008. The financial information accompanying this release provides the separate successor and predecessor GAAP results for the applicable periods, along with the combined results described above for the first nine months of 2008.
This release refers to EBITDA, which we've defined to be earnings before interest, taxes, depreciation, amortization and restructuring. EBITDA is a non-GAAP financial measure, and the measure currently being used by Dana as the primary measure of its reportable operating segment performance. EBITDA was selected as the primary measure for operating segment performance as well as a relevant measure of Dana's overall performance given the enhanced comparability and usefulness after application of fresh start accounting. The most significant impact to Dana's ongoing results of operations as a result of applying fresh start accounting is higher depreciation and amortization.
By using EBITDA, which is a performance measure that excludes depreciation and amortization, the comparability of results is enhanced. Management also believes that EBITDA is an important measure since the financial covenants of our primary debt agreements are EBITDA-based, and our management incentive performance programs are based, in part, on EBITDA. Because it is a non-GAAP measure, EBITDA should not be considered a substitute for net income or other reported results prepared in accordance with GAAP. The financial information accompanying this release provides a reconciliation of EBITDA for the periods presented to the reported income (loss) from continuing operations before income taxes, which is a GAAP measure.
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," 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 Holding Corporation
Dana is a world leader in the supply of axles; driveshafts; and structural, sealing, and thermal-management products; as well as genuine service parts. The company's customer base includes virtually every major vehicle manufacturer in the global automotive, commercial vehicle, and off-highway markets. Based in Maumee, Ohio, the company employs approximately 23,000 people in 26 countries and reported 2008 sales of $8.1 billion. For more information, please visit: www.dana.com.
DANA HOLDING CORPORATION
Consolidated Statement of Operations (Unaudited)
For the Three Months Ended September 30, 2009 and 2008
Three Months
Ended
September 30,
-------------
2009 2008
---- ----
Net sales $1,329 $1,929
Costs and expenses
Cost of sales 1,247 1,881
Selling, general and administrative expenses 73 87
Amortization of intangibles 18 18
Realignment charges, net 14 16
Impairment of goodwill 105
Impairment of intangible assets 3
Other income, net 10 2
--- ---
Loss from continuing operations before interest,
reorganization items and income taxes (13) (179)
Interest expense 36 37
Reorganization items 1
--- ---
Loss from continuing operations before income
taxes (49) (217)
Income tax benefit (expense) 9 (24)
Equity in earnings of affiliates 2 (13)
--- ---
Loss from continuing operations (38) (254)
Loss from discontinued operations (1)
--- ---
Net loss (38) (255)
Less: Noncontrolling interests net income 1
--- ---
Net loss attributable to the parent company (38) (256)
Preferred stock dividend requirements 8 8
--- ---
Net loss available to common stockholders $(46) $(264)
==== =====
Loss per share from continuing operations
attributable to parent company stockholders:
Basic $(0.45) $(2.64)
Diluted $(0.45) $(2.64)
Loss per share from discontinued operations
attributable to parent company stockholders:
Basic $- $(0.02)
Diluted $- $(0.02)
Net loss per share attributable to parent
company stockholders:
Basic $(0.45) $(2.66)
Diluted $(0.45) $(2.66)
Average common shares outstanding
Basic 101 100
Diluted 101 100
DANA HOLDING CORPORATION
Consolidated Statement of Operations (Unaudited)
For the Nine Months Ended September 30, 2009 and 2008
Dana Combined (1) Dana Prior Dana
---- ------------ ---- ----------
Eight Months One Month
Nine Months Ended Ended Ended
September 30, September 30, January 31,
-------------
2009 2008 2008 2008
---- ---- ---- ----
Net sales $3,735 $6,574 $5,823 $751
Costs and expenses
Cost of sales 3,598 6,274 5,572 702
Selling, general and
administrative
expenses 217 270 236 34
Amortization of
intangibles 53 49 49
Realignment charges,
net 93 73 61 12
Impairment of goodwill 180 180
Impairment of
intangible assets 6 10 10
Other income, net 100 62 54 8
--- --- --- ---
Income (loss) from
continuing operations
before interest,
reorganization items
and income taxes (132) (220) (231) 11
Interest expense 108 107 99 8
Reorganization items (2) 120 22 98
Fresh start accounting
adjustments 1,009 1,009
----- ----- ----- -----
Income (loss) from
continuing operations
