DANA Inc

Previous wording

Divestiture of Off-Highway Business — Dana has embarked on a strategic plan to focus on our core on-highway markets, creating a more focused and nimble Dana through the divestiture of our Off-Highway business. In June 2025, we entered into a definitive agreement to sell our Off-Highway business to Allison Transmission Holdings, Inc. We analyzed the quantitative and qualitative factors relevant to the pending divestiture of our Off-Highway business and determined that the conditions for discontinued operations presentation have been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been recast to reflect discontinued operations presentation. See Note 1 and Note 2 of our consolidated financial statements in Item 1 of Part I for additional information. The transaction closed on January 1, 2026, with Dana receiving initial cash proceeds of $2,664. The sale price is subject to adjustment based on net working capital and net indebtedness balances as of the closing date.

Current wording

Divestiture of Off-Highway Business — Dana has embarked on a strategic plan to focus on our core on-highway markets, creating a more focused and nimble Dana through the divestiture of our Off-Highway business. In June 2025, we entered into a definitive agreement to sell our Off-Highway business to Allison Transmission Holdings, Inc. We analyzed the quantitative and qualitative factors relevant to the divestiture of our Off-Highway business and determined that the conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been recast to reflect discontinued operations presentation. The transaction closed on January 1, 2026, with Dana receiving cash proceeds of $2,630. See Note 1 and Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Capital Structure Initiatives — Net cash proceeds from the Off-Highway business divestiture were used to pay down debt, strengthening Dana’s financial position, and provide capital returns to shareholders. On January 7, 2026, we purchased, via a net proceeds tender offer, $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes at prices equal to 100.00% plus accrued and unpaid interest. On January 8, 2026, we redeemed the remaining $262 of our November 2027 Notes and the remaining $258 of our June 2028 Notes at prices equal to 100.00% plus accrued and unpaid interest. In addition, on January 2, 2026, we repaid the $225 outstanding balance on the Term A Facility and the $390 of outstanding borrowings on our Revolving Facility. See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information. On June 8, 2025, Dana’s board of directors approved a program to provide up to a $1,000 return of capital to shareholders through common stock share repurchases and/or special dividends through the end of 2027. On February 11, 2026, Dana's board of directors increased and extended the share repurchase program to a total of $2,000 through the end of 2030. Through March 31, 2026, we have spent $775 to repurchase 38,702,872 shares under the approved stock repurchase program. See Note 6 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Capital Structure Initiatives — Net cash proceeds from the Off-Highway business divestiture were used to pay down debt, strengthening Dana’s financial position, and provide capital returns to shareholders. On January 7, 2026, we purchased, via a net proceeds tender offer, $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our July 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes at prices equal to 100.00% plus accrued and unpaid interest. On January 8, 2026, we redeemed the remaining $262 of our November 2027 Notes and the remaining $258 of our June 2028 Notes at prices equal to 100.00% plus accrued and unpaid interest. In addition, on January 2, 2026, we repaid the $225 outstanding balance on the Term A Facility and the $390 of outstanding borrowings on our Revolving Facility. See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information. On June 8, 2025, Dana’s board of directors approved a program to provide up to a $1,000 return of capital to shareholders through common stock share repurchases and/or special dividends through the end of 2027. On February 11, 2026, Dana's board of directors increased and extended the share repurchase program to a total of $2,000 through the end of 2030. Through June 30, 2026, we have spent $819 to repurchase 39,943,730 shares under the approved stock repurchase program. See Note 6 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Dana, with history dating back to 1904, is headquartered in Maumee, Ohio. We are a world leader in providing power-conveyance and energy-management solutions for on-highway vehicles. The company's portfolio improves the efficiency, performance, and sustainability of light and commercial vehicles. Our technologies include drive systems (axles, driveshafts and transmissions); electrodynamic technologies (motors, inverters, software and control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and predictive analytics). We serve our global light vehicle and medium/heavy vehicle markets through two business units – Light Vehicle Systems (Light Vehicle) and Commercial Vehicle Systems (Commercial Vehicle). At March 31, 2026, we employed approximately 26,900 people and operated in 24 countries.

