Q4 2025 Dana Inc Earnings Call

February 18, 2026

Operator: Good morning, and welcome to Dana Incorporated's Fourth Quarter and Full Year 2025 Financial Webcast and Conference Call. My name is Regina, and I will be your conference facilitator. Please be advised that our meeting today, both the speaker's remarks and Q&A session, will be recorded for replay purposes. For those participants who would like to access the call from the webcast, please reference the URL on our website and sign in as a guest. There will be a question and answer period after the speaker's remarks, and we will take questions from the telephone only. To ensure that everyone has an opportunity to participate in today's Q&A, we ask that callers limit themselves to one question at a time. If you'd like to ask an additional question, please return to the queue.

Speaker #2: Please be advised that our meeting today, both the speakers' remarks and Q&A session, will be recorded for replay purposes. For those participants who would like to access the call from the webcast, please reference the URL on our website and sign in as a guest.

Speaker #2: There will be a question-and-answer period after the speaker's remarks, and we will take questions from the telephone only. To ensure that everyone has an opportunity to participate in today's Q&A, we ask that callers limit themselves to one question at a time.

Speaker #2: If you'd like to ask an additional question, please return to the queue. At this time, I'd like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations and Corporate Communications, Craig Barber.

Operator: At this time, I'd like to begin the presentation by turning the call over to Dana's Senior Director of Investor Relations and Corporate Communications, Craig Barber. Please go ahead, Mr. Barber.

Speaker #2: Please go ahead, Mr. Barber. Thank you, Regina. Good morning and welcome, everyone. Today's presentation includes forward-looking statements about our expectations for Dana's future performance, actual results could differ from what we discussed today.

Craig Barber: Thank you, Regina. Good morning, and welcome, everyone. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we discuss today.

Speaker #2: For more details about the factors that may affect future results, please refer to our Safe Harbor statement found in our public filings and on our reports with the SEC.

Byron Foster: ... For more details about the factors that may affect future results, please refer to our safe harbor statement found in our public filings and other reports with the SEC. I encourage you to visit our investor website, where you'll find this morning's press release and presentation. 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 is Bruce McDonald, Dana's Chairman and Chief Executive Officer; Byron Foster, Senior Vice President and President of Light Vehicle Systems Group; and Timothy Kraus, Senior Vice President and Chief Financial Officer. Bruce, I'll now turn the call over to you.

Craig Barber: ... For more details about the factors that may affect future results, please refer to our safe harbor statement found in our public filings and other reports with the SEC. I encourage you to visit our investor website, where you'll find this morning's press release and presentation. 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 is Bruce McDonald, Dana's Chairman and Chief Executive Officer; Byron Foster, Senior Vice President and President of Light Vehicle Systems Group; and Timothy Kraus, Senior Vice President and Chief Financial Officer. Bruce, I'll now turn the call over to you.

Speaker #2: I encourage you to visit our investor website, where you'll find this morning's press release and presentation. As stated, today's call is being recorded, and the supporting materials are the property of Dana Incorporated.

Speaker #2: They may not be recorded, copied, or rebroadcast without our written consent. With us this morning is Bruce McDonald, Dana's Chairman and Chief Executive Officer.

Speaker #2: Byron Foster, Senior Vice President and President of Light Vehicle Systems Group. And Timothy Kraus, Senior Vice President and Chief Financial Officer. Bruce, I'll now turn the call over to you.

R. Bruce McDonald: Thanks, Craig. Good morning, everyone, and thanks for joining us on our Q4 earnings call. With us today, in addition to the usual cast of characters, we have Byron Foster, our incoming CEO, with us. You know, I've known Byron and worked with him for many years. He and the rest of the management team here at Dana have been instrumental in our cost reduction activities and our transformation plans, as well as the development of our Dana 2030 strategy. So I think, the board and myself have the utmost confidence in the team under Byron's leadership, and I'm very confident in the team's ability to deliver on the financial objectives that we're gonna share with you today. Turning to the business overview. Excuse me.

Speaker #3: Thanks, Craig. Good morning, everyone, and thanks for joining us on our Q4 earnings call. With us today in addition to the usual cast of characters, we have Byron Foster, our income and CEO with us.

Speaker #3: I've known Byron and worked with him for many years. He and the rest of the management team here at Dana have been instrumental in our cost reduction activities and our transformation plans, as well as the development of our Dana 2030 strategy.

Speaker #3: And so I think the board and myself have the utmost confidence in the team under Byron's leadership, and I'm very confident in the team's ability to deliver on the financial objectives that we're going to share with you today.

Speaker #3: Turning to the business overview, excuse me, our final results for the fourth quarter came in higher than our preliminary estimates, so you can see here for the fourth quarter, our margins at 11.1 with 10 million 40 basis points higher, 10 million dollars higher than the announced or pre-announcement numbers.

R. Bruce McDonald: Our final results for the fourth quarter came in higher than our preliminary estimates. So you can see here, for the fourth quarter, our margins at 11.1, with $10 million, 40 basis points higher, $10 million dollars higher than our pre-announcement numbers. In terms of full-year cash flow, we came in at $331 million, which is $16 million higher. And I'd point out that that cash flow is the highest the company has delivered since 2013. We completed the sale of the Off-Highway Business on 1 January, and used most of the proceeds to repay down debt. And Tim will take you through what our new debt profile looks like later on in the pack. In terms of cost reduction, great job by the team.

Speaker #3: In terms of full-year cash flow, it came in at 331, which is 16 million higher. And I'd point out that that cash flow is the highest the company has delivered since 2013.

Speaker #3: We completed the sale of the auth excuse me, the auth highway business on January 1st, and used the most of the proceeds to repay down debt and Tim will take you through what our new debt profile looks like later on in the pack.

Speaker #3: In terms of cost reduction, great job by the team. We had originally committed to a $200 million run rate, we upped that to 300, and we delivered 248 in a year, and a run rate of 325 going into 2026.

R. Bruce McDonald: You know, we had originally committed to a $200 million run rate. We upped that to $300, and we delivered $248 in a year and a run rate of $325, going into 2026. You know, we've talked before about our stranded costs, post the sale of Off-Highway being about $40 million. We're very confident in our guidance. We're assuming that we're gonna be able to substantially eliminate those in next year. In terms of new business, we shared our backlog a couple weeks ago at $750 million. So despite, I'd say, the turmoil in the EV side of our business, the teams secured a higher backlog than we had last year, of which $200 million is gonna flow through in 2026.

Speaker #3: We've talked before about our stranded costs. Post the sale of auth highway being about 40 million, we're very confident in our guidance. We assume that we're going to be able to substantially eliminate those next year.

Speaker #3: In terms of new business, we shared our backlog. A couple of weeks ago, at 750 million, so despite I'd say the turmoil in the EV side of our business, the teams secured a higher backlog than we had last year, of which 200 million is going to flow through in 2026.

Speaker #3: And then I think if you look at our capital return, we returned just under 700, just over 700 million dollars to our shareholders last year.

R. Bruce McDonald: And then I think, if you look at our capital return, we returned just over $700 million to our shareholders last year, and we've grown our dividends. So I think, you know, where Dana sits exiting 2025, I think we're extremely well-positioned. We have strong momentum, and I think we've got a strong plan going forward here. Just a little bit more on the capital return plan, which we upped to $2 billion of share repurchase through 2030, and that really reflects our confidence in the delivery of the longer-term financial targets that we're gonna share on the call later today. For 2025, we bought back just a shade over 34 million shares, which on an average cost of $18.96, and paid $54 million in dividends.

Speaker #3: And we've grown our dividend. So I think where Dana sits exiting 2025, I think we're extremely well positioned. We got strong momentum. And I think we've got a strong plan going forward here.

Speaker #3: Just a little bit more on the capital return plan, which we upped to 2 billion dollars of share repurchase through 2030. That really reflects our confidence in the delivery of the longer-term financial targets that we're going to share on the call later today.

Speaker #3: For 2025, we bought back just the shade over 34 million shares, which on an average cost of 1,896, and paid 54 million in dividends.

Speaker #3: In the first quarter here, we've already bought back 100 million, with a share a little bit over 27 dollars a share. And the balance of the year, we forecast buying back another couple of hundred million, which at current prices, 5, 6 million, something like that.

R. Bruce McDonald: In Q1 here, we've already bought back $100 million worth of share at a little bit over $27 a share. In the balance of the year, we forecast buying back another couple hundred million, which, you know, at current prices, 5, 6 million, something like that. Lastly, on the dividend, we upped our dividend by, excuse me, 20% to $0.12 a quarter. And the way we're sort of thinking about this is we're gonna grow our dividend as our share count declines. So we got a lot of confidence in the value that we're creating. I think if you look at the company right now, we, while we're able to accelerate growth investments and margin enhancement investments in our business, we're also deleveraging, growing our dividend, and comfortably buying back a significant amount of stock every year.

Speaker #3: Lastly, on the dividend, we upped our dividend by excuse me, by 20% to 12 cents a quarter. And the way we're sort of thinking about this is we're going to grow our dividend as our share count declines.

Speaker #3: So we got a lot of confidence in the value that we're creating. I think if you look at the company right now, while we're able to accelerate growth investments and margin enhancement investments in our business, we're also deleveraging, growing our dividend, and comfortably buying back a significant amount of stock every year.

Speaker #3: So that Byron, I'll turn it over to you.

R. Bruce McDonald: So with that, Byron, I'll turn it over to you.

Speaker #2: Okay. Thanks, Bruce. And good morning, everybody. So just to cover on page six, a little bit on the market outlook as we look at the 2026 plan.

Byron Foster: Okay, thanks, Bruce, and good morning, everybody. So just to cover on page six a little bit on the market outlook as we look at the 2026 plan. So on the light truck side, we continue to see the light truck market holding steady, and our plan is built around really kind of flat volume year over year from 2025 levels. And I would say we're seeing a consistent operating environment and volume from our customers, which is allowing us to run at a good, steady clip. On the commercial vehicle side as well, we've built the plan around flat volumes to 2025 levels. However, I would say there is some optimism that towards the back half of the year, perhaps we'll see some improved volumes on the commercial vehicle side.

Speaker #2: So on the light truck side, we can send you to see the light truck market holding steady and our plan is built around really kind of flat volume year over year from 2025 levels.

Speaker #2: And I would say we're seeing a consistent operating environment and volume from our customers, which is allowing us to run at a good steady clip.

Speaker #2: On the commercial vehicle side as well, we've built the plan around flat volumes to 2025 levels. However, I would say there is some optimism that towards the back half of the year, perhaps we'll see some improved volumes on the commercial vehicle side.

Speaker #2: And as Bruce mentioned, you can see on the right-hand side of this page, our three-year net backlog of 750 million, of which 200 million is built into our 2026 plan.

