DANA Inc 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions) Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes in this report. Forward-Looking Information Statements in this report (or otherwise made by us or on our behalf) that are not entirely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often be identified by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “predicts,” “seeks,” “estimates,” “projects,” “outlook,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing” and similar expressions, variations or negatives of these words. These statements represent the present expectations of Dana Incorporated and its consolidated subsidiaries (Dana) based on our current information and assumptions. Forward-looking statements are inherently subject to risks and uncertainties. Our plans, actions and actual results could differ materially from our present expectations due to a number of factors, including those discussed below and elsewhere in this report and in our other filings with the Securities and Exchange Commission (SEC). All forward-looking statements speak only as of the date made and we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances that may arise after the date of this report. Recent Strategic Actions Cost reduction initiatives — During the fourth quarter of 2024, we announced further actions to support sustained long-term profitability and enhanced cash flow generation. This includes substantial reduction in selling, general and administrative costs and aligning engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles. We expect to deliver annualized savings of $310 through 2026. Approximately $245 of annualized savings is expected be realized through 2025 with an additional $65 realized in 2026. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information. Segment realignment — Through December 2024, we managed our operations globally through four operating segments. Our Light Vehicle and Power Technologies segments primarily supported light vehicle original equipment manufacturers (OEMs) with products for light trucks, SUVs, CUVs, vans and passenger cars. Our Commercial Vehicle segment supported the OEMs of on-highway commercial vehicles (primarily trucks and buses), while our Off-Highway segment supported OEMs of off-highway vehicles (primarily wheeled vehicles used in construction, mining and agricultural applications). In the first quarter of 2025, our Power Technologies segment was integrated into our Light Vehicle and Commercial Vehicle segments, streamlining the business, enhancing our go-to-market approach and serving our customers more efficiently. The OEM-facing business was integrated into our Light Vehicle segment while the aftermarket business was integrated into our Commercial Vehicle segment. See Note 19 of our consolidated financial statements in Item 1 of Part I for additional information. 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 planned 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. for $2,732. The sale price is subject to adjustment based on net working capital and net indebtedness balances as of the closing date. The transaction is currently expected to close during the fourth quarter of 2025, subject to satisfaction of regulatory approvals and other customary conditions. 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. Capital Structure Initiatives — Net cash proceeds from the Off-Highway business divestiture will be used to pay down debt, strengthening Dana’s financial position, and provide capital returns to shareholders. 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. Management Overview 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 September 30, 2025, excluding the Off-Highway business which is presented as a discontinued operation, we employed approximately 28,000 people and operated in 26 countries. External sales by operating segment for the periods ended September 30, 2025 and 2024 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 % of % of % of % of Dollars Total Dollars Total Dollars Total Dollars Total Light Vehicle $ 1,353 70.6 % $ 1,285 67.7 % $ 3,901 69.3 % $ 4,049 67.9 % Commercial Vehicle 564 29.4 % 612 32.3 % 1,732 30.7 % 1,911 32.1 % Total $ 1,917 $ 1,897 $ 5,633 $ 5,960 See Note 19 to our consolidated financial statements in Item 1 of Part I for further financial information about our operating segments. Our internet address is www.dana.com. The inclusion of our website address in this report is an inactive textual reference only and is not intended to include or incorporate by reference the information on our website into this report. 26 Table of Contents Trends in Our Markets We serve our customers in two core global end markets: light vehicle, primarily full frame trucks and SUVs; and commercial vehicle, including medium-and heavy-duty trucks and busses. Each of our end-markets has unique cyclical dynamics and market drivers. These cycles are impacted by periods of investment where end-user vehicle fleets are refreshed or expanded in reaction to demand usage patterns, regulatory changes, or when the age of vehicles in service reach their useful life. Key market drivers include regional economic growth rates; cost and availability of end customer financing and industrial output. The current tariff environment has resulted in increased uncertainty in the markets we serve. Light vehicle markets — Our driveline business is weighted more heavily to the truck and SUV segments of the light-vehicle market versus the passenger-car segment. Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive vehicles, as well as hybrid and electric vehicles. During 2024, light-truck markets showed marginal improvement across all regions except Europe, which was down slightly from 2023. The outlook for 2025 reflects global light-truck near-term production being relatively stable across all regions with demand risk due to tariff impacts. Commercial vehicle markets — Our primary business is driveline systems for medium and heavy-duty trucks and busses, including the emerging market for hybrid and electric vehicles. Key regional markets are North America, South America (primarily Brazil) and Asia Pacific. During 2024, production of Class-8 trucks in North America decreased 3% from 2023 reflecting lower demand driven by lower freight volumes and rates. Medium-duty truck production in North America experienced a modest 4% year-over-year increase from 2023. The outlook for 2025 is for a significant decrease in production from the prior year. Outside of North America, production of medium- and heavy-duty trucks in South America increased 41% over 2023, reflecting improved economic conditions in the region. The 2025 outlook for South America reflects a moderate decrease in production compared to the prior year. Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, decreased 5% in 2024. The 2025 outlook for Asia Pacific is for a moderate increase in production from the prior year. Foreign currency — With 43% of our sales for the first nine months of 2025 coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations. The euro zone countries accounted for 31% of our year-to-date 2025 non-U.S. sales, while Brazil, India, Thailand and China accounted for 14%, 8%, 8% and 7%, respectively. International currencies weakened against the U.S. dollar during the first nine months of 2025, decreasing sales by $3, with the effects of a weaker Brazilian real, Indian rupee, Mexican peso and Canadian dollar being partially offset by a stronger euro, Thai baht and South Africa rand. Argentina has experienced significant inflationary pressures the past few years, contributing to significant devaluation of its currency among other economic challenges. Our Argentine operation supports our Light Vehicle operating segment. Our sales in Argentina for the first nine months of 2025 of approximately $169 are 3% of our consolidated sales and our net asset exposure related to Argentina was approximately $58, including $20 of net fixed assets, at September 30, 2025. During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy. In assessing Argentina's economy as highly inflationary we considered its three-year cumulative inflation rate along with other factors. As a result, effective July 1, 2018, the U.S. dollar is the functional currency for our Argentine operations, rather than the Argentine peso. Beginning July 1, 2018, peso-denominated monetary assets and liabilities are remeasured into U.S. dollars using current Argentine peso exchange rates with resulting translation gains or losses included in results of operations. Nonmonetary assets and liabilities are remeasured into U.S. dollar using historic Argentine peso exchange rates. Commodity costs — The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important to us being those of various grades of steel, aluminum, copper, brass and rare earth materials. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings, batteries and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers based on the movement in various published commodity indexes. Where such formal agreements are not present, we have historically been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes. Higher year-over-year commodity prices decreased earnings during the first nine months of 2025 by $3. Material cost recovery pricing actions increased earnings in the first nine months of 2025 by $3. 27 Table of Contents Sales, Earnings and Cash Flow Outlook 2025 Outlook Sales ~$7,400 Adjusted EBITDA ~$590 Net cash provided by operating activities ~$600 Adjusted free cash flow ~$275 Adjusted EBITDA and adjusted free cash flow are non-GAAP financial measures. See the Non-GAAP Financial Measures discussion below for definitions of our non-GAAP financial measures and reconciliations to the most directly comparable U.S. generally accepted accounting principles (GAAP) measures. We have not provided a reconciliation of our adjusted EBITDA outlook to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance. In June 2025, we entered into a definitive agreement to sell our Off-Highway business to Allison Transmission Holdings, Inc. for $2,732. The sale price is subject to adjustment based on net working capital and net indebtedness balances as of the closing date. The transaction is currently expected to close during the fourth quarter of 2025, subject to satisfaction of regulatory approvals and other customary conditions. While the sale process continues to advance, there can be no assurance that it will result in a transaction. 