What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-20 · 242 added, 163 removed, 327 unchanged (55% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions)

Discussion and analysis of our results of operations pertaining to 2023 compared to 2022 not included in this Form 10-K can be found in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2023.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes in Item 8.

Management Overview

We are a global provider of high-technology products to virtually every major vehicle manufacturer in the world.

We also serve the stationary industrial market.

Our technologies include drive systems (axles, driveshafts, transmissions, and wheel and track drives);

motion systems (winches, slew drives, and hub drives);

We are a global provider of high-technology products to virtually every major on-highway vehicle manufacturer in the world.

Our technologies include drive systems (axles, driveshafts and transmissions);

electrodynamic technologies (motors, inverters, software and control systems, battery-management systems, and fuel cell plates);

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and digital solutions (active and passive system controls and descriptive and predictive analytics).

We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four business units – Light Vehicle Drive Systems (Light Vehicle), Commercial Vehicle Drive and Motion Systems (Commercial Vehicle), Off-Highway Drive and Motion Systems (Off-Highway) and Power Technologies, which is the center of excellence for sealing and thermal-management technologies that span all customers in our on-highway and off-highway markets.

We serve our global light vehicle and medium/heavy vehicle markets through two business units – Light Vehicle Drive Systems (Light Vehicle) and Commercial Vehicle Drive and Motion Systems (Commercial Vehicle).

We have a diverse customer base and geographic footprint which minimizes our exposure to individual market and segment declines.

In 2025, 60% of our sales came from North American operations and 40% from operations throughout the rest of the world.

Our sales by operating segment were Light Vehicle – 41%, Commercial Vehicle – 19%, Off-Highway – 27% and Power Technologies – 13%.

Our sales by operating segment were Light Vehicle – 70% and Commercial Vehicle – 30%.

Operational and Strategic Initiatives

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Our customer-centric focus has uniquely positioned us to win more than our fair share of new business and capitalize on future customer outsourcing initiatives.

Dana has embarked on a strategic plan to focus on core on-highway markets and accelerate value creation by improving its cost structure, increasing its efficiency, and creating a more focused and nimble Dana through the planned divestiture of our Off-Highway business.

Capital Structure Initiatives

In addition to investing in our business, we plan to prioritize a balanced allocation of capital while maintaining a strong balance sheet.

Shareholder return initiatives — When evaluating capital structure initiatives, we balance our growth opportunities with maintaining a strong balance sheet and returning capital to shareholders via dividends and share repurchases.

Except for three quarters in 2020, when we temporarily suspended dividends to common shareholders in response to the global COVID pandemic, we have paid quarterly dividends to our common shareholders since the first quarter of 2012.

We also utilize share repurchases to provide returns to our shareholders.

We repurchased $25 common shares in 2022.

Financing initiatives — Our current portfolio of unsecured senior notes is structured such that no more than $440 of senior notes comes due in any calendar year, with no maturities until the second quarter of 2025.

In addition, during 2023 we extended the maturity of our $1,150 revolving credit facility to March 2028.

See Note 12 to our consolidated financial statements in Item 8 for additional information.

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 $325 through 2026.

Approximately $260 of annualized savings was realized through 2025 with an additional $65 to be realized in 2026.

See Summary of Consolidated Results and Segment Results of Operations in Item 7 and Note 4 of our consolidated financial statements in Item 8 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 Vehicles 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 20 of our consolidated financial statements in Item 8 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 divestiture of our Off-Highway business.

In June 2025, we entered into a definitive agreement to sell our Off-Highway business to Allison Transmission Holdings, Inc.

We analyzed the quantitative and qualitative factors relevant to the pending divestiture of our Off-Highway business and determined that the conditions for discontinued operations presentation have been met.

As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements.

Prior period amounts have been recast to reflect discontinued operations presentation.

See Note 1 and Note 2 of our consolidated financial statements in Item 8 for additional information.

The transaction closed on January 1, 2026, with Dana receiving initial cash proceeds of $2,664.

The sale price is subject to adjustment based on net working capital and net indebtedness balances as of the closing date.

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 January 7, 2026, we purchased, via a net proceeds tender offer, $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes at prices equal to 100.00% plus accrued and unpaid interest.

On January 8, 2026, we redeemed the remaining $262 of our November 2027 Notes and the remaining $258 of our June 2028 Notes at prices equal to 100.00% plus accrued and unpaid interest.

In addition, on January 2, 2026, we repaid the $225 outstanding balance on the Term A Facility.

See Note 13 of our consolidated financial statements in Item 8 for additional information.

On June 8, 2025, Dana’s board of directors approved a program to provide up to a $1,000 return of capital to shareholders through common stock share repurchases and/or special dividends through the end of 2027.

On February 11, 2026, Dana's board of directors increased and extended the share repurchase program to a total of $2,000 through the end of 2030.