Byron Foster: As Bruce mentioned, you can see on the right-hand side of this page, our three-year net backlog of $750 million, of which $200 million is built into our 2026 plan, and you can see kind of how that matures through 2028. If we go to page 7, I thought it might be interesting to give you a bit of a view of how our new business pursuit activities have kind of evolved here over the last 7 or 8 years. You can see a really dramatic increase in business pursuit activity, kinda in the early 2000s, really dominated by increasing EV activity.

Speaker #2: And you can see kind of how that matures through 2028. If we go to page seven, I thought it might be interesting to give you a bit of a view of how our new business pursuit activities have kind of evolved here over the last seven or eight years.

Speaker #2: You can see a really dramatic increase in business pursuit activity. Kind of in the early 2000s, really dominated by increasing EV activity. And then you can see here more recently how that trend has really pivoted and reversed itself from kind of 80% EV level activity to now really heavy mix towards our more traditional or ICE powertrain types of vehicles.

Byron Foster: And then, you can see here more recently how that, that trend has really pivoted and, and reversed itself from kinda 80% EV level activity to now really heavy mix towards our more traditional or ICE powertrain types of vehicles. And we really expect that trend to continue as our customers are revisiting their product plans to adjust to, to consumer demand for, ICE, more traditional ICE type, vehicles, as well as hybrids, and some, some full BEVs will still exist, but obviously at a, at lower rate than kind of what we saw a few years back. So we're encouraged by that, and as we talk about growth going forward, we expect that, that's really going to play into our ability to capitalize on that opportunity.

Speaker #2: And we really expect that trend to continue, as our customers are revisiting their product plans to adjust to consumer demand for more traditional ICE-type vehicles, as well as hybrids, and some full BEVs will still exist, but obviously at a lower rate than kind of what we saw a few years back.

Speaker #2: So we're encouraged by that. And as we talk about growth going forward, we expect that that's really going to play into our ability to capitalize on that opportunity.

Speaker #2: So with that, I'll hand it over to Tim, and he'll take us through the numbers.

Byron Foster: So with that, I'll hand it over to Tim, and he'll take us through the numbers.

Speaker #3: Thanks, Byron. And good morning to everyone. Please turn with me now to slide nine for review of our fourth quarter and full-year results for 2025.

Timothy Kraus: Thanks, Byron. And good morning to everyone. Please turn with me now to slide 9 for a review of our fourth quarter and full year results for 2025. All results discussed this morning reflect continuing operations except for adjusted free cash flow. Starting on the left side of the fourth quarter, sales were $1.867 billion, an increase of $93 million compared with last year. The improvement was driven primarily by customer recoveries and currency translation. Adjusted EBITDA for the quarter was $208 million, resulting in an 11.1% margin. That's a 640 basis points improvement over the prior year's fourth quarter, reflecting better mix and continued benefit of the company-wide cost improvement actions.

Speaker #3: All results discussed this morning reflect continuing operations, except for adjusted free cash flow. Starting on the left side of the fourth quarter, sales were $1.867 billion, an increase of $93 million compared with last year.

Speaker #3: The improvement was driven primarily by customer recoveries and currency translation. Adjusted EBITDA for the quarter was 208 million dollars, resulting in an 11.1% margin that's a 640 basis points improvement over the prior year's fourth quarter, reflecting better mix and continued benefit of the company-wide cost improvement actions.

Speaker #3: EBIT from continuing operations was 61 million dollars, compared with a loss of 117 million dollars in last year's fourth quarter. Interest expense was 49 million dollars, an increase of about 12 million dollars from last year due to higher average borrowing costs tied to our accelerated capital return initiatives that we did last year.

Timothy Kraus: EBIT from continuing operations was $61 million, compared with a loss of $117 million in last year's Q4. Interest expense was $49 million, an increase of about $12 million from last year due to higher average borrowing costs tied to our accelerated capital return initiatives, that we did last year. Operating cash flow was $406 million for the quarter, an increase of $104 million, driven by higher earnings and disciplined working capital management. Turning now to the full year results on the right side of the slide. Sales for 2025 were $7.5 billion, down $234 million from 2024. As we noted earlier, this reflects weakening market demand across both light vehicle and commercial vehicle sectors, partially offset by customer recoveries.

Speaker #3: Operating cash flow was 406 million dollars for the quarter, an increase of 104 million dollars, driven by higher earnings and disciplined working capital management.

Speaker #3: Turning now to the full-year results on the right side of the slide, sales for 2025 were 7.5 billion dollars, down 234 million dollars from 2024.

Speaker #3: As we noted earlier, this reflects weakening market demand across both light vehicle and commercial vehicle sectors, partially offset by customer recoveries. Full-year adjusted EBITDA was 610 million dollars, an improvement of 215 million dollars from the prior year.

Timothy Kraus: Full year adjusted EBITDA was $610 million, an improvement of $215 million from the prior year, resulting in an 8.1% margin, up 300 basis points. The year-over-year improvement was driven by accelerated cost savings, higher production efficiency, and improved execution across the entire Dana organization. EBIT from continuing operations was $138 million, compared with a loss of $176 million last year. Interest expense was $171 million, up $26 million from last year. Note that we closed the Off-Highway divestiture on 1 January 2026 and began our deleveraging program in 2026, so this is not yet reflected in our 2025 results.

Speaker #3: Resulting in an 8.1% margin, up 300 basis points. The year-over-year improvement was driven by accelerated cost savings, higher production efficiency, and improved execution across the entire Dana organization.

Speaker #3: EBIT from continuing operations was $138 million, compared with a loss of $176 million last year. Interest expense was $171 million, up $26 million from last year.

Speaker #3: Note that we closed the off-highway divestiture on January 1st and began our deleveraging program in 2026. So this is not yet reflected in our 2025 results.

Speaker #3: And finally, operating cash flow was 512 million dollars, a 62 million dollar increase compared with last year. Supported by improved earnings and continued working capital discipline.

Timothy Kraus: Finally, operating cash flow was $512 million, a $62 million increase compared with last year, supported by improved earnings and continued working capital discipline. Overall, 2025 delivered meaningful margin expansion and stronger free cash flow generation, despite a challenging demand environment, underscoring the effectiveness of our cost action programs and operational execution. Please turn with me now to slide 10 for the drivers of the sales and profit change for Q4 2025. As a reminder, results are presented excluding the Off-Highway business, which is classified as discontinuing operations. The removal of $561 million in sales and $102 million of profit from 2024 provides a comparable baseline for our continuing operations.

Speaker #3: Overall, 2025 delivered meaningful margin expansion and stronger free cash flow generation despite a challenging demand environment. Underscoring the effectiveness of our cost action programs and operational execution.

Speaker #3: Please turn with me now to slide 10 for the drivers of the sales and profit change for the fourth quarter of 2025. As a reminder, results are presented excluding the off-highway business, which is classified as discontinuing operations.

Speaker #3: The removal of $561 million in sales and $102 million of profit from 2024 provides a comparable baseline for our continuing operations. Starting with sales, our fourth quarter 2024 continuing operations for the quarter was $1.774 billion.

Timothy Kraus: Starting with sales, our fourth quarter, 2024 continuing operations for the quarter was $1.774 billion. Year-over-year volume and mix increased sales modestly by $2 million, with light vehicle growth largely offset by weaker demand in certain commercial vehicle markets. Performance action contributed an additional $17 million, driven by commercial recoveries and pricing initiatives implemented earlier in the year. Tariff recoveries were $27 million, and currency translation added $31 million, largely due to the benefit of the euro against the US dollars. Commodities provided a further $16 million dollar benefit for the quarter. Altogether, these items resulted in Q4 2025 sales of $1.867 billion.

Speaker #3: Year-over-year, volume and mix increased sales modestly by $2 million, with light vehicle growth largely offset by weaker demand in certain commercial vehicle markets.

Speaker #3: Performance action contributed an additional 17 million dollars, driven by commercial recoveries and pricing initiatives implemented earlier in the year. Tariff recoveries were 27 million dollars, and currency translation added 31 million dollars, largely due to the benefit of the euro against the US dollars.

Speaker #3: Commodities provided a further 16 million dollar benefit for the quarter. Altogether, these items resulted in Q4 2025 sales of 1.867 billion dollars. Moving to adjusted EBITDA, starting from 84 million dollars in Q4 of 2024, representing a 4.7% margin, volume and mix contributed 33 million dollars of incremental profit in the quarter.

Timothy Kraus: Moving to Adjusted EBITDA, starting from $84 million in Q4 of 2024, representing a 4.7% margin, volume and mix contributed $33 million of incremental profit in the quarter. This was driven primarily by a richer mix in Light Vehicle Systems. Performance added $6 million, reflecting pricing and commercial actions, mostly offset by higher conversion costs. Cost savings contributed $74 million. Tariffs provided an $8 million benefit, while currency added $3 million. Commodity impacts were neutral year-over-year. Bringing these together, Adjusted EBITDA for our continuing operations was $208 million, representing an 11.1% margin, a significant expansion from last year. This improvement reflects strong performance execution and the structural benefits realized from our cost action programs.

Speaker #3: This was driven primarily by a richer mix in light vehicle systems. Performance added 6 million dollars, reflecting pricing and commercial actions mostly offset by higher conversion costs.

Speaker #3: Cost savings contributed 74 million dollars, tariffs provided an 8 million dollar benefit, while currency added 3 million. Commodity impacts were neutral year-over-year. Bringing these together, adjusted EBITDA for our continuing operations was 208 million dollars, representing an 11.1% margin, a significant expansion from last year.

Speaker #3: This improvement reflects strong performance execution and the structural benefits realized from our cost action programs. Next, I will turn to slide 11 for the drivers of sales and profit change for the full year 2025.

Timothy Kraus: Next, I will turn to Slide 11 for the drivers of sales and profit change for the full year 2025. This slide shows full year sales and profit changes for 2025 on the same basis as the previous quarterly slide. Starting with sales, our 2024 continuing operations baseline is $7.734 billion. For 2025, year-over-year volume and mix reduces sales by $464 million, primarily due to lower demand across both our end markets, with commercial vehicle and light vehicle largely equal contributor to the lower sales. Performance, which includes pricing and commercial actions, adds $81 million of sales. Tariff recoveries were $102 million, representing the majority of our tariffs for the year. Currency translation provided a $28 million benefit, largely driven by strengthening euro against the US dollar.

Speaker #3: This slide shows full-year sales and profit changes for 2025 on the same basis as the previous quarterly slide. Starting with sales, our 2024 continuing operations baseline is 7.734 billion dollars.

Speaker #3: For 2025, year-over-year volume and mix reduces sales by $464 million, primarily due to lower demand across both our end markets, with commercial vehicle and light vehicle largely equal contributors to the lower sales.

