DAN 10-K & 10-Q changes, risk factors and insider trading

We are impacted by events and conditions that affect the light vehicle,vehicle and commercial vehicle and off-highway markets that we serve, as well as by factors specific to Dana. Among the risks that could materially adversely affect our business, financial condition or results of operations are the following, many of which are interrelated.

OnDuring Novemberthe 25,fourth quarter of 2024, we announced cost reductionfurther actions thatto includesupport sustained long-term profitability and enhanced cash flow generation. This includes substantial reductionsreduction in selling, general and administrative costs acrossand allaligning engineering expenses to match current industry dynamics, including the company’songoing businessesdelay andin engineeringthe expenses.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. Any cost savings that we realize from such efforts may differ materially from our estimates, which involve risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such estimates. In addition, any cost savings that we realize may be offset, in whole or in part, by reductions in net sales, or through increases in other expenses. Our cost reduction actions are subject to numerous risks and uncertainties that may change at any time. We cannot assure you that cost reductions will be completed as anticipated or that the benefits we expect will be achieved on a timely basis or at all.

Several of our joint ventures operate pursuant to established agreements and, as such, we do not unilaterally control the joint venture. There is a risk that the partners’ objectives for the joint venture may not be aligned with ours, leading to potential differences over management of the joint venture that could adversely impact its financial performance and consequent contribution to our earnings. Additionally, inability on the part of our partners to satisfy their contractual obligations under the agreements could adversely impact our results of operations and financial position. Certain of our joint venture partners have the ability to put their ownership interests to Dana at fair value. If a joint venture partner were to put its ownership interest to Dana, it could cause Dana to outlay significant amounts of cash to purchase the joint venture partner's ownership interest in addition to increased future cash outlays required to fund 100% of the operations on a go-forward basis, reducing available funds for other strategic initiatives and capital investments. (See Note 8 to our consolidated financial statements in Item 8 for additional information on redeemable noncontrolling interests.)

We recognize the increasing volume of cyber attacks and employ commercially practical efforts to provide reasonable assurance that the risks of such attacks are appropriately mitigated. Challenges such as malware, unauthorized access and cyber attacks, including those that use advanced artificial intelligence, phishing campaigns that target our associates, as well as other disruptions, continue to evolve and may surpass our current safeguards. Each year, we evaluate the threat profile of our industry to stay abreast of trends and to provide reasonable assurance our existing countermeasures will address any new threats identified. Despite our implementation of security measures, our IT systems and those of our service providers are vulnerable to circumstances beyond our reasonable control including acts of terror, acts of government, natural disasters, civil unrest and denial of service attacks which may lead to the theft of our intellectual property, trade secrets or business disruption. To the extent that any disruption or security breach results in a loss or damage to our data or an inappropriate disclosure of confidential information, it could cause significant damage to our reputation, affect our relationships with our customers, suppliers and employees, lead to claims against the company and ultimately harm our business. Additionally, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.

At DecemberJanuary 31, 2024,2026, Dana had consolidated debt obligations of $2,630,$1,315, with cash and cash equivalents of $494$659 and unused revolving credit capacity of $1,140. Our ability to grow the business and satisfy debt service obligations is dependent, in part, on our ability to gain access to capital at competitive costs. External factors beyond our control can adversely affect capital markets – either tightening availability of capital or increasing the cost of available capital. Failure on our part to maintain adequate financial performance and appropriate credit metrics can also affect our ability to access capital at competitive prices.

We have aestablished board committee and an executive officer positionoversight of sustainability matters, with responsibility for sustainability, additional dedicated employee resources,resources and a cross-functional/business sustainability leadership team to further develop and implement an enterprise-wide sustainability strategy, and we have published a sustainability report. Our sustainability report includes our policies and practices on a variety of ESG matters, including theGHG valueemission creation opportunities provided by our products; diversity, equity,targets and inclusionperformance; employeesafety healthmanagement system goals and safetyperformance; communitystandards givingof business conduct; and humansupplier capitalcode management.of business conduct. These efforts may result in increased investor, media, employee, and other stakeholder attention to such initiatives, and such stakeholders may not be satisfied with our ESG practices or initiatives. Additionally, organizations that inform investors on ESG matters have developed rating systems for evaluating companies on their approach to ESG. Unfavorable ratings may lead to negative investor sentiment, which could negatively impact our stock price and our ability to access capital at competitive prices. Any failure, or perceived failure, to respond to ESG concerns could harm our business and reputation.