before income taxes (238) 562 (352) 914
Income tax benefit
(expense) 39 (255) (56) (199)
Equity in earnings
of affiliates (2) (8) (10) 2
--- --- --- ---
Income (loss) from
continuing operations (201) 299 (418) 717
Loss from discontinued
operations (10) (4) (6)
---- --- --- ---
Net income (loss) (201) 289 (422) 711
Less: Noncontrolling
interests net income
(loss) (6) 8 6 2
--- --- --- ---
Net income (loss)
attributable to the
parent company (195) 281 (428) 709
Preferred stock
dividend requirements 24 21 21
--- --- --- ---
Net income (loss)
available to common
stockholders $(219) $260 $(449) $709
===== ==== ===== ====
Income (loss) per share
from continuing
operations attributable
to parent company
stockholders:
Basic $(2.17) $(4.45) $4.77
Diluted $(2.17) $(4.45) $4.75
Loss per share from
discontinued
operations
attributable to
parent company
stockholders:
Basic $- $(0.04) $(0.04)
Diluted $- $(0.04) $(0.04)
Net income (loss)
per share attributable
to parent company
stockholders:
Basic $(2.17) $(4.49) $4.73
Diluted $(2.17) $(4.49) $4.71
Average common shares
outstanding
Basic 100 100 150
Diluted 100 100 150
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the nine months
ended September 30, 2008.
DANA HOLDING CORPORATION
Consolidated Balance Sheet (Unaudited)
As of September 30, 2009 and December 31, 2008
September 30, December 31,
Assets 2009 2008
---- ----
Current assets
Cash and cash equivalents $814 $777
Accounts receivable
Trade, less allowance for doubtful accounts
of $19 in 2009 and $23 in 2008 800 827
Other 158 170
Inventories
Raw materials 309 394
Work in process and finished goods 370 521
Other current assets 75 58
--- ---
Total current assets 2,526 2,747
Goodwill 113 108
Intangibles 508 569
Investments and other assets 242 207
Investments in affiliates 135 135
Property, plant and equipment, net 1,738 1,841
----- -----
Total assets $5,262 $5,607
====== ======
Liabilities and equity
Current liabilities
Notes payable, including current portion of
long-term debt $30 $70
Accounts payable 643 824
Accrued payroll and employee benefits 122 120
Accrued realignment costs 30 65
Taxes on income 65 93
Other accrued liabilities 276 274
--- ---
Total current liabilities 1,166 1,446
Long-term debt 966 1,181
Deferred employee benefits and other non-current
liabilities 867 845
Commitments and contingencies
----- -----
Total liabilities 2,999 3,472
Parent company stockholders' equity
Preferred stock, 50,000,000 shares authorized
Series A, $0.01 par value, 2,500,000
issued and outstanding 242 242
Series B, $0.01 par value, 5,400,000
issued and outstanding 529 529
Common stock, $.01 par value, 450,000,000 authorized,
134,164,308 issued and outstanding 1 1
Additional paid-in capital 2,545 2,321
Accumulated deficit (925) (706)
Accumulated other comprehensive loss (228) (359)
---- ----
Total parent company stockholders' equity 2,164 2,028
Noncontrolling interests 99 107
--- ---
Total equity 2,263 2,135
----- -----
Total liabilities and equity $5,262 $5,607
====== ======
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended September 30, 2009 and 2008
Three Months
Ended
September 30,
-------------
2009 2008
---- ----
Cash flows - operating activities
Net loss $(38) $(255)
Depreciation 79 74
Amortization of intangibles 22 22
Amortization of deferred financing charges and
original issue discount 9 6
Impairment of goodwill and other intangible
Assets 108
Deferred income taxes (5) (1)
Loss on extinguishment of debt 5
Reorganization:
Reorganization items net of cash payments (1)
Payment of claims (1) (3)
Change in working capital 84 (59)
Other, net 9 27
--- ---
Net cash flows provided by (used in) operating
activities (1) 165 (82)
--- ---
Cash flows - investing activities
Purchases of property, plant and equipment (1) (20) (72)
Proceeds from sale of businesses and assets 1
Other 4
--- ---
Net cash flows used in investing activities (19) (68)
--- ---
Cash flows - financing activities
Net change in short-term debt (1) 14
Deferred financing payments (1)
Proceeds from long-term debt 2
Repayment of long-term debt (115) (4)
Proceeds from issuance of common stock 217
Dividends paid to preferred stockholders (7)
Dividends paid to noncontrolling interests (3) (1)
Other (1) 8
--- ---
Net cash flows provided by financing
activities 99 9
--- ---
Net increase (decrease) in cash and cash
equivalents 245 (141)
Cash and cash equivalents - beginning of
period 553 1,191
Effect of exchange rate changes on cash
balances 16 (43)
--- ---
Cash and cash equivalents - end of period $814 $1,007
==== ======
(1) Free cash flow of $145 in 2009 and ($151) in 2008 is the sum of net
cash provided by (used in) operating activities (excluding claims
payments) reduced by the purchases of property, plant and equipment.
