Dauch Corp

Previous wording

We are a primary supplier of driveline products to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks, sport utility vehicles (SUVs), and crossover vehicles manufactured in North America, supplying a significant portion of GM’s rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. We also supply GM with various components from our Metal Forming segment. Sales to GM were approximately 30% of our consolidated net sales for the first six months of 2026, and 44% for both the first six months of 2025 and the full year 2025.

Current wording

We are a primary supplier of driveline products to General Motors Company (GM) for its full-size rear-wheel drive (RWD) light trucks, sport utility vehicles (SUVs), and crossover vehicles manufactured in North America, supplying a significant portion of GM’s rear axle and four-wheel drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle platforms. We also supply GM with various components from our Metal Forming segment. Sales to GM were approximately 30% of our consolidated net sales for the first nine months of 2026, and 44% for both the first nine months of 2025 and the full year 2025.

Previous wording

We also supply driveline system products to Stellantis N.V. (Stellantis) for programs including the heavy-duty Ram full-size pickup truck and its derivatives. In addition, we sell various components to Stellantis from our Metal Forming segment. Sales to Stellantis were approximately 13% of our consolidated net sales for each of the first six months of 2026, the first six months of 2025 and the full year 2025.

Current wording

We also supply driveline system products to Stellantis N.V. (Stellantis) for programs including the heavy-duty Ram full-size pickup truck and its derivatives. In addition, we sell various components to Stellantis from our Metal Forming segment. Sales to Stellantis were approximately 13% of our consolidated net sales for each of the first nine months of 2026, the first nine months of 2025 and the full year 2025.

Previous wording

We are also a supplier to Ford Motor Company (Ford) for driveline system products on certain vehicle programs including the Bronco Sport, Maverick and Lincoln Nautilus, and we also sell various components to Ford from our Metal Forming segment. Sales to Ford were approximately 11% of our consolidated net sales for the first six months of 2026, and 15% for both the first six months of 2025 and the full year 2025.

Current wording

We are also a supplier to Ford Motor Company (Ford) for driveline system products on certain vehicle programs including the Bronco Sport, Maverick and Lincoln Nautilus, and we also sell various components to Ford from our Metal Forming segment. Sales to Ford were approximately 11% of our consolidated net sales for the first nine months of 2026, and 15% for both the first nine months of 2025 and the full year 2025.

Previous wording

On February 3, 2026, we completed our previously announced acquisition of Dowlais whereby we acquired the entire issued share capital of Dowlais (the Business Combination). Pursuant to the Business Combination, Dowlais shareholders received for each Dowlais ordinary share: 0.0881 shares of new Dauch Corporation common stock and 43 pence per share in cash (approximately $0.59 per share as of the closing date), resulting in the issuance of approximately 117 million shares (and an increase in authorized shares from 150 million shares to 375 million shares) and a total purchase price of approximately $1.7 billion.

Current wording

On February 3, 2026, we completed our previously announced acquisition of Dowlais whereby we acquired the entire issued share capital of Dowlais (the Business Combination). Pursuant to the Business Combination, Dowlais shareholders received for each Dowlais ordinary share: 0.0881 shares of new Dauch Corporation common stock and 43 pence per share in cash (approximately $0.59 per share as of the closing date), resulting in the issuance of approximately 117 million shares (and an increase in authorized shares from 150 million shares to 375 million shares) and a total purchase price of approximately $1.7 billion. See Note 2 - Acquisitions and Dispositions for further detail on the Business Combination.

Previous wording

In 2025, the U.S. government implemented tariffs and increased certain existing tariffs on various products including assembled vehicles and automotive parts and components imported into the U.S., and there is considerable uncertainty around the extent, timing and duration of these tariffs. This has resulted in retaliatory tariffs against the U.S. by the governments of various countries, resulting in significant instability and uncertainty in U.S. trade relations with certain countries. Additionally, the expected 2026 review of the United States-Mexico-Canada Agreement (USMCA) could further contribute to this instability and uncertainty in trade relations.

