Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes in this report.

Forward-Looking Information

Statements in this report (or otherwise made by us or on our behalf) that are not entirely historical constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often be identified by words such as "anticipates," "expects," "believes," "intends," "plans," "predicts," "seeks," "estimates," "projects," "outlook," "may," "will," "should," "would," "could," "potential," "continue," "ongoing" and similar expressions, variations or negatives of these words. These statements represent the present expectations of Dana Incorporated and its consolidated subsidiaries (Dana) based on our current information and assumptions. Forward-looking statements are inherently subject to risks and uncertainties. Our plans, actions and actual results could differ materially from our present expectations due to a number of factors, including those discussed below and elsewhere in this report and in our other filings with the Securities and Exchange Commission (SEC). All forward-looking statements speak only as of the date made and we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances that may arise after the date of this report.

Recent Strategic Actions

Cost reduction initiatives - During the fourth quarter of 2024, we announced further actions to support sustained long-term profitability and enhanced cash flow generation. This includes substantial reduction in selling, general and administrative costs and aligning engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles. We expect to deliver annualized savings of $325 through 2026. Approximately $260 of annualized savings was realized through 2025 with an additional $65 to be realized in 2026. See Note 4 of our consolidated financial statements in Item 1 of Part I for additional information.

Segment realignment - Through December 2024, we managed our operations globally through four operating segments. Our Light Vehicle and Power Technologies segments primarily supported light vehicle original equipment manufacturers (OEMs) with products for light trucks, SUVs, CUVs, vans and passenger cars. Our Commercial Vehicles segment supported the OEMs of on-highway commercial vehicles (primarily trucks and buses), while our Off-Highway segment supported OEMs of off-highway vehicles (primarily wheeled vehicles used in construction, mining and agricultural applications). In the first quarter of 2025, our Power Technologies segment was integrated into our Light Vehicle and Commercial Vehicle segments, streamlining the business, enhancing our go-to-market approach and serving our customers more efficiently. The OEM-facing business was integrated into our Light Vehicle segment while the aftermarket business was integrated into our Commercial Vehicle segment. See Note 17 of our consolidated financial statements in Item 1 of Part I for additional information.

Divestiture of Off-Highway Business - Dana has embarked on a strategic plan to focus on our core on-highway markets, creating a more focused and nimble Dana through the divestiture of our Off-Highway business. In June 2025, we entered into a definitive agreement to sell our Off-Highway business to Allison Transmission Holdings, Inc. We analyzed the quantitative and qualitative factors relevant to the pending divestiture of our Off-Highway business and determined that the conditions for discontinued operations presentation have been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been recast to reflect discontinued operations presentation. See Note 1 and Note 2 of our consolidated financial statements in Item 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 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 March 31, 2026, we have spent $775 to repurchase 38,702,872 shares under the approved stock repurchase program. See Note 6 of our consolidated financial statements in Item 1 of Part I for additional information.

Other Initiatives

Aftermarket opportunities - We have a global group dedicated to identifying and developing aftermarket growth opportunities that leverage the capabilities within our existing businesses - targeting increased future aftermarket sales. Powered by recognized brands such as Dana®, Spicer®, Spicer Electrified™, Victor Reinz®, Glaser®, GWB®, Thompson®, Tru-Cool®, SVL®, and Transejes™, Dana delivers a broad range of aftermarket solutions - including genuine, all makes, and value lines - servicing passenger and commercial vehicles across the globe.

Selective acquisitions - Although transformational opportunities will be considered when strategically and economically attractive, our acquisition focus is principally directed at "bolt-on" or adjacent acquisition opportunities that have a strategic fit with our existing core businesses, particularly opportunities that support our enterprise strategy and enhance the value proposition of our product offerings. Any potential acquisition will be evaluated in the same manner we currently consider customer program opportunities and other uses of capital - with a disciplined financial approach designed to ensure profitable growth and increased shareholder value.

Management Overview

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 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,
		2026								2025
						% of								% of
		Dollars				Total				Dollars				Total
Light Vehicle		$	1,269				67.9	%		$	1,213				68.1	%
Commercial Vehicle			599				32.1	%			568				31.9	%
Total		$	1,868							$	1,781

See Note 17 to our consolidated financial statements in Item 1 of Part I for further financial information about our operating segments.

Our internet address is www.dana.com. The inclusion of our website address in this report is an inactive textual reference only and is not intended to include or incorporate by reference the information on our website into this report.

