Dana Reports Mixed Q4 Financials, Record Sales Backlog
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Truck parts supplier Dana Inc. on Feb. 22 reported increased revenue but an earnings loss in the fourth quarter of 2022. The company also forecasts that 65% of its new business will be from electric-vehicle platforms.
For the quarter, Dana reported revenue of $2.55 billion compared with $2.27 billion a year ago.
For the full year, the company generated revenue of $10.2 billion, an increase of $1.2 billion or 14% over the 2021 period. However, Dana reported a quarterly loss of $178 million or negative $1.25 a share, compared with a $29 million profit, 18 cents per share.
For the full year, Dana reported a loss of $311 million, negative $1.69, compared with a profit of $200 million, $1.39, in 2021.
The company attributed the loss to a “one-time noncash goodwill impairment charge of $191 million due to increasing interest rates and lower market capitalization, and from $157 million of additional noncash tax valuation allowances.”
The one-time accounting change is largely responsible for the loss.
The income results missed Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 23 cents per share. However revenue exceeded expectations of $2.5 billion.
Kamsickas
“Dana continues to successfully execute as front-runners in the transformation to a zero-emission world, while taking extraordinary operational actions to serve our customers, including scaling operations to support near-term market share gains,” Chairman and CEO James Kamsickas said. “Our focus on offering complete in-house electrification capability, coupled with our ability to leverage significant companywide synergies, enables us to provide exceptional customer satisfaction — placing us in a strong position to deliver profitable above-market sales growth in 2023.”
Dana said during the fourth quarter it generated a record sales backlog of $900 million, an increase of $100 million from the previous three-year backlog that the company reported in 2022.
The company said most of the backlog is related to its transition to electrification and the move to EVs is contributing to “heavily elevated levels of launch costs” as new programs are started and production costs ramp up.
Kraus
“As we closed out 2022, Dana achieved many of its goals, including sales growth and cash flow in a challenging environment,” Chief Financial Officer Timothy Kraus said. “We experienced unexpected headwinds in the fourth quarter, including higher raw material costs and lower commercial recoveries, additional costs for EV program wins, increased customer schedule volatility and incremental costs to scale operations.
“Looking forward to 2023, we expect sales growth to accelerate with improved profit conversion as customer operations stabilize throughout the year, ongoing cost recoveries largely offset inflation and commodity costs continue to moderate.”
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Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 49% for Q4 2022 to $176 million compared with $118 million for the same period in 2021.
The improved Q4 profit margin primarily was driven by higher sales volumes and cost recoveries, the company said. That was partially offset by nonmaterial inflation, as well as production inefficiencies driven by volatile customer demand schedules and accelerated spending on development for electric-vehicle products.
Dana also announced several new partnerships, including supplying battery cooling plates and electronics cooling for Jaguar Land Rover’s next-generation EV platforms plus e-axle suspension and battery cooling plates for General Motors’ BrightDrop commercial vehicles.
Dana is preparing to manage about 120 launches of EV and internal combustion engine products this year, including the GM Ultium program and the redesigned Jeep Wrangler and Gladiator.
The company supplies parts including axles, driveshafts, transmissions and other equipment for conventional, hybrid and electric-powered vehicles.
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