Current wording

In 2025, the U.S. government implemented tariffs and increased certain existing tariffs on various products including assembled vehicles and automotive parts and components imported into the U.S., and there is considerable uncertainty around the extent, timing and duration of these tariffs. This has resulted in retaliatory tariffs against the U.S. by the governments of various countries, resulting in significant instability and uncertainty in U.S. trade relations with certain countries. Additionally, the expected review of the United States-Mexico-Canada Agreement (USMCA) could further contribute to this instability and uncertainty in trade relations.

Previous wording

For the six months ended June 30, 2026, the net impact on earnings related to the aforementioned tariffs was approximately $30 million and we expect a continuing impact from tariffs in future periods. For the year ended December 31, 2025, the net impact on earnings related to the aforementioned tariffs was approximately $10 million. We are implementing mitigation actions and pursuing recoveries from our customers for the cost increases resulting from the tariffs but have not reached final agreement with all customers and therefore the total amount and timing of such recoveries is unknown. Further, certain of these recoveries may include government-issued credits and there is uncertainty about whether we will be able to effectively monetize such credits. For the full year 2026, we anticipate the impact on earnings of these tariffs to be approximately $10 million to $20 million after mitigation actions and estimated customer recoveries. However, due to uncertainty associated with the potential further implementation or expansion of tariffs, as well as the potential for additional retaliatory actions and other changes to existing trade agreements or changes in international trade relations, the actual impact on 2026 earnings could differ materially from this estimate.

Current wording

For the nine months ended September 30, 2026, the net impact on earnings related to the aforementioned tariffs was approximately $25 million and we expect a continuing impact from tariffs in future periods. For the year ended December 31, 2025, the net impact on earnings related to the aforementioned tariffs was approximately $10 million. We are implementing mitigation actions and pursuing recoveries from our customers for the cost increases resulting from the tariffs but have not reached final agreement with all customers and therefore the total amount and timing of such recoveries is unknown. Further, certain of these recoveries may include government-issued credits and there is uncertainty about whether we will be able to effectively monetize such credits. For the full year 2026, we anticipate the impact on earnings of these tariffs to be approximately $20 million to $25 million after mitigation actions and estimated customer recoveries. However, due to uncertainty associated with the potential further implementation or expansion of tariffs, as well as the potential for additional retaliatory actions and other changes to existing trade agreements or changes in international trade relations, the actual impact on 2026 earnings could differ materially from this estimate.

Previous wording

During the first six months of 2026, geopolitical conflicts have indirectly impacted our operations and financial results primarily through supply chain disruptions. We continue to work with customers and suppliers in our effort to protect continuity of supply as we expect these challenges to continue in 2026. Due to the ongoing uncertainty associated with these supply chain constraints, the ultimate impact on our net sales, results of operations and cash flows is unknown.

Current wording

During the first nine months of 2026, geopolitical conflicts, including instability in the Middle East, have impacted our operations and financial results primarily through supply chain disruptions. We continue to work with customers and suppliers in our effort to protect continuity of supply as we expect these challenges to continue in 2026. However, we may not be successful in mitigating these cost increases, either by recovery from our customers or otherwise. Due to the ongoing uncertainty associated with these supply chain constraints, the ultimate impact on our net sales, results of operations and cash flows is unknown.

Previous wording

The impact of the Business Combination on net sales in the second quarter of 2026 was approximately $1,439 million. Excluding the impact of the Business Combination, the change in net sales for the second quarter of 2026, as compared to the second quarter of 2025, primarily reflects lower production volumes on certain vehicle programs that we support and a reduction of approximately $34 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., which was completed on July 1, 2025. These decreases were partially offset by an increase of approximately $35 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments.

Current wording

The impact of the Business Combination on net sales in the third quarter of 2026 was approximately $1,390 million. Excluding the impact of the Business Combination, the change in net sales for the third quarter of 2026, as compared to the third quarter of 2025, primarily reflects an increase of approximately $33 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments. This increase was partially offset by lower production volumes on certain vehicle programs that we support.

