What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-15 · 255 added, 93 removed, 260 unchanged (57% of the section changed)

22 unchanged sentences

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.

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

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

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

The transaction closed on January 1, 2026, with Dana receiving cash proceeds of $2,630.

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

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 were used to pay down debt, strengthening Dana’s financial position, and provide capital returns to shareholders.

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

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

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

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

Through March 31, 2026, we have spent $775 to repurchase 38,702,872 shares under the approved stock repurchase program.

Through June 30, 2026, we have spent $819 to repurchase 39,943,730 shares under the approved stock repurchase program.

See Note 6 of our consolidated financial statements in Item 1 of Part I for additional information.

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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.

Eaton Mobility Business — On June 10, 2026, Dana entered into definitive agreements with Eaton Corporation plc (Eaton) and certain wholly owned subsidiaries of Eaton, including Mobility (USA) Corporation (the SpinCo), to acquire Eaton’s Vehicle and eMobility business segments (Mobility business).

The structure of the transaction is a Reverse Morris Trust.

Following the separation of the Mobility business from Eaton, a subsidiary of SpinCo will merge with and into Dana, and Dana will survive the merger as a wholly owned subsidiary of SpinCo.

Following the merger, each outstanding share of Dana will be converted into the right to receive one SpinCo share.

Prior to or at the closing, a subsidiary of Eaton will sell to Dana 100% of the stock in Royal Precision Holdings Corp.

in exchange for cash consideration (the Royal Precision Purchase Price).

In the event of an election by Dana, certain specified assets (as defined in the separation agreement) will be purchased by Dana from Eaton and certain of its subsidiaries.

When the transaction is completed, former Eaton shareholders will own at least 50.1% and former Dana shareholders will own no more than 49.9% of the outstanding shares of SpinCo common stock on a fully diluted basis.

Under the terms of the agreement, Eaton will receive a cash distribution of approximately $1,100, subject to adjustment for cash and indebtedness and reduced by the Royal Precision and other specified assets Purchase Price.

The transaction has been unanimously approved by the Boards of Directors of both Dana and Eaton.

No vote by Eaton shareholders is required.

The transaction is intended to be tax-free to Dana and Eaton shareholders for U.S.

federal income tax purposes.

The transaction is anticipated to close in the first quarter of 2027, subject to approval by Dana's shareholders and customary closing conditions, including receipt of regulatory approvals.

The agreements contain certain customary termination rights for Dana and Eaton, including, without limitation, a right for either party to terminate if the transaction is not completed on or before June 10, 2027.

Termination resulting from Dana shareholders voting against the transaction would result in Dana having to reimburse Eaton for certain expenses in an amount not to exceed $20.

Termination under specified circumstances would require Dana to pay Eaton a termination fee of $159.

In anticipation of the transaction, Mobility (USA) Corporation and Dana became parties to a $2,600 bridge facility, a $350 secured term loan A commitment and a $1,200 secured revolving credit facility commitment.

See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information.

Management Overview

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

At March 31, 2026, we employed approximately 26,900 people and operated in 24 countries.

External sales by operating segment for the periods ended March 31, 2026 and 2025 are as follows:

Three Months Ended March 31,

At June 30, 2026, we employed approximately 27,300 people and operated in 24 countries.

External sales by operating segment for the periods ended June 30, 2026 and 2025 are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Light Vehicle

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

Foreign currency — With 44% of our first quarter 2026 sales coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations.

Foreign currency — With 44% of our first six months 2026 sales coming from outside the U.S., international currency movements can have a significant effect on our sales and results of operations.

The euro zone countries accounted for 33% of our year-to-date 2026 non-U.S.

sales, while Brazil, India, Thailand and China accounted for 14%, 10%, 8% and 7%, respectively.

sales, while Brazil, India, Thailand, China, Argentina and South Africa accounted for 14%, 9%, 7%, 7%, 7% and 6%, respectively.

International currencies strengthened against the U.S.

dollar during the first quarter of 2026, increasing sales by $64, with the effects of a stronger euro, Brazilian real, South African rand and Thai baht being partially offset by a weaker Indian rupee.

dollar during the first six months of 2026, increasing sales by $88, with the effects of a stronger euro, Brazilian real, South African rand and Thai baht being partially offset by a weaker Indian rupee.

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

Our Argentine operation supports our Light Vehicle operating segment.

Our sales in Argentina for the first quarter of 2026 of approximately $45 are 2% of our consolidated sales and our net asset exposure related to Argentina was approximately $68, including $18 of net fixed assets, at March 31, 2026.

Our sales in Argentina for the six months of 2026 of approximately $111 are 3% of our consolidated sales and our net asset exposure related to Argentina was approximately $79, including $21 of net fixed assets, at June 30, 2026.

