On October 27, 2023, Dana Inc (DAN, Financial) announced its financial results for the third quarter of 2023. Despite the impact of the UAW strike on two of its key customers in the North American Light Vehicle business, Dana reported strong sales of $2.7 billion and improved its margin by 150 basis points in the third quarter.
Financial Performance and Challenges
Third-quarter 2023 sales totaled $2.67 billion, compared with $2.54 billion in the same period of 2022, representing a $134 million increase driven by higher market demand, cost-recovery actions, and conversion of sales backlog partially offset by lower demand due to the UAW strike. Adjusted EBITDA for the third quarter of 2023 was $242 million, compared with $192 million for the same period in 2022. The 150 basis points of margin improvement in the third quarter of 2023 was primarily driven by higher sales volume and beneficial mix, net customer pricing and recovery actions, improved customer order patterns driving higher manufacturing efficiency, and lower net commodity costs.
Income Statement Highlights
Net income attributable to Dana was $19 million, or $0.13 per share, compared with a net loss of $88 million, or $0.61 per share, in the third quarter of 2022. Last year’s third-quarter loss was driven by a $191 million non-cash goodwill impairment charge. Adjusted net income attributable to Dana was $43 million, and diluted adjusted earnings per share were $0.30 for the third quarter of 2023, compared with adjusted net income of $34 million and $0.24 per share in 2022.
Cash Flow Statement Analysis
Cash flow from operations in the third quarter of 2023 was $112 million, compared with $171 million in the same period of 2022. Free cash flow was a use of $5 million, compared with free cash flow of $77 million in the third quarter of 2022. The use of cash in this year’s third quarter was driven by higher working capital requirements related to program launches and higher capital spending for new business backlog.
Outlook and Future Expectations
Despite the significant impact of the UAW strike on a number of Dana's operations in North America, the company remains fundamentally strong due to the strength of its balance sheet and capital structure. If all the UAW strikes are resolved by the end of October, Dana expects sales and profit to be maintained at the midpoint of its previous guidance range. If no resolution is reached by year’s end at all its Detroit 3 customers, including Ford, Dana anticipates its sales to be approximately $500 million lower.
Explore the complete 8-K earnings release (here) from Dana Inc for further details.
