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.

1

DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Three Months Ended June 30, 2020 and 2019

Three Months Ended

(In millions, except per share amounts)

June 30,

2020

2019

Net sales

$

1,078

$

2,306

Costs and expenses

Cost of sales

1,088

1,980

Selling, general and administrative expenses

82

140

Amortization of intangibles

3

4

Restructuring charges, net

16

9

Pension settlement charge

-

(258)

Other expense, net

(1)

(10)

Loss before interest and income taxes

(112)

(95)

Write-off deferred financing costs

(5)

-

Interest income

2

3

Interest expense

32

34

Loss before income taxes

(147)

(126)

Income tax expense (benefit)

34

(52)

Equity in earnings of affiliates

8

8

Net loss

(173)

(66)

Less: Noncontrolling interests net income

-

2

Less: Redeemable noncontrolling interests net income

1

-

Net loss attributable to the parent company

$

(174)

$

(68)

Net income (loss) per share available to common stockholders

Basic

$

(1.20)

$

(0.47)

Diluted

$

(1.20)

$

(0.47)

Weighted-average shares outstanding - Basic

144.5

144.0

Weighted-average shares outstanding - Diluted

144.5

144.0

2

DANA INCORPORATED

Consolidated Statement of Operations (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

Six Months Ended

(In millions, except per share amounts)

June 30,

2020

2019

Net sales

$

3,004

$

4,469

Costs and expenses

Cost of sales

2,808

3,843

Selling, general and administrative expenses

188

276

Amortization of intangibles

6

6

Restructuring charges, net

19

18

Impairment of goodwill

(51)

-

Pension settlement charge

-

(258)

Other income (expense), net

3

(23)

Earnings (loss) before interest and income taxes

(65)

45

Write-off deferred financing costs

(5)

Interest income

4

5

Interest expense

61

61

Loss before income taxes

(127)

(11)

Income tax expense (benefit)

18

(32)

Equity in earnings of affiliates

10

14

Net income (loss)

(135)

35

Less: Noncontrolling interests net income

2

6

Less: Redeemable noncontrolling interests net loss

(21)

(1)

Net income (loss) attributable to the parent company

$

(116)

$

30

Net income (loss) per share available to common stockholders

Basic

$

(0.80)

$

0.21

Diluted

$

(0.80)

$

0.21

Weighted-average shares outstanding - Basic

144.4

143.9

Weighted-average shares outstanding - Diluted

144.4

144.8

3

DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Three Months Ended June 30, 2020 and 2019

Three Months Ended

(In millions)

June 30,

2020

2019

Net loss

$

(173)

$

(66)

Other comprehensive income (loss), net of tax:

Currency translation adjustments

7

3

Hedging gains and losses

10

2

Defined benefit plans

4

355

Other comprehensive income

21

360

Total comprehensive income (loss)

(152)

294

Less: Comprehensive income attributable to noncontrolling interests

(9)

(3)

Less: Comprehensive loss attributable to redeemable noncontrolling interests

3

1

Comprehensive income (loss) attributable to the parent company

$

(158)

$

292

4

DANA INCORPORATED

Consolidated Statement of Comprehensive Income (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

Six Months Ended

(In millions)

June 30,

2020

2019

Net income (loss)

$

(135)

$

35

Other comprehensive income (loss), net of tax:

Currency translation adjustments

(147)

30

Hedging gains and losses

39

7

Defined benefit plans

7

360

Other comprehensive income (loss)

(101)

397

Total comprehensive income (loss)

(236)

432

Less: Comprehensive (income) loss attributable to noncontrolling interests

8

(5)

Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests

17

(3)

Comprehensive income (loss) attributable to the parent company

$

(211)

$

424

5

DANA INCORPORATED

Consolidated Balance Sheet (Unaudited)

As of June 30, 2020 and December 31, 2019

(In millions, except share and per share amounts)

June 30,

December 31,

2020

2019

Assets

Current assets

Cash and cash equivalents

$

694

$

508

Marketable securities

19

19

Accounts receivable

Trade, less allowance for doubtful accounts of $7 in 2020 and $9 in 2019

890

1,103

Other

175

202

Inventories

1,116

1,193

Other current assets

148

137

Total current assets

3,042

3,162

Goodwill

451

493

Intangibles

228

240

Deferred tax assets

573

580

Other noncurrent assets

124

120

Investments in affiliates

164

182

Operating lease assets

177

178

Property, plant and equipment, net

2,149

2,265

Total assets

$

6,908

$

7,220

Liabilities and equity

Current liabilities

Short-term debt

$

7

$

14

Current portion of long-term debt

36

20

Accounts payable

796

1,255

Accrued payroll and employee benefits

172

206

Taxes on income

45

46

Current portion of operating lease liabilities

42

42

Other accrued liabilities

281

262

Total current liabilities

1,379

1,845

Long-term debt, less debt issuance costs of $32 in 2020 and $28 in 2019

2,827

2,336

Noncurrent operating lease liabilities

139

140

Pension and postretirement obligations

445

459

Other noncurrent liabilities

239

305

Total liabilities

5,029

5,085

Commitments and contingencies

Redeemable noncontrolling interests

159

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,

144,482,275 and 143,942,539 shares outstanding

2

2

Additional paid-in capital

2,390

2,386

Retained earnings

490

622

Treasury stock, at cost (10,433,465 and 10,111,191 shares)