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows (Unaudited)
For the Nine Months Ended September 30, 2009 and 2008
Dana Combined (1) Dana Prior Dana
---- ------------ ---- ----------
Eight Months One Month
Nine Months Ended Ended Ended
September 30, September 30, January 31,
-------------
2009 2008 2008 2008
---- ---- ---- ----
Cash flows - operating
activities
Net loss $(201) $289 $(422) $711
Depreciation 231 217 194 23
Amortization of
intangibles 64 60 60
Amortization of inventory
valuation 49 49
Amortization of
deferred financing
charges and original
issue discount 27 17 17
Impairment of goodwill
and other intangible
assets 6 190 190
Deferred income taxes (31) 173 (18) 191
Gain on extinguishment
of debt (35)
Reorganization:
Reorganization items
net of cash
payments (4) 55 (24) 79
Payment of claims (2) (100) (100)
Payments to VEBAs (2) (788) (733) (55)
Gain on settlement of
liabilities subject to
compromise (27) (27)
Fresh start adjustments (1,009) (1,009)
Pension contributions
in excess of expense (5) (32) (32)
Change in working
capital 49 (213) (152) (61)
Other, net (13) 64 38 26
--- --- --- ---
Net cash flows provided
by (used in) operating
activities (2) 88 (1,055) (933) (122)
-- ------ ---- ----
Cash flows - investing
activities purchases of
property, plant and
equipment (2) (74) (164) (148) (16)
Proceeds from sale of
businesses and assets 3 5 5
Change in restricted cash 93 93
Other (5) (5)
--- --- ---- ---
Net cash flows provided
by (used in) investing
activities (71) (71) (148) 77
--- --- ---- ---
Cash flows - financing
activities
Net change in short-
term debt (36) (92) (74) (18)
Advance received on
corporate facility
sale 11
Proceeds from Exit
Facility debt 1,430 80 1,350
Deferred financing
payments (1) (42) (2) (40)
Proceeds from long-term
debt 5
Repayment of long-term
debt (197) (11) (11)
Proceeds from issuance
of common stock 217
Dividends paid to
preferred stockholders (18) (18)
Dividends paid to
noncontrolling
interests (5) (6) (6)
Repayment of debtor-in-
possession facility (900) (900)
Payment of DCC Medium Term
Notes (136) (136)
Original issue discount
payment (114) (114)
Issuance of Series A and
Series B preferred stock 771 771
Other (1) 1 (1)
--- --- --- ---
Net cash flows provided
by (used in) financing
activities (7) 882 (30) 912
--- --- --- ---
Net increase (decrease)
in cash and cash
equivalents 10 (244) (1,111) 867
Cash and cash
equivalents - beginning
of period 777 1,271 2,147 1,271
Effect of exchange rate
changes on cash
balances 27 (24) (29) 5
Net change in cash of
discontinued
operations 4 4
---- ---- ------ ----
Cash and cash
equivalents - end of
period $814 $1,007 $1,007 $2,147
==== ====== ====== ======
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the nine months
ended September 30, 2008.
(2) Free cash flow of $14 in 2009 and ($331) in 2008 is the sum of net
cash provided by (used in) operating activities (excluding claims
payments) reduced by the purchases of property, plant and equipment.
