Dana Incorporated announced sales of $1.08 billion for the second quarter ended June 30, 2020, compared with $2.3 billion in the same period of 2019. Dana reports the decrease is primarily attributable to weaker demand across all mobility markets due to customers idling operations through the first half of the quarter in response to the global COVID-19 pandemic.
Dana reported a net loss of $174 million for the second quarter of 2020, compared with a net loss of $68 million in the same period of 2019. This year’s second quarter earnings were reduced due to higher income tax expense, the result of recording $56 million in valuation allowances in foreign jurisdictions.
The second quarter of 2019 was reduced by $258 million in one-time pension settlement charges related to the transfer of future pension liabilities from a U.S. pension plan to third-party insurers. Partially offsetting this one-time charge was a net tax benefit of $87 million in second quarter of 2019 driven by the pension termination and foreign tax credits. Excluding these one-time income tax and pension charges, second-quarter net loss was $118 million in 2020, compared with net income of $103 million in 2019, reflecting the lower operating earnings this year associated with reduced sales due to the COVID-19 pandemic.
“I would like to thank the global Dana family for their dedication and resolve to safely bring our operations back online around the world. Throughout this journey, our team has not only demonstrated remarkable flexibility managing our multi-market operations and integrated supply chain but has also answered the call across our communities to help so many people who have been impacted by this virus,” said James Kamsickas, Dana chairman and CEO.
“As we continue to navigate these unprecedented times, Dana is financially strong and positioned for growth across the multiple end-markets we participate in. We are laser-focused on finishing the year strong and providing our customers with the world-class technology, quality and service they have come to expect from Dana for more than 116 years,” Kamsickas says.
Adjusted EBITDA for the second quarter of 2020 was a loss of $5 million, compared with profit of $286 million for the same period last year. This decline was due to the idling of production in the first half of the quarter in response to the COVID-19 pandemic. Targeted cost management actions and a successful restart of operations in May helped mitigate the margin impact of this event-driven sales decline, the company reports.
Operating cash flow in the second quarter of 2020 was a use of $75 million, compared with $73 million provided in the same period of 2019. The second quarter of 2019 included a voluntary pension contribution of $62 million related to the transfer of the pension plan liabilities.
Adjusted free cash flow was a use of $133 million in the second quarter of 2020, compared with $43 million provided in 2019. The impact of lower profit in this year’s second quarter was partially offset by targeted cash conservation measures, lower cash taxes and lower capital expenditures, compared with the same period last year.
The company says due to this unprecedented disruption in its end markets as a result of the COVID-19 pandemic, and associated economic uncertainty, the company believes it is prudent to refrain from issuing full-year financial guidance until there is further stabilization in end-market demand.
The company reported it had total liquidity of $1.7 billion as of June 30, 2020, including $708 million of available cash and marketable securities and $979 million available on its committed revolving credit facility. The company believes it has ample liquidity and has terminated its temporary bridge facility.
“Our timely cost saving actions and operational flexibility have served us well as we managed through this difficult quarter,” said Jonathan Collins, Dana executive vice president and chief financial officer. “We remain confident in our ability to capitalize on improving market conditions over the balance of the year.”
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