Speaker #3: Performance, which includes pricing and commercial actions, adds $81 million of sales. Tariff recoveries were $102 million, representing the majority of our tariffs for the year.

Speaker #3: Currency translation provided a 28 million dollar benefit, largely driven by strengthening euro against the US dollar. Commodities added an additional 19 million dollars, supported by market stability and our structured recovery mechanisms with our customers.

Timothy Kraus: Commodities added an additional $19 million, supported by market stability and our structured recovery mechanisms with our customers. Taken together, these drivers result in 2025 sales of $8.4 billion for our continuing, or $7.5 billion for our continuing operations. Moving to Adjusted EBITDA, starting from $395 million in 2024 and a 5.1% margin. Volume and mix reduces profit by $112 million, consistent with the reduced sales level and some unfavorable mix early in the year. Performance actions added $90 million, reflecting both pricing and ongoing efficiency improvements across our manufacturing footprint. Cost savings remain a meaningful contributor, adding $248 million in 2025.

Speaker #3: Taken together, these drivers result in 2025 sales of $8.4 billion for our continuing—or $7.5 billion for our continuing operations. Moving to adjusted EBITDA, starting from $395 million in 2024 and a 5.1% margin.

Speaker #3: Volume and mix reduces profit by 112 million, consistent with the mix, early in the year. Performance actions added 90 million dollars, reflecting both pricing and ongoing efficiency improvements across our manufacturing footprint.

Speaker #3: Cost savings remain a meaningful contributor, adding 248 million dollars in 2025. These benefits, more than offset the margin pressure created by lower volumes and continue to demonstrate the momentum behind our cost saving programs as we enter 2026.

Timothy Kraus: These benefits more than offset the margin pressure created by lower volumes and continue to demonstrate the momentum behind our cost-saving programs as we enter 2026. Tariffs represented a $14 million headwind due to timing of recoveries. Together, Adjusted EBITDA for our continuing operations was $610 million, representing an 8.1% margin, a 300 basis points improvement over last year. This improvement is driven primarily by operational efficiencies and our accelerated cost action program, which more than offset both the volume declines and the modest tariff impacts for the year. Next, I will turn to Slide 12 on the detail of our Q4, our full year cash flows. Accounting for cash flow includes both continued and discontinued operations to align with the transaction structure.

Speaker #3: Tariffs represented a 14 million dollar headwind due to timing of recoveries. Together, adjusted EBITDA for our continuing operations was 610 million dollars, representing an 8.1% margin, a 300 basis points improvement over last year.

Speaker #3: This improvement is driven primarily by operational efficiencies and our accelerated cost action program, which more than offset both the volume declines and the modest tariff impacts for the year.

Speaker #3: Next, I will turn to slide 12 in a detail of our fourth quarter or our full year cash flows. Accounting for cash flow includes both continued and discontinued operations to align with the transaction structure.

Speaker #3: For 2025, we delivered adjusted free cash flow of 331 million dollars, which represents a 250 million dollar improvement over 2024. This significant step up reflects higher profitability disciplined working capital management and a meaningful reduction in capital spending.

Timothy Kraus: For 2025, we delivered adjusted free cash flow of $331 million, which represents a $250 million improvement over 2024. This significant step-up reflects higher profitability, disciplined working capital management, and a meaningful reduction in capital spending. Starting at the top of the walk, adjusted EBITDA from continuing operations drove $215 million of improvement, stemming from stronger operational performance and structural cost actions executed over the past two years. This was partially offset by lower profit of $86 million from discontinued operation. One-time costs, largely related to restructuring and ongoing strategic initiatives, were $30 million higher year over year. Net interest expense increased by $16 million, driven primarily by higher borrowing costs associated with funding our capital return initiatives ahead of the planned deleveraging in early 2026.

Speaker #3: Starting at the top of the walk, adjusted EBITDA from continuing operations drove 215 million dollars of improvement, betting from stronger operational performance and structural cost actions, executed over the past two years.

Speaker #3: This was partially offset by lower profit of 86 million from discontinued operation. One-time costs largely rated related to restructuring and ongoing strategic initiatives were 30 million dollars higher year-over-year.

Speaker #3: Net interest expense increased by 16 million dollars, driven primarily by higher borrowing costs associated with funding our capital return initiatives, ahead of the planned deleveraging in early 2026.

Speaker #3: Taxes were a modest headwind with 3 million dollars, with no material changes to our underlying tax structure. Working capital and other items contributed 57 million dollars of improvement, reflecting disciplined inventory management in favorable timing across payables and receivables.

Timothy Kraus: Taxes were a modest headwind with $3 million, with no material changes to our underlying tax structure. Working capital and other items contributed $57 million of improvement, reflecting disciplined inventory management and favorable timing across payables and receivables. Finally, capital spending decreased $113 million, supported by lower program launch requirements, as significant investments made over the last several years begin to taper. Please turn with me now to Slide 13 for an update on our full year guidance. As we look ahead to this year, our outlook remains unchanged from our January call and reflects continued operational execution, accretive new business, and ongoing benefit of our cost reduction initiatives. Overall, we expect results to be broadly consistent with 2025 on the top line, with meaningful profit expansion driven by improved mix and sustained cost management.

Speaker #3: Finally, capital spending decreased $113 million, supported by lower program launch requirements as significant investments made over the last several years begin to taper.

Speaker #3: Please turn with me now to slide 13 for an update on our full year guidance. As we look ahead to this year, our outlook remains unchanged from our January call and reflects continued operational execution accretive new business and ongoing benefit of our cost reduction initiatives.

Speaker #3: Overall, we expect results to be broadly consistent with 2025 on the top line, with meaningful profit expansion driven by improved mix and sustained cost management.

Speaker #3: Starting with sales, we expect 2026 revenue to be approximately 7.5 billion dollars, consistent with this year. Increased backlog and the benefit of higher margin new business are expected to largely offset a modestly softer market environment and changes in product mix.

Timothy Kraus: Starting with sales, we expect 2026 revenue to be approximately $7.5 billion, consistent with this year. Increased backlog and the benefit of higher margin new business are expected to largely offset a modestly softer market environment and changes in product mix. Adjusted EBITDA is expected to be around $800 million, an increase of roughly $200 million compared with 2025. This improvement is driven by full-year run rate of our cost savings program, continued operational improvements, and incremental margin from business that carries higher profitability. At the midpoint of the range, this represents an adjusted EBITDA margin of roughly 10% to 11%, an expansion of approximately 250 basis points year-over-year.... We are reinstating our diluted adjusted EPS guidance for 2026.

Speaker #3: Adjusted EBITDA is expected to be around 800 million dollars, an increase of roughly 200 million dollars compared with 2025. This improvement is driven by full year run rate of our cost savings program, continued operational improvements, and incremental margin from business that carries higher profitability.

Speaker #3: At the midpoint of the range, this represents an adjusted EBITDA margin of roughly 10 to 11 percent, an expansion of approximately 250 basis points year over year.

Speaker #3: We are reinstating our diluted adjusted EPS guidance for 2026. We expect diluted adjusted EPS this year to be $2.50 a share at the midpoint of the range.

Timothy Kraus: We expect Diluted Adjusted EPS this year to be $2.50 a share at the midpoint of the range. For this calculation, we are using a share count of about 109 million shares and are not including future share repurchases in this target estimate. Adjustments for EPS are similar in nature to those made for Adjusted EBITDA. Adjusted Free Cash Flow is expected to be around $300 million, in line with our 2025 performance. Adjusted Free Cash Flow stability reflects disciplined working capital management, improves earnings, and the normalization of capital spending as major investments over the past years begin to taper. Our 2026 outlook demonstrates continued profit improvement drivers by new business, operational efficiencies, and the structural benefit of cost actions, all while maintaining a consistent cash flow profile, positioning us well as we launch New Dana.

Speaker #3: For this calculation, we are using a share count of about 109 million shares and are not including future share repurchases in this target estimate.

Speaker #3: Adjustments for EPS are similar in nature to those made for adjusted EBITDA. Adjusted free cash flow is expected to be around $300 million, in line with our 2025 performance.

Speaker #3: Adjusted free cash flow stability reflects disciplined working capital management, improved earnings, and the normalization of capital spending as major investments over the past years begin to taper.

Speaker #3: Our 2026 outlook demonstrates continued profit improvement drivers by new business, operational efficiencies, and the structural benefit of cost actions. All while maintaining a consistent cash flow profile positioning us well as we launch new Dana.

Speaker #3: Please turn with me now to slide 14 for the driver of sales and profit for our full year guidance. Beginning with sales, volume and mix is expected to reduce revenue by approximately 95 million dollars, as lower demand in traditional commercial vehicle markets, as well as ongoing softness in electric vehicle light vehicle platforms, impacts our battery and electronics cooling business.

Timothy Kraus: Please turn with me now to Slide 14 for the driver of sales and profit for our full year guidance. Beginning with sales, volume mix is expected to reduce revenue by approximately $95 million, as lower demand in traditional commercial vehicle markets, as well as ongoing softness in electric vehicle, light vehicle platforms, impacts our battery and electronics cooling business. Performance is expected to be modestly lower, reducing sales by about $30 million, reflecting a more normalized pricing environment as we lap last year's commercial actions. Tariffs are expected to improve sales by roughly $50 million, largely due to the timing of recoveries and the impact of a full year's worth of tariff environment. Foreign currency translation adds approximately $60 million, primarily driven by the strengthening euro compared to the US dollar.

Speaker #3: Performance is expected to be modestly lower, reducing sales by about 30 million dollars, reflecting a more normalized pricing environment as we lap last year's commercial actions.

Speaker #3: Tariffs are expected to improve sales by roughly $50 million, largely due to the timing of recoveries and the impact of a full year's worth of a tariff environment.

Speaker #3: Foreign currency translation adds approximately 60 million dollars, primarily driven by the strengthening euro compared to the US dollar. And commodities are expected to add about 15 million dollars in sale due to the continuing effectiveness of our recovery mechanisms.

Timothy Kraus: Commodities are expected to add about $15 million in sales due to the continuing effectiveness of our recovery mechanisms, with which we recover approximately 75% of our commodity price changes. Together, these drivers result in 2026 sales of approximately $7.5 billion, in line with 2025 levels. Let's turn now to adjusted EBITDA. Starting from the $610 million we generated in 2025, representing an 8.1% margin, volume of mix is expected to add approximately $20 million. Favorable mix within will drive higher profit on slightly lower sales. Performance is expected to increase EBITDA by roughly $100 million, largely from continued operational efficiency.

Speaker #3: With which we recover approximately 75 percent of our commodity price changes. Together, these drivers result in 2026 sales of approximately 7.5 billion dollars, in line with 2025 levels.

Speaker #3: Let's turn now to adjusted EBITDA. Starting from the $610 million we generated in 2025, representing an 8.1 percent margin, volume and mix is expected to add approximately $20 million.

