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    DAN
    Earnings call· Jun 2026(Q2 FY26)

    DANA Q2 FY26 earnings call DAN

    Aug 6, 2026 Source

    Executive summary

    Dana Q2 FY26 — Strong Operational Execution and Raised Full-Year Outlook

    Dana delivered strong second-quarter financial results, driven by operational execution and strategic initiatives, leading to a raised full-year outlook for sales, adjusted EBITDA, and free cash flow. The company is actively preparing for the Eaton Mobility transaction, which will be structured as a split-off, and has restarted its share repurchase program, demonstrating confidence in its future earnings and cash generation capabilities.

    Highlights

    5

    • Sales reached $2 billion, driven by continued execution and favorable market dynamics.

    • Adjusted EBITDA increased to $207 million, yielding a margin of 10.3%, up 270 basis points year-over-year.

    • Generated $68 million of adjusted free cash flow in Q2, an improvement of $75 million compared to the prior period.

    • Year-to-date cost savings reached $54 million, on track to meet the $65 million target for 2026.

    • Restarted share repurchase program, buying back $44 million (1.2 million shares) in Q2, with plans for an additional $200 million by year-end.

    Concerns

    3

    • Diluted adjusted EPS revised lower to approximately $2 per share at the midpoint of the full-year range, primarily due to higher depreciation, increased net interest, and lower equity earnings from China JVs.

    • A one-time $20 million U.S. union contract signing bonus is expected in Q3, impacting adjusted EBITDA.

    • Commodity-related headwinds of $3 million in Q2 and $10 million for the full year due to timing of recovery mechanisms with customers.

    Guidance & targets

    12
    CategoryTargetConfidence
    Full-year 2026 Sales
    Approximately $7.75 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    Approximately $825 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Margin
    Approximately 10.6%
    medium materiality
    High
    Full-year 2026 Diluted Adjusted EPS
    Approximately $2.00
    high materiality
    Medium
    Full-year 2026 Adjusted Free Cash Flow
    Approximately $325 million
    high materiality
    High
    Share Repurchases
    Additional $200 million
    medium materiality
    High
    Eaton Mobility Transaction Close
    Q1 2027
    high materiality
    High
    Eaton Mobility Cost Synergies
    At least $250 million run rate
    high materiality
    High
    Eaton Mobility Cost Synergies (Year 1)
    Approximately $75 million
    medium materiality
    High
    Eaton Mobility Cost Synergies (Year 2)
    Approximately $200 million
    medium materiality
    High
    Dana 2030 Revenue Target (Combined with Eaton Mobility)
    $14 billion to $15 billion
    high materiality
    High
    Dana 2030 Share Repurchase Completion
    $2 billion
    high materiality
    High

    Operational metrics

    24
    Adjusted EBITDA Margin
    10.3%Up 270 bps YoY
    Q2 FY26

    Reflects continued operational execution and favorable market dynamics.

    Cost Savings
    $19 million
    Q2 FY26

    Contributes to year-to-date total of $54 million, on track for $65 million in 2026.

    Year-to-date Cost Savings
    $54 million
    YTD FY26

    Keeps the company on track to realize the $65 million committed for 2026.

    Cost Savings Program Target
    $325 million
    Program-to-date

    Achieved through Q2, with continued focus on efficiency opportunities.

    Stranded Cost Elimination
    $40 million
    Ongoing

    From the Off-Highway sale, with the bulk of improvement expected in H2 FY26.

    Share Repurchases
    $44 million
    Q2 FY26

    Part of the restarted share repurchase program.

    Year-to-date Share Repurchases
    $169 million
    YTD FY26

    Total repurchases for the year so far.

    Program-to-date Share Repurchases
    $819 million
    Program-to-date (through Q2)

    Total repurchases under the authorization through Q2 FY26.

    Net Interest Expense
    $17 millionDeclined 59% YoY
    Q2 FY26

    Follows debt repayment actions after the Off-Highway divestiture.

    Adjusted Net Income
    $21 millionUp from $4 million YoY
    Q2 FY26

    Reflects higher sales, stronger margins, and improved earnings.