Previous wording

The impact on cost of goods sold of the Business Combination was approximately $1,300 million for the second quarter of 2026. Excluding the impact of the Business Combination, the change in cost of goods sold in the second quarter of 2026, as compared to the second quarter of 2025, primarily reflects lower production volumes on certain vehicle programs that we support. For the three months ended June 30, 2026, material costs were approximately 51% of total costs of goods sold, as compared to approximately 55% for the three months ended June 30, 2025.

Current wording

The impact on cost of goods sold of the Business Combination was approximately $1,310 million for the third quarter of 2026. Excluding the impact of the Business Combination, the change in cost of goods sold in the third quarter of 2026, as compared to the third quarter of 2025, primarily reflects an increase of approximately $30 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments, partially offset by lower production volumes on certain vehicle programs that we support. For the three months ended September 30, 2026, material costs were approximately 51% of total costs of goods sold, as compared to approximately 54% for the three months ended September 30, 2025.

Previous wording

Gross margin was 11.4% in the second quarter of 2026, as compared to 13.1% in the second quarter of 2025. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.

Current wording

Gross margin was 9.7% in the third quarter of 2026, as compared to 12.6% in the third quarter of 2025. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.

Previous wording

SG&A as a percentage of net sales was 5.6% in the second quarter of 2026, as compared to 6.6% in the second quarter of 2025. Research and development (R&D) expense, net of customer engineering, design and development (ED&D) recoveries, was approximately $56.8 million in the second quarter of 2026, as compared to $36.1 million in the second quarter of 2025. In addition to the increase in R&D expense, the change in SG&A in the second quarter of 2026, as compared to the second quarter of 2025, reflects an increase of approximately $46 million associated with the Business Combination, which was partially offset by the achievement of synergies as a result of the Business Combination.

Current wording

SG&A as a percentage of net sales was 4.8% in the third quarter of 2026, as compared to 6.6% in the third quarter of 2025. Research and development (R&D) expense, net of customer engineering, design and development (ED&D) recoveries, was approximately $57.2 million in the third quarter of 2026, as compared to $37.4 million in the third quarter of 2025. In addition to the increase in R&D expense, the change in SG&A in the third quarter of 2026, as compared to the third quarter of 2025, reflects an increase of approximately $25 million associated with the Business Combination, which was partially offset by the achievement of synergies as a result of the Business Combination.

Previous wording

Amortization of Intangible Assets Amortization expense related to intangible assets was $21.8 million for the three months ended June 30, 2026 and $20.4 million for the three months ended June 30, 2025.

Current wording

Amortization of Intangible Assets Amortization expense related to intangible assets was $22.6 million for the three months ended September 30, 2026 and $20.4 million for the three months ended September 30, 2025.

Previous wording

Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $49.8 million in the second quarter of 2026 and $16.5 million in the second quarter of 2025.

Current wording

Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $47.4 million in the third quarter of 2026 and $21.4 million in the third quarter of 2025.

Previous wording

During the three months ended June 30, 2026, we incurred approximately $3 million of acquisition-related costs and approximately $26 million of integration expenses associated with the Business Combination. Acquisition-related costs in the second quarter of 2026 primarily consisted of expenses related to compensation arrangements under the Co-operation Agreement associated with the Business Combination. Integration expenses primarily reflect costs for synergy attainment, including professional fees and severance incurred in conjunction with integration activities. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.

Current wording

During the three months ended September 30, 2026, we incurred approximately $28 million of restructuring costs. Additionally, during the three months ended September 30, 2026, we incurred approximately $2 million of acquisition-related costs and approximately $17 million of integration expenses associated with the Business Combination. Acquisition-related costs in the third quarter of 2026 primarily consisted of expenses related to compensation arrangements under the Co-operation Agreement associated with the Business Combination. Integration expenses primarily reflect costs for synergy attainment, including professional fees and severance incurred in conjunction with integration activities. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.

Previous wording

Operating Income Operating income was $99.7 million in the second quarter of 2026, as compared to $55.0 million in the second quarter of 2025. Operating margin was 3.4% in the second quarter of 2026, as compared to 3.6% in the second quarter of 2025. The changes in operating income and operating margin were primarily due to factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.

