DANA Inc

Previous wording

Cost reduction initiatives — During the fourth quarter of 2024, we announced further actions to support sustained long-term profitability and enhanced cash flow generation. This includes substantial reduction in selling, general and administrative costs and aligning engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles. We expect to deliver annualized savings of $310 through 2026. Approximately $235 of annualized savings is expected be realized through 2025 with an additional $75 realized in 2026. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Cost reduction initiatives — During the fourth quarter of 2024, we announced further actions to support sustained long-term profitability and enhanced cash flow generation. This includes substantial reduction in selling, general and administrative costs and aligning engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles. We expect to deliver annualized savings of $310 through 2026. Approximately $245 of annualized savings is expected be realized through 2025 with an additional $65 realized in 2026. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Light vehicle markets — Our driveline business is weighted more heavily to the truck and SUV segments of the light-vehicle market versus the passenger-car segment. Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive vehicles, as well as hybrid and electric vehicles. During 2024, light-truck markets showed marginal improvement across all regions except Europe, which was down slightly from 2023. The outlook for 2025 reflects global light-truck near-term production being relatively stable across all regions but demand risk later in the year due to tariff impacts.

Current wording

Light vehicle markets — Our driveline business is weighted more heavily to the truck and SUV segments of the light-vehicle market versus the passenger-car segment. Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive vehicles, as well as hybrid and electric vehicles. During 2024, light-truck markets showed marginal improvement across all regions except Europe, which was down slightly from 2023. The outlook for 2025 reflects global light-truck near-term production being relatively stable across all regions with demand risk due to tariff impacts.

Previous wording

Commercial vehicle markets — Our primary business is driveline systems for medium and heavy-duty trucks and busses, including the emerging market for hybrid and electric vehicles. Key regional markets are North America, South America (primarily Brazil) and Asia Pacific. During 2024, production of Class-8 trucks in North America decreased 3% from 2023 reflecting lower demand driven by lower freight volumes and rates. Medium-duty truck production in North America experienced a modest 4% year-over-year increase from 2023. The outlook for 2025 is for a significant decrease in production from the prior year. Outside of North America, production of medium- and heavy-duty trucks in South America increased 41% over 2023, reflecting improved economic conditions in the region. The 2025 outlook for South America reflects relative stability compared to the prior year. Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, decreased 5% in 2024. The 2025 outlook for Asia Pacific is for a modest increase in production from the prior year.

Current wording

Commercial vehicle markets — Our primary business is driveline systems for medium and heavy-duty trucks and busses, including the emerging market for hybrid and electric vehicles. Key regional markets are North America, South America (primarily Brazil) and Asia Pacific. During 2024, production of Class-8 trucks in North America decreased 3% from 2023 reflecting lower demand driven by lower freight volumes and rates. Medium-duty truck production in North America experienced a modest 4% year-over-year increase from 2023. The outlook for 2025 is for a significant decrease in production from the prior year. Outside of North America, production of medium- and heavy-duty trucks in South America increased 41% over 2023, reflecting improved economic conditions in the region. The 2025 outlook for South America reflects a moderate decrease in production compared to the prior year. Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, decreased 5% in 2024. The 2025 outlook for Asia Pacific is for a moderate increase in production from the prior year.

Previous wording

Foreign currency — With 44% of our first half of 2025 sales coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations. The euro zone countries accounted for 31% of our year-to-date 2025 non-U.S. sales, while Brazil, India, Thailand and China accounted for 14%, 9%, 9% and 7%, respectively. Although sales in South Africa are less than 6% of our non-U.S. sales, the rand has been volatile and significantly impacted sales from time to time. International currencies weakened against the U.S. dollar in the first half of 2025, decreasing sales by $24, with the effects of a weaker Brazilian real, Indian rupee, Mexican peso and Canadian dollar being partially offset by a stronger Thai baht and euro.

Current wording

Foreign currency — With 43% of our sales for the first nine months of 2025 coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations. The euro zone countries accounted for 31% of our year-to-date 2025 non-U.S. sales, while Brazil, India, Thailand and China accounted for 14%, 8%, 8% and 7%, respectively. International currencies weakened against the U.S. dollar during the first nine months of 2025, decreasing sales by $3, with the effects of a weaker Brazilian real, Indian rupee, Mexican peso and Canadian dollar being partially offset by a stronger euro, Thai baht and South Africa rand.