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.

We are a global provider of high-technology products to virtually every major on-highway vehicle manufacturer in the world. We also serve the stationary industrial market. Our technologies include drive systems (axles, driveshafts, transmissions,driveshafts and wheel and track drives); motion systems (winches, slew drives, and hub drivestransmissions); electrodynamic technologies (motors, inverters, software and control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and predictive analytics). We serve our global light vehicle,vehicle and medium/heavy vehicle and off-highway markets through fourtwo business units – Light Vehicle Drive Systems (Light Vehicle), and 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 have a diverse customer base and geographic footprint which minimizes our exposure to individual market and segment declines. In 2024,2025, 48%60% of our sales came from North American operations and 52%40% from operations throughout the rest of the world. Our sales by operating segment were Light Vehicle – 41%,70% and Commercial Vehicle – 19%, Off-Highway – 27% and Power Technologies – 13%.30%.

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.Dana.

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, commercialpassenger and off-highwaycommercial vehicles across the globe.

We serve our customers in threetwo core global end markets: light vehicle, primarily full frame trucks and SUVs; and commercial vehicle, including medium-and heavy-duty trucks and busses; and off-highway, including construction, mining, and agriculture equipment.busses. Each of our end-markets has unique cyclical dynamics and market drivers. These cycles are impacted by periods of investment where end-user vehicle fleets are refreshed or expanded in reaction to demand usage patterns, regulatory changes, or when the age of vehicles in service reach their useful life. Key market drivers include regional economic growth rates; cost and availability of end customer financing; and industrial output; commodity production and pricing; and residential and nonresidential construction rates.output. Our multi-market coverage and broad customer base help provide stability across the cycles while mitigating secular variability.

Light vehicle markets — Our driveline business is weighted more heavily to the truck and SUV segments of the light-vehicle market versus the passenger-car segment. Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive vehicles, as well as hybrid and electric vehicles. During 2024,2025, light-truck markets showed marginal improvement across all regions except Europe,North America, which was downflat slightlycompared fromto 2023.2024. The outlook for 20252026 reflects global light-truck production being relatively stable acrossin allNorth regionsAmerica 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 2024,2025, production of Class-8 and Classes 5-7 trucks in North America both decreased 3%23% fromcompared 2023to 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 2023.2024. The outlook for 20252026 is for a moderate decreaseincrease in production fromof 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 increaseddecreased 41%7% overcompared 2023,to 2024, reflecting improvedrelatively stable economic conditions in the region. The 20252026 outlook for South America reflects amedium- modestand decrease inheavy-duty production frombeing relatively flat compared to the prior year. Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, decreasedincreased 5%12% in 2024. The 20252026 outlook for Asia Pacific is for a modest increase in production from the prior year.

Foreign currency — With 55%43% of our 20242025 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 IndiaBrazil accounted for 47%32% and 10%13% of our 20242025 non-U.S. sales, respectively, while BrazilIndia, Thailand and China accounted for 9%9%, 8% and 8%,7%, respectively. Although sales in South Africa are less than 5%7% of our non-U.S. sales, the rand has been volatile and significantly impacted sales from time to time. International currencies weakenedstrengthened against the U.S. dollar in 2024,2025, decreasingincreasing 20242025 sales by $49.$28. A weakerstronger Brazilian real, Chinese renminbieuro and IndianThai rupee,baht, were partially offset by a strongerweaker euro.Brazilian real and India rupee.

Commodity costs — The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important to us being those of various grades of steel, aluminum, copper, brass and rare earth materials. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings, batteries and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers based on the movement in various published commodity indexes. Where such formal agreements are not present, we have historically been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes. LowerHigher commodity prices decreased year-over-year earnings by $19 in 2025. Material recovery pricing actions increased year-over-year earnings by $13$19 in 2024. Material recovery pricing actions decreased year-over-year earnings by $53 in 2024.2025.

