NEW YORK - Dana Incorporated (NYSE:DAN) reported a decline in first-quarter earnings, missing analyst expectations, as the company faced a $29 million charge related to its European hydraulics business divestiture.
The automotive supplier announced adjusted earnings per share (EPS) of $0.02, falling short of the $0.19 consensus. Revenue for the quarter was also below expectations at $2.49 billion, compared to the estimated $2.69 billion.
Despite the earnings miss, Dana's sales increased by $91 million to $2.7 billion compared to the first quarter of the previous year, signaling a 3.8% rise. Adjusted EBITDA saw a growth of $19 million, reaching $223 million with a margin improvement of 50 basis points to 8.2%, as efficiency improvements continued to offset inflation and spending on electric-vehicle product development.
The company's stock saw a modest increase of 0.6% following the earnings release, indicating a restrained positive market response.
James Kamsickas, Dana's chairman and CEO, highlighted the company's strong performance with improved sales, profit margins, and free cash flow over the previous year. "We achieved 39 percent profit conversion on traditional organic sales in the quarter... This performance... positions the company on a strong trajectory to achieve our full-year targets," Kamsickas stated.
For the full year 2024, Dana provided guidance for EPS in the range of $0.35 to $0.85, which is below the analyst consensus of $0.88. The company anticipates revenue between $10.65 billion and $11.15 billion, with the midpoint slightly below the consensus estimate of $10.9 billion.
The company's net income was reported at $3 million, compared to $28 million in the same period last year. This decrease was largely due to the divestiture charge and a $7 million European valuation allowance. The anticipated sale of the European Off-Highway non-core hydraulics business, expected to close in the second quarter of 2024, contributed to the reduced earnings.
Dana's CFO, Timothy Kraus, attributed the improved free cash flow to effective working capital management, which led to a substantial increase in the full-year free cash flow guidance by $25 million.
Investors will be watching closely as Dana navigates the challenges of inflation and the transition to electric vehicles while managing to improve efficiency and cash flow.
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