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Item 1A. Risk Factors

2026-02-24 compared with 2025-02-13 · 164 added, 85 removed, 316 unchanged (44% of the section changed)

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In addition to the factors discussed elsewhere in this Annual Report on Form 10-K, the following are the material factors that, individually or in the aggregate, we believe could make our actual results differ materially from those described in any forward-looking statements.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, results of operations and financial condition.

Risks Related to Our Business and Operations

• We participate in markets that are competitive, and our competitors’ actions could have a material adverse effect on our business, results of operations and financial condition.

• Volatility in and disruption to the global economic environment may have a material adverse effect on our business, results of operations and financial condition.

• Increases in cost, disruption of supply or shortage of raw materials or components used in our products could harm our business and profitability.

• Prolonged inflation could result in higher costs and decreased margins and earnings.

• Labor cost inflation and employee attraction and retention could have an adverse effect on our business, results of operations and financial condition.

• Certain of our end users operate in highly cyclical industries, which can result in uncertainty and significantly impact the demand for our products, which could have a material adverse effect on our business, results of operations and financial condition.

• In 2025, our sales were concentrated among our top five OEM customers.

The loss or consolidation of any one of these customers or the discontinuation of particular vehicle models for which we are a significant supplier could reduce our net sales and have a material adverse effect on our results of operations and financial condition.

• Labor unrest could have an adverse effect on our business, results of operations and financial condition.

• We are subject to cybersecurity risks to operational systems, security systems, and infrastructure owned by Allison or third-party vendors or suppliers.

• Geopolitical risks may have an adverse effect on our results of operations and financial condition.

• Our brand and reputation are dependent on the continued participation and level of service of our numerous independent distributors and dealers.

• In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be adversely affected.

Strategic Risks

• Our success depends on research and development efforts, and we may not be successful in developing or introducing new products and technologies and responding to customer needs.

• Our long-term growth prospects and results of operations may be impaired if the rate of adoption of fully automatic transmissions in commercial vehicles outside North America does not increase.

• Our international operations, in particular our emerging markets, are subject to various risks which could have a material adverse effect on our business, results of operations and financial condition.

• Fluctuations in foreign currency exchange rates could adversely affect our results.

• We may not be able to identify or consummate acquisitions or partnerships or achieve expected benefits from or effectively integrate acquisitions or partnerships, which could harm our growth.

Risks Related to our Acquisition of the Acquired Off-Highway Business

• We expect to incur significant costs in connection with the integration of the Acquired Off-Highway Business.

• Any failure to integrate the Acquired Off-Highway Business and its operations with ours successfully in the expected time frame may adversely affect our results of operations and financial condition.

• We may fail to realize all of the anticipated benefits from the integration of the Acquired Off-Highway Business and its operations after the acquisition or fail to effectively manage our expanded operations.

• Our future results may suffer if we do not effectively manage our expanded operations.

Legal and Regulatory Risks

• Any events that impact our brand name could have an adverse effect on our reputation, cause us to incur significant costs and negatively impact our business, results of operations and financial condition.

• Many of the key patents and unpatented technology we use in our business are licensed to us, not owned by us, and our ability to use and enforce such patents and technology is restricted by the terms of the license.

• We rely on unpatented technology, which exposes us to certain risks.

• Environmental, health and safety laws and regulations may impose significant compliance costs and liabilities on us.

• Our business and financial results may be adversely affected by government contracting risks.

• Provisions of our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, as a result, depress the trading price of our common stock.

Risks Related to Our Indebtedness and Financial Risks

• Our indebtedness could adversely affect our financial health, restrict our activities and affect our ability to meet our obligations.

• To service our indebtedness, we will require a significant amount of cash, and our ability to generate cash depends on many factors beyond our control.

• Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional indebtedness, which could further exacerbate the risks associated with our substantial financial leverage.

• Our pension and other post-retirement benefits funding obligations could increase as a result of a variety of factors.

• An impairment in the carrying value of goodwill, other intangible assets or long-lived assets could negatively affect our consolidated results of operations and net worth.

For a more complete discussion of the material risks facing our business, see below.

Risks Related to Our Business and Operations

We participate in markets that are competitive, and our competitors’ actions could have a material adverse effect on our business, results of operations and financial condition.

Our business operates in competitive markets.

We compete against other existing or new global manufacturers of transmissions and propulsion solutions for commercial vehicles on the basis of product performance, quality, price, distribution capability, service and fuel efficiency in addition to other factors.

We compete against other existing or new global manufacturers of transmissions and propulsion solutions for commercial vehicles on the basis of product

performance, quality, price, distribution capability, service and fuel efficiency in addition to other factors.

In addition, we compete with manufacturers developing alternative technologies, including fully electric propulsion solutions, that may or may not require a transmission.

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A significant reduction in the level of external sourcing by our OEM customers could significantly impact our net sales and cash flows and, accordingly, have a material adverse effect on our business, results of operations and financial condition.

Volatility in and disruption to the global economic environment, including the impact of an economic recession, trade protectionism and tariffs, and changes in the regulatory and business environments in which we operate, may have a material adverse effect on our business, results of operations and financial condition.

Geopolitical risks, supply chain, labor and energy constraints and inflation have caused and may continue to cause volatility in and disruption to the global economic environment.

Historically, the commercial vehicle industry as a whole has been more adversely affected by volatile economic conditions, such as a recession, than many other industries, as the purchase or replacement of commercial vehicles, which are durable items, can be deferred for many reasons, including reduced spending by end users.