28 Table of Contents Summary Consolidated Results of Operations (Third Quarter, 2025 versus 2024) Three Months Ended September 30, 2025 2024 Dollars % of Net Sales Dollars % of Net Sales Increase/ (Decrease) Net sales $ 1,917 $ 1,897 $ 20 Cost of sales 1,751 91.3 % 1,775 93.6 % (24 ) Gross margin 166 8.7 % 122 6.4 % 44 Selling, general and administrative expenses 87 4.5 % 106 5.6 % (19 ) Amortization of intangibles 2 2 — Restructuring charges, net 4 20 (16 ) Loss on disposal group previously held for sale 4 (4 ) Other income (expense), net (20 ) (6 ) (14 ) Earnings (loss) from continuing operations before interest and income taxes 53 (8 ) 61 Interest income 3 5 (2 ) Interest expense 47 38 9 Income (loss) from continuing operations before income taxes 9 (41 ) 50 Income tax benefit (2 ) (18 ) 16 Equity in earnings of affiliates 2 2 — Net income (loss) from continuing operations 13 (21 ) 34 Net income from discontinued operations 74 32 42 Net income 87 11 76 Less: Noncontrolling interests net income from continuing operations 4 7 (3 ) Net income attributable to the parent company $ 83 $ 4 $ 79 Sales — The following table shows changes in our sales by geographic region. Three Months Ended September 30, Amount of Change Due To 2025 2024 Increase/ (Decrease) Currency Effects Divestiture Organic Change North America $ 1,189 $ 1,119 $ 70 $ (1 ) $ — $ 71 Europe 357 362 (5 ) 18 (23 ) South America 178 189 (11 ) 3 (14 ) Asia Pacific 193 227 (34 ) 1 (35 ) Total $ 1,917 $ 1,897 $ 20 $ 21 $ — $ (1 ) Sales in the third quarter of 2025 were $20 higher than 2024. Stronger international currencies increased sales by $21, principally due to a stronger euro, Thai baht and Brazilian real, partially offset by a weaker India rupee. The organic sales decrease of $1 primarily resulted from lower medium/heavy-truck production volumes in North America and South America and lower electric-vehicle product orders in Europe and Asia Pacific, partially offset by higher full-frame light-truck production volumes in North America and the conversion of sales backlog. Pricing actions and recoveries, including material commodity and tariff and inflationary cost adjustments, increased sales by $65. The North America organic sales increase of 6% was driven principally by higher full-frame light-truck production volumes, the conversion of sales backlog and net customer pricing and tariff and cost recovery actions, partially offset by lower medium- and heavy-truck production volumes. Third quarter 2025 full-frame light-truck production was up 6%, while Class 8 and Classes 5-7 production were down 28% and 23%, respectively. Excluding currency effects, sales in Europe were down 6% compared to 2024, reflecting lower electric-vehicle product orders. Excluding currency effects, sales in South America were down 7% compared to 2024, reflecting lower medium/heavy-truck production. Excluding currency effects, sales in Asia Pacific decreased 15% reflecting lower electric vehicle-related product orders. 29 Table of Contents Cost of sales and gross margin — Cost of sales for the third quarter of 2025 decreased $24 when compared to 2024. Cost of sales as a percent of sales was 230 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $66, higher material cost savings of $25, operational efficiencies of $10, lower premium freight costs of $6 and lower warranty expense of $3 were partially offset by unfavorable product mix, tariff-related impacts of $50, non-material inflation of $32, commodity cost increases of $7 and higher incentive compensation expense of $2. Commodity costs are primarily driven by certain grades of steel and aluminum. Non-material inflation includes higher labor, energy and transportation rates. Gross margin of $166 for the third quarter of 2025 increased $44 from 2024. Gross margin as a percent of sales was 8.7% in the third quarter of 2025, 230 basis points higher than in 2024. The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above. Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days. The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries. Selling, general and administrative expenses (SG&A) — SG&A expenses in the third quarter of 2025 were $87 (4.5% of sales) as compared to $106 (5.6% of sales) in the third quarter of 2024. SG&A expenses were $19 lower in the third quarter of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024. Amortization of intangibles — Amortization expense was $2 in both the third quarter of 2025 and the third quarter of 2024. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information. Restructuring charges, net — Net restructuring charges were $4 in the third quarter of 2025 and $20 in the third quarter of 2024. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information. Loss on disposal group previously held for sale — In February 2024, we entered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l. We classified the disposal group as held for sale in the first quarter of 2024. The transaction was not completed by the date set forth in the definitive agreement. The disposal group is no longer held for sale. See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information. Other income (expense), net — The following table shows the major components of other income (expense), net. Three Months Ended September 30, 2025 2024 Non-service cost components of pension and OPEB costs $ (3 ) $ (5 ) Government assistance 1 Foreign exchange gain (loss) (5 ) (3 ) Strategic transaction expenses (6 ) 2 Gain on sale of property, plant and equipment (1 ) 1 Other, net (6 ) (1 ) Other income (expense), net $ (20 ) $ (6 ) Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. During the third quarter of 2024, we received a transaction break fee related to the failed sale of our European hydraulics business to HPIH S.à.r.l. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information. Interest income and interest expense — Interest income was $3 in the third quarter of 2025 and $5 in the third quarter of 2024. Interest expense increased from $38 in the third quarter of 2024 to $47 in the third quarter of 2025, reflecting higher average outstanding borrowings partially offset by lower average interest rates. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.4% in the third quarter of 2025 and 5.7% in the third quarter of 2024. Income tax benefit — We reported income tax benefit of $2 and $18 for the third quarter of 2025 and 2024, respectively. Our effective tax rates were (22)% and 44% for the third quarter of 2025 and 2024, respectively. During the third quarter of 2025, we recorded tax benefit of $27 resulting from the release of valuation allowance on certain U.S. federal attributes and $6 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions. During the third quarter of 2024, we recorded tax expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses. Equity in earnings of affiliates — Net earnings from equity investments was $2 in both the third quarter of 2025 and the third quarter of 2024. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $1 in the third quarter of 2025 and de minimis in the third quarter of 2024. See Note 20 of our consolidated financial statements in Item 1 of Part I for additional information. Net income from discontinued operations — Net income from discontinued operations in the third quarter of 2025 was $42 higher than the third quarter of 2024. The year-over-year increase was primarily due to higher sales resulting from improving global construction/mining equipment and agricultural equipment markets, especially in Europe, and lower year-over-year income tax expense, partially offset by Off-Highway business divesture related costs incurred during the third quarter of 2025. During the third quarter of 2025, $20 of Off-Highway business divesture transaction related costs were attributed to discontinued operations. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information. 30 Table of Contents Summary Consolidated Results of Operations (Year-to-Date, 2025 versus 2024) Nine Months Ended September 30, 2025 2024 Dollars % of Net Sales Dollars % of Net Sales Increase/ (Decrease) Net sales $ 5,633 $ 5,960 $ (327 ) Cost of sales 5,211 92.5 % 5,609 94.1 % (398 ) Gross margin 422 7.5 % 351 5.9 % 71 Selling, general and administrative expenses 291 5.2 % 328 5.5 % (37 ) Amortization of intangibles 6 6 — Restructuring charges, net 17 36 (19 ) Loss on disposal group previously held for sale (26 ) 26 Other income (expense), net (31 ) (14 ) (17 ) Earnings (loss) from continuing operations before interest and income taxes 77 (59 ) 136 Interest income 8 9 (1 ) Interest expense 130 117 13 Loss from continuing operations before income taxes (45 ) (167 ) 122 Income tax benefit (2 ) (13 ) 11 Equity in earnings of affiliates 27 7 20 Net loss from continuing operations (16 ) (147 ) 131 Net income from discontinued operations 164 174 (10 ) Net income 148 27 121 Less: Noncontrolling interests net income from continuing operations 13 17 (4 ) Less: Redeemable noncontrolling interests net loss from continuing operations — (13 ) 13 Net income attributable to the parent company $ 135 $ 23 $ 112 Sales — The following table shows changes in our sales by geographic region. Nine Months Ended September 30, Amount of Change Due To 2025 2024 Increase/ (Decrease) Currency Effects (Divestitures) Organic Change North America $ 3,394 $ 3,622 $ (228 ) $ (8 ) $ — $ (220 ) Europe 1,104 1,134 (30 ) 25 (55 ) South America 516 553 (37 ) (25 ) (12 ) Asia Pacific 619 651 (32 ) 5 $ (1 ) (36 ) Total $ 5,633 $ 5,960 $ (327 ) $ (3 ) $ (1 ) $ (323 ) Sales in the first nine months of 2025 were $327 lower than 2024. Weaker international currencies decreased sales by $3, principally due to a weaker Brazilian real, Indian rupee, Mexican peso and Canadian dollar, partially offset by a stronger euro, Thai baht and South Africa rand. The organic sales decrease of $323, or 5%, primarily resulted from lower full-frame light-truck production volumes in North America and lower medium/heavy-truck production volumes in North America, South America and Europe, partially offset by the conversion of sales backlog. Pricing actions and recoveries, including material commodity price and tariff and inflationary costs adjustments, increased sales by $142. The North America organic sales decrease of 6% was driven principally by lower full-frame light-truck and medium- and heavy-truck production volumes, partially offset by the conversion of sales backlog and net customer pricing and tariff and cost recovery actions. First nine months 2025 full-frame light-truck production was down 2%, Class 8 production was down 21% and Classes 5-7 was down 25% compared to 2024. Excluding currency effects, sales in Europe were down 5% compared with 2024, reflecting lower electric-vehicle product orders. Excluding currency effects, sales in South America were down 2% compared to 2024, reflecting lower medium/heavy-duty production volumes. Excluding currency effects, sales in Asia Pacific were down 6% compared to 2024, reflecting lower electric-vehicle related production orders, partially offset by modestly improving medium/heavy-truck production volumes. 31 Table of Contents Cost of sales and gross margin — Cost of sales for the nine months of 2025 decreased $398 when compared to 2024. Cost of sales as a percent of sales was 160 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $156, higher material cost savings of $68, operational efficiencies of $31, lower premium freight costs of $16 and lower warranty expense of $5 were partially offset by unfavorable product mix, tariff-related impacts of $97, non-material inflation of $89, higher spending on electrification initiatives of $4, commodity cost increases of $3 and higher incentive compensation expense of $3. Commodity costs are primarily driven by certain grades of steel and aluminum. Non-material inflation includes higher labor, energy and transportation rates. Gross margin of $422 for first nine months of 2025 increased $71 from 2024. Gross margin as a percent of sales was 7.5% in the first nine months of 2025, 160 basis points higher than in 2024. The improvement in gross margin as a percent of sales was driven principally by the cost of sales factors referenced above. Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days. The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries. Selling, general and administrative expenses (SG&A) — SG&A expenses in the first nine months of 2025 were $291 (5.2% of sales) as compared to $328 (5.5% of sales) in the first nine months of 2024. SG&A expenses were $37 lower in the first nine months of 2025 primarily due to lower salary and employee benefit costs and lower travel and discretionary spending, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024. Amortization of intangibles — Amortization expense was $6 in both the first nine months of 2025 and the first nine months of 2024. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information. Restructuring charges, net — Net restructuring charges were $17 in the first nine months of 2025 and $36 in the first nine months of 2024. See Note 5 of our consolidated financial statements in Item 1 of Part I for additional information. Loss on disposal group previously held for sale — In February 2024, we entered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l. We classified the disposal group as held for sale in the first quarter of 2024. The transaction was not completed by the date set forth in the definitive agreement. The disposal group is no longer held for sale. See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information. Other income (expense), net — The following table shows the major components of other income (expense), net. Nine Months Ended September 30, 2025 2024 Non-service cost components of pension and OPEB costs $ (7 ) $ (12 ) Government assistance 5 4 Foreign exchange gain (loss) (11 ) (9 ) Strategic transaction expenses (12 ) (2 ) Loss on divestiture of ownership interests (7 ) Other, net 1 5 Other income (expense), net $ (31 ) $ (14 ) Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. During the third quarter of 2024, we received a transaction break fee related to the failed sale of our European hydraulics business to HPIH S.à.r.l. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited, recognizing an $8 pre-tax loss on the transaction. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information. Interest income and interest expense — Interest income was $8 in the first nine months of 2025 and $9 in the first nine months of 2024. Interest expense increased from $117 in the first nine months of 2024 to $130 in the first nine months of 2025, reflecting higher average outstanding borrowings in 2025 being partially offset by lower average interest rates. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.4% in the first nine months of 2025 and 5.7% in the first nine months of 2024. Income tax benefit — We reported income tax benefit of $2 and $13 for the first nine months of 2025 and 2024, respectively. Our effective tax rates were 4% and 8% for the first nine months of 2025 and 2024, respectively. During the first nine months of 2025, we recorded a tax benefit of $27 to release valuation allowance on certain U.S. federal attributes, $19 of tax benefit due to a basis difference in a foreign subsidiary as a result of a change in tax status, $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions, $6 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions and expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment. During the first nine months of 2024, we recorded tax expense of $11 for valuation allowances related to foreign jurisdictions and expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release and adjustment of valuation allowances in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of nondeductible expenses. Equity in earnings of affiliates — Net earnings from equity investments was $27 in the first nine months of 2025 and $7 in the first nine months of 2024. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $5 in the first nine months of 2025 and $1 in the first nine months of 2024. On April 25, 2025, we sold our ownership interest in Axles India Limited, recognizing a $19 pre-tax gain on the transaction. See Note 20 of our consolidated financial statements in Item 1 of Part I for additional information. Net income from discontinued operations — Net income from discontinued operations for the first nine months of 2025 was $10 lower than the first nine months of 2024. The year-over-year decrease was primarily due to lower sales resulting from weaker global construction/mining equipment and agricultural equipment markets, especially in Europe, and Off-Highway business divesture related costs incurred during 2025, partially offset by lower year-over-year income tax expense. Year-over-year construction/mining equipment and agricultural equipment production in Europe were down 8% and 5%, respectively. During the first nine months of 2025, $54 of Off-Highway business divesture transaction related costs were attributed to discontinued operations. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information. 