Dana Incorporated announced financial results for the fourth quarter and full-year 2021, which includes annual net income attributable to Dana of $197 million, an increase of $228 million.
“Despite a year of unprecedented challenges impacting the global mobility industry, including substantial supply-chain constraints and cost inflation, Dana had significantly stronger sales, adjusted EBITDA, and adjusted EPS in 2021,” says James Kamsickas, Dana chairman and CEO.
“As we look forward to 2022, we expect to see some easing later this year of the challenges that have hindered our customers’ ability to produce vehicles, and we are well positioned to benefit from simultaneous recovery in all three of our end markets. In addition to this market recovery and cyclical growth, about half of our $800 million of new business sales backlog is coming online this year, representing above-market growth, with half of our backlog coming from electrification,” Kamsickas says.
Fourth-quarter 2021 financial results
Sales for the fourth quarter of 2021 totaled $2.27 billion, compared with $2.11 billion in the same period of 2020, representing a $165 million increase driven by strong customer demand in our heavy-vehicle markets and the recovery of commodity cost inflation.
Net income attributable to Dana was $25 million for the fourth quarter of 2021, compared with $40 million in the same period of 2020. The year-over-year decline was due to higher input costs for commodities, transportation, labor and energy combined with production inefficiencies driven by inconsistent customer order patterns. The impact of the period cost related to our new U.S. labor agreement was offset by lower restructuring charges. The fourth quarter of 2021 benefited from a $51 million gain resulting from a facility sale-leaseback transaction, the company reports.
Reported diluted earnings per share were $0.18, compared with diluted earnings per share of $0.27 in the fourth quarter of 2020.
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Adjusted EBITDA for the fourth quarter of 2021 was $118 million, compared with $192 million for the same period in 2020. Profit margin compression in the fourth quarter of 2021 was primarily driven by higher input costs, including higher commodity costs, and the $17 million of period cost related to our new U.S. labor agreement.
Diluted adjusted earnings per share, which do not include the benefit of the sale-leaseback transaction, were negligible in the fourth quarter of 2021, compared with $0.24 in the same period of the prior year. The lower year-over-year comparison was primarily due to lower earnings resulting from higher input costs and the period cost related to a new U.S. labor agreement.
Operating cash flow in the fourth quarter of 2021 was $139 million, compared with $191 million in the same period of 2020. Free cash flow was a use of $2 million, compared with free cash flow of $46 million in the fourth quarter of 2020. Cash flow use in this year’s fourth quarter was driven by higher working capital requirements, primarily inventory, resulting from customer schedule disruptions and supply-chain challenges.
Full-year 2021 financial results
Sales for 2021 were $8.9 billion, compared with $7.1 billion in 2020. The increase of $1.8 billion is primarily attributable to stronger demand across all mobility markets.
The net income attributable to Dana was $197 million, compared with a net loss of $31 million in 2020.
Reported diluted earnings per share were a gain of $1.35, compared with a net loss of $0.21 in 2020.
Adjusted EBITDA for 2021 was $795 million or 8.9 percent of sales, compared with $593 million or 8.3 percent of sales in 2020. Margin headwinds were driven by higher commodity costs, production inefficiencies caused by OEM supply chain disruptions and cost inflation in transportation, energy, and labor.
Diluted adjusted earnings per share for 2021 were $1.66, compared with $0.39 in 2020.
The company reported operating cash flow of $158 million in 2021. Free cash flow was a use of $211 million, compared with free cash flow of $60 million in 2020. Cash flow use in this year was driven by higher inventory requirements resulting from customer schedule disruptions and supply-chain challenges, compared with lower inventory levels in 2020 due primarily to actions taken to reduce inventory levels, preserving working capital, in response to the COVID pandemic.
“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,” says Timothy Kraus, Dana senior vice president and chief financial officer.
“We carried higher levels of inventory in 2021 to protect our ability to supply our customers and mitigate ongoing global supply-chain disruptions and labor shortages. As these challenges begin to subside, we anticipate a sustained recovery period as low end-market inventory levels, combined with strong end-consumer demand, drive higher sales and a more stable production environment, allowing us to drastically reduce our inventory as well as improve margins,” Kraus.
2022 financial targets
- Sales of $9.6 to $10.1 billion;
- Adjusted EBITDA of $900 million to $1.0 billion, 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;
- Operating cash flow of approximately 6.5 to 7.5 percent of sales; and
- Free cash flow of approximately 2.5 to 3.5 percent of sales.