Adjusted EBITDA and adjusted free cash flow are non-GAAP financial measures. See the Non-GAAP Financial Measures discussion below for definitions of our non-GAAP financial measures and reconciliations to the most directly comparable U.S. generally accepted accounting principles (GAAP) measures. We have not provided a reconciliation of our adjusted EBITDA outlook to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

Our 20252026 sales outlook is $9,525$7,300 to $10,025,$7,700, reflecting declining global market demand and currency headwinds, partiallydemand, offset by $150$200 of net new business backlog.backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds. Based on our current sales and exchange rate outlook for 2025,2026, we expect international currencies to be a modest headwindtailwind to sales primarily due to a weakerstronger euro. At sales levels in our current outlook for 2025,2026, a 5% movement on the euro would impact our annual sales by approximately $120.$135. A 5% change on the Chinese renminbi, Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $25. At our current sales outlook for 2025,2026, we expect full year 20252026 adjusted EBITDA to approximate $925$750 to $1,025.$850. Adjusted EBITDA margin is expected to be 10.0%10.7% at the midpoint of our guidance range, a 140260 basis-point improvement over 2024,2025, reflecting the impact of significant cost savings actions andactions, improved operational performance,performance and favorable product mix, 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$300 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA,EBITDA and lower capitalincome spendingtax and improvedinterest workingpayments, partially offset by higher capital efficiency.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. Our success on this front is measured, in part, by our sales backlog – net new business awarded that will be launching over the next three years, adding to our base annual sales. This backlog excludes replacement business and represents incremental sales associated with new programs for which we have received formal customer awards. At December 31, 2024,2025, our sales backlog of net new business for the 20252026 through 20272028 period was $650.$750. We expect to realize $150$200 of our sales backlog in 2025,2026, with incremental sales backlog of $300 and $200$250 being realized in 20262027 and 2027,2028, respectively. Our sales backlog is primarily attributable to our on-highway end markets.

Sales in 2024 were $271$121 lowerhigher than in 2023. Weaker international currencies decreased sales by $49,$42, principally due to a weaker Brazilian real, ChineseIndian renminbirupee and IndianThai rupee, partially offset by a stronger euro.baht. The organic sales decreaseincrease of $217,$163, 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 year2023 and the conversion of sales backlog. Pricing actions and recoveries, including material commodity price and inflationary cost adjustments, increased sales by $94.$131.

The North America organic sales increase of 5%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 last year,2024, the conversion of sales backlog and net customer pricing and cost recovery actions. Excluding currency effects, sales in Europe were down 12%5% compared with 2023.2023, Withreflecting ourlower significantelectric Off-Highwayvehicle presencerelated inproduct 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.sales. Excluding currency effects, sales in South America were up 12%14% compared with 2023, reflecting improved medium- and heavy-duty truck production volumes. Excluding currency effects, sales in Asia Pacific decreased 8%10% compared to 2023, reflecting lower electric vehicle related product sales.

Cost of sales and gross margin — Cost of sales for 2024 decreasedincreased $247,$120, or 3%,2%, when compared to 2023. Cost of sales as a percent of sales was flat10 withbasis points hihger than in the previous year. Incremental margins resulting from higher material cost savings of $132, operational efficiencies of $72,$90, lower premium freight costs of $32,$26, lower incentive compensation expense of $16, lower commodity costs of $13,$15, lower program launch costs of $9$11 and lower spending on electrification initiatives of $5$5, were partially offset by unfavorable product mix, non-material inflation of $165$157, operational inefficiencies of $16 and higher warranty expense of $5.$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$378 for 2024 decreasedincreased $24$1 from 2023. Gross margin as a percent of sales was 8.5%4.9% in both2024, 202410 andbasis points lower than in 2023. The 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. With commodity costs abating during 2024, gross margin was negatively impacted by net material cost recoveries on both a dollar and percentage basis. 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 2024 were $524$429 (5.1%5.5% of sales) as compared to $549$440 (5.2%5.8% of sales) in 2023. SG&A expenses were $25$11 lower in 2024 primarily due to lower incentive compensation and lower professional services and consulting costs, partially offset by increased information technology expenses.

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. 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.

Equity in earnings of affiliates — Net earnings (loss) from equity investments waswere earnings of $10 in 2024 and a loss of $9 in 2023. Net earnings (loss) from Dongfeng Dana Axle Co., Ltd. (DDAC) were earnings of $3 in 2024 and a loss of $16 in 2023. DDAC’s 2023 results were negatively impacted by valuation allowances being recorded against certain deferred tax assets.