Speaker #3: Favorable mix within will drive higher profit on slightly lower sales. Performance is expected to increase EBITDA by roughly 100 million, largely from continued operational efficiency.

Speaker #3: Please note that we are expecting to eliminate about 40 million dollars of postage to divestiture stranded cost, which is included in the performance line of our walk.

Timothy Kraus: Please note that we are expecting to eliminate about $40 million of post-divestiture stranded costs, which is included in the performance line of our walk. Cost savings, in addition to the stranded cost reduction, will be a meaningful contributor, adding $65 million of profit for the year. Tariffs are expected to be a $10 million tailwind due to the timing of recoveries. Commodity cost recovery is expected to represent a $15 million headwind, driven by timing of recoveries, and expected material cost changes. All combined, Adjusted EBITDA for 2026 is expected to be approximately $800 million at the midpoint of our range, or a 10.6% margin, representing an improvement of roughly 250 basis points over 2025.

Speaker #3: Cost savings, in addition to the stranded cost reduction, will mean a meaningful contributor, adding 65 million dollars of profit for the year. Tariffs are expected to be a 10 million dollar tailwind due to the timing of recoveries.

Speaker #3: Commodity cost recovery is expected to represent a 15 million dollars headwind, driving by timing of recoveries and expected material cost changes. All combined, adjusted EBITDA for 2026 is expected to be approximately 800 million dollars at the midpoint of our range.

Speaker #3: Or a 10.6 percent margin, representing an improvement of roughly 250 basis points over 2025. This step change in profitability is driven by our ongoing performance improvements and cost savings initiatives.

Timothy Kraus: This step change in profitability is driven by our ongoing performance improvements and cost savings initiatives. Next, I will turn to Slide 15 for details of adjusted free cash flow outlook for 2026. You will note on this slide that 2025 includes profit and free cash flow from discontinued operations that will not be included in 2026. Even without the discontinued operations contribution, we expect full year 2026 adjusted free cash flow to be about $300 million at the midpoint of the guidance range. One-time costs will be about $30 million lower than last year, due to lower expected levels of restructuring as our cost-saving programs wind down.

Speaker #3: Next, I will turn to slide 15 for details of adjusted free cash flow outlook for 2026. You will note on this slide that 2025 includes profit and free cash flow from discontinued option operations that will not be included in 2026.

Speaker #3: Even without the discontinued operations contribution, we expect full year 2026 adjusted free cash flow to be about 300 million dollars at the midpoint of the guidance range.

Speaker #3: One-time costs will be about $30 million lower than last year, due to lower expected levels of restructuring as our cost-saving programs wind down.

Speaker #3: Net interest will be about $70 million in 2026, about $95 million lower than last year, due to our aggressive debt reduction that we executed earlier this year.

Timothy Kraus: Net interest will be about $70 million in 2026, about $95 million lower than last year due to our aggressive debt reduction that we executed earlier this year. Taxes will be about $100 million, about $75 million lower than 2025, due to lower taxable income and jurisdictional distribution of profits for New Dana. Working capital will be a source of about $25 million in 2026, a $40 million improvement over last year. Finally, net capital spending is expected to be about $325 million this year, which is about $70 million higher than last year as we invest in efficiency improvements at our operations and support the new business backlog. Please turn to Slide 16 for a review of our balance sheet and debt reduction actions that we executed earlier this year.

Speaker #3: Taxes will be about 100 million dollars, about 75 million dollars lower than 2025, due to lower taxable income and jurisdictional distribution of profits for new Dana.

Speaker #3: Working capital will be a source of about 25 million dollars in 2026. A 40 million dollars improvement over last year. And finally, net capital spending is expected to be about 325 million dollars this year, which is about 70 million dollars higher than last year, as we invest in efficiency improvements at our operations and support the new business backlog.

Speaker #3: Please turn to slide 16 for a review of our balance sheet and debt reduction actions that we executed earlier this year. As a reminder, the off-highway divestiture closed on January 1, and we will be reporting year-end without the benefit of the sale and subsequent deleveraging.

Timothy Kraus: As a reminder, the Off-Highway divestiture closed on 1 January 2026, and we will be reporting at year-end without the benefit of the sale and subsequent deleveraging. So I thought it'd be helpful to show our balance sheet post divestiture and after the debt reduction. If you look on the left side of the page, we ended January of 2026 with $659 million of cash and a total liquidity of about $1.8 billion, including the revolver capacity of just over $1.1 billion. As we progress through the year, we expect our average cash balance to be approximately $400 million, consistent with our operating needs and lower liquidity requirements.

Speaker #3: So I thought it'd be helpful to show our balance sheet post-divestiture and after the debt reduction. If you look on the left side of the page, we ended January of 2026 with 659 million dollars of cash and a total liquidity of about 1.8 billion.

Speaker #3: Including the revolver capacity of just over $1.1 billion. As we progressed through the year, we expect our average cash balance to be approximately $400 million, consistent with our operating needs and lower liquidity requirements.

Speaker #3: We are continuing to evaluate opportunities to optimize the balance sheet, including right-sizing of our revolver capacity and the examination of our real estate lease portfolio.

Timothy Kraus: We are continuing to evaluate opportunities to optimize the balance sheet, including right sizing of our revolver capacity and the examination of our real estate lease portfolio, while we also pursue additional divestitures of non-core operations where appropriate. We also continue to see positive response from our delevering actions from the rating agencies, with upgrades from both Fitch and Standard & Poor's. This reflects the strength of our improved balance sheet and expanded margin and free cash flow profile. Now, turning to the right side of the page, you can see the impact of the meaningful deleveraging associated with the Off-Highway sale. Relative to our starting position, we have reduced total debt by approximately $1.9 billion, highlighted by the red boxes shown across the maturity ladder. This leaves us in an extremely strong capital structure position.

Speaker #3: While we also pursue additional divestitures of non-core operations where appropriate. We also continue to receive positive response from our deleveraging actions from the rating agencies, with upgrades from both Fitch and Standard & Poor's.

Speaker #3: This reflects the strength of our improved balance sheet and expanded margin and free cash flow profile. Now, turning to the right side of the page, you can see the impact of the meaningful deleveraging associated with the off-highway sale.

Speaker #3: Relative to our starting position, we have reduced total debt by approximately 1.9 billion dollars, highlighted by the red boxes shown across the maturity ladder.

Speaker #3: This leaves us in an extremely strong capital structure position. Importantly, we now have no near-term maturities. Our first majority is in 2029 at just over 200 million dollars.

Timothy Kraus: Importantly, we now have no near-term maturities. Our first maturity is in 2029 at just over $200 million. The remaining debt on our balance sheet carries an average interest rate of around 6%, providing both predictability and flexibility as we continue to strengthen the business. On the bottom right side, you can see that the deleveraging results in less than 1x net leverage through 2026. This enhanced financial strength positions us well to navigate a dynamic market environment while we continue to invest in growth and deliver value for our shareholders. Overall, our balance sheet is now significantly stronger, with ample liquidity, reduced debt, and a long-dated maturity profile that supports our strategic priorities moving forward. I will now turn the call over to Byron for a sneak peek at our targets for the Dana 2030 on page 17.

Speaker #3: The remaining debt on our balance sheet carries an average interest rate of around 6%, providing both predictability and flexibility as we continue to strengthen the business.

Speaker #3: On the bottom right side, you can see that the deleveraging results in less than one times net leverage through 2026. This enhanced financial strength positions us well to navigate a dynamic market environment while we continue to invest in growth and deliver value for our shareholders.

Speaker #3: Overall, our balance sheet is now significantly stronger, with ample liquidity, reduced debt, and a long-dated maturity profile that supports our strategic priorities moving forward.

Speaker #3: I will now turn the call over to Byron for a sneak peek at our targets for the Dana 2030 on page 17. Okay, great.

Byron Foster: Okay, great. Thank you, Tim. And, hey, before I get into the targets here, I do want to take the opportunity to thank Bruce for his leadership through Dana's transformation here over the last year and a half or so. And as he mentioned, we will have a very seamless transition here through the end of Q2. And, myself and the management team, we couldn't be more excited for the opportunities ahead for Dana. So let's take a look at our long-term targets and our plans to continue to drive performance of the company to new levels. So if you look at the 2030 financial targets, starting with revenue, we're targeting close to $10 billion of sales, which would be 33% higher than the midpoint of the 2026 guide that Tim just took us through.

Speaker #3: Thank you, Tim. And hey, before I get into the targets here, I do want to take the opportunity to thank Bruce for his leadership through Dana's transformation here over the last year and a half or so.

Speaker #3: And, as he mentioned, we will have a very seamless transition here through the end of Q2. Myself and the management team couldn't be more excited for the opportunities ahead for Dana.

Speaker #3: So let's take a look at our long-term targets and our plans to continue to drive performance of the company to new levels. So if you look at the 2030 financial targets, starting with revenue, we're targeting close to 10 billion dollars of sales which would be 33% higher than the midpoint of the 26 guide that Tim just took us through.

Speaker #3: We expect margins to increase by close to 400 basis points to 14 to 15 percent at the EBITDA line. And adjusted free cash flow at 6%, which would be about a 200 basis point improvement from our 26 guide.

Byron Foster: We expect margins to increase by close to 400 basis points, to 14 to 15% at the EBITDA line, and adjusted free cash flow at 6%, which would be about a 200 basis point improvement from our 2026 guide. In terms of returning capital to our shareholders, you can see that we plan to return $2 billion vis-a-vis stock buybacks, of which $650 million has been completed in 2025, with the remaining plan for 2026 through 2030. And specifically in 2026, we're targeting $300 million of buybacks. And that's on top of the 20% dividend increase that was previously announced. In terms of our roadmap of how we plan to deliver that level of performance, it's really all under our strategy that we've called Dana 2030.

Speaker #3: In terms of returning capital to our shareholders, you can see that we plan to return 2 billion dollars vis-à-vis stock buybacks of which 650 million has been completed in 2025, with the remaining plan for 26 through 30.

Speaker #3: And specifically in 2026, we're targeting 300 million dollars of buybacks. And that's on top of the 20% dividend increase that was previously announced. In terms of our roadmap of how we plan to deliver that level of performance, it's really all under our strategy that we've called Dana 2030.

Speaker #3: And you can see the five pillars of that plan, three related to growth in our aftermarket business, our traditional light vehicle and commercial vehicle business, as well as our EV and applied technologies, which basically takes Dana's know-how and technology and explores opportunities for growth in new and adjacent markets.

