Dana Incorporated 2026 Q3 Earnings Call

Thank you, Fern. Good morning, and welcome to Dana Incorporated's earnings call for the third quarter of 2026. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we discuss today. For more details about the factors that may affect future results, please refer to our disclaimer and safe harbor statements, which can be found in our public filings and reports with the SEC. You will find this morning's press release and presentation posted on our investor website. As stated, today's call is being recorded, and the supporting materials are the property of Dana Incorporated. They may not be recorded, copied, or rebroadcast without our written consent. With us this morning are Dana's Chief Executive Officer, Byron Foster, and Timothy Kraus, Executive Vice President and Chief Financial Officer. Byron, I'll now turn the call over to you.

Okay. Thanks, Craig. Good morning, everybody, and thanks for joining the call. I'm excited to share progress on our third quarter results. If you look at the business, it continues to perform well, illustrated by solid third quarter results, really driven by continued focus on productivity gains, supply chain efficiencies, and commercial discipline. Sales in the quarter came in just over $2 billion, which is an increase over Q3 of 2025 of $121 million. Our EBITDA was $218 million, which is up $56 million versus the same period last year. Our margin is at 10.7%, which is a 220 basis point improvement over the same period last year. So, really proud of the team for delivering solid results here in Q3. Our cost savings program is on track to deliver $325 million here at the end of Q4.

You'll remember when we launched the program in November of 2024, our target was $200 million. We're going to come in at $325 million here by the end of the quarter. So far, year to date, the team has delivered $60 million against that target, which brings us to $320 million program to date. So pretty much complete with that program, with $5 million left to deliver here at the end of the quarter. I think this is also a great demonstration of the cost discipline and efficiency focus that the company continues to maintain, and it's really what gives us the strong confidence that we'll be able to deliver the synergy targets that we've put out there relative to the Eaton merger, which I'll come to here in the following slides. Regarding share repurchases, we've increased our repurchases for 2026 to a target of $469 million.

In the quarter, we bought back 6.6 million shares or $200 million worth of capital that we have returned to shareholders. Year to date, that brings us to 369, with $100 million left to complete here in the calendar year. Program to date, we are just over $1 billion, at $1.02 billion of our $2 billion authorization, which we plan to complete in the first half of 2029. Regarding share repurchases post-closing of the Eaton transaction, I know that that will be a question for the folks on the call. We have yet to have a final decision on the post-close direction of buybacks, so we will continue to keep you informed as that situation evolves. Finally, the Eaton Mobility transaction is on track, and pre-closing share repurchases, as I mentioned earlier, have been increased. If we go to page 5, turning to the Eaton Mobility transaction.

We continue to view this as a highly strategic combination of Dana and Eaton. As we have shared, the companies have very complementary product portfolios, customers, and manufacturing footprints, and we really see this combination as a great opportunity to accelerate our Dana 2030 plans that we have shared with you. As previously shared, the combination is structured as a split-off and Reverse Morris Trust transaction. It is intended to be tax-free for both the Dana and Eaton shareholders. Given the split-off structure of the transaction, we expect an orderly distribution of shares to Eaton shareholders that are interested in new Dana. Our target for synergies is $250 million of run rate within 24 months post-close. The teams are working hard on the details around those plans, but as we have shared in previous calls, we feel really confident in the 250.

With each day of integration work that we are doing, our confidence only increases that we will be able to deliver that type of value through the combination of these companies. In addition to the cost synergies, I have a slide to share a little bit of our thinking relative to sales synergies. But we are confident that the combination of these companies and the strong product fit and combined sales force is also going to deliver significant top-line synergies for the combined companies. Through the transaction, we will maintain an attractive net leverage of 1.6 times, which is inclusive of the additional $100 million in share buybacks. The transaction is on track to close around the end of the first quarter of 2027, and all of our regulatory approvals have been achieved with only one outstanding, which we expect also to get closed here shortly.