Through January 31, 2026, we have spent $750 to repurchase 37,943,413 shares under the approved stock repurchase program.

See Note 8 of our consolidated financial statements in Item 8 for additional information.

Other Initiatives

Aftermarket opportunities — We have a global group dedicated to identifying and developing aftermarket growth opportunities that leverage the capabilities within our existing businesses – targeting increased future aftermarket sales.

Powered by recognized brands such as Dana®, Spicer®, Spicer Electrified™, Victor Reinz®, Glaser®, GWB®, Thompson®, Tru-Cool®, SVL®, and Transejes™, Dana delivers a broad range of aftermarket solutions – including genuine, all makes, and value lines – servicing passenger, commercial and off-highway vehicles across the globe.

Selective acquisitions — Although transformational opportunities will be considered when strategically and economically attractive, our acquisition focus is principally directed at “bolt-on” or adjacent acquisition opportunities that have a strategic fit with our existing core businesses, particularly opportunities that support our enterprise strategy and enhance the value proposition of our product offerings.

Any potential acquisition will be evaluated in the same manner we currently consider customer program opportunities and other uses of capital – with a disciplined financial approach designed to ensure profitable growth and increased shareholder value.

Through December 2024, we managed our operations globally through four operating segments.

Our Light Vehicle and Power Technologies segments primarily support light vehicle original equipment manufacturers (OEMs) with products for light trucks, SUVs, CUVs, vans and passenger cars.

Our Commercial Vehicle segment supports the OEMs of on-highway commercial vehicles (primarily trucks and buses), while our Off-Highway segment supports 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 will be 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 will be integrated into our Light Vehicle segment while the aftermarket business will be integrated into our Commercial Vehicle segment.

Trends in Our Markets

We serve our customers in three core global end markets:

We serve our customers in two core global end markets:

light vehicle, primarily full frame trucks and SUVs;

commercial vehicle, including medium-and heavy-duty trucks and busses;

and off-highway, including construction, mining, and agriculture equipment.

and commercial vehicle, including medium-and heavy-duty trucks and busses.

Each of our end-markets has unique cyclical dynamics and market drivers.

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cost and availability of end customer financing;

industrial output;

commodity production and pricing;

and residential and nonresidential construction rates.

and industrial output.

Our multi-market coverage and broad customer base help provide stability across the cycles while mitigating secular variability.

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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 production being relatively stable across all regions in comparison with the prior year.

During 2025, light-truck markets showed marginal improvement across all regions except North America, which was flat compared to 2024.

The outlook for 2026 reflects global light-truck production being relatively stable in North America and Asia Pacific, while Europe and South America reflect marginal improvement, in comparison with the prior year.

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 moderate 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 modest decrease in production from the prior year.

Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, decreased 5% in 2024.

During 2025, production of Class-8 and Classes 5-7 trucks in North America both decreased 23% compared to 2024.

The outlook for 2026 is for a moderate increase in production of Classes 5-7 trucks and continued deterioration in Class-8 truck production compared to the prior year.

Outside of North America, production of medium- and heavy-duty trucks in South America decreased 7% compared to 2024, reflecting relatively stable economic conditions in the region.

The 2026 outlook for South America reflects medium- and heavy-duty production being relatively flat compared to the prior year.

Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, increased 12% in 2024.

The 2026 outlook for Asia Pacific is for a modest increase in production from the prior year.

Off-highway markets — Our off-highway business has a large presence outside of North America, with 65% of its 2024 sales coming from products manufactured in Europe;

however, a large portion of these products are utilized in vehicle production outside the region.

The construction equipment segment of the off-highway market is closely related to global economic growth and infrastructure investment.

The global construction equipment market softened in 2024 with production declining 5% from 2023.

The outlook for 2025 is for continued market weakness, with moderate production declines in North America and Europe and relative stability in Asia Pacific compared to the prior year.

End-user investment in the mining equipment segment is driven by prices for commodity products produced by underground mining.

The global mining equipment market has been mostly stable over the past several years as industry participants have maintained vehicle inventory levels to match commodity output.

The outlook for 2025 is for a modest decline in global production from the prior year.

The agriculture equipment market is the third of our key off-highway segments.

Like the underground mining segment, investment in agriculture equipment is primarily driven by prices for farm commodities.

Farm commodity price decreases in 2024 spurred a 8% decrease in agriculture equipment production.

The outlook for 2025 is for a moderate decrease in global end-market demand relative to the prior year.

Foreign currency — With 43% of our 2025 sales coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations.

The euro zone countries and India accounted for 47% and 10% of our 2024 non-U.S.

sales, respectively, while Brazil and China accounted for 9% and 8%, respectively.

The euro zone countries and Brazil accounted for 32% and 13% of our 2025 non-U.S.

sales, respectively, while India, Thailand and China accounted for 9%, 8% and 7%, respectively.