Future changes in the regulatory and business environments in which we operate, including increased geopolitical risks, trade protectionism and tariffs, may adversely affect our ability to sell our products or source materials needed to manufacture our products.

Furthermore, financial instability or bankruptcy at any of our suppliers or customers could disrupt our ability to manufacture our products and impair our ability to collect receivables, any or all of which may have a material adverse effect on our business, results of operations and financial condition.

In addition, some of our customers and suppliers may experience serious cash flow problems and, thus, may find it difficult to obtain financing, if financing is available at all.

As a result, our customers’ need for and ability to purchase our products or services may decrease, and our suppliers may increase their prices, reduce their output or change their terms of sale.

Any inability of customers to pay us for our products and services, or any demands by suppliers for different payment terms, may materially and adversely affect our business, results of operations and financial condition.

Furthermore, our suppliers may not be successful in generating sufficient sales or securing alternate financing arrangements, and therefore may no longer be able to supply goods and services to us.

In that event, we would need to find alternate sources for these goods and services, and there is no assurance we would be able to find such alternate sources

on favorable terms, if at all.

Any such disruption in our supply chain could adversely affect our ability to manufacture and deliver our products on a timely basis, and thereby affect our results of operations.

Increases in cost, disruption of supply or shortage of raw materials or components used in our products could harm our business and profitability.

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We generally purchase components with significant raw material content on the open market.

The prices for and availability of these raw materials fluctuate depending on market conditions.

The prices for and availability of these raw materials fluctuate depending on market conditions, including government trade policies and tariffs.

Volatility in the prices of raw materials such as steel, aluminum and nickel could increase the cost of manufacturing our products.

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In the event they are successful in doing so, our margins would decline.

We may not be able to pass on these costs to our customers,

and this could have a material adverse effect on our business, results of operations and financial condition.

Even in the event that increased costs can be passed through to customers, our gross margin percentages would decline as the recovery of these costs from customers generally lags six to twelve months.

We may not be able to pass on these costs to our customers, and this could have a material adverse effect on our business, results of operations and financial condition.

Even in the event that increased costs can be passed through to customers, our gross margin percentages would decline as the recovery of these costs from customers generally lags six to 12 months.

In 2025, approximately 75% of our total spending on components was sourced from approximately 40 suppliers, many of which are the single source for such components.

All of the suppliers from which we purchase materials and components used in our business are fully validated suppliers, meaning the suppliers’ manufacturing processes and inputs have been validated under a production part approval process (“PPAP”).

As of December 31, 2025, all of the suppliers from which we purchase materials and components used in our business were fully validated suppliers, meaning the suppliers’ manufacturing processes and inputs have been validated under a production part approval process (“PPAP”).

Furthermore, there are only a limited number of suppliers for certain of the materials used in our business, such as corrosion-resistant steel.

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We also cannot guarantee we will be able to maintain favorable arrangements and relationships with these suppliers.

An increase in the cost or a sustained interruption in the supply or shortage of some of these raw materials or components that may be caused by a deterioration of our relationships with suppliers, adverse geopolitical events such as the crisis in the Red Sea, events such as natural disasters and extreme weather events which may increase in frequency and intensity as a result of climate change, power outages, labor strikes and public health crisis such as pandemics and epidemics or the like could negatively impact our business, results of operations and financial condition.

An increase in the cost or a sustained interruption in the supply or shortage of some of these raw materials or components that may be caused by a deterioration of our relationships with suppliers, adverse geopolitical events such as the crisis in the Red Sea, events such as natural disasters and extreme weather events, which may increase in frequency and intensity as a result of climate change, power outages, labor strikes and public health crises, such as pandemics and epidemics, could negatively impact our business, results of operations and financial condition.

Although we have agreements with many of our customers that we will pass such price increases through to them, such contracts may be canceled by our customers and/or we may not be able to recoup the costs of such price increases.

Additionally, if we are unable to continue to purchase our required quantities of raw materials on commercially reasonable terms, or at all, if we are unable to maintain or enter into purchasing contracts for commodities, or if delivery of materials or component parts from suppliers is delayed or non-conforming, our operations could be disrupted, we may not be able to meet customer demand, and our profitability and our financial results may be materially impacted.

While we may experience the supply chain constraints mentioned above across all our products lines, the impacts to our customers are likely to be more pronounced in our lower volume product lines, including those supplied to the Defense and Off-Highway end markets.

While we may experience the supply chain constraints mentioned above across all our product lines, the impacts to our customers are likely to be more pronounced in our

lower volume product lines, including those supplied to the Allison Transmission Defense and Allison Transmission Off-Highway end markets.

Prolonged inflation could result in higher costs and decreased margins and earnings.

Recent inflationary pressures have resulted in increased raw material, labor, energy, freight and logistics expenses and other costs, which may adversely affect our results of operations.

If our costs are subject to continuing significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.

Our inability to do so could harm our business and results of operations.

In addition, government trade policies and tariffs have increased, and could continue to increase our manufacturing costs, and we may not be able to fully offset such higher costs through price increases.

Labor cost inflation and employee attraction and retention could have an adverse effect on our business, results of operations and financial condition.

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As a result, we may not be able to attract and retain qualified personnel, which may impact our ability to manufacture, design and develop our propulsion solutions, satisfy customer demand in a timeframe that meets their desired production schedules and compete effectively.

In addition, we continue to experience increased labor costs, including significant labor cost increases under our new collective bargaining agreement with the UAW, which will continue to impact our results of operations.