Light Vehicle segment EBITDA increased by $102$103 in 2024. Higher sales volumes provided a year-over-year earnings benefit of $16$41 (15%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,$129, higher material cost savings of $50,$63, lower premium freight costs of $16,$17, lower incentive compensation expense of $15 and lower program launch costs of $10,$12. lowerPartially incentive compensation expense of $8 and commodity cost decreases of $2. Offsettingoffsetting these performance-related earnings increases were inflationary cost increases of $134 and$146, higher spending on electrification initiatives of $16.$14, commodity cost increases of $2, higher warranty expense of $1 and operational inefficiencies of $9.

Commercial Vehicle segment EBITDA decreased $20$27 in 2024. Lower sales volumes and unfavorable product mix decreased earnings by $53$63 (87%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, lower incentive compensation expense of $8, net customer pricing and cost recovery actions of $8, lower incentive compensation expense of $8$2 and commodity cost decreases of $2. Partially offsetting these performance-related earnings increases were inflationary cost increases of $19,$20, operational inefficiencies of $16,$7, higher warranty expense of $6$5 and higher program launch costs of $1.

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

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 havehad 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 July 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes at prices equal to 100.00% plus accrued and unpaid interest. On January 8, 2026, we redeemed the remaining $262 of our November 2027 Notes and the remaining $258 of our June 2028 Notes at prices equal to 100.00% plus accrued and unpaid interest. In addition, on January 2, 2026, we repaid the $225 outstanding balance on the Term A Facility and the $390 of outstanding borrowings on our Revolving Facility. See Note 10 of our consolidated financial statements in Item 1 of Part I for additional information. On June 8, 2025, Dana’s board of directors approved a program to provide up to a $1,000 return of capital to shareholders through common stock share repurchases and/or special dividends through the end of 2027. On February 11, 2026, Dana's board of directors increased and extended the share repurchase program to a total of $2,000 through the end of 2030. Through MarchJune 31,30, 2026, we have spent $775$819 to repurchase 38,702,87239,943,730 shares under the approved stock repurchase program. See Note 6 of our consolidated financial statements in Item 1 of Part I for additional information.

Dana, with history dating back to 1904, is headquartered in Maumee, Ohio. We are a world leader in providing power-conveyance and energy-management solutions for on-highway vehicles. The company's portfolio improves the efficiency, performance, and sustainability of light and commercial vehicles. Our technologies include drive systems (axles, driveshafts and transmissions); electrodynamic technologies (motors, inverters, software and control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and predictive analytics). We serve our global light vehicle and medium/heavy vehicle markets through two business units – Light Vehicle Systems (Light Vehicle) and Commercial Vehicle Systems (Commercial Vehicle). At MarchJune 31,30, 2026, we employed approximately 26,90027,300 people and operated in 24 countries.

External sales by operating segment for the periods ended MarchJune 31,30, 2026 and 2025 are as follows:

Foreign currency — With 44% of our first quartersix 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, ThailandThailand, China, Argentina and ChinaSouth Africa accounted for 14%, 10%,9%, 8%7%, 7%, 7% and 7%,6%, respectively. International currencies strengthened against the U.S. dollar during the first quartersix months of 2026, increasing sales by $64,$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 firstsix quartermonths of 2026 of approximately $45$111 are 2%3% of our consolidated sales and our net asset exposure related to Argentina was approximately $68,$79, including $18$21 of net fixed assets, at MarchJune 31,30, 2026. During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy. In assessing Argentina's economy as highly inflationary we considered its three-year cumulative inflation rate along with other factors. As a result, effective July 1, 2018, the U.S. dollar is the functional currency for our Argentine operations, rather than the Argentine peso. Beginning July 1, 2018, peso-denominated monetary assets and liabilities are remeasured into U.S. dollars using current Argentine peso exchange rates with resulting translation gains or losses included in results of operations. Nonmonetary assets and liabilities are remeasured into U.S. dollar using historic Argentine peso exchange rates.

Commodity costs — The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important to us being those of various grades of steel, aluminum, copper, brass and rare earth materials. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings, batteries and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers based on the movement in various published commodity indexes. Where such formal agreements are not present, we have historically been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes. Higher year-over-year commodity prices decreased earnings during the second quarter and first quarterhalf of 2026 by $8.$15 and $23, respectively. Material cost recovery pricing actions increased earnings in the second quarter and first quarterhalf of 2026 by $6.$12 and $18, respectively.