    Aftermarket Sales (Dana 2030)
    $40 millionAdditional sales
    Annualized

    From expanded DC participation, SKU expansion, and new product launches.

    Aftermarket Sales (VIPAR Partnership)
    $10 million to $15 millionIncremental sales
    Annualized

    Expands Dana's distribution reach.

    Applied Technologies Sales (Defense)
    $30 millionNew sales
    Annualized

    Driven by increased volume and demand for existing programs.

    Eaton Mobility Combined Aftermarket Sales
    $1.7 billion
    Combined 2026 basis

    Represents approximately 4 percentage points higher than Dana on a stand-alone basis.

    Eaton Mobility Synergy Cash Cost
    Less than $250 million
    Total

    Expected cash cost to achieve the $250 million run rate synergies.

    Pro Forma Synergized Net Leverage
    Approximately 1.4x
    Pro forma 2026

    Expected for the combined company, even with planned buybacks.

    Sales Change Drivers (Q2 FY26 YoY)
    $75 million increaseYoY
    Q2 FY26

    Breakdown of factors contributing to the year-over-year sales increase.

    Adjusted EBITDA Change Drivers (Q2 FY26 YoY)
    Increased to $207 millionUp from $147 million YoY
    Q2 FY26

    Breakdown of factors contributing to the year-over-year Adjusted EBITDA increase.

    Full-year 2026 Sales Growth vs. Prior Outlook
    $250 millionIncrease
    FY26

    Largest change versus prior outlook is stronger demand in the commercial vehicle market.

    Full-year 2026 Adjusted EBITDA Change Drivers
    Increased to $825 millionFrom $610 million in 2025
    FY26

    Breakdown of factors contributing to the full-year Adjusted EBITDA outlook.

    Union Contract Signing Bonus
    $20 million
    Q3 FY26

    Expected in Q3, offsetting a portion of EBITDA benefits. Included in FCF guidance.

    Full-year 2026 Net Interest Expense Improvement
    $80 millionYoY
    FY26

    Reflecting debt reduction actions completed following the Off-Highway divestiture.

    Full-year 2026 Net Capital Spending
    $325 millionHigher than last year
    FY26

    Investments to support future growth and efficiency actions.

    Class 8 Commercial Vehicle Volume
    275,000 units
    FY26

    Expected volume for the year, with increases projected for 2027 and 2028.

    Industry KPIs

    8
    MetricValueDetails
    EPS$0.19USD
    Revenue$2 billionUSD
    Inventory—
    Net income$21 millionUSD
    Operating margin10.3%%
    Adjusted EBITDA ebita$207 millionUSD
    Tariff impact mitigation$4 millionUSD
    Share buyback capital return$44 millionUSD

    Product announcements

    5
    ProductTypeDetails
    Victor Reinz branded sealing productsexpansion
    Partnership with VIPARexpansion
    GM Defense ISVmilestone
    Major project with large OEM (Defense)roadmap
    Ford's new Super Duty capacity in Oakvillelaunch

    Deals & partnerships

    1
    Eaton MobilityCombination of Eaton's Mobility business with Dana, structured as a split-off.

    The transaction will be structured as a tax-free split-off, allowing current Eaton shareholders the choice to participate in the exchange offer. It aims to create a focused, scaled powertrain leader, accelerating Dana's 2030 plan by broadening system offerings, increasing commercial vehicle and aftermarket exposure, and creating a stronger platform for margin expansion and free cash flow growth.

    Risks & headwinds

    6
    Lower equity earnings from China JVsFY26

    Contributes to lower full-year adjusted EPS outlook

    Higher depreciation expenseFY26

    Contributes to lower full-year adjusted EPS outlook

    Higher net interest expenseFY26

    Contributes to lower full-year adjusted EPS outlook

    One-time U.S. union contract signing bonusQ3 FY26

    Approximately $20 million

    Commodity-related headwindsQ2 FY26 and FY26

    $3 million in Q2 FY26; $10 million for FY26

    Mitigation: Primarily due to timing of recovery mechanism with customers.