During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy.

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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.

Higher year-over-year commodity prices decreased earnings during the first quarter of 2026 by $8.

Material cost recovery pricing actions increased earnings in the first quarter of 2026 by $6.

Higher year-over-year commodity prices decreased earnings during the second quarter and first half of 2026 by $15 and $23, respectively.

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

Sales, Earnings and Cash Flow Outlook

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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.

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.

Our 2026 sales outlook is $7,650 to $7,850, reflecting relatively stable global market demand, $200 of net new business backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds.

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

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At our current sales outlook for 2026, we expect full year 2026 adjusted EBITDA to approximate $800 to $850.

Adjusted EBITDA margin is expected to be 10.6% at the midpoint of our guidance range, a 250 basis-point improvement over 2025, reflecting the impact of significant cost savings actions, improved operational performance and favorable product mix, partially offset by the impact of lower end-market demand and net material cost recoveries.

Adjusted EBITDA margin is expected to be 10.6% at the midpoint of our guidance range, a 250 basis-point improvement over 2025, reflecting the impact of significant cost savings actions, improved operational performance and favorable product mix, partially offset by the impact of net material cost recoveries and net inflationary cost recoveries.

We expect to generate free cash flow of $325 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA and lower income tax and interest payments, partially offset by higher capital spending.

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This backlog excludes replacement business and represents incremental sales associated with new programs for which we have received formal customer awards.

At March 31, 2026, our sales backlog of net new business for the 2026 through 2028 period was $950.

At June 30, 2026, our sales backlog of net new business for the 2026 through 2028 period was $950.

We expect to realize $200 of our sales backlog in 2026, with incremental sales backlog of $300 and $450 being realized in 2027 and 2028, respectively.

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

Three Months Ended March 31,

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

Three Months Ended June 30,

% of Net Sales

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Earnings from continuing operations before interest and income taxes

Interest income

Interest expense

Earnings (loss) from continuing operations before income taxes

Income tax expense

Equity in earnings of affiliates

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Noncontrolling interests net income from continuing operations

Net income (loss) attributable to the parent company

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

Three Months Ended

Amount of Change Due To

Increase/ (Decrease)

Currency Effects

Organic Change

North America

South America

Sales in the second quarter of 2026 were $75 higher than 2025.

Stronger international currencies increased sales by $24, principally due to a stronger Brazilian real, euro and South African rand, partially offset by a weaker India rupee.

The organic sales increase of $51 primarily resulted from pricing actions and recoveries, including material commodity, tariff and inflationary costs adjustments, higher full-frame light-truck production volumes in North America and the conversion of sales backlog, partially offset by lower medium/heavy-truck production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific.

Pricing actions and recoveries, including material commodity, tariff and inflationary costs adjustments, increased sales by $45.

The North America organic sales increase of 4% was driven principally by net customer pricing, tariff and cost recovery actions, higher full-frame light-truck production volumes and the conversion of sales backlog, partially offset by lower medium- and heavy-truck production volumes.

Second quarter 2026 full-frame light-truck production was up 6%.

Second quarter 2026 Class 8 and Classes 5-7 production were down 8% and 10%, respectively.

Excluding currency effects, sales in Europe were up 3% compared to 2025, reflecting net customer pricing and cost recovery actions.

Excluding currency effects, sales in South America were up 2% compared to 2025, reflecting higher year-over-year medium/heavy-truck production volumes.

Excluding currency effects, sales in Asia Pacific decreased 3% reflecting lower electric vehicle-related product orders, partially offset by a modest improvement in year-over-year second quarter medium/heavy-truck production volumes.

Cost of sales and gross margin — Cost of sales for the second quarter of 2026 increased $3 when compared to 2025.

Cost of sales as a percent of sales was 330 basis points lower than in the previous year.

Incremental margins from cost reduction initiatives of $18, higher material cost savings of $24, operational efficiencies of $6, lower incentive compensation expense of $3, lower premium freight costs of $2 and favorable product mix were partially offset by non-material inflation of $26, commodity cost increases of $15, higher spending on electrification initiatives of $7, higher warranty expense of $1 and higher program launch costs of $1.

Commodity costs are primarily driven by certain grades of steel and aluminum.

Non-material inflation includes higher labor, energy and transportation rates.

Gross margin of $210 for the second quarter of 2026 increased $72 from 2025.

Gross margin as a percent of sales was 10.4% in the second quarter of 2026, 330 basis points higher than in 2025.

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

Material cost recovery mechanisms with our customers lag material cost changes by our suppliers by approximately 90 days.