In addition, we continue to experience increased labor costs, including significant labor cost increases under our collective bargaining agreement with the UAW, which will continue to impact our results of operations.

Our business would be adversely affected if we fail to retain key executives, or to adequately plan for the succession of members of our executive management team.

While we have succession plans in place for members of our executive management team, and continue to review and update those plans, and certain key executive

officers are party to or participants in severance and change in control arrangements, these arrangements do not guarantee that the services of our executive officers will continue to be available to us or that we will be able to find suitable management personnel to replace departing executives on a timely basis.

Prolonged inflation could result in higher costs and decreased margins and earnings.

Recent inflationary pressures have resulted in increased raw material, labor, energy, freight and logistics expenses and other costs, which may adversely affect our results of operations.

If our costs are subject to continuing significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.

Our inability to do so could harm our results of operations.

Volatility in and disruption to the global economic environment, including the impact of an economic recession, trade protectionism and tariffs, and changes in the regulatory and business environments in which we operate may have a material adverse effect on our business, results of operations and financial condition.

Geopolitical risks, supply chain, labor and energy constraints and inflation have caused and may continue to cause volatility in and disruption to the global economic environment.

In addition, some of our customers and suppliers may experience serious cash flow problems and, thus, may find it difficult to obtain financing, if financing is available at all.

As a result, our customers’ need for and ability to purchase our products or services may decrease, and our suppliers may increase their prices, reduce their output or change their terms of sale.

Any inability of customers to pay us for our products and services, or any demands by suppliers for different payment terms, may materially and adversely affect our results of operations and financial condition.

Furthermore, our suppliers may not be successful in generating sufficient sales or securing alternate financing arrangements, and therefore may no longer be able to supply goods and services to us.

In that event, we would need to find alternate sources for these goods and services, and there is no assurance we would be able to find such alternate sources on favorable terms, if at all.

Any such disruption in our supply chain could adversely affect our ability to manufacture and deliver our products on a timely basis, and thereby affect our results of operations.

While we have succession plans in place for members of our executive management team, and continue to review and update those plans, and certain key executive officers are party to or participants in severance and change in control arrangements, these arrangements do not guarantee that the services of our executive officers will continue to be available to us or that we will be able to find suitable management personnel to replace departing executives on a timely basis.

Certain of our end users operate in highly cyclical industries, which can result in uncertainty and significantly impact the demand for our products, which could have a material adverse effect on our business, results of operations and financial condition.

Some of the markets in which we operate, including energy, mining, construction, distribution and motorhomes, exhibit a high degree of cyclicality.

Some of the markets in which we operate, including agriculture, energy, mining, construction, material handling, distribution and motorhomes, exhibit a high degree of cyclicality.

Decisions to purchase our products are largely a result of the performance of these and other industries we serve.

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Demand in these industries is impacted by numerous factors, including prices of commodities, rates of infrastructure spending, housing starts, real estate equity values, interest rates, consumer spending, fuel costs, energy demands, municipal spending, commercial construction and global pandemics, among others.

Increases or decreases in these variables globally may significantly impact the demand for our products, which could have a material adverse effect on our business, results of operations and financial

If we are unable to accurately predict demand, we may be unable to meet our customers’ needs, resulting in the loss of potential sales, or we may manufacture excess products, resulting in increased inventories and overcapacity in our production facilities, increasing our unit production cost and decreasing our operating margins.

Our sales are concentrated among our top five OEM customers and the loss or consolidation of any one of these customers or the discontinuation of particular vehicle models for which we are a significant supplier could reduce our net sales and have a material adverse effect on our results of operations and financial condition.

In 2025, our sales were concentrated among our top five OEM customers.

We have in the past and may in the future derive a significant portion of our net sales from a relatively limited number of OEM customers.

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and Traton SE, accounted for approximately 18%, 11% and 10%, respectively, of our net sales during 2025.

The loss of, or consolidation of, any one of these customers, or a significant decrease in business from, one or more of these customers could harm our business.

In addition, the discontinuation of particular vehicle models for which we are a significant supplier could reduce our net sales and have a material adverse effect on our results of operations.

The loss of, or consolidation of, any one of these customers or a significant decrease in business from one or more of these customers, could harm our business, results of operations and financial condition.

In addition, the discontinuation of particular vehicle models for which we are a significant supplier could reduce our net sales and have a material adverse effect on our business, results of operations and financial condition.

Labor unrest could have an adverse effect on our business, results of operations and financial condition.

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Our current collective bargaining agreement with UAW Local 933 is effective through November 2027.

Any new collective bargaining agreement we negotiate with the UAW to replace the existing collective bargaining agreement upon its expiration may result in increased costs to us, in particular labor costs, which could have an adverse effect on our results of operations.

In addition, approximately 68% of the U.S.

employees that were acquired with the Acquired Off-Highway Business are represented by the UAW or the USW and are subject to collective bargaining agreements.

Any new collective bargaining agreements we negotiate with the UAW or the USW to replace the existing collective bargaining agreements upon their expiration may result in increased costs to us, in particular labor costs, which could have an adverse effect on our results of operations.

In addition to our unionized work force, many of our direct and indirect customers and vendors have unionized work forces.

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If strikes, work stoppages or lock-outs at our facilities or at the facilities of our vendors or customers occur or continue for a long period of time, our business, results of operations and financial condition may be materially adversely affected.

We are subject to cybersecurity risks to operational systems, security systems, or infrastructure owned by Allison or third-party vendors or suppliers.