Although sales in South Africa are less than 7% of our non-U.S.

sales, the rand has been volatile and significantly impacted sales from time to time.

International currencies weakened against the U.S.

dollar in 2024, decreasing 2024 sales by $49.

A weaker Brazilian real, Chinese renminbi and Indian rupee, were partially offset by a stronger euro.

International currencies strengthened against the U.S.

dollar in 2025, increasing 2025 sales by $28.

A stronger euro and Thai baht, were partially offset by a weaker Brazilian real and India rupee.

Argentina has experienced significant inflationary pressures the past several years, contributing to significant devaluation of its currency among other economic challenges.

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Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes.

Lower commodity prices increased year-over-year earnings by $13 in 2024.

Material recovery pricing actions decreased year-over-year earnings by $53 in 2024.

Higher commodity prices decreased year-over-year earnings by $19 in 2025.

Material recovery pricing actions increased year-over-year earnings by $19 in 2025.

Sales, Earnings and Cash Flow Outlook

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Adjusted EBITDA

$925 - $1,025

Net cash provided by operating activities

Purchases of property, plant and equipment

Free Cash Flow

Adjusted EBITDA and free cash flow are non-GAAP financial measures.

Adjusted Free Cash Flow

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.

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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.

On November 25, 2024, we announced that we are pursuing a sale of our Off-Highway business.

While the sale process continues to advance, there can be no assurance that it will result in a transaction.

Our 2025 outlook includes a full twelve months of operations for our Off-Highway business.

Our 2025 sales outlook is $9,525 to $10,025, reflecting declining global market demand and currency headwinds, partially offset by $150 of net new business backlog.

Based on our current sales and exchange rate outlook for 2025, we expect international currencies to be a modest headwind to sales primarily due to a weaker euro.

Our 2026 sales outlook is $7,300 to $7,700, reflecting declining global market demand, offset by $200 of net new business backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds.

Based on our current sales and exchange rate outlook for 2026, we expect international currencies to be a modest tailwind to sales primarily due to a stronger euro.

At sales levels in our current outlook for 2026, a 5% movement on the euro would impact our annual sales by approximately $135.

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At our current sales outlook for 2026, we expect full year 2026 adjusted EBITDA to approximate $750 to $850.

Adjusted EBITDA margin is expected to be 10.0% at the midpoint of our guidance range, a 140 basis-point improvement over 2024, reflecting the impact of significant cost savings actions and improved operational performance, partially offset by the impact of lower end-market demand and net material cost recoveries.

With commodity costs continuing to abate during 2025, Adjusted EBITDA margin will be negatively impacted by net material cost recoveries on both a dollar and percentage basis.

We expect to generate free cash flow of $225 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA, lower capital spending and improved working capital efficiency.

Adjusted EBITDA margin is expected to be 10.7% at the midpoint of our guidance range, a 260 basis-point improvement over 2025, reflecting the impact of significant cost savings actions, improved operational performance and favorable product mix, partially offset by the impact of lower end-market demand and net material cost recoveries.

We expect to generate free cash flow of $300 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA and lower income tax and interest payments, partially offset by higher capital spending.

Among our operational and strategic initiatives is continued focus on and investment in product technology – delivering products and technology that are key to bringing solutions to issues of paramount importance to our customers.

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We expect to realize $200 of our sales backlog in 2026, with incremental sales backlog of $300 and $250 being realized in 2027 and 2028, respectively.

Our sales backlog is primarily attributable to our on-highway end markets.

Consolidated Results of Operations

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Other income (expense), net

Earnings before interest and income taxes

Earnings (loss) before interest and income taxes

Interest income

Interest expense

Loss before income taxes

Income tax expense

Equity in earnings of affiliates

Net loss from continuing operations

Net income from discontinued operations

Net income (loss)

Noncontrolling interests net income from continuing operations

Redeemable noncontrolling interests net loss from continuing operations

Net income (loss) attributable to the parent company

Sales — The following table shows changes in our sales by geographic region.

Amount of Change Due To

North America

South America

Sales in 2025 were $234 lower than in 2024.

Stronger international currencies increased sales by $28, principally due to a stronger euro and Thai baht, partially offset by a weaker Brazilian real and Indian rupee.

The organic sales decrease of $257, or 3%, resulted primarily from lower full-frame light-truck production volumes in North America and lower medium/heavy-truck production volumes in North America and South America, 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 $202.

The North America organic sales decrease of 3% 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.

Full-frame light-truck production was down 1%, Class 8 production was down 23% and Classes 5-7 was down 23% compared to 2024.

Excluding currency effects, sales in Europe were down 3% compared with 2024, reflecting lower electric-vehicle product orders.

Excluding currency effects, sales in South America were down 5% compared to 2024, reflecting lower light-truck product orders and lower medium/heavy-duty production volumes.