Current wording

Operating Income Operating income was $71.8 million in the third quarter of 2026, as compared to $48.4 million in the third quarter of 2025. Operating margin was 2.5% in the third quarter of 2026, as compared to 3.2% in the third quarter of 2025. The changes in operating income and operating margin were primarily due to factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.

Previous wording

Interest Expense and Interest Income Interest expense was $89.8 million in the second quarter of 2026, as compared to $43.1 million in the second quarter of 2025. The weighted-average interest rate of our long-term debt outstanding was 7.1% in the second quarter of 2026 and 6.7% in the second quarter of 2025. The increase in interest expense in the second quarter of 2026, as compared to the second quarter of 2025, primarily reflects the issuance of new indebtedness in connection with the Business Combination.

Current wording

Interest Expense and Interest Income Interest expense was $86.6 million in the third quarter of 2026, as compared to $42.7 million in the third quarter of 2025. The weighted-average interest rate of our long-term debt outstanding was 6.9% in the third quarter of 2026 and 6.7% in the third quarter of 2025. The increase in interest expense in the third quarter of 2026, as compared to the third quarter of 2025, primarily reflects the issuance of new indebtedness in connection with the Business Combination.

Previous wording

Debt Refinancing and Redemption Costs Debt refinancing and redemption costs were $0.9 million in the second quarter of 2026 and we incurred no such expense in the second quarter of 2025. See Note 5 - Long-Term Debt for additional detail on our debt refinancing and redemption activities.

Current wording

Debt Refinancing and Redemption Costs Debt refinancing and redemption costs were $0.8 million in the third quarter of 2026 and we incurred no such expense in the third quarter of 2025. See Note 5 - Long-Term Debt for additional detail on our debt refinancing and redemption activities.

Previous wording

Gain on Business Combination Derivative In the second quarter of 2025, we recognized an unrealized gain on the Business Combination Derivative of $46.3 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.

Current wording

Loss on Business Combination Derivative In the third quarter of 2025, we recognized an unrealized loss on the Business Combination Derivative of $16.0 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.

Previous wording

Income from Equity-Method Affiliates Income from equity-method affiliates represents our proportionate share of earnings from equity in unconsolidated subsidiaries. In the second quarter of 2026, we recognized income from equity-method affiliates of $17.4 million, as compared to $0.5 million in the second quarter of 2025, primarily driven by our net share of income from Shanghai GKN HUAYU Driveline Systems Co Limited (SDS). See Note 15 - Investments in Equity-Method Affiliates for more information on our investment in SDS.

Current wording

Income (Loss) from Equity-Method Affiliates Income (loss) from equity-method affiliates represents our proportionate share of earnings from equity in unconsolidated subsidiaries. In the third quarter of 2026, we recognized income from equity-method affiliates of $15.1 million, as compared to a loss of $0.4 million in the third quarter of 2025, primarily driven by our net share of income from Shanghai GKN HUAYU Driveline Systems Co Limited (SDS). See Note 15 - Investments in Equity-Method Affiliates for more information on our investment in SDS.

Previous wording

Other Income (Expense), Net Other income (expense), net includes the net effect of foreign exchange gains and losses and all components of net periodic pension and postretirement benefit costs other than service cost. Other income (expense), net was expense of $16.0 million in the second quarter of 2026, as compared to income of $3.1 million in the second quarter of 2025. The change in Other income (expense), net was primarily driven by changes in foreign exchange gains and losses in the second quarter of 2026, as compared to the second quarter of 2025, as well as increased net periodic pension and postretirement benefit costs as a result of the Business Combination.