We are subject to cybersecurity risks to operational systems, security systems, and infrastructure owned by Allison or third-party vendors or suppliers.

We are at risk for interruptions, outages, and compromises to the confidentiality, integrity or availability of:

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and/or affect the performance of vehicle propulsion control modules or other in-product technology.

A cyber incident could be caused by malicious insiders or by third parties using sophisticated, targeted

methods to circumvent firewalls, encryption, and other security defenses, including hacking, fraud, trickery, or other forms of deception, such as social engineering and phishing, or due to human or technological error, such as misconfigurations, “bugs,” or vulnerabilities in software or hardware used by us or others.

The techniques used by threat actors change frequently and may be difficult to detect for long periods of time.

A cyber incident could be caused by malicious insiders or by third parties using sophisticated, targeted methods to circumvent firewalls, encryption, and other security defenses, including hacking, fraud, trickery, or other

forms of deception, such as social engineering and phishing, or due to human or technological error, such as misconfigurations, “bugs,” or vulnerabilities in software or hardware used by us or others.

The techniques used by threat actors change frequently and are often difficult to detect.

Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are increasingly using tools - including artificial intelligence - to evade detection and even remove forensic evidence.

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In addition, remote or hybrid working arrangements at our Company, our customers and many third-party providers increase cybersecurity risks due to the challenges associated with managing remote computing assets and the nature of security vulnerabilities that are present in many non-corporate and home networks.

We also deploy scanning tools in our systems that allow us to identify and track known security vulnerabilities, but we cannot guarantee that patches or mitigation measures will be applied in all instances before such vulnerabilities can be exploited by a threat actor.

We and certain of our customers and third-party providers have experienced cyberattacks and other incidents in the past and will continue to experience varying degrees of cyberattacks and incidents in the future.

While to date no cybersecurity incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future.

In addition, as a provider of defense products and services to the U.S.

As a provider of defense products and services to the U.S.

government and foreign governments, we are subject to a heightened risk of cyberattacks, including by foreign governments, violent extremist organizations, and transnational criminal organizations.

In addition, because certain of our systems are integrated with third-party (e.g., dealers) systems and technology, the circumvention or failure of our cybersecurity measures could compromise the confidentiality, integrity, and availability of those third-party systems, and vice versa.

A significant cyber incident could impact our production capability, harm our reputation and business relationships, impact our competitive position (including compromising our intellectual property assets), and subject us to regulatory actions or litigation and fines and/or penalties, including pursuant to evolving global privacy and security regulations and laws, as well as significant investigative, restoration or remediation costs and/or increased compliance costs.

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and other governments is uncertain.

Extended or expanded conflicts could impact our ability or those of our suppliers or customers to obtain certain raw materials or component parts and could limit the availability and cost of energy throughout Europe, which could increase our costs, impact our ability to deliver our products or reduce customer demand.

our products or reduce customer demand.

In addition, while we have suspended indefinitely all sales and exports of our products to customers in Russia and Belarus and Russian and Belarusian affiliate owned or controlled entities, certain of our competitors have continued to sell products in Russia during this time, which may have a negative impact on our long-term sales opportunities in Russia.

Our brand and reputation are dependent on the continued participation and level of service of our numerous independent distributors and dealers.

We work with a network of approximately 1,600 independent distributors and dealers that provide post-sale service, service parts and support equipment.

We work with a network of approximately 1,500 independent distributors and dealers (as of December 31, 2025) that provide post-sale service, service parts and support equipment.

Because we depend on the pull-through demand generated by end users for our products, any actions by the independent distributors or dealers, which are not in our control, may harm our reputation and damage the brand loyalty among our customer base.

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In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be adversely affected.

While we manufacture our products in several facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our manufacturing facilities due to accident, labor issues, weather conditions, acts of war, political unrest, terrorist activity, natural disaster or extreme weather events, which may increase in frequency and intensity as a result of climate change, public health crises, such as pandemics and epidemics or otherwise, whether short- or long-term, would have a material adverse effect on our business, results of operations and financial condition.

Our most significant concentration of manufacturing is around our corporate headquarters in Indianapolis, Indiana, where we produce approximately 90% of our transmissions.

While we manufacture our products in many facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our manufacturing facilities due to accident, labor issues, weather conditions, acts of war, political unrest, terrorist activity, natural disaster or extreme weather events, which may increase in frequency and intensity as a result of climate change, public health crises, such as pandemics and epidemics, or otherwise, whether short- or long-term, would have a material adverse effect on our business, results of operations and financial condition.

Our most significant concentration of manufacturing is around our corporate headquarters in Indianapolis, Indiana, where we produced approximately 85% of our transmissions in 2025.

In addition to our Indianapolis manufacturing facilities, we currently operate manufacturing facilities for our fully electric propulsion solutions in Auburn Hills, Michigan, for our transmissions in both Szentgotthard, Hungary and Chennai, India and for our aluminum die cast components in Lewisburg, Tennessee.

We also acquired approximately 46 manufacturing and assembly facilities as part of the acquisition of the Acquired Off-Highway Business, located in approximately 22 countries.

In the event of a disruption at the Indianapolis facilities, our other facilities may not be adequately equipped to operate at a level sufficient to compensate for the volume of production at the Indianapolis facility due to their size and the fact that they have not yet been tested for such significant increases in production volume.

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Not all of our new product launches have been successful, and we may not be successful in the future in introducing other new products and responding to customer needs.

In addition, it often takes significant time, in some cases multiple fleet buy cycles, before customers gain experience with new products and technologies and those new products and technologies become widely-accepted by the market, if at all.