Current wording

Dana, with history dating back to 1904, is headquartered in Maumee, Ohio. We are a world leader in providing power-conveyance and energy-management solutions for on-highway vehicles. The company's portfolio improves the efficiency, performance, and sustainability of light and commercial vehicles. Our technologies include drive systems (axles, driveshafts and transmissions); electrodynamic technologies (motors, inverters, software and control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and predictive analytics). We serve our global light vehicle and medium/heavy vehicle markets through two business units – Light Vehicle Systems (Light Vehicle) and Commercial Vehicle Systems (Commercial Vehicle). At June 30, 2026, we employed approximately 27,300 people and operated in 24 countries.

Previous wording

Foreign currency — With 44% of our first quarter 2026 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 33% of our year-to-date 2026 non-U.S. sales, while Brazil, India, Thailand and China accounted for 14%, 10%, 8% and 7%, respectively. International currencies strengthened against the U.S. dollar during the first quarter of 2026, increasing sales by $64, with the effects of a stronger euro, Brazilian real, South African rand and Thai baht being partially offset by a weaker Indian rupee.

Current wording

Foreign currency — With 44% of our first six months 2026 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 33% of our year-to-date 2026 non-U.S. sales, while Brazil, India, Thailand, China, Argentina and South Africa accounted for 14%, 9%, 7%, 7%, 7% and 6%, respectively. International currencies strengthened against the U.S. dollar during the first six months of 2026, increasing sales by $88, with the effects of a stronger euro, Brazilian real, South African rand and Thai baht being partially offset by a weaker Indian rupee.

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 quarter of 2026 of approximately $45 are 2% of our consolidated sales and our net asset exposure related to Argentina was approximately $68, including $18 of net fixed assets, at March 31, 2026. 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 six months of 2026 of approximately $111 are 3% of our consolidated sales and our net asset exposure related to Argentina was approximately $79, including $21 of net fixed assets, at June 30, 2026. 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. Higher year-over-year commodity prices decreased earnings during the first quarter of 2026 by $8. Material cost recovery pricing actions increased earnings in the first quarter of 2026 by $6.

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 second quarter and first half of 2026 by $15 and $23, respectively. Material cost recovery pricing actions increased earnings in the second quarter and first half of 2026 by $12 and $18, respectively.

Previous wording

Our 2026 sales outlook is $7,300 to $7,700, reflecting declining global market demand, offset by $200 of net new business backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds. Based on our current sales and exchange rate outlook for 2026, we expect international currencies to be a modest tailwind to sales primarily due to a stronger euro. At sales levels in our current outlook for 2026, a 5% movement on the euro would impact our annual sales by approximately $115. A 5% change on the Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $25. A 5% change on the Chinese renminbi rate would impact our annual sales by approximately $15. At our current sales outlook for 2026, we expect full year 2026 adjusted EBITDA to approximate $750 to $850. Adjusted EBITDA margin is expected to be 10.6% at the midpoint of our guidance range, a 250 basis-point improvement over 2025, reflecting the impact of significant cost savings actions, improved operational performance and favorable product mix, partially offset by the impact of lower end-market demand and net material cost recoveries. We expect to generate free cash flow of $300 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA and lower income tax and interest payments, partially offset by higher capital spending.

Current wording

Our 2026 sales outlook is $7,650 to $7,850, reflecting relatively stable global market demand, $200 of net new business backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds. Based on our current sales and exchange rate outlook for 2026, we expect international currencies to be a modest tailwind to sales primarily due to a stronger euro. At sales levels in our current outlook for 2026, a 5% movement on the euro would impact our annual sales by approximately $65. A 5% change on the Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $15. A 5% change on the Chinese renminbi rate would impact our annual sales by approximately $10. At our current sales outlook for 2026, we expect full year 2026 adjusted EBITDA to approximate $800 to $850. Adjusted EBITDA margin is expected to be 10.6% at the midpoint of our guidance range, a 250 basis-point improvement over 2025, reflecting the impact of significant cost savings actions, improved operational performance and favorable product mix, partially offset by the impact of net material cost recoveries and net inflationary cost recoveries. We expect to generate free cash flow of $325 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA and lower income tax and interest payments, partially offset by higher capital spending.