Previous wording

Argentina has experienced significant inflationary pressures the past few years, contributing to significant devaluation of its currency among other economic challenges. Our Argentine operation supports our Light Vehicle operating segment. Our sales in Argentina for the first half of 2025 of approximately $110 are 3% of our consolidated sales and our net asset exposure related to Argentina was approximately $52, including $21 of net fixed assets, at June 30, 2025. During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy. In assessing Argentina's economy as highly inflationary we considered its three-year cumulative inflation rate along with other factors. As a result, effective July 1, 2018, the U.S. dollar is the functional currency for our Argentine operations, rather than the Argentine peso. Beginning July 1, 2018, peso-denominated monetary assets and liabilities are remeasured into U.S. dollars using current Argentine peso exchange rates with resulting translation gains or losses included in results of operations. Nonmonetary assets and liabilities are remeasured into U.S. dollar using historic Argentine peso exchange rates.

Current wording

Argentina has experienced significant inflationary pressures the past few years, contributing to significant devaluation of its currency among other economic challenges. Our Argentine operation supports our Light Vehicle operating segment. Our sales in Argentina for the first nine months of 2025 of approximately $169 are 3% of our consolidated sales and our net asset exposure related to Argentina was approximately $58, including $20 of net fixed assets, at September 30, 2025. During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy. In assessing Argentina's economy as highly inflationary we considered its three-year cumulative inflation rate along with other factors. As a result, effective July 1, 2018, the U.S. dollar is the functional currency for our Argentine operations, rather than the Argentine peso. Beginning July 1, 2018, peso-denominated monetary assets and liabilities are remeasured into U.S. dollars using current Argentine peso exchange rates with resulting translation gains or losses included in results of operations. Nonmonetary assets and liabilities are remeasured into U.S. dollar using historic Argentine peso exchange rates.

Previous wording

Commodity costs — The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important to us being those of various grades of steel, aluminum, copper, brass and rare earth materials. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings, batteries and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers based on the movement in various published commodity indexes. Where such formal agreements are not present, we have historically been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes. Lower year-over-year commodity prices increased earnings during the first six months of 2025 by $7. Material cost recovery pricing actions decreased earnings in the first six months of 2025 by $12.

Current wording

Commodity costs — The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important to us being those of various grades of steel, aluminum, copper, brass and rare earth materials. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings, batteries and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers based on the movement in various published commodity indexes. Where such formal agreements are not present, we have historically been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes. Higher year-over-year commodity prices decreased earnings during the first nine months of 2025 by $3. Material cost recovery pricing actions increased earnings in the first nine months of 2025 by $3.

Previous wording

Summary Consolidated Results of Operations (Second Quarter, 2025 versus 2024)

Current wording

Summary Consolidated Results of Operations (Third Quarter, 2025 versus 2024)

Previous wording

Sales in the second quarter of 2025 were $112 lower than 2024. Stronger international currencies increased sales by $11, principally due to a stronger euro and Thai baht, partially offset by a weaker Brazilian real. The organic sales decrease of $122, or 6%, primarily resulted from lower full-frame light-truck production in North America and lower medium/heavy-truck production volumes in North America and Europe, partially offset by the conversion of sales backlog. Pricing actions and recoveries, including material commodity price and tariff and inflationary costs adjustments, increased sales by $55.

Current wording

Sales in the third quarter of 2025 were $20 higher than 2024. Stronger international currencies increased sales by $21, principally due to a stronger euro, Thai baht and Brazilian real, partially offset by a weaker India rupee. The organic sales decrease of $1 primarily resulted from lower medium/heavy-truck production volumes in North America and South America and lower electric-vehicle product orders in Europe and Asia Pacific, partially offset by higher full-frame light-truck production volumes in North America and the conversion of sales backlog. Pricing actions and recoveries, including material commodity and tariff and inflationary cost adjustments, increased sales by $65.

Previous wording

The North America organic sales decrease of 8% was driven principally by lower full-frame light-truck and medium- and heavy-truck production volumes, partially offset by the conversion of sales backlog and net customer pricing and tariff and cost recovery actions. Second quarter 2025 full-frame light-truck production was down 4%, Class 8 production was down 28% and Classes 5-7 was down 31% compared to 2024. Excluding currency effects, sales in Europe were down 4% compared with 2024, reflecting lower electric-vehicle product orders. Excluding currency effects, sales in South America were flat compared to 2024, reflecting flat medium/heavy-duty production volumes. Excluding currency effects, sales in Asia Pacific decreased 4% compared to 2024, reflecting lower electric vehicle related product orders, partially offset by modestly improving medium/heavy-truck production.