Our 2026 sales outlook is $7,300$7,650 to $7,700,$7,850, reflecting decliningrelatively stable global market demand, offset by $200 of net new business backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds. Based on our current sales and exchange rate outlook for 2026, we expect international currencies to be a modest tailwind to sales primarily due to a stronger euro. At sales levels in our current outlook for 2026, a 5% movement on the euro would impact our annual sales by approximately $115.$65. A 5% change on the Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $25.$15. A 5% change on the Chinese renminbi rate would impact our annual sales by approximately $15.$10. At our current sales outlook for 2026, we expect full year 2026 adjusted EBITDA to approximate $750$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 lowernet end-marketmaterial demandcost recoveries and net materialinflationary cost recoveries. We expect to generate free cash flow of $300$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.

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. Our success on this front is measured, in part, by our sales backlog – net new business awarded that will be launching over the next three years, adding to our base annual sales. This backlog excludes replacement business and represents incremental sales associated with new programs for which we have received formal customer awards. At MarchJune 31,30, 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 (FirstSecond Quarter, 2026 versus 2025)

Sales in the firstsecond quarter of 2026 were $87$75 higher than 2025. Stronger international currencies increased sales by $64,$24, principally due to a stronger euro, Brazilian real, euro and South African rand and Thai baht,rand, partially offset by a weaker India rupee. The organic sales increase of $23$51 primarily resulted from pricing actions and recoveries, including material commodity andcommodity, 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 andcommodity, tariff and inflationary costcosts adjustments, increased sales by $56.$45.

The North America organic sales increase of 3%4% was driven principally by net customer pricing andpricing, tariff and cost recovery actionsactions, higher full-frame light-truck production volumes and the conversion of sales backlog, partially offset by lower medium- and heavy-truck production volumes. FirstSecond quarter 2026 full-frame light-truck production was up 6%. Second quarter 2026 Class 8 and Classes 5-7 production were down 25%8% and 20%,10%, respectively. Excluding currency effects, sales in Europe were up 1%3% compared to 2025, reflecting anet modestcustomer improvementpricing inand year-over-yearcost firstrecovery quarter medium/heavy-truck production volumes.actions. Excluding currency effects, sales in South America were downup 4%2% compared to 2025, reflecting lowerhigher year-over-year medium/heavy-truck productproduction sales.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 firstsecond quarter medium/heavy-truck production volumes.

Cost of sales and gross margin — Cost of sales for the firstsecond quarter of 2026 increased $36$3 when compared to 2025. Cost of sales as a percent of sales was 240330 basis points lower than in the previous year. Incremental margins from cost reduction initiatives of $33,$18, higher material cost savings of $23,$24, operational efficiencies of $14,$6, lower incentive compensation expense of $3, lower premium freight costs of $10, lower program launch costs of $1$2 and favorable product mix were partially offset by tariff-related impacts of $50, non-material inflation of $24,$26, commodity cost increases of $8,$15, higher spending on electrification initiatives of $6 and$7, higher warranty expense of $2.$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 $169$210 for the firstsecond quarter of 2026 increased $51$72 from 2025. Gross margin as a percent of sales was 9.0%10.4% in the firstsecond quarter of 2026, 240330 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 firstsecond quarter of 2026 were $102$104 (5.5%5.2% of sales) as compared to $105$99 (5.9%5.1% of sales) in the firstsecond quarter of 2025. SG&A expenses were $3$5 lowerhigher in the firstsecond quarter of 2026 primarily due to lowerhigher salarylegal and employeeprofessional benefitservices costs, resulting from global headcount and cost reduction initiatives that commenced during the fourth quarter of 2024.costs.

Amortization of intangibles — Amortization expense was $2$1 in both the firstsecond quarter of 2026 and $2 in the firstsecond quarter 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$9 in the firstsecond quarter of 2026 and $2$11 in the firstsecond quarter of 2025. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

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 firstsecond quarter of 2026, we recorded $56$3 of charges, including impairment and loss on disposition of property, plant and equipment, associated with certain electric vehicle programs that were either cancelled by the customer or that have experienced a precipitous decline in program volumes. On January 1, 2026, we sold our Off-Highway business to Allison Transmission Holdings, Inc. (Allison). At closing, Dana entered into a transition services agreement and an engineering services agreement with Allison. Services to be provided by Dana under the transition services agreement include finance, information technology, human resources and certain other administrative services for periods up to 24 months. See Note 2 to our consolidated financial statements in Item 1 of Part I for additional information. On JanuaryJune 30,6, 2026,2025, we sold our wholly-ownedownership subsidiaryinterest Piin InnovoSwitch LLC,Mobility Limited, recognizing aan $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 $6$10 in the first quartersix months of 2026 and $2$5 in the first quartersix months of 2025. Interest expense decreased from $39$83 in the first quartersix months of 2025 to $22$43 in the first quartersix 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%6.4% in the first quartersix months of 2026 and 5.5%5.6% in the first quartersix months of 2025.