The recovery of non-material inflation is not specifically provided for in our current contracts with customers resulting in prolonged negotiations and indeterminate recoveries.

Selling, general and administrative expenses (SG&A) — SG&A expenses in the second quarter of 2026 were $104 (5.2% of sales) as compared to $99 (5.1% of sales) in the second quarter of 2025.

SG&A expenses were $5 higher in the second quarter of 2026 primarily due to higher legal and professional services costs.

Amortization of intangibles — Amortization expense was $1 in the second quarter of 2026 and $2 in the second quarter of 2025.

See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information.

Restruct uring charges, net — Net restructuring charges were $9 in the second quarter of 2026 and $11 in the second quarter of 2025.

See Note 4 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

Non-service cost components of pension and OPEB costs

Government assistance

Foreign exchange loss

Strategic transaction expenses

Electric vehicle program termination charges

Loss on divestiture of ownership interests

Transition services income

Other income (expense), net

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

Strategic transaction expenses in 2026 were primarily attributable to the potential acquisition of Eaton's Mobility business.

See Note 1 of our consolidated financial statements in Item 1 of Part I for additional information.

During the second quarter of 2026, we recorded $3 of charges, including impairment and loss on disposition of property, plant and equipment, associated with certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes.

On January 1, 2026, we sold our Off-Highway business to Allison Transmission Holdings, Inc.

At closing, Dana entered into a transition services agreement and an engineering services agreement with Allison.

Services to be provided by Dana under the transition services agreement include finance, information technology, human resources and certain other administrative services for periods up to 24 months.

See Note 2 to our consolidated financial statements in Item 1 of Part I for additional information.

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

See Note 18 to our consolidated financial statements in Item 1 of Part I for additional information.

Interest income and interest expense — Interest income was $4 in the second quarter of 2026 and $3 in the second quarter of 2025.

Interest expense decreased from $44 in the second quarter of 2025 to $21 in the second quarter of 2026, reflecting lower average outstanding borrowings.

See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 6.2% in the second quarter of 2026 and 5.8% in the second quarter of 2025.

Income tax expense — We reported income tax expense of $54 and $10 for the second quarters of 2026 and 2025, respectively.

Our effective tax rates were 92% and (40)% for the second quarters of 2026 and 2025, respectively.

During the second quarter of 2025, we recorded tax expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment.

Our effective income tax rates vary from the U.S.

federal statutory rate of 21% due to establishment, release, and adjustment of valuation allowances in several countries, nondeductible expenses and deemed income, local tax incentives in several countries outside the U.S., different statutory tax rates outside the U.S.

and withholding taxes related to repatriations of international earnings.

The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of non-deductible expenses.

Equity in earnings of affiliates — Net earnings from equity investments was $6 in the second quarter of 2026 and $23 in the second quarter of 2025.

Net earnings from Dongfeng Dana Axle Co., Ltd.

(DDAC) were $5 in the second quarter of 2026 and $4 in the second quarter of 2025.

On April 25, 2025, we sold our ownership interest in Axles India Limited, recognizing a $19 pre-tax gain on the transaction.

See Note 18 of our consolidated financial statements in Item 1 of Part I for additional information.

Net income from discontinued operations — Net income (loss) from discontinued operations was a loss of $11 in the second quarter of 2026 and income of $43 in the second quarter of 2025.

The Off-Highway business sale transaction closed on January 1, 2026.

The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer.

See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Summary Consolidated Results of Operations (Year-to-Date Quarter, 2026 versus 2025)

Six Months Ended June 30,

% of Net Sales

Increase/ (Decrease)

Cost of sales

Selling, general and administrative expenses

Amortization of intangibles

Restructuring charges, net

Other income (expense), net

Earnings from continuing operations before interest and income taxes

Loss on extinguishment of debt

1 unchanged sentence

Interest expense

Loss from continuing operations before income taxes

Income tax expense (benefit)

Earnings (loss) from continuing operations before income taxes

Income tax expense

Equity in earnings of affiliates

4 unchanged sentences

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

Three Months Ended

Six Months Ended

Amount of Change Due To

1 unchanged sentence

Currency Effects

(Divestitures)

Organic Change

1 unchanged sentence

South America

Sales in the first quarter of 2026 were $87 higher than 2025.

Sales in the first six months of 2026 were $162 higher than 2025.

Stronger international currencies increased sales by $88, principally due to a stronger euro, Brazilian real, South African rand and Thai baht, partially offset by a weaker India rupee.

The organic sales increase of $23 primarily resulted from pricing actions and recoveries, including material commodity and tariff and inflationary costs adjustments, and the conversion of sales backlog, partially offset by lower medium/heavy-truck production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific.