In addition, it often takes significant time, in some cases multiple fleet buy cycles,

before customers gain experience with new products and technologies and those new products and technologies become widely-accepted by the market, if at all.

Given the early stages of development of some of these new products and technologies, there can be no guarantee of future market acceptance and investment returns with respect to these products.

In addition, the increased adoption of electric propulsion solutions could result in lower demand for our fully automatic transmissions and, over time, the demand for related service parts and support equipment, which would impact our margins.

If we do not adequately anticipate the changing needs of our

customers by keeping pace with improvements and changes in vehicle propulsion technology and developing and introducing new and effective products and technologies on a timely basis, or if the products and technologies we develop do not become market-leading, our competitive position and prospects could be harmed.

In addition, an increased adoption of electric propulsion solutions could result in lower demand for our fully automatic transmissions and, over time, the demand for related service parts and support equipment, which would impact our margins.

If we do not adequately anticipate the changing needs of our customers by keeping pace with improvements and changes in vehicle propulsion technology and developing and introducing new and effective products and technologies on a timely basis, or if the products and technologies we develop do not become market-leading, our competitive position and prospects could be harmed.

If our competitors are able to respond to changing market demands and adopt new technologies more quickly than we do, demand for our products could decline, our competitive position could be harmed, our future research and development activities may be constrained due to intellectual property rights of others, licenses for technologies that would enable us to keep pace with our competitors may not be available on commercially reasonable terms if at all and we may not be able to recoup a return on our development investments.

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If the rate of adoption of new technologies, including electric vehicles for the medium- and heavy-duty commercial market, occurs at a pace that is faster than we are anticipating, we may not have products available to meet that accelerated timeframe.

If we experience significant delays or increased costs in the production, launch or acceptance of our products and technologies, our net sales and results of operations may be materially adversely affected.

If we experience significant delays or increased costs in the production, launch or acceptance of our products and technologies, our business, results of operations and financial condition may be materially adversely affected.

Our long-term growth prospects and results of operations may be impaired if the rate of adoption of fully automatic transmissions in commercial vehicles outside North America does not increase.

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Outside-North America net sales represented approximately 24% of our net sales for 2025.

Most of our operations are in the U.S., but we also have manufacturing and customization facilities in India and Hungary with a services agreement with Stellantis NV and customization capability in Brazil, the Netherlands, China and Japan.

Further, we intend to continue to pursue growth opportunities for our business in a variety of business environments outside the U.S., which could exacerbate the risks set forth below.

Most of our operations were in the U.S.

in 2025, but we also have manufacturing and customization facilities in India and Hungary with a services agreement with Stellantis N.V.

and customization capability in Brazil, the Netherlands, China and Japan, and, effective January 1, 2026, manufacturing and assembly facilities located in approximately 14 additional countries as a result of the acquisition of the Acquired Off-Highway Business.

Further, we intend to continue to pursue growth opportunities for our business in a variety of business environments outside the U.S.,

which could exacerbate the risks set forth below.

Our international operations are subject to, without limitation, the following risks:

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Department of the Treasury, and other trade protection regulations and measures;

• political risks, including increased trade protectionism and risks of loss due to civil disturbances, acts of terrorism, acts of war, guerilla activities and insurrection;

• political risks, including increased trade protectionism and risks of loss due to civil disturbances, acts of terrorism, acts of war, guerrilla activities and insurrection;

• unstable economic, financial and market conditions and increased expenses as a result of inflation, higher energy costs or higher interest rates;

• difficulties in enforcement of third-party contractual obligations and intellectual property rights and collecting receivables through foreign legal systems;

• difficulty in staffing and managing international operations and the application of foreign labor regulations;

• difficulties in staffing and managing international operations and the application of foreign labor regulations;

• differing local product preferences and product requirements;

• fluctuations in currency exchange rates to the extent that our assets or liabilities are denominated in a currency other than the functional currency of the country where we operate;

• potentially adverse tax consequences from changes in tax laws, requirements relating to withholding taxes on remittances and other payments by subsidiaries and restrictions on our ability to repatriate dividends from our subsidiaries;

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Any one of these factors could materially adversely affect our sales of products or services to international customers or harm our reputation, which could have a material adverse effect on our business, results of operations and financial condition.

Fluctuations in foreign currency exchange rates could adversely affect our results.

We generate revenues and incur costs in multiple currencies.

As a result, changes in exchange rates may impact margins on sales outside the U.S.

and on products that include components sourced from suppliers located in other countries.

In addition, the translation of foreign-denominated revenues, expenses, assets and liabilities into U.S.

dollars for financial reporting purposes may result in variability in our reported results.

We use natural hedging strategies and may, from time to time, enter into derivative instruments to manage a portion of our foreign currency exposure.

However, these measures may not fully offset the effects of exchange rate fluctuations, and our hedging activities may not be effective in mitigating all foreign currency risks, which could adversely affect our results of operations, financial condition and cash flows.

Our exposure to such exchange rate fluctuations and foreign currency risks has increased with the acquisition of the Acquired Off-Highway Business.

We may not be able to identify or consummate acquisitions or partnerships or achieve expected benefits from or effectively integrate acquisitions or partnerships, which could harm our growth.

From time to time, we evaluate selective acquisitions, partnerships and strategic investments.