32 Table of Contents Segment Results of Operations (2025 versus 2024) Light Vehicle Three Months Nine Months Sales Segment EBITDA Segment EBITDA Margin Sales Segment EBITDA Segment EBITDA Margin 2024 $ 1,285 $ 82 6.4 % $ 4,049 $ 250 6.2 % Volume and mix 6 (19 ) (267 ) (86 ) Divestitures (1 ) Performance 54 63 109 141 Currency effects 8 11 1 2025 $ 1,353 $ 126 9.3 % $ 3,901 $ 306 7.8 % Light Vehicle sales in the third quarter of 2025, exclusive of currency effects, were 5% higher than 2024 reflecting higher production volumes in North America, the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog, partially offset by lower electric-vehicle product orders in Europe and Asia Pacific. Year-over-year North America full-frame light-truck production increased 6% and light-truck production in Asia Pacific increased 5%. Light-truck production in Europe was flat compared with last year’s third quarter. Light Vehicle sales in the first nine months of 2025, exclusive of divestiture and currency effects, were 4% lower than 2024 reflecting lower production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific partially offset by the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog. Year-over-year North America full-frame light-truck production decreased 2% in this year’s first nine months while light-truck production in Asia Pacific and Europe increased 8% and 2%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $54 and $109 in this year’s third quarter and first nine months, respectively. Light Vehicle third quarter and first nine months 2025 segment EBITDA increased $44 and $56, respectively, from the comparable periods of 2024. The EBITDA benefit of higher sales volumes was offset by unfavorable product mix in the third quarter of 2025. Lower sales volumes decreased year-over-year earnings by $86 (32% decremental margin) in the first nine months of 2025. The year-over-year performance-related earnings increase in the third quarter of 2025 was driven by net customer pricing and cost and tariff recovery actions of $54, cost reduction initiatives of $35, higher material cost savings of $18, lower premium freight costs of $3 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $26. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $41, inflationary cost increases of $25, commodity cost increases of $5, higher incentive compensation expense of $1 and higher warranty expense of $1. The year-over-year performance-related earnings increase in the first nine months of 2025 was driven by net customer pricing and cost and tariff recovery actions of $109, cost reduction initiatives of $74, higher material cost savings of $46, lower premium freight costs of $9, commodity cost decreases of $1, lower incentive compensation expense of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $51. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $77, inflationary cost increases of $69, higher warranty expense of $3 and higher program launch costs of $1. Commercial Vehicle Three Months Nine Months Sales Segment EBITDA Segment EBITDA Margin Sales Segment EBITDA Segment EBITDA Margin 2024 $ 612 $ 45 7.4 % $ 1,911 $ 117 6.1 % Volume and mix (72 ) (16 ) (198 ) (58 ) Performance 11 20 33 80 Currency effects 13 2 (14 ) 2025 $ 564 $ 51 9.0 % $ 1,732 $ 139 8.0 % Commercial Vehicle sales in the third quarter of 2025, exclusive of currency effects, were 10% lower than 2024 reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions. Year-over-year Class 8 production in North America was down 28% while Classes 5-7 was down 23% in this year’s third quarter. Year-over-year medium/heavy-truck production in South America was down 16% while production in Europe was up 9% in this year’s third quarter. Commercial Vehicle sales in the first nine months of 2025, exclusive of currency effects, were 9% lower than 2024, reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions. Year-over-year Class 8 production in North America was down 21% while Classes 5-7 was down 25% in this year’s first nine months. Year-over-year medium/heavy truck production in Europe and South America were down 1% and 4%, respectively. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $11 and $33 in this year’s third quarter and first nine months, respectively. Commercial Vehicle third quarter and first nine months 2025 segment EBITDA increased $6 and $22, respectively, from the comparable periods of 2025. Lower sales volumes decreased year-over-year earnings by $16 (22% decremental margin) in the third quarter of 2025. Lower sales volumes decreased year-over-year earnings by $58 (29% decremental margin) in the first nine months of 2025. The year-over-year performance-related earnings increase in the third quarter of 2025 was driven by cost reduction initiatives of $17, net customer pricing and cost and tariff recovery actions of $11, higher material cost savings of $7, lower warranty expense of $4 and lower premium freight costs of $3. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $9, inflationary cost increases of $8, commodity cost increases of $2 and operational inefficiencies of $3, inclusive of lower corporate allocations resulting from cost reduction initiatives. The year-over-year performance-related earnings increase in the first nine months of 2025 was driven by cost reduction initiatives of $38, net customer pricing and cost and tariff recovery actions of $33, higher material costs savings of $22, lower warranty expense of $8, lower premium freight costs of $7, lower program launch costs of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $24. Partially offsetting these performance-related earnings increases were inflationary cost increases of $24, higher tariff-related costs of $20, higher spending on electrification initiatives of $4, commodity cost increases of $4 and higher incentive compensation expense of $1. 