Byron Foster: You can see the 5 pillars of that plan, 3 related to growth in our aftermarket business, our traditional light vehicle and commercial vehicle business, as well as our EV and applied technologies, which basically takes Dana's know-how and technology and explores opportunities for growth in new and adjacent markets. In addition to those growth pillars, there's two pillars around efficiency and execution in everything we do, both at the manufacturing level as well as our structural cost and support of the business. We look forward to sharing more details of our 2030 plan with you during our Capital Markets Day, which is planned for March 25 in New York at 9:00 AM, and we're hoping to see you guys all there, so we can talk more about the future ahead for Dana. So with that, I'll hand it back to Regina for Q&A.

Speaker #3: In addition to those growth pillars, there's two pillars around efficiency and execution and everything we do, both at the manufacturing level as well as our structural cost and support of the business.

Speaker #3: We look forward to sharing more details of our 2030 plan with you during our capital markets day which is planned for March 25th in New York at 9:00 AM.

Speaker #3: And we're hoping to see you guys all there so we can talk more about the future ahead for Dana. So with that, I'll hand it back to Regina for Q&A.

Speaker #3: Thank you.

Byron Foster: Thank you.

Operator: We will now begin the question-and-answer session. To ask a question, press Star, then the number one on your telephone keypad. We kindly ask that you please limit yourself to one question at a time. Our first question comes from the line of Colin Langan with Wells Fargo. Please go ahead.

Speaker #2: We will now begin the question and answer session. To ask a question, press star, then the number one on your telephone keypad. We kindly ask that you please limit yourself to one question at a time.

Speaker #2: Our first question comes from the line of Colin Langen with Wells Fargo. Please go ahead.

Speaker #3: Oh, great. Thanks for taking my question. I just want to follow up on the target for sales of 10 billion by 2030. That's faster than we've seen growth historically from Dana.

Colin Langan: Oh, great. Thanks for taking my question. I just want to follow up on the target for sales of $10 billion by 2030. That's faster than, you know, we've seen growth historically from Dana, and particularly, you just gave a backlog. I think it was $550 million from, you know, 2027, 2028 coming. So, where's the other, you know, almost $2 billion? Is that market factors? Is there M&A assumed in there?

Speaker #3: And particularly, you just gave a backlog. I think there's $550 million from '27, '28 coming. So, where's the other almost $2 billion? Is that market factors?

Speaker #3: Is there M&A assumed in there?

Byron Foster: Yeah, I'll-

R. Bruce McDonald: Yeah, I'll-

Speaker #1: Yeah. I'll take that. I'll take that, Colin. So here's kind of the way you should think about it. If of the two and a half billion dollars that we're committing to grow over the next five years, our backlog, as you said, for 27 and 28 is 500, 550.

Colin Langan: How should we think about that?

Byron Foster: I'll take that. I'll take that, Colin. So here, here's kind of the way you should think about it, is if of the $2.5 billion that we're committing to grow over the next five years, our backlog, as you said, for 2027 and 2028, is $550 million. We anticipate that a normalization in the North American CV market is worth another $200 to 300 million. So that's kind of 1/3 of it. Then we've got five growth strategies. One is, you know, the slide that Byron covered off around our coding activity.

R. Bruce McDonald: I'll take that. I'll take that, Colin. So here, here's kind of the way you should think about it, is if of the $2.5 billion that we're committing to grow over the next five years, our backlog, as you said, for 2027 and 2028, is $550 million. We anticipate that a normalization in the North American CV market is worth another $200 to 300 million. So that's kind of 1/3 of it. Then we've got five growth strategies. One is, you know, the slide that Byron covered off around our coding activity.

Speaker #1: We anticipate that a normalization in the North American CV markets worth another two, three hundred million. So that's kind of a third of it.

Speaker #1: Then we've got five growth strategies. One is the slide that Byron covered off around our quoting activity. Really around ICE is going to be here for longer.

R. Bruce McDonald: ... really around, you know, ICE is gonna be here for longer. Our customers are changing their product plans to reflect more SUVs and CUVs. So the market, we do expect to continue to win new business on new programs that our customers are introducing. Secondly is in CV. You know, that business is very North American-centric. We have a very strong position in the market right now. We have a brand new world-class, low-cost manufacturing facility, greenfield site that we opened up in Mexico. That plant is performing for us at a very high level. And as a result of our delivery performance, our quality, and our cost base, I think we're well positioned to gain share of wallet at our main North American customers. Third, aftermarket.

Speaker #1: Our customers are changing their product plans to reflect more SUVs and CUVs. So the market, we do expect to continue to win new business on new programs that our customers are introducing.

Speaker #1: Secondly is in CV. We know that business very North American-centric. We have a very strong position in the market right now. We have a brand new World Class low-cost manufacturing facility, Greenfield site, that we opened up in Mexico.

Speaker #1: That plant is performing for us at a very high level. And as a result of our delivery performance, our quality, and our cost base, I think we're well positioned to gain share of wallet at our main North American customers.

Speaker #1: Third, aftermarket. It's an area that we haven't really focused on in the past. So, we have several growth strategies within aftermarket, but the one I would sort of point to as being front and center here is our North America sealing and gasket opportunity.

R. Bruce McDonald: You know, it's an area that we haven't really focused on in the past. You know, so we have several growth strategies within aftermarket, but the one I would sort of point to as being front and center here is our North America sealing and gasket opportunity. So this is a market where we've got 30 to 35% share in Europe, and we're just looking to enter North America. We see that as being a $250 million opportunity that we're just starting to get our foot in the door this year. Fourth, I would point to EV.

Speaker #1: So this is a market where we've got 30, 35 percent share in Europe. And we're just looking to enter North America we see that as being a two 250 million dollar opportunity that would just starting to get our foot in the door this year.

Speaker #1: Fourth, I would point to EV. We have adopted more rigid and commercially sensible—I'll say—quoting disciplines. And there are still opportunities there, particularly as what we're seeing on the range-extended products from our customers.

R. Bruce McDonald: You know, we have adopted more, you know, rigid and commercially sensible, I'll say, quoting disciplines, and there's still opportunities there, as particularly as what we're seeing on the range extended products from our customers. And then lastly, you know, Byron touched on applied technologies, where we're looking to get into adjacent markets or areas that we've historically underinvested in. And we got four or five of those opportunities. But just a couple of examples, I'd point to one, powersport. So this is sort of the off-roading, you know, quad vehicles. Those vehicles are becoming larger and larger. The supply chain in terms of our products for those is largely Chinese and old technology, so we think we have a big opportunity to enter into that market.

Speaker #1: And then, lastly, Byron touched on applied technologies, where we're looking to get into adjacent markets or areas that we've historically underinvested in. And we've got four or five of those opportunities.

Speaker #1: But just a couple of examples I'd point to. One power sport. So this is sort of the off-roading quad vehicles, those vehicles are becoming larger and larger.

Speaker #1: The supply chain in terms of our products for those is largely Chinese. And old technology. So we think we have a big opportunity to enter into that market.

Speaker #1: And we have several hundred million dollars of RFQs as we've put some resources into that business. So that's a good example of an adjacent opportunity.

R. Bruce McDonald: And we have $several hundred million of RFQs, as we've put some resources into that business. So that's a good example of an adjacent opportunity. And then if I thought about something that I'll say we've kind of neglected, I'd say Fendt. We got, you know, a very highly profitable, and we just haven't put the sales and technical resources into capturing growth in that market. So those applied technologies as a bucket, we think are another $400 or 500 million. So that's kind of the path to the $2.5 billion. Kind of a long answer. I apologize for that.

Speaker #1: And then, if I thought about something that I'll say we've kind of neglected, I'd point to events. We've got a very highly profitable, and we just haven't put the sales and technical resources into capturing growth in that market.

Speaker #1: So those applied technologies, as a bucket, we think are another four or five hundred million. So that's kind of the path to the two and a half billion, kind of a long answer.

Speaker #1: I apologize for that.

Speaker #3: No, I appreciate all the color. And just as a second question, would just be any help from that—we've seen pretty much all the Detroit Three have these big recovery programs for EV cancellations.

Colin Langan: No, I appreciate all the color. And just as a second question would just be, you know, any help from that... We've seen all, pretty much all the Detroit Three have these big, recovery programs for EV cancellations. Was any of that helping 2025? Is that any of that baked into the guidance? And, any help actually in cash flow as well?

Speaker #3: Was any of that helping '25? Is any of that baked into the guidance? And any help actually in cash flow as well?

Speaker #4: Hey, Colin. This is Tim. As we mentioned in Q3, we took some charges that were due to some of this. So we did get a little bit of recovery in the fourth quarter.

Timothy Kraus: Hey, Colin, this is Tim. You know, as we mentioned in Q3, we took some charges that, you know, due to some of this. So we did get a little bit of recovery in Q4. But you know, in terms of the recoveries, a lot of what we're seeing is really adjustments to ongoing sales prices, because many of our programs haven't completely canceled. Many of them are just volume down. But in terms of the other recoveries, it's really a net coverage of the costs that we've incurred and what we owe in terms of suppliers and other development costs.

Speaker #4: But in terms of the recoveries, a lot of what we're seeing is really adjustments to ongoing sales prices, because many of our programs haven't completely canceled.

Speaker #4: Many of them are just volume down. But in terms of the other recoveries, it's really a net coverage of the cost that we've incurred.

Speaker #4: And what we owe in terms of suppliers and other development costs. So it's largely not a big tailwind in terms of profit drivers for us in the short term.

Timothy Kraus: So it's largely not a big tailwind in terms of profit drivers for us in the short term. But it obviously avoids our necessity to continue to write amounts off like we had to do in the third quarter.

Speaker #4: But obviously, avoids our necessity to continue to write amounts off like we had to do in the third quarter.

Speaker #3: Got it. All right. Thanks for taking my questions.

Colin Langan: Got it. All right. Thanks for taking my questions.

Speaker #4: Yep.

Timothy Kraus: Yep.

Speaker #1: I would just add is if you look at Tim showed the volume mix slide and how it's a little bit strange that it's top lines negative and bottom lines positive.

R. Bruce McDonald: I would just add, if you look at, you know, Tim showed the volume mix slide and how it's a little bit strange that the top line's negative and bottom line's positive. Some of the benefit of repricing EV programs is in that bar.

Speaker #1: Some of the benefit of repricing EV programs is in that bar.

Speaker #3: Got it. Okay. Thank you. That's helpful, Colin.

Colin Langan: Got it. Okay. Thank you. That's helpful, Colin.

Speaker #5: Our next question will come from the line of Tom Narayan with RBC Capital Markets. Please go ahead.

Operator: Our next question will come from the line of Tom Narayan with RBC Capital Markets. Please go ahead.

Speaker #6: Hi, this is Thomas Ito on for Tom. Thanks for taking the question. So you guys are guiding to those 14% to 15% EBITDA margins by 2030, which is about 400 basis points higher than your '26 guide.