Excluding currency effects, sales in Asia Pacific were down 4% compared to 2024, reflecting lower electric-vehicle related production orders, partially offset by modestly improving medium/heavy-truck production volumes.

Cost of sales and gross margin — Cost of sales decreased $458, or 6%, when compared to 2024.

Cost of sales as a percent of sales was 310 basis points lower than in the previous year.

Incremental margins from cost reduction initiatives of $223, higher material cost savings of $90, operational efficiencies of $53, lower premium freight costs of $22, lower spending on electrification initiatives of $7 and lower warranty expense of $2 were partially offset by unfavorable product mix, tariff-related impacts of $116, non-material inflation of $122, commodity cost increases of $19 and higher incentive compensation expense of $13.

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 $602 for 2025 increased $224 from 2024.

Gross margin as a percent of sales was 8.0% in 2025, 310 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 2025 were $387 (5.2% of sales) as compared to $429 (5.5% of sales) in 2024.

SG&A expenses were $42 lower in 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, partially offset by higher incentive compensation.

Amortization of intangibles — Amortization expense was $7 in 2025 and $8 in 2024.

See Note 3 of our consolidated financial statements in Item 8 for additional information.

Restructuring charges, net — Net restructuring charges were $23 in 2025 and $70 in 2024.

See Note 4 of our consolidated financial statements in Item 8 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, recognizing a $26 loss to adjust the carrying value of net assets to fair value less estimated costs to sell.

The transaction was not completed by the date set forth in the definitive agreement.

The assets of the European hydraulics business are no longer held for sale and have been reclassified as held and used at the lower of their adjusted carrying value or fair value at the date the held for sale criteria was no longer met.

Other income (expense), net — The following table shows the major components of other income (expense), net.

Non-service cost components of pension and OPEB costs

Government assistance

Foreign exchange gain (loss)

Strategic transaction expenses

Loss on sale of property, plant and equipment

Loss on divestiture of ownership interests

Impairment of electric vehicle program property, plant and equipment

Other income (expense), net

We continue to account for Argentina as a highly inflationary economy and remeasure the financial statements of our Argentine subsidiaries as if their functional currency was the U.S.

Continued devaluation of the Argentine peso was the primary driver of the foreign exchange loss in 2025 and 2024.

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives.

On June 6, 2025, we sold our ownership interest in Switch Mobility Limited, recognizing an $8 pre-tax loss on the transaction.

See Note 21 of our consolidated financial statements in Item 8 for additional information.

During the fourth quarter of 2025, we recorded an impairment charge associated with machinery and equipment, including construction in progress, of certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes.

Interest income and interest expense — Interest income was $10 in 2025 and $13 in 2024.

Interest expense increased from $158 in 2024 to $181 in 2025, due to higher average outstanding borrowings, partially offset by lower average interest rates.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.2% in 2025 and 5.8% in 2024.

Income tax expense — Income tax expense was $53 in 2025 and $31 in 2024.

During 2025, we recorded a tax benefit of $48 to release valuation allowance on certain U.S.

federal attributes, $7 of tax benefit due to 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 a foreign jurisdiction and $6 of tax expense resulting from the sale of Dana's ownership interest in an equity method investment.

During 2024, we recorded tax expense of $21 for valuation allowances related to foreign jurisdictions and tax expense of $11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions.

See Note 17 to our consolidated financial statements in Item 8 for additional information.

Equity in earnings of affiliates — Net earnings from equity investments were $32 in 2025 and $10 in 2024.

Net earnings from Dongfeng Dana Axle Co., Ltd.

(DDAC) were $9 in 2025 and $3 in 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 21 of our consolidated financial statements in Item 8 for additional information.

Summary Consolidated Results of Operations (2024 versus 2023)

Cost of sales

Selling, general and administrative expenses

Amortization of intangibles

Restructuring charges, net

Loss on disposal group previously held for sale

Other income (expense), net

Loss before interest and income taxes

Loss on extinguishment of debt

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Interest expense

Earnings before income taxes

Loss before income taxes

Income tax expense

Equity in earnings (loss) of affiliates

Net loss from continuing operations

Net income from discontinued operations

Net income (loss)

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Noncontrolling interests net income from continuing operations

Redeemable noncontrolling interests net loss from continuing operations

Net income (loss) attributable to the parent company

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South America

Sales in 2024 were $271 lower than in 2023.

Weaker international currencies decreased sales by $49, principally due to a weaker Brazilian real, Chinese renminbi and Indian rupee, partially offset by a stronger euro.

The organic sales decrease of $217, or 2%, resulted from declining global construction/mining and agricultural equipment markets, which were partially offset by having a full year of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of last year and the conversion of sales backlog.

Sales in 2024 were $121 higher than in 2023.

Weaker international currencies decreased sales by $42, principally due to a weaker Brazilian real, Indian rupee and Thai baht.

The organic sales increase of $163, or 2%, resulted from having a full year of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of 2023 and the conversion of sales backlog.