Current wording

The North America organic sales increase of 6% was driven principally by higher full-frame light-truck production volumes, the conversion of sales backlog and net customer pricing and tariff and cost recovery actions, partially offset by lower medium- and heavy-truck production volumes. Third quarter 2025 full-frame light-truck production was up 6%, while Class 8 and Classes 5-7 production were down 28% and 23%, respectively. Excluding currency effects, sales in Europe were down 6% compared to 2024, reflecting lower electric-vehicle product orders. Excluding currency effects, sales in South America were down 7% compared to 2024, reflecting lower medium/heavy-truck production. Excluding currency effects, sales in Asia Pacific decreased 15% reflecting lower electric vehicle-related product orders.

Previous wording

Cost of sales and gross margin — Cost of sales for the second quarter of 2025 decreased $133 when compared to 2024. Cost of sales as a percent of sales was 140 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $52, higher material cost savings of $31, operational efficiencies of $23, lower premium freight costs of $9, lower commodity costs of $8, lower warranty expense of $6 and lower program launch costs of $1 were partially offset by unfavorable product mix, tariff-related impacts of $46, non-material inflation of $39, higher incentive compensation expense of $4 and higher spending on electrification initiatives of $3. Commodity costs are primarily driven by certain grades of steel and aluminum. Non-material inflation includes higher labor, energy and transportation rates.

Current wording

Cost of sales and gross margin — Cost of sales for the third quarter of 2025 decreased $24 when compared to 2024. Cost of sales as a percent of sales was 230 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $66, higher material cost savings of $25, operational efficiencies of $10, lower premium freight costs of $6 and lower warranty expense of $3 were partially offset by unfavorable product mix, tariff-related impacts of $50, non-material inflation of $32, commodity cost increases of $7 and higher incentive compensation expense of $2. Commodity costs are primarily driven by certain grades of steel and aluminum. Non-material inflation includes higher labor, energy and transportation rates.

Previous wording

Gross margin of $138 for the second quarter of 2025 increased $21 from 2024. Gross margin as a percent of sales was 7.1% in the second quarter of 2025, 140 basis points higher than in 2024. The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above. Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days. With commodity costs decreasing during the second quarter of 2025, gross margin was positively impacted by net material cost recoveries on both a dollar and percentage basis. The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Current wording

Gross margin of $166 for the third quarter of 2025 increased $44 from 2024. Gross margin as a percent of sales was 8.7% in the third quarter of 2025, 230 basis points higher than in 2024. The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above. Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days. The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Previous wording

Selling, general and administrative expenses (SG&A) — SG&A expenses in the second quarter of 2025 were $99 (5.1% of sales) as compared to $108 (5.3% of sales) in the second quarter of 2024. SG&A expenses were $9 lower in the second quarter of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.

Current wording

Selling, general and administrative expenses (SG&A) — SG&A expenses in the third quarter of 2025 were $87 (4.5% of sales) as compared to $106 (5.6% of sales) in the third quarter of 2024. SG&A expenses were $19 lower in the third quarter of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.

Previous wording

Amortization of intangibles — Amortization expensewas $2 in both the second quarter of 2025 and the second quarter of 2024. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Amortization of intangibles — Amortization expensewas $2 in both the third quarter of 2025 and the third quarter of 2024. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Restructuring charges, net —Net restructuring charges were $11 in both the second quarter of 2025 and the second quarter of 2024. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Restructuring charges, net —Net restructuring charges were $4 in the third quarter of 2025 and $20 in the third quarter of 2024. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited, recognizing an $8 pre-tax loss on the transaction. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. During the third quarter of 2024, we received a transaction break fee related to the failed sale of our European hydraulics business to HPIH S.à.r.l. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Interest income and interest expense— Interest income was $3 in the second quarter of 2025 and $1 in the second quarter of 2024. Interest expense increased from $40 in the second quarter of 2024 to $44 in the second quarter of 2025, reflecting higher average outstanding borrowings in 2025. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.8% in both the second quarter of 2025 and the second quarter of 2024.

Current wording

Interest income and interest expense— Interest income was $3 in the third quarter of 2025 and $5 in the third quarter of 2024. Interest expense increased from $38 in the third quarter of 2024 to $47 in the third quarter of 2025, reflecting higher average outstanding borrowings partially offset by lower average interest rates. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.4% in the third quarter of 2025 and 5.7% in the third quarter of 2024.