Current wording

Other Income (Expense), Net Other income (expense), net includes the net effect of foreign exchange gains and losses and all components of net periodic pension and postretirement benefit costs other than service cost. Other income (expense), net was expense of $35.9 million in the third quarter of 2026, as compared to income of $2.0 million in the third quarter of 2025. The change in Other income (expense), net in the third quarter of 2026, as compared to the third quarter of 2025, was primarily driven by changes in foreign exchange gains and losses, the impact of the mark-to-market on nondesignated derivatives assumed as part of the Business Combination, as well as increased net periodic pension and postretirement benefit costs as a result of the Business Combination.

Previous wording

Income Tax Expense (Benefit)Income tax expense (benefit) was a benefit of $3.5 million for the six months ended June 30, 2026, as compared to expense of $42.1 million for the six months ended June 30, 2025. Our effective income tax rate was 3.4% in the first six months of 2026 as compared to 47.6% in the first six months of 2025.

Current wording

Income Tax Expense (Benefit)Income tax expense (benefit) was expense of $13.9 million for the three months ended September 30, 2026, as compared to a benefit of $10.9 million for the three months ended September 30, 2025. Our effective income tax rate was (45.3)% in the third quarter of 2026, as compared to 641.2% in the third quarter of 2025.

Previous wording

During the three months ended June 30, 2026, our effective income tax rate varies from the U.S. federal statutory rate primarily due to the impact of net losses in certain jurisdictions with no corresponding tax benefit due to increases in our valuation allowance and permanent adjustments associated with nondeductible transaction costs incurred in conjunction with the Business Combination, partially offset by the benefit from utilization of tax credits.

Current wording

For the three months ended September 30, 2026, our effective income tax rate varies from the U.S. federal statutory rate primarily due to the impact of net losses in certain jurisdictions with no corresponding tax benefit due to increases in our valuation allowance and permanent adjustments associated with nondeductible transaction costs incurred in conjunction with the Business Combination, partially offset by the benefit from utilization of tax credits.

Previous wording

Our income tax expense and effective income tax rate for the three months ended June 30, 2026 vary from our income tax expense and effective income tax rate for the three months ended June 30, 2025 primarily as a result of the items described in the preceding paragraph, as well as the mix of earnings on a jurisdictional basis.

Current wording

Our income tax expense and effective income tax rate for the three months ended September 30, 2026 vary from our income tax expense and effective income tax rate for the three months ended September 30, 2025 primarily as a result of the items described in the preceding paragraphs, as well as the mix of earnings on a jurisdictional basis.

Previous wording

For the three months ended June 30, 2025, our effective income tax rate varied from the U.S. federal statutory rate primarily due to the unfavorable impact of disallowed interest expense deductions in the U.S., as well as the mix of earnings on a jurisdictional basis, and the impact of certain non-U.S. tax rates and non-U.S. withholding taxes. In addition, the impact of tax expense from valuation allowances in certain non-U.S. jurisdictions also impacted our effective tax rate, as compared to the U.S. federal statutory rate, for the three months ended June 30, 2025. These tax expenses were partially offset by the favorable impact of tax credits.

Current wording

For the three months ended September 30, 2025, our effective income tax rates vary from the U.S. federal statutory rate primarily due to the impact of the Act, as well as the mix of earnings on a jurisdictional basis, and the impact of certain non-U.S. tax rates and non-U.S. withholding taxes. In addition, the impact of tax expense from valuation allowances in certain non-U.S. jurisdictions also impacted our effective tax rate, as compared to the U.S. federal statutory rate, for the three months ended September 30, 2025. These tax expenses were partially offset by the favorable impact of tax credits.

Previous wording

Net Income Attributable to Dauch and Earnings Per Share (EPS) Net income attributable to Dauch was $1.0 million in the second quarter of 2026, as compared to $39.3 million in the second quarter of 2025. Diluted earnings per share was $0.00 per share in the second quarter of 2026, as compared to $0.32 per share in the second quarter of 2025. Net income and EPS for the second quarters of 2026 and 2025 were primarily impacted by the factors discussed above.