Previous wording

Summary Consolidated Results of Operations (First Quarter, 2026 versus 2025)

Current wording

Summary Consolidated Results of Operations (Second Quarter, 2026 versus 2025)

Previous wording

Cost of sales and gross margin — Cost of sales for the first quarter of 2026 increased $36 when compared to 2025. Cost of sales as a percent of sales was 240 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $33, higher material cost savings of $23, operational efficiencies of $14, lower premium freight costs of $10, lower program launch costs of $1 and favorable product mix were partially offset by tariff-related impacts of $50, non-material inflation of $24, commodity cost increases of $8, higher spending on electrification initiatives of $6 and higher warranty 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.

Current wording

Cost of sales and gross margin — Cost of sales for the second quarter of 2026 increased $3 when compared to 2025. Cost of sales as a percent of sales was 330 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $18, higher material cost savings of $24, operational efficiencies of $6, lower incentive compensation expense of $3, lower premium freight costs of $2 and favorable product mix were partially offset by non-material inflation of $26, commodity cost increases of $15, higher spending on electrification initiatives of $7, higher warranty expense of $1 and higher program launch costs of $1. 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 $169 for the first quarter of 2026 increased $51 from 2025. Gross margin as a percent of sales was 9.0% in the first quarter of 2026, 240 basis points higher than in 2025. 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.

Current wording

Gross margin of $210 for the second quarter of 2026 increased $72 from 2025. Gross margin as a percent of sales was 10.4% in the second quarter of 2026, 330 basis points higher than in 2025. 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 quarter of 2026 were $102 (5.5% of sales) as compared to $105 (5.9% of sales) in the first quarter of 2025. SG&A expenses were $3 lower in the first quarter of 2026 primarily due to lower salary and employee benefit costs, 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 second quarter of 2026 were $104 (5.2% of sales) as compared to $99 (5.1% of sales) in the second quarter of 2025. SG&A expenses were $5 higher in the second quarter of 2026 primarily due to higher legal and professional services costs.

Previous wording

Amortization of intangibles — Amortization expensewas $2 in both the first quarter of 2026 and the first quarter of 2025. See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Amortization of intangibles — Amortization expensewas $1 in the second quarter of 2026 and $2 in the second quarter of 2025. See Note 3 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. During the first quarter of 2026, we recorded $56 of charges, including impairment and loss on disposition of property, plant and equipment, associated with certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes. On January 1, 2026, we sold our Off-Highway business to Allison Transmission Holdings, Inc. (Allison). At closing, Dana entered into a transition services agreement and an engineering services agreement with Allison. Services to be provided by Dana under the transition services agreement include finance, information technology, human resources and certain other administrative services for periods up to 24 months. See Note 2 for additional information. On January 30, 2026, we sold our wholly-owned subsidiary Pi Innovo LLC, recognizing a $8 pre-tax loss on the transaction.

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. Strategic transaction expenses in 2026 were primarily attributable to the potential acquisition of Eaton's Mobility business. See Note 1 of our consolidated financial statements in Item 1 of Part I for additional information. During the second quarter of 2026, we recorded $3 of charges, including impairment and loss on disposition of property, plant and equipment, associated with certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes. On January 1, 2026, we sold our Off-Highway business to Allison Transmission Holdings, Inc. (Allison). At closing, Dana entered into a transition services agreement and an engineering services agreement with Allison. Services to be provided by Dana under the transition services agreement include finance, information technology, human resources and certain other administrative services for periods up to 24 months. See Note 2 to our consolidated financial statements in Item 1 of Part I for additional information. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited, recognizing an $8 pre-tax loss on the transaction. See Note 18 to our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Interest income and interest expense— Interest income was $6 in the first quarter of 2026 and $2 in the first quarter of 2025. Interest expense decreased from $39 in the first quarter of 2025 to $22 in the first quarter of 2026, reflecting lower average outstanding borrowings. See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 6.6% in the first quarter of 2026 and 5.5% in the first quarter of 2025.

Current wording

Interest income and interest expense— Interest income was $4 in the second quarter of 2026 and $3 in the second quarter of 2025. Interest expense decreased from $44 in the second quarter of 2025 to $21 in the second quarter of 2026, reflecting lower average outstanding borrowings. See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 6.2% in the second quarter of 2026 and 5.8% in the second quarter of 2025.