    Mix of higher sales in lower-margin commercial vehicles businessFY26

    Adjusted EBITDA margin remains approximately 10.6% despite higher sales outlook

    What to watch in Q3 FY26

    5

    Share Repurchase Restart Post-Eaton Close

    Post Q1 2027 close
    CurrentExploring possibility with Eaton
    TargetAgreement to restart buybacks in 24-month post-closing period

    Why it matters

    Indicates management's ability to return capital to shareholders and confidence in the combined entity's cash flow, potentially accelerating the $2 billion authorization.

    Yes. So I'll take your second part first, if we're not able to solve the buyback issue. Yes, the answer is we're not in any way restricted from either raising the dividend or paying a special. So that would be -- those 2 options are absolutely available to us in order to return additional amounts to shareholders within that 24-month period.

    Q&A highlights

    5

    Clarification on the possibility of restarting share buybacks in the 24-month post-closing period of the Eaton Mobility transaction, given previous restrictions, and how it impacts the $2 billion authorization.

    Management is exploring options with Eaton to restart buybacks post-close, acknowledging the complexity of tax codes. They believe the Eaton transaction will accelerate the completion of the $2 billion buyback authorization to before the end of 2029, even if post-close buybacks are delayed, due to increased earnings and free cash flow from the combined entity. If buybacks are not possible, higher dividends or special dividends are alternative options.

    “So even if we're not able to restart the buyback in the post 24-month period, we do now believe we will be able to complete the $2 billion buyback before the end of 2029 versus 2030, which is where we were prior to announcing the Eaton transaction, largely because once we integrate Eaton, we'll have a lot more earnings and free cash flow that we'll be able to put towards the stock buyback.”

    asked by Gautam Narayan · answered by Timothy Kraus

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 Financial Performance and Cost Savings

    Dana reported strong Q2 FY26 financial results with sales of $2 billion and adjusted EBITDA of $207 million, representing a 10.3% margin, a 270 basis point improvement year-over-year. The company achieved $19 million in cost savings during the quarter, bringing the year-to-date total to $54 million, keeping it on track for its $65 million target for 2026. Efforts continue to eliminate $40 million of stranded costs from the Off-Highway sale.

    02

    Dana 2030 Progress: Aftermarket and Applied Technologies

    The Dana 2030 program continues to advance, particularly in aftermarket and Applied Technologies. Aftermarket expansion includes new agreements with AutoZone, Advance, and O'Reilly, projected to add $40 million in sales. A new partnership with VIPAR, North America's largest heavy-duty truck parts program group, is expected to deliver an incremental $10 million to $15 million in aftermarket sales starting later this year. In Applied Technologies, increased demand for the ISV with GM Defense is driving $30 million in new sales, with further opportunities in the defense market being pursued.

    03

    Eaton Mobility Transaction Updates and Strategic Rationale

    The Eaton Mobility combination is progressing, with a key update being its structuring as a tax-free split-off, allowing Eaton shareholders choice in participation. Dana has restarted its share repurchase program, planning an additional $200 million by year-end, and is exploring further repurchases post-closing. The transaction is expected to create a scaled powertrain leader with approximately $1.7 billion in combined aftermarket sales (16% of total sales), targeting $14 billion to $15 billion in revenue by 2030, and at least $250 million in run-rate cost synergies within 24 months post-close.

    04

    Full-Year 2026 Outlook Revision

    Based on strong first-half performance and improving commercial vehicle market demand, Dana raised its full-year 2026 outlook. Sales are now expected to be approximately $7.75 billion, adjusted EBITDA around $825 million, and adjusted free cash flow approximately $325 million. However, diluted adjusted EPS was revised lower to about $2 per share due to higher depreciation, increased net interest expense, and reduced equity earnings from China joint ventures.

    05

    Commercial Vehicle Market Dynamics and Ford Super Duty

    Dana is observing increased demand from commercial vehicle customers, particularly in the Class 8 segment, which is expected to continue into next year. The company anticipates Class 8 volume to be roughly 275,000 units this year, with marginal increases in 2027 and a significant uptick in 2028. Dana is also preparing for the ramp-up of Ford's new Super Duty capacity in Oakville, with low-volume production starting this month and meaningful volumes expected by year-end, leveraging existing U.S. Super Duty production footprint.

    AI-generated summary of the company’s earnings call. Not investment advice.