Pricing actions and recoveries, including material commodity price and inflationary cost adjustments, increased sales by $131.

The North America organic sales increase of 5% was driven principally by having a full year of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of last year, the conversion of sales backlog and net customer pricing and cost recovery actions.

Excluding currency effects, sales in Europe were down 12% compared with 2023.

With our significant Off-Highway presence in the region, weaker construction/mining and agricultural equipment markets were a major factor.

Organic sales in this operating segment were down 13% compared with 2023.

The North America organic sales increase of 6% was driven principally by having a full year of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of 2024, the conversion of sales backlog and net customer pricing and cost recovery actions.

Excluding currency effects, sales in Europe were down 5% compared with 2023, reflecting lower electric vehicle related product sales.

Excluding currency effects, sales in South America were up 14% compared with 2023, reflecting improved medium- and heavy-duty truck production volumes.

Excluding currency effects, sales in Asia Pacific decreased 10% compared to 2023, reflecting lower electric vehicle related product sales.

Cost of sales and gross margin — Cost of sales for 2024 decreased $247, or 3%, when compared to 2023.

Cost of sales as a percent of sales was flat with the previous year.

Incremental margins resulting from higher material cost savings of $132, operational efficiencies of $72, lower premium freight costs of $32, lower incentive compensation expense of $16, lower commodity costs of $13, lower program launch costs of $9 and lower spending on electrification initiatives of $5 were offset by unfavorable product mix, non-material inflation of $165 and higher warranty expense of $5.

Cost of sales and gross margin — Cost of sales for 2024 increased $120, or 2%, when compared to 2023.

Cost of sales as a percent of sales was 10 basis points hihger than in the previous year.

Incremental margins resulting from higher material cost savings of $90, lower premium freight costs of $26, lower incentive compensation expense of $15, lower program launch costs of $11 and lower spending on electrification initiatives of $5, were partially offset by unfavorable product mix, non-material inflation of $157, operational inefficiencies of $16 and higher warranty expense of $6.

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 $876 for 2024 decreased $24 from 2023.

Gross margin as a percent of sales was 8.5% in both 2024 and 2023.

Gross margin of $378 for 2024 increased $1 from 2023.

Gross margin as a percent of sales was 4.9% in 2024, 10 basis points lower than in 2023.

The gross margin as a percent of sales was driven principally by the cost of sales factors referenced above.

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Selling, general and administrative expenses (SG&A) — SG&A expenses in 2024 were $429 (5.5% of sales) as compared to $440 (5.8% of sales) in 2023.

SG&A expenses were $25 lower in 2024 due to lower incentive compensation and lower professional services and consulting costs, partially offset by increased information technology expenses.

SG&A expenses were $11 lower in 2024 primarily due to lower incentive compensation and lower professional services and consulting costs, partially offset by increased information technology expenses.

Amortization of intangibles — Amortization expense was $8 in both 2024 and 2023.

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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, recognizing a $26 loss to date to adjust the carrying value of net assets to fair value less estimated costs to sell.

We classified the disposal group as held for sale, recognizing a $26 loss to adjust the carrying value of net assets to fair value less estimated costs to sell.

The transaction was not completed by the date set forth in the definitive agreement.

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See Note 17 to our consolidated financial statements in Item 8 for additional information.

Equity in earnings of affiliates — Net earnings (loss) from equity investments was earnings of $10 in 2024 and a loss of $9 in 2023.

Equity in earnings of affiliates — Net earnings (loss) from equity investments were earnings of $10 in 2024 and a loss of $9 in 2023.

Net earnings (loss) from Dongfeng Dana Axle Co., Ltd.

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Currency effects

Light Vehicle sales in 2025, exclusive of divestiture and currency effects, were 1% 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 1% while light-truck production in Europe, Asia Pacific and South America increased 2%, 8% and 7%, respectively.

Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $156.

Light Vehicle segment EBITDA increased by $132 in 2025.

Lower sales volumes decreased year-over-year earnings by $49 (24% decremental margin).

The year-over-year performance-related earnings increase was driven by net customer pricing and cost and tariff recovery actions of $156, cost reduction initiatives of $99, higher material cost savings of $66, lower premium freight costs of $11 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $65.

Partially offsetting these performance-related earnings increases were higher tariff-related costs of $96, inflationary cost increases of $92, commodity cost increases of $13, higher incentive compensation expense of $9, higher warranty expense of $6 and higher program launch costs of $1.

Commercial Vehicle

Volume and mix

Currency effects

Commercial Vehicle sales, exclusive of currency effects, were 8% lower than 2024, reflecting generally weaker global markets partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions.

Year-over-year Class 8 production in North America was down 23% and Classes 5-7 was down 23%.

Year-over-year medium/heavy truck production in Europe was up 3% while South America was down 7%.

Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $46.

