The truck craze among people who don't really need them appears to be over.
Dana Holding Corporation (NYSE:DAN) announced today that it has initiated an underwritten, registered public offering of 27 million shares of its common stock.
Dana emerged from bankruptcy last February, and, as with most auto suppliers, has struggled since then as the Global Great Recession marches on. Dana is in the process of cutting 5,800 jobs by year-end.
Dana posted a net loss of $11 million on revenue of $8 billion in 2008, compared with a net loss of $511 million on revenue of $8.72 billion in 2007.
However, the 2008 results include a one-time “fresh start” accounting gain of $1 billion. Dana closed four plants last year, and as many as 10 more closings are planned through 2010. The company is also combining its light-axle and driveshaft operations into a single, global unit.
Dana achieved break-even net income in the second quarter of 2009, compared to a loss of $122 million during the same period last year. Second-quarter sales were $1.2 billion, compared with sales of $2 billion during the same period last year. The decrease was caused by lower vehicle production across all market segments, notably within the off-highway sector.
As of June 30, 2009, cash balances were $553 million, with total available liquidity of $664 million. Net debt was $546 million. The stock is currently trading at about $7 a share; the low for the year was 19 cents.
“Our second-quarter revenues reflected the continued weak demand in all three of our market segments,” said Dana Executive Chairman John Devine. “Despite this difficult environment, our aggressive efforts to resize our organization, implement permanent structural improvements, and address pricing continued to take hold. These actions resulted in substantial profit and cash flow improvements compared to the prior quarter, despite slightly lower sales.”
During the quarter, Dana reduced its global workforce by approximately 1,400 employees, bringing its total year-to-date reduction to approximately 6,200. The workforce reductions include both actions to align the organization to reduced volume levels, as well as permanent, structural reductions to improve productivity and profitability. Thus, Dana reflects the “jobless economic recovery” that is apparently now under way.
The company intends to use the net proceeds from the new stock offering for “general corporate purposes including flexibility for future expansion and restructuring of operations.” Additionally, in accordance with the terms of its credit agreement, the company will use approximately 50% of the proceeds to repay debt.
In conjunction with the offering, Dana intends to grant the underwriters a 30-day option to purchase up to 4 million additional shares. Goldman, Sachs & Company is serving as the sole book-runner, with Citi and J.P. Morgan as co-managers for the offering.
Dana Holding Corporation is a large supplier of axles, driveshafts, as well as structural, sealing, and thermal-management products, and service parts. The company’s customer base includes almost every major vehicle manufacturer in the global automotive, commercial vehicle, and off-highway markets. Ford Motor Company is Dana’s largest customer. Based in Toledo, Ohio, the company employs approximately 29,000 people in 26 countries.