Potential and completed acquisitions and partnerships involve many risks that could have an adverse effect on our business, financial condition or results of operations, including:

Potential and completed acquisitions, including the acquisition of the Acquired Off-Highway Business, and partnerships involve many risks that could have an adverse effect on our business, financial condition or results of operations, including:

• our ability to identify suitable acquisition or partnership candidates, prevail against competing potential acquirers or partners and negotiate and consummate acquisitions or partnerships on terms attractive to us;

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If we are unable to identify suitable acquisition candidates or to consummate and successfully integrate any future acquisitions, our business and results of operations may be adversely affected as a result.

See also “Risks Related to our Acquisition of the Acquired Off-Highway Business” below for additional discussion of certain risks related to the acquisition of the Acquired Off-Highway Business.

Risks Related to our Acquisition of the Acquired Off-Highway Business

We expect to incur significant costs in connection with the integration of the Acquired Off-Highway Business.

We have incurred, and will continue to incur, substantial costs related to formulating and implementing plans to integrate the Acquired Off-Highway Business, including facilities, systems and service contract consolidation costs and employment‑related costs.

We will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the integration of the Acquired Off-Highway Business.

These costs, as well as other unanticipated costs and expenses, could adversely affect our business, results of operations and financial condition.

Any failure to integrate the Acquired Off-Highway Business and its operations with ours successfully in the expected time frame may adversely affect our results of operations and financial condition.

The Acquired Off-Highway Business and its operations may not be integrated successfully with ours.

It is possible that the integration process could result in the loss of our or Dana’s key employees, the loss of customers, suppliers, service providers or other business counterparties, the disruption of our ongoing businesses, inconsistencies in standards, controls, procedures and policies, potential unknown liabilities and unforeseen expenses, delays, or regulatory conditions associated with and following completion of the acquisition, higher‑than‑expected integration costs and an overall post‑closing integration process that takes longer than originally anticipated.

In addition, the attention of our management team and our resources may be focused on the integration process, which may harm our day-to-day business operations or prevent us from pursuing other opportunities that may be beneficial.

We may fail to realize all of the anticipated benefits from the integration of the Acquired Off-Highway Business and its operations after the acquisition or fail to effectively manage our expanded operations.

The success of the acquisition of the Acquired Off-Highway Business will depend, in part, on our ability to achieve the expected opportunities, cost savings, operating synergies and other benefits from integrating the Acquired Off-Highway Business.

However, the anticipated benefits of the acquisition may not be realized fully or at all, may take longer to realize than expected, or may result in other adverse effects that we do not currently foresee, which could adversely affect our business, results of operations and financial condition.

In addition, the estimates and assumptions that we and Dana have made when evaluating the anticipated benefits from the acquisition may not be accurate, and there could be potential unknown liabilities and unforeseen expenses associated with the acquisition that could adversely impact us.

In addition, following the acquisition, the size and complexity of our businesses and operations increased significantly.

Our future success will depend, in part, upon our ability to manage this expanded business.

Legal and Regulatory Risks

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We also rely on our reputation with end users of our products to specify our products when purchasing new vehicles from our OEM customers.

In the event we are not able to maintain or enhance our brand in these new markets or our reputation is damaged in our existing markets as a result of product defects or recalls, we may face difficulty in maintaining our pricing positions with respect to some of our products or experience reduced demand for our products, which could negatively impact our business, results of operations and financial condition.

In the event we are not able to maintain or enhance our

brand in these new markets or our reputation is damaged in our existing markets as a result of product defects or recalls, we may face difficulty in maintaining our pricing positions with respect to some of our products or experience reduced demand for our products, which could negatively impact our business, results of operations and financial condition.

Additionally, we license the “Allison Transmission” name and certain related trademarks to third parties.

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We rely on unpatented technology, which exposes us to certain risks.

We currently do, and may continue in the future to, rely on unpatented proprietary technology.

We currently rely, and may continue in the future to rely, on unpatented proprietary technology.

In such regard, we cannot be assured that any of our applications for protection of our intellectual property rights will be approved or that others will not infringe or challenge our intellectual property rights.

It is possible our competitors will independently develop the same or similar technology or otherwise obtain access to our unpatented technology.

Although we believe the loss or expiration of any single patent would not have a material effect on our business, results of operations or financial position, there can be no assurance that any one, or more, of the patents or any other intellectual property owned by or licensed to us will not be challenged, invalidated or circumvented by third parties.

Although we believe the loss or expiration of any single patent would not have a material effect on our business, results of operations or financial condition, there can be no assurance that any one, or more, of the patents or any other intellectual property owned by or licensed to us will not be challenged, invalidated or circumvented by third parties.

In fact, a number of the patents licensed to us are set to expire in the next few years.

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Moreover, regulatory bodies are increasingly adopting regulations that target limiting greenhouse gases and combating climate change, which may impact our ability to sell our current products or require us to develop new products or technologies.

If these environmental, health and safety laws and regulations

that impact our operations or products become more stringent or expand to include a larger portion of our products or our customers’ products in the future, we could incur additional costs in order to ensure that our business and products comply with such regulations.

If these environmental, health and safety laws and regulations that impact our operations or products become more stringent or expand to include a larger portion of our products or our customers’ products in the future, we could incur additional costs in order to ensure that our business and products comply with such regulations.

In addition, we may not be successful in developing products or technologies that comply with, or the vehicle or customer OEMs to which we sell our products may choose not to comply with, such laws and regulations, which could impact our ability to sell our products in certain locations, negatively impact our business and result in a loss of market share.

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Concern over climate change continues to result in new legal and regulatory requirements designed to mitigate the effects of climate change on the environment, such as actions taken by the U.S.