33 Table of Contents Non-GAAP Financial Measures Adjusted EBITDA We have defined adjusted EBITDA as net income (loss) from continuing operations before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefits (OPEB) costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The following table provides a reconciliation of net income (loss) from continuing operations to adjusted EBITDA. Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net income (loss) from continuing operations $ 13 $ (21 ) $ (16 ) $ (147 ) Equity in earnings of affiliates 2 2 27 7 Income tax benefit (2 ) (18 ) (2 ) (13 ) Income (loss) from continuing operations before income taxes 9 (41 ) (45 ) (167 ) Depreciation and amortization 89 86 266 263 Restructuring charges, net 4 20 17 36 Interest expense, net 44 33 122 108 Loss on divestiture of ownership interests 7 Supplier capacity charge adjustment (2 ) (21 ) Loss on disposal group previously held for sale (4 ) 26 Other* 18 17 56 45 Adjusted EBITDA $ 162 $ 111 $ 402 $ 311 * Other includes stock compensation expense, non-service cost components of pension and OPEB costs, strategic transaction expenses and other items. See Note 19 to our consolidated financial statements in Item 1 of Part I for additional details. Adjusted Free Cash Flow We have defined adjusted free cash flow as cash provided by (used in) operating activities less purchases of property, plant and equipment plus proceeds from sale of property, plant and equipment plus cash paid for Off-Highway business divestiture related activities. We believe adjusted free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Adjusted free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP. Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies. The following table reconciles net cash flows provided by (used in) operating activities to adjusted free cash flow. Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net cash provided by (used in) operating activities $ 111 $ 35 $ 106 $ 148 Purchases of property, plant and equipment - Continuing operations (49 ) (37 ) (153 ) (198 ) Purchases of property, plant and equipment - Discontinued operations (11 ) (9 ) (33 ) (29 ) Proceeds from sale of property, plant and equipment - Continuing operations 1 3 12 3 Proceeds from sale of property, plant and equipment - Discontinued operations 4 Cash paid for Off-Highway business divestiture related activities 49 61 Adjusted free cash flow $ 101 $ (8 ) $ (7 ) $ (72 ) 34 Table of Contents Liquidity The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at September 30, 2025: Cash and cash equivalents $ 414 Additional cash availability from Revolving Facility 765 Total liquidity $ 1,179 We had availability of $765 at September 30, 2025 under our Revolving Facility after deducting $375 of outstanding borrowings and $10 of outstanding letters of credit. The components of our September 30, 2025 consolidated cash balance were as follows: U.S. Non-U.S. Total Cash and cash equivalents $ — $ 333 $ 333 Cash and cash equivalents held at less than wholly-owned subsidiaries 1 80 81 Consolidated cash balance $ 1 $ 413 $ 414 A portion of the non-U.S. cash and cash equivalents is utilized for working capital and other operating purposes. Several countries have local regulatory requirements that restrict the ability of our operations to repatriate this cash. Beyond these restrictions, there are practical limitations on repatriation of cash from certain subsidiaries because of the resulting tax withholdings and subsidiary by-law restrictions which could limit our ability to access cash and other assets. At September 30, 2025, we were in compliance with the covenants of our financing agreements. Under the Revolving Facility and our senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types. The incurrence-based covenants in the Revolving Facility permit us to, among other things, (i) issue foreign subsidiary indebtedness, (ii) incur general secured indebtedness subject to a pro forma first lien net leverage ratio not to exceed 1.50:1.00 in the case of first lien debt and a pro forma secured net leverage ratio of 2.50:1.00 in the case of other secured debt and (iii) incur additional unsecured debt subject to a pro forma total net leverage ratio not to exceed 3.50:1.00, tested at the time of incurrence. We may also make dividend payments in respect of our common stock as well as certain investments and acquisitions subject to a pro forma total net leverage ratio of 2.75:1.00. In addition, the Revolving Facility is subject to a financial covenant requiring us to maintain a first lien net leverage ratio not to exceed 2.00:1.00. The indentures governing the senior notes include other incurrence-based covenants that may subject us to additional specified limitations. From time to time, depending upon market, pricing and other conditions, as well as our cash balances and liquidity, we may seek to acquire our senior notes or other indebtedness through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine (or as may be provided for in the indentures governing the notes), for cash, securities or other consideration. In addition, we may enter into sale-leaseback transactions related to certain of our real estate holdings and factor receivables. There can be no assurance that we will pursue any such transactions in the future, as the pursuit of any alternative will depend upon numerous factors such as market conditions, our financial performance and the limitations applicable to such transactions under our financing and governance documents. In June 2025, we entered into a definitive agreement to sell our Off-Highway business to Allison Transmission Holdings, Inc. for $2,732. The sale price is subject to adjustment based on net working capital and net indebtedness balances as of the closing date. The transaction is currently expected to close during the fourth quarter of 2025, subject to satisfaction of regulatory approvals and other customary conditions. Net cash proceeds from the Off-Highway business divestiture will be used to pay down debt, strengthening Dana’s financial position, and provide capital returns to shareholders. 