Dana slides after margin headwinds hit earnings: Q4 Results

Feb. 23, 2022 2:42 PM ETDana Incorporated (DAN)By: Shweta Agarwal, SA News Editor2 Comments
  • Dana (NYSE:DAN) is down 8% after the company missed bottom-line consensus in its fourth quarter earnings report.
  • Revenue of $2.27B (+7.6% Y/Y) beats consensus by $90M. The increase represents a $165M increase driven by strong customer demand in the company's heavy-vehicle markets and the recovery of commodity cost inflation.
  • Adjusted EBITDA of $118M compared to $192M in 4Q20; Margin was 8.9%.
  • The company noted profit margin compression was primarily driven by higher input costs, including higher commodity costs, and the $17M of period cost related to its new U.S. labor agreement.
  • GAAP EPS of $0.18 misses by $0.08.
  • The company reported operating cash flow of $158M in 2021. Free cash flow was a use of $211M.
  • "Global supply-chain disruptions, high commodity costs, and labor and semiconductor shortages have continued to disrupt our customers' production patterns that, in turn, have pressured our margins and limited free cash flow over the past year," said Timothy Kraus, Dana senior vice president and chief financial officer.
  • 2022 Financial Targets: Sales of $9.6 to $10.1B vs. consensus of $9.76B; Adjusted EBITDA of $900M to $1B, an implied adjusted EBITDA margin of approximately 9.6 percent at the midpoint of the range; Diluted adjusted EPS of $2.05 to $2.55 vs. consensus of $2.76;
  • Operating cash flow expected to be of approximately 6.5 to 7.5 percent of sales; and Free cash flow of approximately 2.5 to 3.5 percent of sales.
  • "In addition to this market recovery and cyclical growth, about half of our $800M of new business sales backlog is coming online this year, representing above-market growth, with half of our backlog coming from electrification," said James Kamsickas, Dana chairman and CEO.
  • Earlier in the day, Tenneco sale to Apollo good read through for ICE-leveraged peers Dana, BorgWarner

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