Environmental Protection Agency and several states to address greenhouse gas emissions, the European Union’s CSRD, California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, and the SEC's final climate disclosure rules, which are currently stayed.

Environmental Protection Agency and several states to address greenhouse gas emissions, the European Union’s CSRD and California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act.

We are experiencing increased compliance burdens and costs in addressing our obligations under these new legal and regulatory obligations, and these new legal and regulatory obligations may adversely affect raw material sourcing, manufacturing operations and the distribution of our products.

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We or our predecessors have been named potentially responsible parties at contaminated sites from time to time.

There can be no assurances that future environmental remediation obligations will not have a material adverse effect on our results of operations and financial condition.

There can be no assurance that future environmental remediation obligations will not have a material adverse effect on our results of operations and financial condition.

In addition, we occasionally evaluate alternatives with respect to our facilities, including possible dispositions or closings.

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We may also face lawsuits brought by third parties that either allege property damage or personal injury as a result of, or seek reimbursement for costs associated with, such contamination.

Our business and financial results may be adversely affected by U.S.

government contracting risks.

We are subject to various laws and regulations applicable to parties doing business with the U.S.

government, including laws and regulations governing performance of U.S.

government contracts, the use and treatment of U.S.

government furnished property and the nature of materials used in our products.

We may be unilaterally suspended or barred from conducting business with the U.S.

government, or become subject to fines or other sanctions if we are found to have violated such laws or regulations.

Our business and financial results may be adversely affected by government contracting risks.

We are subject to various laws and regulations applicable to parties doing business with governmental entities, including laws and regulations governing performance of government contracts, capital allocations, the use and treatment of government furnished property and the nature of materials used in our products.

We may be unilaterally suspended or barred from conducting business with a governmental entity, or become subject to fines or other sanctions if we are found to have violated such laws or regulations.

As a result of the need to comply with these laws and regulations, we are subject to increased risks of governmental investigations, civil fraud actions, criminal prosecutions, whistleblower lawsuits and other enforcement actions.

The laws and regulations to which we are

subject include, but are not limited to, Export Administration Regulations, the Federal Acquisition Regulation, International Traffic in Arms Regulations and regulations from the Bureau of Alcohol, Tobacco, Firearms and Explosives and the FCPA.

The laws and regulations to which we are subject include, but are not limited to, Export Administration Regulations, the Federal Acquisition Regulation, International Traffic in Arms Regulations, regulations from the Bureau of Alcohol, Tobacco, Firearms and Explosives and the FCPA in the U.S., as well as the regulations and laws applicable to government contracting in countries outside the U.S.

The risks may be amplified in non-U.S.

jurisdictions due to differing legal regimes, export controls, trade restrictions, currency and payment practices, and political and economic instability.

government contracts are subject to modification, curtailment or termination by the U.S.

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The result of, or expiration of the statute of limitations for, such audits could have an impact on reported liabilities, net income and cash flow from operations.

As our business increasingly includes contracts with governmental customers outside the U.S., we are subject to comparable risk of modification, suspension or termination, as well as audit, compliance and performance requirements, under foreign legal and regulatory regimes.

These risks may be heightened by differing procurement practices, payment terms, export controls, political or regulatory developments, and other complexities inherent in contracting with non-U.S.

governmental entities.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, as a result, depress the trading price of our common stock.

Our amended and restated certificate of incorporation and amended and restated bylaws and certain provisions of the Delaware General Corporation Law contain provisions that could discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous.

Our amended and restated certificate of incorporation and amended and restated bylaws and certain provisions of the General Corporation Law of the State of Delaware contain provisions that could discourage, delay or prevent a change in control of our Company or changes in our management that the stockholders of our Company may deem advantageous.

These provisions:

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As of December 31, 2025, we had no outstanding borrowings against the Revolving Credit Facility.

At December 31, 2024, $514 million of our total indebtedness was associated with ATI’s

term loan facility due March 2031 (“Term Loan” , and together with the Revolving Credit Facility, the “Senior Secured Credit Facility”), $400 million of our total indebtedness was associated with ATI’s 4.75% Senior Notes due October 2027 (“4.75% Senior Notes”), $500 million of our total indebtedness was associated with ATI’s 5.875% Senior Notes due June 2029 (“5.875% Senior Notes”) and $1,000 million of our total indebtedness was associated with ATI’s 3.75% Senior Notes due January 2031 (“3.75% Senior Notes”, and together with the 4.75% Senior Notes and 5.875% Senior Notes, the “Senior Notes”).

For a complete description of the terms of the Senior Secured Credit Facility and the Senior Notes, please see "Note 8.

Debt” in Part II, Item 8., of this Annual Report on Form 10-K.

At December 31, 2025, $509 million of indebtedness was associated with ATI’s term loan facility due March 2031 (“Term Loan” , and together with the Revolving Credit Facility, the “Senior Secured Credit Facility”), $400 million of indebtedness was associated with ATI’s 4.75% Senior Notes due October 2027 (“4.75% Senior Notes”), $500 million of indebtedness was associated with ATI’s 5.875% Senior Notes due June 2029 (“5.875% Senior Notes 2029”), $1,000 million of indebtedness was associated with ATI’s 3.75% Senior Notes due January 2031 (“3.75% Senior Notes”) and $500 million of indebtedness was associated with ATI’s 5.875% Senior Notes due December 2033 (“5.875% Senior Notes 2033”, and together with the 4.75% Senior Notes, 5.875% Senior Notes 2029 and 3.75% Senior Notes, the “Senior Notes”).