Pricing actions and recoveries, including material commodity and tariff and inflationary cost adjustments, increased sales by $56.

The North America organic sales increase of 3% was driven principally by net customer pricing and tariff and cost recovery actions and the conversion of sales backlog, partially offset by lower medium- and heavy-truck production volumes.

First quarter 2026 Class 8 and Classes 5-7 production were down 25% and 20%, respectively.

Excluding currency effects, sales in Europe were up 1% compared to 2025, reflecting a modest improvement in year-over-year first quarter medium/heavy-truck production volumes.

The organic sales increase of $74 primarily resulted from pricing actions and recoveries, including material commodity, tariff and inflationary costs adjustments, and the conversion of sales backlog, partially offset by lower medium/heavy-truck production volumes in North America and lower electric-vehicle product orders in Europe and Asia Pacific.

Pricing actions and recoveries, including material commodity, tariff and inflationary costs adjustments, increased sales by $101.

The North America organic sales increase of 3% was driven principally by net customer pricing, tariff and cost recovery actions and the conversion of sales backlog, partially offset by lower medium- and heavy-truck production volumes.

First six months 2026 Class 8 and Classes 5-7 production were down 17% and 16%, respectively.

Excluding currency effects, sales in Europe were up 2% compared to 2025, reflecting net customer pricing and cost recovery actions and a modest improvement in year-over-year first six months medium/heavy-truck production volumes.

Excluding currency effects, sales in South America were down 1% compared to 2025, reflecting lower year-over-year medium/heavy-truck product sales.

Excluding currency effects, sales in Asia Pacific decreased 3% reflecting lower electric vehicle-related product orders, partially offset by a modest improvement in year-over-year first quarter medium/heavy-truck production volumes.

Cost of sales and gross margin — Cost of sales for the first quarter of 2026 increased $36 when compared to 2025.

Cost of sales and gross margin — Cost of sales for the first six months of 2026 increased $39 when compared to 2025.

Cost of sales as a percent of sales was 290 basis points lower than in the previous year.

Incremental margins from cost reduction initiatives of $33, higher material cost savings of $23, operational efficiencies of $14, lower premium freight costs of $10, lower program launch costs of $1 and favorable product mix were partially offset by tariff-related impacts of $50, non-material inflation of $24, commodity cost increases of $8, higher spending on electrification initiatives of $6 and higher warranty expense of $2.

Incremental margins from cost reduction initiatives of $51, higher material cost savings of $47, operational efficiencies of $20, lower premium freight costs of $12, lower incentive compensation expense of $2 and favorable product mix were partially offset by tariff-related impacts of $50, non-material inflation of $49, commodity cost increases of $23, higher spending on electrification initiatives of $13 and higher warranty 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 $169 for the first quarter of 2026 increased $51 from 2025.

Gross margin as a percent of sales was 9.0% in the first quarter of 2026, 240 basis points higher than in 2025.

Gross margin of $379 for the first six months of 2026 increased $123 from 2025.

Gross margin as a percent of sales was 9.8% in the first six months of 2026, 290 basis points higher than in 2025.

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

1 unchanged sentence

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 quarter of 2026 were $102 (5.5% of sales) as compared to $105 (5.9% of sales) in the first quarter of 2025.

SG&A expenses were $3 lower in the first quarter of 2026 primarily due to lower salary and employee benefit costs, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.

Amortization of intangibles — Amortization expense was $2 in both the first quarter of 2026 and the first quarter of 2025.

Selling, general and administrative expenses (SG&A) — SG&A expenses in the first six months of 2026 were $206 (5.3% of sales) as compared to $204 (5.5% of sales) in the first six months of 2025.

SG&A expenses were $2 higher in the first six months of 2026 primarily due to higher legal and professional services costs.

Amortization of intangibles — Amortization expense was $3 in the first six months of 2026 and $4 in the first six months of 2025.

See Note 3 of our consolidated financial statements in Item 1 of Part I for additional information.

Restructuring charges, net — Net restructuring charges were $6 in the first quarter of 2026 and $2 in the first quarter of 2025.

Restructuring charges, net — Net restructuring charges were $15 in the first six months of 2026 and $13 in the first six months of 2025.

See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

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

Three Months Ended

Six Months Ended

Non-service cost components of pension and OPEB costs

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During the first quarter of 2026, we recorded $56 of charges, including impairment and loss on disposition of property, plant and equipment, associated with certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes.

Strategic transaction expenses in 2026 were primarily attributable to the potential acquisition of Eaton's Mobility business.

See Note 1 of our consolidated financial statements in Item 1 of Part I for additional information.