Previous wording

Income tax expense — We reported income tax expense of $10 and $12 for the second quarter of 2025 and 2024, respectively. Our effective tax rates were (43)% and (23)% for the second quarter of 2025 and 2024, respectively. During the second quarter of 2025, we recorded tax expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment. During the second quarter of 2024, we recorded tax expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses.

Current wording

Income tax benefit — We reported income tax benefit of $2 and $18 for the third quarter of 2025 and 2024, respectively. Our effective tax rates were (22)% and 44% for the third quarter of 2025 and 2024, respectively. During the third quarter of 2025, we recorded tax benefit of $27 resulting from the release of valuation allowance on certain U.S. federal attributes and $6 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions. During the third quarter of 2024, we recorded tax expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses.

Previous wording

Equity in earnings of affiliates — Net earnings from equity investments was $23 in the second quarter of 2025 and $3 in the second quarter of 2024. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $4 in the second quarter of 2025 and $1 in the second quarter of 2024. On April 25, 2025, we sold our ownership interest in Axles India Limited, recognizing a $19 pre-tax gain on the transaction. See Note 20 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Equity in earnings of affiliates — Net earnings from equity investments was $2 in both the third quarter of 2025 and the third quarter of 2024. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $1 in the third quarter of 2025 and de minimis in the third quarter of 2024. See Note 20 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Net income from discontinued operations — Net income from discontinued operations in the second quarter of 2025 was $34 lower than the second quarter of 2024. The year-over-year second quarter decrease was primarily due to lower sales resulting from weaker global construction/mining equipment and agricultural equipment markets, especially in Europe, and Off-Highway business divesture related costs incurred during the second quarter of 2025. Year-over-year second quarter construction/mining equipment and agricultural equipment production in Europe were down 10% and 5%, respectively. During the second quarter of 2025, $14 of Off-Highway business divesture transaction related costs were attributed to discontinued operations.

Current wording

Net income from discontinued operations — Net income from discontinued operations in the third quarter of 2025 was $42 higher than the third quarter of 2024. The year-over-year increase was primarily due to higher sales resulting from improving global construction/mining equipment and agricultural equipment markets, especially in Europe, and lower year-over-year income tax expense, partially offset by Off-Highway business divesture related costs incurred during the third quarter of 2025. During the third quarter of 2025, $20 of Off-Highway business divesture transaction related costs were attributed to discontinued operations. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Sales in the first six months of 2025 were $346 lower than 2024. Weaker international currencies decreased sales by $24, principally due to a weaker Brazilian real, Indian rupee, Mexican peso and Canadian dollar, partially offset by a stronger Thai baht and euro. The organic sales decrease of $321, or 8%, primarily resulted from lower full-frame light-truck production volumes in North America and lower medium/heavy-truck production volumes in North America and Europe, partially offset by the conversion of sales backlog. Pricing actions and recoveries, including material commodity price and tariff and inflationary costs adjustments, increased sales by $72.

Current wording

Sales in the first nine months of 2025 were $327 lower than 2024. Weaker international currencies decreased sales by $3, principally due to a weaker Brazilian real, Indian rupee, Mexican peso and Canadian dollar, partially offset by a stronger euro, Thai baht and South Africa rand. The organic sales decrease of $323, or 5%, primarily resulted from lower full-frame light-truck production volumes in North America and lower medium/heavy-truck production volumes in North America, South America and Europe, partially offset by the conversion of sales backlog. Pricing actions and recoveries, including material commodity price and tariff and inflationary costs adjustments, increased sales by $142.

Previous wording

The North America organic sales decrease of 12% was driven principally by lower full-frame light-truck and medium- and heavy-truck production volumes, partially offset by the conversion of sales backlog and net customer pricing and tariff and cost recovery actions. First six months 2025 full-frame light-truck production was down 6%, Class 8 production was down 22% and Classes 5-7 was down 25% compared to 2024. Excluding currency effects, sales in Europe were down 4% compared with 2024, reflecting lower electric-vehicle product orders. Excluding currency effects, sales in South America were up 1% compared to 2024, reflecting flat medium/heavy-duty production volumes. Excluding currency effects, sales in Asia Pacific were flat compared to 2024, reflecting modestly improving medium/heavy-truck production partially offset by lower electric-vehicle related product orders.