Commercial Vehicle segment EBITDA increased $65 in 2025.

Lower sales volumes decreased year-over-year earnings by $63 (25% decremental margin).

The year-over-year performance-related earnings increase was driven by cost reduction initiatives of $53, net customer pricing and cost and tariff recovery actions of $46, higher material costs savings of $24, lower premium freight costs of $11, lower warranty expense of $8, lower spending on electrification initiatives of $7, lower program launch costs of $2 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $41.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $35, higher tariff-related costs of $20, commodity cost increases of $6 and higher incentive compensation expense of $5.

Segment Results of Operations (2024 versus 2023)

Light Vehicle

Volume and mix

Currency effects

Light Vehicle sales in 2024, exclusive of currency effects, were 5% higher than 2023, reflecting a full year of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of 2023, the conversion of sale backlog and the benefit of net customer pricing and cost recovery actions, partially offset by mixed global markets.

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Higher sales volumes provided a year-over-year earnings benefit of $41 (29% incremental margin).

The year-over-year performance-related earnings increase was driven by net customer pricing and cost recovery actions of $90, operational efficiencies of $62, higher material cost savings of $50, lower premium freight costs of $16, lower program launch costs of $10, lower incentive compensation expense of $8 and commodity cost decreases of $2.

Offsetting these performance-related earnings increases were inflationary cost increases of $134 and higher spending on electrification initiatives of $16.

The year-over-year performance-related earnings increase was driven by net customer pricing and cost recovery actions of $129, higher material cost savings of $63, lower premium freight costs of $17, lower incentive compensation expense of $15 and lower program launch costs of $12.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $146, higher spending on electrification initiatives of $14, commodity cost increases of $2, higher warranty expense of $1 and operational inefficiencies of $9.

Commercial Vehicle

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Lower sales volumes and unfavorable product mix decreased earnings by $63 (57% decremental margin).

The year-over-year performance-related earnings increase was driven by higher material cost savings of $27, lower spending on electrification initiatives of $24, lower premium freight costs of $9, net customer pricing and cost recovery actions of $8, lower incentive compensation expense of $8 and commodity cost decreases of $2.

The year-over-year performance-related earnings increase was driven by higher material cost savings of $27, lower spending on electrification initiatives of $24, lower premium freight costs of $9, lower incentive compensation expense of $8, net customer pricing and cost recovery actions of $2 and commodity cost decreases of $2.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $20, operational inefficiencies of $7, higher warranty expense of $5 and higher program launch costs of $1.

Volume and mix

Currency effects

Off-Highway sales in 2024, exclusive of currency and divestiture effects, were 13% lower than 2023 reflecting softening global markets and the impact of net customer pricing and cost recovery actions.

Year-over-year global construction/mining equipment and agricultural equipment markets are softening, especially in Europe.

Year-over-year construction/mining equipment and agricultural equipment production in Europe were down 12% and 24%, respectively.

Net customer pricing and cost recovery actions decreased year-over-year sales by $22.

Off-Highway segment EBITDA decreased $46 in 2024.

Lower sales volumes decreased year-over-year earnings by $110 (28% decremental margin).

The year-over-year performance-related earnings increase was driven by operational efficiencies of $41, higher material costs savings of $33, commodity cost decreases of $13, lower premium freight costs of $6, lower incentive compensation of $5 and lower warranty expense of $2.

Partially offsetting these performance-related earning increases were net customer pricing and cost recovery actions of $22, inflationary cost increases of $11 and higher program launch costs of $2.

Power Technologies

Volume and mix

Currency effects

Power Technologies primarily serves the light-vehicle market but also sells product to the medium/heavy-truck and off-highway markets.

Power Technologies sales in 2024, exclusive of currency effects, were 4% higher than 2023, reflecting the conversion of sales backlog and the benefit of net customer pricing actions, partially offset by weaker global markets.

Year-over-year light vehicle engine production in North America and Europe were down 1% and 5%, respectively.

Net customer pricing and cost recovery actions increased year-over-year sales by $18.

Power Technologies segment EBITDA increased by $3 in 2024.

The EBITDA benefit of higher sales volumes was offset by unfavorable product mix in 2024.

The year-over-year performance-related earnings increase was driven by higher material cost savings of $22, net customer pricing and cost recovery actions of $18, lower incentive compensation expense of $5, lower program launch costs of $2, lower spending on electrification initiatives of $2 and lower premium freight costs of $1.

These performance-related earnings increases were partially offset by operational inefficiencies of $18, inflationary cost increases of $12, commodity cost increases of $4 and higher warranty expense of $1.