During the first six months of 2026, we recorded $59 of charges, including impairment and loss on disposition of property, plant and equipment, associated with certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes.

On January 1, 2026, we sold our Off-Highway business to Allison Transmission Holdings, Inc.

1 unchanged sentence

Services to be provided by Dana under the transition services agreement include finance, information technology, human resources and certain other administrative services for periods up to 24 months.

See Note 2 for additional information.

See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

On January 30, 2026, we sold our wholly-owned subsidiary Pi Innovo LLC, recognizing a $8 pre-tax loss on the transaction.

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

See Note 18 to our consolidated financial statements in Item 1 of Part I for additional information.

Loss on extinguishment of debt — The $7 loss on extinguishment of debt is comprised of the write-off of deferred financing costs associated with purchases and redemptions of certain of our senior notes and the repayment of our Term A Facility during the first quarter of 2026.

See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information.

Interest income and interest expense — Interest income was $6 in the first quarter of 2026 and $2 in the first quarter of 2025.

Interest expense decreased from $39 in the first quarter of 2025 to $22 in the first quarter of 2026, reflecting lower average outstanding borrowings.

Interest income and interest expense — Interest income was $10 in the first six months of 2026 and $5 in the first six months of 2025.

Interest expense decreased from $83 in the first six months of 2025 to $43 in the first six months of 2026, reflecting lower average outstanding borrowings.

See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 6.6% in the first quarter of 2026 and 5.5% in the first quarter of 2025.

Income tax benefit — We reported income tax expense of $14 and benefit of $(10) for the first quarters of 2026 and 2025, respectively.

Our effective tax rates were (350)% and 34% for the first quarters of 2026 and 2025.

During the first quarter of 2026, we recorded $12 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions.

During the first quarter of 2025, we recorded a tax benefit of $19 due to a basis difference in a foreign subsidiary as a result of a change in tax status and $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions.

Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 6.4% in the first six months of 2026 and 5.6% in the first six months of 2025.

Income tax expense — We reported income tax expense of $68 and $0 for the first six months of 2026 and 2025, respectively.

Our effective tax rates were 124% and 0% for the first six months of 2026 and 2025, respectively.

During the first six months of 2026, we recorded $12 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions.

During the first six months of 2025, we recorded a tax benefit of $19 due to a basis difference in a foreign subsidiary as a result of a change in tax status, $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions and tax expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment.

Our effective income tax rates vary from the U.S.

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The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of non-deductible expenses.

Equity in earnings of affiliates — Net earnings from equity investments was $3 in the first quarter of 2026 and $2 in the first quarter of 2025.

Equity in earnings of affiliates — Net earnings from equity investments was $9 in the first six months of 2026 and $25 in the first six months of 2025.

Net earnings from Dongfeng Dana Axle Co., Ltd.

(DDAC) were $2 in the first quarter of 2026 and de minimis in the first quarter of 2025.

(DDAC) were $7 in the first six months of 2026 and $4 in the first six months of 2025.

On April 25, 2025, we sold our ownership interest in Axle India Limited, recognizing a $19 pre-tax gain on the transaction.

See Note 18 of our consolidated financial statements in Item 1 of Part I for additional information.

Net income from discontinued operations — Net income from discontinued operations was $1,059 higher in the first quarter of 2026 compared to the first quarter of 2025.

The Off-Highway business sale transaction closed on January 1, 2026, with a preliminary $1,191 pre-tax gain being recognized in net income from discontinued operations during the first quarter of 2026.

Net income from discontinued operations — Net income from discontinued operations was $1,095 in the first six months of 2026 and $90 in the first six months of 2025.

The Off-Highway business sale transaction closed on January 1, 2026, with a $1,186 pre-tax gain being recognized in net income from discontinued operations during the first six months of 2026.

The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer.

4 unchanged sentences

Segment EBITDA Margin

Segment EBITDA

Segment EBITDA Margin

Volume and mix

Currency effects

Light Vehicle sales in the first quarter of 2026, exclusive of currency effects, were 2% higher than 2025 reflecting the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog partially offset by lower global electric-vehicle product orders.

Year-over-year North America full-frame light-truck production increased 6% and light-truck production in Europe increased 5%.

Light-truck production in Asia Pacific was flat compared with last year’s first quarter.

Year-over-year light-vehicle engine production decreased in North America, Europe and Asia Pacific by 1%, 5% and 4%, respectively.

Net customer pricing and cost and tariff recovery actions increased year-over-year first quarter sales by $36.

Light Vehicle first quarter 2026 segment EBITDA increased $44 from the comparable period of 2025.

Favorable product mix and improved pricing on electric vehicle programs was partially offset by lower sales volumes.

