Dana (NYSE:DAN) reported higher third-quarter sales and earnings as commercial vehicle demand, backlog conversion, cost actions and favorable mix supported margin expansion. The company also raised its full-year sales outlook while maintaining its adjusted EBITDA and free-cash-flow guidance.
Chief Executive Officer Byron Foster said third-quarter sales exceeded $2 billion, rising $121 million from the prior-year period. Adjusted EBITDA increased $56 million to $218 million, while adjusted EBITDA margin expanded 220 basis points to 10.7%.
“The business continues to perform well,” Foster said, citing productivity gains, supply-chain efficiencies and commercial discipline. He added that the company’s cost-savings program is on track to deliver $325 million by the end of the fourth quarter, surpassing the $200 million target established when the program was launched in November 2024.
Third-Quarter Results
Executive Vice President and Chief Financial Officer Timothy Kraus said third-quarter sales totaled $2.038 billion, compared with $1.917 billion a year earlier. Volume and mix added $87 million to sales, supported by commercial vehicle demand, favorable product mix and backlog conversion. Tariff recoveries contributed $12 million, commodity recoveries added $17 million, and foreign exchange added $5 million.
Adjusted EBITDA benefited from $24 million in volume and mix, $29 million from operating efficiencies, commercial initiatives and cost-recovery actions, and $6 million from the annualization of cost-savings actions. Tariffs were a $3 million headwind to adjusted EBITDA because of recovery timing, while currency and commodities were neutral in the quarter.
The company reported EBITDA of $92 million, up $39 million year over year. Net interest expense fell $28 million to $16 million following debt-reduction actions taken after the sale of Dana’s Off-Highway business.
Income tax expense totaled $64 million and included a $29 million charge tied to the settlement of a foreign income tax audit. The company also recorded a $24 million loss on the redemption of its 2031 euro notes. Dana posted a loss from continuing operations of $10 million, but adjusted net income improved to $44 million from a $5 million loss in the prior-year quarter. Diluted adjusted earnings per share rose to $0.41 from a loss of $0.04 a year earlier.
Third-quarter adjusted free cash flow was $66 million, down from $101 million in the prior-year period. Kraus said the comparison was affected by the prior year’s inclusion of cash generated by discontinued Off-Highway operations. Higher continuing-operations EBITDA, lower one-time costs, reduced interest expense and improved taxes were offset by the absence of discontinued-operation earnings, a $20 million year-over-year working-capital use and $11 million of higher capital spending.
Updated 2026 Outlook
Dana increased its full-year sales forecast to approximately $7.8 billion at the midpoint of its range, up $50 million from its previous midpoint outlook. The company cited stronger commercial vehicle demand and higher commodity recoveries.
- Sales: approximately $7.8 billion, plus or minus $50 million.
- Adjusted EBITDA: approximately $825 million, plus or minus $25 million.
- Adjusted EBITDA margin: approximately 10.6%.
- Diluted adjusted EPS: approximately $2.00, plus or minus $0.25.
- Adjusted free cash flow: approximately $325 million, plus or minus $50 million.
The company expects approximately $300 million of full-year sales growth from 2025, including contributions from volume and mix, tariff recoveries, foreign currency and commodities. It expects adjusted EBITDA to rise from $610 million in 2025 to about $825 million in 2026, driven by volume and mix, performance improvements and $65 million from cost savings. Dana expects commodities to be a roughly $10 million headwind to adjusted EBITDA, largely because of recovery timing.
Kraus said the company was maintaining its EBITDA outlook despite pressure from broader inflation, particularly energy and freight costs. While customer agreements generally provide for commodity recovery mechanisms, they do not typically provide broad recovery mechanisms for general cost inflation, he said. Dana is pursuing pricing actions, purchasing savings, operational improvements, cost reductions and value analysis/value engineering efforts to offset those costs.
Eaton Mobility Transaction Remains on Track
Foster said Dana’s planned combination with Eaton Mobility remains on track to close around the end of the first quarter of 2027. The transaction is structured as a split-off and Reverse Morris Trust transaction and is intended to be tax-free for Dana and Eaton shareholders.
The company said it has obtained all but one required regulatory approval, with the final approval expected shortly. Dana expects to hold a special shareholder meeting on Dec. 7, while it plans to report fourth-quarter and full-year 2026 results in mid-February.
Dana continues to target $250 million of run-rate cost synergies within 24 months of closing. Kraus said the company expects synergies to contribute about $75 million in 2027, while costs to achieve synergies are expected to be about $200 million over the 24 months following the transaction’s close. Transaction-related costs are expected to total about $250 million, some of which are being incurred before closing.
Foster said early synergy opportunities include duplicative corporate functions, IT integration and purchasing. Longer-term opportunities include manufacturing-footprint consolidation and engineering-site consolidation. The company also sees revenue opportunities from combining sales forces, expanding aftermarket product offerings and providing Eaton Mobility products to Dana’s global original-equipment manufacturer relationships.
The combined company is targeting sales of $14 billion to $15 billion and a 15% margin by 2030, according to executives. Dana expects to maintain net leverage of 1.6 times through the transaction, including its additional planned share repurchases.
Capital Returns and Market Conditions
Dana increased its 2026 share-repurchase target to $469 million. During the third quarter, the company repurchased 6.6 million shares for $200 million, bringing year-to-date repurchases to $369 million. Since the program began, Dana has repurchased $1.02 billion of stock under its $2 billion authorization, which it intends to complete in the first half of 2029.
Management said no final decision has been made on buybacks after the Eaton transaction closes. If Dana cannot restart repurchases during a potential 24-month period after closing, Kraus said the company would use cash to reduce debt while maintaining its regular dividend and retaining the ability to pay special dividends.
Foster said demand remains elevated in the Class 5 through 7, bus and Class 8 commercial vehicle markets, supported by infrastructure investment, replacement demand and strong backlogs. He said the company sees an opportunity to support sustainable market-share gains by meeting that demand. In the light-vehicle market, Kraus noted softness on some North American platforms but said it was offset by strength in other programs, including Super Duty and Bronco.
About Dana (NYSE:DAN)
Dana Incorporated (NYSE: DAN) is a global supplier of drivetrain, motion, and thermal-management technologies for the automotive, commercial-vehicle, and off-highway industries. The company develops systems that help vehicles transmit power, manage heat, and operate efficiently across conventional, hybrid, and electric powertrains.
Dana’s products include axles, driveshafts, gearboxes, transmissions, sealing solutions, thermal-management systems, and components for electrified propulsion.
