Editor’s Note: Updates with details of recent debt issuance and closing stock price.
Dana Inc. (NYSE DAN) reported a second-quarter net loss of $174 million. Weaker demand resulted from industry-wide coronavirus-prompted plant idlings.
Excluding one-time charges, the second-quarter net loss was $118 million, or a negative $0.69 per diluted share. That compared with net income of $103 million, or a positive $0.87 per share in 2019.
The manufacturer of commercial vehicle driveline and electrification systems reported sales of $1.08 billion compared with $2.3 billion in the second quarter of 2019. Demand weakened across all markets because of the COVID-19 pandemic.
Both top- and bottom-line figures beat the consensus estimates of analysts tracked by investor site Seeking Alpha. Despite the better-than-expected results, Dana shares closed Thursday at $11.89, down $1.00 or 7.76%.
Cash burn
Dana burned through $75 million in operating cash. It gained $73 million in operating cash in the same period of 2019. The second quarter of 2019 included a voluntary pension contribution of $62 million related to the transfer of pension plan liabilities.
The company reported total liquidity of $1.7 billion as of June 30. That included $708 million of available cash and marketable securities and $979 million available in borrowing.
The company terminated a temporary credit bridge note during the second quarter. It also issued a total of $500 million in senior notes that mature in 2027 and 2028. That follows $300 million in notes issued in November 2019. With some of the new borrowing, Dana repaid $300 million it had drawn from its credit revolver in the first quarter.
“Our timely cost saving actions and operational flexibility have served us well as we managed through this difficult quarter,” Jonathan Collins, Dana executive vice president and chief financial officer, said in a statement. “We remain confident in our ability to capitalize on improving market conditions over the balance of the year.”
Special items
Both quarters had special items.
In 2019, Dana recorded a $258 million loss for one-time pension settlement charges for transferring pension obligations to a third party. That was offset by an $87 million tax benefit from removing the pensions from its books and from foreign tax credits.
In the 2020 second quarter, Dana paid higher income taxes because it recorded $56 million in foreign valuation allowances.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was a loss of $5 million, compared with profit of $286 million for the same period of 2019. Dana mitigated Idling of production in the first half of the quarter by targeted cost management. Operations restarted in May.
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