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 July 31, 2025, we amended our credit and guaranty agreement to include a $250 Term A Facility. The Term A Facility matures at the earlier of five days after the consummation of the Off-Highway business sale or July 30, 2026. We are required to make quarterly installments on the Term A facility on the last day of each quarter commencing on December 31, 2025 in an amount equal to 10% of the original amount borrowed adjusted for any prepayments. On July 31, 2025, we fully drew the Term A Facility and used the proceeds to pay down outstanding borrowings on our Revolving Facility. See Note 12 of our consolidated financial statements in Item 1 of Part I for additional information The principal sources of liquidity available for our future cash requirements are expected to be (i) cash flows from operations, (ii) cash and cash equivalents on hand, (iii) borrowings from our Revolving Facility and (iv) net cash proceeds from the sale of the Off-Highway business. We believe that our overall liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working capital, debt obligations and other commitments during the next twelve months. While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity. 35 Table of Contents Cash Flow The following table summarizes our consolidated statement of cash flows: Nine Months Ended September 30, 2025 2024 Net cash provided by (used in) operating activities $ 106 $ 148 Net cash used in investing activities (130 ) (205 ) Net cash used in financing activities (111 ) (56 ) Net decrease in cash, cash equivalents and restricted cash $ (135 ) $ (113 ) Operating activities — Exclusive of working capital, other cash provided by continuing operations was $153 in 2025 and $175 in 2024. Continuing operations working capital used cash of $212 and $219 in 2025 and 2024. Cash of $219 and $112 was used to finance receivables in 2025 and 2024. Cash of $18 and $71 was used to fund higher inventory levels in 2025 and 2024. Increases in accounts payable and other net liabilities provided cash of $25 in 2025 while decreases in accounts payable and other net liabilities used cash of $36 in 2024. Operating activities of discontinued operations generated cash of $165 and $192 in 2025 and 2024. Investing activities — Expenditures for property, plant and equipment by continuing operations were $153 and $198 in 2025 and 2024. The decrease in capital spending during 2025 is primarily due to lower year-over-year program launches and a continued focus on rationalizing capital investments. On April 25, 2025, we sold our ownership interest in Axles India Limited for $43. On June 6, 2025, we sold our ownership interest in Switch Mobility Limited for $10. Investing activities of discontinued operations used cash of $31 and $7 in 2025 and 2024. Financing activities — During 2025, we had net borrowings on our Revolving Facility of $375. During 2025, we drew $250 on our Term A Facility. During 2025, we redeemed the remaining $200 of our April 2025 Notes. During 2024, we paid the $25 note payable due to the former owners of SME S.p.A. We used cash of $42 and $43 for dividend payments to common stockholders during 2025 and 2024, respectively. Distributions to noncontrolling interests totaled $14 in 2025 and $17 in 2024. During 2025, we used cash of $439 to repurchase common shares under our share repurchase program. During 2025, we used cash of $14 to settle swaps associated with our April 2025 Notes. Hydro-Québec made cash contributions to Dana TM4 of $18 in 2024. During 2024, we received $11 from Hydro-Québec, which represents deferred purchase consideration associated with their acquisition of a 45% ownership interest in SME S.p.A. from Dana. 36 Table of Contents Off-Balance Sheet Arrangements There have been no material changes at September 30, 2025 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 2024 Form 10-K. Contractual Obligations There have been no material changes in our contractual obligations from those disclosed in Item 7 of our 2024 From 10-K. Contingencies For a summary of litigation and other contingencies, see Note 14 to our consolidated financial statements in Item 1 of Part I. Based on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued that may result from these contingencies will have a material adverse effect on our liquidity, financial condition or results of operations. Critical Accounting Estimates 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 2024 Form 10-K for a description of our critical accounting estimates and Note 1 to our consolidated financial statements in Item 8 of our 2024 Form 10-K for our significant accounting policies. There were no changes to our critical accounting estimates in the nine months ended September 30, 2025. See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first nine months of 2025. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to market risk exposures related to changes in currency exchange rates, interest rates or commodity costs from those discussed in Item 7A of our 2024 Form 10-K.