Trends in Our Markets

We serve our customers in two core global end markets: light vehicle, primarily full frame trucks and SUVs; and commercial vehicle, including medium-and heavy-duty trucks and 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. 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 2025, light-truck markets showed marginal improvement across all regions except North America, which was flat compared to 2024. The outlook for 2026 reflects global light-truck production being relatively stable in North America and Asia Pacific, while Europe and South America reflect marginal improvement, in comparison with the prior year.

Commercial vehicle markets - Our primary business is driveline systems for medium and heavy-duty trucks and busses, including the emerging market for hybrid and electric vehicles. Key regional markets are North America, South America (primarily Brazil) and Asia Pacific. During 2025, production of Class-8 and Classes 5-7 trucks in North America both decreased 23% compared to 2024. The outlook for 2026 is for a modest decrease in production of Classes 5-7 trucks and a modest increase in Class-8 truck production compared to the prior year. Outside of North America, production of medium- and heavy-duty trucks in South America decreased 7% compared to 2024, reflecting relatively stable economic conditions in the region. The 2026 outlook for South America reflects medium- and heavy-duty production being relatively flat compared to the prior year. Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, increased 12% in 2025. 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. 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. 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.

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. 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 first quarter of 2026 by $8. Material cost recovery pricing actions increased earnings in the first quarter of 2026 by $6.

Sales, Earnings and Cash Flow Outlook

	2026 Outlook
Sales	$7,300 - $7,700
Adjusted EBITDA	$750 - $850
Adjusted Free Cash Flow	$250 - $350

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 2026 sales outlook is $7,300 to $7,700, reflecting declining global market demand, offset by $200 of net new business backlog, dissipation of the tariff recovery lag experienced in 2025 and currency tailwinds. Based on our current sales and exchange rate outlook for 2026, we expect international currencies to be a modest tailwind to sales primarily due to a stronger euro. At sales levels in our current outlook for 2026, a 5% movement on the euro would impact our annual sales by approximately $115. A 5% change on the Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $25. A 5% change on the Chinese renminbi rate would impact our annual sales by approximately $15. At our current sales outlook for 2026, we expect full year 2026 adjusted EBITDA to approximate $750 to $850. Adjusted EBITDA margin is expected to be 10.6% 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. We expect to generate free cash flow of $300 at the midpoint of our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA and lower income tax and interest payments, partially offset by higher capital spending.

Among our operational and strategic initiatives is continued focus on and investment in product technology - delivering products and technology that are key to bringing solutions to issues of paramount importance to our customers. 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 March 31, 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,
		2026								2025
		Dollars				% of Net Sales				Dollars				% of Net Sales				Increase/ (Decrease)
Net sales		$	1,868							$	1,781							$	87
Cost of sales			1,699				91.0	%			1,663				93.4	%			36
Gross margin			169				9.0	%			118				6.6	%			51
Selling, general and administrative expenses			102				5.5	%			105				5.9	%			(3	)
Amortization of intangibles			2								2								-
Restructuring charges, net			6								2								4
Other income (expense), net			(40	)							(1	)							(39	)
Earnings from continuing operations before interest and income taxes			19								8								11
Loss on extinguishment of debt			(7	)															(7	)
Interest income			6								2								4
Interest expense			22								39								(17	)
Loss from continuing operations before income taxes			(4	)							(29	)							25
Income tax expense (benefit)			14								(10	)							24
Equity in earnings of affiliates			3								2								1
Net loss from continuing operations			(15	)							(17	)							2
Net income from discontinued operations			1,106								47								1,059
Net income			1,091								30								1,061
Less: Noncontrolling interests net income from continuing operations			4								5								(1	)
Net income attributable to the parent company		$	1,087							$	25							$	1,062

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

		Three Months Ended
		March 31,												Amount of Change Due To
		2026				2025				Increase/ (Decrease)				Currency Effects				Divestiture				Organic Change
North America		$	1,084			$	1,048			$	36			$	4			$	-			$	32
Europe			408				361				47				44								3
South America			161				155				6				12								(6	)
Asia Pacific			215				217				(2	)			4								(6	)
Total		$	1,868			$	1,781			$	87			$	64			$	-			$	23

Sales in the first quarter of 2026 were $87 higher than 2025. Stronger international currencies increased sales by $64, 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. Excluding currency effects, sales in South America were down 4% 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 as a percent of sales was 240 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. 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. 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 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. 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. 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
		March 31,
		2026				2025
Non-service cost components of pension and OPEB costs		$	(1	)		$	(2	)
Government assistance							2
Foreign exchange gain (loss)			17				(5	)
Strategic transaction expenses			(1	)			(1	)
Gain on sale of property, plant and equipment							1
Electric vehicle program termination charges			(56	)
Loss on divestiture of ownership interests			(8	)
Transition services income			10
Other, net			(1	)			4
Other income (expense), net		$	(40	)		$	(1	)

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. 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. 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 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.