Current wording

The North America organic sales decrease of 6% was driven principally by lower full-frame light-truck and medium- and heavy-truck production volumes, partially offset by the conversion of sales backlog and net customer pricing and tariff and cost recovery actions. First nine months 2025 full-frame light-truck production was down 2%, Class 8 production was down 21% and Classes 5-7 was down 25% compared to 2024. Excluding currency effects, sales in Europe were down 5% compared with 2024, reflecting lower electric-vehicle product orders. Excluding currency effects, sales in South America were down 2% compared to 2024, reflecting lower medium/heavy-duty production volumes. Excluding currency effects, sales in Asia Pacific were down 6% compared to 2024, reflecting lower electric-vehicle related production orders, partially offset by modestly improving medium/heavy-truck production volumes.

Previous wording

Cost of sales and gross margin — Cost of sales for the first six months of 2025 decreased $373 when compared to 2024. Cost of sales as a percent of sales was 130 basis points lower than in the pervious year. Incremental margins from cost reduction initiatives of $90, higher material cost savings of $59, operational efficiencies of $37, lower premium freight costs of $10, lower commodity costs of $7 and lower warranty expense of $3 were partially offset by unfavorable product mix, tariff-related impacts of $52, non-material inflation of $72, higher spending on electrification initiatives of $4 and higher incentive compensation expense of $1. Commodity costs are primarily driven by certain grades of steel and aluminum. Non-material inflation includes higher labor, energy and transportation rates.

Current wording

Cost of sales and gross margin — Cost of sales for the nine months of 2025 decreased $398 when compared to 2024. Cost of sales as a percent of sales was 160 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $156, higher material cost savings of $68, operational efficiencies of $31, lower premium freight costs of $16 and lower warranty expense of $5 were partially offset by unfavorable product mix, tariff-related impacts of $97, non-material inflation of $89, higher spending on electrification initiatives of $4, commodity cost increases of $3 and higher incentive compensation expense of $3. Commodity costs are primarily driven by certain grades of steel and aluminum. Non-material inflation includes higher labor, energy and transportation rates.

Previous wording

Gross margin of $256 for first six months 2025 increased $27 from 2024. Gross margin as a percent of sales was 6.9% in the first six months of 2025, 130 basis points higher than in 2024. The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above. Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days. Despite commodity costs decreasing during the first six months of 2025, gross margin was negatively impacted by net material cost recoveries on both a dollar and percentage basis. The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Current wording

Gross margin of $422 for first nine months of 2025 increased $71 from 2024. Gross margin as a percent of sales was 7.5% in the first nine months of 2025, 160 basis points higher than in 2024. The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above. Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days. The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Previous wording

Selling, general and administrative expenses (SG&A) — SG&A expenses in the first six months of 2025 were $204 (5.5% of sales) as compared to $222 (5.5% of sales) in the first six months of 2024. SG&A expenses were $18 lower in the first six months of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.

Current wording

Selling, general and administrative expenses (SG&A) — SG&A expenses in the first nine months of 2025 were $291 (5.2% of sales) as compared to $328 (5.5% of sales) in the first nine months of 2024. SG&A expenses were $37 lower in the first nine months of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.

Previous wording

Amortization of intangibles — Amortization expense was$4 in both the first six months of 2025 and the first six months of 2024. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Amortization of intangibles — Amortization expense was$6 in both the first nine months of 2025 and the first nine months of 2024. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Restructuring charges, net —Net restructuring charges were $13 in the first six months of 2025 and $16 in the first six months in 2024. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Restructuring charges, net —Net restructuring charges were $17 in the first nine months of 2025 and $36 in the first nine months of 2024. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited, recognizing an $8 pre-tax loss on the transaction. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. During the third quarter of 2024, we received a transaction break fee related to the failed sale of our European hydraulics business to HPIH S.à.r.l. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited, recognizing an $8 pre-tax loss on the transaction. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Interest income and interest expense— Interest income was $5 in the first six months of 2025 and $4 in the first six months of 2024. Interest expense increased from $79 in the first six months of 2024 to $83 in the first six months of 2025, reflecting higher average outstanding borrowings in 2025 being partially offset by lower average interest rates. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.6% in the first six months of 2025 and 5.8% in the first six months of 2024.

Current wording

Interest income and interest expense— Interest income was $8 in the first nine months of 2025 and $9 in the first nine months of 2024. Interest expense increased from $117 in the first nine months of 2024 to $130 in the first nine months of 2025, reflecting higher average outstanding borrowings in 2025 being partially offset by lower average interest rates. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.4% in the first nine months of 2025 and 5.7% in the first nine months of 2024.

Previous wording

Income tax expense — We reported income tax expense of $0 and $5 for the firstsix months of 2025 and 2024, respectively. Our effective tax rates were 0% and (4)% for the firstsix months of 2025 and 2024, respectively. During the firstsix months of 2025, we recorded a tax benefit of $19 due to a basis difference in a foreign subsidiary as a result of a change in tax status, $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions and expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment. During the firstsix months of 2024, we recorded tax expense of $11 for valuation allowances related to foreign jurisdictions and expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses.