Current wording

Net Income (Loss) Attributable to Dauch and Earnings (Loss) Per Share (EPS) Net loss attributable to Dauch was $45.3 million in the third quarter of 2026, as compared to income of $9.2 million in the third quarter of 2025. Diluted loss per share was $0.19 per share in the third quarter of 2026, as compared to diluted earnings per share of $0.07 in the third quarter of 2025. Net income (loss) attributable to Dauch and EPS for the third quarters of 2026 and 2025 were primarily impacted by the factors discussed above.

Previous wording

The impact of the Business Combination on net sales for the first six months of 2026 was approximately $2,411 million. Excluding the impact of the Business Combination, the change in net sales in the first six months of 2026, as compared to the first six months of 2025, primarily reflects lower production volumes on certain vehicle programs that we support and a reduction of approximately $69 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., which was completed on July 1, 2025. These decreases were partially offset by an increase of approximately $79 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments.

Current wording

The impact of the Business Combination on net sales for the first nine months of 2026 was approximately $3,801 million. Excluding the impact of the Business Combination, the change in net sales in the first nine months of 2026, as compared to the first nine months of 2025, primarily reflects lower production volumes on certain vehicle programs that we support and a reduction of approximately $69 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., which was completed on July 1, 2025. These decreases were partially offset by an increase of approximately $112 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments.

Previous wording

The impact on cost of goods sold of the Business Combination was approximately $2,227 million for the first six months of 2026, which includes approximately $38 million for the step-up of inventory to fair value as a result of purchase accounting. Excluding the impact of the Business Combination, the change in cost of goods sold in the first six months of 2026, as compared to the first six months of 2025, primarily reflects a reduction of approximately $65 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., as well as the impact of lower production volumes on certain vehicle programs that we support, partially offset by an increase of approximately $71 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments. For the six months ended June 30, 2026, material costs were approximately 52% of total cost of goods sold as compared to approximately 55% for the six months ended June 30, 2025.

Current wording

The impact on cost of goods sold of the Business Combination was approximately $3,537 million for the first nine months of 2026, which includes approximately $38 million for the step-up of inventory to fair value as a result of purchase accounting. Excluding the impact of the Business Combination, the change in cost of goods sold in the first nine months of 2026, as compared to the first nine months of 2025, primarily reflects a reduction of approximately $65 million as a result of the sale of AAM India Manufacturing Corporation Pvt., Ltd., as well as the impact of lower production volumes on certain vehicle programs that we support, partially offset by an increase of approximately $101 million associated with the effect of metal market pass-throughs to our customers and the impact of foreign exchange related to translation adjustments. For the nine months ended September 30, 2026, material costs were approximately 51% of total cost of goods sold as compared to approximately 55% for the nine months ended September 30, 2025.

Previous wording

Gross margin was 10.6% in the first six months of 2026, as compared to 12.7% in the first six months of 2025. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.

Current wording

Gross margin was 10.3% in the first nine months of 2026, as compared to 12.7% in the first nine months of 2025. Gross profit and gross margin were impacted by the factors discussed in Net Sales and Cost of Goods Sold above.

Previous wording

SG&A as a percentage of net sales was 5.7% in the first six months of 2026 as compared to 6.5% in the first six months of 2025. R&D expense, net of customer ED&D recoveries, was approximately $108.4 million in the first six months of 2026, as compared to $72.4 million in the first six months of 2025. In addition to the increase in R&D expense, the change in SG&A in the first six months of 2026, as compared to the first six months of 2025, reflects an increase of approximately $71 million associated with the Business Combination.

Current wording

SG&A as a percentage of net sales was 5.4% in the first nine months of 2026 as compared to 6.5% in the first nine months of 2025. R&D expense, net of customer ED&D recoveries, was approximately $165.6 million in the first nine months of 2026, as compared to $109.8 million in the first nine months of 2025. In addition to the increase in R&D expense, the change in SG&A in the first nine months of 2026, as compared to the first nine months of 2025, reflects an increase of approximately $96 million associated with the Business Combination. SG&A for the first nine months of 2026 was also impacted by the achievement of synergies as a result of the Business Combination.

Previous wording

Amortization of Intangible Assets Amortization expense for the six months ended June 30, 2026 was $44.7 million, as compared to $41.0 million for the six months ended June 30, 2025.