If we go to the next page, just to give you a visual of the timeline. As I mentioned, here in Q3, we are pretty much through the regulatory approvals with only one remaining. Our focus throughout this timeline is obviously on continuing to execute the business, which the team, again, has demonstrated with a solid Q3 result. December 7th is when we expect our special shareholder meeting to take place. Mid-February, we will obviously be back in front of you with our Q4 and total fiscal year results for 2026, and we are targeting the transaction to close around the end of Q1 2027. So very much still on track to deliver the combined companies here.

If you go to the next page, again, I want to keep this framework in front of you in terms of how we're thinking about the value creation opportunity of Dana and Eaton coming together. If you think about our Dana 2030 plan that we've shared with you and the five pillars, three of those around growth, two around efficiency and margin expansion. If we look at each of these pillars, we continue to see opportunities of the combined companies to accelerate the goals that we have in place, be it on traditional product growth through the expansion of the product line that Eaton brings to bear.

Our aftermarket growth, I think we've shared with you that the combined Dana and Eaton will basically double our presence in the aftermarket, and we see ways to continue to grow that by leveraging the expanded product line as well as the expanded sales force in the field to help us drive top-line growth. Or if you look at manufacturing excellence, which is another example where we've shared with you on the Dana 2030 plan, our activities around automation as one example, and we see great opportunities to take that strategy more broadly across not only the Dana footprint, but the Eaton manufacturing footprint as well. Our sales target of $14 billion-$15 billion through the combination is where we're driving. If you go to the next page 8, just to give you a quick update on Dana 2030, our manufacturing excellence pillar and automation specifically.

As we look into 2027, we have 11 plants that are executing various automation projects, and between those automation projects, and those could be robots, cobots, AMRs, et cetera, 38 have been deployed, and we see another 56 of those opportunities being deployed within the calendar year, delivering a run rate savings of $20 million. If you just think about this activity within the scope of Dana, we very much see that the Eaton manufacturing sites are on the same journey, at the same starting point. Our ability to take the capability we're building here to deploy automation and the lessons learned and deploy it not only across the broader Dana footprint, but the Eaton footprint, is a huge opportunity for us. That's just one example of the synergy opportunity through the combination of Dana and Eaton that we're actively pursuing.

If you go to page 9, just to talk a little bit about the growth opportunity and the top-line synergies that we see. Beyond the cost synergies that we're focused on, we do see significant revenue synergies. Just to give you a bit of a flavor of what we're seeing from an aftermarket perspective, as an example, we have worked hard to grow our big box retail relationships on the Dana side, and I think we've shared several examples of our ability to expand the Spicer branded products into those big box retailers. Now with those relationships established, our ability to take a broader product portfolio to those customers and bring the Eaton Mobility products to bear is a big opportunity for us. Likewise, if you look in Europe, we have a much larger European aftermarket presence on the Dana side.

We see the same opportunity to bring the Eaton Mobility products to those channels and geographies. If you look on the commercial vehicle and light vehicle side, taking advantage of Eaton's fleet sales force and leveraging that team to also bring to bear the Dana driveline products is a big opportunity for us. On the light vehicle side, our ability to leverage the global OEM relationships that we have, and again, bring the Eaton Mobility product offerings to those customers, we see as a big opportunity. As we continue to work the cost synergy detailed plan, we are also building the plans around how best to capture the top-line opportunities that we see through this combination.

Lastly, if you go to page 10, I did want to take an opportunity to give a brief update on the commercial vehicle market, where we are encouraged that we continue to see robust demand in both the Class 5 through 7 and bus markets, as well as Class 8. In both of those markets, we are seeing elevated demand and elevated backlogs, really driven by a number of things that we are seeing in the market. Be it continued investment through infrastructure projects or replacement demand supporting growth on the Class 8 side. We are obviously reacting to this demand and capturing these opportunities, and we are really encouraged that through meeting this increased demand, that we will also have the opportunity for sustainable market share gains as a result. With that, I will turn it over to Tim to take us deeper into the financial results.