Current wording

Income tax benefit — We reported income tax benefit of $2 and $13 for the first nine months of 2025 and 2024, respectively. Our effective tax rates were 4% and 8% for the first nine months of 2025 and 2024, respectively. During the first nine months of 2025, we recorded a tax benefit of $27 to release valuation allowance on certain U.S. federal attributes, $19 of tax benefit due to a basis difference in a foreign subsidiary as a result of a change in tax status, $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions, $6 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions and expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment. During the first nine months of 2024, we recorded tax expense of $11 for valuation allowances related to foreign jurisdictions and expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses.

Previous wording

Equity in earnings of affiliates — Net earnings from equity investments was $25 in the first six months of 2025 and $5 in the first six months of 2024. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $4 in the first six months of 2025 and $1 in the first six months of 2024. On April 25, 2025, we sold our ownership interest in Axles India Limited, recognizing a $19 pre-tax gain on the transaction. See Note 20 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Equity in earnings of affiliates — Net earnings from equity investments was $27 in the first nine months of 2025 and $7 in the first nine months of 2024. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $5 in the first nine months of 2025 and $1 in the first nine months of 2024. On April 25, 2025, we sold our ownership interest in Axles India Limited, recognizing a $19 pre-tax gain on the transaction. See Note 20 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Net income from discontinued operations — Net income from discontinued operations in the first half of 2025 was $52 lower than the first half of 2024. The year-over-year first half decrease was primarily due to lower sales resulting from weaker global construction/mining equipment and agricultural equipment markets, especially in Europe, and Off-Highway business divesture related costs incurred during the second quarter of 2025. Year-over-year second quarter construction/mining equipment and agricultural equipment production in Europe were down 10% and 5%, respectively. During the first half of 2025, $34 of Off-Highway business divesture transaction related costs were attributed to discontinued operations.

Current wording

Net income from discontinued operations — Net income from discontinued operations for the first nine months of 2025 was $10 lower than the first nine months of 2024. The year-over-year decrease was primarily due to lower sales resulting from weaker global construction/mining equipment and agricultural equipment markets, especially in Europe, and Off-Highway business divesture related costs incurred during 2025, partially offset by lower year-over-year income tax expense. Year-over-year construction/mining equipment and agricultural equipment production in Europe were down 8% and 5%, respectively. During the first nine months of 2025, $54 of Off-Highway business divesture transaction related costs were attributed to discontinued operations. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Light Vehicle sales in the second quarter of 2025, exclusive of divestiture and currency effects, were 5% lower than 2024 reflecting lower production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific partially offset by the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog. Year-over-year North America full-frame light-truck production decreased 4% in this year’s second quarter while light-truck production in Asia Pacific increased 6%. Light-truck production in Europe was flat compared with last year’s second quarter. Light Vehicles sales in the first half of 2025, exclusive of divestiture and currency effects, were 8% lower than 2024 reflecting lower production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific partially offset by the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog. Year-over-year North America full-frame light-truck production decreased 6% in this year’s first half while light-truck production in Asia Pacific increased 8%. Light-truck production in Europe was flat compared with last year’s first half. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $41 and $55 in this year’s second quarter and first half, respectively.

Current wording

Light Vehicle sales in the third quarter of 2025, exclusive of currency effects, were 5% higher than 2024 reflecting higher production volumes in North America, the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog, partially offset by lower electric-vehicle product orders in Europe and Asia Pacific. Year-over-year North America full-frame light-truck production increased 6% and light-truck production in Asia Pacific increased 5%. Light-truck production in Europe was flat compared with last year’s third quarter. Light Vehicle sales in the first nine months of 2025, exclusive of divestiture and currency effects, were 4% lower than 2024 reflecting lower production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific partially offset by the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog. Year-over-year North America full-frame light-truck production decreased 2% in this year’s first nine months while light-truck production in Asia Pacific and Europe increased 8% and 2%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $54 and $109 in this year’s third quarter and first nine months, respectively.