Thomas Ito: Hi, this is Thomas Ito on for Tom. Thanks for taking the question. So you guys are guiding to those 14 to 15% EBITDA margins by 2030, which is about 400 basis points higher than your 2026 guide. This might have to wait for the capital markets day, but could you give us any sort of rough breakdown of the contributions you're expecting from those items listed to the right of slide 17?

Speaker #6: This might have to wait for the capital markets day. But could you give us any sort of rough breakdown of the contributions you're expecting from those items listed to the right of slide 17?

Speaker #1: No, I don't really want to get into a lot of the detail. I mean, what I would tell you, if you think about margin enhancement, how do we get that 400 basis points?

R. Bruce McDonald: No, we don't. I don't really want to get into a lot of the detail. I mean, what I would tell you, and if you think about margin enhancement, where, you know, how do we get that 400 basis points? It's in two places. One, structural cost reduction. You know, we cut $325 million out of our cost base this year. And if we look at the opportunities that we have that are longer term or require systems investments, we think there's, like, $100 million there. And just a couple of examples of that would be putting our shared service, expanding our shared service center and a lot of ERP and other system standardization.

Speaker #1: It's in two places. One, structural cost reduction we cut 325 million out of our cost base this year. And if we look at the opportunities that we have that are longer term, or require systems investments, we think there's like 100 million dollars here.

Speaker #1: And just a couple of examples of that would be expanding our shared service center and a lot of ERP and other system standardization.

Speaker #4: Yeah. I think the thing we encourage you to come see us in New York. We're going to lay out the walk and how we get there and why we're so confident.

Timothy Kraus: Yeah, I think the thing like, we encourage you to come see us in New York. We're gonna lay out what, you know, the walk and how we get there and why we're so confident. So come to the Capital Markets Day; we'll lay it all out for you. But look, we're highly confident. I think what you've seen from Bruce and the management team here over the last 14, 15 months is, you know, we're very bullish on what we can deliver and what we tell you we're gonna deliver; we do. And I think we have that same confidence as we start looking forward to the strategy to deliver the $10 billion and the 15% to 16% margins in 2030.

Speaker #4: And so, come to the Capital Markets Day. We'll lay it all out for you. But look, we're highly, highly confident. I think what you've seen from Bruce and the management team here over the last 14, 15 months is we're very bullish on what we can deliver and what we tell you we're going to deliver.

Speaker #4: We do. And I think we have that same confidence as we start looking forward to the strategy to deliver the $10 billion and the 15 to 16 percent margins in 2030.

Speaker #4: So encourage you guys to come down and we'll take you all through it in March.

Timothy Kraus: Encourage you guys to come down and, you know, we'll take you all through it in March.

Speaker #6: Okay. Got it. Thank you. As a quick follow-up, it looks like you're commercial vehicle margins expanded pretty significantly in Q4, even though sales are down year over year.

Thomas Ito: Okay, got it. Thank you. As a quick follow-up, it looks like your commercial vehicle margins expanded pretty significantly in Q4, even though sales are down year-over-year. It sounds like this is mostly a mix and a cost reduction story, but I was wondering if you guys think that margin level is sustainable going into 2026, or whether there were any one-offs in the Q4 results? Thanks.

Speaker #6: It sounds like this is mostly a mix and a cost reduction story. But I was wondering if you guys think that margin level is sustainable going into 2026, or whether there were any one-offs in the Q4 results thing.

Speaker #4: Yeah. Not a lot of one-offs. I mean, obviously, this has been a part of the business over the last few years. That we've focused quite a bit on improving our operating efficiency.

Timothy Kraus: Yeah, not a lot of one-offs. I mean, obviously, this has been a part of the business, you know, over the last few years that we've focused quite a bit on improving our operating efficiency, and you're starting to see some of that. Bruce mentioned, you know, we did, over the last years, build you know a new plant, state-of-the-art, and as we continue to ramp that plant up and have more production in there, we are getting the benefits of that into the efficiency and the margins in that product. So we don't-- we're not done yet. We think we've got more opportunity to continue to improve margins in the CV business because they're not where we think they should be.

Speaker #4: And you're starting to see some of that. Bruce mentioned we did, over the last years, build a new plant—state of the art. And as we continue to ramp that plant up and have more production in there, we are getting the benefits of that in the efficiency and the margins in that product.

Speaker #4: So we're not done yet. We think we've got more opportunity to continue to improve margins in the CV business because they're not where we think they should be.

Speaker #4: So stay tuned. I think there's more good things to come when you think about our CV segment.

Timothy Kraus: So, stay tuned. I think there's more good things to come when you think about our CV segment.

R. Bruce McDonald: Yeah, maybe just add to that is, you know, we've the team in CV has done a great job this year, great job, but we've been fighting volumes falling against us all year long. And as we get into this year, we're gonna start to see that flip around and have volume as a tailwind instead of chasing the year-over-year declines.

Speaker #1: Yeah, maybe just adding to that is, the team in CV has done a great job this year. Great job. But we've been fighting volumes falling against us all year long.

Speaker #1: And as we get into this year, we're going to start to see that flip around and have volume as a tailwind instead of chasing year-over-year declines.

Speaker #6: Okay. Great. Thank you.

Thomas Ito: Okay, great. Thank you.

Speaker #5: Our next question comes from the line of Edison U with Deutsche Bank. Please go ahead.

Operator: Our next question comes from the line of Edison Yu with Deutsche Bank. Please go ahead.

Speaker #3: Good morning. This is James Mulholland on for Edison. A quick question on our part: if we do just a bit of math, even with the share buyback and increased dividend that you've outlined with your sort of longer-term free cash flow guide, it looks like you're looking at a materially higher cash position than what you've historically maintained or are even guiding to.

James Mulholland: Good morning. This is James Mulholland on for Edison. A quick question on our part. So if we do just a bit of math, even with the share buyback and increased dividend that you've outlined with your sort of longer-term free cash flow guide, it looks like you're looking at a materially higher cash position than what you've historically maintained or even guiding to. So do you have any thoughts on to where you're gonna put that to work? Would you consider further inorganic investments, shareholder returns? Just any thoughts you might have there.

Speaker #3: So do you have any thoughts on to where you're going to put that to work? Would you consider further inorganic investments, shareholder returns, just any thoughts you might have there?

Speaker #4: Yeah. I think, look, we've obviously laid out a pretty significant increase in the amount of capital that we would return to shareholders as we move out.

Timothy Kraus: Yeah, I think, look, we've obviously laid out a pretty significant increase in the amount of capital that we would return to shareholders. As we move out, and, you know, we'll talk a little bit about this in March as well. As we move out beyond 2026 and we think about our growth strategy, there certainly could be opportunities for some acquisitions or other investments that are inorganic, in order to fill in the parts of the portfolio that we think can help accelerate the growth. So, you know, I think... But we're really focused right now, you know, in continuing to execute on the plan.

Byron Foster: Yeah, I think, look, we've obviously laid out a pretty significant increase in the amount of capital that we would return to shareholders. As we move out, and, you know, we'll talk a little bit about this in March as well. As we move out beyond 2026 and we think about our growth strategy, there certainly could be opportunities for some acquisitions or other investments that are inorganic, in order to fill in the parts of the portfolio that we think can help accelerate the growth. So, you know, I think... But we're really focused right now, you know, in continuing to execute on the plan.

Speaker #4: And we'll talk a little bit about this in March as well. As we move out beyond '26 and we think about our growth strategy, there certainly could be opportunities for some acquisitions or other investments that are inorganic.

Speaker #4: In order to fill in the parts of the portfolio that we think can help accelerate the growth. So I think but we're really focused right now in continuing to execute on the plan.

Speaker #4: But again, we do think that the business that we own and the management team that we have is going to be able to continue to drive the business forward and deliver superior returns for the shareholder.

Timothy Kraus: But again, we do think that the business that we own and the management team that we have is gonna be able to continue to drive the business forward and deliver a superior returns for the shareholder.

Byron Foster: But again, we do think that the business that we own and the management team that we have is gonna be able to continue to drive the business forward and deliver a superior returns for the shareholder.

Speaker #3: Got it. That's helpful. And I guess, on the flip side of my prior question, in the presentation it sounds like you're thinking about other non-core operations that could either be sold or perhaps shuttered.

James Mulholland: Got it. That's helpful. And I guess on the flip side of my prior question, in the presentation, it sounds like you're thinking about other non-core operations that could either be sold or perhaps shuttered. You know, are there other parts of your business that can be as cleanly separated as the Off-Highway business, or is there something that specifically you're thinking about that you can share with us now?

Speaker #3: Are there other parts of your business that can be as cleanly separated as the Off-Highway business? Or is there something specific you're thinking about that you could share with us now?

Speaker #4: Yeah. Nothing obviously we can share with you now. But we're talking about some of the smaller things that we have a number of different smaller businesses.

Timothy Kraus: Yeah, nothing, obviously, we can share with you now, but, like, we're talking about some of the smaller things. We only have a number of different, you know, smaller businesses, but nothing on the scale or size of Off-Highway. But to answer your question, yes, we believe that those are imminently separable. We did a few of them. We had a few of these last year, where we sold a couple of interests we had in some joint ventures. So we'll continue to look at the portfolio, whether that be, you know, individual JVs, plants, or just product lines in some of the businesses.

Speaker #4: But nothing on the scale or size of off-highway. But to answer your question, yes, we believe that those are eminently separable. We did a few of them.

Speaker #4: We had a few of these last year, where we sold a couple of interests we had in some joint ventures. So we'll continue to look at the portfolio, whether that be individual JVs, plants, or just product lines in some of the businesses.

Speaker #4: So I think as we continue to think through the portfolio, I think there's a number of opportunities where maybe we're not the best owner or they're aren't the most profitable of product lines or part numbers.

Timothy Kraus: So, I think, you know, as we continue to think through the portfolio, I think there's a number of opportunities where, you know, maybe we're not the best owner or they aren't the most profitable of product lines or part numbers, and we'll continue to, you know, sort of cull through that and make those adjustments, so. But we do think that there's some opportunities there for us on the portfolio side. Again, these are smaller type things.

Speaker #4: And we'll continue to sort of cull through that and make those adjustments. But we do think that there are some opportunities there for us on the portfolio side.

Speaker #4: Again, these are smaller type things.

Speaker #3: Great. Thank you, guys.

James Mulholland: Great. Thank you, guys.

Speaker #5: Our next question comes from the line of James Pecorello with BNP Paribas. Please go ahead.

Operator: Our next question comes from the line of James Picariello with BNP Paribas. Please go ahead.

Speaker #7: Hey. Sorry, just to clarify, what was the last answer regarding? Is there a possibility for M&A within this revenue target, or would that be in excess of the $10 billion target?

James Picariello: Hey, sorry, just to clarify, what was the last answer regarding... Like, is there possibility for M&A within this revenue target, or that would be in excess of the $10 billion target?