Previous wording

Equity in earnings of affiliates — Net earnings from equity investments was $3 in the first quarter of 2026 and $2 in the first quarter of 2025. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $2 in the first quarter of 2026 and de minimis in the first quarter of 2025. See Note 18 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 $6 in the second quarter of 2026 and $23 in the second quarter of 2025. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $5 in the second quarter of 2026 and $4 in the second quarter of 2025. On April 25, 2025, we sold our ownership interest in Axles India Limited, recognizing a $19 pre-tax gain on the transaction. See Note 18 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Sales in the first quarter of 2026 were $87 higher than 2025. Stronger international currencies increased sales by $64, principally due to a stronger euro, Brazilian real, South African rand and Thai baht, partially offset by a weaker India rupee. The organic sales increase of $23 primarily resulted from pricing actions and recoveries, including material commodity and tariff and inflationary costs adjustments, and the conversion of sales backlog, partially offset by lower medium/heavy-truck production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific. Pricing actions and recoveries, including material commodity and tariff and inflationary cost adjustments, increased sales by $56.

Current wording

Sales in the first six months of 2026 were $162 higher than 2025. Stronger international currencies increased sales by $88, principally due to a stronger euro, Brazilian real, South African rand and Thai baht, partially offset by a weaker India rupee. The organic sales increase of $74 primarily resulted from pricing actions and recoveries, including material commodity, tariff and inflationary costs adjustments, and the conversion of sales backlog, partially offset by lower medium/heavy-truck production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific. Pricing actions and recoveries, including material commodity, tariff and inflationary costs adjustments, increased sales by $101.

Previous wording

The North America organic sales increase of 3% was driven principally by net customer pricing and tariff and cost recovery actions and the conversion of sales backlog, partially offset by lower medium- and heavy-truck production volumes. First quarter 2026 Class 8 and Classes 5-7 production were down 25% and 20%, respectively. Excluding currency effects, sales in Europe were up 1% compared to 2025, reflecting a modest improvement in year-over-year first quarter medium/heavy-truck production volumes. Excluding currency effects, sales in South America were down 4% compared to 2025, reflecting lower year-over-year medium/heavy-truck product sales. Excluding currency effects, sales in Asia Pacific decreased 3% reflecting lower electric vehicle-related product orders, partially offset by a modest improvement in year-over-year first quarter medium/heavy-truck production volumes.

Current wording

The North America organic sales increase of 3% was driven principally by net customer pricing, tariff and cost recovery actions and the conversion of sales backlog, partially offset by lower medium- and heavy-truck production volumes. First six months 2026 Class 8 and Classes 5-7 production were down 17% and 16%, respectively. Excluding currency effects, sales in Europe were up 2% compared to 2025, reflecting net customer pricing and cost recovery actions and a modest improvement in year-over-year first six months medium/heavy-truck production volumes. Excluding currency effects, sales in South America were down 1% compared to 2025, reflecting lower year-over-year medium/heavy-truck product sales. Excluding currency effects, sales in Asia Pacific decreased 3% reflecting lower electric vehicle-related product orders, partially offset by a modest improvement in year-over-year first-half medium/heavy-truck production volumes.

Previous wording

Restructuring charges, net —Net restructuring charges were $6 in the first quarter of 2026 and $2 in the first quarter of 2025. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Restructuring charges, net —Net restructuring charges were $15 in the first six months of 2026 and $13 in the first six months of 2025. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Income tax benefit — We reported income tax expense of $14 and benefit of $(10) for the first quarters of 2026 and 2025, respectively. Our effective tax rates were (350)% and 34% for the first quarters of 2026 and 2025. During the first quarter of 2026, we recorded $12 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions. During the first quarter 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 and $9 of tax expense for income tax reserves associated with prior tax years 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, nondeductible expenses and deemed income, local tax incentives 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 non-deductible expenses.

Current wording

Income tax expense — We reported income tax expense of $68 and $0 for the first six months of 2026 and 2025, respectively. Our effective tax rates were 124% and 0% for the first six months of 2026 and 2025, respectively. During the first six months of 2026, we recorded $12 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions. During the first six 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 tax expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment. 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, nondeductible expenses and deemed income, local tax incentives 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 non-deductible expenses.

