DANA Inc — Call Transcript 2025

Good morning and welcome to Dana Incorporated's third quarter 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. 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. Thank you, Regina, and good morning and welcome to Dana Incorporated's earnings call for the third quarter of 2025. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we present here today. For more details about the factors that may affect future results, please refer to our safe harbor statement found in our public filings and our reports at PIPC. 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 me this morning is Bruce McDonald, Dana Chairman and Executive Officer, and Timothy Kraus, Senior Vice President and Chief Financial Officer. Bruce, the floor is yours. Thank you, Craig, and good morning everyone, and thanks for joining Craig, Tim, and I for a discussion here on Dana's Q3 earnings. Maybe just before I get into my slide here, just stepping back and talking about kind of the puts and takes in terms of the third quarter. I guess here's what I sort of see as the highlights. First of all, I think you'll see improving business performance, and that's something that we expect to see accelerate as we get into our fourth quarter. The driver for that would really be a few restructuring initiatives that have been completed or are substantially complete and will start to turn from sort of headwinds that are in our numbers right now to tailwinds for us going forward. Secondly, on the volume side, even though we're down year over year, the comps are getting better. They're negative, but they're getting better, and that drives improved financial performance. On the tariff side, less of a headwind. You'll see we had minimal impact here in Q3. Our full-year charge in terms of tariffs is lower than we thought a quarter ago. Cost savings, we're on track to deliver the $310 million we talked about last quarter, but we are realizing those quicker, and that's helping us with some of the uplift to our outlook here. In terms of negatives, I'd say we have some volume softness, particularly in CV North America and to a lesser extent Brazil. We did have JLR down for about five weeks in the quarter. Those were headwinds against us. The last thing I'd sort of point out is we do have, there has been some supplier or some EV program cancellations, and we have some charges in the quarter that we took associated with that that we expect will recover here in the fourth quarter. Turning to the highlights in terms of the off-highway divestiture, that remains on track. We do expect that to close here later in the fourth quarter. In terms of regulatory approvals, we've received almost all of them. We have one minor European country that we expect to wrap up here in the next week or so. The joint teams between ourselves and Allison are working hard to sort out all the plethora of workstreams that we have in place to effect an orderly transition here in the quarter. In terms of our capital returns, you'll see in our note we talked about buying between $100 million and $150 million of shares in the third quarter. We actually bought more than that, 9.5 million or 7% of our shares outstanding. We have had a 10b5 plan in place throughout the quarter, and as we sit here today, we've bought nearly 30 million shares or just over 20% of our shares outstanding, and we expect to complete the balance of the share repurchase here over the next month or so. As I said in my earlier remarks on the cost-saving side, a really good number here in the quarter. We're almost up to our full-year run rate at $73 million. We continue to look for other opportunities. I am really pleased with the progress our team has made on bringing these home. Tariffs, the situation is getting a little bit better. We continue to make progress getting USMCA compliance, which reduces the sort of headwind both from an on-charge point of view, but also the margin deterioration that we see. Our outlook, our recovery rate is now up in the upper 80%. Lastly, in terms of the balance of the year outlook, I'd say the light demand or the light truck demand remains relatively stable. We do have the odd production interruption here and there, but overall light vehicles looking good for the quarter. In terms of commercial vehicle, we continue to see deterioration in North America and to a lesser extent Brazil. Nonetheless, the fact that we've got a better outlook in terms of tariffs, quicker realization of cost recovery, we are taking our full-year guide up $15 million at the midpoint. I would note that within our guidance, we do have some volume catch-up factored in here, JLR. We factored in the lower commercial vehicle outlook here in North America in line with estimates out there. We have factored in the latest Super Duty schedule releases that we have as of this week. With that, a good solid quarter, and Tim, I'll turn it over to you to go through the financials. Thanks, Bruce, and good morning to everyone. Turning to slide six now, let's review our third quarter financial performance. First, a reminder, results are presented excluding the off-highway business, which is classified as discontinued operations. Sales for the quarter were $1.917 billion, up $20 million compared to Q3 of last year. This reflects recoveries in currency benefits, offsetting the impact of lower demand. Adjusted EBITDA came in at $162 million, an improvement of $51 million year over year. Our margin expanded by 260 basis points to 8.5%, driven by cost-saving actions and operational efficiencies that help mitigate the profit impact of lower sales and tariffs. EBIT improved significantly to $53 million from a loss of $8 million in the prior period. Net interest expense increased $11 million to $44 million, due to higher borrowings and modestly higher rates. Income tax was a benefit of $2 million. While this is down $16 million from last year, we continue to benefit from positive adjustments to the carrying value of our deferred tax assets. Net income attributable to Dana was $13 million compared with a loss of $21 million in Q3 of last year, a positive swing of $34 million. Overall, these results demonstrate the effectiveness of our cost-savings initiatives, operational improvements, and offsetting market headwinds. Please turn with me now to slide seven for the drivers of the sales and profit change for the quarter. In line with the new reporting method, we have revised our WOC presentation to include the impact of discontinued operations for the current and prior periods. The $579 million in sales and $121 million of profit removed from 2024 represent the off-highway business being sold and the accounting treatment for discontinued operations. Beginning with sales, this year's third quarter volume and mix were $66 million lower, driven by lower demand in commercial vehicle end markets, partially offset by higher sales in light vehicle. Production disruptions at certain customers had minimal impact on light vehicle system sales in the quarter. Performance drove sales higher by $8 million due to pricing actions, while tariff recoveries totaled $49 million. Currency translation, primarily the strength of the euro against the U.S. dollar, yielded $21 million in higher sales compared to last year. Moving to adjusted EBITDA, volume and mix lowered EBITDA by $35 million. This was a decremental margin of about 50%, higher than we typically expect, reflecting significant mix changes and continued operational impacts within our thermal products business, including battery cooling. Recall, we are breaking out performance, which includes efficiency gains in manufacturing separately. Performance increased profit by $11 million due to pricing and efficiency improvements across both segments. Cost savings added $73 million in profit through the actions we have taken across the company. This brings us to $183 million to date, and we are secure in our increased target of $235 million in savings for the full year 2025. Tariff impact in the quarter was minimal at just $1 million. Due to the catch-up in tariff recoveries, we expect to see continuing profit headwind in the future, but we do expect recovery of the majority of this impact this year. Next, I will turn to slide eight for details on our third quarter cash flow. As I discussed on slide six, the accounting for cash flow includes both continued and discontinued operations as shown here on slide nine. For the third quarter of 2025, we delivered adjusted free cash flow of $101 million, which represents a $109 million improvement compared to the prior year. This strong performance was driven primarily by higher profitability and lower working capital requirements. One-time costs, primarily related to our cost savings program, were $17 million, which is $8 million higher than the prior period. Net interest increased by $11 million, primarily due to higher borrowing costs associated with the capital return initiatives. Taxes were lower at $47 million compared to $72 million last year, driven by the timing of payments. Working capital improved significantly by $76 million, reflecting better inventory management and timing of receivables and payables. Capital spending was $59 million, up $16 million year over year as we continue to invest in new programs to support our backlog. Overall, these factors combine to deliver a substantial improvement in free cash flow, positioning us well to achieve our full-year target. Please turn with me now to slide nine for an updated guidance for continuing operations. For all our targets, we've narrowed our ranges as we approach the end of the year, as we remain confident in achieving our targets. We expect sales from continuing operations to be approximately $7.4 billion at the midpoint of the tightened range. Adjusted EBITDA from continuing operations is now expected to be about $590 million at the midpoint of the narrower range. This is approximately $15 million higher than previously anticipated, driven primarily by accelerated cost savings and performance improvements. Full-year adjusted free cash flow is anticipated at $275 million at the midpoint of the tighter range for the year. The profit improvement in continuing operations is expected to be offset by lower profit from discontinued operations. Please turn with me now to slide 10 for the drivers in sales and profit change for our full-year guidance. As with the quarterly WOC we showed earlier, our full-year guidance WOC adjusts 2024 for estimated discontinued operations and WOC's forward our guidance for continuing operations. Beginning on the left, discontinued operations reduced 2024 sales by $2.5 billion, so we begin 2025 at $7.7 billion in sales for continuing operations. Adjusted EBITDA from discontinued operations was $490 million, reducing adjusted EBITDA to $395 million, resulting in a 5.1% margin. In this presentation, we have combined the impact of sales from continuing operations in our off-highway business into the volume and mix category. We are expecting volume and mix to lower sales by approximately $600 million, driven by lower demand in traditional commercial vehicle markets, as well as for electric light vehicles impacting our battery cooling business. Adjusted EBITDA from volume and mix is expected to be lower by $130 million. Performance is now expected to increase EBITDA by approximately $110 million, mostly through pricing improvements. Cost savings will add $235 million in profit, as I mentioned previously. The tariff impact for the full year is expected to add about $150 million to sales, and we now expect it to lower profit by about $20 million. The majority of this profit headwind will be recovered next year. Foreign currency translation is now expected to increase sales by $25 million, primarily driven by the strengthening euro compared to the U.S. dollar, offsetting some of these sales impacts of lower volume. Finally, commodity cost recovery should drive about $15 million in higher sales and now only about a $5 million headwind to profit. The net result will be about a 290 basis point margin improvement in continuing operations compared to last year, as performance and cost-saving actions overcome market headwinds. Next, I will turn to slide 11 for the details of our free cash flow guidance. As I mentioned, we anticipate full-year 2025 adjusted free cash flow to be about $275 million at the midpoint of the guidance range. We expect about $105 million of higher free cash flow from increased adjusted EBITDA. One-time costs will be about $30 million higher as we invest in our cost-saving programs and restructuring. Working capital will be about $105 million lower as we continue to reduce the requirements to operate the business. Capital spending net is expected to be about $325 million this year, which is $45 million lower than last year. Finally, I will turn back over to Bruce for some closing comments on slide 12. Okay, thanks, Tim. This slide is really the same as we talked about last quarter, which kind of reflects the fact that I think the business is performing well and we're delivering on our commitment. Cost savings for the year, or the run rate that we're targeting, the $310 million, we're solidly on track. As we've discussed here earlier, we're realizing more of that benefit here in 2026, sorry, 2025. In terms of our margin outlook, we've been consistent for a year now that we were going to have 10%-10.5% margins for 2026. It's really nice to be giving guidance here for the fourth quarter that's in that range or even slightly on top of. I'd say overall, our team is doing a great job over-delivering on the things that we can control, and it's helping us offset the things that we cannot control. In terms of our return of capital to shareholders, we're committed to the $600 million this year. Lastly, I would say in terms of our growth story, I think it's underappreciated by the market. We have had some deterioration in our backlog due to EV program cancellations, deferrals, or lower volumes. Nonetheless, our team's done a nice job this year, gaining share, winning incremental programs. We plan on having an analyst call here in January and going through our revised backlog. We continue to win new business, and I hope to add to our backlog between now and January. With that, we'll turn it over for Q&A. 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 Tom Narayan with RBC Capital Markets. Please go ahead. Yeah, thanks for taking the question, guys. My first one, it's kind of an OEM question, but it relates to you guys too. The big story from this earnings season was the big policy change, the MSRP exemption or extension that included broadening the scope of parts. You saw that two large U.S. OEMs, huge impacts on their tariff guidance and presumably their volume outlook. Conversely, earlier this morning, a large European OEM reported results that had no positive impact from that. I was just wondering if you were seeing some dynamic here where the U.S. OEMs, which you guys have more exposure to, may be benefiting more from tariff policy changes than perhaps others, the European or maybe even the Japanese and the Koreans. I have a quick follow-up. Yeah, I think you're absolutely right. I mean, the rebate is based on vehicles assembled in the U.S., and obviously the Detroit 3 make more in the U.S. than the European or the other transplants. To me, the most important thing in the recent announcement in that regard is I think there's always been some concern around are our customers going to have to pass along the higher prices that in the short term they're eating in their margins to the end customer. To the extent that were to happen, obviously vehicle demand is going to drop. I think that risk has substantially diminished with the new guidelines that have come out. That's kind of the way I look at it. Okay. My quick follow-up, the commercial vehicle side, it sounds like from your prepared commentary that that situation is deteriorating. Just curious if you could give us a context of how typically that cycle works and you know, are you seeing any kind of light at the end of the tunnel? Thanks. Nope. We're not seeing any light at the end of the tunnel. I would say, if you look at kind of the run rate here, and I'll talk about North America specifically, in the third quarter, we're running around a 200,000 unit annualized run rate. I know from talking to our customers that the backlogs that they all have have really been run down. I think there's a lot of uncertainty in the marketplace. We would have expected maybe to start to see some signs of pre-buy in 2026 associated with some emissions legislation changes, and we're not seeing any of that. I think it's going to be a fairly soft market here, certainly for as long as we can see into mid-2026. At this point in time, I don't see any green shoots that would suggest it's going to turn around. Got it. I also don't think we're going to have a heck of a lot of deterioration from here either. I mean, we're at pretty historically depressed levels. Okay. Our next question comes from the line of Emmanuel Rosner with Wolfe Research. Please go ahead. Oh, thank you so much. Good morning. My first question is on the implied outlook for the fourth quarter, which, as you pointed, is pretty strong and with margins already, you know, basically above, slightly above the high end of your margin outlook for next year. Just curious if you can help us out in terms of sequential drivers. It looks like it would be a 200 basis point margin improvement versus Q3 on what is essentially lower revenue at the midpoint. You flagged a few exogenous events such as, you know, some of the Ford schedules and the impact potentially from the fire. Just curious, how do you think about the performance quarter over quarter into the fourth? Yeah, Emmanuel's it's Tim. A couple of things. Obviously, we've got continued improvement coming through from our cost-saving initiative. We do see mix improving in the quarter. I think the other big driver, and Bruce mentioned this in a couple of his opening comments, we are at the tail end of some restructuring actions that we believe are, which have some headwinds certainly through the third quarter that we think will also drive additional performance and better profitability into the fourth quarter. That provides us a great springboard into 2026 as we get some of these actions behind us. We did announce the closure of a battery cooling plant earlier in the quarter. This is part of what we're seeing and we're continuing to work to improve the cost base of the business across the board. You'll see those come through in the fourth quarter as well as next year. Yeah, that's helpful. Could you give us a little bit more color around what mix you're referring to in terms of improving in the fourth quarter? Also, maybe any color around what's assumed for some of these potential indirect impacts on your customers from the Novelis fire? IHS has one view around Ford schedule, and then Ford obviously gave their own guidance, which had a fairly massive amount of volume production of loss. Just curious what's embedded in your schedules that you have received. Yeah, we obviously don't want to get ahead of our customer, but we're fairly in line with what our customer has said publicly around those. How they ultimately run, we'll see. Certainly, from our perspective, we're fairly in line with where we see Ford's public statements. In terms of mix, some of this is really the mix of products as we're moving from plant to plant. We do have a bit better mix on some of the products where we have better contribution margin quarter to quarter. A lot of it is really getting some of the restructuring and the movement of some of the product around in the plants as we rationalize our production footprint. Yeah, maybe just one other comment on that one, kind of going the other way is if you look at our third quarter, we were pretty constrained in terms of magnets. We have facilities in China, India, and Europe where we had difficulties getting magnets. That logjam, knock wood, seems to have broken free here. We do expect to have some substantial catch-up in terms of frustrated orders, which are for us very high margin. Yeah, correct. Great. Thank you. Thank you. Our next question will come from the line of Edison Yu with Deutsche Bank. Please go ahead. Hi, this is Wenyang for Edison. Thanks for taking the call. My first question is on the $110 million performance. I think in your prepared remark, you mentioned that it's mostly driven by pricing improvements. I'm just curious, is there sort of like bigger programs that are both going on at better pricing? What are some of the other drivers that might be embedded in this number? Thank you. Yeah, some of it is as we move through and bring new platforms and new programs on place. That comes with revised pricing, so that's running through there. The commercial teams have done a really nice job with the customers to go get recoveries both from an economic and for improvements. A lot of that is real pure pricing that we see, and you see that falling through. I don't have the number in front of me, but I think there's about $80 million of top line that's flowing through, and that's what you're seeing in that $110 million. The balance of that is really productivity and performance improvement at the plant level, net of all of the inflationary impacts that flow through the business. Got it. That's very helpful. Maybe on both light vehicle and commercial, you can maybe just provide some higher level, you know, preliminary puts and takes that you're seeing or considering into 2026. Thank you. Yeah, I think, you