The year-over-year performance-related earnings increase was driven by net customer pricing and cost and tariff recovery actions of $36, higher material cost savings of $14, lower premium freight costs of $8, cost reduction initiatives of $5 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $13.

Partially offsetting these performance-related earnings increases were higher tariff-related costs of $36, inflationary cost increases of $19, commodity cost increases of $6 and higher warranty expense of $3.

Light Vehicle sales in the second quarter of 2026, exclusive of currency effects, were 3% higher than 2025 reflecting the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog partially offset by lower global electric-vehicle product orders.

Year-over-year North America full-frame light-truck production increased 6% and light-truck production in South America and Asia Pacific increased 11% and 6%, respectively.

Year-over-year light-truck production in Europe decreased 1%.

Year-over-year light-vehicle engine production was flat in North America and Asia Pacific.

Year-over-year light-vehicle engine production increased 2% in South America and decreased 7% in Europe.

Net customer pricing and cost and tariff recovery actions increased year-over-year second quarter sales by $35.

Light Vehicle sales in the first half of 2026, exclusive of currency effects, were 3% higher than 2025 reflecting the benefit of net customer pricing and cost and tariff recovery actions and the conversion of sales backlog partially offset by lower global electric-vehicle product orders.

Year-over-year North America full-frame light-truck production increased 6% and light-truck production in Europe, South America and Asia Pacific increased 3%, 10% and 5%, respectively.

Year-over-year light-vehicle engine production was flat in North America and Asia Pacific.

Year-over-year light-vehicle engine production increased 5% in South America and decreased 5% in Europe.

Net customer pricing and cost and tariff recovery actions increased year-over-year first-half sales by $71.

Light Vehicle second-quarter and first-half EBITDA increased $31 and $75, respectively, from the comparable periods of 2025.

Higher sales volumes, favorable product mix and improved pricing on electric vehicle programs increased second-quarter EBITDA by $14.

Favorable product mix and improved pricing on electric vehicle programs was partially offset by lower sales volumes, increasing first-half EBITDA by $45.

The year-over-year performance-related earnings increase in the second quarter of 2026 was driven by net customer pricing and cost and tariff recovery actions of $35, higher material cost savings of $16, lower premium freight costs of $5, cost reduction initiatives of $3, lower incentive compensation expense of $3 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $4.

Partially offsetting these performance-related earnings increases were inflationary cost increases of $20, commodity cost increases of $11, higher tariff-related costs of $10, net foreign currency transaction losses of $7 and higher program launch costs of $1.

The year-over-year performance-related earnings increase in the first half of 2026 was driven by net customer pricing and cost and tariff recovery actions of $71, higher material cost savings of $30, lower premium freight costs of $13, cost reduction initiatives of $8, lower incentive compensation expense of $3 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $17.

Partially offsetting these performance-related earnings increases were higher tariff-related costs of $46, inflationary cost increases of $39, commodity cost increases of $17, net foreign currency transaction losses of $7, higher warranty expense of $3 and higher program launch costs of $1.

Commercial Vehicle

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Segment EBITDA Margin

Segment EBITDA

Segment EBITDA Margin

Volume and mix

Currency effects

Commercial Vehicle sales in the first quarter of 2026, exclusive of currency effects, were 1% lower than 2025 reflecting a weakening North American market partially offset by the conversion of sales backlog and net customer pricing and cost and tariff recovery actions.

Year-over-year Class 8 production in North America was down 25% while Classes 5-7 was down 20% in this year’s first quarter.

Year-over-year medium/heavy-truck production in Europe, South America and Asia Pacific were up 10%, 2% and 9%, respectively, this year’s first quarter.

Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $20 in this year’s first quarter.

Commercial Vehicle first quarter 2026 segment EBITDA increased $22 from the comparable period of 2025.

Lower sales volumes decreased year-over-year earnings by $4 (17% decremental margin) in the first quarter of 2026.

The year-over-year performance-related earnings increase was driven by net customer pricing and cost and tariff recovery actions of $20, higher material cost savings of $9, cost reduction initiatives of $3, lower premium freight costs of $2, lower warranty expense of $1, lower program launch costs of $1 and operational efficiencies, inclusive of lower corporate allocations resulting from cost reduction initiatives, of $13.

Partially offsetting these performance-related earnings increases were higher tariff-related costs of $14, higher spending on electrification initiatives of $6, inflationary cost increases of $4, commodity cost increases of $2 and higher incentive compensation expense of $1.

Commercial Vehicle sales in the second quarter of 2026, exclusive of currency effects, were 2% higher than 2025 reflecting a stronger Asia Pacific market, the conversion of sales backlog and net customer pricing and cost and tariff recovery actions, partially offset by a weakening North America market.