(156)

(150)

Accumulated other comprehensive loss

(1,082)

(987)

Total parent company stockholders' equity

1,644

1,873

Noncontrolling interests

76

95

Total equity

1,720

1,968

Total liabilities and equity

$

6,908

$

7,220

6

DANA INCORPORATED

Consolidated Statement of Cash Flows (Unaudited)

For the Three Months Ended June 30, 2020 and 2019

Three Months Ended

(In millions)

June 30,

2020

2019

Operating activities

Net loss

$

(173)

$

(66)

Depreciation

84

79

Amortization

5

5

Amortization of deferred financing charges

2

2

Write-off of deferred financing costs

5

Earnings of affiliates, net of dividends received

13

8

Stock compensation expense

(1)

5

Deferred income taxes

27

(91)

Pension expense, net

1

203

Change in working capital

(45)

(72)

Other, net

7

Net cash provided by (used in) operating activities

(75)

73

Investing activities

Purchases of property, plant and equipment

(58)

(92)

Acquisition of businesses, net of cash acquired

2

(48)

Purchases of marketable securities

(3)

(7)

Proceeds from sales and maturities of marketable securities

7

12

Settlements of undesignated derivatives

(2)

1

Other, net

(2)

(5)

Net cash used in investing activities

(56)

(139)

Financing activities

Net change in short-term debt

(306)

(1)

Proceeds from long-term debt

506

Repayment of long-term debt

(2)

(10)

Deferred financing payments

(11)

Dividends paid to common stockholders

(15)

Distributions to noncontrolling interests

(2)

(11)

Contributions from noncontrolling interests

7

1

Payments to acquire noncontrolling interests

(1)

Other, net

2

3

Net cash provided by (used in) financing activities

193

(33)

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

62

(99)

Cash, cash equivalents and restricted cash − beginning of period

636

395

Effect of exchange rate changes on cash balances

4

2

Cash, cash equivalents and restricted cash − end of period

$

702

$

298

7

DANA INCORPORATED

Consolidated Statement of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

Six Months Ended

(In millions)

June 30,

2020

2019

Operating activities

Net income (loss)

$

(135)

$

35

Depreciation

169

153

Amortization

9

8

Amortization of deferred financing charges

4

3

Write-off of deferred financing costs

5

Earnings of affiliates, net of dividends received

11

3

Stock compensation expense

3

10

Deferred income taxes

(8)

(105)

Pension expense, net

2

207

Impairment of goodwill

51

Change in working capital

(228)

(247)

Other, net

(9)

(10)

Net cash provided by (used in) operating activities

(126)

57

Investing activities

Purchases of property, plant and equipment

(121)

(190)

Acquisition of businesses, net of cash acquired

(6)

(654)

Purchases of marketable securities

(15)

(12)

Proceeds from sales and maturities of marketable securities

13

18

Settlements of undesignated derivatives

(5)

(19)

Other, net

(7)

(6)

Net cash used in investing activities

(141)

(863)

Financing activities

Net change in short-term debt

(8)

(3)

Proceeds from long-term debt

510

675

Repayment of long-term debt

(3)

(19)

Deferred financing payments

(11)

(12)

Dividends paid to common stockholders

(15)

(29)

Distributions to noncontrolling interests

(3)

(12)

Contributions from noncontrolling interests

9

2

Payments to acquire noncontrolling interests

(1)

Repurchases of common stock

(25)

Other, net

(2)

Net cash provided by financing activities

476

577

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

209

(229)

Cash, cash equivalents and restricted cash − beginning of period

518

520

Effect of exchange rate changes on cash balances

(25)

7

Cash, cash equivalents and restricted cash − end of period

$

702

$

298

8

DANA INCORPORATED

Reconciliation of Net Cash Provided By (Used In) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow (Unaudited)

Three Months Ended

(In millions)

June 30,

2020

2019

Net cash provided by (used in) operating activities

$

(75)

$

73

Purchase of property, plant and equipment

(58)

(92)

Free cash flow

(133)

(19)

Discretionary pension contributions

-

62

Adjusted free cash flow

$

(133)

$

43

Six Months Ended

(In millions)

June 30,

2020

2019

Net cash provided by (used in) operating activities

$

(126)

$

57

Purchase of property, plant and equipment

(121)

(190)

Free cash flow

(247)

(133)

Discretionary pension contributions

-

62

Adjusted free cash flow

$

(247)

$

(71)

9

DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited) For the Three Months Ended June 30, 2020 and 2019

Three Months Ended

(In millions)

June 30,

2020

2019

Sales

Light Vehicle

$

337

$

927

Commercial Vehicle

200

437

Off-Highway

401

674

Power Technologies

140

268

Total Sales

$

1,078

$

2,306

Segment EBITDA

Light Vehicle

$

(32)