know, Bruce mentioned, we don't, we're probably not seeing a lot, at least through the first half on the commercial vehicle side, especially in North America, that there'd be a whole lot of improvement. As we look through on the light vehicle side, we have a number of programs that are launching next year that should help volume. You know, our core light vehicle program, especially on the driveline side, right? You know, Super Duty, Bronco, Wrangler, Ranger, those are all still very strong runners, and we would continue to see those well into next year to continue to drive the volume side of this. Wrangler is going to come out and have some refreshments, so that should help as well. Yeah, maybe just a couple other color commentary on that. I mean, obviously, with oil prices being quite soft, that's a nice tailwind in terms of large SUV. Some of the short-term deterioration that we're seeing in Super Duty, Ford's already talked about uplifting their volume next year. In the middle, I think it's August of next year, they'll be introducing incremental Super Duty production at their Oakville facility. I would say the tailwinds in terms of ICE, large SUV, our product exposure bodes well for us as we drift into 2026 here. Got it. I'm just a little surprised to the question that I know you might be implying before that you're just not seeing a lot of impact in Q4 itself from one of your larger customers. Is it just because the original guidance was conservative and therefore, even if you're taking in some of the impact, you're still retaining a lot of it, or are they not really flowing through that impact to you guys? Yeah, it's a bit of both, right? Weny, it's a bit of both. We had some of this in our forecast that we had back in August, and then some of it's the view from the customers are going to make up some of this as we move through the back part of the quarter. Keep in mind, our exposure is Super Duty, not F-150. When you're hearing the volumes, you're hearing kind of both. I think just given the profitability of the Super Duty, they're kind of over-rotating to try and keep that running as strong as they can. Got it. Okay, that's very helpful. Thank you. Our next question will come from the line of James Picariello with BNP Paribas. Please go ahead. Good morning, everyone. Just as we think about next year, are we at a point at all to quantify the next slate of cost savings, beyond the $310 million program, with respect to plant closures, which you touched on in your prepared remarks? Just overall, I guess, yeah, stronger execution. Yeah, thanks for that question. That's a good one. I would say in terms of the opportunity that we have to expand our margins, that we still have a long way to go. If you think about the $310 million, it's heavily focused on things that we could implement quickly without investment. If I just look at that bucket of costs through standardization, some systems work, we would still say we probably have another $50 million, $75 million that we can get over the next few years. If I look at the cost base outside of where we've been focusing on in terms of our plants, for sure, we've got some footprint opportunities. You know, we announced one earlier this month. I would say just given the amount of investment that we've had to make in an electric vehicle over the last few years, we've made those investments you could think about at the expense of our core operations. If you looked at the level of automation that we have in our plants, it is well below what you would see at other well-capitalized suppliers. I think we've got other opportunities in terms of product line rationalization. We still have a lot of products where we make inadequate or negative returns, and we're working our way through that. Lastly, on the EV side, we do expect to continue to refine our cost base there and get that business from being a drag on our margins to being accretive. I expect that to sort of flip around here in the next 6 months-12 months. There's still an awful lot of levers that we can pull. I don't see 10% or 10.5% as being our high watermark. I believe we've got opportunity to continue to grow it fairly significantly over the next couple of years. Got it. No, that's really helpful. My follow-on may be on the topic of plant automation. How are you thinking about the right run rate for CapEx as a % of sales next year? Could you just remind us what's assumed or expected for the stranded costs to capture for next year as well? Thank you. Yeah, James. Hey, you can sort of think of CapEx in about the 4% of sales range. That's probably where we'll end up, plus or minus. In terms of stranded cost, it's probably $30 million-$40 million. We do expect to be able to start taking a good chunk of those costs out once we close the transaction and move into 2026. Some of those costs will remain because we'll have some transitional services that'll need to be provided, but they'll be offset with payments from Allison for that. Again, $30 million-$40 million, and we believe we'll be able to take all those out as we get through and we exit 2026. You'll see next year a fairly big, like within that number that Tim talked about, a fairly big step up in terms of automation expenditure next year. I don't want anybody to be misled here. We're not talking about humanoid robots and stuff like that. We're talking about basic automation, unloading and loading machines, AGVs, moving material around our factories. We're way behind the automotive standard. I view that as a huge opportunity for us. Our next question will come from the line of Joe Spak with UBS. Please go ahead. Thank you. I just wanted to maybe follow up on that last point. It sounds like there's a big bucket of opportunity here, but it will require some investment. I just want to be clear. Should we expect some of that investment to start next year, and then, you know, savings? How quickly can savings come in after that investment? Yeah, we will. I mean, if you think about it, we've been spending pretty significantly on EV over the last few years. The easy way to think about this is we plan to take some of those dollars and redeploy them. As Bruce mentioned, we were investing in EV to some extent at the expense of some of the stuff in our normal old-school ICE plants. We'll spend that capital to find areas. By the way, it's a target-rich environment in terms of being able to improve the efficiency on the plant floor. I mean, we do this every day, but this will be a bit more deliberate and accelerated as we go through and those dollars are freed up. Don't forget that as we come through the transaction, we'll free up a lot of cash flow, operating cash flow from lower interest expense and lower taxes. We intend to make sure that we're investing in the right places at the right returns for the business to drive shareholder value. Yeah, with that level of CapEx, we're still maintaining our 4% free cash flow guide. Right. Okay. Some of it is redeployment and some of it's incremental is the right way to... Yeah, correct. That's correct. I mean, we're below that obviously today, but our view is that we'll have more, given the improvement at the operating margin level. We're going to redeploy some of those dollars that we're delivering from increased profitability back into the business to kind of generate the snowball effect and continue to drive those margins higher over the next two, three years. Yeah, this is fairly short payback stuff. Yeah. I guess the second question, I just want to make sure I heard correctly, Bruce, I think in your opening comments, you talked about some EV charges in the quarter. I think that related to sort of, I don't know if that was sort of some of the plant actions you took, but then you alluded to a recovery maybe from lower EV volumes in the fourth quarter. I guess, A, were those charges in the third quarter results? Is the recovery in the guidance? How much are we talking about here? Yeah, we did take, I mean, I'll say charges. We did have to book some additional costs related to some of the EV programs that were canceled during the quarter. It's a number of different OEMs. The total number is, you know, you can call it $10 million, maybe, you know, plus or minus. It's not a massive number, but again, we are in active discussions with the customer over recovery of these amounts. We expect to get those in the fourth quarter. Yeah, they just didn't match up. It just didn't match up. The accounting rules are a little different between what we got to book in terms of cost and what we have to book in terms of the recoveries, since they're non-contractual on the recoveries. I don't want to get into specifics of programs or customers because obviously we're actively engaged with those discussions with the customer today. No, that's totally fine. Yeah, $8 million or $10 million in Q3 that we anticipate recovering in Q4. Correct. Okay. I guess what I wanted to make sure was that that was actually in the results. You're not expecting it to be in the results. It's included in the adjusted EBITDA number, Joe. Thank you. Thanks for all that guys. Yep. No problem. Our next question will come from the line of Ryan Brinkman with JPMorgan. Please go ahead. Hi, thanks for taking my question. I know we just had the discussion about what's next in terms of the additional opportunity to improve margin and cash flow beyond even the 10%-10.5% and 4% of sales that you target respectively, you continue to target for 2026. I don't think that's a premature discussion to have. I'd plan to ask that question myself if you really are at 10%-10.5% exit run rate at the end of the fourth quarter. Maybe just taking a step back, it's worth pointing out, I think consensus is at like 9.4% for next year for EBITDA margin. Maybe just review a little bit too your confidence in next year and in the lack of incremental execution, I think, that's maybe needed to get there and on the free cash flow number too. Are there additional levers that you need to pull or you feel like you're pretty much going to be on track for that so long as, you know, the end markets are there by the end of this quarter? Just making your assumption on end markets as the premise, you know, Bruce and I and the entire team are supremely confident in our ability to deliver what we've said for next year. The fourth quarter, we think, is a good indication of that. Do I think there's opportunities above that? Absolutely, I do. A lot of things can go right and a lot of things can go wrong over the course of a year. Yes, we think there are additional opportunities both in terms of margin and cash flow, even in 2026. Right now, we're focused on closing out 2025, delivering the $310 million, and really setting the company and the team up for delivering on next year. When you say the consensus is below that, you know, Bruce and I share a bit of frustration. I mean, we've been saying this here for the better part of the year. We're really thinking that what we're going to deliver in the fourth quarter will help cement the fact that we're going to deliver that 10%-10.5% next year, with potentially some upside. Yeah, I mean, I'd say, Ryan, in terms of, you know, here's how I look at it. A year ago, we said we were going to be 10%-10.5%, and our consensus has slowly moved up. The reason why we've bought back our stock so aggressively is because we're highly confident in our number. If you use our number, our stock price is significantly undervalued. It's almost like we're buying two and getting one free in. It's on sale. The stock's on sale right now. Congratulations on the execution so far. Maybe just to finish on the end market point, I feel like you have been, while others have been quicker to point out the headwinds that they were experiencing in the commercial vehicle market, both in North America and in Brazil. I just wonder if you are situated a little bit differently relative to some of the competition. I do not know if it is a class five through seven relative to eight, or I am not sure. You are seeing the softening now. Others are saying the floor has fallen out on the new vehicle builds in North America. I am just curious if maybe you have got a little bit different exposure, a little bit more on the aftermarket. I am not sure. Yeah, obviously we have exposure to aftermarket, but I would assume most of the other players do as well. Look, vehicle fleets are aging. They're still up there. We do think that the run rate we're at now is still pretty low. We had some of this built in. While others are calling it, we were building a bit more conservatism into the CV vehicle build when we came out three months ago. That's part of the reason why we're not probably calling it out as much now and we're holding to the $7.4 billion. I think as we move into next year, the first half is not going to be, we're not going to see gains, but we don't see it going a whole lot lower than we are now. I just don't think, even with the backdrop that the age of the fleets, they'll have to do some work to replace it. I would maybe just add to that one on the CV side. Our business has gained share. If you look at kind of our share wallet at our customers, we've done a lot. The team prior to when I got here had done a lot of good work on refootprinting that business. I think we have a cost-advantaged model right now, and we are picking up share at the big three customers that we have exposure to here in North America, which has helped to offset some of the market deterioration. Yeah, that's a really good point, right? Our share at some of these has increased significantly over the past 12 months, and we expect that to hold and continue to increase. Got it. Thank you. Our next question will come from the line of Dan Levy with Barclays. Please go ahead. Hi, how's your day today? Thanks for taking my question. As my first one, I just was kind of trying to wonder how we should bridge the 4Q margin into 2026. I understand on the slides, it kind of shows the main drivers increase margin. We're trying to figure out if there's anything, you know, weird in 4Q that wouldn't, I guess, imply like a larger step of the margin in the next year. No, I mean, these are really, if you look at page 12, those basis points are off of our total 2025 full year continuing ops basis financials. They're not off of the fourth quarter. Obviously, when you look at the fourth quarter, it's highly indicative of why we believe the full year overall run rate bridges into that 10%-10.5% next year. Okay, I guess we should assume that a decent portion of those main drivers are included already within the 4Q margin. The cost savings, yeah, think about the cost savings. It's 100 basis points. I mean, our fourth quarter, when you look at the full run rate out of 2025, right, we're going to deliver $235 million. We had $10 million last year. That's already $245 million off of, you know, sort of where we were at in 2024. That incremental, you know, $65 million or $75 million of cost savings runs through next year, and we'll have a full run rate of $310 million. That's 100 basis points right there. You know, and then, you know, stranded costs, right? We just talked about that. That adds, you know, some incremental margin in the business because right now, when you look at our continuing ops, it's burdened with the stranded costs that we expect to take out. To say it modestly, I think, you know, from our perspective, moving from where we're at on a full, you know, average basis this year to 10%-10.5% next year, we do not see, assuming the markets hold up, that we're going to have any trouble getting to 10%-10.5% next year. Again, our fourth quarter run rate supports that in a very strong manner. Got it. Thank you. Another follow-up, I know you mentioned some of your key platform volumes are holding in next year. I know some of your customers have mentioned that just given the regulatory environment, some of the platforms can go to, I guess, richer mix, you know, off-road performance trims. I was just wondering if you would have, like, I mean, see a significant benefit from some of those powertrain changes. Yeah, I mean, obviously, better mix. I mean, we're one of the original creators of the four-wheel drive vehicle. We created the Jeep for the government in World War II. Yeah, richer mix, larger axles. If you think at Wrangler, right, if that mix moves further to Rubicon, that's much better for us. We have more content on it. The same would be true for Bronco. Bruce already mentioned Super Duty with Ford's plans to expand that capacity and build more trucks. For us, that's a great program to have content on, and that content, if it gets richer, is better for us as it is for the OEM. Our final question will come from the line of Colin Langan with Wells Fargo. Please go ahead. Oh, great. Thanks for taking my questions. I just want to follow up on the sequential margin increase of $220 million on lower sales. I mean, just make sure I'm capturing all the factors. You have the incremental cost savings from Q3 to Q4. I think you mentioned like $10 million of EV headwinds, and those will get recovered. It's like, sorry, $10 million of headwinds that will get recovered. So a $20 million maybe swing quarter over quarter. I think mix. Are those the big factors? I'm a little surprised by the, I thought you said in the last quarter you had taken most of the actions. I'm a little surprised there's even more coming sequentially in Q3 and Q4. When you say, Colin, this is Tim. When you say actions, what are you talking about for actions? You talked about the cost-saving actions? Yes, I thought that was the comment you made last time. Yeah, no, I mean, we had a, we still have additional actions coming through the third and into the fourth. I think the incremental or sequential savings will be lower in the fourth quarter. It's implied when you look at our $235 million. They're obviously slowing down. We're on track to have a run rate exit at $310 million coming out. We do have those actions. There's also additional performance actions at the plant level that will come through in the fourth quarter. I mentioned we're in the middle of rationalizing some product, and that's been a headwind for us in our performance and in the volume and mix through the first three quarters of the year. We do see that improving as well. All of that combined continues to drive that margin from quarter to quarter up. Okay, got it. I think in the past you've mentioned that the backlog of $300 million for next year is still pretty much intact. Has that changed much with some of the EV cancellations that you just mentioned on the call? In the past, it was like 70% EV or something. What are some of the ICE launches that are going to help as we think about next year? Yeah, I don't want to get into the specifics, but our backlog has been impacted by program delays and cancellations. I think what we want to do is take you through a pretty fulsome review of backlog and how it looks and how it shakes out in January, or probably mid-January, so that you get a really full view. We're right in the middle of finalizing our plans for new Dana, and we want an opportunity to really give you the full information and be able to answer your questions then. I think that's it. We do see increases in ICE, no question about it, from a backlog perspective. Yeah, there's EV in there, but the proportion will be more ICE. Yeah. Okay, has anything changed since the last quarter with the comments on? Yeah, sure. Obviously, we've had cancellations in EV. Like we talked about, the headwind will absolutely impact some of the backlog that we have out there. And delays. Yeah. Okay, got it. Okay. Maybe with that, we'll sort of get into some closing comments here. First of all, and it goes without saying, thanks to the Dana team for continuing to deliver on our commitments. Like I said earlier in my comments, despite external headwinds, we're over-delivering on the things that we can control, and I couldn't be prouder to be part of the team. A year ago, we committed to three things. One, selling our off-highway business, and we're very close to having that done. When that has been completed, we will have returned a substantial amount of capital to our shareholders and still be left with what we think is a best-in-class balance sheet in terms of our sector. We committed to $200 million of cost reduction, which we've subsequently upped to $310 million, and we're in great shape and basically at that run rate here this quarter. Lastly, and very importantly, we said we could get to double-digit margins in 2026, and we're exiting 2025 at that level. I know there was a healthy amount of skepticism around some of these commitments last year, but hopefully, the market will sort of recognize that the Dana team is delivering on its commitments. Despite some EV deterioration, we have an impressive backlog that we will talk about in January. It does have a combination of both ICE and EV, but as we said before, EV will be a smaller percent there. We'll share a lot more details in our January call. Long-term, I continue to see a lot of upside in terms of our margin potential. I think a combination of us getting our margins up to the double digit and growing them beyond the 10%-10.5% in 2026, combined with our balance sheet, we believe we're going to be rewarded with multiple expansion. I think we got an extremely motivated management team here. I couldn't be prouder of the accomplishments year to date, and I think our best days are in front of us. With that, thanks for joining us on our call today. This will conclude today's call. Thank you all for joining. You may now disconnect.

Speaker 10: Good morning and welcome to Dana Incorporated's third quarter 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. Good morning and welcome to Dana Incorporated's third quarter 2025 financial webcast and conference call. good morning and welcome to dana incorporated's third quarter 2025 financial webcast and conference call My name is Regina and I will be your conference facilitator. 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. 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. 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. 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. 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. 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. Please go ahead, Mr. Barber. 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. 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. please go ahead mr barber

Speaker 8: Thank you, Regina, and good morning and welcome to Dana Incorporated's earnings call for the third quarter of 2025. Today's presentation includes forward-looking statements about our expectations for Dana's future performance. Actual results could differ from what we present here today. For more details about the factors that may affect future results, please refer to our safe harbor statement found in our public filings and our reports at PIPC. 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 me this morning is Bruce McDonald, Dana Chairman and Executive Officer, and Timothy Kraus, Senior Vice President and Chief Financial Officer. Bruce, the floor is yours. Thank you, Regina, and good morning and welcome to Dana Incorporated's earnings call for the third quarter of 2025. thank you regina and good morning and welcome to dana incorporated's earnings call for the third quarter of 2025 Today's presentation includes forward-looking statements about our expectations for Dana's future performance. today's presentation includes forward-looking statements about our expectations for dana's future performance Actual results could differ from what we present here today. actual results could differ from what we present here today For more details about the factors that may affect future results, please refer to our safe harbor statement found in our public filings and our reports at PIPC. for more details about the factors that may affect future results please refer to our safe harbor statement found in our public filings and our reports at pipc I encourage you to visit our investor website where you'll find this morning's press release and presentation. 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. 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. they may not be recorded copied or rebroadcast without our written consent With me this morning is Bruce McDonald, Dana Chairman and Executive Officer, and Timothy Kraus, Senior Vice President and Chief Financial Officer. with me this morning is bruce mcdonald dana chairman and executive officer and timothy kraus senior vice president and chief financial officer Bruce, the floor is yours. bruce the floor is yours

Speaker 6: Thank you, Craig, and good morning everyone, and thanks for joining Craig, Tim, and I for a discussion here on Dana's Q3 earnings. Maybe just before I get into my slide here, just stepping back and talking about kind of the puts and takes in terms of the third quarter. I guess here's what I sort of see as the highlights. First of all, I think you'll see improving business performance, and that's something that we expect to see accelerate as we get into our fourth quarter. The driver for that would really be a few restructuring initiatives that have been completed or are substantially complete and will start to turn from sort of headwinds that are in our numbers right now to tailwinds for us going forward. Secondly, on the volume side, even though we're down year over year, the comps are getting better. Thank you, Craig, and good morning everyone, and thanks for joining Craig, Tim, and I for a discussion here on Dana's Q3 earnings. thank you craig and good morning everyone and thanks for joining craig tim and i for a discussion here on dana's q3 earnings Maybe just before I get into my slide here, just stepping back and talking about kind of the puts and takes in terms of the third quarter. maybe just before i get into my slide here just stepping back and talking about kind of the puts and takes in terms of the third quarter I guess here's what I sort of see as the highlights. i guess here's what i sort of see as the highlights First of all, I think you'll see improving business performance, and that's something that we expect to see accelerate as we get into our fourth quarter. first of all i think you'll see improving business performance and that's something that we expect to see accelerate as we get into our fourth quarter The driver for that would really be a few restructuring initiatives that have been completed or are substantially complete and will start to turn from sort of headwinds that are in our numbers right now to tailwinds for us going forward. the driver for that would really be a few restructuring initiatives that have been completed or are substantially complete and will start to turn from sort of headwinds that are in our numbers right now to tailwinds for us going forward Secondly, on the volume side, even though we're down year over year, the comps are getting better. secondly on the volume side even though we're down year over year the comps are getting better They're negative, but they're getting better, and that drives improved financial performance. On the tariff side, less of a headwind. You'll see we had minimal impact here in Q3. Our full-year charge in terms of tariffs is lower than we thought a quarter ago. Cost savings, we're on track to deliver the $310 million we talked about last quarter, but we are realizing those quicker, and that's helping us with some of the uplift to our outlook here. In terms of negatives, I'd say we have some volume softness, particularly in CV North America and to a lesser extent Brazil. We did have JLR down for about five weeks in the quarter. Those were headwinds against us. They're negative, but they're getting better, and that drives improved financial performance. they're negative but they're getting better and that drives improved financial performance On the tariff side, less of a headwind. on the tariff side less of a headwind You'll see we had minimal impact here in Q3. you'll see we had minimal impact here in q3 Our full-year charge in terms of tariffs is lower than we thought a quarter ago. our full-year charge in terms of tariffs is lower than we thought a quarter ago Cost savings, we're on track to deliver the $310 million we talked about last quarter, but we are realizing those quicker, and that's helping us with some of the uplift to our outlook here. cost savings we're on track to deliver the $310 million we talked about last quarter but we are realizing those quicker and that's helping us with some of the uplift to our outlook here In terms of negatives, I'd say we have some volume softness, particularly in CV North America and to a lesser extent Brazil. in terms of negatives i'd say we have some volume softness particularly in cv north america and to a lesser extent brazil We did have JLR down for about five weeks in the quarter. we did have jlr down for about five weeks in the quarter Those were headwinds against us. those were headwinds against us The last thing I'd sort of point out is we do have, there has been some supplier or some EV program cancellations, and we have some charges in the quarter that we took associated with that that we expect will recover here in the fourth quarter. Turning to the highlights in terms of the off-highway divestiture, that remains on track. We do expect that to close here later in the fourth quarter. In terms of regulatory approvals, we've received almost all of them. We have one minor European country that we expect to wrap up here in the next week or so. The joint teams between ourselves and Allison are working hard to sort out all the plethora of workstreams that we have in place to effect an orderly transition here in the quarter. The last thing I'd sort of point out is we do have, there has been some supplier or some EV program cancellations, and we have some charges in the quarter that we took associated with that that we expect will recover here in the fourth quarter. the last thing i'd sort of point out is we do have there has been some supplier or some ev program cancellations and we have some charges in the quarter that we took associated with that that we expect will recover here in the fourth quarter Turning to the highlights in terms of the off-highway divestiture, that remains on track. turning to the highlights in terms of the off-highway divestiture that remains on track We do expect that to close here later in the fourth quarter. we do expect that to close here later in the fourth quarter In terms of regulatory approvals, we've received almost all of them. in terms of regulatory approvals we've received almost all of them We have one minor European country that we expect to wrap up here in the next week or so. we have one minor european country that we expect to wrap up here in the next week or so The joint teams between ourselves and Allison are working hard to sort out all the plethora of workstreams that we have in place to effect an orderly transition here in the quarter. the joint teams between ourselves and allison are working hard to sort out all the plethora of workstreams that we have in place to effect an orderly transition here in the quarter In terms of our capital returns, you'll see in our note we talked about buying between $100 million and $150 million of shares in the third quarter. We actually bought more than that, 9.5 million or 7% of our shares outstanding. We have had a 10b5 plan in place throughout the quarter, and as we sit here today, we've bought nearly 30 million shares or just over 20% of our shares outstanding, and we expect to complete the balance of the share repurchase here over the next month or so. As I said in my earlier remarks on the cost-saving side, a really good number here in the quarter. We're almost up to our full-year run rate at $73 million. We continue to look for other opportunities. I am really pleased with the progress our team has made on bringing these home. In terms of our capital returns, you'll see in our note we talked about buying between $100 million and $150 million of shares in the third quarter. in terms of our capital returns you'll see in our note we talked about buying between $100 million and $150 million of shares in the third quarter We actually bought more than that, 9.5 million or 7% of our shares outstanding. we actually bought more than that 9.5 million or 7% of our shares outstanding We have had a 10b5 plan in place throughout the quarter, and as we sit here today, we've bought nearly 30 million shares or just over 20% of our shares outstanding, and we expect to complete the balance of the share repurchase here over the next month or so. we have had a 10b5 plan in place throughout the quarter and as we sit here today we've bought nearly 30 million shares or just over 20% of our shares outstanding and we expect to complete the balance of the share repurchase here over the next month or so As I said in my earlier remarks on the cost-saving side, a really good number here in the quarter. as i said in my earlier remarks on the cost-saving side a really good number here in the quarter We're almost up to our full-year run rate at $73 million. we're almost up to our full-year run rate at $73 million We continue to look for other opportunities. we continue to look for other opportunities I am really pleased with the progress our team has made on bringing these home. i am really pleased with the progress our team has made on bringing these home Tariffs, the situation is getting a little bit better. We continue to make progress getting USMCA compliance, which reduces the sort of headwind both from an on-charge point of view, but also the margin deterioration that we see. Our outlook, our recovery rate is now up in the upper 80%. Lastly, in terms of the balance of the year outlook, I'd say the light demand or the light truck demand remains relatively stable. We do have the odd production interruption here and there, but overall light vehicles looking good for the quarter. In terms of commercial vehicle, we continue to see deterioration in North America and to a lesser extent Brazil. Nonetheless, the fact that we've got a better outlook in terms of tariffs, quicker realization of cost recovery, we are taking our full-year guide up $15 million at the midpoint. Tariffs, the situation is getting a little bit better. tariffs the situation is getting a little bit better We continue to make progress getting USMCA compliance, which reduces the sort of headwind both from an on-charge point of view, but also the margin deterioration that we see. we continue to make progress getting usmca compliance which reduces the sort of headwind both from an on-charge point of view but also the margin deterioration that we see Our outlook, our recovery rate is now up in the upper 80%. our outlook our recovery rate is now up in the upper 80% Lastly, in terms of the balance of the year outlook, I'd say the light demand or the light truck demand remains relatively stable. lastly in terms of the balance of the year outlook i'd say the light demand or the light truck demand remains relatively stable We do have the odd production interruption here and there, but overall light vehicles looking good for the quarter. we do have the odd production interruption here and there but overall light vehicles looking good for the quarter In terms of commercial vehicle, we continue to see deterioration in North America and to a lesser extent Brazil. in terms of commercial vehicle we continue to see deterioration in north america and to a lesser extent brazil Nonetheless, the fact that we've got a better outlook in terms of tariffs, quicker realization of cost recovery, we are taking our full-year guide up $15 million at the midpoint. nonetheless the fact that we've got a better outlook in terms of tariffs quicker realization of cost recovery we are taking our full-year guide up $15 million at the midpoint I would note that within our guidance, we do have some volume catch-up factored in here, JLR. We factored in the lower commercial vehicle outlook here in North America in line with estimates out there. We have factored in the latest Super Duty schedule releases that we have as of this week. With that, a good solid quarter, and Tim, I'll turn it over to you to go through the financials. I would note that within our guidance, we do have some volume catch-up factored in here, JLR. i would note that within our guidance we do have some volume catch-up factored in here jlr We factored in the lower commercial vehicle outlook here in North America in line with estimates out there. we factored in the lower commercial vehicle outlook here in north america in line with estimates out there We have factored in the latest Super Duty schedule releases that we have as of this week. we have factored in the latest super duty schedule releases that we have as of this week With that, a good solid quarter, and Tim, I'll turn it over to you to go through the financials. with that a good solid quarter and tim i'll turn it over to you to go through the financials

Speaker 1: Thanks, Bruce, and good morning to everyone. Turning to slide six now, let's review our third quarter financial performance. First, a reminder, results are presented excluding the off-highway business, which is classified as discontinued operations. Sales for the quarter were $1.917 billion, up $20 million compared to Q3 of last year. This reflects recoveries in currency benefits, offsetting the impact of lower demand. Adjusted EBITDA came in at $162 million, an improvement of $51 million year over year. Our margin expanded by 260 basis points to 8.5%, driven by cost-saving actions and operational efficiencies that help mitigate the profit impact of lower sales and tariffs. EBIT improved significantly to $53 million from a loss of $8 million in the prior period. Net interest expense increased $11 million to $44 million, due to higher borrowings and modestly higher rates. Income tax was a benefit of $2 million. Thanks, Bruce, and good morning to everyone. thanks bruce and good morning to everyone Turning to slide six now, let's review our third quarter financial performance. turning to slide six now let's review our third quarter financial performance First, a reminder, results are presented excluding the off-highway business, which is classified as discontinued operations. first a reminder results are presented excluding the off-highway business which is classified as discontinued operations Sales for the quarter were $1.917 billion, up $20 million compared to Q3 of last year. sales for the quarter were $1.917 billion up $20 million compared to q3 of last year This reflects recoveries in currency benefits, offsetting the impact of lower demand. this reflects recoveries in currency benefits offsetting the impact of lower demand Adjusted EBITDA came in at $162 million, an improvement of $51 million year over year. adjusted ebitda came in at $162 million an improvement of $51 million year over year Our margin expanded by 260 basis points to 8.5%, driven by cost-saving actions and operational efficiencies that help mitigate the profit impact of lower sales and tariffs. our margin expanded by 260 basis points to 8.5% driven by cost-saving actions and operational efficiencies that help mitigate the profit impact of lower sales and tariffs EBIT improved significantly to $53 million from a loss of $8 million in the prior period. ebit improved significantly to $53 million from a loss of $8 million in the prior period Net interest expense increased $11 million to $44 million, due to higher borrowings and modestly higher rates. net interest expense increased $11 million to $44 million due to higher borrowings and modestly higher rates Income tax was a benefit of $2 million. income tax was a benefit of $2 million While this is down $16 million from last year, we continue to benefit from positive adjustments to the carrying value of our deferred tax assets. Net income attributable to Dana was $13 million compared with a loss of $21 million in Q3 of last year, a positive swing of $34 million. Overall, these results demonstrate the effectiveness of our cost-savings initiatives, operational improvements, and offsetting market headwinds. Please turn with me now to slide seven for the drivers of the sales and profit change for the quarter. In line with the new reporting method, we have revised our WOC presentation to include the impact of discontinued operations for the current and prior periods. The $579 million in sales and $121 million of profit removed from 2024 represent the off-highway business being sold and the accounting treatment for discontinued operations. While this is down $16 million from last year, we continue to benefit from positive adjustments to the carrying value of our deferred tax assets. while this is down $16 million from last year we continue to benefit from positive adjustments to the carrying value of our deferred tax assets Net income attributable to Dana was $13 million compared with a loss of $21 million in Q3 of last year, a positive swing of $34 million. net income attributable to dana was $13 million compared with a loss of $21 million in q3 of last year a positive swing of $34 million Overall, these results demonstrate the effectiveness of our cost-savings initiatives, operational improvements, and offsetting market headwinds. overall these results demonstrate the effectiveness of our cost-savings initiatives operational improvements and offsetting market headwinds Please turn with me now to slide seven for the drivers of the sales and profit change for the quarter. please turn with me now to slide seven for the drivers of the sales and profit change for the quarter In line with the new reporting method, we have revised our WOC presentation to include the impact of discontinued operations for the current and prior periods. in line with the new reporting method we have revised our woc presentation to include the impact of discontinued operations for the current and prior periods The $579 million in sales and $121 million of profit removed from 2024 represent the off-highway business being sold and the accounting treatment for discontinued operations. the $579 million in sales and $121 million of profit removed from 2024 represent the off-highway business being sold and the accounting treatment for discontinued operations Beginning with sales, this year's third quarter volume and mix were $66 million lower, driven by lower demand in commercial vehicle end markets, partially offset by higher sales in light vehicle. Production disruptions at certain customers had minimal impact on light vehicle system sales in the quarter. Performance drove sales higher by $8 million due to pricing actions, while tariff recoveries totaled $49 million. Currency translation, primarily the strength of the euro against the U.S. dollar, yielded $21 million in higher sales compared to last year. Moving to adjusted EBITDA, volume and mix lowered EBITDA by $35 million. This was a decremental margin of about 50%, higher than we typically expect, reflecting significant mix changes and continued operational impacts within our thermal products business, including battery cooling. Recall, we are breaking out performance, which includes efficiency gains in manufacturing separately. Beginning with sales, this year's third quarter volume and mix were $66 million lower, driven by lower demand in commercial vehicle end markets, partially offset by higher sales in light vehicle. beginning with sales this year's third quarter volume and mix were $66 million lower driven by lower demand in commercial vehicle end markets partially offset by higher sales in light vehicle Production disruptions at certain customers had minimal impact on light vehicle system sales in the quarter. production disruptions at certain customers had minimal impact on light vehicle system sales in the quarter Performance drove sales higher by $8 million due to pricing actions, while tariff recoveries totaled $49 million. performance drove sales higher by $8 million due to pricing actions while tariff recoveries totaled $49 million Currency translation, primarily the strength of the euro against the U.S. dollar, yielded $21 million in higher sales compared to last year. currency translation primarily the strength of the euro against the u.s dollar yielded $21 million in higher sales compared to last year Moving to adjusted EBITDA, volume and mix lowered EBITDA by $35 million. moving to adjusted ebitda volume and mix lowered ebitda by $35 million This was a decremental margin of about 50%, higher than we typically expect, reflecting significant mix changes and continued operational impacts within our thermal products business, including battery cooling. this was a decremental margin of about 50% higher than we typically expect reflecting significant mix changes and continued operational impacts within our thermal products business including battery cooling Recall, we are breaking out performance, which includes efficiency gains in manufacturing separately. recall we are breaking out performance which includes efficiency gains in manufacturing separately Performance increased profit by $11 million due to pricing and efficiency improvements across both segments. Cost savings added $73 million in profit through the actions we have taken across the company. This brings us to $183 million to date, and we are secure in our increased target of $235 million in savings for the full year 2025. Tariff impact in the quarter was minimal at just $1 million. Due to the catch-up in tariff recoveries, we expect to see continuing profit headwind in the future, but we do expect recovery of the majority of this impact this year. Next, I will turn to slide eight for details on our third quarter cash flow. As I discussed on slide six, the accounting for cash flow includes both continued and discontinued operations as shown here on slide nine. Performance increased profit by $11 million due to pricing and efficiency improvements across both segments. performance increased profit by $11 million due to pricing and efficiency improvements across both segments Cost savings added $73 million in profit through the actions we have taken across the company. cost savings added $73 million in profit through the actions we have taken across the company This brings us to $183 million to date, and we are secure in our increased target of $235 million in savings for the full year 2025. this brings us to $183 million to date and we are secure in our increased target of $235 million in savings for the full year 2025 Tariff impact in the quarter was minimal at just $1 million. tariff impact in the quarter was minimal at just $1 million Due to the catch-up in tariff recoveries, we expect to see continuing profit headwind in the future, but we do expect recovery of the majority of this impact this year. due to the catch-up in tariff recoveries we expect to see continuing profit headwind in the future but we do expect recovery of the majority of this impact this year Next, I will turn to slide eight for details on our third quarter cash flow. next i will turn to slide eight for details on our third quarter cash flow As I discussed on slide six, the accounting for cash flow includes both continued and discontinued operations as shown here on slide nine. as i discussed on slide six the accounting for cash flow includes both continued and discontinued operations as shown here on slide nine For the third quarter of 2025, we delivered adjusted free cash flow of $101 million, which represents a $109 million improvement compared to the prior year. This strong performance was driven primarily by higher profitability and lower working capital requirements. One-time costs, primarily related to our cost savings program, were $17 million, which is $8 million higher than the prior period. Net interest increased by $11 million, primarily due to higher borrowing costs associated with the capital return initiatives. Taxes were lower at $47 million compared to $72 million last year, driven by the timing of payments. Working capital improved significantly by $76 million, reflecting better inventory management and timing of receivables and payables. Capital spending was $59 million, up $16 million year over year as we continue to invest in new programs to support our backlog. For the third quarter of 2025, we delivered adjusted free cash flow of $101 million, which represents a $109 million improvement compared to the prior year. for the third quarter of 2025 we delivered adjusted free cash flow of $101 million which represents a $109 million improvement compared to the prior year This strong performance was driven primarily by higher profitability and lower working capital requirements. this strong performance was driven primarily by higher profitability and lower working capital requirements One-time costs, primarily related to our cost savings program, were $17 million, which is $8 million higher than the prior period. one-time costs primarily related to our cost savings program were $17 million which is $8 million higher than the prior period Net interest increased by $11 million, primarily due to higher borrowing costs associated with the capital return initiatives. net interest increased by $11 million primarily due to higher borrowing costs associated with the capital return initiatives Taxes were lower at $47 million compared to $72 million last year, driven by the timing of payments. taxes were lower at $47 million compared to $72 million last year driven by the timing of payments Working capital improved significantly by $76 million, reflecting better inventory management and timing of receivables and payables. working capital improved significantly by $76 million reflecting better inventory management and timing of receivables and payables Capital spending was $59 million, up $16 million year over year as we continue to invest in new programs to support our backlog. capital spending was $59 million up $16 million year over year as we continue to invest in new programs to support our backlog Overall, these factors combine to deliver a substantial improvement in free cash flow, positioning us well to achieve our full-year target. Please turn with me now to slide nine for an updated guidance for continuing operations. For all our targets, we've narrowed our ranges as we approach the end of the year, as we remain confident in achieving our targets. We expect sales from continuing operations to be approximately $7.4 billion at the midpoint of the tightened range. Adjusted EBITDA from continuing operations is now expected to be about $590 million at the midpoint of the narrower range. This is approximately $15 million higher than previously anticipated, driven primarily by accelerated cost savings and performance improvements. Full-year adjusted free cash flow is anticipated at $275 million at the midpoint of the tighter range for the year. Overall, these factors combine to deliver a substantial improvement in free cash flow, positioning us well to achieve our full-year target. overall these factors combine to deliver a substantial improvement in free cash flow positioning us well to achieve our full-year target Please turn with me now to slide nine for an updated guidance for continuing operations. please turn with me now to slide nine for an updated guidance for continuing operations For all our targets, we've narrowed our ranges as we approach the end of the year, as we remain confident in achieving our targets. for all our targets we've narrowed our ranges as we approach the end of the year as we remain confident in achieving our targets We expect sales from continuing operations to be approximately $7.4 billion at the midpoint of the tightened range. we expect sales from continuing operations to be approximately $7.4 billion at the midpoint of the tightened range Adjusted EBITDA from continuing operations is now expected to be about $590 million at the midpoint of the narrower range. adjusted ebitda from continuing operations is now expected to be about $590 million at the midpoint of the narrower range This is approximately $15 million higher than previously anticipated, driven primarily by accelerated cost savings and performance improvements. this is approximately $15 million higher than previously anticipated driven primarily by accelerated cost savings and performance improvements Full-year adjusted free cash flow is anticipated at $275 million at the midpoint of the tighter range for the year. full-year adjusted free cash flow is anticipated at $275 million at the midpoint of the tighter range for the year The profit improvement in continuing operations is expected to be offset by lower profit from discontinued operations. Please turn with me now to slide 10 for the drivers in sales and profit change for our full-year guidance. As with the quarterly WOC we showed earlier, our full-year guidance WOC adjusts 2024 for estimated discontinued operations and WOC's forward our guidance for continuing operations. Beginning on the left, discontinued operations reduced 2024 sales by $2.5 billion, so we begin 2025 at $7.7 billion in sales for continuing operations. Adjusted EBITDA from discontinued operations was $490 million, reducing adjusted EBITDA to $395 million, resulting in a 5.1% margin. In this presentation, we have combined the impact of sales from continuing operations in our off-highway business into the volume and mix category. The profit improvement in continuing operations is expected to be offset by lower profit from discontinued operations. the profit improvement in continuing operations is expected to be offset by lower profit from discontinued operations Please turn with me now to slide 10 for the drivers in sales and profit change for our full-year guidance. please turn with me now to slide 10 for the drivers in sales and profit change for our full-year guidance As with the quarterly WOC we showed earlier, our full-year guidance WOC adjusts 2024 for estimated discontinued operations and WOC's forward our guidance for continuing operations. as with the quarterly woc we showed earlier our full-year guidance woc adjusts 2024 for estimated discontinued operations and woc's forward our guidance for continuing operations Beginning on the left, discontinued operations reduced 2024 sales by $2.5 billion, so we begin 2025 at $7.7 billion in sales for continuing operations. beginning on the left discontinued operations reduced 2024 sales by $2.5 billion so we begin 2025 at $7.7 billion in sales for continuing operations Adjusted EBITDA from discontinued operations was $490 million, reducing adjusted EBITDA to $395 million, resulting in a 5.1% margin. adjusted ebitda from discontinued operations was $490 million reducing adjusted ebitda to $395 million resulting in a 5.1% margin In this presentation, we have combined the impact of sales from continuing operations in our off-highway business into the volume and mix category. in this presentation we have combined the impact of sales from continuing operations in our off-highway business into the volume and mix category We are expecting volume and mix to lower sales by approximately $600 million, driven by lower demand in traditional commercial vehicle markets, as well as for electric light vehicles impacting our battery cooling business. Adjusted EBITDA from volume and mix is expected to be lower by $130 million. Performance is now expected to increase EBITDA by approximately $110 million, mostly through pricing improvements. Cost savings will add $235 million in profit, as I mentioned previously. The tariff impact for the full year is expected to add about $150 million to sales, and we now expect it to lower profit by about $20 million. The majority of this profit headwind will be recovered next year. Foreign currency translation is now expected to increase sales by $25 million, primarily driven by the strengthening euro compared to the U.S. dollar, offsetting some of these sales impacts of lower volume. We are expecting volume and mix to lower sales by approximately $600 million, driven by lower demand in traditional commercial vehicle markets, as well as for electric light vehicles impacting our battery cooling business. we are expecting volume and mix to lower sales by approximately $600 million driven by lower demand in traditional commercial vehicle markets as well as for electric light vehicles impacting our battery cooling business Adjusted EBITDA from volume and mix is expected to be lower by $130 million. adjusted ebitda from volume and mix is expected to be lower by $130 million Performance is now expected to increase EBITDA by approximately $110 million, mostly through pricing improvements. performance is now expected to increase ebitda by approximately $110 million mostly through pricing improvements Cost savings will add $235 million in profit, as I mentioned previously. cost savings will add $235 million in profit as i mentioned previously The tariff impact for the full year is expected to add about $150 million to sales, and we now expect it to lower profit by about $20 million. the tariff impact for the full year is expected to add about $150 million to sales and we now expect it to lower profit by about $20 million The majority of this profit headwind will be recovered next year. the majority of this profit headwind will be recovered next year Foreign currency translation is now expected to increase sales by $25 million, primarily driven by the strengthening euro compared to the U.S. dollar, offsetting some of these sales impacts of lower volume. foreign currency translation is now expected to increase sales by $25 million primarily driven by the strengthening euro compared to the u.s dollar offsetting some of these sales impacts of lower volume Finally, commodity cost recovery should drive about $15 million in higher sales and now only about a $5 million headwind to profit. The net result will be about a 290 basis point margin improvement in continuing operations compared to last year, as performance and cost-saving actions overcome market headwinds. Next, I will turn to slide 11 for the details of our free cash flow guidance. As I mentioned, we anticipate full-year 2025 adjusted free cash flow to be about $275 million at the midpoint of the guidance range. We expect about $105 million of higher free cash flow from increased adjusted EBITDA. One-time costs will be about $30 million higher as we invest in our cost-saving programs and restructuring. Working capital will be about $105 million lower as we continue to reduce the requirements to operate the business. Finally, commodity cost recovery should drive about $15 million in higher sales and now only about a $5 million headwind to profit. finally commodity cost recovery should drive about $15 million in higher sales and now only about a $5 million headwind to profit The net result will be about a 290 basis point margin improvement in continuing operations compared to last year, as performance and cost-saving actions overcome market headwinds. the net result will be about a 290 basis point margin improvement in continuing operations compared to last year as performance and cost-saving actions overcome market headwinds Next, I will turn to slide 11 for the details of our free cash flow guidance. next i will turn to slide 11 for the details of our free cash flow guidance As I mentioned, we anticipate full-year 2025 adjusted free cash flow to be about $275 million at the midpoint of the guidance range. as i mentioned we anticipate full-year 2025 adjusted free cash flow to be about $275 million at the midpoint of the guidance range We expect about $105 million of higher free cash flow from increased adjusted EBITDA. we expect about $105 million of higher free cash flow from increased adjusted ebitda One-time costs will be about $30 million higher as we invest in our cost-saving programs and restructuring. one-time costs will be about $30 million higher as we invest in our cost-saving programs and restructuring Working capital will be about $105 million lower as we continue to reduce the requirements to operate the business. working capital will be about $105 million lower as we continue to reduce the requirements to operate the business Capital spending net is expected to be about $325 million this year, which is $45 million lower than last year. Finally, I will turn back over to Bruce for some closing comments on slide 12. Capital spending net is expected to be about $325 million this year, which is $45 million lower than last year. capital spending net is expected to be about $325 million this year which is $45 million lower than last year Finally, I will turn back over to Bruce for some closing comments on slide 12. finally i will turn back over to bruce for some closing comments on slide 12

Speaker 6: Okay, thanks, Tim. This slide is really the same as we talked about last quarter, which kind of reflects the fact that I think the business is performing well and we're delivering on our commitment. Cost savings for the year, or the run rate that we're targeting, the $310 million, we're solidly on track. As we've discussed here earlier, we're realizing more of that benefit here in 2026, sorry, 2025. In terms of our margin outlook, we've been consistent for a year now that we were going to have 10%-10.5% margins for 2026. It's really nice to be giving guidance here for the fourth quarter that's in that range or even slightly on top of. I'd say overall, our team is doing a great job over-delivering on the things that we can control, and it's helping us offset the things that we cannot control. Okay, thanks, Tim. okay thanks tim This slide is really the same as we talked about last quarter, which kind of reflects the fact that I think the business is performing well and we're delivering on our commitment. this slide is really the same as we talked about last quarter which kind of reflects the fact that i think the business is performing well and we're delivering on our commitment Cost savings for the year, or the run rate that we're targeting, the $310 million, we're solidly on track. cost savings for the year or the run rate that we're targeting the $310 million we're solidly on track As we've discussed here earlier, we're realizing more of that benefit here in 2026, sorry, 2025. as we've discussed here earlier we're realizing more of that benefit here in 2026 sorry 2025 In terms of our margin outlook, we've been consistent for a year now that we were going to have 10%- 10.5% margins for 2026. in terms of our margin outlook we've been consistent for a year now that we were going to have 10%- 10.5% margins for 2026 It's really nice to be giving guidance here for the fourth quarter that's in that range or even slightly on top of. it's really nice to be giving guidance here for the fourth quarter that's in that range or even slightly on top of I'd say overall, our team is doing a great job over-delivering on the things that we can control, and it's helping us offset the things that we cannot control. i'd say overall our team is doing a great job over-delivering on the things that we can control and it's helping us offset the things that we cannot control In terms of our return of capital to shareholders, we're committed to the $600 million this year. Lastly, I would say in terms of our growth story, I think it's underappreciated by the market. We have had some deterioration in our backlog due to EV program cancellations, deferrals, or lower volumes. Nonetheless, our team's done a nice job this year, gaining share, winning incremental programs. We plan on having an analyst call here in January and going through our revised backlog. We continue to win new business, and I hope to add to our backlog between now and January. With that, we'll turn it over for Q&A. In terms of our return of capital to shareholders, we're committed to the $600 million this year. in terms of our return of capital to shareholders we're committed to the $600 million this year Lastly, I would say in terms of our growth story, I think it's underappreciated by the market. lastly i would say in terms of our growth story i think it's underappreciated by the market We have had some deterioration in our backlog due to EV program cancellations, deferrals, or lower volumes. we have had some deterioration in our backlog due to ev program cancellations deferrals or lower volumes Nonetheless, our team's done a nice job this year, gaining share, winning incremental programs. nonetheless our team's done a nice job this year gaining share winning incremental programs We plan on having an analyst call here in January and going through our revised backlog. we plan on having an analyst call here in january and going through our revised backlog We continue to win new business, and I hope to add to our backlog between now and January. we continue to win new business and i hope to add to our backlog between now and january With that, we'll turn it over for Q&A. with that we'll turn it over for q&a

Speaker 10: 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 Tom Narayan with RBC Capital Markets. Please go ahead. We will now begin the question and answer session. we will now begin the question and answer session To ask a question, press star then the number one on your telephone keypad. 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. we kindly ask that you please limit yourself to one question at a time Our first question comes from the line of Tom Narayan with RBC Capital Markets. our first question comes from the line of tom narayan with rbc capital markets Please go ahead. please go ahead

Speaker 4: Yeah, thanks for taking the question, guys. My first one, it's kind of an OEM question, but it relates to you guys too. The big story from this earnings season was the big policy change, the MSRP exemption or extension that included broadening the scope of parts. You saw that two large U.S. OEMs, huge impacts on their tariff guidance and presumably their volume outlook. Conversely, earlier this morning, a large European OEM reported results that had no positive impact from that. I was just wondering if you were seeing some dynamic here where the U.S. OEMs, which you guys have more exposure to, may be benefiting more from tariff policy changes than perhaps others, the European or maybe even the Japanese and the Koreans. I have a quick follow-up. Yeah, thanks for taking the question, guys. yeah thanks for taking the question guys My first one, it's kind of an OEM question, but it relates to you guys too. my first one it's kind of an oem question but it relates to you guys too The big story from this earnings season was the big policy change, the MSRP exemption or extension that included broadening the scope of parts. the big story from this earnings season was the big policy change the msrp exemption or extension that included broadening the scope of parts You saw that two large U.S. you saw that two large u.s OEMs, huge impacts on their tariff guidance and presumably their volume outlook. oems huge impacts on their tariff guidance and presumably their volume outlook Conversely, earlier this morning, a large European OEM reported results that had no positive impact from that. conversely earlier this morning a large european oem reported results that had no positive impact from that I was just wondering if you were seeing some dynamic here where the U.S. i was just wondering if you were seeing some dynamic here where the u.s OEMs, which you guys have more exposure to, may be benefiting more from tariff policy changes than perhaps others, the European or maybe even the Japanese and the Koreans. oems which you guys have more exposure to may be benefiting more from tariff policy changes than perhaps others the european or maybe even the japanese and the koreans I have a quick follow-up. i have a quick follow-up

Speaker 6: Yeah, I think you're absolutely right. I mean, the rebate is based on vehicles assembled in the U.S., and obviously the Detroit 3 make more in the U.S. than the European or the other transplants. To me, the most important thing in the recent announcement in that regard is I think there's always been some concern around are our customers going to have to pass along the higher prices that in the short term they're eating in their margins to the end customer. To the extent that were to happen, obviously vehicle demand is going to drop. I think that risk has substantially diminished with the new guidelines that have come out. That's kind of the way I look at it. Yeah, I think you're absolutely right. yeah i think you're absolutely right I mean, the rebate is based on vehicles assembled in the U.S., and obviously the Detroit 3 make more in the U.S. than the European or the other transplants. i mean the rebate is based on vehicles assembled in the u.s and obviously the detroit 3 make more in the u.s than the european or the other transplants To me, the most important thing in the recent announcement in that regard is I think there's always been some concern around are our customers going to have to pass along the higher prices that in the short term they're eating in their margins to the end customer. to me the most important thing in the recent announcement in that regard is i think there's always been some concern around are our customers going to have to pass along the higher prices that in the short term they're eating in their margins to the end customer To the extent that were to happen, obviously vehicle demand is going to drop. to the extent that were to happen obviously vehicle demand is going to drop I think that risk has substantially diminished with the new guidelines that have come out. i think that risk has substantially diminished with the new guidelines that have come out That's kind of the way I look at it. that's kind of the way i look at it

Speaker 4: Okay. My quick follow-up, the commercial vehicle side, it sounds like from your prepared commentary that that situation is deteriorating. Just curious if you could give us a context of how typically that cycle works and you know, are you seeing any kind of light at the end of the tunnel? Thanks. Okay. okay My quick follow-up, the commercial vehicle side, it sounds like from your prepared commentary that that situation is deteriorating. my quick follow-up the commercial vehicle side it sounds like from your prepared commentary that that situation is deteriorating Just curious if you could give us a context of how typically that cycle works and you know, are you seeing any kind of light at the end of the tunnel? just curious if you could give us a context of how typically that cycle works and you know are you seeing any kind of light at the end of the tunnel Thanks. thanks

Speaker 6: Nope. We're not seeing any light at the end of the tunnel. I would say, if you look at kind of the run rate here, and I'll talk about North America specifically, in the third quarter, we're running around a 200,000 unit annualized run rate. I know from talking to our customers that the backlogs that they all have have really been run down. I think there's a lot of uncertainty in the marketplace. We would have expected maybe to start to see some signs of pre-buy in 2026 associated with some emissions legislation changes, and we're not seeing any of that. I think it's going to be a fairly soft market here, certainly for as long as we can see into mid-2026. At this point in time, I don't see any green shoots that would suggest it's going to turn around. Nope. nope We're not seeing any light at the end of the tunnel. we're not seeing any light at the end of the tunnel I would say, if you look at kind of the run rate here, and I'll talk about North America specifically, in the third quarter, we're running around a 200,000 unit annualized run rate. i would say if you look at kind of the run rate here and i'll talk about north america specifically in the third quarter we're running around a 200,000 unit annualized run rate I know from talking to our customers that the backlogs that they all have have really been run down. i know from talking to our customers that the backlogs that they all have have really been run down I think there's a lot of uncertainty in the marketplace. i think there's a lot of uncertainty in the marketplace We would have expected maybe to start to see some signs of pre-buy in 2026 associated with some emissions legislation changes, and we're not seeing any of that. we would have expected maybe to start to see some signs of pre-buy in 2026 associated with some emissions legislation changes and we're not seeing any of that I think it's going to be a fairly soft market here, certainly for as long as we can see into mid-2026. i think it's going to be a fairly soft market here certainly for as long as we can see into mid-2026 At this point in time, I don't see any green shoots that would suggest it's going to turn around. at this point in time i don't see any green shoots that would suggest it's going to turn around

Speaker 4: Got it. Got it. got it

Speaker 6: I also don't think we're going to have a heck of a lot of deterioration from here either. I mean, we're at pretty historically depressed levels. I also don't think we're going to have a heck of a lot of deterioration from here either. i also don't think we're going to have a heck of a lot of deterioration from here either I mean, we're at pretty historically depressed levels. i mean we're at pretty historically depressed levels

Speaker 4: Okay. Okay. okay

Speaker 10: Our next question comes from the line of Emmanuel Rosner with Wolfe Research. Please go ahead. Our next question comes from the line of Emmanuel Rosner with Wolfe Research. our next question comes from the line of emmanuel rosner with wolfe research Please go ahead. please go ahead

Speaker 12: Oh, thank you so much. Good morning. My first question is on the implied outlook for the fourth quarter, which, as you pointed, is pretty strong and with margins already, you know, basically above, slightly above the high end of your margin outlook for next year. Just curious if you can help us out in terms of sequential drivers. It looks like it would be a 200 basis point margin improvement versus Q3 on what is essentially lower revenue at the midpoint. You flagged a few exogenous events such as, you know, some of the Ford schedules and the impact potentially from the fire. Just curious, how do you think about the performance quarter over quarter into the fourth? Oh, thank you so much. oh thank you so much Good morning. good morning My first question is on the implied outlook for the fourth quarter, which, as you pointed, is pretty strong and with margins already, you know, basically above, slightly above the high end of your margin outlook for next year. my first question is on the implied outlook for the fourth quarter which as you pointed is pretty strong and with margins already you know basically above slightly above the high end of your margin outlook for next year Just curious if you can help us out in terms of sequential drivers. just curious if you can help us out in terms of sequential drivers It looks like it would be a 200 basis point margin improvement versus Q3 on what is essentially lower revenue at the midpoint. it looks like it would be a 200 basis point margin improvement versus q3 on what is essentially lower revenue at the midpoint You flagged a few exogenous events such as, you know, some of the Ford schedules and the impact potentially from the fire. you flagged a few exogenous events such as you know some of the ford schedules and the impact potentially from the fire Just curious, how do you think about the performance quarter over quarter into the fourth? just curious how do you think about the performance quarter over quarter into the fourth

Speaker 1: Yeah, Emmanuel's it's Tim. A couple of things. Obviously, we've got continued improvement coming through from our cost-saving initiative. We do see mix improving in the quarter. I think the other big driver, and Bruce mentioned this in a couple of his opening comments, we are at the tail end of some restructuring actions that we believe are, which have some headwinds certainly through the third quarter that we think will also drive additional performance and better profitability into the fourth quarter. That provides us a great springboard into 2026 as we get some of these actions behind us. We did announce the closure of a battery cooling plant earlier in the quarter. This is part of what we're seeing and we're continuing to work to improve the cost base of the business across the board. You'll see those come through in the fourth quarter as well as next year. Yeah, Emmanuel's it's Tim. yeah emmanuel's it's tim A couple of things. a couple of things Obviously, we've got continued improvement coming through from our cost-saving initiative. obviously we've got continued improvement coming through from our cost-saving initiative We do see mix improving in the quarter. we do see mix improving in the quarter I think the other big driver, and Bruce mentioned this in a couple of his opening comments, we are at the tail end of some restructuring actions that we believe are, which have some headwinds certainly through the third quarter that we think will also drive additional performance and better profitability into the fourth quarter. i think the other big driver and bruce mentioned this in a couple of his opening comments we are at the tail end of some restructuring actions that we believe are which have some headwinds certainly through the third quarter that we think will also drive additional performance and better profitability into the fourth quarter That provides us a great springboard into 2026 as we get some of these actions behind us. that provides us a great springboard into 2026 as we get some of these actions behind us We did announce the closure of a battery cooling plant earlier in the quarter. we did announce the closure of a battery cooling plant earlier in the quarter This is part of what we're seeing and we're continuing to work to improve the cost base of the business across the board. this is part of what we're seeing and we're continuing to work to improve the cost base of the business across the board You'll see those come through in the fourth quarter as well as next year. you'll see those come through in the fourth quarter as well as next year

Speaker 12: Yeah, that's helpful. Could you give us a little bit more color around what mix you're referring to in terms of improving in the fourth quarter? Also, maybe any color around what's assumed for some of these potential indirect impacts on your customers from the Novelis fire? IHS has one view around Ford schedule, and then Ford obviously gave their own guidance, which had a fairly massive amount of volume production of loss. Just curious what's embedded in your schedules that you have received. Yeah, that's helpful. yeah that's helpful Could you give us a little bit more color around what mix you're referring to in terms of improving in the fourth quarter? could you give us a little bit more color around what mix you're referring to in terms of improving in the fourth quarter Also, maybe any color around what's assumed for some of these potential indirect impacts on your customers from the Novelis fire? also maybe any color around what's assumed for some of these potential indirect impacts on your customers from the novelis fire IHS has one view around Ford schedule, and then Ford obviously gave their own guidance, which had a fairly massive amount of volume production of loss. ihs has one view around ford schedule and then ford obviously gave their own guidance which had a fairly massive amount of volume production of loss Just curious what's embedded in your schedules that you have received. just curious what's embedded in your schedules that you have received

Speaker 1: Yeah, we obviously don't want to get ahead of our customer, but we're fairly in line with what our customer has said publicly around those. How they ultimately run, we'll see. Certainly, from our perspective, we're fairly in line with where we see Ford's public statements. In terms of mix, some of this is really the mix of products as we're moving from plant to plant. We do have a bit better mix on some of the products where we have better contribution margin quarter to quarter. A lot of it is really getting some of the restructuring and the movement of some of the product around in the plants as we rationalize our production footprint. Yeah, we obviously don't want to get ahead of our customer, but we're fairly in line with what our customer has said publicly around those. yeah we obviously don't want to get ahead of our customer but we're fairly in line with what our customer has said publicly around those How they ultimately run, we'll see. how they ultimately run we'll see Certainly, from our perspective, we're fairly in line with where we see Ford's public statements. certainly from our perspective we're fairly in line with where we see ford's public statements In terms of mix, some of this is really the mix of products as we're moving from plant to plant. in terms of mix some of this is really the mix of products as we're moving from plant to plant We do have a bit better mix on some of the products where we have better contribution margin quarter to quarter. we do have a bit better mix on some of the products where we have better contribution margin quarter to quarter A lot of it is really getting some of the restructuring and the movement of some of the product around in the plants as we rationalize our production footprint. a lot of it is really getting some of the restructuring and the movement of some of the product around in the plants as we rationalize our production footprint

Speaker 6: Yeah, maybe just one other comment on that one, kind of going the other way is if you look at our third quarter, we were pretty constrained in terms of magnets. We have facilities in China, India, and Europe where we had difficulties getting magnets. That logjam, knock wood, seems to have broken free here. We do expect to have some substantial catch-up in terms of frustrated orders, which are for us very high margin. Yeah, maybe just one other comment on that one, kind of going the other way is if you look at our third quarter, we were pretty constrained in terms of magnets. yeah maybe just one other comment on that one kind of going the other way is if you look at our third quarter we were pretty constrained in terms of magnets We have facilities in China, India, and Europe where we had difficulties getting magnets. we have facilities in china india and europe where we had difficulties getting magnets That logjam, knock wood, seems to have broken free here. that logjam knock wood seems to have broken free here We do expect to have some substantial catch-up in terms of frustrated orders, which are for us very high margin. we do expect to have some substantial catch-up in terms of frustrated orders which are for us very high margin

Speaker 1: Yeah, correct. Yeah, correct. yeah correct

Speaker 12: Great. Thank you. Great. great Thank you. thank you

Speaker 6: Thank you. Thank you. thank you

Speaker 10: Our next question will come from the line of Edison Yu with Deutsche Bank. Please go ahead. Our next question will come from the line of Edison Yu with Deutsche Bank . our next question will come from the line of edison yu with deutsche bank Please go ahead. please go ahead Hi, this is Wenyang for Edison. Thanks for taking the call. My first question is on the $110 million performance. I think in your prepared remark, you mentioned that it's mostly driven by pricing improvements. I'm just curious, is there sort of like bigger programs that are both going on at better pricing? What are some of the other drivers that might be embedded in this number? Thank you. Hi, this is Wenyang for Edison. hi this is wenyang for edison Thanks for taking the call. thanks for taking the call My first question is on the $110 million performance. my first question is on the $110 million performance I think in your prepared remark, you mentioned that it's mostly driven by pricing improvements. i think in your prepared remark you mentioned that it's mostly driven by pricing improvements I'm just curious, is there sort of like bigger programs that are both going on at better pricing? i'm just curious is there sort of like bigger programs that are both going on at better pricing What are some of the other drivers that might be embedded in this number? what are some of the other drivers that might be embedded in this number Thank you. thank you

Speaker 1: Yeah, some of it is as we move through and bring new platforms and new programs on place. That comes with revised pricing, so that's running through there. The commercial teams have done a really nice job with the customers to go get recoveries both from an economic and for improvements. A lot of that is real pure pricing that we see, and you see that falling through. I don't have the number in front of me, but I think there's about $80 million of top line that's flowing through, and that's what you're seeing in that $110 million. The balance of that is really productivity and performance improvement at the plant level, net of all of the inflationary impacts that flow through the business. Yeah, some of it is as we move through and bring new platforms and new programs on place. yeah some of it is as we move through and bring new platforms and new programs on place That comes with revised pricing, so that's running through there. that comes with revised pricing so that's running through there The commercial teams have done a really nice job with the customers to go get recoveries both from an economic and for improvements. the commercial teams have done a really nice job with the customers to go get recoveries both from an economic and for improvements A lot of that is real pure pricing that we see, and you see that falling through. a lot of that is real pure pricing that we see and you see that falling through I don't have the number in front of me, but I think there's about $80 million of top line that's flowing through, and that's what you're seeing in that $110 million. i don't have the number in front of me but i think there's about $80 million of top line that's flowing through and that's what you're seeing in that $110 million The balance of that is really productivity and performance improvement at the plant level, net of all of the inflationary impacts that flow through the business. the balance of that is really productivity and performance improvement at the plant level net of all of the inflationary impacts that flow through the business Got it. That's very helpful. Maybe on both light vehicle and commercial, you can maybe just provide some higher level, you know, preliminary puts and takes that you're seeing or considering into 2026. Thank you. Got it. got it That's very helpful. that's very helpful Maybe on both light vehicle and commercial, you can maybe just provide some higher level, you know, preliminary puts and takes that you're seeing or considering into 2026. maybe on both light vehicle and commercial you can maybe just provide some higher level you know preliminary puts and takes that you're seeing or considering into 2026 Thank you. thank you Yeah, I think, you know, Bruce mentioned, we don't, we're probably not seeing a lot, at least through the first half on the commercial vehicle side, especially in North America, that there'd be a whole lot of improvement. As we look through on the light vehicle side, we have a number of programs that are launching next year that should help volume. You know, our core light vehicle program, especially on the driveline side, right? You know, Super Duty, Bronco, Wrangler, Ranger, those are all still very strong runners, and we would continue to see those well into next year to continue to drive the volume side of this. Wrangler is going to come out and have some refreshments, so that should help as well. Yeah, I think, you know, Bruce mentioned, we don't, we're probably not seeing a lot, at least through the first half on the commercial vehicle side, especially in North America, that there'd be a whole lot of improvement. yeah i think you know bruce mentioned we don't we're probably not seeing a lot at least through the first half on the commercial vehicle side especially in north america that there'd be a whole lot of improvement As we look through on the light vehicle side, we have a number of programs that are launching next year that should help volume. as we look through on the light vehicle side we have a number of programs that are launching next year that should help volume You know, our core light vehicle program, especially on the driveline side, right? you know our core light vehicle program especially on the driveline side right You know, Super Duty, Bronco, Wrangler, Ranger, those are all still very strong runners, and we would continue to see those well into next year to continue to drive the volume side of this. Wrangler is going to come out and have some refreshments, so that should help as well. you know super duty bronco wrangler ranger those are all still very strong runners and we would continue to see those well into next year to continue to drive the volume side of this wrangler is going to come out and have some refreshments so that should help as well

Speaker 6: Yeah, maybe just a couple other color commentary on that. I mean, obviously, with oil prices being quite soft, that's a nice tailwind in terms of large SUV. Some of the short-term deterioration that we're seeing in Super Duty, Ford's already talked about uplifting their volume next year. In the middle, I think it's August of next year, they'll be introducing incremental Super Duty production at their Oakville facility. I would say the tailwinds in terms of ICE, large SUV, our product exposure bodes well for us as we drift into 2026 here. Yeah, maybe just a couple other color commentary on that. yeah maybe just a couple other color commentary on that I mean, obviously, with oil prices being quite soft, that's a nice tailwind in terms of large SUV. i mean obviously with oil prices being quite soft that's a nice tailwind in terms of large suv Some of the short-term deterioration that we're seeing in Super Duty, Ford's already talked about uplifting their volume next year. some of the short-term deterioration that we're seeing in super duty ford's already talked about uplifting their volume next year In the middle, I think it's August of next year, they'll be introducing incremental Super Duty production at their Oakville facility. in the middle i think it's august of next year they'll be introducing incremental super duty production at their oakville facility I would say the tailwinds in terms of ICE, large SUV, our product exposure bodes well for us as we drift into 2026 here. i would say the tailwinds in terms of ice large suv our product exposure bodes well for us as we drift into 2026 here Got it. I'm just a little surprised to the question that I know you might be implying before that you're just not seeing a lot of impact in Q4 itself from one of your larger customers. Is it just because the original guidance was conservative and therefore, even if you're taking in some of the impact, you're still retaining a lot of it, or are they not really flowing through that impact to you guys? Got it. got it I'm just a little surprised to the question that I know you might be implying before that you're just not seeing a lot of impact in Q4 itself from one of your larger customers. i'm just a little surprised to the question that i know you might be implying before that you're just not seeing a lot of impact in q4 itself from one of your larger customers Is it just because the original guidance was conservative and therefore, even if you're taking in some of the impact, you're still retaining a lot of it, or are they not really flowing through that impact to you guys? is it just because the original guidance was conservative and therefore even if you're taking in some of the impact you're still retaining a lot of it or are they not really flowing through that impact to you guys

Speaker 1: Yeah, it's a bit of both, right? Weny, it's a bit of both. We had some of this in our forecast that we had back in August, and then some of it's the view from the customers are going to make up some of this as we move through the back part of the quarter. Yeah, it's a bit of both, right? yeah it's a bit of both right Weny, it's a bit of both. weny it's a bit of both We had some of this in our forecast that we had back in August, and then some of it's the view from the customers are going to make up some of this as we move through the back part of the quarter. we had some of this in our forecast that we had back in august and then some of it's the view from the customers are going to make up some of this as we move through the back part of the quarter

Speaker 6: Keep in mind, our exposure is Super Duty, not F-150. When you're hearing the volumes, you're hearing kind of both. I think just given the profitability of the Super Duty, they're kind of over-rotating to try and keep that running as strong as they can. Keep in mind, our exposure is Super Duty, not F-150. keep in mind our exposure is super duty not f-150 When you're hearing the volumes, you're hearing kind of both. when you're hearing the volumes you're hearing kind of both I think just given the profitability of the Super Duty, they're kind of over-rotating to try and keep that running as strong as they can. i think just given the profitability of the super duty they're kind of over-rotating to try and keep that running as strong as they can Got it. Okay, that's very helpful. Thank you. Got it. got it Okay, that's very helpful. okay that's very helpful Thank you. thank you

Speaker 10: Our next question will come from the line of James Picariello with BNP Paribas. Please go ahead. Our next question will come from the line of James Picariello with BNP Paribas . our next question will come from the line of james picariello with bnp paribas Please go ahead. please go ahead

Speaker 7: Good morning, everyone. Just as we think about next year, are we at a point at all to quantify the next slate of cost savings, beyond the $310 million program, with respect to plant closures, which you touched on in your prepared remarks? Just overall, I guess, yeah, stronger execution. Good morning, everyone. good morning everyone Just as we think about next year, are we at a point at all to quantify the next slate of cost savings, beyond the $310 million program, with respect to plant closures, which you touched on in your prepared remarks? just as we think about next year are we at a point at all to quantify the next slate of cost savings beyond the $310 million program with respect to plant closures which you touched on in your prepared remarks Just overall, I guess, yeah, stronger execution. just overall i guess yeah stronger execution

Speaker 6: Yeah, thanks for that question. That's a good one. I would say in terms of the opportunity that we have to expand our margins, that we still have a long way to go. If you think about the $310 million, it's heavily focused on things that we could implement quickly without investment. If I just look at that bucket of costs through standardization, some systems work, we would still say we probably have another $50 million, $75 million that we can get over the next few years. If I look at the cost base outside of where we've been focusing on in terms of our plants, for sure, we've got some footprint opportunities. You know, we announced one earlier this month. Yeah, thanks for that question. yeah thanks for that question That's a good one. that's a good one I would say in terms of the opportunity that we have to expand our margins, that we still have a long way to go. i would say in terms of the opportunity that we have to expand our margins that we still have a long way to go If you think about the $310 million, it's heavily focused on things that we could implement quickly without investment. if you think about the $310 million it's heavily focused on things that we could implement quickly without investment If I just look at that bucket of costs through standardization, some systems work, we would still say we probably have another $50 million, $75 million that we can get over the next few years. if i just look at that bucket of costs through standardization some systems work we would still say we probably have another $50 million $75 million that we can get over the next few years If I look at the cost base outside of where we've been focusing on in terms of our plants, for sure, we've got some footprint opportunities. if i look at the cost base outside of where we've been focusing on in terms of our plants for sure we've got some footprint opportunities You know, we announced one earlier this month. you know we announced one earlier this month I would say just given the amount of investment that we've had to make in an electric vehicle over the last few years, we've made those investments you could think about at the expense of our core operations. If you looked at the level of automation that we have in our plants, it is well below what you would see at other well-capitalized suppliers. I think we've got other opportunities in terms of product line rationalization. We still have a lot of products where we make inadequate or negative returns, and we're working our way through that. Lastly, on the EV side, we do expect to continue to refine our cost base there and get that business from being a drag on our margins to being accretive. I expect that to sort of flip around here in the next 6 months-12 months. I would say just given the amount of investment that we've had to make in an electric vehicle over the last few years, we've made those investments you could think about at the expense of our core operations. i would say just given the amount of investment that we've had to make in an electric vehicle over the last few years we've made those investments you could think about at the expense of our core operations If you looked at the level of automation that we have in our plants, it is well below what you would see at other well-capitalized suppliers. if you looked at the level of automation that we have in our plants it is well below what you would see at other well-capitalized suppliers I think we've got other opportunities in terms of product line rationalization. i think we've got other opportunities in terms of product line rationalization We still have a lot of products where we make inadequate or negative returns, and we're working our way through that. we still have a lot of products where we make inadequate or negative returns and we're working our way through that Lastly, on the EV side, we do expect to continue to refine our cost base there and get that business from being a drag on our margins to being accretive. lastly on the ev side we do expect to continue to refine our cost base there and get that business from being a drag on our margins to being accretive I expect that to sort of flip around here in the next 6 months- 12 months. i expect that to sort of flip around here in the next 6 months- 12 months There's still an awful lot of levers that we can pull. I don't see 10% or 10.5% as being our high watermark. I believe we've got opportunity to continue to grow it fairly significantly over the next couple of years. There's still an awful lot of levers that we can pull. there's still an awful lot of levers that we can pull I don't see 10% or 10.5% as being our high watermark. i don't see 10% or 10.5% as being our high watermark I believe we've got opportunity to continue to grow it fairly significantly over the next couple of years. i believe we've got opportunity to continue to grow it fairly significantly over the next couple of years

Speaker 7: Got it. No, that's really helpful. My follow-on may be on the topic of plant automation. How are you thinking about the right run rate for CapEx as a % of sales next year? Could you just remind us what's assumed or expected for the stranded costs to capture for next year as well? Thank you. Got it. got it No, that's really helpful. no that's really helpful My follow-on may be on the topic of plant automation. my follow-on may be on the topic of plant automation How are you thinking about the right run rate for CapEx as a % of sales next year? how are you thinking about the right run rate for capex as a % of sales next year Could you just remind us what's assumed or expected for the stranded costs to capture for next year as well? could you just remind us what's assumed or expected for the stranded costs to capture for next year as well Thank you. thank you

Speaker 1: Yeah, James. Hey, you can sort of think of CapEx in about the 4% of sales range. That's probably where we'll end up, plus or minus. In terms of stranded cost, it's probably $30 million-$40 million. We do expect to be able to start taking a good chunk of those costs out once we close the transaction and move into 2026. Some of those costs will remain because we'll have some transitional services that'll need to be provided, but they'll be offset with payments from Allison for that. Again, $30 million-$40 million, and we believe we'll be able to take all those out as we get through and we exit 2026. Yeah, James. yeah james Hey, you can sort of think of CapEx in about the 4% of sales range. hey you can sort of think of capex in about the 4% of sales range That's probably where we'll end up, plus or minus. that's probably where we'll end up plus or minus In terms of stranded cost, it's probably $30 million- $40 million. in terms of stranded cost it's probably $30 million- $40 million We do expect to be able to start taking a good chunk of those costs out once we close the transaction and move into 2026. we do expect to be able to start taking a good chunk of those costs out once we close the transaction and move into 2026 Some of those costs will remain because we'll have some transitional services that'll need to be provided, but they'll be offset with payments from Allison for that. some of those costs will remain because we'll have some transitional services that'll need to be provided but they'll be offset with payments from allison for that Again, $30 million-$40 million, and we believe we'll be able to take all those out as we get through and we exit 2026. again $30 million-$40 million and we believe we'll be able to take all those out as we get through and we exit 2026

Speaker 6: You'll see next year a fairly big, like within that number that Tim talked about, a fairly big step up in terms of automation expenditure next year. I don't want anybody to be misled here. We're not talking about humanoid robots and stuff like that. We're talking about basic automation, unloading and loading machines, AGVs, moving material around our factories. We're way behind the automotive standard. I view that as a huge opportunity for us. You'll see next year a fairly big, like within that number that Tim talked about, a fairly big step up in terms of automation expenditure next year. you'll see next year a fairly big like within that number that tim talked about a fairly big step up in terms of automation expenditure next year I don't want anybody to be misled here. i don't want anybody to be misled here We're not talking about humanoid robots and stuff like that. we're not talking about humanoid robots and stuff like that We're talking about basic automation, unloading and loading machines, AGVs, moving material around our factories. we're talking about basic automation unloading and loading machines agvs moving material around our factories We're way behind the automotive standard. we're way behind the automotive standard I view that as a huge opportunity for us. i view that as a huge opportunity for us

Speaker 10: Our next question will come from the line of Joe Spak with UBS. Please go ahead. Our next question will come from the line of Joe Spak with UBS . our next question will come from the line of joe spak with ubs Please go ahead. please go ahead

Speaker 9: Thank you. I just wanted to maybe follow up on that last point. It sounds like there's a big bucket of opportunity here, but it will require some investment. I just want to be clear. Should we expect some of that investment to start next year, and then, you know, savings? How quickly can savings come in after that investment? Thank you. thank you I just wanted to maybe follow up on that last point. i just wanted to maybe follow up on that last point It sounds like there's a big bucket of opportunity here, but it will require some investment. it sounds like there's a big bucket of opportunity here but it will require some investment I just want to be clear. i just want to be clear Should we expect some of that investment to start next year, and then, you know, savings? should we expect some of that investment to start next year and then you know savings How quickly can savings come in after that investment? how quickly can savings come in after that investment

Speaker 1: Yeah, we will. I mean, if you think about it, we've been spending pretty significantly on EV over the last few years. The easy way to think about this is we plan to take some of those dollars and redeploy them. As Bruce mentioned, we were investing in EV to some extent at the expense of some of the stuff in our normal old-school ICE plants. We'll spend that capital to find areas. By the way, it's a target-rich environment in terms of being able to improve the efficiency on the plant floor. I mean, we do this every day, but this will be a bit more deliberate and accelerated as we go through and those dollars are freed up. Don't forget that as we come through the transaction, we'll free up a lot of cash flow, operating cash flow from lower interest expense and lower taxes. Yeah, we will. yeah we will I mean, if you think about it, we've been spending pretty significantly on EV over the last few years. i mean if you think about it we've been spending pretty significantly on ev over the last few years The easy way to think about this is we plan to take some of those dollars and redeploy them. the easy way to think about this is we plan to take some of those dollars and redeploy them As Bruce mentioned, we were investing in EV to some extent at the expense of some of the stuff in our normal old-school ICE plants. as bruce mentioned we were investing in ev to some extent at the expense of some of the stuff in our normal old-school ice plants We'll spend that capital to find areas. we'll spend that capital to find areas By the way, it's a target-rich environment in terms of being able to improve the efficiency on the plant floor. by the way it's a target-rich environment in terms of being able to improve the efficiency on the plant floor I mean, we do this every day, but this will be a bit more deliberate and accelerated as we go through and those dollars are freed up. i mean we do this every day but this will be a bit more deliberate and accelerated as we go through and those dollars are freed up Don't forget that as we come through the transaction, we'll free up a lot of cash flow, operating cash flow from lower interest expense and lower taxes. don't forget that as we come through the transaction we'll free up a lot of cash flow operating cash flow from lower interest expense and lower taxes We intend to make sure that we're investing in the right places at the right returns for the business to drive shareholder value. We intend to make sure that we're investing in the right places at the right returns for the business to drive shareholder value. we intend to make sure that we're investing in the right places at the right returns for the business to drive shareholder value

Speaker 6: Yeah, with that level of CapEx, we're still maintaining our 4% free cash flow guide. Yeah, with that level of CapEx, we're still maintaining our 4% free cash flow guide. yeah with that level of capex we're still maintaining our 4% free cash flow guide

Speaker 9: Right. Okay. Some of it is redeployment and some of it's incremental is the right way to... Right. right Okay. okay Some of it is redeployment and some of it's incremental is the right way to... some of it is redeployment and some of it's incremental is the right way to

Speaker 1: Yeah, correct. That's correct. I mean, we're below that obviously today, but our view is that we'll have more, given the improvement at the operating margin level. We're going to redeploy some of those dollars that we're delivering from increased profitability back into the business to kind of generate the snowball effect and continue to drive those margins higher over the next two, three years. Yeah, correct. yeah correct That's correct. that's correct I mean, we're below that obviously today, but our view is that we'll have more, given the improvement at the operating margin level. i mean we're below that obviously today but our view is that we'll have more given the improvement at the operating margin level We're going to redeploy some of those dollars that we're delivering from increased profitability back into the business to kind of generate the snowball effect and continue to drive those margins higher over the next two, three years. we're going to redeploy some of those dollars that we're delivering from increased profitability back into the business to kind of generate the snowball effect and continue to drive those margins higher over the next two three years

Speaker 6: Yeah, this is fairly short payback stuff. Yeah, this is fairly short payback stuff. yeah this is fairly short payback stuff

Speaker 9: Yeah. I guess the second question, I just want to make sure I heard correctly, Bruce, I think in your opening comments, you talked about some EV charges in the quarter. I think that related to sort of, I don't know if that was sort of some of the plant actions you took, but then you alluded to a recovery maybe from lower EV volumes in the fourth quarter. I guess, A, were those charges in the third quarter results? Is the recovery in the guidance? How much are we talking about here? Yeah. yeah I guess the second question, I just want to make sure I heard correctly, Bruce, I think in your opening comments, you talked about some EV charges in the quarter. i guess the second question i just want to make sure i heard correctly bruce i think in your opening comments you talked about some ev charges in the quarter I think that related to sort of, I don't know if that was sort of some of the plant actions you took, but then you alluded to a recovery maybe from lower EV volumes in the fourth quarter. i think that related to sort of i don't know if that was sort of some of the plant actions you took but then you alluded to a recovery maybe from lower ev volumes in the fourth quarter I guess, A, were those charges in the third quarter results? i guess a were those charges in the third quarter results Is the recovery in the guidance? is the recovery in the guidance How much are we talking about here? how much are we talking about here

Speaker 1: Yeah, we did take, I mean, I'll say charges. We did have to book some additional costs related to some of the EV programs that were canceled during the quarter. It's a number of different OEMs. The total number is, you know, you can call it $10 million, maybe, you know, plus or minus. It's not a massive number, but again, we are in active discussions with the customer over recovery of these amounts. We expect to get those in the fourth quarter. Yeah, we did take, I mean, I'll say charges. yeah we did take i mean i'll say charges We did have to book some additional costs related to some of the EV programs that were canceled during the quarter. we did have to book some additional costs related to some of the ev programs that were canceled during the quarter It's a number of different OEMs. it's a number of different oems The total number is, you know, you can call it $10 million, maybe, you know, plus or minus. the total number is you know you can call it $10 million maybe you know plus or minus It's not a massive number, but again, we are in active discussions with the customer over recovery of these amounts. it's not a massive number but again we are in active discussions with the customer over recovery of these amounts We expect to get those in the fourth quarter. we expect to get those in the fourth quarter

Speaker 6: Yeah, they just didn't match up. Yeah, they just didn't match up. yeah they just didn't match up

Speaker 1: It just didn't match up. The accounting rules are a little different between what we got to book in terms of cost and what we have to book in terms of the recoveries, since they're non-contractual on the recoveries. I don't want to get into specifics of programs or customers because obviously we're actively engaged with those discussions with the customer today. It just didn't match up. it just didn't match up The accounting rules are a little different between what we got to book in terms of cost and what we have to book in terms of the recoveries, since they're non-contractual on the recoveries. the accounting rules are a little different between what we got to book in terms of cost and what we have to book in terms of the recoveries since they're non-contractual on the recoveries I don't want to get into specifics of programs or customers because obviously we're actively engaged with those discussions with the customer today. i don't want to get into specifics of programs or customers because obviously we're actively engaged with those discussions with the customer today

Speaker 9: No, that's totally fine. No, that's totally fine. no that's totally fine

Speaker 6: Yeah, $8 million or $10 million in Q3 that we anticipate recovering in Q4. Yeah, $8 million or $10 million in Q3 that we anticipate recovering in Q4. yeah, $8 million or $10 million in q3 that we anticipate recovering in q4

Speaker 1: Correct. Correct. correct

Speaker 9: Okay. I guess what I wanted to make sure was that that was actually in the results. You're not expecting it to be in the results. Okay. okay I guess what I wanted to make sure was that that was actually in the results. i guess what i wanted to make sure was that that was actually in the results You're not expecting it to be in the results. you're not expecting it to be in the results

Speaker 1: It's included in the adjusted EBITDA number, Joe. It's included in the adjusted EBITDA number, Joe. it's included in the adjusted ebitda number joe

Speaker 9: Thank you. Thanks for all that guys. Thank you. thank you Thanks for all that guys . thanks for all that guys

Speaker 1: Yep. Yep. yep

Speaker 6: No problem. No problem. no problem

Speaker 10: Our next question will come from the line of Ryan Brinkman with JPMorgan. Please go ahead. Our next question will come from the line of Ryan Brinkman with JPMorgan . our next question will come from the line of ryan brinkman with jpmorgan Please go ahead. please go ahead

Speaker 3: Hi, thanks for taking my question. I know we just had the discussion about what's next in terms of the additional opportunity to improve margin and cash flow beyond even the 10%-10.5% and 4% of sales that you target respectively, you continue to target for 2026. I don't think that's a premature discussion to have. I'd plan to ask that question myself if you really are at 10%-10.5% exit run rate at the end of the fourth quarter. Maybe just taking a step back, it's worth pointing out, I think consensus is at like 9.4% for next year for EBITDA margin. Maybe just review a little bit too your confidence in next year and in the lack of incremental execution, I think, that's maybe needed to get there and on the free cash flow number too. Hi, thanks for taking my question. hi thanks for taking my question I know we just had the discussion about what's next in terms of the additional opportunity to improve margin and cash flow beyond even the 10%- 10.5% and 4% of sales that you target respectively, you continue to target for 2026. i know we just had the discussion about what's next in terms of the additional opportunity to improve margin and cash flow beyond even the 10%- 10.5% and 4% of sales that you target respectively you continue to target for 2026 I don't think that's a premature discussion to have. i don't think that's a premature discussion to have I'd plan to ask that question myself if you really are at 10%-1 0.5% exit run rate at the end of the fourth quarter. i'd plan to ask that question myself if you really are at 10%-1 0.5% exit run rate at the end of the fourth quarter Maybe just taking a step back, it's worth pointing out, I think consensus is at like 9.4% for next year for EBITDA margin. maybe just taking a step back it's worth pointing out i think consensus is at like 9.4% for next year for ebitda margin Maybe just review a little bit too your confidence in next year and in the lack of incremental execution, I think, that's maybe needed to get there and on the free cash flow number too. maybe just review a little bit too your confidence in next year and in the lack of incremental execution i think that's maybe needed to get there and on the free cash flow number too Are there additional levers that you need to pull or you feel like you're pretty much going to be on track for that so long as, you know, the end markets are there by the end of this quarter? Are there additional levers that you need to pull or you feel like you're pretty much going to be on track for that so long as, you know, the end markets are there by the end of this quarter? are there additional levers that you need to pull or you feel like you're pretty much going to be on track for that so long as you know the end markets are there by the end of this quarter

Speaker 1: Just making your assumption on end markets as the premise, you know, Bruce and I and the entire team are supremely confident in our ability to deliver what we've said for next year. The fourth quarter, we think, is a good indication of that. Do I think there's opportunities above that? Absolutely, I do. A lot of things can go right and a lot of things can go wrong over the course of a year. Yes, we think there are additional opportunities both in terms of margin and cash flow, even in 2026. Right now, we're focused on closing out 2025, delivering the $310 million, and really setting the company and the team up for delivering on next year. When you say the consensus is below that, you know, Bruce and I share a bit of frustration. Just making your assumption on end markets as the premise, you know, Bruce and I and the entire team are supremely confident in our ability to deliver what we've said for next year. just making your assumption on end markets as the premise you know bruce and i and the entire team are supremely confident in our ability to deliver what we've said for next year The fourth quarter, we think, is a good indication of that. the fourth quarter we think is a good indication of that Do I think there's opportunities above that? do i think there's opportunities above that Absolutely, I do. absolutely i do A lot of things can go right and a lot of things can go wrong over the course of a year. a lot of things can go right and a lot of things can go wrong over the course of a year Yes, we think there are additional opportunities both in terms of margin and cash flow, even in 2026. yes we think there are additional opportunities both in terms of margin and cash flow even in 2026 Right now, we're focused on closing out 2025, delivering the $310 million, and really setting the company and the team up for delivering on next year. right now we're focused on closing out 2025 delivering the $310 million and really setting the company and the team up for delivering on next year When you say the consensus is below that, you know, Bruce and I share a bit of frustration. when you say the consensus is below that you know bruce and i share a bit of frustration I mean, we've been saying this here for the better part of the year. We're really thinking that what we're going to deliver in the fourth quarter will help cement the fact that we're going to deliver that 10%-10.5% next year, with potentially some upside. I mean, we've been saying this here for the better part of the year. i mean we've been saying this here for the better part of the year We're really thinking that what we're going to deliver in the fourth quarter will help cement the fact that we're going to deliver that 10%- 10.5% next year, with potentially some upside. we're really thinking that what we're going to deliver in the fourth quarter will help cement the fact that we're going to deliver that 10%- 10.5% next year with potentially some upside

Speaker 6: Yeah, I mean, I'd say, Ryan, in terms of, you know, here's how I look at it. A year ago, we said we were going to be 10%-10.5%, and our consensus has slowly moved up. The reason why we've bought back our stock so aggressively is because we're highly confident in our number. If you use our number, our stock price is significantly undervalued. It's almost like we're buying two and getting one free in. Yeah, I mean, I'd say, Ryan, in terms of, you know, here's how I look at it. yeah i mean i'd say ryan in terms of you know here's how i look at it A year ago, we said we were going to be 10%- 10.5%, and our consensus has slowly moved up. a year ago we said we were going to be 10%- 10.5% and our consensus has slowly moved up The reason why we've bought back our stock so aggressively is because we're highly confident in our number. the reason why we've bought back our stock so aggressively is because we're highly confident in our number If you use our number, our stock price is significantly undervalued. if you use our number our stock price is significantly undervalued It's almost like we're buying two and getting one free in. it's almost like we're buying two and getting one free in

Speaker 1: It's on sale. The stock's on sale right now. It's on sale. it's on sale The stock's on sale right now. the stock's on sale right now

Speaker 3: Congratulations on the execution so far. Maybe just to finish on the end market point, I feel like you have been, while others have been quicker to point out the headwinds that they were experiencing in the commercial vehicle market, both in North America and in Brazil. I just wonder if you are situated a little bit differently relative to some of the competition. I do not know if it is a class five through seven relative to eight, or I am not sure. You are seeing the softening now. Others are saying the floor has fallen out on the new vehicle builds in North America. I am just curious if maybe you have got a little bit different exposure, a little bit more on the aftermarket. I am not sure. Congratulations on the execution so far. congratulations on the execution so far Maybe just to finish on the end market point, I feel like you have been, while others have been quicker to point out the headwinds that they were experiencing in the commercial vehicle market, both in North America and in Brazil. maybe just to finish on the end market point i feel like you have been while others have been quicker to point out the headwinds that they were experiencing in the commercial vehicle market both in north america and in brazil I just wonder if you are situated a little bit differently relative to some of the competition. i just wonder if you are situated a little bit differently relative to some of the competition I do not know if it is a class five through seven relative to eight, or I am not sure. i do not know if it is a class five through seven relative to eight or i am not sure You are seeing the softening now. you are seeing the softening now Others are saying the floor has fallen out on the new vehicle builds in North America. I am just curious if maybe you have got a little bit different exposure, a little bit more on the aftermarket. I am not sure. others are saying the floor has fallen out on the new vehicle builds in north america. i am just curious if maybe you have got a little bit different exposure a little bit more on the aftermarket. i am not sure

Speaker 1: Yeah, obviously we have exposure to aftermarket, but I would assume most of the other players do as well. Look, vehicle fleets are aging. They're still up there. We do think that the run rate we're at now is still pretty low. We had some of this built in. While others are calling it, we were building a bit more conservatism into the CV vehicle build when we came out three months ago. That's part of the reason why we're not probably calling it out as much now and we're holding to the $7.4 billion. I think as we move into next year, the first half is not going to be, we're not going to see gains, but we don't see it going a whole lot lower than we are now. Yeah, obviously we have exposure to aftermarket, but I would assume most of the other players do as well. yeah obviously we have exposure to aftermarket but i would assume most of the other players do as well Look, vehicle fleets are aging. look vehicle fleets are aging They're still up there. they're still up there We do think that the run rate we're at now is still pretty low. we do think that the run rate we're at now is still pretty low We had some of this built in. we had some of this built in While others are calling it, we were building a bit more conservatism into the CV vehicle build when we came out three months ago. while others are calling it we were building a bit more conservatism into the cv vehicle build when we came out three months ago That's part of the reason why we're not probably calling it out as much now and we're holding to the $7.4 billion. that's part of the reason why we're not probably calling it out as much now and we're holding to the $7.4 billion I think as we move into next year, the first half is not going to be, we're not going to see gains, but we don't see it going a whole lot lower than we are now. i think as we move into next year the first half is not going to be we're not going to see gains but we don't see it going a whole lot lower than we are now I just don't think, even with the backdrop that the age of the fleets, they'll have to do some work to replace it. I just don't think, even with the backdrop that the age of the fleets, they'll have to do some work to replace it. i just don't think even with the backdrop that the age of the fleets they'll have to do some work to replace it

Speaker 6: I would maybe just add to that one on the CV side. Our business has gained share. If you look at kind of our share wallet at our customers, we've done a lot. The team prior to when I got here had done a lot of good work on refootprinting that business. I think we have a cost-advantaged model right now, and we are picking up share at the big three customers that we have exposure to here in North America, which has helped to offset some of the market deterioration. I would maybe just add to that one on the CV side. i would maybe just add to that one on the cv side Our business has gained share. our business has gained share If you look at kind of our share wallet at our customers, we've done a lot. if you look at kind of our share wallet at our customers we've done a lot The team prior to when I got here had done a lot of good work on refootprinting that business. the team prior to when i got here had done a lot of good work on refootprinting that business I think we have a cost-advantaged model right now, and we are picking up share at the big three customers that we have exposure to here in North America, which has helped to offset some of the market deterioration. i think we have a cost-advantaged model right now and we are picking up share at the big three customers that we have exposure to here in north america which has helped to offset some of the market deterioration

Speaker 1: Yeah, that's a really good point, right? Our share at some of these has increased significantly over the past 12 months, and we expect that to hold and continue to increase. Yeah, that's a really good point, right? yeah that's a really good point right Our share at some of these has increased significantly over the past 12 months, and we expect that to hold and continue to increase. our share at some of these has increased significantly over the past 12 months and we expect that to hold and continue to increase

Speaker 3: Got it. Thank you. Got it. got it Thank you. thank you

Speaker 10: Our next question will come from the line of Dan Levy with Barclays. Please go ahead. Our next question will come from the line of Dan Levy with Barclays. our next question will come from the line of dan levy with barclays Please go ahead. please go ahead

Speaker 11: Hi, how's your day today? Thanks for taking my question. As my first one, I just was kind of trying to wonder how we should bridge the 4Q margin into 2026. I understand on the slides, it kind of shows the main drivers increase margin. We're trying to figure out if there's anything, you know, weird in 4Q that wouldn't, I guess, imply like a larger step of the margin in the next year. Hi, how's your day today? hi how's your day today Thanks for taking my question. thanks for taking my question As my first one, I just was kind of trying to wonder how we should bridge the 4Q margin into 2026. as my first one i just was kind of trying to wonder how we should bridge the 4q margin into 2026 I understand on the slides, it kind of shows the main drivers increase margin. i understand on the slides it kind of shows the main drivers increase margin We're trying to figure out if there's anything, you know, weird in 4Q that wouldn't, I guess, imply like a larger step of the margin in the next year. we're trying to figure out if there's anything you know weird in 4q that wouldn't i guess imply like a larger step of the margin in the next year

Speaker 1: No, I mean, these are really, if you look at page 12, those basis points are off of our total 2025 full year continuing ops basis financials. They're not off of the fourth quarter. Obviously, when you look at the fourth quarter, it's highly indicative of why we believe the full year overall run rate bridges into that 10%-10.5% next year. No, I mean, these are really, if you look at page 12, those basis points are off of our total 2025 full year continuing ops basis financials. no i mean these are really if you look at page 12 those basis points are off of our total 2025 full year continuing ops basis financials They're not off of the fourth quarter. they're not off of the fourth quarter Obviously, when you look at the fourth quarter, it's highly indicative of why we believe the full year overall run rate bridges into that 10%- 10.5% next year. obviously when you look at the fourth quarter it's highly indicative of why we believe the full year overall run rate bridges into that 10%- 10.5% next year

Speaker 11: Okay, I guess we should assume that a decent portion of those main drivers are included already within the 4Q margin. Okay, I guess we should assume that a decent portion of those main drivers are included already within the 4Q margin. okay i guess we should assume that a decent portion of those main drivers are included already within the 4q margin

Speaker 1: The cost savings, yeah, think about the cost savings. It's 100 basis points. I mean, our fourth quarter, when you look at the full run rate out of 2025, right, we're going to deliver $235 million. We had $10 million last year. That's already $245 million off of, you know, sort of where we were at in 2024. That incremental, you know, $65 million or $75 million of cost savings runs through next year, and we'll have a full run rate of $310 million. That's 100 basis points right there. You know, and then, you know, stranded costs, right? We just talked about that. That adds, you know, some incremental margin in the business because right now, when you look at our continuing ops, it's burdened with the stranded costs that we expect to take out. The cost savings, yeah, think about the cost savings. the cost savings yeah think about the cost savings It's 100 basis points. it's 100 basis points I mean, our fourth quarter, when you look at the full run rate out of 2025, right, we're going to deliver $235 million. i mean our fourth quarter when you look at the full run rate out of 2025 right we're going to deliver $235 million We had $10 million last year. we had $10 million last year That's already $245 million off of, you know, sort of where we were at in 2024. that's already $245 million off of you know sort of where we were at in 2024 That incremental, you know, $65 million or $75 million of cost savings runs through next year, and we'll have a full run rate of $310 million. that incremental you know $65 million or $75 million of cost savings runs through next year and we'll have a full run rate of $310 million That's 100 basis points right there. that's 100 basis points right there You know, and then, you know, stranded costs, right? you know and then you know stranded costs right We just talked about that. we just talked about that That adds, you know, some incremental margin in the business because right now, when you look at our continuing ops, it's burdened with the stranded costs that we expect to take out. that adds you know some incremental margin in the business because right now when you look at our continuing ops it's burdened with the stranded costs that we expect to take out To say it modestly, I think, you know, from our perspective, moving from where we're at on a full, you know, average basis this year to 10%-10.5% next year, we do not see, assuming the markets hold up, that we're going to have any trouble getting to 10%-10.5% next year. Again, our fourth quarter run rate supports that in a very strong manner. To say it modestly, I think, you know, from our perspective, moving from where we're at on a full, you know, average basis this year to 10%- 10.5% next year, we do not see, assuming the markets hold up, that we're going to have any trouble getting to 10%- 10.5% next year. to say it modestly i think you know from our perspective moving from where we're at on a full you know average basis this year to 10%- 10.5% next year we do not see assuming the markets hold up that we're going to have any trouble getting to 10%- 10.5% next year Again, our fourth quarter run rate supports that in a very strong manner. again our fourth quarter run rate supports that in a very strong manner

Speaker 11: Got it. Thank you. Another follow-up, I know you mentioned some of your key platform volumes are holding in next year. I know some of your customers have mentioned that just given the regulatory environment, some of the platforms can go to, I guess, richer mix, you know, off-road performance trims. I was just wondering if you would have, like, I mean, see a significant benefit from some of those powertrain changes. Got it. got it Thank you. thank you Another follow-up, I know you mentioned some of your key platform volumes are holding in next year. another follow-up i know you mentioned some of your key platform volumes are holding in next year I know some of your customers have mentioned that just given the regulatory environment, some of the platforms can go to, I guess, richer mix, you know, off-road performance trims. i know some of your customers have mentioned that just given the regulatory environment some of the platforms can go to i guess richer mix you know off-road performance trims I was just wondering if you would have, like, I mean, see a significant benefit from some of those powertrain changes. i was just wondering if you would have like i mean see a significant benefit from some of those powertrain changes

Speaker 1: Yeah, I mean, obviously, better mix. I mean, we're one of the original creators of the four-wheel drive vehicle. We created the Jeep for the government in World War II. Yeah, richer mix, larger axles. If you think at Wrangler, right, if that mix moves further to Rubicon, that's much better for us. We have more content on it. The same would be true for Bronco. Bruce already mentioned Super Duty with Ford's plans to expand that capacity and build more trucks. For us, that's a great program to have content on, and that content, if it gets richer, is better for us as it is for the OEM. Yeah, I mean, obviously, better mix. yeah i mean obviously better mix I mean, we're one of the original creators of the four-wheel drive vehicle. i mean we're one of the original creators of the four-wheel drive vehicle We created the Jeep for the government in World War II. we created the jeep for the government in world war ii Yeah, richer mix, larger axles. yeah richer mix larger axles If you think at Wrangler, right, if that mix moves further to Rubicon, that's much better for us. if you think at wrangler right if that mix moves further to rubicon that's much better for us We have more content on it. we have more content on it The same would be true for Bronco. the same would be true for bronco Bruce already mentioned Super Duty with Ford's plans to expand that capacity and build more trucks. bruce already mentioned super duty with ford's plans to expand that capacity and build more trucks For us, that's a great program to have content on, and that content, if it gets richer, is better for us as it is for the OEM. for us that's a great program to have content on and that content if it gets richer is better for us as it is for the oem

Speaker 10: Our final question will come from the line of Colin Langan with Wells Fargo. Please go ahead. Our final question will come from the line of Colin Langan with Wells Fargo . our final question will come from the line of colin langan with wells fargo Please go ahead. please go ahead

Speaker 5: Oh, great. Thanks for taking my questions. I just want to follow up on the sequential margin increase of $220 million on lower sales. I mean, just make sure I'm capturing all the factors. You have the incremental cost savings from Q3 to Q4. I think you mentioned like $10 million of EV headwinds, and those will get recovered. It's like, sorry, $10 million of headwinds that will get recovered. So a $20 million maybe swing quarter over quarter. I think mix. Are those the big factors? I'm a little surprised by the, I thought you said in the last quarter you had taken most of the actions. I'm a little surprised there's even more coming sequentially in Q3 and Q4. Oh, great. oh great Thanks for taking my questions. thanks for taking my questions I just want to follow up on the sequential margin increase of $220 million on lower sales. i just want to follow up on the sequential margin increase of $220 million on lower sales I mean, just make sure I'm capturing all the factors. i mean just make sure i'm capturing all the factors You have the incremental cost savings from Q3 to Q4. you have the incremental cost savings from q3 to q4 I think you mentioned like $10 million of EV headwinds, and those will get recovered. i think you mentioned like $10 million of ev headwinds and those will get recovered It's like, sorry, $10 million of headwinds that will get recovered. it's like sorry $10 million of headwinds that will get recovered So a $20 million maybe swing quarter over quarter. so a $20 million maybe swing quarter over quarter I think mix. i think mix Are those the big factors? are those the big factors I'm a little surprised by the, I thought you said in the last quarter you had taken most of the actions. i'm a little surprised by the i thought you said in the last quarter you had taken most of the actions I'm a little surprised there's even more coming sequentially in Q3 and Q4. i'm a little surprised there's even more coming sequentially in q3 and q4

Speaker 1: When you say, Colin, this is Tim. When you say actions, what are you talking about for actions? You talked about the cost-saving actions? When you say, Colin, this is Tim. when you say colin this is tim When you say actions, what are you talking about for actions? when you say actions what are you talking about for actions You talked about the cost-saving actions? you talked about the cost-saving actions

Speaker 5: Yes, I thought that was the comment you made last time. Yes, I thought that was the comment you made last time. yes i thought that was the comment you made last time

Speaker 1: Yeah, no, I mean, we had a, we still have additional actions coming through the third and into the fourth. I think the incremental or sequential savings will be lower in the fourth quarter. It's implied when you look at our $235 million. They're obviously slowing down. We're on track to have a run rate exit at $310 million coming out. We do have those actions. There's also additional performance actions at the plant level that will come through in the fourth quarter. I mentioned we're in the middle of rationalizing some product, and that's been a headwind for us in our performance and in the volume and mix through the first three quarters of the year. We do see that improving as well. All of that combined continues to drive that margin from quarter to quarter up. Yeah, no, I mean, we had a, we still have additional actions coming through the third and into the fourth. yeah no i mean we had a we still have additional actions coming through the third and into the fourth I think the incremental or sequential savings will be lower in the fourth quarter. i think the incremental or sequential savings will be lower in the fourth quarter It's implied when you look at our $235 million. it's implied when you look at our $235 million They're obviously slowing down. they're obviously slowing down We're on track to have a run rate exit at $310 million coming out. we're on track to have a run rate exit at $310 million coming out We do have those actions. we do have those actions There's also additional performance actions at the plant level that will come through in the fourth quarter. there's also additional performance actions at the plant level that will come through in the fourth quarter I mentioned we're in the middle of rationalizing some product, and that's been a headwind for us in our performance and in the volume and mix through the first three quarters of the year. i mentioned we're in the middle of rationalizing some product and that's been a headwind for us in our performance and in the volume and mix through the first three quarters of the year We do see that improving as well. we do see that improving as well All of that combined continues to drive that margin from quarter to quarter up. all of that combined continues to drive that margin from quarter to quarter up

Speaker 5: Okay, got it. I think in the past you've mentioned that the backlog of $300 million for next year is still pretty much intact. Has that changed much with some of the EV cancellations that you just mentioned on the call? In the past, it was like 70% EV or something. What are some of the ICE launches that are going to help as we think about next year? Okay, got it. okay got it I think in the past you've mentioned that the backlog of $300 million for next year is still pretty much intact. i think in the past you've mentioned that the backlog of $300 million for next year is still pretty much intact Has that changed much with some of the EV cancellations that you just mentioned on the call? has that changed much with some of the ev cancellations that you just mentioned on the call In the past, it was like 70% EV or something. in the past it was like 70% ev or something What are some of the ICE launches that are going to help as we think about next year? what are some of the ice launches that are going to help as we think about next year

Speaker 1: Yeah, I don't want to get into the specifics, but our backlog has been impacted by program delays and cancellations. I think what we want to do is take you through a pretty fulsome review of backlog and how it looks and how it shakes out in January, or probably mid-January, so that you get a really full view. We're right in the middle of finalizing our plans for new Dana, and we want an opportunity to really give you the full information and be able to answer your questions then. I think that's it. We do see increases in ICE, no question about it, from a backlog perspective. Yeah, I don't want to get into the specifics, but our backlog has been impacted by program delays and cancellations. yeah i don't want to get into the specifics but our backlog has been impacted by program delays and cancellations I think what we want to do is take you through a pretty fulsome review of backlog and how it looks and how it shakes out in January, or probably mid-January, so that you get a really full view. i think what we want to do is take you through a pretty fulsome review of backlog and how it looks and how it shakes out in january or probably mid-january so that you get a really full view We're right in the middle of finalizing our plans for new Dana, and we want an opportunity to really give you the full information and be able to answer your questions then. we're right in the middle of finalizing our plans for new dana and we want an opportunity to really give you the full information and be able to answer your questions then I think that's it. i think that's it We do see increases in ICE, no question about it, from a backlog perspective. we do see increases in ice no question about it from a backlog perspective

Speaker 6: Yeah, there's EV in there, but the proportion will be more ICE. Yeah, there's EV in there, but the proportion will be more ICE. yeah there's ev in there but the proportion will be more ice

Speaker 1: Yeah. Yeah. yeah

Speaker 5: Okay, has anything changed since the last quarter with the comments on? Okay, has anything changed since the last quarter with the comments on? okay has anything changed since the last quarter with the comments on

Speaker 1: Yeah, sure. Obviously, we've had cancellations in EV. Like we talked about, the headwind will absolutely impact some of the backlog that we have out there. Yeah, sure. yeah sure Obviously, we've had cancellations in EV. obviously we've had cancellations in ev Like we talked about, the headwind will absolutely impact some of the backlog that we have out there. like we talked about the headwind will absolutely impact some of the backlog that we have out there

Speaker 6: And delays. And delays. and delays

Speaker 1: Yeah. Yeah. yeah

Speaker 5: Okay, got it. Okay, got it. okay got it

Speaker 6: Okay. Maybe with that, we'll sort of get into some closing comments here. First of all, and it goes without saying, thanks to the Dana team for continuing to deliver on our commitments. Like I said earlier in my comments, despite external headwinds, we're over-delivering on the things that we can control, and I couldn't be prouder to be part of the team. A year ago, we committed to three things. One, selling our off-highway business, and we're very close to having that done. When that has been completed, we will have returned a substantial amount of capital to our shareholders and still be left with what we think is a best-in-class balance sheet in terms of our sector. We committed to $200 million of cost reduction, which we've subsequently upped to $310 million, and we're in great shape and basically at that run rate here this quarter. Okay. okay Maybe with that, we'll sort of get into some closing comments here. maybe with that we'll sort of get into some closing comments here First of all, and it goes without saying, thanks to the Dana team for continuing to deliver on our commitments. first of all and it goes without saying thanks to the dana team for continuing to deliver on our commitments Like I said earlier in my comments, despite external headwinds, we're over-delivering on the things that we can control, and I couldn't be prouder to be part of the team. like i said earlier in my comments despite external headwinds we're over-delivering on the things that we can control and i couldn't be prouder to be part of the team A year ago, we committed to three things. a year ago we committed to three things One, selling our off-highway business, and we're very close to having that done. one selling our off-highway business and we're very close to having that done When that has been completed, we will have returned a substantial amount of capital to our shareholders and still be left with what we think is a best-in-class balance sheet in terms of our sector. when that has been completed we will have returned a substantial amount of capital to our shareholders and still be left with what we think is a best-in-class balance sheet in terms of our sector We committed to $200 million of cost reduction, which we've subsequently upped to $310 million, and we're in great shape and basically at that run rate here this quarter. we committed to $200 million of cost reduction which we've subsequently upped to $310 million and we're in great shape and basically at that run rate here this quarter Lastly, and very importantly, we said we could get to double-digit margins in 2026, and we're exiting 2025 at that level. I know there was a healthy amount of skepticism around some of these commitments last year, but hopefully, the market will sort of recognize that the Dana team is delivering on its commitments. Despite some EV deterioration, we have an impressive backlog that we will talk about in January. It does have a combination of both ICE and EV, but as we said before, EV will be a smaller percent there. We'll share a lot more details in our January call. Long-term, I continue to see a lot of upside in terms of our margin potential. Lastly, and very importantly, we said we could get to double-digit margins in 2026, and we're exiting 2025 at that level. lastly and very importantly we said we could get to double-digit margins in 2026 and we're exiting 2025 at that level I know there was a healthy amount of skepticism around some of these commitments last year, but hopefully, the market will sort of recognize that the Dana team is delivering on its commitments. i know there was a healthy amount of skepticism around some of these commitments last year but hopefully the market will sort of recognize that the dana team is delivering on its commitments Despite some EV deterioration, we have an impressive backlog that we will talk about in January. despite some ev deterioration we have an impressive backlog that we will talk about in january It does have a combination of both ICE and EV, but as we said before, EV will be a smaller percent there. it does have a combination of both ice and ev but as we said before ev will be a smaller percent there We'll share a lot more details in our January call. we'll share a lot more details in our january call Long-term, I continue to see a lot of upside in terms of our margin potential. long-term i continue to see a lot of upside in terms of our margin potential I think a combination of us getting our margins up to the double digit and growing them beyond the 10%-10.5% in 2026, combined with our balance sheet, we believe we're going to be rewarded with multiple expansion. I think we got an extremely motivated management team here. I couldn't be prouder of the accomplishments year to date, and I think our best days are in front of us. With that, thanks for joining us on our call today. I think a combination of us getting our margins up to the double digit and growing them beyond the 10%- 10.5% in 2026, combined with our balance sheet, we believe we're going to be rewarded with multiple expansion. i think a combination of us getting our margins up to the double digit and growing them beyond the 10%- 10.5% in 2026 combined with our balance sheet we believe we're going to be rewarded with multiple expansion I think we got an extremely motivated management team here. i think we got an extremely motivated management team here I couldn't be prouder of the accomplishments year to date, and I think our best days are in front of us. i couldn't be prouder of the accomplishments year to date and i think our best days are in front of us With that, thanks for joining us on our call today. with that thanks for joining us on our call today

Speaker 10: This will conclude today's call. Thank you all for joining. You may now disconnect. This will conclude today's call. this will conclude today's call Thank you all for joining. thank you all for joining You may now disconnect. you may now disconnect