DANA HOLDING CORPORATION
Segment Sales & EBITDA
For the Three Months Ended September 30, 2009 and 2008
Three Months
Ended
September 30,
-------------
SALES 2009 2008
---- ----
Light Vehicle Driveline $547 $671
Sealing 140 175
Thermal 45 60
Structures 157 192
Commercial Vehicle 256 405
Off-Highway 184 424
Other 2
------ ------
Total Sales $1,329 $1,929
====== ======
EBITDA
Light Vehicle Driveline $46 $20
Sealing 11 14
Thermal 3 (2)
Structures 11 5
Commercial Vehicle 26 7
Off-Highway 11 17
--- ---
Segment EBITDA 108 61
Shared services and administrative (5) (6)
Other expense, net (2) (5)
Foreign exchange not in segments (3)
---- ---
EBITDA $101 $47
==== ===
DANA HOLDING CORPORATION
Segment Sales and EBITDA
For the Nine Months Ended September 30, 2009 and 2008
Dana Combined (1) Dana Prior Dana
---- ------------ ---- ----------
Eight Months One Month
Nine Months Ended Ended Ended
September 30, September 30, January 31,
-------------
SALES 2009 2008 2008 2008
---- ---- ---- ----
Light Vehicle
Driveline $1,426 $2,376 $2,095 $281
Sealing 377 571 507 64
Thermal 126 217 189 28
Structures 403 717 627 90
Commercial Vehicle 763 1,251 1,121 130
Off-Highway 640 1,436 1,279 157
Other 6 5 1
------ --- --- ---
Total Sales $3,735 $6,574 $5,823 $751
====== ====== ====== ====
EBITDA
Light Vehicle
Driveline $79 $106 $96 $10
Sealing 11 56 50 6
Thermal 3 7 4 3
Structures 20 49 45 4
Commercial Vehicle 53 53 47 6
Off-Highway 27 106 92 14
--- --- --- ---
Segment EBITDA 193 377 334 43
Shared services and
administrative (15) (19) (16) (3)
Other income
(expense), net 30 (10) (8) (2)
Foreign exchange
not in segments 3 (3) (3)
--- --- --- ---
EBITDA $211 $345 $307 $38
==== ==== ==== ===
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the nine months
ended September 30, 2008.
DANA HOLDING CORPORATION
Segment EBITDA Reconciliation (Unaudited)
Reconciliation of Segment EBITDA to Income (Loss)
from Continuing Operations Before Income Taxes
For the Three Months Ended September 30, 2009 and 2008
Three Months
Ended
September 30,
-------------
2009 2008
---- ----
Segment EBITDA $108 $61
Shared services and administrative (5) (6)
Other expense, net (2) (5)
Foreign exchange not in segments (3)
--- ---
EBITDA 101 47
Depreciation (79) (74)
Amortization (22) (22)
Realignment (14) (16)
Impairment (108)
Reorganization items, net (1)
Loss on extinguishment of debt (5)
Strategic transaction expenses (2) (4)
Loss on sale of assets, net (1) (5)
Stock compensation expense (3) (1)
Foreign exchange on intercompany loans
and market value adjustments on hedges 6 (7)
Interest expense (36) (37)
Interest income 6 11
--- ---
Loss from continuing operations
before income taxes $(49) $(217)
==== =====
DANA HOLDING CORPORATION
Segment EBITDA Reconciliation (Unaudited)
Reconciliation of Segment EBITDA to Income (Loss)
from Continuing Operations Before Income Taxes
For the Nine Months Ended September 30, 2009 and 2008
Dana Combined (1) Dana Prior Dana
---- ------------ ---- ----------
Eight Months One Month
Nine Months Ended Ended Ended
September 30, September 30, January 31,
-------------
2009 2008 2008 2008
---- ---- ---- ----
Segment EBITDA $193 $377 $334 $43
Shared services and
administrative (15) (19) (16) (3)
Other income
(expense), net 30 (10) (8) (2)
Foreign exchange not
in segments 3 (3) (3)
--- --- --- ---
EBITDA 211 345 307 38
Depreciation (231) (217) (194) (23)
Amortization (64) (109) (109)
Realignment (93) (73) (61) (12)
DCC EBIT (2) (2)
Impairment (6) (190) (190)
Reorganization items,
net 2 (120) (22) (98)
Gain on extinguishment
of debt 35
Strategic transaction
expenses (4) (7) (7)
Loss on sale of
assets, net (2) (7) (7)
Stock compensation
expense (7) (4) (4)
Foreign exchange on
intercompany loans
and market value
adjustments on hedges 11 4 4
Interest expense (108) (107) (99) (8)
Interest income 18 40 36 4
Fresh start accounting
adjustments 1,009 1,009
--- ----- --- -----
Income (loss) from
continuing operations
before income taxes $(238) $562 $(352) $914
===== ==== ===== ====
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the nine months
ended September 30, 2008.
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