Previous wording

Net income from discontinued operations — Net income from discontinued operations was $1,059 higher in the first quarter of 2026 compared to the first quarter of 2025. The Off-Highway business sale transaction closed on January 1, 2026, with a preliminary $1,191 pre-tax gain being recognized in net income from discontinued operations during the first quarter of 2026. The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Current wording

Net income from discontinued operations — Net income from discontinued operations was $1,095 in the first six months of 2026 and $90 in the first six months of 2025. The Off-Highway business sale transaction closed on January 1, 2026, with a $1,186 pre-tax gain being recognized in net income from discontinued operations during the first six months of 2026. The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Previous wording

Light Vehicle sales in the first quarter of 2026, exclusive of currency effects, were 2% higher than 2025 reflecting the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog partially offset by lower global electric-vehicle product orders. Year-over-year North America full-frame light-truck production increased 6% and light-truck production in Europe increased 5%. Light-truck production in Asia Pacific was flat compared with last year’s first quarter. Year-over-year light-vehicle engine production decreased in North America, Europe and Asia Pacific by 1%, 5% and 4%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year first quarter sales by $36.

Current wording

Light Vehicle sales in the second quarter of 2026, exclusive of currency effects, were 3% higher than 2025 reflecting the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog partially offset by lower global electric-vehicle product orders. Year-over-year North America full-frame light-truck production increased 6% and light-truck production in South America and Asia Pacific increased 11% and 6%, respectively. Year-over-year light-truck production in Europe decreased 1%. Year-over-year light-vehicle engine production was flat in North America and Asia Pacific. Year-over-year light-vehicle engine production increased 2% in South America and decreased 7% in Europe. Net customer pricing and cost and tariff recovery actions increased year-over-year second quarter sales by $35. Light Vehicle sales in the first half of 2026, exclusive of currency effects, were 3% higher than 2025 reflecting the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog partially offset by lower global electric-vehicle product orders. Year-over-year North America full-frame light-truck production increased 6% and light-truck production in Europe, South America and Asia Pacific increased 3%, 10% and 5%, respectively. Year-over-year light-vehicle engine production was flat in North America and Asia Pacific. Year-over-year light-vehicle engine production increased 5% in South America and decreased 5% in Europe. Net customer pricing and cost and tariff recovery actions increased year-over-year first-half sales by $71.

Previous wording

Light Vehicle first quarter 2026 segment EBITDA increased $44 from the comparable period of 2025. Favorable product mix and improved pricing on electric vehicle programs was partially offset by lower sales volumes. The year-over-year performance-related earnings increase was driven by net customer pricing and cost and tariff recovery actions of $36, higher material cost savings of $14, lower premium freight costs of $8, cost reduction initiatives of $5 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $13. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $36, inflationary cost increases of $19, commodity cost increases of $6 and higher warranty expense of $3.

Current wording

Light Vehicle second-quarter and first-half EBITDA increased $31 and $75, respectively, from the comparable periods of 2025. Higher sales volumes, favorable product mix and improved pricing on electric vehicle programs increased second-quarter EBITDA by $14. Favorable product mix and improved pricing on electric vehicle programs was partially offset by lower sales volumes, increasing first-half EBITDA by $45. The year-over-year performance-related earnings increase in the second quarter of 2026 was driven by net customer pricing and cost and tariff recovery actions of $35, higher material cost savings of $16, lower premium freight costs of $5, cost reduction initiatives of $3, lower incentive compensation expense of $3 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $4. Partially offsetting these performance-related earnings increases were inflationary cost increases of $20, commodity cost increases of $11, higher tariff-related costs of $10, net foreign currency transaction losses of $7 and higher program launch costs of $1. The year-over-year performance-related earnings increase in the first half of 2026 was driven by net customer pricing and cost and tariff recovery actions of $71, higher material cost savings of $30, lower premium freight costs of $13, cost reduction initiatives of $8, lower incentive compensation expense of $3 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $17. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $46, inflationary cost increases of $39, commodity cost increases of $17, net foreign currency transaction losses of $7, higher warranty expense of $3 and higher program launch costs of $1.

Previous wording

Commercial Vehicle sales in the first quarter of 2026, exclusive of currency effects, were 1% lower than 2025 reflecting a weakening North American market 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 25% while Classes 5-7 was down 20% in this year’s first quarter. Year-over-year medium/heavy-truck production in Europe, South America and Asia Pacific were up 10%, 2% and 9%, respectively, this year’s first quarter. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $20 in this year’s first quarter.