Previous wording

Light Vehicle second-quarter and first-half 2025 segment EBITDA increased $22 and $12, respectively, from the comparable periods of 2024. Lower sales volumes decreased year-over-year earnings by $31 (26% decremental margin) in the second quarter of 2025. Lower sales volumes decreased year-over-year earnings by $67 (25% decremental margin) in the first half of 2025. The year-over-year performance-related earnings increase in the second quarter of 2025 was driven by net customer pricing and cost and tariff recovery actions of $41, cost reduction initiatives of $22, higher material cost savings of $16, lower premium freight costs of $8, commodity cost decreases of $6 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $17. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $32, inflationary cost increases of $24, higher incentive compensation expense of $1 and higher warranty expense of $1. The year-over-year performance-related earnings increase in the first half of 2025 was driven by net customer pricing and cost and tariff recovery actions of $55, cost reduction initiatives of $39, higher material cost savings of $28, lower premium freight costs of $6, commodity cost decreases of $6, lower incentive compensation expense of $2 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $25. Partially offsetting these performance-related earnings increases were inflationary cost increases of $44, higher tariff-related costs of $36, higher warranty expense of $2 and higher program launch costs of $1.

Current wording

Light Vehicle third quarter and first nine months 2025 segment EBITDA increased $44 and $56, respectively, from the comparable periods of 2024. The EBITDA benefit of higher sales volumes was offset by unfavorable product mix in the third quarter of 2025. Lower sales volumes decreased year-over-year earnings by $86 (32% decremental margin) in the first nine months of 2025. The year-over-year performance-related earnings increase in the third quarter of 2025 was driven by net customer pricing and cost and tariff recovery actions of $54, cost reduction initiatives of $35, higher material cost savings of $18, lower premium freight costs of $3 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $26. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $41, inflationary cost increases of $25, commodity cost increases of $5, higher incentive compensation expense of $1 and higher warranty expense of $1. The year-over-year performance-related earnings increase in the first nine months of 2025 was driven by net customer pricing and cost and tariff recovery actions of $109, cost reduction initiatives of $74, higher material cost savings of $46, lower premium freight costs of $9, commodity cost decreases of $1, lower incentive compensation expense of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $51. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $77, inflationary cost increases of $69, higher warranty expense of $3 and higher program launch costs of $1.

Previous wording

Commercial Vehicle sales in the second quarter of 2025, exclusive of currency effects, were 7% lower than 2024 reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions. Year-over-year Class 8 production in North America was down 28% while Classes 5-7 was down 31% in this year’s second quarter. Year-over-year medium/heavy-truck production in Europe and South America were down 2% and 1%, respectively, while medium/heavy-truck production in Asia Pacific was up 13%. Commercial Vehicle sales in the first half of 2025, exclusive of currency effects, were 8% lower than 2024 reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions. Year-over-year Class 8 production in North America was down 22% while Classes 5-7 was down 25% in this year’s first half. Year-over-year medium/heavy truck production in Europe was down 9% while medium/heavy truck production in South America and Asia Pacific were up 3% and 9%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $16 and $22 in this year’s second quarter and first half, respectively.

Current wording

Commercial Vehicle sales in the third quarter of 2025, exclusive of currency effects, were 10% lower than 2024 reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions. Year-over-year Class 8 production in North America was down 28% while Classes 5-7 was down 23% in this year’s third quarter. Year-over-year medium/heavy-truck production in South America was down 16% while production in Europe was up 9% in this year’s third quarter. Commercial Vehicle sales in the first nine months of 2025, exclusive of currency effects, were 9% lower than 2024, reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions. Year-over-year Class 8 production in North America was down 21% while Classes 5-7 was down 25% in this year’s first nine months. Year-over-year medium/heavy truck production in Europe and South America were down 1% and 4%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $11 and $33 in this year’s third quarter and first nine months, respectively.

Previous wording

Commercial Vehicle second-quarter and first-half 2025 segment EBITDA increased $8 and $16, respectively, from the comparable periods of 2024. Lower sales volumes decreased year-over-year earnings by $20 (32% decremental margin) in the second quarter of 2025. Lower sales volumes decreased year-over-year earnings by $42 (33% decremental margin) in the first half of 2025. The year-over-year performance-related earnings increase in the second quarter of 2025 was driven by net customer pricing and cost and tariff recovery actions of $16, cost reduction initiatives of $10, higher material cost savings of $7, lower warranty expense of $4, lower premium freights costs of $2, lower program launch costs of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $10. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $9, inflationary costs increases of $8, higher spending on electrification initiatives of $3 and higher incentives compensation expense of $2. The year-over-year performance-related earnings increase in the first half of 2025 was driven by net customer pricing and cost and tariff recovery actions of $22, cost reduction initiatives of $21, higher material costs savings of $15, lower warranty expense of $4, lower premium freight costs of $4, lower program launch costs of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $27. Partially offsetting these performance-related earnings increases were inflationary cost increases of $16, higher tariff-related costs of $11, higher spending on electrification initiatives of $4, commodity cost increases of $2 and higher incentive compensation expense of $1.

