Dana Q3 Margin Expands as 2026 Sales Outlook Increases

Dana Incorporated (NYSE: DAN) reported higher third-quarter sales and a 220-basis-point expansion in adjusted EBITDA margin, supported by commercial-vehicle demand, productivity gains, cost reductions and commercial actions. The company also increased the midpoint of its 2026 sales outlook by $50 million while maintaining its adjusted EBITDA and adjusted free cash flow expectations.

Sales for the quarter ended September 30 rose to $2.04 billion from $1.92 billion a year earlier. Adjusted EBITDA increased by $56 million to $218 million, lifting the adjusted EBITDA margin to 10.7% from 8.5%.

Dana attributed the sales increase to stronger commercial-vehicle demand, backlog conversion and commercial and cost-recovery actions. Favorable business mix, operating efficiencies, material savings and structural cost measures contributed to the improvement in adjusted EBITDA. The timing of tariff recoveries was a modest margin headwind, while currency movements provided a benefit, largely from the Brazilian real and South African rand.

On a GAAP basis, Dana recorded a $10 million loss from continuing operations, compared with income of $13 million in the prior-year quarter. The result reflected higher tax expense and a $24 million loss from redeeming its 2031 euro-denominated notes. Tax expense included a $29 million charge tied to a foreign income-tax settlement, partly offset by a $12 million benefit associated with restructuring after the Off-Highway business sale.

Net interest expense declined by $28 million to $16 million following debt-reduction actions completed after the divestiture. Adjusted net income was $44 million, compared with an adjusted net loss of $5 million a year earlier, while diluted adjusted earnings were $0.41 per share versus a loss of $0.04 per share.

Commercial Vehicle business leads sales growth

Commercial Vehicle Systems generated third-quarter sales of $667 million, up from $564 million a year earlier. Segment adjusted EBITDA increased to $69 million from $51 million, with margin rising to 10.3% from 9.0%.

Light Vehicle Systems sales increased more modestly to $1.37 billion from $1.35 billion. Adjusted EBITDA rose to $151 million from $126 million, expanding the segment margin to 11.0% from 9.3%.

For the first nine months of 2026, Dana’s total sales reached $5.92 billion, compared with $5.63 billion in the same period of 2025. Nine-month adjusted EBITDA increased to $596 million from $402 million.

Dana said it had realized $320 million of savings since the start of its cost-reduction program, including $60 million in 2026 through the third quarter. The company remains on track to reach its $325 million program target in the fourth quarter while continuing to offset about $40 million of stranded costs associated with the Off-Highway sale.

The company is also deploying automation across 11 plants. Dana said 38 automation units, including robots, collaborative robots and autonomous mobile robots, had been installed, with another 56 units in progress. The initial phase is expected to produce $20 million of run-rate savings in 2027.

Full-year sales outlook increases

Dana now expects 2026 sales of approximately $7.8 billion, plus or minus $50 million. The midpoint increased by $50 million, reflecting stronger commercial-vehicle demand and higher commodity recoveries.

The company maintained its full-year adjusted EBITDA forecast at approximately $825 million, plus or minus $25 million, implying an adjusted EBITDA margin of about 10.6%. Diluted adjusted earnings are expected to be about $2.00 per share, plus or minus $0.25, and adjusted free cash flow is forecast at roughly $325 million, plus or minus $50 million.

Management expects backlog conversion, commercial-vehicle aftermarket growth and favorable mix to support organic sales. Operating efficiencies, commercial actions and remaining cost reductions are expected to contribute to profit improvement. Dana also expects tariff costs to be substantially recovered within the year, although commodities are projected to remain a modest margin headwind.

Third-quarter adjusted free cash flow was $66 million, down from $101 million a year earlier. Higher continuing-operations profit, lower interest and taxes, and reduced one-time costs were offset by the absence of $113 million in adjusted EBITDA from discontinued operations, working-capital timing and increased capital spending on new programs and automation. Full-year adjusted free cash flow is expected to be broadly consistent with the $331 million generated in 2025.

Eaton Mobility transaction targets first-quarter 2027 close

Dana said its proposed combination with Eaton’s Mobility business remains on track to close around the end of the first quarter of 2027, with one regulatory approval still pending. The transaction is structured as a split-off and Reverse Morris Trust and is intended to be tax-free to Dana and Eaton shareholders for U.S. federal income-tax purposes.

The company expects at least $250 million in annual run-rate cost synergies within 24 months after closing. Dana also identified potential revenue opportunities in aftermarket distribution, commercial-vehicle fleet sales and broader access to global original-equipment manufacturers, though it did not quantify those opportunities. The combined company is targeting 2030 sales of $14 billion to $15 billion.

Dana increased planned 2026 share repurchases to $469 million. It returned $200 million to shareholders during the third quarter through the repurchase of approximately 6.6 million shares and had completed $369 million of buybacks through September, with about $100 million more planned for the year. The repurchase program is expected to remain active until the Eaton Mobility transaction closes.

Completion of the transaction remains subject to regulatory and shareholder approvals and other closing conditions. Dana also cited integration, financing, tax, litigation and execution risks, as well as the possibility that expected cost or revenue benefits may not be realized. For its commercial-vehicle outlook, the company identified supply-chain constraints and regulatory uncertainty as the main risks to near-term production volumes.