Timothy Kraus: There's no M&A in the $10 billion.

Speaker #4: There's no M&A in the $10 billion.

Timothy Kraus: There's no M&A in the $10 billion.

Speaker #7: Okay. All right. That's what I thought. So, yeah, when I think about the capital deployment out to 2030—right—if there is no M&A embedded in the target, which I think is a great thing, right, free cash flow is slated to double over 2026 to 2030.

James Picariello: Okay. All right. That's what I thought. So yeah, when I think about the capital deployment out to 2030, right? If there is no M&A embedded in the target, which I think is a great thing, right? Free cash flow is slated to double over 2026 to 2030. If I just assume a linear annualized step up, right, off the $300 million this year to the $600 million targeted for 2030, right? That, that cumulative free cash flow generation looks something like $2.2 to 2.3 billion, right, in that zip code. Why would the, you know, we're looking at $250 million in dividends, right?

Speaker #7: If I just assume a linear annualized step up, right, off to 300 million this year to the 600 million targeted for 2030, right, that cumulative free cash flow generation looks something like 2.2 to 2.3 billion, right, in that zip code.

Speaker #7: Why would the we're looking at 250 million in dividends, right, 50 million a year over five years. And you've got the 1.35 billion in buybacks.

James Picariello: $50 million a year over 5 years, and you've got the $1.35 billion in buybacks, which leaves about $650 million left over in excess capital. Just curious, you know, how you're thinking about that, where you disagree or agree on, you know, how I laid that out, and just, yeah, what are we doing with that additional, you know, $650 million or so?

Speaker #7: Which leaves about $650 million left over in excess capital. Just curious how you're thinking about that—where you disagree or agree on how I laid that out.

Speaker #7: And just, yeah, what are we doing with that additional $650 million or so?

Speaker #4: Yeah. I mean, look, I think—won't get into the specifics, obviously—it leaves us some flexibility in what we use the cash flow for. Obviously, we have maturities coming due.

Timothy Kraus: Yeah, I mean, look, I think, you know, won't get into the specifics. Obviously, leaves us some flexibility in what we use the cash flow for. Obviously, we have maturities coming due, so, you know, we can use it to reduce leverage on the business if we want. And if we're in... You know, depending on where we are in the cycle, that may be something we do. Otherwise, you know, we have more opportunities to return, you know, capital to shareholder shareholders, if that seems to be the best use of that capital. I mean, 2, 3, 4, 5 years from now is a long time and a lot of things can happen.

Speaker #4: So we can use it to reduce leverage on the business if we want. And if we're in depending on where we are in the cycle, that may be something we do.

Speaker #4: Otherwise, we have more opportunities to return capital to the shareholder if that seems to be the best use of that capital. I mean, 2, 3, 4, 5 years from now, there's a long time.

Speaker #4: And a lot of things can happen. But I think what we're planning for is having an exceedingly strong operating performance through the business cycle with a capital structure that allows us to continue to be exceedingly nimble in our ability to continue to invest in the business, regardless of where the markets are.

Timothy Kraus: Like, I think what we're planning for is having an exceedingly strong operating performance across the business cycle, with a capital structure that allows us to continue to be exceedingly nimble in our ability to continue to invest in the business, regardless of where the markets are. I think that's really, really important to think about, given where we were and, you know, the high 2 turns leverage and what we're gonna be able to do through the business cycle, regardless of where the end markets are, going forward. So we're just leaving ourselves some flexibility. I think what we've said is, "Hey, we're gonna continue to drive really high shareholder returns," and that's our intention.

Speaker #4: And I think that's really, really important to think about, given where we were in the high two turns leverage, and what we're going to be able to do through the business cycle, regardless of where the end markets are, going forward.

Speaker #4: So we're just leaving ourselves some flexibility. I think what we've said is, "Hey, we're going to continue to drive really high shareholder returns and that's our intention."

Speaker #7: Okay, yeah, that makes a lot of sense. My follow-up is a quick one. What's the assumed effective tax rate for this year to inform the adjusted EPS range of $2 to $3?

James Picariello: Okay. Yeah, no, that makes a lot of sense. My follow-up is a quick one. What's the assumed effective tax rate for this year to inform the Adjusted EPS range of $2 to 3?

Timothy Kraus: Yeah, it's somewhere. We've had some pretty strange ones. It's somewhere between 20% and 30%. It really depends on some of the jurisdictional mix, but that's kind of where we're targeting somewhere. That's a wide range, but given the val balances that we have and how the income mix can change, you know, it moves around. It happens to be a pretty reasonable rate this year, just based on the jurisdictional mix and where the val balances are.

Speaker #4: Yeah, it's somewhere— we've had some pretty strange ones. It's somewhere between 20% and 30%. It really depends on some of the jurisdictional mix.

Speaker #4: But that's kind of where we're targeting—somewhere. That's a wide range, but given the balances that we have, and how the income mix can change, it moves around.

Speaker #4: It happens to be a pretty reasonable rate this year, just based on the jurisdictional mix and where the balances are.

Speaker #7: Understood. Thank you.

James Picariello: Understood. Thank you.

Speaker #4: Yep.

Timothy Kraus: Yep.

Speaker #5: Our next question comes from the line of Joe Speck with UBS. Please go ahead.

Operator: Our next question comes from the line of Joe Spak with UBS. Please go ahead.

Speaker #8: Thanks. Good morning, everyone. Maybe just a question on CapEx, but with two flavors, if you will. So it looks like you were low 3s, 25, guidance calls for low 4s this year.

Joseph Spak: Thanks. Good morning, everyone.

Joe Spak: Thanks. Good morning, everyone.

Timothy Kraus: Good.

Joseph Spak: Maybe just a question on CapEx, but with two flavors of view. So, you know, looks like your low 3s, 2025 guidance calls for low 4s this year. I'm assuming that's just a step up to support some of these growth initiatives, but maybe you could add some color there. And then how should we think-- I know you gave the free cash margin guidance for the 2030 plan, but should we think about any material change in CapEx to sales to support that growth opportunity? Is 4% the new, like, right go-forward rate we should be thinking about?

Joe Spak: Maybe just a question on CapEx, but with two flavors of view. So, you know, looks like your low 3s, 2025 guidance calls for low 4s this year. I'm assuming that's just a step up to support some of these growth initiatives, but maybe you could add some color there. And then how should we think-- I know you gave the free cash margin guidance for the 2030 plan, but should we think about any material change in CapEx to sales to support that growth opportunity? Is 4% the new, like, right go-forward rate we should be thinking about?

Speaker #8: I'm assuming that's just a step up to support some of these growth initiatives, but maybe you could add some color there. And then how should we think—I know you gave the free cash margin guidance for the 2030 plan.

Speaker #8: But should we think about any material change in CapEx-to-sales to support that growth opportunity? Is 4% the new, right go-forward rate we should be thinking about?

Speaker #4: Yeah. I think 4% is probably a good number to kind of pencil in as you go forward. I think, look, we're we will have to spend both on growth initiatives and on the initiatives to drive margin expansion, Bruce mentioned our plant-level operational efficiency.

Timothy Kraus: Yeah, I think 4% is probably, you know, a good number to kind of pencil in as you go forward. I think... Look, we will have to spend both on growth initiatives and on the initiatives to drive margin expansion. You know, Bruce mentioned, you know, our plant level, you know, operational efficiency. You know, we've taken a lot of costs out at a relatively modest, you know, investment. You know, the next step is we'll have to have a higher level of, I mean, investment, which is largely CapEx, in order to drive that next lockstep change in our margin profile, especially at the plant level.

Speaker #4: We've taken a lot of costs out at a relatively modest investment. The next step is we'll have to have a higher level of investment, which is largely CapEx.

Speaker #4: In order to drive that next lock step change in our margin profile, especially at the plant level. But that's built into our targets, both the 2030 target that we're giving you and the target that we have for CapEx in 2026.

Timothy Kraus: So, but that's, like, that's built into our, our targets, both the 2030 target that we're giving you and the target that we have, for CapEx in, in 2026. So we, we've committed significant amounts of, of CapEx to help drive both growth and, and the efficiencies, in the business.

Speaker #4: So we've committed significant amounts of CapEx to help drive both growth and the efficiencies in the business.

Speaker #8: Okay. Thank you. And you alluded to this a little bit earlier, but I was wondering if you could just sort of get a little bit more color.

Joseph Spak: Okay. Thank you. And you alluded to this a little bit earlier, but was wondering if you could just sort of get a little bit more color. You know, you're showing—you're guiding 250 basis points of margin expansion this year. It sounds like we should be maybe above that level in CV, given some of your comments, so maybe slightly a little bit below that in light vehicle to get to the number. But was wondering if you could just sort of help us understand some of the profit drivers or margin drivers and by segment for 2026.

Joe Spak: Okay. Thank you. And you alluded to this a little bit earlier, but was wondering if you could just sort of get a little bit more color. You know, you're showing—you're guiding 250 basis points of margin expansion this year. It sounds like we should be maybe above that level in CV, given some of your comments, so maybe slightly a little bit below that in light vehicle to get to the number. But was wondering if you could just sort of help us understand some of the profit drivers or margin drivers and by segment for 2026.

Speaker #8: You're guiding 250 basis points of margin expansion. This year, it sounds like we should be maybe above that level in CV, given some of your comments.

Speaker #8: So maybe slightly a little bit below that in light vehicle to get to the number. But I was wondering if you could just sort of help us understand some of the profit drivers or margin drivers by segment for 2026.

Speaker #4: Yeah, I mean, I think you have it right. I mean, obviously, we're going to have continued flow-through on the cost savings, and then we will continue to get performance improvements, which is fairly— I mean, it's fairly consistent on a relative basis in the segments.

Timothy Kraus: Yeah, I mean, I think you have it right. I mean, obviously, we're gonna have continued flow-through on the cost savings, and, and then we, we will continue to get, you know, performance improvements, which is, you know, fairly consistent on a relative basis in the segments. Probably a little bit more in CV, 'cause we got, we got a little more opportunity there, but, but generally pretty balanced between, between the segments. But I, I think the, the important thing to note here is that, you know, we continued to focus on our ability to expand margins through actions that are completely within our control and that, that are low risk and have high returns. You know, so you think about some of the things we're doing, you know, with automation, with, with, you know, efficiencies within the plants.

Speaker #4: Probably a little bit more in CV because we got a little more opportunity there. But generally, pretty balanced between the segments. But I think the important thing to note here is that we continue to focus on our ability to expand margins through actions that are completely within our control.

Speaker #4: And that are low-risk and have high returns. So, you think about some of the things we're doing with automation, with efficiencies within the plants.

Speaker #4: I mean, largely, those are in plants that are on ICE programs. We know what the volumes are going to be, and we know what the investment and the returns look like.