$

118

Commercial Vehicle

(8)

41

Off-Highway

38

103

Power Technologies

(1)

28

Total Segment EBITDA

(3)

290

Corporate expense and other items, net

(2)

(4)

Adjusted EBITDA

$

(5)

$

286

10

DANA INCORPORATED

Segment Sales and Segment EBITDA (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

Six Months Ended

(In millions)

June 30,

2020

2019

Sales

Light Vehicle

$

1,145

$

1,833

Commercial Vehicle

533

868

Off-Highway

933

1,226

Power Technologies

393

542

Total Sales

$

3,004

$

4,469

Segment EBITDA

Light Vehicle

$

51

$

220

Commercial Vehicle

13

82

Off-Highway

110

185

Power Technologies

29

62

Total Segment EBITDA

203

549

Corporate expense and other items, net

(3)

(6)

Adjusted EBITDA

$

200

$

543

11

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Loss (Unaudited) For the Three Months Ended June 30, 2020 and 2019

Three Months Ended

(In millions)

June 30,

2020

2019

Segment EBITDA

$

(3)

$

290

Corporate expense and other items, net

(2)

(4)

Adjusted EBITDA

(5)

286

Depreciation

(84)

(79)

Amortization

(5)

(5)

Non-service cost components of pension and OPEB costs

(3)

(9)

Restructuring charges, net

(16)

(9)

Stock compensation expense

1

(5)

Strategic transaction expenses

(5)

(11)

Acquisition related inventory adjustments

(5)

Pension settlement charges, net

(258)

Other items

5

Loss before interest and income taxes

(112)

(95)

Write-off deferred financing costs

(5)

Interest income

2

3

Interest expense

32

34

Loss before income taxes

(147)

(126)

Income tax expense (benefit)

34

(52)

Equity in earnings of affiliates

8

8

Net loss

$

(173)

$

(66)

12

DANA INCORPORATED

Reconciliation of Segment and Adjusted EBITDA to Net Income (Loss) (Unaudited) For the Six Months Ended June 30, 2020 and 2019

Six Months Ended

(In millions)

June 30,

2020

2019

Segment EBITDA

$

203

$

549

Corporate expense and other items, net

(3)

(6)

Adjusted EBITDA

200

543

Depreciation

(169)

(153)

Amortization

(9)

(8)

Non-service cost components of pension and OPEB costs

(5)

(15)

Restructuring charges, net

(19)

(18)

Stock compensation expense

(3)

(10)

Strategic transaction expenses

(11)

(24)

Impairment of goodwill

(51)

Acquisition related inventory adjustments

(9)

Non-income tax legal judgment

6

Pension settlement charges, net

(258)

Other items

2

(9)

Earnings (loss) before interest and income taxes

(65)

45

Write-off deferred financing costs

(5)

Interest income

4

5

Interest expense

61

61

Loss before income taxes

(127)

(11)

Income tax expense (benefit)

18

(32)

Equity in earnings of affiliates

10

14

Net income (loss)

$

(135)

$

35

13

DANA INCORPORATED

Diluted Adjusted EPS (Unaudited)

For the Three Months Ended June 30, 2020 and 2019

(In millions, except per share amounts)

Three Months Ended

June 30,

2020

2019

Net income (loss) attributable to parent company

$

(174)

$

(68)

Items impacting income before income taxes:

Restructuring charges

15

9

Amortization

4

4

Strategic transaction expenses

5

11

Acquisition related inventory adjustments

5

Pension settlement charges

258

Write-off deferred financing costs

5

Other items

(1)

Items impacting income taxes:

Net income tax expense on items above

(8)

(14)

Tax expense (benefit) attributable to utilization of federal tax credits,

state tax law changes and valuation allowance adjustments

54

(78)

Adjusted net income

$

(99)

$

126

Diluted shares - as reported

144.5

144.8

Adjusted diluted shares

144.5

144.8

Diluted adjusted EPS

$

(0.69)

$

0.87

14

DANA INCORPORATED

Diluted Adjusted EPS (Unaudited)

For the Six Months Ended June 30, 2020 and 2019

(In millions, except per share amounts)

Six Months Ended

June 30,

2020

2019

Net income (loss) attributable to parent company

$

(116)

$

30

Items impacting income before income taxes:

Restructuring charges

18

18

Amortization

8

8

Strategic transaction expenses

11

24

Acquisition related inventory adjustments

9

Non-income tax legal judgment

(6)

Impairment of goodwill

31

Pension settlement charges

258

Write-off deferred financing costs

5

Loss on deal contingent forward

13

Other items

(2)

Items impacting income taxes:

Net income tax expense on items above

(11)

(19)

Tax expense (benefit) attributable to utilization of federal tax credits,

state tax law changes and valuation allowance adjustments

23

(94)

Adjusted net income

$

(31)

$

239

Diluted shares - as reported

144.4

144.8

Adjusted diluted shares

144.4

144.8

Diluted adjusted EPS

$

(0.21)

$

1.65

15

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Disclaimer

DANA Incorporated published this content on 28 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2020 00:05:04 UTC