Current wording

Commercial Vehicle sales in the second quarter of 2026, exclusive of currency effects, were 2% higher than 2025 reflecting a stronger Asia Pacific market, the conversion of sales backlog and net customer pricing and cost and tariff recovery actions, partially offset by a weakening North America market. Year-over-year Class 8 production in North America was down 8% while Classes 5-7 was down 10% in this year’s second quarter. Year-over-year medium/heavy-truck production in South America and Asia Pacific were up 6% and 12%, respectively, while Europe was down 3% in this year’s second quarter. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $10 in this year’s second quarter. Commercial Vehicle sales in the first half of 2026, exclusive of currency effects, were 1% higher than 2025 reflecting a stronger Asia Pacific market, the conversion of sales backlog and net customer pricing and cost and tariff recovery actions, partially offset by a weakening North America market. Year-over-year Class 8 production in North America was down 17% while Classes 5-7 was down 16% in this year's first half. Year-over-year medium/heavy-truck production in Europe, South America and Asia Pacific were up 3%, 1% and 11%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $30 in this year's first half.

Previous wording

Commercial Vehicle first quarter 2026 segment EBITDA increased $22 from the comparable period of 2025. Lower sales volumes decreased year-over-year earnings by $4 (17% decremental margin) in the first quarter of 2026. The year-over-year performance-related earnings increase was driven by net customer pricing and cost and tariff recovery actions of $20, higher material cost savings of $9, cost reduction initiatives of $3, lower premium freight costs of $2, lower warranty expense of $1, lower program launch costs of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $13. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $14, higher spending on electrification initiatives of $6, inflationary cost increases of $4, commodity cost increases of $2 and higher incentive compensation expense of $1.

Current wording

Commercial Vehicle second-quarter and first-half 2026 segment EBITDA increased $21 and $43, respectively, from the comparable periods of 2025. The EBITDA benefit of higher sales volumes was offset by unfavorable product mix in the second quarter of 2026. Lower sales volumes decreased year-over-year earnings by $8 (40% decremental margin) in the first half of 2026. Unfavorable product mix in the first half of 2026 contributed to the decremental margin. The year-over-year performance-related earnings increase in the second quarter of 2026 was driven by net customer pricing and cost and tariff recovery actions of $10, net tariff refunds of $10, higher material cost savings of $8, cost reduction initiatives of $3, net foreign currency transaction gains of $3, lower incentive compensation expense of $2 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $7. Partially offsetting these performance-related earnings increases were higher spending on electrification initiatives of $7, inflationary cost increases of $5, commodity cost increases of $4, higher premium freight costs of $3 and higher warranty expense of $1. The year-over-year performance-related earnings increase in the first half of 2026 was driven by net customer pricing and cost and tariff recovery actions of $30, higher material cost savings of $17, cost reduction initiatives of $6, net foreign currency transaction gains of $3, lower incentive compensation expense of $1, lower program launch costs of $1 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $20. Partially offsetting these performance-related earnings increases were higher spending on electrification initiatives of $13, inflationary cost increases of $9, commodity cost increases of $6, higher tariff-related costs of $4 and higher premium freight costs of $1.

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 plus cash paid for purchases of leased facilities 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.

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 purchases of leased facilities plus cash paid for Off-Highway business divestiture and Eaton Mobility business acquisition 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

Operating activities — Exclusive of working capital, other cash provided by continuing operations was $118 in 2026 and $53 in 2025. The year-over-year improvement is primarily attributable to the impact of higher year-over-year operating earnings from continuing operations. Continuing operations working capital used cash of $252 and $418 in 2026 and 2025. Cash of $295 and $259 was used to finance receivables in 2026 and 2025. Cash of $18 was provided by lower inventory levels in 2026, while cash of $176 was used to fund higher inventory levels in 2025. Increases in accounts payable and other net liabilities provided cash of $25 and $17 in 2026 and 2025. The Off-Highway business sale transaction closed on January 1, 2026. The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. Operating activities of discontinued operations used cash of $61 in 2026 and generated cash of $328 in 2025.