Current wording

Amortization of Intangible Assets Amortization expense for the nine months ended September 30, 2026 was $67.3 million, as compared to $61.4 million for the nine months ended September 30, 2025.

Previous wording

Impairment Charge In connection with the sale of AAM India Manufacturing Corporation Pvt., Ltd., we recorded an impairment charge in the three months ended June 30, 2025 of $8.0 million to reduce the carrying value of this business to fair value less costs to sell. See Note 2 - Acquisitions and Dispositions for additional detail regarding the sale of AAM India Manufacturing Corporation Pvt., Ltd.

Current wording

Impairment Charge In connection with the sale of AAM India Manufacturing Corporation Pvt., Ltd., we recorded an impairment charge in the nine months ended September 30, 2025 of $8.0 million to reduce the carrying value of this business to fair value less costs to sell. See Note 2 - Acquisitions and Dispositions for additional detail regarding the sale of AAM India Manufacturing Corporation Pvt., Ltd.

Previous wording

Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $148.7 million for the six months ended June 30, 2026, as compared to $36.2 million for the six months ended June 30, 2025.

Current wording

Restructuring and Acquisition-Related Costs Restructuring and acquisition-related costs were $196.1 million for the nine months ended September 30, 2026, as compared to $57.6 million for the nine months ended September 30, 2025.

Previous wording

During the six months ended June 30, 2026, we incurred approximately $57 million of acquisition-related costs and approximately $45 million of integration expenses associated with the Business Combination. Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred, as well as expenses related to compensation arrangements under the Co-operation Agreement associated with the Business Combination. Integration expenses primarily reflect costs for synergy attainment, including professional fees and severance incurred in conjunction with integration activities.

Current wording

During the nine months ended September 30, 2026, we incurred approximately $75 million of restructuring costs. Additionally, during the nine months ended September 30, 2026, we incurred approximately $59 million of acquisition-related costs and approximately $62 million of integration expenses associated with the Business Combination. Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred, as well as expenses related to compensation arrangements under the Co-operation Agreement associated with the Business Combination. Integration expenses primarily reflect costs for synergy attainment, including professional fees and severance incurred in conjunction with integration activities.

Previous wording

In 2026, we expect to incur approximately $90 million to $120 million of total restructuring charges. In addition, we expect to incur $60 million to $70 million of acquisition-related costs and $100 million to $120 million of integration costs in 2026 associated with the Business Combination. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.

Current wording

In 2026, we expect to incur approximately $90 million to $110 million of total restructuring charges. In addition, we expect to incur approximately $100 million to $115 million of integration costs in 2026 associated with the Business Combination. We do not expect to incur further acquisition-related costs. See Note 12 - Restructuring and Acquisition-Related Costs for additional detail regarding our restructuring, acquisition and integration activity.

Previous wording

Operating Income Operating income was $66.0 million in the first six months of 2026 as compared to $97.7 million in the first six months of 2025. Operating margin was 1.2% in the first six months of 2026, as compared to 3.3% in the first six months of 2025. The changes in operating income and operating margin were due primarily to the factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.

Current wording

Operating Income Operating income was $137.8 million in the first nine months of 2026 as compared to $146.1 million in the first nine months of 2025. Operating margin was 1.7% in the first nine months of 2026, as compared to 3.3% in the first nine months of 2025. The changes in operating income and operating margin were due primarily to the factors discussed in Net Sales, Cost of Goods Sold, SG&A and Restructuring and Acquisition-Related Costs above.

Previous wording

Interest Expense and Interest Income Interest expense was $179.4 million in the first six months of 2026 as compared to $86.0 million in the first six months of 2025. The weighted-average interest rate of our long-term debt outstanding was 7.2% for the six months ended June 30, 2026 and 6.7% for the six months ended June 30, 2025. The increase in interest expense during the first six months of 2026, as compared to the first six months of 2025, primarily reflects the issuance of new indebtedness in connection with the Business Combination. We expect our interest expense for the full year 2026 to be approximately $340 million to $360 million.