Income tax benefitexpense — We reported income tax expense of $14$68 and benefit of $(10)$0 for the first quarterssix months of 2026 and 2025, respectively. Our effective tax rates were (350)%124% and 34%0% for the first quarterssix months of 2026 and 2025.2025, respectively. During the first quartersix months of 2026, we recorded $12 of tax expense due to revisions in our assertions on unremitted earnings in foreign jurisdictions. During the first quartersix 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 andstatus, $9 of tax expense for income tax reserves associated with prior tax years in foreign jurisdictions.jurisdictions and tax expense of $6 resulting from the sale of Dana's ownership interest in an equity method investment. Our effective income tax rates vary from the U.S. federal statutory rate of 21% due to establishment, release, and adjustment of valuation allowances in several countries, nondeductible expenses and deemed income, local tax incentives in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of non-deductible expenses.

Equity in earnings of affiliates — Net earnings from equity investments was $3$9 in the first quartersix months of 2026 and $2$25 in the first quartersix months of 2025. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) were $2$7 in the first quartersix months of 2026 and de minimis$4 in the first quartersix 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$1,095 in the first quartersix months of 2026 comparedand to$90 in the first quartersix months of 2025. The Off-Highway business sale transaction closed on January 1, 2026, with a preliminary $1,191$1,186 pre-tax gain being recognized in net income from discontinued operations during the first quartersix months of 2026. The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. See Note 2 of our consolidated financial statements in Item 1 of Part I for additional information.

Light Vehicle sales in the firstsecond quarter of 2026, exclusive of currency effects, were 2%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 EuropeSouth America and Asia Pacific increased 5%.11% Light-truckand 6%, respectively. Year-over-year light-truck production in AsiaEurope Pacificdecreased was flat compared with last year’s first quarter.1%. Year-over-year light-vehicle engine production decreasedwas flat in North America, EuropeAmerica and Asia PacificPacific. byYear-over-year 1%,light-vehicle 5%engine production increased 2% in South America and 4%,decreased respectively.7% in Europe. Net customer pricing and cost and tariff recovery actions increased year-over-year firstsecond quarter sales by $36.$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 firstsecond-quarter quarterand 2026 segmentfirst-half EBITDA increased $44$31 and $75, respectively, from the comparable periodperiods 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.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 $36,$35, higher material cost savings of $14,$16, lower premium freight costs of $8,$5, cost reduction initiatives of $5$3, lower incentive compensation expense of $3 and operational efficiencies, inclusive ofincluding lower corporate allocations resulting from cost reduction initiatives,initiatives of $13.$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 $36,$46, inflationary cost increases of $19,$39, commodity cost increases of $6$17, andnet foreign currency transaction losses of $7, higher warranty expense of $3.$3 and higher program launch costs of $1.

Commercial Vehicle sales in the firstsecond quarter of 2026, exclusive of currency effects, were 1%2% lowerhigher than 2025 reflecting a weakeningstronger NorthAsia AmericanPacific market partially offset bymarket, the conversion of sales backlog and net customer pricing and cost and tariff recovery actions.actions, partially offset by a weakening North America market. Year-over-year Class 8 production in North America was down 25%8% while Classes 5-7 was down 20%10% in this year’s firstsecond quarter. Year-over-year medium/heavy-truck production in Europe, South America and Asia Pacific were up 10%, 2%6% and 9%,12%, respectively, while Europe was down 3% in this year’s firstsecond quarter. Net customer pricing and cost and tariff recovery actions increased year-over-year sales by $20$10 in this year’s second quarter. Commercial Vehicle sales in the first quarter.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 firstsecond-quarter quarterand first-half 2026 segment EBITDA increased $22$21 and $43, respectively, from the comparable periodperiods 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 $4$8 (17%40% decremental margin) in the first quarterhalf 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 $20,$10, net tariff refunds of $10, higher material cost savings of $9,$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 $2,$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 warrantyincentive compensation expense of $1, lower program launch costs of $1 and operational efficiencies, inclusive ofincluding lower corporate allocations resulting from cost reduction initiatives,initiatives of $13.$20. Partially offsetting these performance-related earnings increases were higher tariff-related costs of $14, higher spending on electrification initiatives of $6,$13, inflationary cost increases of $4,$9, commodity cost increases of $2$6, higher tariff-related costs of $4 and higher incentivepremium compensationfreight expensecosts of $1.