Year-over-year Class 8 production in North America was down 8% while Classes 5-7 was down 10% in this year’s second quarter.

Year-over-year medium/heavy-truck production in South America and Asia Pacific were up 6% and 12%, respectively, while Europe was down 3% in this year’s second quarter.

Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $10 in this year’s second quarter.

Commercial Vehicle sales in the first half of 2026, exclusive of currency effects, were 1% higher than 2025 reflecting a stronger Asia Pacific market, the conversion of sales backlog and net customer pricing and cost and tariff recovery actions, partially offset by a weakening North America market.

Year-over-year Class 8 production in North America was down 17% while Classes 5-7 was down 16% in this year's first half.

Year-over-year medium/heavy-truck production in Europe, South America and Asia Pacific were up 3%, 1% and 11%, respectively.

Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $30 in this year's first half.

Commercial Vehicle second-quarter and first-half 2026 segment EBITDA increased $21 and $43, respectively, from the comparable periods of 2025.

The EBITDA benefit of higher sales volumes was offset by unfavorable product mix in the second quarter of 2026.

Lower sales volumes decreased year-over-year earnings by $8 (40% decremental margin) in the first half of 2026.

Unfavorable product mix in the first half of 2026 contributed to the decremental margin.

The year-over-year performance-related earnings increase in the second quarter of 2026 was driven by net customer pricing and cost and tariff recovery actions of $10, net tariff refunds of $10, higher material cost savings of $8, cost reduction initiatives of $3, net foreign currency transaction gains of $3, lower incentive compensation expense of $2 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $7.

Partially offsetting these performance-related earnings increases were higher spending on electrification initiatives of $7, inflationary cost increases of $5, commodity cost increases of $4, higher premium freight costs of $3 and higher warranty expense of $1.

The year-over-year performance-related earnings increase in the first half of 2026 was driven by net customer pricing and cost and tariff recovery actions of $30, higher material cost savings of $17, cost reduction initiatives of $6, net foreign currency transaction gains of $3, lower incentive compensation expense of $1, lower program launch costs of $1 and operational efficiencies, including lower corporate allocations resulting from cost reduction initiatives of $20.

Partially offsetting these performance-related earnings increases were higher spending on electrification initiatives of $13, inflationary cost increases of $9, commodity cost increases of $6, higher tariff-related costs of $4 and higher premium freight costs of $1.

Non-GAAP Financial Measures

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Three Months Ended

Net loss from continuing operations

Six Months Ended

Net income (loss) from continuing operations

Equity in earnings of affiliates

Income tax expense (benefit)

Loss from continuing operations before income taxes

Income tax expense

Earnings (loss) from continuing operations before income taxes

Depreciation and amortization

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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 purchases of leased facilities plus cash paid for Off-Highway business divestiture related activities.

We believe adjusted free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations.

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Three Months Ended

Net cash used in operating activities

Six Months Ended

Net cash provided by (used in) operating activities

Purchases of property, plant and equipment - Continuing operations

1 unchanged sentence

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

Cash paid for purchase of leased facilities

Cash paid for Off-Highway business divestiture related activities

Adjusted free cash flow

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

The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at June 30, 2026:

Cash and cash equivalents

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Total liquidity

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

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

We had availability of $1,140 at June 30, 2026 under our Revolving Facility after deducting $10 of outstanding letters of credit.

The components of our June 30, 2026 consolidated cash balance were as follows:

Cash and cash equivalents

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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 March 31, 2026, we were in compliance with the covenants of our financing agreements.

At June 30, 2026, 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.

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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.

On June 10, 2026, we became a party to a $2,600 bridge facility (the Bridge Facility).

The Bridge Facility serves as a backstop to certain contemplated financing transactions associated with Dana's intended acquisition of Eaton's Mobility business.

See Note 1 of our consolidated financial statements in Item 1 of Part I for additional information.

The Bridge Facility may be drawn upon only if the acquisition transaction closes.

Availability under the Bridge Facility is subject to reduction to the extent contemplated financing transactions are completed prior to the acquisition transaction closing.

See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information.

On July 1, 2026, we issued notices of conditional full redemption with a redemption date of July 31, 2026, for all of our outstanding July 2031 Notes at a redemption price equal to 104.25% plus accrued and unpaid interest.

On July 10, 2026, we amended our credit and guaranty agreement to include a $500 Term A Facility.

Borrowings under the Term A Facility bear interest at a floating rate based on Term Secured Overnight Financing Rate (SOFR) (as described in the credit agreement) plus a margin.

The Term A Facility matures 364 days from the date of the first draw on the Term A Facility.

