Earnings Watch: Dana Reports $82 Million Loss
Dana Holding Corp. moved from a profit to a loss in the fourth quarter of last year, as sales turned lower and it felt the effects of a strong U.S. dollar on overseas operations.


Dana Holding Corp. (NYSE: DAN) on Thursday reported it moved from a profit to a loss in the fourth quarter of last year as sales turned lower and it felt the effects of a strong U.S. dollar on overseas operations. However, it affirmed its financial targets for this year.
The commercial, passenger and off-highway vehicle component supplier posted a net loss of $82 million, compared with income of $109 million in the fourth quarter of 2014, or a loss of 54 cents per diluted share versus a profit of 64 cents per diluted share.
The results included non-cash income tax charges of $79 million resulting from the completion of a planned restructuring. Also, the company had an after-tax impairment charge of $39 million to reduce its investment in a 50% owned equity affiliate in China, due to a continued expectation of declining commercial-vehicle production demand there.
Sales for the fourth quarter of 2015 totaled $1.38 billion, compared with $1.58 billion for 2014, which the company attributed to unfavorable foreign currency exchange rates and the divestiture of operations in Venezuela, lowering sales by $103 million and $38 million, respectively.
Commercial vehicle driveline sales for the quarter, adjusted for the effects of foreign currency exchange rates, were lower by $100 million, or about 23%, when compared with 2014. Significant demand weakness in Brazilian truck production, combined with lower market share with a major North American customer, were the principal drivers, according to the company.
If you take out these and other items, adjusted net income for the quarter was $36 million, compared with $68 million a year earlier. Diluted adjusted earnings per share in the fourth quarter of 2015 were 34 cents, 2 cents less than expectations from Zacks Investment Research, and compares to 53 cents a year earlier.
Full Year Numbers Also Move Lower
Sales for 2015 were $6.06 billion, $557 million lower compared with 2014, with unfavorable foreign currency exchange rates and the divestiture of operations in Venezuela lowering sales by $516 million and $107 million, respectively.
According to Dana, favorable volume, mix, and performance contributed to higher sales of $66 million. Also, strong performance in the company's light vehicle driveline, off-highway driveline, and power technologies business units provided a combined increase in organic sales of about $250 million. Sales in Dana’s commercial vehicle driveline business for the year were negatively hit by the same factors in Brazil and North America that affected the fourth-quarter numbers.
Net income for 2015 was $159 million, compared with $319 million in 2014 due to the fourth quarter impairment charges of $118 million, but included a tax benefit of $74 million related to restructuring and a $24 million after-tax impairment charge for certain assets associated with a distressed supplier relationship in Brazil.
Excluding these items, adjusted net income was $227 million in 2015, compared with $278 million in 2014. Diluted adjusted earnings per share for 2015 were $1.74, compared with $1.99 in 2014, also reflecting lower earnings partially offset by a lower share count due to the company's share repurchase program.
Commercial vehicle driveline technologies sales were $1.53 billion for 2015, compared with $1.84 billion in 2014. Weaker demand in Brazil, where medium- and heavy-truck production was down 49% from 2014, lowered sales by $166 million, and foreign currency, principally a weaker Brazilian real, lowered sales by an additional $144 million, according to Dana. Higher sales resulting from stronger North American production levels in 2015 and improved pricing and recoveries were largely offset by lower sales with a major North American customer.
Commercial vehicle segment EBITDA (earnings before interest, taxes, depreciation and amortization) for the year was $100 million, $72 million lower than 2014.
Despite the lower earnings, Dana affirmed its 2016 finanacial targets of sales of $5.8 to $6 billion, adjusted EBITDA of $640 million to $670 million and diluted adjusted earnings per share of approximately $1.65 to $1.80.
More details are on the Dana website.
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