Non-GAAP Financial Measures

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Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

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

Net income (loss)

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

Net loss from continuing operations

Equity in earnings (loss) of affiliates

Income tax expense

Earnings before income taxes

Loss from continuing operations before income taxes

Depreciation and amortization

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Loss on extinguishment of debt

Supplier capacity charge

Distressed supplier costs

Electric vehicle program termination charges

Loss on divestiture of ownership interests

Supplier capacity charge, net

Loss on disposal group previously held for sale

Amounts attributable to previously closed/divested operations

Distress supplier costs

Adjusted EBITDA

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Free Cash Flow

We have defined free cash flow as cash provided by operating activities less purchases of property, plant and equipment.

We believe 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.

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.

Free cash flow may not be comparable to similarly titled measures reported by other companies.

The following table reconciles net cash flows provided by operating activities to 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 operating activities to adjusted free cash flow.

Net cash provided by operating activities

Purchases of property, plant and equipment

Free cash flow

The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at December 31, 2024:

Purchases of property, plant and equipment - Continuing operations

Purchases of property, plant and equipment - Discontinued operations

Proceeds from sale of property, plant and equipment - Continuing operations

Proceeds from sale of property, plant and equipment - Discontinued operations

Cash paid for Off-Highway business divestiture related activities

Adjusted free cash flow

On January 1, 2026, Dana completed the sale of its Off-Highway business.

Net cash proceeds from the Off-Highway business divestiture have been used to pay down debt, strengthening Dana’s financial position, and provide capital returns to shareholders.

During January 2026, Dana purchase and redeemed certain of its senior notes, paid down its Term A Facility and continued to repurchase common shares under its board of director approved program.

See "Capital Structure Initiatives" in Item 1 for additional information.

The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at January 31, 2026:

Cash and cash equivalents

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Total liquidity

We had availability of $1,140 at December 31, 2024 under our Revolving Facility after deducting $10 of outstanding letters of credit.

The components of our December 31, 2024 consolidated cash balance were as follows:

We had availability of $1,140 at January 31, 2026 under our Revolving Facility after deducting $10 of outstanding letters of credit.

The components of our January 31, 2026 consolidated cash balance were as follows:

Cash and cash equivalents

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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.

In November 2024, we announced we are exploring the divestiture of our Off-Highway business.

We expect that a portion of any cash proceeds received from a sale transaction would be used to repay or redeem a portion of our outstanding indebtedness.

Cash provided by changes in working capital

Other cash provided by operations

Net cash provided by operating activities

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Net cash provided by (used in) financing activities

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

The table above summarizes our consolidated statement of cash flows.

Operating activities — Exclusive of working capital, other cash provided by operations was $423 in 2024 and $406 in 2023.

The year-over-year increase is primarily attributable to the impact of higher year-over-year operating earnings and lower year-over-year cash payments made to a distressed supplier, partially offset by higher year-over-year cash paid for interest, income taxes and restructuring activities.

Working capital provided cash of $27 in 2024 and $70 in 2023.

Cash of $94 and $12 was provided by receivables in 2024 and 2023, respectively.

Cash of $55 was provided by lower inventory levels in 2024 while cash of $42 was used to fund higher inventory levels during 2023.

Decreases in accounts payable and other net liabilities used cash of $122 in 2024 while increases in accounts payable and other net liabilities provided cash of $100 in 2023.

Investing activities — Expenditures for property plant and equipment were $380 and $501 in 2024 and 2023.

Elevated capital spending in 2023 was driven by the high volume of new program launches in that year.

Financing activities — During 2023, we made net repayments of $25 on our Revolving Facility.

Operating activities — Exclusive of working capital, other cash provided by continuing operations was $300 and $43 in 2025 and 2024, respectively, while other cash used by continuing operations was $10 in 2023.

The year-over-year improvement from 2023 to 2024 and 2024 to 2025 is primarily attributable to the impact of higher year-over-year operating earnings from continuing operations.

Working capital provided cash of $29, $33 and $15 in 2025, 2024 and 2023, respectively.

Cash of $47, $14 and $63 was used to fund higher accounts receivable in 2025, 2024 and 2023, respectively.

Cash of $78 was provided by lower inventory levels in 2025.

Cash of $11 and $37 was used to fund higher inventory levels is 2024 and 2023, respectively.

Decreases in accounts payable and other net liabilities used cash of $2 in 2025, while increases in accounts payable and other net liabilities provided cash of $58 and $115 in 2024 and 2023, respectively.

Operating activities of discontinued operations generated cash of $183, $374 and $471 in 2025, 2024 and 2023, respectively.

Investing activities — Expenditures for property plant and equipment by continuing operations were $214, $312 and $427, in 2025, 2024 and 2023 respectively.

The decrease in capital spending from 2023 to 2024 was primarily due to lower year-over-year program launches.

The decrease in capital spending from 2024 to 2025 was primarily due to lower year-over-year program launches and a 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 $53, $47 and $91 in 2025, 2024 and 2023, respectively.

Financing activities — During 2025, we had net borrowings on our Revolving Facility of $390 and net borrowings on our Term A Facility of $225.