Current wording

Commercial Vehicle third quarter and first nine months 2025 segment EBITDA increased $6 and $22, respectively, from the comparable periods of 2025. Lower sales volumes decreased year-over-year earnings by $16 (22% decremental margin) in the third quarter of 2025. Lower sales volumes decreased year-over-year earnings by $58 (29% decremental margin) in the first nine months of 2025. The year-over-year performance-related earnings increase in the third quarter of 2025 was driven by cost reduction initiatives of $17, net customer pricing and cost and tariff recovery actions of $11, higher material cost savings of $7, lower warranty expense of $4 and lower premium freight costs of $3. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $9, inflationary cost increases of $8, commodity cost increases of $2 and operational inefficiencies of $3, inclusive of lower corporate allocations resulting from cost reduction initiatives. The year-over-year performance-related earnings increase in the first nine months of 2025 was driven by cost reduction initiatives of $38, net customer pricing and cost and tariff recovery actions of $33, higher material costs savings of $22, lower warranty expense of $8, lower premium freight costs of $7, lower program launch costs of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $24. Partially offsetting these performance-related earnings increases were inflationary cost increases of $24, higher tariff-related costs of $20, higher spending on electrification initiatives of $4, commodity cost increases of $4 and higher incentive compensation expense of $1.

Previous wording

The following table provides a reconciliation of net loss from continuing operations to adjusted EBITDA.

Current wording

The following table provides a reconciliation of net income (loss) from continuing operations to adjusted EBITDA.

Previous wording

We have defined adjusted free cash flow as cash provided by (used in) operating activities less purchases of property, plant and equipment plus proceeds from sale of property, plant and equipment. We believe adjusted free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Adjusted free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP. Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

Current wording

We have defined adjusted free cash flow as cash provided by (used in) operating activities less purchases of property, plant and equipment plus proceeds from sale of property, plant and equipment plus cash paid for Off-Highway business divestiture related activities. We believe adjusted free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Adjusted free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP. Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

Previous wording

We had availability of $615 at June 30, 2025 under our Revolving Facility after deducting $525 of outstanding borrowings and $10 of outstanding letters of credit.

Current wording

We had availability of $765 at September 30, 2025 under our Revolving Facility after deducting $375 of outstanding borrowings and $10 of outstanding letters of credit.

Previous wording

Continuing operations working capital used cash of $202 and $181 in 2025 and 2024. Cash of $134 and $164 was used to finance receivables in 2025 and 2024. Lower inventory levels provided cash of $48 in 2025 while cash of $45 was used to fund higher inventory levels in 2024. Decrease in accounts payable and other net liabilities used cash of $116 in 2025 while increases in accounts payable and other net liabilities provided cash of $28 in 2024. Operating activities of discontinued operations generated cash of $26 and $181 in 2025 and 2024.

Current wording

Operating activities — Exclusive of working capital, other cash provided by continuing operations was $153 in 2025 and $175 in 2024. Continuing operations working capital used cash of $212 and $219 in 2025 and 2024. Cash of $219 and $112 was used to finance receivables in 2025 and 2024. Cash of $18 and $71 was used to fund higher inventory levels in 2025 and 2024. Increases in accounts payable and other net liabilities provided cash of $25 in 2025 while decreases in accounts payable and other net liabilities used cash of $36 in 2024. Operating activities of discontinued operations generated cash of $165 and $192 in 2025 and 2024.

Previous wording

Investing activities — Expenditures for property, plant and equipment by continuing operations were $104 and $161 in 2025 and 2024. The decrease in capital spending during 2025 is primarily due to lower year-over-year program launches and a continued focus on rationalizing capital investments. On April 25, 2025, we sold our ownership interest in Axles India Limited for $43. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited for $10. Investing activities of discontinued operations used cash of $22 and $16 in 2025 and 2024.

Current wording

Investing activities — Expenditures for property, plant and equipment by continuing operations were $153 and $198 in 2025 and 2024. The decrease in capital spending during 2025 is primarily due to lower year-over-year program launches and a continued focus on rationalizing capital investments. On April 25, 2025, we sold our ownership interest in Axles India Limited for $43. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited for $10. Investing activities of discontinued operations used cash of $31 and $7 in 2025 and 2024.