For a complete description of the terms of the Senior Secured Credit Facility and the Senior Notes, see "Note 8.

Debt” of Notes to Consolidated Financial Statements included in Part II, Item 8., of this Annual Report on Form 10-K.

On January 2, 2026, we amended the Second Amended and Restated Credit Agreement dated as of March 29, 2019, as amended (the “Credit Agreement”), to provide for an incremental term loan facility under the Credit Agreement in an aggregate principal amount equal to $1,200 million (the “Incremental Term Loan”) and increased the commitments under the Revolving Credit Facility by $250 million to an aggregate principal amount of up to $1,000 million.

We used the proceeds of the Incremental Term Loan and also borrowed $300 million under the Revolving Credit Facility to pay a portion of the consideration for the acquisition of the Acquired Off-Highway Business and fees, costs and expenses related to the acquisition.

Our indebtedness could have important consequences.

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We and our subsidiaries may be able to incur additional indebtedness in the future because the terms of our indebtedness do not fully prohibit us or our subsidiaries from doing so.

Subject to covenant compliance and certain

conditions, our indebtedness permits additional borrowing, including total borrowing up to $744 million under the Revolving Credit Facility, net of $6 million in letters of credit.

Subject to covenant compliance and certain conditions, our indebtedness as of December 31, 2025 permitted additional borrowing, including total borrowing up to $745 million under the Revolving Credit Facility, net of $5 million in letters of credit.

If new debt is added to our current debt levels and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify.

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Although GAAP pension expense and pension contributions are not directly related, the key economic indicators that affect GAAP pension expense also affect the amount of cash that we would contribute to our defined benefit pension plans.

Because the values of these defined benefit pension plans’ assets have fluctuated and will fluctuate in response to changing market conditions, the amount of gains or losses that will be recognized in subsequent periods, the impact on the funded status of the defined benefit pension plans and the future minimum required contributions, if any, could have a material adverse effect on our business, results of operations and financial condition.

a material adverse effect on our business, results of operations and financial condition.

The magnitude of such impact cannot be determined with certainty at this time.

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Similarly, a one percentage point decrease in the assumed discount rate would result in an increase in the December 31, 2025 OPEB obligation of approximately $6 million.

As of December 31, 2024, the net overfunded status of our defined benefit pension plans was $2 million, while the unfunded status of our OPEB plan was $59 million.

As of December 31, 2025, the unfunded status of our defined benefit pension plans was $4 million and the unfunded status of our OPEB plan was $66 million.

An impairment in the carrying value of goodwill, other intangible assets or long-lived assets could negatively affect our consolidated results of operations and net worth.

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In addition, management updates the Audit Committee, as necessary, regarding significant cybersecurity incidents.

The Committee reports to the full Board regarding its activities, including those related to cybersecurity.

The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity.

The full Board also receives briefings from management on our cybersecurity risk management program.

Board members receive presentations on cybersecurity topics from our Chief Information Security Officer ("CISO"), internal security staff or external experts as part of the Board’s continuing education on topics that impact public companies.

Our management team, including our Chief Executive Officer, Chief Financial Officer, General Counsel, Chief Information Officer ("CIO") and CISO , has overall responsibility for assessing and managing our material risks from cybersecurity threats.

Our management team has primary responsibility for implementing our cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.

Our management team, led by our CISO, is informed about and monitors the prevention, detection, mitigation, and remediation of key cybersecurity risks and incidents through various means, which may include briefings with internal cybersecurity team members and external consultants, threat intelligence and other information obtained from public or private sources, and alerts and reports produced by security tools deployed in our information technology environment.

Our CISO has over 25 years and our CIO has over 10 years of experience in designing and implementing corporate information technology security systems and strategies.

In addition, our CISO leads the operational cybersecurity team, which has an average of over 10 years of experience.

Our CISO has primary responsibility for assessing and managing our material risks from cybersecurity threats and supervises both our internal cybersecurity operations team and our retained external cybersecurity consultants.

Our management team, which includes our CISO as well as our Chief Executive Officer, Chief Financial Officer, General Counsel and Chief Information Officer , has overall responsibility for implementing our cybersecurity risk management program.

Our management team, led by our CISO, stays informed about and monitors the prevention, detection, mitigation, and remediation of key cybersecurity risks and incidents through various means, which may include briefings with internal cybersecurity team members and external consultants, threat intelligence and other information obtained from public or private sources, and alerts and reports produced by security tools deployed in

our information technology environment.

Our CISO has over 30 years of experience in leading strategy and operations across information technology, cybersecurity and cloud infrastructure areas for entities in the public, private, government and military sectors.

In addition, o ur CISO leads the operational cybersecurity team, which has an average of over 10 years of experience.

Collectively, the members of the operational cybersecurity team have various certifications, including, but not limited to, CISSP, GSOM, GCIA, GCIH, CISA, CCSK, SSCP, GPEN, CEH, and CISM.

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As of December 31, 2025, we have 17 manufacturing and certain other facilities in eight countries.

The following table sets forth certain information regarding our significant facilities.

The following table sets forth certain information regarding our significant facilities as of December 31, 2025.

Engineering, Operational Support

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Manufacturing & Customization

In addition, in connection with the acquisition of the Acquired Off-Highway Business, effective as of January 1, 2026, we acquired approximately 46 additional manufacturing and assembly plants and approximately 30 other facilities located in 24 countries.

We believe all our facilities are suitable for their intended purpose, are being efficiently utilized and provide adequate capacity to meet demand for the next several years.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors