Dana Inc. Q2 2026 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 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 January 1, 2026, divestiture of the Off-Highway business to Allison Transmission, which is now reported as discontinued operations. Additionally, on June 10, 2026, Dana entered into definitive agreements to acquire Eaton's Mobility business in a Reverse Morris Trust transaction, expected to close in Q1 2027.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Sales (Continuing Ops) | $2,010M | $1,935M | $3,878M | $3,716M |
| Gross Margin | 10.4% | 7.1% | 9.8% | 6.9% |
| Segment EBITDA | $211M | $159M | $386M | $268M |
| Net Income (Continuing Ops) | $11M | ($12M) | ($4M) | ($29M) |
| Net Income (Total) | $0M | $31M | $1,091M | $61M |
| Adjusted EBITDA | $207M | $147M | $378M | $240M |
| Cash & Equivalents | $331M | $469M (Dec 2025) | $331M | $486M (Dec 2025) |
| Total Debt (Long-term + Current) | $1,344M | $2,596M (Dec 2025) | $1,344M | $2,596M (Dec 2025) |
| Liquidity (Cash + Revolver) | $1,471M | N/A | $1,471M | N/A |
Note: YTD Net Income includes a $1,095M gain from discontinued operations (Off-Highway sale). Continuing operations net income was a loss of $4M YTD 2026.
Material Changes vs. Prior Period
- Revenue Growth: Q2 2026 sales increased 4% ($75M) vs. Q2 2025, driven by a $24M currency tailwind and $51M organic growth (pricing, cost recoveries, and backlog conversion).
- Margin Expansion: Gross margin improved 330 basis points to 10.4% in Q2, driven by cost reduction initiatives ($18M), material cost savings ($24M), and operational efficiencies, partially offset by commodity inflation ($15M) and non-material inflation ($26M).
- Debt Reduction: Total debt decreased significantly from $2,596M (Dec 2025) to $1,344M (June 2026) following the use of Off-Highway divestiture proceeds to retire senior notes and term facilities.
- Unusual Items: Q2 2026 included $59M in electric vehicle program termination charges (YTD) and $20M in strategic transaction expenses related to the Eaton acquisition. Q2 2025 included a $7M loss on divestiture of ownership interests.
- Discontinued Operations: The Off-Highway business sale closed Jan 1, 2026, generating a $1,186M pre-tax gain recognized in YTD 2026. Mexican operations remain in discontinued operations pending legal transfer.
Guidance, Outlook, and Risks
- 2026 Full-Year Guidance:
- Sales: $7,650M - $7,850M
- Adjusted EBITDA: $800M - $850M (Midpoint margin ~10.6%)
- Adjusted Free Cash Flow: $275M - $375M
- Management Commentary: Outlook reflects stable global demand, $200M net new business backlog realization in 2026, and currency tailwinds (stronger Euro). Cost savings initiatives are expected to deliver $325M in annualized savings by 2026.
- Strategic Transactions: The Eaton Mobility acquisition is structured as a Reverse Morris Trust. Dana shareholders will own ~49.9% of the new entity. Termination fees could reach $159M under specified circumstances.
- Risks:
- Commodity Costs: Higher steel and aluminum prices impact margins, though recovery mechanisms with customers are in place.
- EV Program Volatility: Significant charges ($59M YTD) recorded due to customer cancellations or volume declines in EV programs.
- Regulatory/Tariffs: Ongoing impact of tariffs and potential refunds (e.g., IEEPA refunds of $26M recorded in Q2).
- Argentina Inflation: Operations in Argentina are in a highly inflationary economy, requiring remeasurement of monetary assets/liabilities.
Investor Verification Checklist
- Discontinued Operations: Verify the status of the Mexican Off-Highway operations transfer and the timing of the remaining $82M deferred proceeds.
- Eaton Transaction: Monitor regulatory approvals and shareholder vote outcomes for the Reverse Morris Trust structure; confirm the $1,100M cash distribution to Eaton.
- EV Program Exposure: Assess the sustainability of EV program volumes given the $59M termination charges recorded YTD.
- Debt Covenants: Confirm continued compliance with the 2.00:1.00 first lien net leverage ratio maintenance covenant under the Revolving Facility.
- Tax Rate Volatility: Review the 124% effective tax rate YTD 2026, driven by $12M in foreign jurisdiction earnings revisions, to understand future tax liability risks.