Current wording

Interest Expense and Interest Income Interest expense was $266.0 million in the first nine months of 2026 as compared to $128.7 million in the first nine months of 2025. The weighted-average interest rate of our long-term debt outstanding was 7.1% for the nine months ended September 30, 2026 and 6.7% for the nine months ended September 30, 2025. The increase in interest expense during the first nine months of 2026, as compared to the first nine months of 2025, primarily reflects the issuance of new indebtedness in connection with the Business Combination. We expect our interest expense for the full year 2026 to be approximately $350 million to $360 million.

Previous wording

Interest income was $19.3 million in the first six months of 2026, as compared to $11.2 million in the first six months of 2025. In connection with the 6.375% senior secured notes due 2032 (the 6.375% Notes) and 7.75% senior unsecured notes due 2033 (the 7.75% Notes, and together with the 6.375% Notes, the Notes) issued by American Axle & Manufacturing, Inc. (AAM, Inc.) on October 3, 2025, we received approximately $4.6 million of interest income in the first six months of 2026 on the proceeds from the Notes placed in segregated escrow accounts until the closing of the Business Combination on February 3, 2026. See Note 5 - Long-Term Debt for further detail on the financing for the Business Combination and the funds in escrow.

Current wording

Interest income was $25.0 million in the first nine months of 2026, as compared to $18.2 million in the first nine months of 2025. In connection with the 6.375% senior secured notes due 2032 (the 6.375% Notes) and 7.75% senior unsecured notes due 2033 (the 7.75% Notes, and together with the 6.375% Notes, the Notes) issued by American Axle & Manufacturing, Inc. (AAM, Inc.) on October 3, 2025, we received approximately $4.6 million of interest income in the first nine months of 2026 on the proceeds from the Notes placed in segregated escrow accounts until the closing of the Business Combination on February 3, 2026. See Note 5 - Long-Term Debt for further detail on the financing for the Business Combination and the funds in escrow.

Previous wording

Debt Refinancing and Redemption Costs Debt refinancing and redemption costs were $3.9 million in the first six months of 2026, as compared to $3.3 million in the first six months of 2025. See Note 5 - Long-Term Debt for additional detail on our debt refinancing and redemption activities.

Current wording

Debt Refinancing and Redemption Costs Debt refinancing and redemption costs were $4.7 million in the first nine months of 2026, as compared to $3.3 million in the first nine months of 2025. See Note 5 - Long-Term Debt for additional detail on our debt refinancing and redemption activities.

Previous wording

Gain on Business Combination Derivative In the first six months of 2026, we recognized a realized gain on the Business Combination Derivative of $12.9 million upon the completion of the Business Combination. In the first six months of 2025, we recognized an unrealized gain on the Business Combination Derivative of $68.2 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.

Current wording

Gain on Business Combination Derivative In the first nine months of 2026, we recognized a realized gain on the Business Combination Derivative of $12.9 million upon the completion of the Business Combination. In the first nine months of 2025, we recognized an unrealized gain on the Business Combination Derivative of $52.2 million. See Note 6 - Derivatives for additional detail on the Business Combination Derivative.

Previous wording

Income from Equity-Method Affiliates Income from equity-method affiliates represents our proportionate share of earnings from equity in unconsolidated subsidiaries. In the first six months of 2026, we recognized income from equity-method affiliates of $27.7 million, as compared to $0.5 million in the first six months of 2025, primarily driven by our net share of income from Shanghai GKN HUAYU Driveline Systems Co Limited (SDS). See Note 15 - Investments in Equity-Method Affiliates for more information on our investment in SDS.

Current wording

Income from Equity-Method Affiliates Income from equity-method affiliates represents our proportionate share of earnings from equity in unconsolidated subsidiaries. In the first nine months of 2026, we recognized income from equity-method affiliates of $42.8 million, as compared to $0.1 million in the first nine months of 2025, primarily driven by our net share of income from SDS. See Note 15 - Investments in Equity-Method Affiliates for more information on our investment in SDS.