Dana Inc. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Dana Inc. is a global provider of driveline, sealing, thermal-management, and electric vehicle powertrain products. The reporting period is significantly impacted by the strategic divestiture of the Off-Highway business, which closed on January 1, 2026, and is now reported as discontinued operations. The company operates two primary segments: Light Vehicle Systems and Commercial Vehicle Systems.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales (Continuing Ops) | $1,868 million | $1,781 million |
| Gross Margin | 9.0% | 6.6% |
| Net Income (Total) | $1,091 million | $30 million |
| Net Income (Continuing Ops) | $(15) million | $(17) million |
| Net Income (Discontinued Ops) | $1,106 million | $47 million |
| Adjusted EBITDA | $171 million | $93 million |
| Cash and Cash Equivalents | $477 million | $507 million |
| Total Debt (Long-term + Current) | $1,260 million | $3,241 million |
| Liquidity (Cash + Revolver Availability) | $1,617 million | N/A |
Material Changes vs. Prior Period
- Divestiture Impact: The sale of the Off-Highway business to Allison Transmission generated a pre-tax gain of $1,191 million, driving the massive increase in total net income. Proceeds were used to pay down approximately $1.9 billion in debt.
- Revenue Growth: Net sales from continuing operations increased 4.9% year-over-year, driven by a $64 million favorable currency impact and $23 million in organic growth (pricing and backlog conversion), offset by lower volumes in North American commercial trucks.
- Margin Expansion: Gross margin improved by 240 basis points to 9.0%, aided by cost reduction initiatives ($33 million), material cost savings ($23 million), and operational efficiencies, partially offset by tariff impacts ($50 million) and commodity inflation ($8 million).
- Debt Reduction: Long-term debt decreased significantly from $2,566 million to $1,236 million following the redemption of senior notes and repayment of the Term A Facility.
- Unusual Items: Continuing operations included a $56 million charge for electric vehicle program terminations and a $7 million loss on debt extinguishment.
Guidance, Outlook, and Risks
- 2026 Full-Year Guidance:
- Sales: $7,300 - $7,700 million.
- Adjusted EBITDA: $750 - $850 million (Midpoint margin of 10.6%).
- Adjusted Free Cash Flow: $250 - $350 million.
- Management Commentary: Outlook reflects declining global market demand offset by $200 million in net new business backlog and currency tailwinds (stronger Euro). Cost savings initiatives are expected to deliver $325 million in annualized savings by 2026.
- Risks and Contingencies:
- Tariffs: Uncertainty remains regarding refunds for IEEPA tariffs previously paid following a Supreme Court ruling; no recovery has been recorded.
- EV Program Volatility: Significant charges were taken for cancelled or declining EV programs, highlighting execution risk in electrification.
- Market Cycles: North American Class 8 and Classes 5-7 truck production volumes remain down significantly year-over-year.
Investor Verification Checklist
- Verify the final purchase price adjustment for the Off-Highway divestiture based on working capital and indebtedness balances.
- Monitor the status of the Mexican operations transfer, which remains in discontinued operations pending legal transfer completion.
- Assess the sustainability of the 9.0% gross margin given the lag in material cost recovery mechanisms (approx. 90 days) and ongoing tariff negotiations.
- Review the $56 million EV program termination charges to understand the extent of exposure to customer program cancellations.
- Confirm the timeline for realizing the $950 million sales backlog (2026-2028) to validate revenue guidance.