Timothy Kraus: I mean, you know, largely those are in plants that are on ICE programs, that we know what the volumes are gonna be, and we know what the investment and the returns look like. So, we're highly confident in our ability to both make those investments and deliver the expanded margins that they will deliver, so.

Speaker #4: So we're highly confident in our ability to both make those investments and deliver the expanded margins that they will deliver.

Speaker #8: Okay. Great. And I sure do love this. But congrats to both Byron and Bruce. And looking forward to learning more at the upcoming investor event.

Joseph Spak: Okay, great. And I should go on with this, but congrats to both Byron and Bruce, and looking forward to learning more at the upcoming investor event. So thanks everyone.

Joe Spak: Okay, great. And I should go on with this, but congrats to both Byron and Bruce, and looking forward to learning more at the upcoming investor event. So thanks everyone.

Speaker #8: So thanks, everyone.

Timothy Kraus: Oh, we plan to put Byron out there, so you guys can go right after him in March. Okay?

Speaker #4: Oh, we plan to put Byron out there so you guys can go right after him in March. Okay?

Speaker #8: Look forward to it. Thank you.

Joseph Spak: Look forward to it.

Joe Spak: Look forward to it.

Speaker #4: Thank you. Thanks, Joe.

R. Bruce McDonald: Thank you.

Joseph Spak: Thank you.

Joe Spak: Thank you.

Timothy Kraus: Thanks, Joe.

Speaker #5: Our final question comes from the line of Emanuel Rosner with Wolf Research. Please go ahead.

Operator: Our final question comes from the line of Emmanuel Rosner with Wolfe Research. Please go ahead.

Speaker #9: Oh, great. Thanks so much. First question is on the appreciated sneak peek on the 2030 financial targets. I wanted to ask you about the high-level drivers of the 400 bips in margin expansion.

Emmanuel Rosner: Great. Thank you so much. First question is on the, appreciate the sneak peek on the 2030 financial targets. I wanted to ask you about the, high-level drivers of the, 400 bps in, in, in margin expansion. How much of it is, growth driven versus, cost savings? I think, Bruce, you mentioned maybe $100 million, opportunity from the systems enhancement. I don't know if there was anything else you'd call out on the, on, on the cost side. And what implication does it have in terms of, potential cadence? 400 bps is, you know, obviously averages out to about 100 bps a year. But, I would assume that the cost savings are maybe more front-end loaded, whereas like some of the growth initiatives may take a little bit longer.

Speaker #9: How much of it is growth-driven versus cost savings? I think, Bruce, you mentioned maybe a $100 million opportunity from the systems enhancement. I don't know if there was anything else you would call out on the cost side.

Speaker #9: And what implication does it have in terms of potential cadence? 400 bps is obviously averaged at about 100 bps a year. But I would assume that the cost savings are maybe more front-end loaded, whereas some of the growth initiatives may take a little bit longer?

Emmanuel Rosner: So anything you could share on that?

Speaker #9: So anything you could share on that?

Speaker #4: Yeah, I think we'll come see us in March. I think it's the line of the day. I think some of what you said makes some sense.

Timothy Kraus: Yeah, I think we're-- well, come see us in March, I think is the line of the day. You know, some of what you said makes some sense, but look, given where we're at today, we're gonna be able to invest in both the growth and the margin expansion initiatives and deliver them over time. But we'll lay it out in detail, you know, in a few weeks. So come down and see us.

Speaker #4: But look, given where we're at today, we're going to be able to invest in both the growth and the margin expansion initiatives, and deliver on them over time.

Speaker #4: But we'll lay it out in detail in a few weeks. So come down and see us.

Speaker #9: Yeah. I would say, though, that the margin and getting to the 15 is not because we're growing. In other words, we will expand our margins based on investments that we're making and cost actions.

R. Bruce McDonald: Yeah.

Emmanuel Rosner: Okay.

R. Bruce McDonald: I would say, though, that the margin and getting to the 15 is not because we're growing. In other words, we will expand our margins based on investments that we're making and cost actions. The growth will help out, but the main driver is the investments that we're making in our manufacturing operations and automation, things like that.

Speaker #9: The growth will help out. But the main driver is the investments that we're making in our manufacturing operations and automation and things like that.

Speaker #4: Yeah, I mean, I wouldn't say the growth is coming through at super high rates. We still operate in the mobility business, for goodness' sake.

Timothy Kraus: Yeah, I mean, I wouldn't say the growth is coming through at super high, you know, rates. Like, we still operate in the mobility business, for goodness sake. So, like, you know, and like I said before, a lot of what we're thinking about is things that are completely within our control and tied to programs that are tried and true. So, you know, high return, low risk type things to drive margin improvement.

Speaker #4: So, we—and like I said before—a lot of what we're thinking about is things that are completely within our control, and tied to programs that are tried and true.

Speaker #4: So high return low-risk type things to drive margin improvement.

Speaker #9: I appreciate the call. If I could just follow up on this based on what's disclosed in today's slides, obviously, revenues target of 10 billion dollars up from seven and a half billion I guess this year.

Emmanuel Rosner: I appreciate the call. If I could just follow up on this, based on what's disclosed in, you know, today's slides, obviously. Revenue target of $10 billion, up from, you know, $7.5 billion, I guess this year. So if you just have like, I guess, what is the right incremental margin on that kind of, you know, revenue increase? Because if you just apply that to $2.5 billion in revenue, you'd already have probably like $500 million of uplift in EBITDA. So just curious, how do you think about, you know, that piece just based on the numbers that you already shared with us?

Speaker #9: So if you just had I guess what is the right incremental margin on that kind of revenue increase? Because if you just apply that to two and a half billion dollars in revenue, you'd already have probably like 500 million dollars of uplift in EBITDA.

Speaker #9: So, just curious, if there is, how do you think about that piece just based on the numbers that you already shared with us?

Speaker #4: Yeah. I mean, I think there's you also have to realize that there are some costs associated with some of that growth. So it's not like we just go out and sell it and put it in the same plant and it isn't that simple.

Timothy Kraus: Yeah, I mean, I think there's... You know, you also have to realize that the, you know, there are some costs associated with some of that growth. So it's not-

Emmanuel Rosner: Yeah.

Timothy Kraus: It's not like we just go out and sell it and put it in the same plan. Like, it isn't that-

Emmanuel Rosner: Yeah

Timothy Kraus: ... simple, but I think, again, we'll give you a front-row seat, Emmanuel, in March, and we'll take you all through it, and we'll answer all your questions.

Speaker #4: But I think the again, we'll give you a front-row seat Emanuel in March and we'll take you all through it and we'll answer all your questions.

Emmanuel Rosner: I look forward to that. And then maybe just, on 2026, the, on slide 14, the walk to the 2026 EBITDA by factor. Can you just remind us, what goes inside the performance and the, and the cost savings bucket in terms of-

Speaker #9: I look forward to that. And then maybe just on 2026, the on-site $14 million, the walk to the 2026 EBITDA by factor. Can you just remind us what goes inside the performance and the cost savings bucket, in terms of that?

Timothy Kraus: Yeah

Speaker #4: Yeah, so cost—yeah. Think of cost savings as our $325 million; that's all above the plants, okay? That's what's in that number, and that's the last piece of that $325.

Emmanuel Rosner: -the prevention?

Timothy Kraus: Think of cost savings as our $325 million, that's all above the plants. Okay? That's what's in that number, and that's the last piece of that 325, right? And then if you think about performance, that is all the improvements that are going on at the, you know, really at the plant level. So this is, you know, material cost savings, engineering cost savings that's coming through as a result of, you know, design and whatnot, updates, conversion cost savings. And then we've also included in here about $40 million of the stranded cost avoidance that we're taking out this year. So that's one of the reasons why that number looks, you know, pretty large.

Speaker #4: Right? And then if you think about performance, that is all the improvements that are going on at the really at the plant level. So this is material cost savings, engineering cost savings that's coming through as a result of design and whatnot updates.

Speaker #4: Conversion cost savings. And then we've also included in here about 40 million dollars of the stranded costs avoidance that we're taking out this year.

Speaker #4: So that's one of the reasons why that number looks pretty large. There's 40% of it—$40 million—is related to structural cost takeout, related to stranded costs from the deal.

Timothy Kraus: There's 40, 40% of it, $40 million is related to-

Emmanuel Rosner: Mm-hmm.

Timothy Kraus: The structural cost takeout related to stranded costs from the deal.

Speaker #9: Understood. All right. Thank you. Okay. Hey, that's the last of the questions, so thanks, everybody, for joining us here this morning. Clearly, I want to have a big shout-out to the Dana team.

Emmanuel Rosner: Understood. All right, thank you.

Timothy Kraus: Yep.

R. Bruce McDonald: Okay. Hey, that's the last of the questions. So thanks, everybody, for, for joining us here this morning. Clearly, I wanna have a big shout-out to the Dana team. I know a lot of them are listening in on this call. You know, an incredible 2025, and I thank each and every one of our team members for help making this happen. You know, coming into 2025, we made some very bold commitments, and the teams delivered on all fronts. I'm very proud of them. Looking ahead, the team's laser focused on performance and delivering on our financial commitments. You know, as I said earlier, right now, Dana is exceptionally well positioned. We have a strong balance sheet. I think best-in-sector balance sheet. We have a strong top line growth story.

Speaker #9: I know a lot of them are listening in on this call. An incredible 2025. And I thank each and every one of our team members for help making this happen.

Speaker #9: Coming into 2025, we made some very bold commitments. And the teams delivered on all fronts. I'm very proud of them. Looking ahead, the team's laser-focused on performance.

Speaker #9: And delivering on our financial commitments. As I said earlier, right now, Dana is exceptionally well positioned. We have a strong balance sheet. I talk best-in-sector balance sheet.

Speaker #9: We have a strong top-line growth story. We have a very clear plan and actions to deliver significant margin expansion. Our free cash flow is accelerating.

R. Bruce McDonald: We have a very clear plan, and actions to deliver significant margin expansion. You know, our free cash flow is accelerating, to the point where we can, first, grow our investment in our business. Second, return a significant amount of capital to our shareholders via dividends. Third, grow our buyback, and right now, we can comfortably buy 8 to 9% of our shares per year, all while deleveraging. I love how Dana is positioned right now. In the auto space, I wouldn't change places with anybody else. Thanks for joining us this morning.

Speaker #9: To the point where we can first grow our investment in our business. Second, return a significant amount of capital to our shareholders via dividends.

Speaker #9: Third, grow our buyback. And right now, we can comfortably buy 8 to 9 percent of our shares per year, all while deleveraging. I love how Dana is positioned right now.

Speaker #9: In the auto space, I wouldn't change places with anybody else. Thanks for joining us this morning.

Operator: This will conclude our call today. Thank you all for joining. You may now disconnect.

Q4 2025 Dana Inc Earnings Call

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