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. 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. 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 in the first quarter of 2026 and $2 in the first quarter 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. 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. 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.

Segment Results of Operations (2026 versus 2025)

Light Vehicle

		Three Months
		Sales				Segment EBITDA				Segment EBITDA Margin
2025		$	1,213			$	68				5.6	%
Volume and mix			(9	)			31
Performance			36				12
Currency effects			29				1
2026		$	1,269			$	112				8.8	%

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.

Commercial Vehicle

		Three Months
		Sales				Segment EBITDA				Segment EBITDA Margin
2025		$	568			$	41				7.2	%
Volume and mix			(24	)			(4	)
Performance			20				22
Currency effects			35				4
2026		$	599			$	63				10.5	%

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.

Non-GAAP Financial Measures

Adjusted EBITDA

We have defined adjusted EBITDA as net income (loss) from continuing operations before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefits (OPEB) costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

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

		Three Months Ended
		March 31,
		2026				2025
Net loss from continuing operations		$	(15	)		$	(17	)
Equity in earnings of affiliates			3				2
Income tax expense (benefit)			14				(10	)
Loss from continuing operations before income taxes			(4	)			(29	)
Depreciation and amortization			87				85
Restructuring charges, net			6				2
Interest expense, net			16				37
Loss on extinguishment of debt			7
Loss on divestiture of ownership interests			8
Electric vehicle program termination charges			56
Foreign currency gain on unhedged intercompany loans			(21	)
Supplier capacity charge adjustment							(19	)
Other*			16				17
Adjusted EBITDA		$	171			$	93

*	Other includes stock compensation expense, non-service cost components of pension and OPEB costs, strategic transaction expenses and other items. See Note 17 to our consolidated financial statements in Item 1 of Part I for additional details.

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. Adjusted free cash flow is not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance with GAAP. Adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

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

		Three Months Ended
		March 31,
		2026				2025
Net cash used in operating activities		$	(195	)		$	(37	)
Purchases of property, plant and equipment - Continuing operations			(62	)			(67	)
Purchases of property, plant and equipment - Discontinued operations							(8	)
Proceeds from sale of property, plant and equipment - Continuing operations			1				11
Cash paid for Off-Highway business divestiture related activities			61
Adjusted free cash flow		$	(195	)		$	(101	)

Liquidity

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

Cash and cash equivalents		$	477
Additional cash availability from Revolving Facility			1,140
Total liquidity		$	1,617

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:

		U.S.				Non-U.S.				Total
Cash and cash equivalents		$	-			$	406			$	406
Cash and cash equivalents held at less than wholly-owned subsidiaries			2				69				71
Consolidated cash balance		$	2			$	475			$	477

A portion of the non-U.S. cash and cash equivalents is utilized for working capital and other operating purposes. Several countries have local regulatory requirements that restrict the ability of our operations to repatriate this cash. 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. 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.

From time to time, depending upon market, pricing and other conditions, as well as our cash balances and liquidity, we may seek to acquire our senior notes or other indebtedness through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine (or as may be provided for in the indentures governing the notes), for cash, securities or other consideration. In addition, we may enter into sale-leaseback transactions related to certain of our real estate holdings and factor receivables. 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.

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. We believe that our overall liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working capital, debt obligations and other commitments during the next twelve months. While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity.

Cash Flow

The following table summarizes our consolidated statement of cash flows:

		Three Months Ended
		March 31,
		2026				2025
Net cash used in operating activities		$	(195	)		$	(37	)
Net cash provided by (used in) investing activities			2,499				(65	)
Net cash provided by (used in) financing activities			(2,292	)			95
Net increase (decrease) in cash, cash equivalents and restricted cash		$	12			$	(7	)

Operating activities - Exclusive of working capital, other cash provided by continuing operations was $118 in 2026 and $53 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. 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 in 2026 and generated cash of $328 in 2025.

Investing activities - Expenditures for property, plant and equipment by continuing operations were $62 and $67 in 2026 and 2025, respectively. 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.

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. 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. Also during 2026, we redeemed $262 of our November 2027 Notes and $258 of our June 2028 Notes. We used cash of $13 and $15 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. 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.

Contractual Obligations

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

Contingencies

For a summary of litigation and other contingencies, see Note 12 to our consolidated financial statements in Item 1 of Part I. Based on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued that may result from these contingencies will have a material adverse effect on our liquidity, financial condition or results of operations.

Critical Accounting Estimates

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 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.