We are required to make quarterly installments on the Term A Facility on the last day of each quarter commencing on December 31, 2026 in an amount equal to 10% of the original amount borrowed adjusted for any prepayments.

On July 28, 2026, we fully drew the Term A Facility.

On July 31, 2026, we redeemed all of our outstanding July 2031 Notes.

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 and (iii) borrowings from our Revolving Facility.

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The following table summarizes our consolidated statement of cash flows:

Three Months Ended

Six Months Ended

Net cash used in operating activities

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Net cash provided by (used in) financing activities

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

Net decrease in cash, cash equivalents and restricted cash

Operating activities — Exclusive of working capital, other cash provided by continuing operations was $211 in 2026 and $171 in 2025.

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

Continuing operations working capital used cash of $252 and $418 in 2026 and 2025.

Cash of $295 and $259 was used to finance receivables in 2026 and 2025.

Cash of $18 was provided by lower inventory levels in 2026, while cash of $176 was used to fund higher inventory levels in 2025.

Increases in accounts payable and other net liabilities provided cash of $25 and $17 in 2026 and 2025.

Continuing operations working capital used cash of $221 and $202 in 2026 and 2025, respectively.

Cash of $321 and $134 was used to finance receivables in 2026 and 2025, respectively.

Cash of $32 and $48 was provided by lower inventory levels in 2026 and 2025, respectively.

Increases in accounts payable and other net liabilities provided cash of $68 in 2026, while decreases in accounts payable and other net liabilities used cash of $116 in 2025.

The Off-Highway business sale transaction closed on January 1, 2026.

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Operating activities of discontinued operations used cash of $76 in 2026 and generated cash of $26 in 2025.

The use of cash in 2026 is primarily due cash paid for Off-Highway related divestiture activities.

Investing activities — Expenditures for property, plant and equipment by continuing operations were $204 and $104 in 2026 and 2025, respectively.

The elevated level of capital spending in 2026 is primarily due to the purchase of three U.S.

manufacturing facilities that were previously leased.

Investing activities of discontinued operations provided cash of $2,528 in 2026 and used cash of $22 in 2025.

The Off-Highway business sale transaction closed on January 1, 2026, with only the Off-Highway business's Mexican operations continuing to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer.

We received net cash proceeds of $2,563 on the sale of the Off-Highway business to Allison.

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

Investing activities of discontinued operations used cash of $8 in 2025.

We received net cash proceeds of $2,529 during 2026 on the sale of the Off-Highway business to Allison.

Financing activities — During 2026, we had net payments on our Revolving Facility of $390 and we repaid the $225 outstanding balance on the Term A Facility.

During 2025, we had net borrowings on our Revolving Facility of $525.

During 2026, we purchased $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes.

During 2026, we purchased $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our July 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes.

Also during 2026, we redeemed $262 of our November 2027 Notes and $258 of our June 2028 Notes.

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

We used cash of $26 and $29 for dividend payments to common stockholders during 2026 and 2025, respectively.

During 2026, we used cash of $125 to repurchase 4,424,056 common shares under our share repurchase program.

Distributions to noncontrolling interests totaled $1 in both 2026 and 2025.

We used cash of $169 and $257 to repurchase 5,664,914 common shares and 14,607,283 common shares under our share repurchase during 2026 and 2025, respectively.

Distributions to noncontrolling interests totaled $2 and $3 in 2026 and 2025, respectively.

During 2026, we paid Hydro-Québec $190 to acquire their 45% mandatorily redeemable noncontrolling interests in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC.

Off-Balance Sheet Arrangements

There have been no material changes at March 31, 2026 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 2025 Form 10-K.

There have been no material changes at June 30, 2026 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 2025 Form 10-K.

Contractual Obligations

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

During the second quarter of 2026, the Company modified an operating lease, resulting in a reassessment and reclassification of the lease as a finance lease.

At the modification date, the carrying amounts of the operating lease right-of-use asset and lease liability were $62 million and $57 million, respectively.

Following remeasurement, the Company recognized a finance lease right-of-use asset of $103 million and a finance lease liability of $98 million.

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

Contingencies

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See Item 7 in our 2025 Form 10-K for a description of our critical accounting estimates and Note 1 to our consolidated financial statements in Item 8 of our 2025 Form 10-K for our significant accounting policies.

There were no changes to our critical accounting estimates in the three months ended March 31, 2026.

See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first three months of 2026.

There were no changes to our critical accounting estimates in the six months ended June 30, 2026.

See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of new accounting guidance adopted during the first six months of 2026.

Quantitative and Qualitative Disclosures About Market Risk

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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-Q

Item 2. Management’s Discussion and Analysis