During 2025, we redeemed the remaining $200 of our April 2025 Notes.

During 2023, we made net repayments of $25 on our Revolving Facility.

During 2023, we completed the issuance of €425 of our July 2031 Notes, paying financings costs of $7.

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During 2023, we paid financing costs of $2 to amend our credit and guaranty agreement, extending the Revolving Facility maturity to March 14, 2028.

We used cash of $58 in both 2024 and 2023 for dividend payments to common stockholders.

Distributions to noncontrolling interests totaled $20 in 2024 and $10 in 2023.

Hydro-Québec made cash contributions to Dana TM4 of $18 in 2024 and $22 in 2023.

We used cash of $54, $58 and $58 for dividend payments to common stockholders in 2025, 2024 and 2023, respectively.

During 2025, we used $650 to repurchase 34,278,815 common stock shares.

Distributions to noncontrolling interests totaled $17, $20 and $10 in 2025, 2024 and 2023, respectively.

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.

Off-Balance Sheet Arrangements

In connection with the divestiture of our Structural Products business in 2010, leases covering three U.S.

facilities were assigned to a U.S.

affiliate of the new owner, Metalsa S.A.

Under the terms of the sale agreement, we guarantee the affiliate’s performance under the leases, which run through June 2025, including approximately $6 of annual payments.

In the event of a required payment by Dana as guarantor, we are entitled to pursue full recovery from Metalsa of the amounts paid under the guarantee and to take possession of the leased property.

Hydro-Québec made cash contributions to Dana TM4 of $18 and $22 in 2024 and 2023, respectively.

During 2025, we used cash of $14 to settle swaps associated with our April 2025 Notes.

Contractual Obligations

We are obligated to make future cash payments in fixed amounts under various agreements.

The following table summarizes our significant contractual obligations as of December 31, 2024.

The following table summarizes our significant contractual obligations as of December 31, 2025, except for the long-term debt and interest payment figures which are presented as of January 8, 2026.

On January 1, 2026, Dana completed the sale of its Off-Highway business.

A portion of the cash proceeds from the divestiture were used to purchase and redeem certain of Dana's senior notes.

See Note 13 of our consolidated financial statements in Item 8 for additional information.

The long-term debt and interest payment amounts presented in the table below are after the January 7, 2026 senior note purchases and January 8, 2026 senior note redemptions.

Payments Due by Period

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______________________________________________________

Principal payments on long-term debt.

Interest payments are based on long-term debt in place at December 31, 2024 and the interest rates applicable to such obligations.

Principal payments on long-term debt as of January 8, 2026.

Interest payments are based on long-term debt in place at January 8, 2026 and the interest rates applicable to such obligations.

Operating lease obligations, including interest, related to real estate, manufacturing and material handling equipment, vehicles and other assets.

Finance lease obligations, including interest, related to real estate and manufacturing and material handling equipment.

Excluded from this table are $52 of undiscounted minimum lease payments for leases that have not yet commenced.

See Note 6 of our consolidated financial statements in Item 8 for additional discussion.

Unconditional purchase obligations are comprised of commitments for the procurement of fixed assets, the purchase of raw materials and the fulfillment of other contractual obligations.

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Generally, we have, if necessary, up to one year from the acquisition date to finalize our estimates of acquisition date fair values.

Redeemable noncontrolling interests — Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling interest balances adjusted for comprehensive income items and distributions or the redemption values.

Redeemable noncontrolling interest adjustments of redemption value are recorded in retained earnings.

We estimate the fair value of the redemption value using an income based approach based on discounted cash flow projections.

In determining fair value using discounted cash flow projections, we make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth rates, projected EBITDA, discount rate, capital expenditures and terminal growth rate.

See additional discussion of redeemable noncontrolling interests in Note 8 of our consolidated financial statements in Item 8.

Goodwill and other indefinite-lived intangible assets — Our goodwill and other indefinite-lived intangible assets are tested for impairment annually as of October 31 for all of our reporting units, and more frequently if events or circumstances warrant such a review.

Indefinite-lived intangible assets — Our indefinite-lived intangible assets are tested for impairment annually as of October 31 for all of our reporting units, and more frequently if events or circumstances warrant such a review.

We make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth rates, projected gross margins, discount rates, and exit earnings multiples.

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The most likely factors that would significantly impact our forecasts are changes in customer production levels and loss of significant portions of our business.

We believe that the assumptions and estimates used in the assessment of the goodwill and other indefinite-lived intangible assets as of October 31, 2024 were reasonable.

We believe that the assumptions and estimates used in the assessment of indefinite-lived intangible assets as of October 31, 2025 were reasonable.

Long-lived assets with definite lives — We perform impairment assessments on our property, plant and equipment and our definite-lived intangible assets whenever events and circumstances indicate that the carrying amounts of the assets may not be recoverable.

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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 7. Management’s Discussion and Analysis