We have defined adjusted free cash flow as cash provided by (used in) operating activities less purchases of property, plant and equipment plus proceeds from sale of property, plant and equipment plus cash paid for purchases of leased facilities plus cash paid for Off-Highway business divestiture and Eaton Mobility business acquisition related activities. We believe adjusted free cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Adjusted free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP. Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at MarchJune 31,30, 2026:

We had availability of $1,140 at MarchJune 31,30, 2026 under our Revolving Facility after deducting $10 of outstanding letters of credit.

The components of our MarchJune 31,30, 2026 consolidated cash balance were as follows:

At MarchJune 31,30, 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. The incurrence-based covenants in the Revolving Facility permit us to, among other things, (i) issue foreign subsidiary indebtedness, (ii) incur general secured indebtedness subject to a pro forma first lien net leverage ratio not to exceed 1.50:1.00 in the case of first lien debt and a pro forma secured net leverage ratio of 2.50:1.00 in the case of other secured debt and (iii) incur additional unsecured debt subject to a pro forma total net leverage ratio not to exceed 3.50:1.00, tested at the time of incurrence. We may also make dividend payments in respect of our common stock as well as certain investments and acquisitions subject to a pro forma total net leverage ratio of 2.75:1.00. In addition, the Revolving Facility is subject to a financial covenant requiring us to maintain a first lien net leverage ratio not to exceed 2.00:1.00. The indentures governing the senior notes include other incurrence-based covenants that may subject us to additional specified limitations.

Operating activities — Exclusive of working capital, other cash provided by continuing operations was $118$211 in 2026 and $53$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$221 and $418$202 in 2026 and 2025.2025, respectively. Cash of $295$321 and $259$134 was used to finance receivables in 2026 and 2025.2025, respectively. Cash of $18$32 and $48 was provided by lower inventory levels in 2026,2026 whileand cash2025, of $176 was used to fund higher inventory levels in 2025.respectively. Increases in accounts payable and other net liabilities provided cash of $25$68 in 2026, while decreases in accounts payable and $17other net liabilities used cash of $116 in 2026 and 2025. The Off-Highway business sale transaction closed on January 1, 2026. The Off-Highway business's Mexican operations continue to be presented as discontinued operations, as those operations have not yet legally transferred to the buyer. Operating activities of discontinued operations used cash of $61$76 in 2026 and generated cash of $328$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 $62$204 and $67$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$2,529 during 2026 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.

Financing activities — During 2026, we had net payments on our Revolving Facility of $390 and we repaid the $225 outstanding balance on the Term A Facility. During 2025, we had net borrowings on our Revolving Facility of $115.$525. During 2026, we purchased $138 of our November 2027 Notes, $142 of our June 2028 Notes, €141 of our July 2029 Notes ($164 as of January 7, 2026), $173 of our September 2030 Notes, €9 of our July 2031 Notes ($10 as of January 7, 2026) and $152 of our February 2032 Notes. Also during 2026, we redeemed $262 of our November 2027 Notes and $258 of our June 2028 Notes. During 2025, we redeemed the remaining $200 of our April 2025 Notes. We used cash of $13$26 and $15$29 for dividend payments to common stockholders during 2026 and 2025, respectively. During 2026, weWe used cash of $125$169 and $257 to repurchase 4,424,0565,664,914 common shares and 14,607,283 common shares under our share repurchase program.during 2026 and 2025, respectively. Distributions to noncontrolling interests totaled $1$2 and $3 in both 2026 and 2025.2025, 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.

There have been no material changes at MarchJune 31,30, 2026 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 2025 Form 10-K.

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

The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. See Item 7 in our 2025 Form 10-K for a description of our critical accounting estimates and Note 1 to our consolidated financial statements in Item 8 of our 2025 Form 10-K for our significant accounting policies. There were no changes to our critical accounting estimates in the threesix months ended MarchJune 31,30, 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 threesix months of 2026.