Current wording

Operating activities — Exclusive of working capital, other cash provided by continuing operations was $211 in 2026 and $171 in 2025. The year-over-year improvement is primarily attributable to the impact of higher year-over-year operating earnings from continuing operations. Continuing operations working capital used cash of $221 and $202 in 2026 and 2025, respectively. Cash of $321 and $134 was used to finance receivables in 2026 and 2025, respectively. Cash of $32 and $48 was provided by lower inventory levels in 2026 and 2025, respectively. Increases in accounts payable and other net liabilities provided cash of $68 in 2026, while decreases in accounts payable and other net liabilities used cash of $116 in 2025. The Off-Highway business sale transaction closed on January 1, 2026. The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. Operating activities of discontinued operations used cash of $76 in 2026 and generated cash of $26 in 2025. The use of cash in 2026 is primarily due cash paid for Off-Highway related divestiture activities.

Previous wording

Investing activities — Expenditures for property, plant and equipment by continuing operations were $62 and $67 in 2026 and 2025, respectively. The Off-Highway business sale transaction closed on January 1, 2026, with only the Off-Highway business's Mexican operations continuing to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. We received net cash proceeds of $2,563 on the sale of the Off-Highway business to Allison. The sale price is subject to adjustment based on net working capital and net indebtedness balances as of the closing date. Investing activities of discontinued operations used cash of $8 in 2025.

Current wording

Investing activities — Expenditures for property, plant and equipment by continuing operations were $204 and $104 in 2026 and 2025, respectively. The elevated level of capital spending in 2026 is primarily due to the purchase of three U.S. manufacturing facilities that were previously leased. Investing activities of discontinued operations provided cash of $2,528 in 2026 and used cash of $22 in 2025. The Off-Highway business sale transaction closed on January 1, 2026, with only the Off-Highway business's Mexican operations continuing to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. We received net cash proceeds of $2,529 during 2026 on the sale of the Off-Highway business to Allison.

Previous wording

Financing activities— During 2026, we had net payments on our Revolving Facility of $390 and we repaid the $225 outstanding balance on the Term A Facility. During 2025, we had net borrowings on our Revolving Facility of $115. During 2026, we purchased $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes. Also during 2026, we redeemed $262 of our November 2027 Notes and $258 of our June 2028 Notes. We used cash of $13 and $15 for dividend payments to common stockholders during 2026 and 2025, respectively. During 2026, we used cash of $125 to repurchase 4,424,056 common shares under our share repurchase program. Distributions to noncontrolling interests totaled $1 in both 2026 and 2025. During 2026, we paid Hydro-Québec $190 to acquire their 45% mandatorily redeemable noncontrolling interests in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC.

Current wording

Financing activities— During 2026, we had net payments on our Revolving Facility of $390 and we repaid the $225 outstanding balance on the Term A Facility. During 2025, we had net borrowings on our Revolving Facility of $525. During 2026, we purchased $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our July 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes. Also during 2026, we redeemed $262 of our November 2027 Notes and $258 of our June 2028 Notes. During 2025, we redeemed the remaining $200 of our April 2025 Notes. We used cash of $26 and $29 for dividend payments to common stockholders during 2026 and 2025, respectively. We used cash of $169 and $257 to repurchase 5,664,914 common shares and 14,607,283 common shares under our share repurchase during 2026 and 2025, respectively. Distributions to noncontrolling interests totaled $2 and $3 in 2026 and 2025, respectively. During 2026, we paid Hydro-Québec $190 to acquire their 45% mandatorily redeemable noncontrolling interests in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC.

Previous wording

There have been no material changes in our contractual obligations from those disclosed in Item 7 of our 2025 From 10-K.

Current wording

There have been no other material changes in our contractual obligations from those disclosed in Item 7 of our 2025 From 10-K.

Previous wording

The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. See Item 7 in our 2025 Form 10-K for a description of our critical accounting estimates and Note 1 to our consolidated financial statements in Item 8 of our 2025 Form 10-K for our significant accounting policies. There were no changes to our critical accounting estimates in the three months ended March 31, 2026. See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first three months of 2026.

Current wording

The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. See Item 7 in our 2025 Form 10-K for a description of our critical accounting estimates and Note 1 to our consolidated financial statements in Item 8 of our 2025 Form 10-K for our significant accounting policies. There were no changes to our critical accounting estimates in the six months ended June 30, 2026. See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first six months of 2026.